Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
HOSTELWORLD’S
VISION
OUR PURPOSE
Inspire passionate travellers to see the world, meet new people
and come back with extraordinary stories to tell.
OUR MISSION
To create a platform that connects our hostel partners and
hostel guests with the most customised tech solutions, and
offers the best choice of hostels and travel experiences
around the world.
OUR AMBITION
To reaffirm our position as the world’s leading online booking
platform for hostel travellers.
GENERATOR COPENHAGEN
COPENHAGEN
3
Hostelworld Annual Report 2018 | Overview
ABOUT
HOSTELWORLD
GROUP
Hostelworld Group is the leading hostel-focussed online booking
platform, sparking social experiences for young and independent
travellers.
Our customers are not your average tourists; they crave unique
experiences that we facilitate with the best choice of hostels
around the world offered in 19 languages across the website and
13 languages on the app of our core brand Hostelworld.
We have 20 years’ experience as the hostel Online Travel Agent
(“OTA”) experts, and today we work with over 16,500 hostel
properties globally, in addition to 20,000 other forms of budget
accommodation.
Our customers have access to an extensive database of more than
11.5 million customer reviews which allows them to choose the
hostel that’s right for them.
Since 1999 we’ve partnered with hostels worldwide, enabling
them to manage and distribute their inventory to our highly
engaged and valuable global customer base.
4
CASA ELEMENTO
MINCA
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
CONTENTS
CONTENTS
OVERVIEW
OVERVIEW
10
10
12
12
Our Journey
Our Journey
2018 Summary
2018 Summary
01
01
04
04
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
120
120
121
121
122
122
123
123
124
124
125
125
156
156
157
157
158
158
Consolidated Income Statement
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Company Statement of Finanical Position
Company Statement of Finanical Position
Company Statement of Changes in Equity
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Notes to the Company Financial Statements
STRATEGIC REPORT
STRATEGIC REPORT
02
02
17
17
20
20
25
25
30
30
37
37
Chairman’s Statement
Chairman’s Statement
Chief Executive’s Statement
Chief Executive’s Statement
Financial Review
Financial Review
Principal Risks and Uncertainties
Principal Risks and Uncertainties
Corporate Social Responsibility
Corporate Social Responsibility
ADDITIONAL INFORMATION
ADDITIONAL INFORMATION
164
164
165
165
Shareholder Information
Shareholder Information
Advisers
Advisers
05
05
03
03
GOVERNANCE
GOVERNANCE
45
45
46
46
48
48
59
59
66
66
71
71
76
76
86
86
98
98
106
106
Chairman’s Introduction to Governance
Chairman’s Introduction to Governance
Directors’ Biographies
Directors’ Biographies
Corporate Governance Statement
Corporate Governance Statement
Report of the Audit Committee
Report of the Audit Committee
Report of the Nomination Committee
Report of the Nomination Committee
Chairman of the Remuneration Committee’s Annual Statement
Chairman of the Remuneration Committee’s Annual Statement
Directors’ Remuneration Policy
Directors’ Remuneration Policy
Annual Report on Remuneration
Annual Report on Remuneration
Directors’ Report
Directors’ Report
Independent Auditor’s Report
Independent Auditor’s Report
6
6
FREEHAND LOS ANGELES
FREEHAND LOS ANGELES
LOS ANGELES
LOS ANGELES
01
THE INDEPENDENTE HOSTEL & SUITES
LISBON
OVERVIEW
10
Our Journey
12
2018 Summary
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
OUR JOURNEY
A Celebration of 20 years
Launch of the
Hostelworld website,
providing an online
booking platform and
back-end property
management system
2003
Opened office
in Shanghai
2009
Acquired
the Hostelbookers
business, based
in the UK
1999
Acquired the
Hostels.com
business and
brand
2006
Hellman & Friedman
LLC, a US private
equity firm,
acquired the Group
2013
Listed on the London
and Euronext Dublin
Stock Exchanges
Rebranding
of Hostelworld with
‘Meet the world’
2017
Roadmap to
Growth programme
2019
2015
Opened technology
development centre
in Porto, Portugal
2018
Celebrating 20 years
of Hostelworld
2014
Released new suite
of Hostelworld
booking apps for iOS
and Android
10
11
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
Hostelworld Annual Report 2018 | Overview
2018 SUMMARY
2018 SUMMARY
2018
2018
2017
2017
2018
2018
2017
2017
2018
2018
2017
2017
Bookings
Bookings
Net Revenue
Net Revenue
7.6m
7.6m
Gross bookings
Gross bookings
€7.6m
€7.6m
€7.5m
€7.5m
2018
2018
Hostelworld Brand
Hostelworld Brand
Other Brands
Other Brands
Adjusted EBITDA
Adjusted EBITDA
7.2m
7.2m
Net bookings
Net bookings
2017
2017
Hostelworld Brand
Hostelworld Brand
Other Brands
Other Brands
€7.2m
€7.2m
€7.5m
€7.5m
€82.1m
€82.1m
€82.1m
€82.1m
€86.7m
€86.7m
Adjusted Profit
Adjusted Profit
After Tax
After Tax
€21.4m
€21.4m
€21.4m
€21.4m
€26.4m
€26.4m
€17.5m
€17.5m
€17.5m
€17.5m
€21.7m
€21.7m
2018
2018
2017
2017
2018
2018
2017
2017
Deferred Revenue
Deferred Revenue
- Free Cancellation Booking
- Free Cancellation Booking
Revenue
Revenue
€2.9m
€2.9m
2018
2018
€2.9m
€2.9m
2017
2017
€0m
€0m
Definitions
Definitions
Adjusted EBITDA - Earnings before interest, tax, depreciation and amortisation, excluding exceptional and non-cash items;
Adjusted EBITDA - Earnings before interest, tax, depreciation and amortisation, excluding exceptional and non-cash items;
Adjusted Profit after Tax – Profit after tax excluding exceptional costs, amortisation of acquired domain and technology
Adjusted Profit after Tax – Profit after tax excluding exceptional costs, amortisation of acquired domain and technology
intangibles, impairment charges, net finance costs, share based payment expenses and deferred taxation;
intangibles, impairment charges, net finance costs, share based payment expenses and deferred taxation;
Adjusted Free Cash Flow – Free cash flow adjusted for capital expenditure, acquisition of intangible assets, net finance costs
Adjusted Free Cash Flow – Free cash flow adjusted for capital expenditure, acquisition of intangible assets, net finance costs
and net movement in working capital excluding the effect of exceptional costs.
and net movement in working capital excluding the effect of exceptional costs.
12
12
Adjusted Free
Adjusted Free
Cash Flow
Cash Flow
2018
2018
2017
2017
€20.7m
€20.7m
€20.7m
€20.7m
€21.5m
€21.5m
97% adjusted cash conversion
97% adjusted cash conversion
81% adjusted cash conversion
81% adjusted cash conversion
13
13
02
UNITE HOSTEL BARCELONA
BARCELONA
STRATEGIC
REPORT
17
Chairman’s Statement
20
25
30
37
Chief Executive’s Statement
Financial Review
Principal Risks and Uncertainties
Corporate Social Responsibility
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
CHAIRMAN’S
CHAIRMAN’S
STATEMENT
STATEMENT
2018 was a year of significant activity and
2018 was a year of significant activity and
cancellations, in 2019 when the last cancellation
cancellations, in 2019 when the last cancellation
change for the Hostelworld Group. Despite
change for the Hostelworld Group. Despite
date has passed.
date has passed.
experiencing challenging industry conditions
experiencing challenging industry conditions
during the summer months, we are pleased to
during the summer months, we are pleased to
Revenue for the year was €82.1m (2017: €86.7m) a
Revenue for the year was €82.1m (2017: €86.7m) a
report continued growth in gross bookings from
report continued growth in gross bookings from
decrease of 5%, due to the impact of the deferred
decrease of 5%, due to the impact of the deferred
our core Hostelworld brand of 4%, although
our core Hostelworld brand of 4%, although
revenue. Adjusted EBITDA (as defined in the
revenue. Adjusted EBITDA (as defined in the
the managed decline in our supporting brands
the managed decline in our supporting brands
Financial Review) for the year was €21.4m (2017:
Financial Review) for the year was €21.4m (2017:
resulted in flat overall Group bookings. In
resulted in flat overall Group bookings. In
€26.4m) and operating profit for the year was
€26.4m) and operating profit for the year was
response to customer demand and following a
response to customer demand and following a
€6.7m (2017: €11.9m). Both were also impacted by
€6.7m (2017: €11.9m). Both were also impacted by
pilot launch, in July we successfully rolled out our
pilot launch, in July we successfully rolled out our
the deferred revenue.
the deferred revenue.
free cancellation booking option globally, which
free cancellation booking option globally, which
further enhanced and broadened our customer
further enhanced and broadened our customer
The business continues to be strongly cash
The business continues to be strongly cash
product offering.
product offering.
generative, with Adjusted Free Cash Flow (as
generative, with Adjusted Free Cash Flow (as
defined in the Financial Review) of €20.7m (2017:
defined in the Financial Review) of €20.7m (2017:
In June 2018 Gary Morrison joined Hostelworld as
In June 2018 Gary Morrison joined Hostelworld as
€21.5m). Cash balances at year end were €26.0m
€21.5m). Cash balances at year end were €26.0m
Chief Executive Officer, following the departure of
Chief Executive Officer, following the departure of
(2017: €21.3m), after payment of €16.1m of
(2017: €21.3m), after payment of €16.1m of
Feargal Mooney from the Group. Gary worked for
Feargal Mooney from the Group. Gary worked for
dividends during the year (2017: €24.8m).
dividends during the year (2017: €24.8m).
Expedia for over seven years and brings a wealth
Expedia for over seven years and brings a wealth
of experience and knowledge of the Online Travel
of experience and knowledge of the Online Travel
Dividend and Capital Structure
Dividend and Capital Structure
Agent (“OTA”) marketplace. Following his arrival,
Agent (“OTA”) marketplace. Following his arrival,
Gary undertook a detailed strategic review of the
Gary undertook a detailed strategic review of the
The Board is recommending a full year final
The Board is recommending a full year final
Group which he completed in November 2018.
Group which he completed in November 2018.
dividend of 9.0 euro cent per share which
dividend of 9.0 euro cent per share which
As outlined in more detail in his Chief Executive’s
As outlined in more detail in his Chief Executive’s
together with the interim dividend of 4.8 euro
together with the interim dividend of 4.8 euro
review, this confirmed the significant growth
review, this confirmed the significant growth
cent per share brings the total dividend for 2018
cent per share brings the total dividend for 2018
opportunity for Hostelworld and the strengths
opportunity for Hostelworld and the strengths
to 13.8 euro cent. This reflects a distribution of
to 13.8 euro cent. This reflects a distribution of
and continuing relevance of our brand, in
and continuing relevance of our brand, in
75% of the Adjusted Profit after Taxation for the
75% of the Adjusted Profit after Taxation for the
addition to highlighting areas that require future
addition to highlighting areas that require future
year and is in line with our stated dividend policy.
year and is in line with our stated dividend policy.
investment.
investment.
Results and Financial Position
Results and Financial Position
The Board continues to review its approach to
The Board continues to review its approach to
returning capital to shareholders, whilst retaining
returning capital to shareholders, whilst retaining
flexibility to enable us to stabilise and strengthen
flexibility to enable us to stabilise and strengthen
our core platform.
our core platform.
Gross bookings for the year were flat given
Gross bookings for the year were flat given
the managed decline in our supporting brands
the managed decline in our supporting brands
Board Composition
Board Composition
which offset the growth of 4% in the Hostelworld
which offset the growth of 4% in the Hostelworld
brand. As indicated at the time, the peak summer
brand. As indicated at the time, the peak summer
months were impacted by unseasonably hot
months were impacted by unseasonably hot
weather in Europe and the timing of the World
weather in Europe and the timing of the World
Cup. The Group’s core brand, Hostelworld,
Cup. The Group’s core brand, Hostelworld,
currently represents 96% of total Group bookings
currently represents 96% of total Group bookings
(2017: 93%) with this percentage likely to
(2017: 93%) with this percentage likely to
increase further during 2019 as per our strategy.
increase further during 2019 as per our strategy.
The successful rollout of the free cancellation
The successful rollout of the free cancellation
booking option during the year led to a deferral
booking option during the year led to a deferral
of revenue recognition, which has impacted
of revenue recognition, which has impacted
reported earnings in 2018, however this has not
reported earnings in 2018, however this has not
had an impact on cash receipts. At 31 December
had an impact on cash receipts. At 31 December
2018, €2.9m of revenue from free cancellation
2018, €2.9m of revenue from free cancellation
bookings was collected from customers and
bookings was collected from customers and
deferred and will be recognised, net of any future
deferred and will be recognised, net of any future
The composition of the Board is fully compliant
The composition of the Board is fully compliant
with the UK Corporate Governance Code as
with the UK Corporate Governance Code as
applied to small companies. The Board has
applied to small companies. The Board has
undertaken an appraisal of the Directors, as
undertaken an appraisal of the Directors, as
well as of the Board and each sub-committee,
well as of the Board and each sub-committee,
which concluded that the Board is functioning
which concluded that the Board is functioning
effectively.
effectively.
There was significant change to the Board during
There was significant change to the Board during
2018. In May 2018, we announced that Feargal
2018. In May 2018, we announced that Feargal
Mooney who had been with Hostelworld for 16
Mooney who had been with Hostelworld for 16
years would be leaving the Board in June and
years would be leaving the Board in June and
would be succeeded by Gary Morrison.
would be succeeded by Gary Morrison.
17
17
“Our expanded
“Our expanded
in-house capability
in-house capability
is key to our plans
is key to our plans
to reaffirm our
to reaffirm our
competitive position
competitive position
as a leading hostel
as a leading hostel
focussed online
focussed online
booking platform.”
booking platform.”
Michael Cawley
Michael Cawley
Chairman
Chairman
JUMBO STAY STF/IYHF
JUMBO STAY STF/IYHF
STOCKHOLM
STOCKHOLM
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Earlier in 2018, Mari Hurley who had been with
Earlier in 2018, Mari Hurley who had been with
Following Gary Morrison’s appointment as Chief
Following Gary Morrison’s appointment as Chief
the Group for 11 years as Chief Financial Officer,
the Group for 11 years as Chief Financial Officer,
Executive Officer, he developed a ‘Roadmap
Executive Officer, he developed a ‘Roadmap
resigned from the Board. In August 2018 we
resigned from the Board. In August 2018 we
for Growth’ programme and strengthened
for Growth’ programme and strengthened
announced that TJ Kelly would be taking up the
announced that TJ Kelly would be taking up the
the management team to better resource
the management team to better resource
position of Chief Financial Officer and would be
position of Chief Financial Officer and would be
us to deliver the significant future growth
us to deliver the significant future growth
joining the Group and the Board in November
joining the Group and the Board in November
opportunities in the business. In addition to the
opportunities in the business. In addition to the
2018. TJ was formerly Chief Financial Officer of
2018. TJ was formerly Chief Financial Officer of
appointment of TJ Kelly as Chief Financial Officer,
appointment of TJ Kelly as Chief Financial Officer,
Glanbia plc’s Performance Nutrition division
Glanbia plc’s Performance Nutrition division
a number of key appointments and internal
a number of key appointments and internal
and brings a wealth of financial experience in
and brings a wealth of financial experience in
promotions have been made across the business
promotions have been made across the business
international consumer-focussed businesses and
international consumer-focussed businesses and
in areas including Product, Technology, and
in areas including Product, Technology, and
a proven track record in financial leadership.
a proven track record in financial leadership.
Analytics and Insights in order
Analytics and Insights in order
Pursuant to changes to the composition of the
Pursuant to changes to the composition of the
audit committee as set out in the 2018 Corporate
audit committee as set out in the 2018 Corporate
I would also like to thank our customers and
I would also like to thank our customers and
Governance Code, I stepped down as a member
Governance Code, I stepped down as a member
hostel partners, whom we continue to place at
hostel partners, whom we continue to place at
of the Audit Committee in December 2018. In
of the Audit Committee in December 2018. In
the heart of our business, for their loyalty and
the heart of our business, for their loyalty and
to deliver our ambitious growth objectives.
to deliver our ambitious growth objectives.
February 2018 Éimear Moloney was appointed
February 2018 Éimear Moloney was appointed
support.
support.
as a member of both the Nomination Committee
as a member of both the Nomination Committee
and Remuneration Committee. There were
and Remuneration Committee. There were
Finally, to our shareholders for their confidence
Finally, to our shareholders for their confidence
no other changes to the Audit Committee,
no other changes to the Audit Committee,
and commitment, we look forward to returning
and commitment, we look forward to returning
Remuneration Committee and Nomination
Remuneration Committee and Nomination
our business to growth and continuing to return
our business to growth and continuing to return
Committee during the year.
Committee during the year.
value to our shareholders.
value to our shareholders.
Colleagues, Customers and
Colleagues, Customers and
Shareholders
Shareholders
On behalf of the Board, I would like to thank
On behalf of the Board, I would like to thank
all members of the Hostelworld team for their
all members of the Hostelworld team for their
commitment and hard work during the year.
commitment and hard work during the year.
I would like to particularly acknowledge the
I would like to particularly acknowledge the
dedication of our product and technology
dedication of our product and technology
development teams based in Dublin and Porto.
development teams based in Dublin and Porto.
Our expanded in-house capability is key to our
Our expanded in-house capability is key to our
plans to leverage Hostelworld’s data assets and
plans to leverage Hostelworld’s data assets and
native app development strengths and reaffirm
native app development strengths and reaffirm
our competitive position as a leading hostel
our competitive position as a leading hostel
focussed online booking platform.
focussed online booking platform.
Michael Cawley
Michael Cawley
Chairman
Chairman
1 April 2019
1 April 2019
18
18
ECOMAMA
ECOMAMA
AMSTERDAM
AMSTERDAM
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
CHIEF EXECUTIVE’S
CHIEF EXECUTIVE’S
STATEMENT
STATEMENT
Since its foundation twenty years ago,
Since its foundation twenty years ago,
Hostelworld has grown into a global
Hostelworld has grown into a global
business focussed on facilitating a
business focussed on facilitating a
social travelling experience for young
social travelling experience for young
and independent travellers and
and independent travellers and
others seeking a sense of adventure,
others seeking a sense of adventure,
community and interaction with like-
community and interaction with like-
minded international travellers. Since
minded international travellers. Since
joining the business in June I have
joining the business in June I have
completed my strategic review, which
completed my strategic review, which
has confirmed why I decided to join the
has confirmed why I decided to join the
Group. Hostelworld has a very relevant
Group. Hostelworld has a very relevant
brand which is trusted by a loyal and
brand which is trusted by a loyal and
engaged customer base and has access
engaged customer base and has access
to exclusive inventory of high quality
to exclusive inventory of high quality
hostels. By leveraging our significant
hostels. By leveraging our significant
accumulated data assets and native
accumulated data assets and native
app development skills to exploit our
app development skills to exploit our
unique and focussed position in the
unique and focussed position in the
hostel ecosystem, we are not just well
hostel ecosystem, we are not just well
positioned in a growing market, but as
positioned in a growing market, but as
a market leading category specialist
a market leading category specialist
we can compete effectively with the
we can compete effectively with the
generalist lodging online travel agents
generalist lodging online travel agents
(“OTAs”).
(“OTAs”).
It is also clear that in recent years, while
It is also clear that in recent years, while
Hostelworld has had a strong track record of
Hostelworld has had a strong track record of
EBITDA delivery, this has not been matched
EBITDA delivery, this has not been matched
by consistent top line growth. Furthermore
by consistent top line growth. Furthermore
the reliance on, and significant investment
the reliance on, and significant investment
in category advertising to drive customer
in category advertising to drive customer
acquisition has not accelerated the core business
acquisition has not accelerated the core business
and translated into bookings growth, despite
and translated into bookings growth, despite
operating in a growing market. My strategic
operating in a growing market. My strategic
review, announced in November, also identified
review, announced in November, also identified
a number of areas where there has been a
a number of areas where there has been a
lack of investment, most notably in our core
lack of investment, most notably in our core
platform, that need to be addressed to ensure
platform, that need to be addressed to ensure
that we remain competitive in our marketplace.
that we remain competitive in our marketplace.
These will be the main focus of our attention
These will be the main focus of our attention
in the coming year. At the same time, I have
in the coming year. At the same time, I have
identified and developed a ‘Roadmap for
identified and developed a ‘Roadmap for
Growth’ programme in order to capitalise on the
Growth’ programme in order to capitalise on the
significant opportunities for the business and to
significant opportunities for the business and to
return it to a proper growth trajectory. In order to
return it to a proper growth trajectory. In order to
deliver this, I have taken steps to strengthen the
deliver this, I have taken steps to strengthen the
management team with a number of significant
management team with a number of significant
20
20
hires and internal promotions.
hires and internal promotions.
The main elements of our ‘Roadmap for Growth’
The main elements of our ‘Roadmap for Growth’
programme have now been agreed, with a
programme have now been agreed, with a
number of initiatives started during the second
number of initiatives started during the second
half of 2018. As we look to 2019 as a year of
half of 2018. As we look to 2019 as a year of
investment to fund the ‘return to growth drivers’
investment to fund the ‘return to growth drivers’
in 2020, there will be a number of key focus
in 2020, there will be a number of key focus
areas for the management team as described in
areas for the management team as described in
more detail below. It is anticipated that organic
more detail below. It is anticipated that organic
growth will be self-funded from our existing cash
growth will be self-funded from our existing cash
resources and cash generated from the business.
resources and cash generated from the business.
Appropriate deployment of capital against
Appropriate deployment of capital against
organic and inorganic growth opportunities will
organic and inorganic growth opportunities will
be subject to continual assessment and appraisal
be subject to continual assessment and appraisal
by the Board.
by the Board.
Returning to Growth
Returning to Growth
Gross bookings were flat year on year (2017:
Gross bookings were flat year on year (2017:
6% growth) with modest growth of 4% in the
6% growth) with modest growth of 4% in the
Hostelworld brand, which now accounts for 96%
Hostelworld brand, which now accounts for 96%
of total bookings, being offset by the managed
of total bookings, being offset by the managed
decline in our supporting brands. As announced
decline in our supporting brands. As announced
in August at the time of our half year results,
in August at the time of our half year results,
bookings growth in 2018 was impacted by some
bookings growth in 2018 was impacted by some
softness in trading seen during the peak Summer
softness in trading seen during the peak Summer
months as a result of the hot weather in Europe
months as a result of the hot weather in Europe
and the timing of the World Cup.
and the timing of the World Cup.
Our focus is on the hostel market and we are
Our focus is on the hostel market and we are
operating in a growing market: the total value
operating in a growing market: the total value
of hostel revenue is forecast to grow from
of hostel revenue is forecast to grow from
US$5.5bn in 2017 to US$6.4bn in 2020 (Source:
US$5.5bn in 2017 to US$6.4bn in 2020 (Source:
Phocuswright’s “The Global Hostel Market Place
Phocuswright’s “The Global Hostel Market Place
Second Edition”, March 2018). The market is
Second Edition”, March 2018). The market is
highly fragmented, but with a growing supply
highly fragmented, but with a growing supply
base of high quality accommodation. We are
base of high quality accommodation. We are
seeing significant investment and some modest
seeing significant investment and some modest
consolidation by the top chains within the
consolidation by the top chains within the
hostel segment and the share of bookings made
hostel segment and the share of bookings made
through OTAs, such as Hostelworld, is forecast to
through OTAs, such as Hostelworld, is forecast to
grow at a faster rate than the traditional hostel
grow at a faster rate than the traditional hostel
market. We also have a strong and trusted brand
market. We also have a strong and trusted brand
that provides relevant and valuable customers to
that provides relevant and valuable customers to
the hostel sector. It is therefore imperative that
the hostel sector. It is therefore imperative that
we are correctly positioned to take advantage
we are correctly positioned to take advantage
of the growth opportunities in our marketplace
of the growth opportunities in our marketplace
and that we appropriately invest in our core
and that we appropriately invest in our core
product, platform, technological capabilities and
product, platform, technological capabilities and
marketing in order to achieve this.
marketing in order to achieve this.
Our Strategy
Our Strategy
The strategic review has highlighted the
The strategic review has highlighted the
opportunity for significant growth for the
opportunity for significant growth for the
to the hostel market. Therefore upgrading our
to the hostel market. Therefore upgrading our
third party platform connectivity is a key priority
third party platform connectivity is a key priority
in order to defend our competitive position,
in order to defend our competitive position,
ensuring we have the best access to inventory for
ensuring we have the best access to inventory for
business. The positive market dynamics showcase
business. The positive market dynamics showcase
our customers.
our customers.
the potential pace for growth, which a purely
the potential pace for growth, which a purely
hostel focussed business can exploit. We have
hostel focussed business can exploit. We have
identified a number of key focus areas as our
identified a number of key focus areas as our
strategic objectives for 2019. These are as follows:
strategic objectives for 2019. These are as follows:
► Investing in our Platform
► Investing in our Platform
One of the key areas of our focus in 2019 will
One of the key areas of our focus in 2019 will
be on strengthening the core platform in order
be on strengthening the core platform in order
to improve its flexibility and the experience of
to improve its flexibility and the experience of
our customers bringing it up to competitive
our customers bringing it up to competitive
parity. Since 2015 there was underinvestment in
parity. Since 2015 there was underinvestment in
the total product and engineering headcount,
the total product and engineering headcount,
which was insufficient to maintain our platform
which was insufficient to maintain our platform
competitiveness against other OTAs. I have
competitiveness against other OTAs. I have
identified closing this technological gap as a key
identified closing this technological gap as a key
priority for my management team.
priority for my management team.
During 2018 we rolled out our free cancellation
During 2018 we rolled out our free cancellation
option for customers which has now been
option for customers which has now been
successfully embedded, with cancellation rates
successfully embedded, with cancellation rates
performing in line with our expectations. We plan
performing in line with our expectations. We plan
to make further improvements to the range of
to make further improvements to the range of
booking options we offer our customers which
booking options we offer our customers which
will result in greater flexibility to make online
will result in greater flexibility to make online
changes and a wider range of payment options,
changes and a wider range of payment options,
including different currencies and different
including different currencies and different
payment methods.
payment methods.
We plan to improve the search experience for our
We plan to improve the search experience for our
customers in order to present the right hostels
customers in order to present the right hostels
to the right customers at the right time through
to the right customers at the right time through
more dynamically optimised search functions.
more dynamically optimised search functions.
This will involve expanding and improving the
This will involve expanding and improving the
hostels available to our customers with unique
hostels available to our customers with unique
experiences and improved site and hostel content
experiences and improved site and hostel content
localisation.
localisation.
We are also investing in our current platform
We are also investing in our current platform
to upgrade connectivity for hostel owners and
to upgrade connectivity for hostel owners and
to offer improved and more flexible rate plan
to offer improved and more flexible rate plan
configurations. Hostelworld has significant
configurations. Hostelworld has significant
exclusive inventory and in order to retain this
exclusive inventory and in order to retain this
position we need to invest and ensure that our
position we need to invest and ensure that our
platform is as flexible and convenient as possible
platform is as flexible and convenient as possible
for hostel owners to use. In recent years the
for hostel owners to use. In recent years the
use of third party platforms has increased with
use of third party platforms has increased with
these platforms typically providing connections
these platforms typically providing connections
to multiple OTAs, including Hostelworld. This
to multiple OTAs, including Hostelworld. This
has allowed more competitors to gain access
has allowed more competitors to gain access
► Best-in-Class App Technology
► Best-in-Class App Technology
Hostelworld launched its first app in 2010 and this
Hostelworld launched its first app in 2010 and this
has been one of the key factors in our success
has been one of the key factors in our success
over the past few years with continued growth in
over the past few years with continued growth in
bookings via our app every year. In 2018 40% of
bookings via our app every year. In 2018 40% of
all bookings were made via the app up from 33%
all bookings were made via the app up from 33%
in 2017. Since we launched our iOS and Android
in 2017. Since we launched our iOS and Android
apps in 2014, they have won industry awards
apps in 2014, they have won industry awards
and recognition. However, in an increasingly
and recognition. However, in an increasingly
competitive market where our customers have
competitive market where our customers have
more choice and options, we need to ensure that
more choice and options, we need to ensure that
our app has the best functionality with the most
our app has the best functionality with the most
relevant content, together with the appropriate
relevant content, together with the appropriate
inventory for our chosen segment. We expect to
inventory for our chosen segment. We expect to
see app usage continue to grow in the future and
see app usage continue to grow in the future and
this will continue to drive marketing efficiencies
this will continue to drive marketing efficiencies
by lowering our customer acquisition and
by lowering our customer acquisition and
transaction costs.
transaction costs.
One of Hostelworld’s key strengths is our
One of Hostelworld’s key strengths is our
experience and expertise in native app
experience and expertise in native app
development. Our software development office
development. Our software development office
in Porto which we opened in 2017 has been
in Porto which we opened in 2017 has been
significantly expanded during 2018. As at 31
significantly expanded during 2018. As at 31
December 2018 we had 53 people employed
December 2018 we had 53 people employed
in Porto compared to 24 at the end of 2017.
in Porto compared to 24 at the end of 2017.
During 2019 our Dublin and Porto product and
During 2019 our Dublin and Porto product and
development teams will continue to update
development teams will continue to update
and expand our app capability. The native
and expand our app capability. The native
app development skills that Hostelworld has
app development skills that Hostelworld has
developed are a key source of competitive
developed are a key source of competitive
advantage for our business.
advantage for our business.
► Leveraging our Data Assets
► Leveraging our Data Assets
Hostelworld has millions of stored anonymised
Hostelworld has millions of stored anonymised
itineraries which provide a rich data source
itineraries which provide a rich data source
and have historically been under-utilised by the
and have historically been under-utilised by the
Group. We can use this data to better understand
Group. We can use this data to better understand
the preferences of different types of customer:
the preferences of different types of customer:
for example, a single destination trip customer
for example, a single destination trip customer
will typically have different requirements and
will typically have different requirements and
be looking for different features in their hostel
be looking for different features in their hostel
stay compared to a multi destination trip
stay compared to a multi destination trip
traveller who is seeking a different type of hostel
traveller who is seeking a different type of hostel
experience. By using this data we can generate
experience. By using this data we can generate
highly relevant bespoke recommendations and
highly relevant bespoke recommendations and
suggestions for our customers. For Hostelworld,
suggestions for our customers. For Hostelworld,
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Hostelworld Annual Report 2018 | Strategic Report
leveraging our data will allow us to target and
leveraging our data will allow us to target and
and strong cash conversion. Debt collection and
and strong cash conversion. Debt collection and
grow the most profitable customer segments,
grow the most profitable customer segments,
invoicing overheads are all minimised.
invoicing overheads are all minimised.
such as multi destination customers.
such as multi destination customers.
During 2018, we rolled out a global free
During 2018, we rolled out a global free
► Driving Customer Acquisition
► Driving Customer Acquisition
cancellation model to further broaden our
cancellation model to further broaden our
product offering. As with the other deposit
product offering. As with the other deposit
In recent years Hostelworld has invested in
In recent years Hostelworld has invested in
models, at the time of booking, hostel travellers
models, at the time of booking, hostel travellers
category advertising through some high profile
category advertising through some high profile
pay a deposit directly to us, and the remainder
pay a deposit directly to us, and the remainder
celebrity advertising campaigns. However, whilst
celebrity advertising campaigns. However, whilst
of the cost of their stay directly to the hostel
of the cost of their stay directly to the hostel
these generated strong interest on social media,
these generated strong interest on social media,
at the time of their visit. If the hostel traveller
at the time of their visit. If the hostel traveller
it is difficult to measure the related core business
it is difficult to measure the related core business
cancels their free cancellation booking, within
cancels their free cancellation booking, within
growth and associated returns. The conclusions of
growth and associated returns. The conclusions of
a specified period, we will refund their deposit.
a specified period, we will refund their deposit.
the recent strategic review are that in 2019 these
the recent strategic review are that in 2019 these
The introduction of the free cancellation booking
The introduction of the free cancellation booking
resources would be more productively deployed
resources would be more productively deployed
option has resulted in a portion of gross bookings
option has resulted in a portion of gross bookings
in investing in our products and systems as
in investing in our products and systems as
being cancelled and the deposits refunded to
being cancelled and the deposits refunded to
previously outlined and that marketing activities
previously outlined and that marketing activities
customers. Underlying cancellation rates are
customers. Underlying cancellation rates are
will be focussed on core customer acquisition.
will be focussed on core customer acquisition.
performing in line with our expectations.
performing in line with our expectations.
We know that our most engaged customer base
We know that our most engaged customer base
The Market
The Market
who book for four or more destinations per trip
who book for four or more destinations per trip
is significantly more valuable than those who
is significantly more valuable than those who
book two or three destinations per trip, both
book two or three destinations per trip, both
for Hostelworld and for our hostel partners.
for Hostelworld and for our hostel partners.
Providing the right customer to the right hostel
Providing the right customer to the right hostel
at the right time not only increases the chances
at the right time not only increases the chances
of repeat bookings through Hostelworld, but it
of repeat bookings through Hostelworld, but it
also delivers the most valuable customers for the
also delivers the most valuable customers for the
hostels. These are customers who understand the
hostels. These are customers who understand the
hostel experience and who are most likely to leave
hostel experience and who are most likely to leave
positive reviews. Hostelworld customers are also
positive reviews. Hostelworld customers are also
best known for contributing to the atmosphere
best known for contributing to the atmosphere
in the hostel, by participating most fully in the
in the hostel, by participating most fully in the
activities of the hostel and using in-house food
activities of the hostel and using in-house food
and beverage facilities during their stay.
and beverage facilities during their stay.
Business Model
Business Model
In operating a global hostel-focussed online
In operating a global hostel-focussed online
booking platform, we offer a simple and
booking platform, we offer a simple and
comprehensive online mechanism that
comprehensive online mechanism that
gives providers of hostels and other budget
gives providers of hostels and other budget
accommodation a shop window to show their
accommodation a shop window to show their
accommodation to young and independent
accommodation to young and independent
travellers. We provide the technology solution
travellers. We provide the technology solution
to facilitate bookings between the hostel
to facilitate bookings between the hostel
and traveller, offering a high quality booking
and traveller, offering a high quality booking
experience that provides us with commission
experience that provides us with commission
based revenue.
based revenue.
The second independent study of the global
The second independent study of the global
hostel market (“Second Edition”) was published by
hostel market (“Second Edition”) was published by
Phocuswright in 2018.
Phocuswright in 2018.
The topline findings of the Second Edition include:
The topline findings of the Second Edition include:
► Phocuswright estimates total property count
► Phocuswright estimates total property count
globally of approximately 18,200 in 2016,
globally of approximately 18,200 in 2016,
increasing significantly from 15,700 properties
increasing significantly from 15,700 properties
in 2014.
in 2014.
► Phocuswright projects 5% hostel revenue
► Phocuswright projects 5% hostel revenue
growth per year through 2020 for the global
growth per year through 2020 for the global
hostel market (on pace with the global hotel
hostel market (on pace with the global hotel
industry), when it estimates that total hostel
industry), when it estimates that total hostel
revenue will reach nearly US$6.4 billion in
revenue will reach nearly US$6.4 billion in
revenue.
revenue.
► Online channels accounted for 62% of global
► Online channels accounted for 62% of global
hostel revenue in 2016. OTAs are the fastest-
hostel revenue in 2016. OTAs are the fastest-
growing channel, processing 46% of global
growing channel, processing 46% of global
hostel bookings in 2016, and estimated to rise
hostel bookings in 2016, and estimated to rise
to 54% by 2020.
to 54% by 2020.
Phocuswright’s conclusions provide us with
Phocuswright’s conclusions provide us with
additional confidence in the strength of our
additional confidence in the strength of our
target market and the long term growth
target market and the long term growth
opportunities it offers the Group as a leading
opportunities it offers the Group as a leading
provider of bookings into this niche market.
provider of bookings into this niche market.
At the time of booking, hostel travellers pay a
At the time of booking, hostel travellers pay a
deposit directly to us, and the remainder of the
deposit directly to us, and the remainder of the
cost of their stay directly to the hostel at the time
cost of their stay directly to the hostel at the time
of their visit. The deposit equates to our revenue
of their visit. The deposit equates to our revenue
from the transaction. This efficient business
from the transaction. This efficient business
model has favourable working capital attributes
model has favourable working capital attributes
Investing in People
Investing in People
In order to deliver our ‘Roadmap for Growth’
In order to deliver our ‘Roadmap for Growth’
programme, since my appointment in June I have
programme, since my appointment in June I have
made a number of important changes to strengthen
made a number of important changes to strengthen
the management team. In November, TJ Kelly joined
the management team. In November, TJ Kelly joined
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Hostelworld from Glanbia as our Chief Financial Officer.
Hostelworld from Glanbia as our Chief Financial Officer.
Outlook
Outlook
In addition, I have made a number of internal
In addition, I have made a number of internal
promotions: Breffni Horgan to Chief Product
promotions: Breffni Horgan to Chief Product
Hostelworld is operating in a highly competitive
Hostelworld is operating in a highly competitive
Officer, Noel Maher to Chief Technology Officer
Officer, Noel Maher to Chief Technology Officer
market, which is growing. We have a very relevant
market, which is growing. We have a very relevant
and Catriona Flood to Chief Analytics Officer.
and Catriona Flood to Chief Analytics Officer.
We will continue to invest in talent across the
We will continue to invest in talent across the
business especially in product, technology and
business especially in product, technology and
in our Porto office. We are fortunate to have an
in our Porto office. We are fortunate to have an
brand which is trusted by a loyal and engaged
brand which is trusted by a loyal and engaged
customer base. Trading in the first quarter of
customer base. Trading in the first quarter of
2019 is in line with the Board’s expectations.
2019 is in line with the Board’s expectations.
We remain committed to delivering value to
We remain committed to delivering value to
excellent and diverse pool of talented individuals
excellent and diverse pool of talented individuals
shareholders and continue to assess our capital
shareholders and continue to assess our capital
working across our organisation who are critical to
working across our organisation who are critical to
allocation approach in line with investment
allocation approach in line with investment
our future success. I would like to thank the entire
our future success. I would like to thank the entire
choices and priorities.
choices and priorities.
team, in Dublin, London, Porto, Shanghai and
team, in Dublin, London, Porto, Shanghai and
Sydney for their hard work in 2018.
Sydney for their hard work in 2018.
Gary Morrison
Gary Morrison
Chief Executive
Chief Executive
1 April 2019
1 April 2019
Optimising Capital Allocation
Optimising Capital Allocation
After our people, capital is our most important
After our people, capital is our most important
resource and it is critical that we invest it wisely.
resource and it is critical that we invest it wisely.
My strategic review has highlighted insufficient
My strategic review has highlighted insufficient
investment in our core platform and product
investment in our core platform and product
suite in recent years. Therefore my priorities
suite in recent years. Therefore my priorities
for future capital allocation are on focussed
for future capital allocation are on focussed
marketing programmes that will drive growth
marketing programmes that will drive growth
in core customer acquisition and re-investment
in core customer acquisition and re-investment
in our core platform in order to reaffirm and
in our core platform in order to reaffirm and
strengthen our position as a leading hostel-
strengthen our position as a leading hostel-
focussed online booking platform. Most of
focussed online booking platform. Most of
our existing growth plans can be delivered
our existing growth plans can be delivered
organically using the existing resources and
organically using the existing resources and
experience of the Group, including more effective
experience of the Group, including more effective
leveraging of our under-utilised existing data
leveraging of our under-utilised existing data
assets. However, we will continue to appraise
assets. However, we will continue to appraise
complementary target acquisitions that would
complementary target acquisitions that would
accelerate our growth or provide us with a
accelerate our growth or provide us with a
unique capability to improve our offering to our
unique capability to improve our offering to our
customers or hostel partners.
customers or hostel partners.
2019 will be a year of investment for Hostelworld
2019 will be a year of investment for Hostelworld
to fund the ‘return to growth’ drivers for 2020
to fund the ‘return to growth’ drivers for 2020
and beyond. It is anticipated that organic growth
and beyond. It is anticipated that organic growth
will be self-funded through our existing cash
will be self-funded through our existing cash
resources and the strong cashflows generated
resources and the strong cashflows generated
from the business.
from the business.
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FINANCIAL REVIEW
FINANCIAL REVIEW
Introduction
Introduction
► Hostelworld gross brand bookings growth of 4%, total Group bookings growth flat reflecting the
► Hostelworld gross brand bookings growth of 4%, total Group bookings growth flat reflecting the
managed decline in supporting brands
managed decline in supporting brands
► Average Booking Value (“ABV”) (gross) of €11.89, a 3% increase on 2017, 6% increase on a constant
► Average Booking Value (“ABV”) (gross) of €11.89, a 3% increase on 2017, 6% increase on a constant
currency basis
currency basis
► Revenue decreased by 5%, 3% decrease on a constant currency basis, impacted by deferred revenue.
► Revenue decreased by 5%, 3% decrease on a constant currency basis, impacted by deferred revenue.
Excluding the impact of deferred revenue, Group revenue decreased by 2% and grew by 1% on a
Excluding the impact of deferred revenue, Group revenue decreased by 2% and grew by 1% on a
constant currency basis
constant currency basis
► €2.9m of revenue generated from free cancellation bookings has been deferred (2017: €nil) and will be
► €2.9m of revenue generated from free cancellation bookings has been deferred (2017: €nil) and will be
recognised, net of any future cancellations, in future periods
recognised, net of any future cancellations, in future periods
► Marketing expenses represented 38% of Revenue (2017: 38%)
► Marketing expenses represented 38% of Revenue (2017: 38%)
► Adjusted EBITDA decreased by 19%, 17% decrease on a constant currency basis
► Adjusted EBITDA decreased by 19%, 17% decrease on a constant currency basis
► Excluding the impact of deferred revenue, Adjusted EBITDA would have decreased by €2.1m (8%)
► Excluding the impact of deferred revenue, Adjusted EBITDA would have decreased by €2.1m (8%)
► Adjusted EBITDA margin of 26% (2017: 30%) impacted by deferred revenue. Excluding the impact of
► Adjusted EBITDA margin of 26% (2017: 30%) impacted by deferred revenue. Excluding the impact of
deferred revenue, Adjusted EBITDA margin would have been 29%
deferred revenue, Adjusted EBITDA margin would have been 29%
► Strong underlying cash conversion (97%) and final proposed dividend of 9.0 euro cent per share
► Strong underlying cash conversion (97%) and final proposed dividend of 9.0 euro cent per share
Key Performance Indicators
Key Performance Indicators
Gross Bookings:
Gross Bookings:
Bookings – Hostelworld brand (m)
Bookings – Hostelworld brand (m)
Bookings – supporting brands and channels (m)
Bookings – supporting brands and channels (m)
Total Booking Volume (m)
Total Booking Volume (m)
Net Bookings:
Net Bookings:
Net Bookings – Hostelworld brand (m)
Net Bookings – Hostelworld brand (m)
Total Net Group Bookings Volume (m)
Total Net Group Bookings Volume (m)
Average Booking Value ("ABV") (gross) (€)
Average Booking Value ("ABV") (gross) (€)
Revenue (€m)
Revenue (€m)
Deferred Free Cancellation Revenue (€m)
Deferred Free Cancellation Revenue (€m)
Adjusted EBITDA (€m)
Adjusted EBITDA (€m)
2018
2018
2017
2017
% Change
% Change
Reported
Reported
% Change
% Change
Constant Currency
Constant Currency
7.27
7.27
0.28
0.28
7.55
7.55
6.96
6.96
7.24
7.24
11.89
11.89
82.1
82.1
2.9
2.9
21.4
21.4
7.00
7.00
0.54
0.54
7.54
7.54
7.00
7.00
7.54
7.54
11.55
11.55
86.7
86.7
n/a
n/a
26.4
26.4
4%
4%
(47%)
(47%)
0%
0%
(1%)
(1%)
(4%)
(4%)
3%
3%
(5%)
(5%)
6%
6%
(3%)
(3%)
(19%)
(19%)
(17%)
(17%)
The Group believes that both gross booking
The Group believes that both gross booking
bookings (2017: 93%). Bookings growth was
bookings (2017: 93%). Bookings growth was
volume (“Gross Bookings”, “Bookings”) and
volume (“Gross Bookings”, “Bookings”) and
skewed towards H1 2018, with Hostelworld brand
skewed towards H1 2018, with Hostelworld brand
booking volume net of cancellations (“Net
booking volume net of cancellations (“Net
bookings growth of 6% (H2 2018: 2% growth)
bookings growth of 6% (H2 2018: 2% growth)
Bookings”) are key performance indicators
Bookings”) are key performance indicators
which was partially attributed to softer booking
which was partially attributed to softer booking
and are critical in assessing the operational
and are critical in assessing the operational
volume in the key summer months due to the
volume in the key summer months due to the
performance of the business.
performance of the business.
World Cup and the unusually hot weather in
World Cup and the unusually hot weather in
The Group’s gross booking volumes were flat
The Group’s gross booking volumes were flat
Europe.
Europe.
in 2018 (2017: 6% growth), with 4% growth in
in 2018 (2017: 6% growth), with 4% growth in
In 2018 in response to customer demand, the
In 2018 in response to customer demand, the
the core Hostelworld brand (2017: 13% growth)
the core Hostelworld brand (2017: 13% growth)
Group rolled out a free cancellation booking
Group rolled out a free cancellation booking
offset by 47% decline in the Group’s supporting
offset by 47% decline in the Group’s supporting
option, to further broaden our product offering.
option, to further broaden our product offering.
brands (2017: 41% decline). The Group’s core
brands (2017: 41% decline). The Group’s core
This booking option was rolled out on a phased
This booking option was rolled out on a phased
brand, Hostelworld, represents 96% of Group
brand, Hostelworld, represents 96% of Group
basis in H1 2018 and globally in H2 2018. As with
basis in H1 2018 and globally in H2 2018. As with
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“The Group’s
“The Group’s
business model
business model
continues
continues
to produce
to produce
strong free cash
strong free cash
flow conversion.”
flow conversion.”
TJ Kelly
TJ Kelly
Chief Financial Officer
Chief Financial Officer
MEMORY HOSTEL
MEMORY HOSTEL
DA NANG
DA NANG
Hostelworld Annual Report 2018 | Strategic Report
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Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
the other deposit models, at the time of booking,
the other deposit models, at the time of booking,
All of the marketing costs in relation to these
All of the marketing costs in relation to these
of deferred revenue that can be recognised in
of deferred revenue that can be recognised in
Gross staff costs (excluding share based payment
Gross staff costs (excluding share based payment
hostel travellers pay a deposit directly to us, and
hostel travellers pay a deposit directly to us, and
bookings have been recognised in the year.
bookings have been recognised in the year.
future periods.
future periods.
the remainder of the cost of their stay directly to
the remainder of the cost of their stay directly to
expense and before the impact of capitalised
expense and before the impact of capitalised
development labour) increased from €18.7m to
development labour) increased from €18.7m to
the hostel at the time of their visit. If the hostel
the hostel at the time of their visit. If the hostel
Average Booking Value (“ABV”) is the average
Average Booking Value (“ABV”) is the average
Administration expenses increased by €1.6m (3%) to
Administration expenses increased by €1.6m (3%) to
€19.2m. Average full time equivalent headcount
€19.2m. Average full time equivalent headcount
traveller cancels their free cancellation booking,
traveller cancels their free cancellation booking,
value paid by a customer for a gross booking. ABV
value paid by a customer for a gross booking. ABV
€61.9m in 2018. A contributory factor in this increase
€61.9m in 2018. A contributory factor in this increase
increased by 13% from 254 in 2017 to 288 in 2018.
increased by 13% from 254 in 2017 to 288 in 2018.
within a specified period, we will refund their
within a specified period, we will refund their
grew by 3% during the year, and 6% in constant
grew by 3% during the year, and 6% in constant
was the increase in exceptional costs, and in staff
was the increase in exceptional costs, and in staff
Excluding the impact of development labour
Excluding the impact of development labour
deposit.
deposit.
currency. The average commission rate in 2018
currency. The average commission rate in 2018
increased to 15.4% (2017: 14.3%), primarily driven
increased to 15.4% (2017: 14.3%), primarily driven
and other administration costs due to the increased
and other administration costs due to the increased
capitalised in accordance with IFRS standards (2018:
capitalised in accordance with IFRS standards (2018:
investment in the technology development centre in
investment in the technology development centre in
€1.7m; 2017: €1.7m), share based payment expense
€1.7m; 2017: €1.7m), share based payment expense
This has led to a deferral of revenue recognition,
This has led to a deferral of revenue recognition,
by a base commission increase during the year.
by a base commission increase during the year.
Porto during the year as part of the strategy of the
Porto during the year as part of the strategy of the
and the impact of bonus provisions, staff costs
and the impact of bonus provisions, staff costs
which has impacted reported earnings in
which has impacted reported earnings in
The commission increase and an increase in the
The commission increase and an increase in the
Group to invest in its development capacity.
Group to invest in its development capacity.
increased by 3% on a constant currency basis.
increased by 3% on a constant currency basis.
2018, however this has not had an impact on
2018, however this has not had an impact on
underlying base price per bed were offset by the
underlying base price per bed were offset by the
cash receipts. At 31 December 2018, €2.9m of
cash receipts. At 31 December 2018, €2.9m of
continued decline in the number of bed nights
continued decline in the number of bed nights
revenue from free cancellation bookings was
revenue from free cancellation bookings was
per booking with the continued shift to mobile
per booking with the continued shift to mobile
collected from customers and deferred and will
collected from customers and deferred and will
bookings and the negative impact of exchange
bookings and the negative impact of exchange
be recognised, net of any future cancellations,
be recognised, net of any future cancellations,
rate movements in 2018.
rate movements in 2018.
in 2019 when the last cancellation date has
in 2019 when the last cancellation date has
passed. Any cancellations that were processed by
passed. Any cancellations that were processed by
The Group continues to actively manage its
The Group continues to actively manage its
customers up to and including 31 December 2018
customers up to and including 31 December 2018
marketing mix with marketing investment as a
marketing mix with marketing investment as a
have been refunded and are not included in this
have been refunded and are not included in this
percentage of net revenue of 38% in 2018 (2017:
percentage of net revenue of 38% in 2018 (2017:
deferred revenue balance.
deferred revenue balance.
38%). Excluding the impact of deferred free
38%). Excluding the impact of deferred free
cancellation revenue, marketing investment
cancellation revenue, marketing investment
The introduction of the free cancellation booking
The introduction of the free cancellation booking
would be 37% of revenue (2017: 38%). While
would be 37% of revenue (2017: 38%). While
option has resulted in a portion of gross bookings
option has resulted in a portion of gross bookings
exchange rate movements had a negative impact
exchange rate movements had a negative impact
being cancelled and refunded to customers.
being cancelled and refunded to customers.
on Revenue and Adjusted EBITDA, there was a
on Revenue and Adjusted EBITDA, there was a
Group bookings, net of any cancellations
Group bookings, net of any cancellations
partial offsetting benefit to marketing expenses
partial offsetting benefit to marketing expenses
processed by 31 December 2018, have declined by
processed by 31 December 2018, have declined by
as the majority of marketing investment is
as the majority of marketing investment is
4% in 2018, with Hostelworld brand net bookings
4% in 2018, with Hostelworld brand net bookings
denominated in US dollars.
denominated in US dollars.
declining by 1%. Underlying cancellation rates are
declining by 1%. Underlying cancellation rates are
performing in line with our expectations.
performing in line with our expectations.
Adjusted EBITDA
Adjusted EBITDA
Bookings generated from the app and mobile
Bookings generated from the app and mobile
web channels represented 59% of Group
web channels represented 59% of Group
bookings (2017: 54%), with bookings from the
bookings (2017: 54%), with bookings from the
app growing by 22% during the year to 40% of
app growing by 22% during the year to 40% of
all bookings. The Group’s booking volumes are
all bookings. The Group’s booking volumes are
seasonal and peak between May and August
seasonal and peak between May and August
during the summer travel period in the northern
during the summer travel period in the northern
hemisphere.
hemisphere.
While the Group operates in one segment and
While the Group operates in one segment and
is managed as such, business performance is
is managed as such, business performance is
reviewed on a bookings volume and average
reviewed on a bookings volume and average
booking value basis for both the Hostelworld
booking value basis for both the Hostelworld
brand as well as all supporting brands (including
brand as well as all supporting brands (including
Hostelbookers, Hostels.com, booking engines
Hostelbookers, Hostels.com, booking engines
and affiliates).
and affiliates).
Revenue decreased by 5% during the year to
Revenue decreased by 5% during the year to
€82.1m (2017: €86.7m), a 3% decrease on a
€82.1m (2017: €86.7m), a 3% decrease on a
constant currency basis, partially as a result of
constant currency basis, partially as a result of
the impact of €2.9m deferred revenue (2017: €nil).
the impact of €2.9m deferred revenue (2017: €nil).
Excluding the impact of deferred revenue, Group
Excluding the impact of deferred revenue, Group
revenue would have declined by €1.7m (2%) and
revenue would have declined by €1.7m (2%) and
increased by 1% on a constant currency basis
increased by 1% on a constant currency basis
26
26
during the year.
during the year.
The Group uses Earnings before Interest, Tax,
The Group uses Earnings before Interest, Tax,
Depreciation and Amortisation, excluding
Depreciation and Amortisation, excluding
exceptional and non-cash items (“Adjusted EBITDA”)
exceptional and non-cash items (“Adjusted EBITDA”)
as a key performance indicator when measuring
as a key performance indicator when measuring
the outcome in the business. Exceptional items by
the outcome in the business. Exceptional items by
their nature and size can make interpretation of the
their nature and size can make interpretation of the
underlying trends in the business more difficult.
underlying trends in the business more difficult.
We believe this alternative performance measure
We believe this alternative performance measure
reflects the key drivers of profitability for the Group
reflects the key drivers of profitability for the Group
and removes those items which do not impact
and removes those items which do not impact
underlying trading performance.
underlying trading performance.
Adjusted EBITDA of €21.4m (2017: €26.4m) has
Adjusted EBITDA of €21.4m (2017: €26.4m) has
decreased by €5.0m (19%) in the year and by 17%
decreased by €5.0m (19%) in the year and by 17%
on a constant currency basis. Adjusted EBITDA as
on a constant currency basis. Adjusted EBITDA as
a percentage of revenue declined to 26% (2017:
a percentage of revenue declined to 26% (2017:
30%) due in part to the impact of €2.9m revenue
30%) due in part to the impact of €2.9m revenue
relating to free cancellation bookings that was
relating to free cancellation bookings that was
received but deferred in the year. Excluding the
received but deferred in the year. Excluding the
impact of the deferral of this revenue, Adjusted
impact of the deferral of this revenue, Adjusted
EBITDA would have declined by €2.1m (8%), by
EBITDA would have declined by €2.1m (8%), by
5% on a constant currency basis, and Adjusted
5% on a constant currency basis, and Adjusted
EBITDA margin would have been 29%. Any future
EBITDA margin would have been 29%. Any future
cancellations (made within a specified period) will
cancellations (made within a specified period) will
reduce the amount
reduce the amount
Reconciliation between Operating Profit and Adjusted EBITDA:
Reconciliation between Operating Profit and Adjusted EBITDA:
€'m
€'m
Operating profit
Operating profit
Depreciation
Depreciation
Amortisation of development costs
Amortisation of development costs
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets
Exceptional items
Exceptional items
Share based payment (credit) / expense
Share based payment (credit) / expense
Adjusted EBITDA
Adjusted EBITDA
2018
2018
6.7
6.7
1.2
1.2
1.9
1.9
10.3
10.3
1.6
1.6
(0.3)
(0.3)
21.4
21.4
2017
2017
11.9
11.9
1.1
1.1
2.9
2.9
10.4
10.4
(0.5)
(0.5)
0.6
0.6
26.4
26.4
The exceptional costs for the year of €1.6m were
The exceptional costs for the year of €1.6m were
charge arising on the issuance of options in
charge arising on the issuance of options in
primarily restructuring related costs. In 2017
primarily restructuring related costs. In 2017
accordance with the Group’s Long Term Incentive
accordance with the Group’s Long Term Incentive
exceptional gains for the year of €0.5m were due
exceptional gains for the year of €0.5m were due
Plan (“LTIP”) and Save as you Earn (“SAYE”) plan
Plan (“LTIP”) and Save as you Earn (“SAYE”) plan
to the release of an accrual relating to previously
to the release of an accrual relating to previously
offset by the release of previously recognised
offset by the release of previously recognised
recognised merger and acquisition costs.
recognised merger and acquisition costs.
expenses relating to options which have been
expenses relating to options which have been
forfeited during the year.
forfeited during the year.
The share based payment credit of €0.3m (2017:
The share based payment credit of €0.3m (2017:
€0.6m expense) reflects the share based payment
€0.6m expense) reflects the share based payment
Adjusted Profit after Taxation
Adjusted Profit after Taxation
Reconciliation between Adjusted EBITDA and Profit for the Year:
Reconciliation between Adjusted EBITDA and Profit for the Year:
Adjusted EBITDA
Adjusted EBITDA
Depreciation
Depreciation
Amortisation of development costs
Amortisation of development costs
Corporation tax
Corporation tax
Adjusted Profit after Taxation
Adjusted Profit after Taxation
Exceptional items
Exceptional items
Amortisation of acquired intangibles
Amortisation of acquired intangibles
Net finance costs
Net finance costs
Share based payment credit / (expense)
Share based payment credit / (expense)
Deferred taxation
Deferred taxation
Profit for the year
Profit for the year
€'m
€'m
2018
2018
21.4
21.4
(1.2)
(1.2)
(1.9)
(1.9)
(0.8)
(0.8)
17.5
17.5
(1.5)
(1.5)
(10.3)
(10.3)
0.0
0.0
0.3
0.3
(0.2)
(0.2)
5.7
5.7
2017
2017
26.4
26.4
(1.1)
(1.1)
(2.9)
(2.9)
(0.7)
(0.7)
21.7
21.7
0.5
0.5
(10.4)
(10.4)
(0.1)
(0.1)
(0.6)
(0.6)
0.1
0.1
11.2
11.2
27
27
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Foreign Exchange Risk
Foreign Exchange Risk
The Group’s primary operating currency is euro.
The Group’s primary operating currency is euro.
The Group also has significant sterling and US
The Group also has significant sterling and US
dollar cash flows. In 2018 the average US dollar
dollar cash flows. In 2018 the average US dollar
to euro exchange rate weakened by 5% and the
to euro exchange rate weakened by 5% and the
average sterling to euro exchange rate weakened
average sterling to euro exchange rate weakened
by 1% in comparison to 2017. Restated on a
by 1% in comparison to 2017. Restated on a
constant currency basis, ABV has increased by
constant currency basis, ABV has increased by
6%, revenue has decreased by 3% (€2.4m) and
6%, revenue has decreased by 3% (€2.4m) and
Adjusted EBITDA has decreased by 17% (€4.3m) in
Adjusted EBITDA has decreased by 17% (€4.3m) in
2018. Constant currency is calculated by applying
2018. Constant currency is calculated by applying
the average exchange rates for the year ended
the average exchange rates for the year ended
31 December 2018 to the financial results for the
31 December 2018 to the financial results for the
year ended 31 December 2017 on a month by
year ended 31 December 2017 on a month by
month basis. The Group’s principal policy is to
month basis. The Group’s principal policy is to
match cash flows of like currencies, with excess
match cash flows of like currencies, with excess
sterling and US dollar revenues being settled into
sterling and US dollar revenues being settled into
euros on a timely basis.
euros on a timely basis.
euro cent per share) reflects a distribution of
euro cent per share) reflects a distribution of
75% of the Adjusted PAT for the year ended 31
75% of the Adjusted PAT for the year ended 31
December 2018 and is in line with our stated
December 2018 and is in line with our stated
dividend policy.
dividend policy.
The final dividend of 9.0 euro cent per share is to
The final dividend of 9.0 euro cent per share is to
be approved by shareholders at the 2019 AGM
be approved by shareholders at the 2019 AGM
on 31 May 2019. If approved, the dividend will be
on 31 May 2019. If approved, the dividend will be
paid on 5 June 2019 to members appearing on the
paid on 5 June 2019 to members appearing on the
register at close of business on 10 May 2019.
register at close of business on 10 May 2019.
The Board continually reviews its approach to
The Board continually reviews its approach to
returning capital to shareholders in order to
returning capital to shareholders in order to
ensure that the Group maintains an efficient
ensure that the Group maintains an efficient
and prudent capital structure, which looks to
and prudent capital structure, which looks to
provide increased returns to shareholders, whilst
provide increased returns to shareholders, whilst
at the same time retaining flexibility for capital
at the same time retaining flexibility for capital
and other investment growth opportunities.
and other investment growth opportunities.
After payment of the proposed final dividend
After payment of the proposed final dividend
for 2018 the Group will have returned €56.7m to
for 2018 the Group will have returned €56.7m to
shareholders in dividends since IPO in November
shareholders in dividends since IPO in November
2015.
2015.
The directors are pleased to recommend a full
The directors are pleased to recommend a full
year final dividend payout of €8.6m equating
year final dividend payout of €8.6m equating
to 9.0 euro cent per share. This is in addition to
to 9.0 euro cent per share. This is in addition to
the interim dividend of €4.6m or 4.8 euro cent
the interim dividend of €4.6m or 4.8 euro cent
per share paid in September 2018. This payout
per share paid in September 2018. This payout
of €13.2m or 13.8 euro cent per share (2017: 17.1
of €13.2m or 13.8 euro cent per share (2017: 17.1
TJ Kelly
TJ Kelly
Chief Financial Officer
Chief Financial Officer
1 April 2019
1 April 2019
Adjusted Free Cash Flow Conversion
Adjusted Free Cash Flow Conversion
Dividend
Dividend
Adjusted Profit after Taxation (“Adjusted PAT”) is an
Adjusted Profit after Taxation (“Adjusted PAT”) is an
Given that the capital nature of the Group post
Given that the capital nature of the Group post
alternative performance measure that the Group
alternative performance measure that the Group
IPO is fully equity funded, there is minimal net
IPO is fully equity funded, there is minimal net
uses to calculate the dividend payout for the year,
uses to calculate the dividend payout for the year,
finance costs in 2018 of €0.0m (2017: €0.1m).
finance costs in 2018 of €0.0m (2017: €0.1m).
subject to Company Law requirements regarding
subject to Company Law requirements regarding
distributable profits. It excludes exceptional costs,
distributable profits. It excludes exceptional costs,
Taxation
Taxation
amortisation of acquired domain and technology
amortisation of acquired domain and technology
intangibles, impairment charges, net finance costs,
intangibles, impairment charges, net finance costs,
share based payment expenses and deferred
share based payment expenses and deferred
taxation which can have large impacts on the
taxation which can have large impacts on the
reported result for the year, and which can make
reported result for the year, and which can make
underlying trends difficult to interpret.
underlying trends difficult to interpret.
Adjusted PAT decreased by 19% from €21.7m to
Adjusted PAT decreased by 19% from €21.7m to
€17.5m (2017: 12% increase) and 16% on a constant
€17.5m (2017: 12% increase) and 16% on a constant
currency basis due in part to the impact of €2.9m
currency basis due in part to the impact of €2.9m
revenue related to free cancellation bookings that
revenue related to free cancellation bookings that
was received but deferred in the year.
was received but deferred in the year.
Based on the weighted average number of
Based on the weighted average number of
shares in issue during 2018, reported Earnings
shares in issue during 2018, reported Earnings
per Share (“EPS”), as set out in note 10 to the
per Share (“EPS”), as set out in note 10 to the
financial statements, is 5.95 euro cent per share
financial statements, is 5.95 euro cent per share
for the financial year (2017: earnings per share
for the financial year (2017: earnings per share
11.77 euro cent). Using Adjusted PAT as the
11.77 euro cent). Using Adjusted PAT as the
measure of earnings would result in an adjusted
measure of earnings would result in an adjusted
EPS of 18.33 euro cent per share for the year. The
EPS of 18.33 euro cent per share for the year. The
corresponding EPS for 2017 calculated on the
corresponding EPS for 2017 calculated on the
same basis, using the weighted average number
same basis, using the weighted average number
of shares in issue as at 31 December 2017 is
of shares in issue as at 31 December 2017 is
22.73 euro cent per share. Adjusted EPS is an
22.73 euro cent per share. Adjusted EPS is an
alternative performance measure that excludes
alternative performance measure that excludes
exceptional items, amortisation of acquired
exceptional items, amortisation of acquired
domain and technology intangibles, net finance
domain and technology intangibles, net finance
costs, share based payment expenses and
costs, share based payment expenses and
deferred taxation which can have large impacts
deferred taxation which can have large impacts
on the reported result for the year, and which can
on the reported result for the year, and which can
make underlying trends difficult to interpret.
make underlying trends difficult to interpret.
€'m
€'m
Adjusted EBITDA
Adjusted EBITDA
Acquisition of intangible assets
Acquisition of intangible assets
Capital expenditure
Capital expenditure
Interest and tax paid
Interest and tax paid
Net movement in working capital (1)
Net movement in working capital (1)
Adjusted Free Cash Flow
Adjusted Free Cash Flow
Adjusted Free Cash Flow conversion
Adjusted Free Cash Flow conversion
(1) changes in working capital excludes the effects of exceptional costs
(1) changes in working capital excludes the effects of exceptional costs
The Group corporation tax charge of €0.8m (2017:
The Group corporation tax charge of €0.8m (2017:
€0.7m) results in an effective tax rate (corporation
€0.7m) results in an effective tax rate (corporation
tax as a percentage of profit before taxation) of
tax as a percentage of profit before taxation) of
11.6% (2017: 6.0%). The low effective tax rate in
11.6% (2017: 6.0%). The low effective tax rate in
2017 was primarily as a result of carried forward
2017 was primarily as a result of carried forward
tax losses arising from the previous capital
tax losses arising from the previous capital
structure of the Group.
structure of the Group.
The Group’s deferred tax charge for the year
The Group’s deferred tax charge for the year
ended 31 December 2018 was €0.2m (2017: €0.1m
ended 31 December 2018 was €0.2m (2017: €0.1m
credit) and relates to the movement in deferred
credit) and relates to the movement in deferred
tax assets offset by the movement in deferred tax
tax assets offset by the movement in deferred tax
liabilities.
liabilities.
The Group has a business model which produces
The Group has a business model which produces
strong free cash flow conversion, with a negative
strong free cash flow conversion, with a negative
working capital cycle on operational cash flows.
working capital cycle on operational cash flows.
The movement in working capital in 2018 was at a
The movement in working capital in 2018 was at a
higher level than 2017, due to the impact of €2.9m
higher level than 2017, due to the impact of €2.9m
of revenue related to free cancellation bookings
of revenue related to free cancellation bookings
which was collected but deferred. This resulted
which was collected but deferred. This resulted
in a higher adjusted free cash flow conversion
in a higher adjusted free cash flow conversion
of 97% (2017: 81%). Excluding the impact of the
of 97% (2017: 81%). Excluding the impact of the
deferral of this revenue, adjusted free cash flow
deferral of this revenue, adjusted free cash flow
conversion would have been 85% (2017: 81%).
conversion would have been 85% (2017: 81%).
Total cash at 31 December 2018 was €26.0m
Total cash at 31 December 2018 was €26.0m
(2017: €21.3m) and there were no borrowings at
(2017: €21.3m) and there were no borrowings at
31 December 2018 (2017: €nil).
31 December 2018 (2017: €nil).
2018
2018
21.4
21.4
(1.8)
(1.8)
(0.7)
(0.7)
(0.8)
(0.8)
2.6
2.6
20.7
20.7
97%
97%
2017
2017
26.4
26.4
(1.8)
(1.8)
(1.8)
(1.8)
(0.6)
(0.6)
(0.7)
(0.7)
21.5
21.5
81%
81%
28
28
BABY LEMONADE HOSTEL
BABY LEMONADE HOSTEL
ST PETERSBURG
ST PETERSBURG
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
PRINCIPAL RISKS
PRINCIPAL RISKS
AND UNCERTAINTIES
AND UNCERTAINTIES
The Board takes overall responsibility
The Board takes overall responsibility
for identifying the nature and extent of
for identifying the nature and extent of
the risks to be managed by the Group
the risks to be managed by the Group
to ensure the successful delivery of its
to ensure the successful delivery of its
strategic and business priorities. The
strategic and business priorities. The
Audit Committee monitors certain risk
Audit Committee monitors certain risk
areas and the internal control system,
areas and the internal control system,
as set out in the report on governance.
as set out in the report on governance.
are set out in the table below, together with
are set out in the table below, together with
comments on how they are managed to minimise
comments on how they are managed to minimise
their potential impact. While the table below is
their potential impact. While the table below is
not prioritised nor an exhaustive list of all risks
not prioritised nor an exhaustive list of all risks
that may impact the Group, it is the Board’s
that may impact the Group, it is the Board’s
view of the principal risks at this point in time.
view of the principal risks at this point in time.
Individually or together, these risks could affect
Individually or together, these risks could affect
our ability to operate as planned, and could have
our ability to operate as planned, and could have
a significant impact on revenue and shareholder
a significant impact on revenue and shareholder
The nature of the principal risks and uncertainties
The nature of the principal risks and uncertainties
returns. Additional risks and uncertainties,
returns. Additional risks and uncertainties,
faced by the Group is on the whole unchanged,
faced by the Group is on the whole unchanged,
including those that have not been identified to
including those that have not been identified to
although, external geopolitical factors, including
although, external geopolitical factors, including
date or are currently deemed immaterial, may
date or are currently deemed immaterial, may
a hard Brexit continue to impact the Group’s risk
a hard Brexit continue to impact the Group’s risk
also, individually or together, have a negative
also, individually or together, have a negative
profile in certain areas. The most significant of
profile in certain areas. The most significant of
impact on our revenue, returns, or financial
impact on our revenue, returns, or financial
these factors is the volatility in exchange rates to
these factors is the volatility in exchange rates to
condition.
condition.
the euro, in particular that of the US dollar and
the euro, in particular that of the US dollar and
sterling and the continued incidence of terrorism.
sterling and the continued incidence of terrorism.
The Board also considered its obligations in
The Board also considered its obligations in
relation to providing both the annual viability
relation to providing both the annual viability
The Group’s risk register identifies key risks and
The Group’s risk register identifies key risks and
and going concern statements and its conclusions
and going concern statements and its conclusions
monitors progress in managing and mitigating
monitors progress in managing and mitigating
can be found on page 35 and in note 1 to the
can be found on page 35 and in note 1 to the
them and is reviewed at least annually by the
them and is reviewed at least annually by the
Consolidated Financial Statements respectively.
Consolidated Financial Statements respectively.
Board. The most material risks facing the Group
Board. The most material risks facing the Group
Risk
Risk
Description and Impact
Description and Impact
Management and Mitigation
Management and Mitigation
Direction
Direction
of Change
of Change
1.
1.
Macroeconomic
Macroeconomic
Revenue is derived from the wider leisure travel
Revenue is derived from the wider leisure travel
Our business is a global one, with a dispersed
Our business is a global one, with a dispersed
Conditions
Conditions
sector. A decline in macroeconomic conditions
sector. A decline in macroeconomic conditions
population of users, and a geographically
population of users, and a geographically
could result in a reduction in leisure travel, and
could result in a reduction in leisure travel, and
dispersed set of destinations. Whilst market
dispersed set of destinations. Whilst market
declining revenues.
declining revenues.
conditions may decline in certain regions, the
conditions may decline in certain regions, the
globally diversified nature of the business
globally diversified nature of the business
Significant movements in FX rates can have a
Significant movements in FX rates can have a
significantly mitigates this, with c.50% of
significantly mitigates this, with c.50% of
dramatic impact on travel volumes, revenues
dramatic impact on travel volumes, revenues
destination markets in Europe and c.50% in the
destination markets in Europe and c.50% in the
and travel patterns. Increased volatility in
and travel patterns. Increased volatility in
rest of world.
rest of world.
currency markets have heightened this risk.
currency markets have heightened this risk.
FX movements may impact travel decisions
FX movements may impact travel decisions
and travel patterns by customers, but
and travel patterns by customers, but
typically there is a degree of counterbalancing
typically there is a degree of counterbalancing
movement e.g. the weakening of the US dollar
movement e.g. the weakening of the US dollar
against the euro means fewer US travellers
against the euro means fewer US travellers
visiting the Eurozone, but decreased marketing
visiting the Eurozone, but decreased marketing
costs from US denominated suppliers such as
costs from US denominated suppliers such as
Google.
Google.
FX translation risk is mitigated through
FX translation risk is mitigated through
matching foreign currency cash outflows
matching foreign currency cash outflows
and foreign currency cash inflows and by
and foreign currency cash inflows and by
minimising holdings of excess non-euro
minimising holdings of excess non-euro
currency above anticipated outflow
currency above anticipated outflow
requirements.
requirements.
2.
2.
Impact of
Impact of
The threat of terrorist attacks in key cities and
The threat of terrorist attacks in key cities and
Our target 18-34 year old population tend to
Our target 18-34 year old population tend to
Terrorism Threat
Terrorism Threat
on aircraft in flight may reduce the appetite
on aircraft in flight may reduce the appetite
be both flexible as to destination, and less
be both flexible as to destination, and less
on Leisure Travel
on Leisure Travel
of the leisure traveller to undertake trips
of the leisure traveller to undertake trips
concerned about risk-taking than other sectors
concerned about risk-taking than other sectors
particularly to certain geographies, resulting
particularly to certain geographies, resulting
in the leisure travel industry.
in the leisure travel industry.
in declining revenues.
in declining revenues.
Increased incidence of terrorism impacts
Increased incidence of terrorism impacts
acts as a mitigant, with c.50% of destination
acts as a mitigant, with c.50% of destination
consumer confidence and can shift demand
consumer confidence and can shift demand
markets in Europe and c.50%
markets in Europe and c.50%
away from certain destinations.
away from certain destinations.
in the rest of world.
in the rest of world.
The dispersed nature of our business also
The dispersed nature of our business also
3. Competition
3. Competition
The business operates in an increasingly
The business operates in an increasingly
We continue to build on our strong market
We continue to build on our strong market
competitive marketplace and our relative
competitive marketplace and our relative
position, and our app bookings have grown
position, and our app bookings have grown
scale and size could impact our ability to keep
scale and size could impact our ability to keep
by 22% in 2018.
by 22% in 2018.
pace with changes in customer behaviour
pace with changes in customer behaviour
and technology change. Failure to continue
and technology change. Failure to continue
The Group continues to invest in leveraging
The Group continues to invest in leveraging
to innovate on our product offering and to
to innovate on our product offering and to
its unique data assets allowing it to target and
its unique data assets allowing it to target and
compete effectively in our marketplace could
compete effectively in our marketplace could
grow the most profitable customer segments
grow the most profitable customer segments
have an adverse effect on our market share
have an adverse effect on our market share
by optimising its overall marketing investment.
by optimising its overall marketing investment.
and the future growth of the business.
and the future growth of the business.
The Group continues to strengthen its core
The Group continues to strengthen its core
Increased competition from other online
Increased competition from other online
platform in order to improve its flexibility
platform in order to improve its flexibility
travel agents (“OTAs”) or from the alternative
travel agents (“OTAs”) or from the alternative
and the experience of our customers while
and the experience of our customers while
accommodation sector or a disruptive new
accommodation sector or a disruptive new
also upgrading our third-party platform
also upgrading our third-party platform
entrant such as large hotel chains into the
entrant such as large hotel chains into the
connectivity in order to defend our competitive
connectivity in order to defend our competitive
hostel segment or loss of key accommodation
hostel segment or loss of key accommodation
position.
position.
suppliers could impact revenue due to
suppliers could impact revenue due to
potential loss of traffic or could increase traffic
potential loss of traffic or could increase traffic
The market we operate in remains highly
The market we operate in remains highly
acquisition costs. Demand for our services
acquisition costs. Demand for our services
fragmented with a high proportion of
fragmented with a high proportion of
could suffer, reducing revenue and margins.
could suffer, reducing revenue and margins.
independent and small chains. We continue
independent and small chains. We continue
to focus on expanding our global footprint,
to focus on expanding our global footprint,
meeting emerging demand and also
meeting emerging demand and also
strengthening our overall market position.
strengthening our overall market position.
We undertake regular research to track
We undertake regular research to track
performance in key markets and seek feedback
performance in key markets and seek feedback
from customers as to the relevancy and
from customers as to the relevancy and
competitiveness of our proposition as well as
competitiveness of our proposition as well as
propensity to recommend to others.
propensity to recommend to others.
YES! LISBON
YES! LISBON
LISBON
LISBON
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Risk
Risk
Description and Impact
Description and Impact
Management and Mitigation
Management and Mitigation
Direction
Direction
of Change
of Change
Risk
Risk
Description and Impact
Description and Impact
Management and Mitigation
Management and Mitigation
Direction
Direction
of Change
of Change
4.
4.
Search Engine
Search Engine
A large proportion of traffic to our websites is
A large proportion of traffic to our websites is
The Group invests heavily in recruiting and
The Group invests heavily in recruiting and
7. Regulation
7. Regulation
The global nature of our business means we
The global nature of our business means we
We monitor regulatory matters in locations
We monitor regulatory matters in locations
Algorithms
Algorithms
generated through internet search engines
generated through internet search engines
retaining key personnel with the requisite skills
retaining key personnel with the requisite skills
such as Google, from non-paid (organic)
such as Google, from non-paid (organic)
and capabilities in paid & non-paid search.
and capabilities in paid & non-paid search.
searches and through the purchase of travel-
searches and through the purchase of travel-
This in-house expertise is supplemented by the
This in-house expertise is supplemented by the
related keywords (paid search). We therefore
related keywords (paid search). We therefore
deployment of leading technology tools and
deployment of leading technology tools and
rely significantly on practices such as Search
rely significantly on practices such as Search
where required the engagement of specific
where required the engagement of specific
Engine Optimisation (“SEO”) and Search Engine
Engine Optimisation (“SEO”) and Search Engine
deep functional third party expertise.
deep functional third party expertise.
Marketing (“SEM”) to improve our visibility
Marketing (“SEM”) to improve our visibility
in relevant search results. Search engines,
in relevant search results. Search engines,
The search marketing team works closely
The search marketing team works closely
including Google, frequently update and
including Google, frequently update and
with Google to understand any changes in
with Google to understand any changes in
change the logic that determines the placement
change the logic that determines the placement
functionality to the adwords platform so that
functionality to the adwords platform so that
and display of results of a user’s search, which
and display of results of a user’s search, which
we can avail of any efficiencies in our search
we can avail of any efficiencies in our search
can negatively impact placement of our paid
can negatively impact placement of our paid
traffic. The Group participates in alpha and
traffic. The Group participates in alpha and
and organic results in search results. This
and organic results in search results. This
beta feature tests that give Hostelworld first
beta feature tests that give Hostelworld first
could result in a decrease in bookings and
could result in a decrease in bookings and
mover advantage with new functionality that
mover advantage with new functionality that
thus revenue. It could also result in having to
thus revenue. It could also result in having to
can help drive efficiency.
can help drive efficiency.
replace free traffic with paid traffic, which would
replace free traffic with paid traffic, which would
negatively impact margins.
negatively impact margins.
5. Brand
5. Brand
Consumer trust in our brand is essential
Consumer trust in our brand is essential
We are focussed on investing in our core
We are focussed on investing in our core
to ongoing revenue growth. Negative
to ongoing revenue growth. Negative
products, platform and technological
products, platform and technological
publicity around our products or services
publicity around our products or services
capabilities to support our brand proposition
capabilities to support our brand proposition
could negatively impact on traveller and
could negatively impact on traveller and
as well as actively managing our brand
as well as actively managing our brand
accommodation provider confidence and
accommodation provider confidence and
portfolio through social media channels.
portfolio through social media channels.
result in loss of revenue.
result in loss of revenue.
Our customer service team strive to ensure
Our customer service team strive to ensure
that customers have a positive experience at
that customers have a positive experience at
all stages of interacting with us.
all stages of interacting with us.
The Group has a Crisis Communications
The Group has a Crisis Communications
Document in place which sets out in detail
Document in place which sets out in detail
how various incidents are managed including
how various incidents are managed including
appropriate escalation processes.
appropriate escalation processes.
6. Data Security
6. Data Security
We capture personal data from our customers,
We capture personal data from our customers,
Hostelworld works closely with internal
Hostelworld works closely with internal
including credit card details and retain this
including credit card details and retain this
and external audit functions to ensure that
and external audit functions to ensure that
on our systems. There is always a risk of a
on our systems. There is always a risk of a
our system architectures, work processes
our system architectures, work processes
cyber security related attack or disruption,
cyber security related attack or disruption,
and policies are in place to provide as much
and policies are in place to provide as much
including by criminals, hacktivists or foreign
including by criminals, hacktivists or foreign
protection as possible.
protection as possible.
governments on our systems or those of third
governments on our systems or those of third
party suppliers.
party suppliers.
Hostelworld continues to be fully compliant
Hostelworld continues to be fully compliant
with the guidelines of the payment card
with the guidelines of the payment card
Cybercrime including unauthorised access to
Cybercrime including unauthorised access to
industry (i.e. is “Level 1 PCI compliant”) and is
industry (i.e. is “Level 1 PCI compliant”) and is
confidential information and systems would
confidential information and systems would
in the process of implementing its compliance
in the process of implementing its compliance
have significant reputational impact and could
have significant reputational impact and could
obligations in connection with certain aspects
obligations in connection with certain aspects
result in financial or other penalties.
result in financial or other penalties.
of Payment Services Directive 2 (“PSD2”) as it
of Payment Services Directive 2 (“PSD2”) as it
relates to customer payment authorisation
relates to customer payment authorisation
requirements. Specifically, the Group will
requirements. Specifically, the Group will
be required to facilitate the implementation
be required to facilitate the implementation
of certain customer authentication security
of certain customer authentication security
measures by its payment processor, issuing
measures by its payment processor, issuing
banks and card schemes.
banks and card schemes.
We have adopted all the requirements of GDPR
We have adopted all the requirements of GDPR
and will continue to monitor compliance. We
and will continue to monitor compliance. We
regularly review our employee information
regularly review our employee information
security policy and we continue to invest
security policy and we continue to invest
in security training for all staff so that they
in security training for all staff so that they
remain vigilant and alert to the possibility of
remain vigilant and alert to the possibility of
cybercrime.
cybercrime.
We conduct regular independent penetration
We conduct regular independent penetration
testing of our software. We proactively
testing of our software. We proactively
address vulnerabilities with a continual
address vulnerabilities with a continual
vulnerability assessment program. We have
vulnerability assessment program. We have
also implemented Web Application Protector
also implemented Web Application Protector
from Akamai to migrate threats in real-time.
from Akamai to migrate threats in real-time.
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are exposed to regulatory issues regarding
are exposed to regulatory issues regarding
in which we provide services with a particular
in which we provide services with a particular
competition, licensing of local accommodation,
competition, licensing of local accommodation,
focus on those areas where we have local
focus on those areas where we have local
language usage, web-based trading, consumer
language usage, web-based trading, consumer
operations. Suitable expertise has been
operations. Suitable expertise has been
compliance, tax, intellectual property,
compliance, tax, intellectual property,
engaged to ensure compliance with the
engaged to ensure compliance with the
trademarks, data security and commercial
trademarks, data security and commercial
Group’s regulatory obligations. In addition the
Group’s regulatory obligations. In addition the
disputes in multiple jurisdictions.
disputes in multiple jurisdictions.
Group has engaged appropriately qualified
Group has engaged appropriately qualified
support to ensure compliance with the Listing
support to ensure compliance with the Listing
Compliance with new regulations can
Compliance with new regulations can
Rules, the FRC Corporate Governance Code
Rules, the FRC Corporate Governance Code
mean incurring unforeseen costs, and non-
mean incurring unforeseen costs, and non-
and the Market Abuse Regulations.
and the Market Abuse Regulations.
compliance could result in penalties and
compliance could result in penalties and
reputational damage.
reputational damage.
Developments to international laws and
Developments to international laws and
In addition, as a listed company on the
In addition, as a listed company on the
as Brexit proceeds. The Group’s multinational
as Brexit proceeds. The Group’s multinational
London and Euronext Dublin Stock Exchanges,
London and Euronext Dublin Stock Exchanges,
structure with Head Office in Dublin provides
structure with Head Office in Dublin provides
adherence to the Listing Rules is required.
adherence to the Listing Rules is required.
some natural mitigation to the potential
some natural mitigation to the potential
regulations continue to be closely monitored
regulations continue to be closely monitored
impact.
impact.
Uncertainty remains as to the impact of Brexit
Uncertainty remains as to the impact of Brexit
on UK and international laws and regulations
on UK and international laws and regulations
including matters such as travel visas or work
including matters such as travel visas or work
visas for our UK staff.
visas for our UK staff.
8. Tax
8. Tax
The taxation of e-commerce businesses is
The taxation of e-commerce businesses is
In collaboration with our tax advisers, a large
In collaboration with our tax advisers, a large
constantly being evaluated and developed
constantly being evaluated and developed
professional services firm, we assess possible
professional services firm, we assess possible
by tax authorities around the world. The
by tax authorities around the world. The
tax impacts in the jurisdictions in which we
tax impacts in the jurisdictions in which we
taxation of online transactions in the travel
taxation of online transactions in the travel
operate to ensure our tax obligations are
operate to ensure our tax obligations are
space remains unsettled in the United States
space remains unsettled in the United States
aligned to the operational nature of our
aligned to the operational nature of our
in particular.
in particular.
business.
business.
The taxation of e-commerce is also under
The taxation of e-commerce is also under
active review by both the OECD and European
active review by both the OECD and European
Commission.
Commission.
Due to the global nature of our business, tax
Due to the global nature of our business, tax
authorities in other jurisdictions may consider
authorities in other jurisdictions may consider
that taxes are due in their jurisdiction, for
that taxes are due in their jurisdiction, for
example because the customer is resident in
example because the customer is resident in
that jurisdiction or the travel service is deemed
that jurisdiction or the travel service is deemed
to be supplied in such jurisdiction. If those
to be supplied in such jurisdiction. If those
tax authorities take a different view than the
tax authorities take a different view than the
Group as to the basis on which the Group is
Group as to the basis on which the Group is
subject to tax, it could result in the Group
subject to tax, it could result in the Group
having to account for tax that it currently does
having to account for tax that it currently does
not collect or pay, which could have a material
not collect or pay, which could have a material
adverse effect on the Group’s financial
adverse effect on the Group’s financial
condition and results of operation if it could
condition and results of operation if it could
not reclaim taxes already accounted for in the
not reclaim taxes already accounted for in the
jurisdictions the Group considers relevant.
jurisdictions the Group considers relevant.
The Group has historically had a low effective
The Group has historically had a low effective
tax rate due to the Group’s capital and
tax rate due to the Group’s capital and
corporate structure and the effect of carried
corporate structure and the effect of carried
forward tax losses.
forward tax losses.
Changes to tax legislation or the interpretation
Changes to tax legislation or the interpretation
of tax legislation or changes to tax laws based
of tax legislation or changes to tax laws based
on recommendations made by the OECD in
on recommendations made by the OECD in
relation to its Action Plan on Base Erosion
relation to its Action Plan on Base Erosion
and Profits Shifting (“BEPS”) or national
and Profits Shifting (“BEPS”) or national
governments may result in additional material
governments may result in additional material
tax being suffered by the Group or additional
tax being suffered by the Group or additional
reporting and disclosure obligations.
reporting and disclosure obligations.
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Risk
Risk
Description and Impact
Description and Impact
Management and Mitigation
Management and Mitigation
Direction
Direction
of Change
of Change
9.
9.
Business
Business
Failure in our IT systems or those on which we
Failure in our IT systems or those on which we
As an e-commerce organisation, the Group’s
As an e-commerce organisation, the Group’s
Continuity
Continuity
rely such as third party hosted services could
rely such as third party hosted services could
business continuity plan focusses on the
business continuity plan focusses on the
disrupt availability of our booking engines
disrupt availability of our booking engines
continued operation of consumer facing
continued operation of consumer facing
and payments platforms, or availability of
and payments platforms, or availability of
products and related services to ensure our
products and related services to ensure our
administrative services at our office locations,
administrative services at our office locations,
e-commerce trading systems can continue
e-commerce trading systems can continue
with a knock-on reduction in financial
with a knock-on reduction in financial
to process bookings. Our fully distributed
to process bookings. Our fully distributed
performance.
performance.
and redundant architecture across two data
and redundant architecture across two data
centres based in two different countries
centres based in two different countries
supports this approach. The Group has worked
supports this approach. The Group has worked
with external advisers to produce robust
with external advisers to produce robust
documented business continuity and disaster
documented business continuity and disaster
recovery capabilities. We have also extended
recovery capabilities. We have also extended
our e-commerce business continuity plans to
our e-commerce business continuity plans to
include our corporate office.
include our corporate office.
10.
10.
People
People
The Group is dependent on ability to attract,
The Group is dependent on ability to attract,
The Group has developed strong recruitment
The Group has developed strong recruitment
retain and develop creative, committed and
retain and develop creative, committed and
processes supported by effective HR policies
processes supported by effective HR policies
skilled employees so as to achieve its strategic
skilled employees so as to achieve its strategic
and procedures. The Group has an increased
and procedures. The Group has an increased
objectives.
objectives.
focus on understanding the drivers of
focus on understanding the drivers of
employee engagement, this has informed the
employee engagement, this has informed the
development of its Employee Value Proposition
development of its Employee Value Proposition
aimed at driving levels of motivation,
aimed at driving levels of motivation,
alignment and commitment to the Group’s
alignment and commitment to the Group’s
strategic goals. The Group also operates from
strategic goals. The Group also operates from
five global offices, which provides flexibility for
five global offices, which provides flexibility for
location of recruitment of key talent, thereby
location of recruitment of key talent, thereby
opening up a larger pool of talent for selection.
opening up a larger pool of talent for selection.
11.
11.
Brexit
Brexit
The Group is exposed to Brexit-related risks and
The Group is exposed to Brexit-related risks and
The Group is a global business and continues
The Group is a global business and continues
uncertainties in relation to its continued impact
uncertainties in relation to its continued impact
to grow its international footprint and
to grow its international footprint and
on global markets and currency exchange
on global markets and currency exchange
presence across its key markets. Through
presence across its key markets. Through
rate fluctuations. The uncertainties in relation
rate fluctuations. The uncertainties in relation
continued international expansion and
continued international expansion and
to the movement of people may result in the
to the movement of people may result in the
diversification the Group will seek to naturally
diversification the Group will seek to naturally
reduction of bookings particularly into and
reduction of bookings particularly into and
mitigate the impacts of Brexit. However,
mitigate the impacts of Brexit. However,
from the UK travel market which could impact
from the UK travel market which could impact
the Group will continue to assess Brexit and
the Group will continue to assess Brexit and
on Group revenue. In the twelve months ended
on Group revenue. In the twelve months ended
implement any necessary remediation steps to
implement any necessary remediation steps to
31 December 2018, the UK as a destination
31 December 2018, the UK as a destination
mitigate its impact on the Group.
mitigate its impact on the Group.
represented 6% of total Group bookings (2017:
represented 6% of total Group bookings (2017:
7%) and 14% of Group bookings were from
7%) and 14% of Group bookings were from
UK nationals (2017: 14%). Overall a decline in
UK nationals (2017: 14%). Overall a decline in
macroeconomic conditions and the warning
macroeconomic conditions and the warning
from the Bank of England of a Brexit related
from the Bank of England of a Brexit related
recession in the UK could negatively impact
recession in the UK could negatively impact
consumer confidence and reduce spending
consumer confidence and reduce spending
in all areas including the wider leisure travel
in all areas including the wider leisure travel
sector.
sector.
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principal risks as outlined on pages 30 to 34
principal risks as outlined on pages 30 to 34
represent severe but plausible circumstances
represent severe but plausible circumstances
that the Group could experience.
that the Group could experience.
The scenarios tested on principal risks included:
The scenarios tested on principal risks included:
► Macroeconomic/Terrorism/Brand damage:
► Macroeconomic/Terrorism/Brand damage:
Shortfall in the number of bookings forecast
Shortfall in the number of bookings forecast
► Macroeconomic Shock/FX/ Brand Damage to
► Macroeconomic Shock/FX/ Brand Damage to
Hostels as Accommodation Category:
Hostels as Accommodation Category:
A continual decline in the average booking
A continual decline in the average booking
value (“ABV”)
value (“ABV”)
► Increased Competition or Change in Search
► Increased Competition or Change in Search
Engine Algorithms: An increase in the cost per
Engine Algorithms: An increase in the cost per
paid booking
paid booking
The mitigating actions that were modelled
The mitigating actions that were modelled
included a reduction in variable overheads and a
included a reduction in variable overheads and a
reduced reliance on certain channels to market.
reduced reliance on certain channels to market.
The results of this stress testing showed that,
The results of this stress testing showed that,
due to the stability of the core business, the
due to the stability of the core business, the
responsive business model and the strong cash
responsive business model and the strong cash
balance on the balance sheet, the Group would be
balance on the balance sheet, the Group would be
able to withstand the impact of these scenarios
able to withstand the impact of these scenarios
occurring over the period of the financial
occurring over the period of the financial
forecasts by making adjustments to its operating
forecasts by making adjustments to its operating
plans within the normal course of business.
plans within the normal course of business.
Based on their assessment of prospects and
Based on their assessment of prospects and
viability above, the Directors confirm that they
viability above, the Directors confirm that they
have a reasonable expectation that the Group
have a reasonable expectation that the Group
will be able to continue in operation and meet
will be able to continue in operation and meet
its liabilities as they fall due over the three year
its liabilities as they fall due over the three year
period ended 31 December 2021.
period ended 31 December 2021.
The Directors also consider it appropriate to
The Directors also consider it appropriate to
prepare the financial statements on the going
prepare the financial statements on the going
concern basis, as explained in the Basis of
concern basis, as explained in the Basis of
Preparation paragraph in note 1 to the financial
Preparation paragraph in note 1 to the financial
statements.
statements.
Viability Statement
Viability Statement
In accordance with provision C.2.2 of the UK
In accordance with provision C.2.2 of the UK
Corporate Governance Code 2016, the Directors
Corporate Governance Code 2016, the Directors
have assessed the viability of the Group over a
have assessed the viability of the Group over a
three year period, taking into account the Group’s
three year period, taking into account the Group’s
current position and the potential impact of
current position and the potential impact of
the principal risks and uncertainties outlined
the principal risks and uncertainties outlined
above. The financial position of the Group, its
above. The financial position of the Group, its
cash flows, liquidity position and borrowing
cash flows, liquidity position and borrowing
facilities are outlined in the Financial Review on
facilities are outlined in the Financial Review on
pages 25 to 29. The Directors consider that a
pages 25 to 29. The Directors consider that a
three year period is appropriate as it reflects the
three year period is appropriate as it reflects the
Group’s strategic planning horizon. Based on
Group’s strategic planning horizon. Based on
this assessment, the Directors confirm that they
this assessment, the Directors confirm that they
have a reasonable expectation that the Group
have a reasonable expectation that the Group
will be able to continue in operation and meet
will be able to continue in operation and meet
its liabilities as they fall due over the period to 31
its liabilities as they fall due over the period to 31
December 2021.
December 2021.
The Directors have determined that a three year
The Directors have determined that a three year
period to 31 December 2021 is an appropriate
period to 31 December 2021 is an appropriate
period over which to provide its viability
period over which to provide its viability
statement. This is the period reviewed by the
statement. This is the period reviewed by the
Board in our budgeting and forecasting process.
Board in our budgeting and forecasting process.
In making this statement, the Board carried
In making this statement, the Board carried
out a robust assessment of the principal risks
out a robust assessment of the principal risks
facing the Group, including those that would
facing the Group, including those that would
threaten its business model, future performance,
threaten its business model, future performance,
solvency or liquidity. The assessment process
solvency or liquidity. The assessment process
included detailed engagement with the Executive
included detailed engagement with the Executive
Leadership Team, including the Chief Financial
Leadership Team, including the Chief Financial
Officer, to determine the principal risks facing the
Officer, to determine the principal risks facing the
Group.
Group.
The Board considers annually a three year,
The Board considers annually a three year,
bottom up forecast. The output of this forecast
bottom up forecast. The output of this forecast
is used to perform KPI analysis, which includes
is used to perform KPI analysis, which includes
a review of sensitivity to ‘business as usual’
a review of sensitivity to ‘business as usual’
risks, such as profit growth and severe but
risks, such as profit growth and severe but
plausible events. It also considers the ability of
plausible events. It also considers the ability of
the Group to convert earnings into cash. The
the Group to convert earnings into cash. The
results take into account the availability and
results take into account the availability and
likely effectiveness of the mitigating actions that
likely effectiveness of the mitigating actions that
could be taken to avoid or reduce the impact or
could be taken to avoid or reduce the impact or
occurrence of the identified underlying risks.
occurrence of the identified underlying risks.
Although the forecast reflects the Directors’ best
Although the forecast reflects the Directors’ best
estimate of the future prospects of the business,
estimate of the future prospects of the business,
they have also tested the potential impact on
they have also tested the potential impact on
the Group of a number of scenarios over and
the Group of a number of scenarios over and
above those included in the plan, by quantifying
above those included in the plan, by quantifying
their financial impact and overlaying this on the
their financial impact and overlaying this on the
detailed financial forecasts in the plan. These
detailed financial forecasts in the plan. These
scenarios, which are based on aspects of the
scenarios, which are based on aspects of the
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CORPORATE SOCIAL
CORPORATE SOCIAL
RESPONSIBILITY
RESPONSIBILITY
At Hostelworld Group, we are always
At Hostelworld Group, we are always
committed to operating in a responsible
committed to operating in a responsible
and ethical manner in the wider world.
and ethical manner in the wider world.
We demonstrate this in the way we
We demonstrate this in the way we
engage with our people, suppliers,
engage with our people, suppliers,
customers, shareholders and the
customers, shareholders and the
communities in which we operate
communities in which we operate
worldwide.
worldwide.
Our People
Our People
Our people are our most important asset.
Our people are our most important asset.
Located across five offices globally in Dublin,
Located across five offices globally in Dublin,
London, Porto, Shanghai and Sydney, our people
London, Porto, Shanghai and Sydney, our people
create a diverse and inclusive workforce. As a
create a diverse and inclusive workforce. As a
company that has ’Meet the World’ as its slogan
company that has ’Meet the World’ as its slogan
and core belief, we believe that diversity is
and core belief, we believe that diversity is
essential in our role as a facilitator of global
essential in our role as a facilitator of global
travel. We believe that recruitment, selection
travel. We believe that recruitment, selection
and promotion should be based on merit, and
and promotion should be based on merit, and
should not be impacted by age, gender, sexual
should not be impacted by age, gender, sexual
orientation, civil status, family status, disability,
orientation, civil status, family status, disability,
membership of the travelling community, race,
membership of the travelling community, race,
religious beliefs or political opinions. Our success
religious beliefs or political opinions. Our success
in this area is demonstrated by the fact that
in this area is demonstrated by the fact that
our staff of 291 people come from a variety of
our staff of 291 people come from a variety of
backgrounds, cultures and age groups, and
backgrounds, cultures and age groups, and
represent 27 nationalities. We are committed to
represent 27 nationalities. We are committed to
ensuring and maintaining an environment that is
ensuring and maintaining an environment that is
free from bullying and/or harassment and where
free from bullying and/or harassment and where
the dignity of each and every person at work is
the dignity of each and every person at work is
respected and upheld.
respected and upheld.
Our people are expected to abide by our
Our people are expected to abide by our
general Code of Conduct, which outlines specific
general Code of Conduct, which outlines specific
principles of behaviour all colleagues are
principles of behaviour all colleagues are
expected to follow, at all times, in the key areas
expected to follow, at all times, in the key areas
of integrity, confidentiality, lawful behaviour and
of integrity, confidentiality, lawful behaviour and
disclosure of interests.
disclosure of interests.
We have a Whistleblowing Policy in place that
We have a Whistleblowing Policy in place that
sets out how a colleague can raise a concern, the
sets out how a colleague can raise a concern, the
way the Group will respond, and how the rights
way the Group will respond, and how the rights
of colleagues who raise a concern, and those who
of colleagues who raise a concern, and those who
are the subject of reports, are to be protected.
are the subject of reports, are to be protected.
We have an independent whistleblowing hotline
We have an independent whistleblowing hotline
that all staff can access confidentially should they
that all staff can access confidentially should they
not feel safe reporting a concern internally.
not feel safe reporting a concern internally.
Our culture centres on an inclusive and
Our culture centres on an inclusive and
transparent working environment for all and we
transparent working environment for all and we
believe open communication with our people
believe open communication with our people
is key to aligning our goals, and achieving key
is key to aligning our goals, and achieving key
results. We recognise that in order to achieve
results. We recognise that in order to achieve
our goals it is important that our people are kept
our goals it is important that our people are kept
informed of business decisions and are provided
informed of business decisions and are provided
with opportunities to share their valuable
with opportunities to share their valuable
inputs. Promoting our culture of transparency
inputs. Promoting our culture of transparency
and involvement, over 70% of our employees
and involvement, over 70% of our employees
participated in ‘Stop, Start, Continue’ sessions led
participated in ‘Stop, Start, Continue’ sessions led
by our new Chief Executive Officer Gary Morrison
by our new Chief Executive Officer Gary Morrison
following his appointment in 2018. These sessions
following his appointment in 2018. These sessions
were vital in gaining insights into the business
were vital in gaining insights into the business
activities that employees at all levels felt we
activities that employees at all levels felt we
should start doing, stop doing or continue doing.
should start doing, stop doing or continue doing.
These provided an opportunity for our people to
These provided an opportunity for our people to
express their opinions openly and honestly with
express their opinions openly and honestly with
our Chief Executive Officer, which allowed us to
our Chief Executive Officer, which allowed us to
make improvements and commitments based
make improvements and commitments based
on the collective feedback received.
on the collective feedback received.
This year we also gained invaluable feedback
This year we also gained invaluable feedback
from our people following the launch of our
from our people following the launch of our
employee engagement survey in July. This
employee engagement survey in July. This
was facilitated by an online tool which allowed
was facilitated by an online tool which allowed
us to gather employee feedback to measure
us to gather employee feedback to measure
engagement. Our people were asked to respond
engagement. Our people were asked to respond
to questions regarding topics such as work-
to questions regarding topics such as work-
life-balance, collaboration and communication,
life-balance, collaboration and communication,
innovation, learning and development and
innovation, learning and development and
alignment and involvement. Much like the ‘Stop,
alignment and involvement. Much like the ‘Stop,
Start, Continue’ sessions, the results from this
Start, Continue’ sessions, the results from this
survey enabled us to improve not only as a
survey enabled us to improve not only as a
Group, but within departments and individual
Group, but within departments and individual
teams. Overall, 88% of our people participated
teams. Overall, 88% of our people participated
in the survey, highlighting how passionate our
in the survey, highlighting how passionate our
people are when it comes to engaging with new
people are when it comes to engaging with new
initiatives.
initiatives.
2019 marks our 20 year anniversary as a
2019 marks our 20 year anniversary as a
business, and we could not have reached this
business, and we could not have reached this
milestone without the contributions of each of
milestone without the contributions of each of
our people both past and present.
our people both past and present.
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MOJO NOMAD CENTRAL
MOJO NOMAD CENTRAL
HONG KONG
HONG KONG
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Gender
Gender
Free Booking Cancellation option. This allows
Free Booking Cancellation option. This allows
Our Communities
Our Communities
A breakdown of our Board, Executive Leadership Team and all employees by gender as at 31 December
A breakdown of our Board, Executive Leadership Team and all employees by gender as at 31 December
2018 is set out below:
2018 is set out below:
Directors (1)
Directors (1)
Executive Leadership Team (1)
Executive Leadership Team (1)
Other staff
Other staff
Number
Number
%
%
Male
Male
Female
Female
5
5
6
6
141
141
1
1
3
3
137
137
Male
Male
83.3%
83.3%
66.7%
66.7%
50.7%
50.7%
Female
Female
16.7%
16.7%
33.3%
33.3%
49.3%
49.3%
(1) Executive Directors are included in each of Directors and Executive Leadership Team
(1) Executive Directors are included in each of Directors and Executive Leadership Team
Age
Age
Age
Age
Employees
Employees
9%
9%
13%
13%
25 or Less
25 or Less
26-34
26-34
35-44
35-44
45+
45+
37
37
129
129
100
100
25
25
34%
34%
44%
44%
25 or less
25 or less
26-34
26-34
35-44
35-44
45+
45+
In 2018 we launched the second SAYE (“Save
In 2018 we launched the second SAYE (“Save
A large proportion of accommodation suppliers
A large proportion of accommodation suppliers
As You Earn”) scheme for employees in Dublin
As You Earn”) scheme for employees in Dublin
we deal with tend not to have resources to build
we deal with tend not to have resources to build
and London. Our SAYE plan provides employees
and London. Our SAYE plan provides employees
the tools we can offer at little or no cost. We build
the tools we can offer at little or no cost. We build
with the chance to share in the future success of
with the chance to share in the future success of
and nurture mutually beneficial relationships that
and nurture mutually beneficial relationships that
our business and align to shareholder interest.
our business and align to shareholder interest.
allow both our hostel partners and us to enhance
allow both our hostel partners and us to enhance
Participation in the scheme is voluntary with
Participation in the scheme is voluntary with
yields.
yields.
employees saving between €12 and €500 per
employees saving between €12 and €500 per
month on a three-year savings contract with a
month on a three-year savings contract with a
The safety of our customers is of paramount
The safety of our customers is of paramount
pre-approved bank.
pre-approved bank.
importance to us and we have a strict sign-up
importance to us and we have a strict sign-up
process when on boarding new hostel partners
process when on boarding new hostel partners
Once the savings period is complete, employees
Once the savings period is complete, employees
including thorough verification checks in order
including thorough verification checks in order
can decide if they want to exercise their option
can decide if they want to exercise their option
to deliver the best quality accommodation and
to deliver the best quality accommodation and
to buy the shares. The amount they save must
to buy the shares. The amount they save must
experience to our customers.
experience to our customers.
be enough to buy the shares at the option price
be enough to buy the shares at the option price
set with the Group, before savings start. If
set with the Group, before savings start. If
Our Customers
Our Customers
employees decide not to exercise their option,
employees decide not to exercise their option,
their savings will be returned to them.
their savings will be returned to them.
Our Hostel Partners
Our Hostel Partners
We continually anticipate the needs of our
We continually anticipate the needs of our
customers by providing a 24/7 global customer
customers by providing a 24/7 global customer
service desk. We also offer a booking guarantee,
service desk. We also offer a booking guarantee,
whereby if a customer’s booking details cannot
whereby if a customer’s booking details cannot
In 2018 we focussed on delivering product
In 2018 we focussed on delivering product
be found at check-in, we refund their full booking
be found at check-in, we refund their full booking
enhancements to our hostel partners. These
enhancements to our hostel partners. These
deposit and credit their account with $50, which
deposit and credit their account with $50, which
enhancements included creating an easier
enhancements included creating an easier
can be used on future booking deposits. We offer
can be used on future booking deposits. We offer
password reset function and an improved price
password reset function and an improved price
24/7 Customer Service in 19 languages – helping
24/7 Customer Service in 19 languages – helping
tracking tool. Our Hostel Notice Board feature
tracking tool. Our Hostel Notice Board feature
our customers to Meet the World with ease.
our customers to Meet the World with ease.
allows hostels to post messages and information
allows hostels to post messages and information
about events happening in their hostel directly to
about events happening in their hostel directly to
We understand that there may be times our
We understand that there may be times our
a notice board featured on our app, which guests
a notice board featured on our app, which guests
customers have to cancel their bookings
customers have to cancel their bookings
can see.
can see.
with little notice, so in 2018 we launched our
with little notice, so in 2018 we launched our
38
38
customers to cancel their booking online through
customers to cancel their booking online through
their Hostelworld account within the cancellation
their Hostelworld account within the cancellation
window and have their deposit refunded.
window and have their deposit refunded.
To make travelling more interactive and
To make travelling more interactive and
engaging we also offer Hostel Speak, an
engaging we also offer Hostel Speak, an
innovative translation feature which enables
innovative translation feature which enables
customers to communicate in 43 languages.
customers to communicate in 43 languages.
In addition, customers can also use our Hostel
In addition, customers can also use our Hostel
Chat feature when staying in any of our 50 most
Chat feature when staying in any of our 50 most
popular hostels. Hostel Chat is an in-app instant
popular hostels. Hostel Chat is an in-app instant
messaging feature that lets customers chat with
messaging feature that lets customers chat with
fellow Hostelworld travellers who are staying at
fellow Hostelworld travellers who are staying at
the same hostel, at the same time as them. It’s
the same hostel, at the same time as them. It’s
an easy way to start a conversation and swap
an easy way to start a conversation and swap
tips for their trip, or to meet other solo travellers
tips for their trip, or to meet other solo travellers
for outings. Other features include the Wishlist,
for outings. Other features include the Wishlist,
where customers can save their favourite hostels
where customers can save their favourite hostels
to revisit and book another day, and our Notice
to revisit and book another day, and our Notice
Board feature.
Board feature.
Our Shareholders
Our Shareholders
As a global company with locations across three
As a global company with locations across three
continents, we encourage and support our
continents, we encourage and support our
people in engaging with the communities we
people in engaging with the communities we
both work in, and travel to. In 2018, Hostelworld
both work in, and travel to. In 2018, Hostelworld
again participated in the Techies4TempleStreet
again participated in the Techies4TempleStreet
Irish charity event which brings together the
Irish charity event which brings together the
technology community based in Ireland to
technology community based in Ireland to
fundraise over €240,000 for Temple Street
fundraise over €240,000 for Temple Street
Children’s Hospital, Dublin.
Children’s Hospital, Dublin.
Other charitable initiatives during 2018 included
Other charitable initiatives during 2018 included
a European colleague charity pool tournament
a European colleague charity pool tournament
with the proceeds going to various local charities,
with the proceeds going to various local charities,
the Christmas Shoebox Appeal with Team Hope,
the Christmas Shoebox Appeal with Team Hope,
donating to the St. Vincent de Paul Christmas
donating to the St. Vincent de Paul Christmas
Food Appeal, and a charity coffee morning in aid
Food Appeal, and a charity coffee morning in aid
of Harold’s Cross Hospice, Dublin. A Christmas
of Harold’s Cross Hospice, Dublin. A Christmas
Jumper Day in aid of Cystic Fibrosis Ireland and
Jumper Day in aid of Cystic Fibrosis Ireland and
Save the Children UK took place in our Dublin
Save the Children UK took place in our Dublin
and London offices, and we also encouraged
and London offices, and we also encouraged
employees to become regular blood donors by
employees to become regular blood donors by
arranging local donation clinics.
arranging local donation clinics.
We are committed to building long-term
We are committed to building long-term
relationships with our shareholders through open
relationships with our shareholders through open
In the last year, we eliminated the use of bottled
In the last year, we eliminated the use of bottled
and transparent communication. Our Company
and transparent communication. Our Company
water across all of our offices with our “Ban the
water across all of our offices with our “Ban the
Secretary is available to shareholders, and the
Secretary is available to shareholders, and the
Bottle” initiative. All colleagues were given a new,
Bottle” initiative. All colleagues were given a new,
Senior Independent Director and Chairman are
Senior Independent Director and Chairman are
reusable, BPA free water bottle, to reduce plastic
reusable, BPA free water bottle, to reduce plastic
available to shareholders through the Company
available to shareholders through the Company
waste and encourage the use of filtered water
waste and encourage the use of filtered water
Secretary, if required.
Secretary, if required.
within the office environment.
within the office environment.
THE HOUSE OF SANDEMAN - HOSTEL & SUITES
THE HOUSE OF SANDEMAN - HOSTEL & SUITES
PORTO
PORTO
Hostelworld Annual Report 2018 | Strategic Report
Hostelworld Annual Report 2018 | Strategic Report
Modern Slavery Act 2015
Modern Slavery Act 2015
The Modern Slavery Act 2015 (the “Act”) requires large organisations operating in the United Kingdom
The Modern Slavery Act 2015 (the “Act”) requires large organisations operating in the United Kingdom
to make a public statement outlining how they keep their supply chains free from slavery and human
to make a public statement outlining how they keep their supply chains free from slavery and human
trafficking. We published a statement on our website on 27 June 2017 outlining the steps taken by the
trafficking. We published a statement on our website on 27 June 2017 outlining the steps taken by the
Group to ensure that slavery and human trafficking is not taking place within the business or any supply
Group to ensure that slavery and human trafficking is not taking place within the business or any supply
chain and we will continue to monitor our obligations under the Act.
chain and we will continue to monitor our obligations under the Act.
Greenhouse Gas Emission Statement
Greenhouse Gas Emission Statement
Greenhouse Gas (“GHG”) emissions for the financial year ended 31 December 2018 have been measured
Greenhouse Gas (“GHG”) emissions for the financial year ended 31 December 2018 have been measured
as required under the Large and Medium-sized Companies and Groups (Account and Reports)
as required under the Large and Medium-sized Companies and Groups (Account and Reports)
Regulations 2008 as amended in 2013.
Regulations 2008 as amended in 2013.
We have used the GHG Protocol Corporate Accounting and Reporting standards (revised edition), data
We have used the GHG Protocol Corporate Accounting and Reporting standards (revised edition), data
gathered to fulfil the requirements under the CRC Energy Efficiency scheme, and emission factors from
gathered to fulfil the requirements under the CRC Energy Efficiency scheme, and emission factors from
Defra, UK Government conversion factors for Company Reporting (2018) to calculate the disclosures,
Defra, UK Government conversion factors for Company Reporting (2018) to calculate the disclosures,
where they are not separately disclosed by a supplier.
where they are not separately disclosed by a supplier.
We believe our emissions are impacted by the size of the business, which is driven by our global
We believe our emissions are impacted by the size of the business, which is driven by our global
headcount and office footprint. We have therefore chosen to use an intensity ratio measured on
headcount and office footprint. We have therefore chosen to use an intensity ratio measured on
emissions per €m of net revenue in order to put the GHG in context for the size of the business.
emissions per €m of net revenue in order to put the GHG in context for the size of the business.
Scope 1 – Emissions from operations
Scope 1 – Emissions from operations
Scope 2 – Emissions from energy usage
Scope 2 – Emissions from energy usage
Scope 3 – Emissions from employee travel
Scope 3 – Emissions from employee travel
Total
Total
Intensity Ratio (tCO2e/€m)
Intensity Ratio (tCO2e/€m)
2018
2018
tCO2e
tCO2e
Nil
Nil
161.0
161.0
163.3
163.3
324.3
324.3
4.0
4.0
2017
2017
tCO2e
tCO2e
Nil
Nil
190.9
190.9
258.1
258.1
449.0
449.0
5.2
5.2
Scope 1 - All direct GHG emissions
Scope 1 - All direct GHG emissions
Scope 2 - All indirect emissions due to consumption of purchased electricity
Scope 2 - All indirect emissions due to consumption of purchased electricity
Scope 3 - Voluntary disclosure of other indirect emissions where Hostelworld Group has the ability to influence them
Scope 3 - Voluntary disclosure of other indirect emissions where Hostelworld Group has the ability to influence them
Hostelworld Group is an internet-based business which leases its premises and does not have a retail
Hostelworld Group is an internet-based business which leases its premises and does not have a retail
footprint. The main GHG releasing activities over which the Group has influence are use of purchased
footprint. The main GHG releasing activities over which the Group has influence are use of purchased
electricity and business travel. The Group has no owned vehicles.
electricity and business travel. The Group has no owned vehicles.
The energy consumption in the Group’s Sydney and Shanghai offices has been estimated on a
The energy consumption in the Group’s Sydney and Shanghai offices has been estimated on a
per person basis, based on the actual energy consumption in the Group’s Dublin office, and is not
per person basis, based on the actual energy consumption in the Group’s Dublin office, and is not
considered material to the above disclosures.
considered material to the above disclosures.
The Group is committed to monitoring and reviewing its carbon emissions, and in particular its
The Group is committed to monitoring and reviewing its carbon emissions, and in particular its
employee business travel, which accounts for 51% of its total carbon emissions in 2018 (2017: 57%).
employee business travel, which accounts for 51% of its total carbon emissions in 2018 (2017: 57%).
40
40
GENERATOR STOCKHOLM
GENERATOR STOCKHOLM
STOCKHOLM
STOCKHOLM
03
LUB D PHUKET PATONG
PHUKET
GOVERNANCE
45
Chairman’s Introduction to Governance
46
48
59
66
71
76
86
98
Directors’ Biographies
Corporate Governance Statement
Report of the Audit Committee
Report of the Nomination Committee
Chairman of the Remuneration Committee’s Annual Statement
Directors’ Remuneration Policy
Annual Report on Remuneration
Directors’ Report
106
Independent Auditor’s Report
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
CHAIRMAN’S
CHAIRMAN’S
INTRODUCTION
INTRODUCTION
TO GOVERNANCE
TO GOVERNANCE
I am pleased to introduce the Corporate
I am pleased to introduce the Corporate
Governance Report for the year ended
Governance Report for the year ended
31 December 2018 which sets out how
31 December 2018 which sets out how
Hostelworld Group plc has applied the
Hostelworld Group plc has applied the
main principles of good governance
main principles of good governance
contained in the UK Corporate
contained in the UK Corporate
Governance Code.
Governance Code.
The Board is committed to promoting high
The Board is committed to promoting high
standards of corporate governance in
standards of corporate governance in
Hostelworld Group plc (the “Company”) and
Hostelworld Group plc (the “Company”) and
its subsidiaries (together the “Group”). The
its subsidiaries (together the “Group”). The
Board continues to ensure that the governance
Board continues to ensure that the governance
structures evolve as necessary and remain
structures evolve as necessary and remain
appropriate for a Group of our size and
appropriate for a Group of our size and
complexity. The Directors are fully aware of
complexity. The Directors are fully aware of
their duties and responsibilities under the UK
their duties and responsibilities under the UK
Corporate Governance Code, the Disclosure and
Corporate Governance Code, the Disclosure and
Transparency Rules and the Listing Rules.
Transparency Rules and the Listing Rules.
Compliance with UK Corporate
Compliance with UK Corporate
Governance Code 2016
Governance Code 2016
The Corporate Governance Report for 2018
The Corporate Governance Report for 2018
sets out how the Company has applied the
sets out how the Company has applied the
main principles of good governance and I am
main principles of good governance and I am
pleased to report that the Company is in full
pleased to report that the Company is in full
compliance with the UK Corporate Governance
compliance with the UK Corporate Governance
Code 2016 (the “2016 Code”). In addition, the
Code 2016 (the “2016 Code”). In addition, the
and succession continue to be reviewed by the
and succession continue to be reviewed by the
Nomination Committee and remain an area
Nomination Committee and remain an area
of ongoing focus for the Board and management.
of ongoing focus for the Board and management.
We currently have six board members,
We currently have six board members,
comprising two Executive Directors, myself and
comprising two Executive Directors, myself and
three other Non-Executive Directors. Of the six
three other Non-Executive Directors. Of the six
board members, one is female, five are resident
board members, one is female, five are resident
in Europe and one is resident in the United
in Europe and one is resident in the United
States of America. Four have travel/leisure sector
States of America. Four have travel/leisure sector
executive experience and two members come
executive experience and two members come
from other industry sectors. In my opinion,
from other industry sectors. In my opinion,
we have an excellent mix of skills and styles
we have an excellent mix of skills and styles
which ensures challenging and robust debate at
which ensures challenging and robust debate at
boardroom level and well considered decisions.
boardroom level and well considered decisions.
Board Evaluation
Board Evaluation
In 2018, a formal evaluation of the Board,
In 2018, a formal evaluation of the Board,
its Committees and individual Directors was
its Committees and individual Directors was
undertaken. This review was facilitated by the
undertaken. This review was facilitated by the
Company Secretary. The evaluation established
Company Secretary. The evaluation established
that the Board is operating effectively and
that the Board is operating effectively and
cohesively with a good balance of support and
cohesively with a good balance of support and
challenge. A summary of the process undertaken
challenge. A summary of the process undertaken
is included on page 54 and 55.
is included on page 54 and 55.
Shareholder Engagement
Shareholder Engagement
Financial Reporting Council published an updated
Financial Reporting Council published an updated
We are committed to engaging regularly with
We are committed to engaging regularly with
Corporate Governance Code in July 2018 and
Corporate Governance Code in July 2018 and
our shareholders to address any queries and
our shareholders to address any queries and
while the updated 2018 code does not apply to
while the updated 2018 code does not apply to
concerns.
concerns.
Hostelworld until 2019, in the interest of adhering
Hostelworld until 2019, in the interest of adhering
to high standards of corporate governance, the
to high standards of corporate governance, the
We will keep under constant review
We will keep under constant review
Company has already taken account of certain
Company has already taken account of certain
developments in corporate governance best
developments in corporate governance best
changes on a voluntary basis and will report
changes on a voluntary basis and will report
formally in accordance with the updated 2018
formally in accordance with the updated 2018
code in its 2019 Annual Report.
code in its 2019 Annual Report.
Board Composition, Diversity and
Board Composition, Diversity and
Succession
Succession
There have been significant changes to the Board
There have been significant changes to the Board
during 2018 with the appointment of a new Chief
during 2018 with the appointment of a new Chief
Executive Officer and Chief Financial Officer.
Executive Officer and Chief Financial Officer.
Diversity and succession have been particularly
Diversity and succession have been particularly
important considerations for the Board in a year
important considerations for the Board in a year
of such change. Board composition, diversity
of such change. Board composition, diversity
practice to ensure that our processes continue
practice to ensure that our processes continue
to be aligned to the needs of the business, help
to be aligned to the needs of the business, help
us manage risk and provide assurance and
us manage risk and provide assurance and
accountability in a transparent way for the benefit
accountability in a transparent way for the benefit
of all our shareholders and stakeholders.
of all our shareholders and stakeholders.
I look forward to reporting to you next year as to
I look forward to reporting to you next year as to
how our governance arrangements continue to
how our governance arrangements continue to
develop.
develop.
Michael Cawley
Michael Cawley
Chairman
Chairman
1 April 2019
1 April 2019
45
45
VALENCIA LOUNGE HOSTEL
VALENCIA LOUNGE HOSTEL
VALENCIA
VALENCIA
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
DIRECTORS’ BIOGRAPHIES
DIRECTORS’ BIOGRAPHIES
Michael Cawley
Michael Cawley
Gary Morrison
Gary Morrison
TJ Kelly
TJ Kelly
Andy McCue
Andy McCue
Éimear Moloney
Éimear Moloney
Carl Shepherd
Carl Shepherd
Role: Chair of the Board; Chair of the
Role: Chair of the Board; Chair of the
Role: Chief Executive Officer; Chair of
Role: Chief Executive Officer; Chair of
Role: Chief Financial Officer; member of
Role: Chief Financial Officer; member of
Role: Senior Independent Non-
Role: Senior Independent Non-
Role: Non-Executive Director; Chair of
Role: Non-Executive Director; Chair of
Role: Non-Executive Director; member
Role: Non-Executive Director; member
Nomination Committee; member of the
Nomination Committee; member of the
Disclosure Committee
Disclosure Committee
the Disclosure Committee
the Disclosure Committee
Executive Director; Chair of the
Executive Director; Chair of the
the Audit Committee; member of the
the Audit Committee; member of the
of the Audit Committee; member of the
of the Audit Committee; member of the
Remuneration Committee
Remuneration Committee
Age: 64
Age: 64
Nationality: Irish
Nationality: Irish
Age: 51
Age: 51
Age: 44
Age: 44
the Audit Committee; member of the
the Audit Committee; member of the
the Nomination Committee
the Nomination Committee
the Nomination Committee
the Nomination Committee
Remuneration Committee; member of
Remuneration Committee; member of
Remuneration Committee; member of
Remuneration Committee; member of
Remuneration Committee; member of
Remuneration Committee; member of
Nationality: British
Nationality: British
Nationality: Irish
Nationality: Irish
Nomination Committee
Nomination Committee
Age: 44
Age: 44
Age: 48
Age: 48
Age: 66
Age: 66
Qualifications: Gary has a Masters in
Qualifications: Gary has a Masters in
Qualifications: TJ is a fellow of the
Qualifications: TJ is a fellow of the
Nationality: Irish
Nationality: Irish
Nationality: American
Nationality: American
Qualifications: Michael holds a
Qualifications: Michael holds a
Engineering from Leeds University UK
Engineering from Leeds University UK
Institute of Chartered Accountants in
Institute of Chartered Accountants in
Nationality: British
Nationality: British
Bachelor of Commerce degree from
Bachelor of Commerce degree from
and holds an MBA from INSEAD.
and holds an MBA from INSEAD.
Ireland.
Ireland.
University College Cork and is a
University College Cork and is a
Qualifications: Andy has a M.A. in
Qualifications: Andy has a M.A. in
Finance and MSc. Investment and
Finance and MSc. Investment and
Business Administration from the
Business Administration from the
Qualifications: B.A. Accounting and
Qualifications: B.A. Accounting and
Qualifications: Carl has a M.A. in
Qualifications: Carl has a M.A. in
fellow of the Institute of Chartered
fellow of the Institute of Chartered
Joined Group: June 2018
Joined Group: June 2018
Joined Group: November 2018
Joined Group: November 2018
Economics and Management from the
Economics and Management from the
Treasury from Dublin City University.
Treasury from Dublin City University.
University of Texas.
University of Texas.
Independent: N/A
Independent: N/A
Independent: N/A
Independent: N/A
in Finance from the London Business
in Finance from the London Business
of Chartered Accountants in Ireland.
of Chartered Accountants in Ireland.
Joined Group: October 2017
Joined Group: October 2017
University of Cambridge and a Masters
University of Cambridge and a Masters
Éimear is also a fellow of the Institute
Éimear is also a fellow of the Institute
Accountants in Ireland.
Accountants in Ireland.
Joined Group: October 2015
Joined Group: October 2015
Independent: N/A*
Independent: N/A*
travel industry; technology;
travel industry; technology;
technology; financial services;
technology; financial services;
Sector Experience: Online
Sector Experience: Online
Sector Experience: Nutrition;
Sector Experience: Nutrition;
telecommunications.
telecommunications.
telecommunications.
telecommunications.
Sector Experience: Airlines; motor;
Sector Experience: Airlines; motor;
betting and gaming; construction.
betting and gaming; construction.
Other Board and Management
Other Board and Management
Other Board and Management
Other Board and Management
School.
School.
Joined Group: October 2015
Joined Group: October 2015
Independent: Yes
Independent: Yes
Joined Group: November 2017
Joined Group: November 2017
Independent: Yes
Independent: Yes
Independent: Yes
Independent: Yes
Sector Experience: Online travel
Sector Experience: Online travel
Sector Experience: Financial services.
Sector Experience: Financial services.
industry.
industry.
Experience: Prior to joining the Group,
Experience: Prior to joining the Group,
Experience: Prior to joining the Group,
Experience: Prior to joining the Group,
Sector Experience: E-Commerce;
Sector Experience: E-Commerce;
Other Board and Management
Other Board and Management
Other Board and Management
Other Board and Management
Gary was Senior Vice President and
Gary was Senior Vice President and
TJ was Chief Financial Officer of Glanbia
TJ was Chief Financial Officer of Glanbia
Experience: Michael is also a non-
Experience: Michael is also a non-
Head of Retail for Expedia brand
Head of Retail for Expedia brand
plc’s Performance Nutrition division
plc’s Performance Nutrition division
executive director of Ryanair Holdings
executive director of Ryanair Holdings
worldwide. He also was a director of
worldwide. He also was a director of
primarily based in Chicago. During this
primarily based in Chicago. During this
plc, having joined the Board in August
plc, having joined the Board in August
2014. Michael had previously served
2014. Michael had previously served
as Deputy Chief Executive Officer and
as Deputy Chief Executive Officer and
Chief Operating Officer of Ryanair from
Chief Operating Officer of Ryanair from
2003 to March 2014 and before that as
2003 to March 2014 and before that as
Ryanair’s Chief Financial Officer and
Ryanair’s Chief Financial Officer and
Commercial Director from 1997. Michael
Commercial Director from 1997. Michael
also holds directorships in Paddy
also holds directorships in Paddy
Despegar (NYSE DESP), AirAsiaExpedia
Despegar (NYSE DESP), AirAsiaExpedia
time TJ also had oversight responsibility
time TJ also had oversight responsibility
and Voyages SNCF. Previously,
and Voyages SNCF. Previously,
for Glanbia plc’s Group Procurement
for Glanbia plc’s Group Procurement
Gary held senior management
Gary held senior management
function. Prior to this TJ was Group
function. Prior to this TJ was Group
positions at Google as Head of Global
positions at Google as Head of Global
Financial Controller at Glanbia plc with
Financial Controller at Glanbia plc with
Sales Operations for Google’s Online
Sales Operations for Google’s Online
responsibility for investor relations.
responsibility for investor relations.
Sales Channel and Motorola as VP
Sales Channel and Motorola as VP
Previously TJ held senior financial
Previously TJ held senior financial
and Head of Product management for
and Head of Product management for
roles at Microsoft, GE Capital and Eir.
roles at Microsoft, GE Capital and Eir.
Motorola’s Smartphone division. Gary
Motorola’s Smartphone division. Gary
TJ trained and qualified as a chartered
TJ trained and qualified as a chartered
also worked in corporate development/
also worked in corporate development/
accountant with PwC.
accountant with PwC.
Power Betfair plc, Kingspan Group plc,
Power Betfair plc, Kingspan Group plc,
M&A, consulting and engineering
M&A, consulting and engineering
Mazine Limited, Prepaypower Holdings
Mazine Limited, Prepaypower Holdings
roles at General Electric, Booz Allen &
roles at General Electric, Booz Allen &
Limited, GMS Professional Imaging
Limited, GMS Professional Imaging
Hamilton and Schlumberger France
Hamilton and Schlumberger France
Limited, Gowan
Limited, Gowan
respectively.
respectively.
Group Limited, Flybondi Limited, Linked
Group Limited, Flybondi Limited, Linked
P2P Limited and Meadowbrook Heights
P2P Limited and Meadowbrook Heights
Unlimited. Prior to joining Ryanair,
Unlimited. Prior to joining Ryanair,
Michael was Group Finance Director of
Michael was Group Finance Director of
Gowan Group Limited. Michael is also
Gowan Group Limited. Michael is also
Chairman of Fáilte Ireland Authority.
Chairman of Fáilte Ireland Authority.
*Independent on appointment
*Independent on appointment
46
46
betting and gaming; management and
betting and gaming; management and
Other Board and Management
Other Board and Management
Experience: Carl was co-founder of
Experience: Carl was co-founder of
strategy consulting.
strategy consulting.
Experience: Éimear has held senior
Experience: Éimear has held senior
HomeAway Inc. where he served on
HomeAway Inc. where he served on
Other Board and Management
Other Board and Management
Experience: Andy is currently the Chief
Experience: Andy is currently the Chief
Executive Officer of The Restaurant
Executive Officer of The Restaurant
Group plc*. Andy previously held the
Group plc*. Andy previously held the
positions of Chief Executive Officer,
positions of Chief Executive Officer,
Chief Operating Officer and Head of
Chief Operating Officer and Head of
Retail UK and Ireland at Paddy Power
Retail UK and Ireland at Paddy Power
Betfair plc. Prior to this, Andy was a
Betfair plc. Prior to this, Andy was a
investment manager roles in Zurich Life
investment manager roles in Zurich Life
the board of directors and was the
the board of directors and was the
Assurance (Ireland) plc, for 17 years up
Assurance (Ireland) plc, for 17 years up
company’s founding Chief Operating
company’s founding Chief Operating
to December 2017, with responsibility
to December 2017, with responsibility
Officer and Chief Strategic and
Officer and Chief Strategic and
for all major markets including the
for all major markets including the
Development Officer until its sale to
Development Officer until its sale to
Irish, US and UK equity portfolios,
Irish, US and UK equity portfolios,
Expedia in 2015. Carl is currently on
Expedia in 2015. Carl is currently on
sector, stock analysis and selection.
sector, stock analysis and selection.
the board of @Leisure Group, Turnkey
the board of @Leisure Group, Turnkey
Éimear previously worked with
Éimear previously worked with
Vacation Rentals, Inc., OnceThere, Inc.
Vacation Rentals, Inc., OnceThere, Inc.
Bankers Trust Funds Management
Bankers Trust Funds Management
and RVshare, LLC. Carl’s previous roles
and RVshare, LLC. Carl’s previous roles
Ltd in Australia and also with Crowe
Ltd in Australia and also with Crowe
include Chief Operating Officer and
include Chief Operating Officer and
Horwath, Chartered Accountants in
Horwath, Chartered Accountants in
Chief Development Officer of Hoover’s
Chief Development Officer of Hoover’s
principal at OC&C Strategy Consultants
principal at OC&C Strategy Consultants
Ireland. Eimear also holds directorships
Ireland. Eimear also holds directorships
Online.
Online.
and also worked at Arthur Andersen
and also worked at Arthur Andersen
with Yew Grove REIT plc and Chanelle
with Yew Grove REIT plc and Chanelle
Business Consulting. Andy also holds
Business Consulting. Andy also holds
Pharmaceutical Group.
Pharmaceutical Group.
directorships in The Restaurant Group
directorships in The Restaurant Group
plc and subsidiary companies.
plc and subsidiary companies.
*On 14 February 2019, The Restaurant Group
*On 14 February 2019, The Restaurant Group
plc announced that Andy had informed the
plc announced that Andy had informed the
board of his decision to leave the company
board of his decision to leave the company
but that it anticipated that Andy would
but that it anticipated that Andy would
remain in his position while a successor is
remain in his position while a successor is
being recruited.
being recruited.
47
47
WOMBATS CITY HOSTEL
LONDON
CORPORATE GOVERNANCE
STATEMENT
The Board recognises the importance of
high standards of corporate governance
and is committed to ensuring that
appropriate corporate governance
procedures are in place within the
Group. The Board provides leadership
and oversight designed to achieve
sustained business growth, enhanced
shareholder value and the protection
of the interests of employees and other
stakeholders whilst promoting a culture
of the highest standards of integrity,
transparency and accountability. A key
objective of the governance framework
at Hostelworld is to ensure compliance
with applicable legal requirements and
with best practice in governance.
resigned as Chief Executive Officer and Director
of the Company and was replaced with immediate
effect by Gary Morrison. Feargal will remain as
an employee of the Company until 11 June 2019.
On 21 August 2018, the Company announced the
appointment of TJ Kelly as Chief Financial Officer
and Director of the Company, with effect from 21
November 2018.
In light of the changes to audit committee
composition set out in the updated UK
Corporate Governance Code (July 2018) and to
ensure the Company continues to comply with
best corporate governance, Michael Cawley
(Chairman) resigned as a member of the
Company’s Audit Committee on 5 December
2018.
As part of its role, the Board provides
entrepreneurial leadership and strategic
guidance to management in the constructive
challenge of proposals, the monitoring of
The Board is currently comprised of six members,
as follows:
► Michael Cawley, (Non-Executive Chairman of
performance, and the setting of both short term
the Board and Chairman of the Nomination
and long term objectives. The Board works to
Committee), who was independent on
ensure that the Group has sufficient human and
appointment;
financial capital to meet its objectives, and that
appropriate controls are in place and operational
► Andy McCue (Senior Independent Director and
to safeguard the assets of the Group.
Further to the Company’s announcement on
19 December 2017 of Mari Hurley’s intention to
resign her position as Chief Financial Officer,
Chairman of the Remuneration Committee),
Éimear Moloney (Chairperson of the Audit
Committee) and Carl Shepherd (all three being
independent Non-Executive Directors); and
the Company announced Mari’s resignation as a
► Gary Morrison (Chief Executive Officer) and TJ
Director of the Company on 10 April 2018. Mari
Kelly (Chief Financial Officer), both Executive
remained as an employee of the Company until
Directors.
The Board operates in accordance with the
Moloney and Carl Shepherd are ‘independent
Company’s Articles of Association, and its
non-executive directors’ within the meaning of
operation is governed by the Board Charter and
the term as defined in the 2016 Code. Accordingly,
the Schedule of Matters Reserved for the Board.
all Directors will seek re-election at the
In addition, the Board has established a number
Company’s forthcoming AGM on 31 May 2019.
of Committees, as indicated below, each of
which has its own terms of reference, which are
Board Composition
reviewed at least annually.
Biographies of the Directors are provided on
pages 46 to 47.
Length of Appointments
The Board is comprised of six Directors, four Non-
Executive Directors and two Executive Directors.
Collectively, the Non-Executive Directors possess
a wide range of financial, commercial and
general management experience, online travel
expertise and e-commerce expertise, and each
Non-Executive Director appointments to the
Non-Executive Director brings independent
Board are for an initial term of three years,
judgement to bear on a number of key issues
subject to election at the Company’s AGM. Non-
for the Group, including strategy, performance
Executive Directors are usually expected to serve
and risk management. Their collective range of
two three year terms, unless otherwise agreed
knowledge and viewpoints ensures a high quality
with the Board upon appointment (although
of robust debate and input into key decisions
the Board may invite a Director to serve for an
and ensures the Board operates effectively.
additional period).
Having regard to the level of experience required
Election of Directors
The Board may appoint any person to be
a Director, either to fill a vacancy or as an
addition to the existing Board, subject to the
limits of Board size and composition as set out
in the Articles of Association. Any Director so
appointed by the Board shall hold office until
the AGM following their appointment and must
put themselves forward for election by the
shareholders.
for the Board to operate effectively, it is felt
that collectively the Board is well positioned to
address the risks and uncertainties faced by the
Group as outlined on pages 30 to 34 through
the combined business skills and online travel
expertise of its Non-Executive and Executive
Directors. It is also felt that the current number
of Executive Directors and Non-Executive
Directors is sufficient for the Board to properly
fulfil its duties.
Audit Committee Composition
In accordance with the provisions of the 2016
The 2016 Code requires that the Board is satisfied
Code, an evaluation of the skills, knowledge,
that at least one member of the Audit Committee
independence and experience of each Director
has recent and relevant financial experience. The
took place in 2018. Following the completion of
Disclosure Guidance and Transparency Rules
the evaluation exercise, the Board considers that
(DTRs) require that at least one member of the
all Directors continue to be effective, committed
Audit Committee has competence in accounting
to their roles and are able to devote sufficient
and/or auditing. The Board is satisfied that the
48
17 June 2018. On 11 June 2018, Feargal Mooney
time to their duties and that Andy McCue, Éimear
Chairperson of the Audit Committee meets these
49
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
requirements, being a qualified accountant who
requirements, being a qualified accountant who
Diversity is embraced at Hostelworld and the
Diversity is embraced at Hostelworld and the
has responsibility for maintaining procedures,
has responsibility for maintaining procedures,
► Determining the remuneration policy for the
► Determining the remuneration policy for the
has previously held senior investment manager
has previously held senior investment manager
Group operates and implements a dignity at
Group operates and implements a dignity at
systems and controls required for the purposes
systems and controls required for the purposes
Directors and other senior executives following
Directors and other senior executives following
roles in Zurich Life Assurance (Ireland) plc. In
roles in Zurich Life Assurance (Ireland) plc. In
work policy that seeks to ensure that the working
work policy that seeks to ensure that the working
of complying with the obligations falling on the
of complying with the obligations falling on the
recommendations of the Remuneration
recommendations of the Remuneration
addition, the Board considers that the Audit
addition, the Board considers that the Audit
environment is free from any type of bullying
environment is free from any type of bullying
Company and its Directors and employees under
Company and its Directors and employees under
Committee, including use of share incentive
Committee, including use of share incentive
Committee has the necessary competence and
Committee has the necessary competence and
and/or harassment. Further, the Group strives
and/or harassment. Further, the Group strives
MAR and the Listing Rules of the London Stock
MAR and the Listing Rules of the London Stock
plans;
plans;
broad experience relevant to the sector in which
broad experience relevant to the sector in which
to ensure that a culture is maintained and
to ensure that a culture is maintained and
Exchange and of Euronext Dublin. Membership
Exchange and of Euronext Dublin. Membership
the Group operates, as required by the 2016
the Group operates, as required by the 2016
fostered that values and respects diversity and
fostered that values and respects diversity and
of the Disclosure Committee is comprised of the
of the Disclosure Committee is comprised of the
► Determining the division of responsibilities
► Determining the division of responsibilities
Code. Carl Shepherd is a former Chief Operating
Code. Carl Shepherd is a former Chief Operating
inclusion, not only gender and age diversity but
inclusion, not only gender and age diversity but
Chief Executive Officer and the Chief Financial
Chief Executive Officer and the Chief Financial
between the Chairman, Chief Executive
between the Chairman, Chief Executive
Officer and Chief Strategic and Development
Officer and Chief Strategic and Development
also diversity of educational and professional
also diversity of educational and professional
Officer.
Officer.
Officer with HomeAway, Inc., Andy McCue has
Officer with HomeAway, Inc., Andy McCue has
background. The Group’s success in this area is
background. The Group’s success in this area is
Officer and other Executive Directors, and
Officer and other Executive Directors, and
approving how authority may be delegated
approving how authority may be delegated
held senior executive positions with Paddy Power
held senior executive positions with Paddy Power
demonstrated by the fact that our staff come
demonstrated by the fact that our staff come
As required by the 2016 Code, specific areas of
As required by the 2016 Code, specific areas of
to subcommittees of the Board, the Chief
to subcommittees of the Board, the Chief
Betfair plc and Michael Cawley has previously
Betfair plc and Michael Cawley has previously
from a variety of different cultures, age groups
from a variety of different cultures, age groups
delegation are set out in the Terms of Reference
delegation are set out in the Terms of Reference
Executive Officer and other staff;
Executive Officer and other staff;
served as Deputy Chief Executive Officer and
served as Deputy Chief Executive Officer and
and educational and professional backgrounds
and educational and professional backgrounds
for each of the Audit Committee, Remuneration
for each of the Audit Committee, Remuneration
Chief Operating Officer of Ryanair Holdings
Chief Operating Officer of Ryanair Holdings
and represent 30 different nationalities. The
and represent 30 different nationalities. The
Committee and Nomination Committee. The
Committee and Nomination Committee. The
► Considering the balance of interests between
► Considering the balance of interests between
plc. This means that they each have a deep
plc. This means that they each have a deep
Group believes that recruitment, selection
Group believes that recruitment, selection
Terms of Reference of the Audit, Remuneration
Terms of Reference of the Audit, Remuneration
shareholders, employees, customers and the
shareholders, employees, customers and the
understanding of the challenges presented by
understanding of the challenges presented by
and promotion should be based on merit and
and promotion should be based on merit and
and Nomination Committees, as updated in
and Nomination Committees, as updated in
community;
community;
the Group’s customer-focussed strategy which
the Group’s customer-focussed strategy which
should not be impacted by age, gender, sexual
should not be impacted by age, gender, sexual
December 2018 to align with the requirements of
December 2018 to align with the requirements of
enabled them to make robust contributions to the
enabled them to make robust contributions to the
orientation, civil status, family status, disability,
orientation, civil status, family status, disability,
the updated UK Corporate Governance Code (July
the updated UK Corporate Governance Code (July
► Review of the Group’s overall corporate
► Review of the Group’s overall corporate
Audit Committee’s activities during the reporting
Audit Committee’s activities during the reporting
membership of the travelling community, race,
membership of the travelling community, race,
2018), are available on the Company’s website,
2018), are available on the Company’s website,
governance framework including any matters
governance framework including any matters
period. Further details of the background,
period. Further details of the background,
religious beliefs or political opinions. The Group’s
religious beliefs or political opinions. The Group’s
and reports of each of these Committees are
and reports of each of these Committees are
relating to compliance with the UK Corporate
relating to compliance with the UK Corporate
knowledge and experience of the Chairperson
knowledge and experience of the Chairperson
success in this area is demonstrated by the fact
success in this area is demonstrated by the fact
set out below. Certain matters, however, are
set out below. Certain matters, however, are
Governance Code; and
Governance Code; and
of the Audit Committee and each of the Audit
of the Audit Committee and each of the Audit
that no equality or discrimination based claim
that no equality or discrimination based claim
reserved for the Board’s decision, and are not
reserved for the Board’s decision, and are not
Committee members can be found on pages 46
Committee members can be found on pages 46
has been issued against the Group during the
has been issued against the Group during the
delegated to the Company’s Executive Directors.
delegated to the Company’s Executive Directors.
► Any decision relating to the prosecution,
► Any decision relating to the prosecution,
to 47 of this report.
to 47 of this report.
Board and Group Diversity
Board and Group Diversity
The Board is fully aware of the need to have a
The Board is fully aware of the need to have a
Board that is well balanced and which has the
Board that is well balanced and which has the
appropriate skills, knowledge, experience and
appropriate skills, knowledge, experience and
diversity for the needs of the business. Diversity
diversity for the needs of the business. Diversity
reporting period. The Group’s success in the area
reporting period. The Group’s success in the area
of ensuring gender equality is demonstrated by
of ensuring gender equality is demonstrated by
the fact that the male/female ratio of employees’
the fact that the male/female ratio of employees’
as of 31 December 2018 was 51.5% male and
as of 31 December 2018 was 51.5% male and
48.5% female.
48.5% female.
Board Role
Board Role
is considered in its broadest sense and includes
is considered in its broadest sense and includes
The Board has delegated authority for day-
The Board has delegated authority for day-
age, gender, cultural background, geographical
age, gender, cultural background, geographical
to-day operations within defined governance
to-day operations within defined governance
diversity and business background. During 2018
diversity and business background. During 2018
parameters to the Executive Leadership Team,
parameters to the Executive Leadership Team,
we adopted a formal Board policy on diversity
we adopted a formal Board policy on diversity
consisting of the Executive Directors and other
consisting of the Executive Directors and other
to ensure that the Group continues to derive the
to ensure that the Group continues to derive the
senior executives.
senior executives.
benefits of a diverse Board. The policy provides
benefits of a diverse Board. The policy provides
that an effective Board will include and make
that an effective Board will include and make
The Board may appoint Committees as it thinks
The Board may appoint Committees as it thinks
good use of differences in the skills, regional and
good use of differences in the skills, regional and
fit to exercise certain of its powers and has
fit to exercise certain of its powers and has
industry experience, background, race, gender
industry experience, background, race, gender
delegated certain responsibilities to Board
delegated certain responsibilities to Board
and other distinctions between Directors.
and other distinctions between Directors.
Committees, namely:
Committees, namely:
The application of diversity principles to
The application of diversity principles to
► Audit Committee
► Audit Committee
the appointment of Éimear Moloney as a
the appointment of Éimear Moloney as a
► Remuneration Committee
► Remuneration Committee
member of the Nomination Committee and
member of the Nomination Committee and
► Nomination Committee
► Nomination Committee
Remuneration Committee in February 2018
Remuneration Committee in February 2018
► Disclosure Committee
► Disclosure Committee
and the appointment of Gary Morrison as Chief
and the appointment of Gary Morrison as Chief
Executive Officer and TJ Kelly as Chief Financial
Executive Officer and TJ Kelly as Chief Financial
Following the introduction of the Market Abuse
Following the introduction of the Market Abuse
Officer during the reporting period are described
Officer during the reporting period are described
Regulation in July 2016 (“MAR”), the Company
Regulation in July 2016 (“MAR”), the Company
in detail in the Report of the Nomination
in detail in the Report of the Nomination
established a Disclosure Committee. This
established a Disclosure Committee. This
Committee.
Committee.
Committee has responsibility for considering
Committee has responsibility for considering
and advising on the disclosure requirements
and advising on the disclosure requirements
The Group will continue to monitor diversity
The Group will continue to monitor diversity
and treatment of material information
and treatment of material information
both on the Board, its Committees and across
both on the Board, its Committees and across
disclosed in public filings and determining
disclosed in public filings and determining
the business to ensure diversity and equal
the business to ensure diversity and equal
the disclosure requirements and treatment
the disclosure requirements and treatment
50
50
opportunities.
opportunities.
of material information. This Committee also
of material information. This Committee also
The schedule of these matters includes, but is not
The schedule of these matters includes, but is not
defence or settlement of material litigation.
defence or settlement of material litigation.
limited to:
limited to:
► Responsibility for the overall leadership of the
► Responsibility for the overall leadership of the
is reviewed annually and updated as appropriate.
is reviewed annually and updated as appropriate.
Company and setting the Company’s values,
Company and setting the Company’s values,
standards and objectives as well as approval
standards and objectives as well as approval
Board and Committee Meetings
Board and Committee Meetings
The Schedule of Matters Reserved for the Board
The Schedule of Matters Reserved for the Board
of annual budgets;
of annual budgets;
► Approving the strategic aims and objectives
► Approving the strategic aims and objectives
of the Group;
of the Group;
► Oversight of the Group’s day-to-day operations
► Oversight of the Group’s day-to-day operations
including maintenance of sound internal
including maintenance of sound internal
control and risk management systems and
control and risk management systems and
compliance with statutory and regulatory
compliance with statutory and regulatory
obligations;
obligations;
► Controlling the Company’s capital structure;
► Controlling the Company’s capital structure;
► Approval of the annual report and accounts,
► Approval of the annual report and accounts,
dividend policy, changes in accounting policies,
dividend policy, changes in accounting policies,
or matters that may impact the Company’s tax
or matters that may impact the Company’s tax
residency;
residency;
► Ensuring a satisfactory dialogue with
► Ensuring a satisfactory dialogue with
shareholders;
shareholders;
► Approving the structure, size, composition
► Approving the structure, size, composition
and membership of the Board, and ensuring
and membership of the Board, and ensuring
adequate succession planning for the Board
adequate succession planning for the Board
and senior management;
and senior management;
The Board has scheduled regular meetings
The Board has scheduled regular meetings
throughout the year and holds other meetings
throughout the year and holds other meetings
as required. At scheduled meetings, the Board
as required. At scheduled meetings, the Board
addresses:
addresses:
► Progress against previously agreed actions;
► Progress against previously agreed actions;
► Business performance;
► Business performance;
► Financial performance;
► Financial performance;
► Operational matters of particular note for the
► Operational matters of particular note for the
Board;
Board;
► Strategic considerations; and
► Strategic considerations; and
► Reports of Board Committees.
► Reports of Board Committees.
Other meetings are held on an ad hoc basis
Other meetings are held on an ad hoc basis
as required, and matters addressed will vary
as required, and matters addressed will vary
according to the demands of the business at that
according to the demands of the business at that
time.
time.
Members of the Executive Leadership Team,
Members of the Executive Leadership Team,
other executives and external advisors are
other executives and external advisors are
regularly invited to Board meetings to present
regularly invited to Board meetings to present
on their particular areas of expertise.
on their particular areas of expertise.
The Board periodically reviews the strategic
The Board periodically reviews the strategic
development of the business and collaborates
development of the business and collaborates
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
with the Executive Leadership Team in the
with the Executive Leadership Team in the
Attendance at Meetings
Attendance at Meetings
development of the Group’s strategy to ensure
development of the Group’s strategy to ensure
that the construct and direction of the Group’s
that the construct and direction of the Group’s
strategic plan is appropriate and in the long
strategic plan is appropriate and in the long
term interests of the Group. A comprehensive
term interests of the Group. A comprehensive
programme of engagement with the Group’s
programme of engagement with the Group’s
Chief Executive Officer and Executive Leadership
Chief Executive Officer and Executive Leadership
Team was conducted by the Board during the
Team was conducted by the Board during the
reporting period in connection with the strategic
reporting period in connection with the strategic
review of the Group’s business and the need
review of the Group’s business and the need
to formally establish key strategic areas for the
to formally establish key strategic areas for the
Group to focus on. Detailed strategy proposals
Group to focus on. Detailed strategy proposals
on the below areas were provided to the Board
on the below areas were provided to the Board
and were discussed at Board meetings and in
and were discussed at Board meetings and in
meetings between Board members and the
meetings between Board members and the
Group’s Chief Executive Officer and senior
Group’s Chief Executive Officer and senior
executives.
executives.
Areas of Strategic Focus:
Areas of Strategic Focus:
► Investing in the Group’s core technology
► Investing in the Group’s core technology
platform
platform
► Focus on best-in-class technology
► Focus on best-in-class technology
► Leveraging the Group’s data assets
► Leveraging the Group’s data assets
► Driving customer acquisition
► Driving customer acquisition
The Board meets sufficiently regularly to ensure
The Board meets sufficiently regularly to ensure
that all its duties are discharged effectively. All
that all its duties are discharged effectively. All
Directors are expected to prepare for and attend
Directors are expected to prepare for and attend
meetings of the Board and the AGM. There were
meetings of the Board and the AGM. There were
nine Board meetings held in 2018, seven of
nine Board meetings held in 2018, seven of
which were scheduled Board meetings and all
which were scheduled Board meetings and all
scheduled meetings had full attendance. There
scheduled meetings had full attendance. There
were two unscheduled Board meetings held
were two unscheduled Board meetings held
in 2018 dealing with specific items of business
in 2018 dealing with specific items of business
and convened at short notice (one unscheduled
and convened at short notice (one unscheduled
meeting held by teleconference and the other
meeting held by teleconference and the other
conducted in person). During 2018 there was also
conducted in person). During 2018 there was also
two unanimous written decisions of the Board,
two unanimous written decisions of the Board,
to deal with (1) the appointment of the Group’s
to deal with (1) the appointment of the Group’s
new Chief Financial Officer; and (2) the approval
new Chief Financial Officer; and (2) the approval
of a material contract involving a financial spend
of a material contract involving a financial spend
requiring Board approval in accordance with the
requiring Board approval in accordance with the
Schedule of Matters Reserved for the Board.
Schedule of Matters Reserved for the Board.
There was also one unanimous written
There was also one unanimous written
decision of the Nomination Committee and the
decision of the Nomination Committee and the
Remuneration Committee, respectively, to deal
Remuneration Committee, respectively, to deal
with the appointment of the Group’s new Chief
with the appointment of the Group’s new Chief
Where a Director is unable to attend a meeting,
Where a Director is unable to attend a meeting,
Andy McCue is the Board’s Senior Independent
Andy McCue is the Board’s Senior Independent
all papers for the meeting are issued to them,
all papers for the meeting are issued to them,
Director (“SID”). The SID’s primary role is to
Director (“SID”). The SID’s primary role is to
their views are solicited in advance of the
their views are solicited in advance of the
provide a sounding board for the Chairman and
provide a sounding board for the Chairman and
meeting, and updates are provided to them after
meeting, and updates are provided to them after
to act as an intermediary for other Directors
to act as an intermediary for other Directors
the meetings where appropriate.
the meetings where appropriate.
as required. The SID meets with the other
as required. The SID meets with the other
Non-Executive Directors without the Executive
Non-Executive Directors without the Executive
Directors may request that any relevant concern
Directors may request that any relevant concern
Directors present and also leads the annual
Directors present and also leads the annual
they have be reflected in the minutes of any
they have be reflected in the minutes of any
evaluation of the Chairman’s performance. The
evaluation of the Chairman’s performance. The
Board or Committee meeting, and minutes are
Board or Committee meeting, and minutes are
SID is available to shareholders if they have
SID is available to shareholders if they have
circulated for review in advance of approval and
circulated for review in advance of approval and
concerns that cannot be addressed through
concerns that cannot be addressed through
signing at the next meeting, or as appropriate.
signing at the next meeting, or as appropriate.
the Chairman, Chief Executive Officer or Chief
the Chairman, Chief Executive Officer or Chief
Division of Responsibilities
Division of Responsibilities
The Board takes collective responsibility for the
The Board takes collective responsibility for the
Financial Officer.
Financial Officer.
Support to Directors
Support to Directors
management of the Group. Within the Board, the
management of the Group. Within the Board, the
To assist the Directors in performing their duties,
To assist the Directors in performing their duties,
roles and responsibilities of the Chairman and
roles and responsibilities of the Chairman and
they have full and timely access to all relevant
they have full and timely access to all relevant
Chief Executive Officer are clearly separated and
Chief Executive Officer are clearly separated and
information. For Board meetings, this consists
information. For Board meetings, this consists
are held by different individuals, and there is also
are held by different individuals, and there is also
of a formal agenda, minutes of previous meetings
of a formal agenda, minutes of previous meetings
a Senior Independent Director.
a Senior Independent Director.
and a comprehensive set of Board papers
and a comprehensive set of Board papers
including regular updates and reports of special
including regular updates and reports of special
Michael Cawley, as Chairman, is the link between
Michael Cawley, as Chairman, is the link between
matters of interest. The Directors are entitled
matters of interest. The Directors are entitled
the Board and the Company and is responsible
the Board and the Company and is responsible
to take independent professional advice at the
to take independent professional advice at the
for leadership and governance of the Board,
for leadership and governance of the Board,
Company’s expense in the furtherance of their
Company’s expense in the furtherance of their
including setting the Board’s agenda. He
including setting the Board’s agenda. He
duties, where considered necessary.
duties, where considered necessary.
► Improving the Group’s business model
► Improving the Group’s business model
Financial Officer.
Financial Officer.
oversees the operation and overall effectiveness
oversees the operation and overall effectiveness
► Investing in the Group’s people
► Investing in the Group’s people
► Optimising capital allocation
► Optimising capital allocation
The specific results of the detailed strategic review
The specific results of the detailed strategic review
and the future strategy focus for the Group were
and the future strategy focus for the Group were
approved by the Board and are outlined in more
approved by the Board and are outlined in more
detail in the Chief Executive’s Statement.
detail in the Chief Executive’s Statement.
Details of the Directors attendance at Board and
Details of the Directors attendance at Board and
Committee meetings are set out below.
Committee meetings are set out below.
Board/Committee
Board/Committee
(No. of Meetings held during the year when the Director was a member)
(No. of Meetings held during the year when the Director was a member)
Board
Board
Audit
Audit
Remuneration
Remuneration
Nomination
Nomination
Scheduled
Scheduled
Unscheduled
Unscheduled
Scheduled
Scheduled
Scheduled
Scheduled
Unscheduled
Unscheduled
Scheduled
Scheduled
Unscheduled
Unscheduled
Michael Cawley(i)
Michael Cawley(i)
Andy McCue
Andy McCue
Carl Shepherd
Carl Shepherd
Éimear Moloney(ii)
Éimear Moloney(ii)
Gary Morrison(iii)
Gary Morrison(iii)
TJ Kelly(iv)
TJ Kelly(iv)
Feargal Mooney(v)
Feargal Mooney(v)
Mari Hurley(vi)
Mari Hurley(vi)
7 / 7
7 / 7
7 / 7
7 / 7
7 / 7
7 / 7
7 / 7
7 / 7
4 / 4
4 / 4
1 / 1
1 / 1
3 / 3
3 / 3
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
1 / 2
1 / 2
2 / 2
2 / 2
1 / 1
1 / 1
-
-
-
-
-
-
3 / 3
3 / 3
3 / 3
3 / 3
3 / 3
3 / 3
3 / 3
3 / 3
-
-
-
-
-
-
-
-
4 / 4
4 / 4
4 / 4
4 / 4
4 / 4
4 / 4
4 / 4
4 / 4
-
-
-
-
-
-
-
-
1 / 1
1 / 1
1 / 1
1 / 1
0 / 1
0 / 1
1 / 1
1 / 1
-
-
-
-
-
-
-
-
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
2 / 2
-
-
-
-
-
-
-
-
2 / 2
2 / 2
2 / 2
2 / 2
1 / 2
1 / 2
2 / 2
2 / 2
-
-
-
-
-
-
-
-
i. In advance of the application of the provisions of the updated UK Corporate Governance Code (July 2018), Michael Cawley resigned as a member of the
i. In advance of the application of the provisions of the updated UK Corporate Governance Code (July 2018), Michael Cawley resigned as a member of the
Audit Committee on 5 December 2018
Audit Committee on 5 December 2018
ii. Éimear Moloney was appointed a member of both the Remuneration Committee and the Nomination Committee on 9 February 2018.
ii. Éimear Moloney was appointed a member of both the Remuneration Committee and the Nomination Committee on 9 February 2018.
52
52
iii. Appointed 11 June 2018
iii. Appointed 11 June 2018
iv. Appointed 21 November 2018
iv. Appointed 21 November 2018
v. Resigned 11 June 2018
v. Resigned 11 June 2018
vi. Resigned 10 April 2018
vi. Resigned 10 April 2018
of the Board, ensuring that it has a common
of the Board, ensuring that it has a common
All newly appointed Directors receive a
All newly appointed Directors receive a
purpose, is effective as a group by creating and
purpose, is effective as a group by creating and
comprehensive induction briefing on their duties
comprehensive induction briefing on their duties
managing constructive relationships between
managing constructive relationships between
and responsibilities as directors of a publicly
and responsibilities as directors of a publicly
the Executive and Non-Executive Directors and
the Executive and Non-Executive Directors and
quoted company. This induction also includes
quoted company. This induction also includes
at individual Director level and that it upholds
at individual Director level and that it upholds
meetings with members of the Executive
meetings with members of the Executive
and promotes high standards of integrity
and promotes high standards of integrity
Leadership Team together with briefings on the
Leadership Team together with briefings on the
and corporate governance. The Chairman
and corporate governance. The Chairman
Group’s business, key risks and its competitive
Group’s business, key risks and its competitive
ensures the Directors receive accurate and
ensures the Directors receive accurate and
opportunities and challenges. The programme
opportunities and challenges. The programme
timely information, enabling them to play a
timely information, enabling them to play a
of induction is tailored to take account of prior
of induction is tailored to take account of prior
full and constructive role in the development
full and constructive role in the development
experience and business perspectives and on
experience and business perspectives and on
and determination of the Group’s strategy. He
and determination of the Group’s strategy. He
the Committees on which he or she will serve.
the Committees on which he or she will serve.
ensures that there is effective communication
ensures that there is effective communication
with the shareholders and that the Board is aware
with the shareholders and that the Board is aware
All Directors have access to ongoing training
All Directors have access to ongoing training
of the views of its major shareholders.
of the views of its major shareholders.
as required and, as part of the annual Board
as required and, as part of the annual Board
evaluation and Director appraisal process
evaluation and Director appraisal process
Gary Morrison, as Chief Executive Officer, reports
Gary Morrison, as Chief Executive Officer, reports
in 2018, the Chairman considered and discussed
in 2018, the Chairman considered and discussed
to the Chairman and the Board, and is entrusted
to the Chairman and the Board, and is entrusted
the training and development needs of each
the training and development needs of each
with the ongoing management of the Group’s
with the ongoing management of the Group’s
Director. The Directors are also encouraged to
Director. The Directors are also encouraged to
business. He and his Executive Leadership
business. He and his Executive Leadership
identify any additional training requirements
identify any additional training requirements
Team bring forward to the Board proposals for
Team bring forward to the Board proposals for
that would assist them in carrying out their
that would assist them in carrying out their
the development and strategy of the business.
the development and strategy of the business.
role. During the year, training included detailed
role. During the year, training included detailed
The Chief Executive Officer is responsible
The Chief Executive Officer is responsible
briefings and updates on (1) compliance and
briefings and updates on (1) compliance and
for execution of the agreed strategy and
for execution of the agreed strategy and
governance requirements arising from the
governance requirements arising from the
implementation of the decisions of the Board.
implementation of the decisions of the Board.
application of the updated UK Corporate
application of the updated UK Corporate
Governance Code (July 2018); (2) Market Abuse
Governance Code (July 2018); (2) Market Abuse
It is expected that all Non-Executive Directors
It is expected that all Non-Executive Directors
Regulation compliance requirements; (3)
Regulation compliance requirements; (3)
constructively challenge management proposals
constructively challenge management proposals
company law developments specific to the
company law developments specific to the
where appropriate and contribute their expertise
where appropriate and contribute their expertise
Company’s listed status; and (4) General Data
Company’s listed status; and (4) General Data
and knowledge towards the development of the
and knowledge towards the development of the
Protection Regulation compliance requirements.
Protection Regulation compliance requirements.
Group.
Group.
Product, strategy and business presentations
Product, strategy and business presentations
53
53
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
were provided to the Board during 2018 by the
were provided to the Board during 2018 by the
planning, risk management and relations with
planning, risk management and relations with
to the Board were currently necessary (with the
to the Board were currently necessary (with the
€15,750 respectively in 2018 (2017: €60,000 and
€15,750 respectively in 2018 (2017: €60,000 and
Chief Product Officer, Chief Technology Officer,
Chief Product Officer, Chief Technology Officer,
shareholders. The results were analysed by
shareholders. The results were analysed by
matter being kept under on-going review and
matter being kept under on-going review and
€15,750).
€15,750).
Chief Customer Officer and the Director of
Chief Customer Officer and the Director of
the Company Secretary who prepared a report
the Company Secretary who prepared a report
to be reassessed in 2019). Accordingly, each
to be reassessed in 2019). Accordingly, each
Analytics and Insights and, on the particular
Analytics and Insights and, on the particular
for the Chairman. The report and completed
for the Chairman. The report and completed
Non-Executive Director is considered to be fit for
Non-Executive Director is considered to be fit for
The Chairman and each of the other Non-
The Chairman and each of the other Non-
request of the Board, a presentation on the
request of the Board, a presentation on the
questionnaires were reviewed by the Chairman
questionnaires were reviewed by the Chairman
re-election.
re-election.
Group’s culture and employee engagement
Group’s culture and employee engagement
and the principal findings were fed back to
and the principal findings were fed back to
Executive Directors hold other directorships,
Executive Directors hold other directorships,
and the Board is satisfied that they still have
and the Board is satisfied that they still have
roadmap was also provided to the Board by the
roadmap was also provided to the Board by the
and discussed with the Board. The evaluation
and discussed with the Board. The evaluation
In addition, an assessment of the Chairman’s
In addition, an assessment of the Chairman’s
sufficient capacity to devote adequate time to
sufficient capacity to devote adequate time to
Group’s Chief HR Officer.
Group’s Chief HR Officer.
established that the Board and its Committees
established that the Board and its Committees
were operating effectively and efficiently with
were operating effectively and efficiently with
performance was carried out in 2018 by the Non-
performance was carried out in 2018 by the Non-
Company matters. The Board considers that
Company matters. The Board considers that
Executive Directors, led by the SID, who provided
Executive Directors, led by the SID, who provided
these other directorships considerably enhance
these other directorships considerably enhance
At each scheduled Board meeting, the
At each scheduled Board meeting, the
good leadership and accountability and that the
good leadership and accountability and that the
feedback to him individually that concluded that
feedback to him individually that concluded that
the contribution of the Directors to the Board of
the contribution of the Directors to the Board of
Executive Directors provide operational and
Executive Directors provide operational and
Board has the appropriate depth and breadth of
Board has the appropriate depth and breadth of
he performed effectively.
he performed effectively.
Hostelworld Group plc.
Hostelworld Group plc.
financial updates. Depending on the nature
financial updates. Depending on the nature
skills and experience to be effective. As part of
skills and experience to be effective. As part of
of the proposal to be considered, other senior
of the proposal to be considered, other senior
both the evaluation exercise and a general review
both the evaluation exercise and a general review
executives are invited to make presentations or
executives are invited to make presentations or
of the Board’s effectiveness the following items
of the Board’s effectiveness the following items
participate in Board discussions to ensure that
participate in Board discussions to ensure that
were recommended and will be on the Board’s
were recommended and will be on the Board’s
Board decisions are supported by a full analysis
Board decisions are supported by a full analysis
agenda for 2019:
agenda for 2019:
of each proposal. The Chairman will continue to
of each proposal. The Chairman will continue to
review individual training needs of Directors on
review individual training needs of Directors on
► Non-Executive Directors to be provided
► Non-Executive Directors to be provided
an ongoing basis and as part of the formal annual
an ongoing basis and as part of the formal annual
with tailored training on developments and
with tailored training on developments and
appraisal process.
appraisal process.
competitive challenges in the online travel
competitive challenges in the online travel
industry;
industry;
All Directors also have access to the advice and
All Directors also have access to the advice and
services of the Company Secretary. The Company
services of the Company Secretary. The Company
► The Chief Executive Officer and the Chairman
► The Chief Executive Officer and the Chairman
Secretary acts as Secretary to each of the Board
Secretary acts as Secretary to each of the Board
to arrange more frequent engagement
to arrange more frequent engagement
Committees reporting in these roles directly to
Committees reporting in these roles directly to
between Non-Executive Directors and the
between Non-Executive Directors and the
their Chairperson. John Duggan, appointed as
their Chairperson. John Duggan, appointed as
Group’s senior executives;
Group’s senior executives;
Company Secretary on 11 June 2018 to replace
Company Secretary on 11 June 2018 to replace
Paula Phelan, assists the Chairman in ensuring
Paula Phelan, assists the Chairman in ensuring
► KPI based strategy implementation updates
► KPI based strategy implementation updates
the effective operation of the Board and has the
the effective operation of the Board and has the
to be provided to the Board on an on-going
to be provided to the Board on an on-going
following responsibilities:
following responsibilities:
basis by members of the Group’s Executive
basis by members of the Group’s Executive
► To ensure good information flows between the
► To ensure good information flows between the
Leadership Team;
Leadership Team;
► To ensure Board and Committee procedures
► To ensure Board and Committee procedures
are followed;
are followed;
► Succession planning for the Board and for the
► Succession planning for the Board and for the
Group’s senior executives; and
Group’s senior executives; and
► To facilitate Director induction and assist with
► To facilitate Director induction and assist with
professional development; and
professional development; and
► Increased focus on the emerging risks faced by
► Increased focus on the emerging risks faced by
► To advise the Board on corporate governance
► To advise the Board on corporate governance
obligations.
obligations.
the Group.
the Group.
The Chairman also conducted an appraisal of
The Chairman also conducted an appraisal of
the performance of each Director, having taken
the performance of each Director, having taken
Board Effectiveness and Evaluation
Board Effectiveness and Evaluation
into account the views of the other Directors. He
into account the views of the other Directors. He
In accordance with the provisions of the 2016
In accordance with the provisions of the 2016
Code, a formal internal evaluation of the
Code, a formal internal evaluation of the
Board, Committees and individual Directors
Board, Committees and individual Directors
was undertaken during the year. This included
was undertaken during the year. This included
completion of a detailed questionnaire by each
completion of a detailed questionnaire by each
of the Directors, covering the Board’s role,
of the Directors, covering the Board’s role,
knowledge and skills, effectiveness of Board
knowledge and skills, effectiveness of Board
and Committee meetings and information
and Committee meetings and information
flows, Board composition, succession
flows, Board composition, succession
reported that each Director continues to perform
reported that each Director continues to perform
effectively and demonstrates strong commitment
effectively and demonstrates strong commitment
to the role. As part of the appraisal exercise the
to the role. As part of the appraisal exercise the
Chairman assessed the individual and collective
Chairman assessed the individual and collective
depth and breadth of skills, experience and
depth and breadth of skills, experience and
knowledge of the Non-Executive Directors and
knowledge of the Non-Executive Directors and
concluded that (1) these were adequate to enable
concluded that (1) these were adequate to enable
the Board and its Committees to discharge their
the Board and its Committees to discharge their
respective duties and responsibilities effectively;
respective duties and responsibilities effectively;
and (2) no additional non-executive appointments
and (2) no additional non-executive appointments
54
54
Aside from the Chairman, Michael Cawley, who
Aside from the Chairman, Michael Cawley, who
Shareholder Relations
Shareholder Relations
was independent at appointment, the Board
was independent at appointment, the Board
regards all of the other Non-Executive Directors
regards all of the other Non-Executive Directors
as ‘‘independent non-executive directors’’ within
as ‘‘independent non-executive directors’’ within
the meaning of the 2016 Code and free from any
the meaning of the 2016 Code and free from any
relationship that could materially interfere with
relationship that could materially interfere with
the exercise of their independent judgement. The
the exercise of their independent judgement. The
Board reached this conclusion (1) after assessing
Board reached this conclusion (1) after assessing
the responses to specific questions each
the responses to specific questions each
Director was asked as part of the formal internal
Director was asked as part of the formal internal
evaluation of the Board during the reporting
evaluation of the Board during the reporting
period; and (2) on the basis of the affirmative
period; and (2) on the basis of the affirmative
responses provided by each Director when the
responses provided by each Director when the
Company Secretary, as part of a governance
Company Secretary, as part of a governance
agenda item at a related Board meeting, provided
agenda item at a related Board meeting, provided
the Board with an overview of the independence
the Board with an overview of the independence
requirements prescribed by the 2016 Code and
requirements prescribed by the 2016 Code and
asked each Director if they considered Andy
asked each Director if they considered Andy
McCue, Éimear Moloney and Carl Shepherd to
McCue, Éimear Moloney and Carl Shepherd to
be independent within the meaning of the 2016
be independent within the meaning of the 2016
The Group places considerable importance on
The Group places considerable importance on
communicating with its shareholders to ensure
communicating with its shareholders to ensure
that its strategy, performance, management and
that its strategy, performance, management and
governance are understood and that it remains
governance are understood and that it remains
accountable to shareholders. The Chairman
accountable to shareholders. The Chairman
makes himself available to meet with major
makes himself available to meet with major
shareholders to discuss governance and strategy
shareholders to discuss governance and strategy
and can be contacted through the Company
and can be contacted through the Company
Secretary.
Secretary.
The Company formally updates the market on
The Company formally updates the market on
its financial performance at least twice a year,
its financial performance at least twice a year,
at the half year and full year results. These are
at the half year and full year results. These are
accompanied by formal investor roadshows
accompanied by formal investor roadshows
in Ireland, the UK and other investment
in Ireland, the UK and other investment
centres. There is also an ongoing programme
centres. There is also an ongoing programme
of meetings with institutional investors, fund
of meetings with institutional investors, fund
managers and analysts and attendance by the
managers and analysts and attendance by the
Executive Directors and other senior executives
Executive Directors and other senior executives
at conferences, covering a wide range of issues
at conferences, covering a wide range of issues
(within the constraints of legal requirements
(within the constraints of legal requirements
in respect of publicly available information),
in respect of publicly available information),
Any external directorships or other significant
Any external directorships or other significant
including strategy, performance and governance.
including strategy, performance and governance.
commitments of the Executive Directors require
commitments of the Executive Directors require
On 29 November 2018, the Group held a Capital
On 29 November 2018, the Group held a Capital
prior approval of the Board. Each Non-Executive
prior approval of the Board. Each Non-Executive
Markets Day in London and provided a strategy
Markets Day in London and provided a strategy
Director holds external directorships and these
Director holds external directorships and these
and trading update to shareholders, analysts and
and trading update to shareholders, analysts and
are disclosed within their profiles on pages 46
are disclosed within their profiles on pages 46
fund managers.
fund managers.
to 47.
to 47.
The Board is also kept informed of the views
The Board is also kept informed of the views
Executive Directors are permitted to retain
Executive Directors are permitted to retain
of shareholders through the Executive Directors
of shareholders through the Executive Directors
any fees paid in respect of approved external
any fees paid in respect of approved external
attendance at investor presentations and results
attendance at investor presentations and results
appointments. At the date of this report, as noted
appointments. At the date of this report, as noted
presentations. Furthermore, relevant feedback
presentations. Furthermore, relevant feedback
above, neither of the current Executive Directors
above, neither of the current Executive Directors
from such meetings, investor relations reports
from such meetings, investor relations reports
holds external directorships. Feargal Mooney,
holds external directorships. Feargal Mooney,
and broker notes are provided to the Board on a
and broker notes are provided to the Board on a
the previous Chief Executive Officer, is a non-
the previous Chief Executive Officer, is a non-
regular basis.
regular basis.
executive director of Meetingsbooker Limited for
executive director of Meetingsbooker Limited for
which he earned nil remuneration in 2018 (2017:
which he earned nil remuneration in 2018 (2017:
The Board ensures that any price sensitive
The Board ensures that any price sensitive
€nil). Mari Hurley, the previous Chief Financial
€nil). Mari Hurley, the previous Chief Financial
information is released to all shareholders,
information is released to all shareholders,
Officer, is a non-executive director of the National
Officer, is a non-executive director of the National
institutional and private, at the same time.
institutional and private, at the same time.
Asset Management Agency and of Ervia, for
Asset Management Agency and of Ervia, for
Questions from individual shareholders are
Questions from individual shareholders are
which she received remuneration of €60,000 and
which she received remuneration of €60,000 and
generally dealt with by the Executive Directors.
generally dealt with by the Executive Directors.
55
55
Board and its Committees, senior management
Board and its Committees, senior management
► Increased focus on the Group’s values and
► Increased focus on the Group’s values and
Code.
Code.
and Non-Executive Directors;
and Non-Executive Directors;
assessing and monitoring the Group’s culture;
assessing and monitoring the Group’s culture;
and
and
External Directorships
External Directorships
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
The Chairman, in line with governance
The Chairman, in line with governance
Annual General Meeting
Annual General Meeting
The AGM of the Company will take place at 12
The AGM of the Company will take place at 12
noon on 31 May 2019 at Hostelworld Group plc,
noon on 31 May 2019 at Hostelworld Group plc,
Floor 2, One Central Park, Leopardstown, Dublin
Floor 2, One Central Park, Leopardstown, Dublin
18, Ireland. The Annual Report and Financial
18, Ireland. The Annual Report and Financial
Statements and Notice of the AGM are sent to
Statements and Notice of the AGM are sent to
shareholders at least 20 working days prior to the
shareholders at least 20 working days prior to the
date of the meeting to provide the shareholders
date of the meeting to provide the shareholders
with adequate time to consider the proposed
with adequate time to consider the proposed
resolutions. The Notice of the AGM sets out the
resolutions. The Notice of the AGM sets out the
business of the meeting and an explanatory
business of the meeting and an explanatory
note on all resolutions to be considered at the
note on all resolutions to be considered at the
meeting. Separate resolutions will be proposed
meeting. Separate resolutions will be proposed
on each substantive issue. All shareholders will
on each substantive issue. All shareholders will
have the opportunity to attend and vote, in
have the opportunity to attend and vote, in
person or by proxy, at the AGM.
person or by proxy, at the AGM.
The Chairman and all Directors will be available at
The Chairman and all Directors will be available at
the AGM to answer shareholders’ questions.
the AGM to answer shareholders’ questions.
Results of resolutions proposed at the AGM will
Results of resolutions proposed at the AGM will
be published on the Company’s website
be published on the Company’s website
www.hostelworldgroup.com following the AGM.
www.hostelworldgroup.com following the AGM.
Approved by the Board and signed on its behalf:
Approved by the Board and signed on its behalf:
John Duggan
John Duggan
Company Secretary
Company Secretary
1 April 2019
1 April 2019
requirements, will, as required, ensure that the
requirements, will, as required, ensure that the
views, issues and concerns of major shareholders
views, issues and concerns of major shareholders
are communicated to the Directors so that
are communicated to the Directors so that
appropriate action can be taken.
appropriate action can be taken.
The Group’s website www.hostelworldgroup.
The Group’s website www.hostelworldgroup.
com provides the full text of the Annual Report,
com provides the full text of the Annual Report,
interim management statements, investor
interim management statements, investor
presentations, trading updates and any stock
presentations, trading updates and any stock
exchange announcements.
exchange announcements.
Andy McCue, in his capacity as the SID, is an
Andy McCue, in his capacity as the SID, is an
additional point of contact for shareholders
additional point of contact for shareholders
should they feel their concerns are not being
should they feel their concerns are not being
properly addressed through the normal channels.
properly addressed through the normal channels.
The SID and other Non-Executive Directors
The SID and other Non-Executive Directors
are available to meet with shareholders.
are available to meet with shareholders.
Arrangements can be made to meet with them
Arrangements can be made to meet with them
through the Company Secretary.
through the Company Secretary.
Andy McCue, in his capacity as the Chairman
Andy McCue, in his capacity as the Chairman
of the Remuneration Committee, engaged
of the Remuneration Committee, engaged
with shareholders representing a majority of
with shareholders representing a majority of
the share register during the later part of 2018
the share register during the later part of 2018
on the proposed revisions to the Directors
on the proposed revisions to the Directors
Remuneration Policy which will be put to a
Remuneration Policy which will be put to a
binding shareholder vote at the AGM on 31 May
binding shareholder vote at the AGM on 31 May
2019.
2019.
The AGM is another opportunity for shareholder
The AGM is another opportunity for shareholder
engagement, with all Directors present and
engagement, with all Directors present and
available to answer any questions or concerns
available to answer any questions or concerns
that shareholders may have. Shareholders are
that shareholders may have. Shareholders are
given the opportunity to lodge their votes by way
given the opportunity to lodge their votes by way
of proxy and/or attend the meeting in person
of proxy and/or attend the meeting in person
where they have an opportunity to ask questions
where they have an opportunity to ask questions
of the Board, including the Chairs of the Board
of the Board, including the Chairs of the Board
Committees, vote in person or by proxy and meet
Committees, vote in person or by proxy and meet
informally with the Directors to discuss any issues
informally with the Directors to discuss any issues
they may wish to raise.
they may wish to raise.
Shareholders can also contact the Company
Shareholders can also contact the Company
through the Company Secretary.
through the Company Secretary.
56
56
KING KONG HOSTEL
KING KONG HOSTEL
ROTTERDAM
ROTTERDAM
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
REPORT OF THE
REPORT OF THE
AUDIT COMMITTEE
AUDIT COMMITTEE
Dear Shareholders
Dear Shareholders
On behalf of the Audit Committee I am
On behalf of the Audit Committee I am
pleased to introduce the Report of the
pleased to introduce the Report of the
Audit Committee for 2018.
Audit Committee for 2018.
During the year the Audit Committee
During the year the Audit Committee
dedicated significant time supporting
dedicated significant time supporting
the Board in executing its duties in
the Board in executing its duties in
relation to reviewing and monitoring
relation to reviewing and monitoring
the Group’s risk management and
the Group’s risk management and
internal controls systems. This
internal controls systems. This
was in addition to monitoring the
was in addition to monitoring the
Group’s financial reporting process
Group’s financial reporting process
and assessing the independence and
and assessing the independence and
effectiveness of the Group’s external
effectiveness of the Group’s external
auditor.
auditor.
Membership
Membership
is brought to bear in respect of the work of the
is brought to bear in respect of the work of the
Audit Committee is set out in the Corporate
Audit Committee is set out in the Corporate
Governance Statement under ‘Audit Committee
Governance Statement under ‘Audit Committee
Composition’.
Composition’.
The Company Secretary acts as Secretary to the
The Company Secretary acts as Secretary to the
Audit Committee.
Audit Committee.
Role of the Audit Committee
Role of the Audit Committee
The roles and primary responsibilities of the
The roles and primary responsibilities of the
Audit Committee are summarised below. The
Audit Committee are summarised below. The
full schedule of roles and responsibilities are
full schedule of roles and responsibilities are
contained in the Audit Committee’s Terms of
contained in the Audit Committee’s Terms of
Reference, which were updated in December 2018
Reference, which were updated in December 2018
to align with the requirements of the updated UK
to align with the requirements of the updated UK
Corporate Governance Code (July 2018), which are
Corporate Governance Code (July 2018), which are
available on the Company’s website
available on the Company’s website
www.hostelworldgroup.com.
www.hostelworldgroup.com.
► Éimear Moloney (Chairperson)
► Éimear Moloney (Chairperson)
► Monitor the integrity of the financial
► Monitor the integrity of the financial
► Michael Cawley (resigned on 5 December 2018)
► Michael Cawley (resigned on 5 December 2018)
statements of the Company and any formal
statements of the Company and any formal
► Andy McCue
► Andy McCue
► Carl Shepherd
► Carl Shepherd
announcement relating to its financial
announcement relating to its financial
performance, including reviewing significant
performance, including reviewing significant
financial reporting issues and estimates and
financial reporting issues and estimates and
Members of the Audit Committee are appointed
Members of the Audit Committee are appointed
judgements they contain;
judgements they contain;
by the Board on the recommendation of the
by the Board on the recommendation of the
Nomination Committee. Appointments to the
Nomination Committee. Appointments to the
Audit Committee are for an initial period of three
Audit Committee are for an initial period of three
years, subject to review of the Audit Committee’s
years, subject to review of the Audit Committee’s
composition by the Board. Provided the members
composition by the Board. Provided the members
continue to be independent, this may be
continue to be independent, this may be
► Review and challenge where necessary the
► Review and challenge where necessary the
use of or changes to accounting policies,
use of or changes to accounting policies,
the methods used to account for significant
the methods used to account for significant
or unusual transactions where different
or unusual transactions where different
approaches are possible, the clarity and
approaches are possible, the clarity and
extended by no more than two further three-year
extended by no more than two further three-year
completeness of disclosure in the Company
completeness of disclosure in the Company
periods. As the Company is recognised as a ‘small’
periods. As the Company is recognised as a ‘small’
company under the 2016 Code, the Company
company under the 2016 Code, the Company
Chairman was permitted to be a member of
Chairman was permitted to be a member of
the Audit Committee for the duration of 2018.
the Audit Committee for the duration of 2018.
Pursuant to the changes to audit committee
Pursuant to the changes to audit committee
composition set out in the updated UK Corporate
composition set out in the updated UK Corporate
and Group’s financial reports and the context
and Group’s financial reports and the context
in which statements are made, and all material
in which statements are made, and all material
information presented with the financial
information presented with the financial
statements, such as the operating and
statements, such as the operating and
financial review and the corporate governance
financial review and the corporate governance
statement insofar as it relates to the audit and
statement insofar as it relates to the audit and
Governance Code (July 2018), Michael Cawley
Governance Code (July 2018), Michael Cawley
risk management;
risk management;
(Chairman) resigned from the Audit Committee
(Chairman) resigned from the Audit Committee
on 5 December 2018.
on 5 December 2018.
► Ensure that there are appropriate procedures
► Ensure that there are appropriate procedures
As outlined in the Directors biographical details,
As outlined in the Directors biographical details,
set out on page 46 and 47, members of the
set out on page 46 and 47, members of the
Audit Committee bring considerable financial
Audit Committee bring considerable financial
and accounting experience to the work of
and accounting experience to the work of
the Audit Committee. The extent of the Audit
the Audit Committee. The extent of the Audit
Committee members expertise and how this
Committee members expertise and how this
in place to monitor and evaluate the general
in place to monitor and evaluate the general
business risks facing the Group (the Board
business risks facing the Group (the Board
has delegated the management of certain risk
has delegated the management of certain risk
areas to the Audit Committee with the Board
areas to the Audit Committee with the Board
retaining overall responsibility);
retaining overall responsibility);
► Review the adequacy and effectiveness of the
► Review the adequacy and effectiveness of the
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59
GENERATOR VENICE
GENERATOR VENICE
VENICE
VENICE
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Company’s internal financial controls and the
Company’s internal financial controls and the
requirements, and the arrangements for review
requirements, and the arrangements for review
shareholders to assess the Company’s position
shareholders to assess the Company’s position
Financial Officer, senior members of the Group’s
Financial Officer, senior members of the Group’s
Company’s statements on these matters;
Company’s statements on these matters;
and verification of the information contained in
and verification of the information contained in
and performance, business model and strategy.
and performance, business model and strategy.
Finance department who attend by invitation
Finance department who attend by invitation
► Perform an annual assessment of the
► Perform an annual assessment of the
the Annual Report.
the Annual Report.
The ultimate decision to recommend the Annual
The ultimate decision to recommend the Annual
and the Company Secretary. Other members
and the Company Secretary. Other members
Report and accounts to the shareholders is
Report and accounts to the shareholders is
of the Group’s Executive Leadership Team and
of the Group’s Executive Leadership Team and
Company’s compliance with the requirements
Company’s compliance with the requirements
The Audit Committee reviewed a draft of the
The Audit Committee reviewed a draft of the
taken by the Board, as set out in the Directors’
taken by the Board, as set out in the Directors’
other senior executives are invited to attend as
other senior executives are invited to attend as
of the UK Corporate Governance Code (and
of the UK Corporate Governance Code (and
whole Annual Report at a meeting in advance
whole Annual Report at a meeting in advance
Responsibility Statement on page 104 and 105.
Responsibility Statement on page 104 and 105.
necessary to provide a deeper level of insight
necessary to provide a deeper level of insight
in this regard the Audit Committee notes
in this regard the Audit Committee notes
of giving their final opinion and ahead of final
of giving their final opinion and ahead of final
the substantial changes to the 2016 Code
the substantial changes to the 2016 Code
approval by the Board. The Audit Committee
approval by the Board. The Audit Committee
incorporated in the updated UK Corporate
incorporated in the updated UK Corporate
was provided with all relevant information
was provided with all relevant information
Governance Code (July 2018));
Governance Code (July 2018));
and, in particular, with detailed briefings from
and, in particular, with detailed briefings from
management on how specific issues are managed
management on how specific issues are managed
► Review the Company’s procedures for
► Review the Company’s procedures for
and challenged management as required. The
and challenged management as required. The
detecting fraud;
detecting fraud;
review by the Audit Committee in considering
review by the Audit Committee in considering
whether the Annual Report and accounts, taken
whether the Annual Report and accounts, taken
► Review the Company’s systems and controls
► Review the Company’s systems and controls
as a whole, is fair, balanced and understandable
as a whole, is fair, balanced and understandable
for the prevention of bribery and receive and
for the prevention of bribery and receive and
and provides the information necessary for
and provides the information necessary for
review reports on non-compliance;
review reports on non-compliance;
shareholders to assess the Company’s position
shareholders to assess the Company’s position
and performance, business model and strategy
and performance, business model and strategy
► Consider annually whether there is a need for
► Consider annually whether there is a need for
included:
included:
an internal audit function; and
an internal audit function; and
► considering whether the content of sections
► considering whether the content of sections
► Oversee the relationship with the external
► Oversee the relationship with the external
1 to 3 (inclusive) of the Annual Report,
1 to 3 (inclusive) of the Annual Report,
auditor, including selection, appointment,
auditor, including selection, appointment,
in particular the Strategic Report and business
in particular the Strategic Report and business
removal, terms of engagement, approval of
removal, terms of engagement, approval of
review, provides both positive and negative
review, provides both positive and negative
remuneration, assessing independence and
remuneration, assessing independence and
aspects of performance and developments
aspects of performance and developments
objectivity, assessing effectiveness of the audit
objectivity, assessing effectiveness of the audit
in a clear and meaningful way;
in a clear and meaningful way;
process, and setting policy on the use of non-
process, and setting policy on the use of non-
audit services.
audit services.
► ensuring that the links between discussions of
► ensuring that the links between discussions of
performance, financial position and cash flows,
performance, financial position and cash flows,
The Chairperson of the Audit Committee reports
The Chairperson of the Audit Committee reports
including the use of appropriate performance
including the use of appropriate performance
to the Board as necessary on the activities of the
to the Board as necessary on the activities of the
measures and the financial statements are
measures and the financial statements are
Audit Committee and attends the AGM to answer
Audit Committee and attends the AGM to answer
clear;
clear;
questions on the report of the Audit Committee’s
questions on the report of the Audit Committee’s
activities and matters within the scope of the
activities and matters within the scope of the
► considering that the information provided
► considering that the information provided
Audit Committee’s responsibilities.
Audit Committee’s responsibilities.
on the Company, the environment in which it
on the Company, the environment in which it
Fair, Balanced and Understandable
Fair, Balanced and Understandable
the Group and not explained in general terms;
the Group and not explained in general terms;
operates and the risks it faces are specific to
operates and the risks it faces are specific to
One of the key governance requirements is
One of the key governance requirements is
to consider whether the Annual Report and
to consider whether the Annual Report and
accounts, taken as a whole, is fair, balanced and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information
understandable and provides the information
necessary for shareholders to assess the
necessary for shareholders to assess the
Company’s position and performance, business
Company’s position and performance, business
model and strategy.
model and strategy.
At the request of the Board, the Audit Committee
At the request of the Board, the Audit Committee
has undertaken the detailed work in making
has undertaken the detailed work in making
this assessment, including consideration of
this assessment, including consideration of
the scope of work carried out by the auditors,
the scope of work carried out by the auditors,
the materiality levels considered by them, the
the materiality levels considered by them, the
focus of their work, the work undertaken by
focus of their work, the work undertaken by
management in the preparation of the accounts
management in the preparation of the accounts
and the Annual Report, the analysis performed
and the Annual Report, the analysis performed
of changes to applicable standards and reporting
of changes to applicable standards and reporting
► removing immaterial items; and
► removing immaterial items; and
► explaining the links between information in the
► explaining the links between information in the
Annual Report, such as objectives, KPIs
Annual Report, such as objectives, KPIs
and risks.
and risks.
Having conducted its review, the Audit
Having conducted its review, the Audit
Committee is satisfied that the Annual Report and
Committee is satisfied that the Annual Report and
accounts, taken as a whole, is fair, balanced and
accounts, taken as a whole, is fair, balanced and
understandable and provides the information
understandable and provides the information
necessary for shareholders to assess the
necessary for shareholders to assess the
Company’s position and performance, business
Company’s position and performance, business
model and strategy. Following recommendation
model and strategy. Following recommendation
by the Audit Committee, the Board confirmed
by the Audit Committee, the Board confirmed
that the Annual Report and accounts, taken as
that the Annual Report and accounts, taken as
a whole, is fair, balanced and understandable
a whole, is fair, balanced and understandable
and provides the information necessary for
and provides the information necessary for
60
60
Meetings
Meetings
Under its Terms of Reference, the Audit
Under its Terms of Reference, the Audit
Committee is required to meet at least twice
Committee is required to meet at least twice
a year. The Audit Committee met on three
a year. The Audit Committee met on three
occasions during 2018. Individual attendance at
occasions during 2018. Individual attendance at
these meetings is set out on page 52. The Audit
these meetings is set out on page 52. The Audit
Committee’s meetings and agenda are linked to
Committee’s meetings and agenda are linked to
events in the Group’s financial calendar.
events in the Group’s financial calendar.
or expertise in certain areas related to the
or expertise in certain areas related to the
Group’s principal risks. The Deloitte Ireland LLP
Group’s principal risks. The Deloitte Ireland LLP
audit partner and senior representatives from
audit partner and senior representatives from
PricewaterhouseCoopers (“PwC”), as outsourced
PricewaterhouseCoopers (“PwC”), as outsourced
internal audit provider, are invited to attend
internal audit provider, are invited to attend
certain meetings. The Audit Committee also
certain meetings. The Audit Committee also
met privately with the Deloitte Ireland LLP audit
met privately with the Deloitte Ireland LLP audit
partner and with senior representatives from
partner and with senior representatives from
PwC, without executive management present, in
PwC, without executive management present, in
2018.
2018.
Meetings are attended by the Audit Committee
Meetings are attended by the Audit Committee
members and others, being principally the Chief
members and others, being principally the Chief
The Audit Committee activities during 2018 are
The Audit Committee activities during 2018 are
set out overleaf.
set out overleaf.
BOOK AND BED TOKYO IKEBUKURO
BOOK AND BED TOKYO IKEBUKURO
TOKYO
TOKYO
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Significant Issues
Significant Issues
Significant Issue
Significant Issue
Description and Resolution
Description and Resolution
In reviewing the financial statements with management and the auditors, the Audit Committee has
In reviewing the financial statements with management and the auditors, the Audit Committee has
discussed and debated the critical accounting judgements. The significant issues considered by the
discussed and debated the critical accounting judgements. The significant issues considered by the
Audit Committee in respect of the 2018 Annual Report are as follows:
Audit Committee in respect of the 2018 Annual Report are as follows:
Significant Issue
Significant Issue
Description and Resolution
Description and Resolution
Carrying Value
Carrying Value
of Goodwill and
of Goodwill and
The largest asset on the Group statement of financial position relates
The largest asset on the Group statement of financial position relates
to the goodwill and intangible assets reflecting the underlying value
to the goodwill and intangible assets reflecting the underlying value
Intangible Assets
Intangible Assets
of the brands and technology acquired, with a carrying value at 31
of the brands and technology acquired, with a carrying value at 31
December 2018 of €117.7m. This represented 78.5% of the Group’s total
December 2018 of €117.7m. This represented 78.5% of the Group’s total
assets. Under IFRS goodwill is not amortised but is subject to an annual
assets. Under IFRS goodwill is not amortised but is subject to an annual
impairment review. An impairment review is required to be performed
impairment review. An impairment review is required to be performed
for other intangible assets where there is an indicator of impairment.
for other intangible assets where there is an indicator of impairment.
Goodwill is allocated to Cash Generating Units (“CGUs”) and a model has
Goodwill is allocated to Cash Generating Units (“CGUs”) and a model has
been developed to calculate the value in use of the assets and to review
been developed to calculate the value in use of the assets and to review
the carrying value of goodwill and other intangibles for impairment.
the carrying value of goodwill and other intangibles for impairment.
Management have performed impairment reviews at year end on the
Management have performed impairment reviews at year end on the
Group’s carrying value of goodwill, all of which relates to the Hostelworld
Group’s carrying value of goodwill, all of which relates to the Hostelworld
brand. The cash flow forecasts were based on the budgets approved by
brand. The cash flow forecasts were based on the budgets approved by
the Board. The Audit Committee has reviewed the assumptions around
the Board. The Audit Committee has reviewed the assumptions around
growth rates and discount rates. The Audit Committee discussed with
growth rates and discount rates. The Audit Committee discussed with
the external auditor its review of the assumptions used. The Audit
the external auditor its review of the assumptions used. The Audit
Committee also reviewed the carrying value of other intangibles and
Committee also reviewed the carrying value of other intangibles and
is satisfied that there was no indication of impairment at 31 December
is satisfied that there was no indication of impairment at 31 December
2018. Following these discussions, the Audit Committee is satisfied that
2018. Following these discussions, the Audit Committee is satisfied that
there was no impairment of goodwill and other intangibles as at 31
there was no impairment of goodwill and other intangibles as at 31
December 2018, and that the controls over management’s impairment
December 2018, and that the controls over management’s impairment
review process are adequate.
review process are adequate.
Capitalisation of
Capitalisation of
The Group incurs significant internal costs in respect of the ongoing
The Group incurs significant internal costs in respect of the ongoing
Development Costs
Development Costs
development of its IT systems and core technology and product
development of its IT systems and core technology and product
platforms. The accounting for these costs as either development costs
platforms. The accounting for these costs as either development costs
(which are capitalised as intangibles) or expensed as incurred involves
(which are capitalised as intangibles) or expensed as incurred involves
judgement. In the year ended 31 December 2018 €1.7m (2017: €1.7m) of
judgement. In the year ended 31 December 2018 €1.7m (2017: €1.7m) of
development costs were capitalised in accordance with the criteria as set
development costs were capitalised in accordance with the criteria as set
out in IAS 38. Capitalised development costs carried in the balance sheet
out in IAS 38. Capitalised development costs carried in the balance sheet
amounted to €1.7m at 31 December 2018 (2017: €1.9m).
amounted to €1.7m at 31 December 2018 (2017: €1.9m).
The Audit Committee has reviewed management’s application of the
The Audit Committee has reviewed management’s application of the
accounting policy adopted and the assessment as to whether current
accounting policy adopted and the assessment as to whether current
projects meet the criteria required for costs to be capitalised (including
projects meet the criteria required for costs to be capitalised (including
feasibility of completion, intention to complete, probable economic
feasibility of completion, intention to complete, probable economic
benefits, availability of resources to complete, and ability to measure
benefits, availability of resources to complete, and ability to measure
expenditure). The Audit Committee also held discussions with the
expenditure). The Audit Committee also held discussions with the
external auditor on their review of this area.
external auditor on their review of this area.
The Audit Committee considers the approach taken and the application
The Audit Committee considers the approach taken and the application
of the policy to be appropriate.
of the policy to be appropriate.
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Transfer Pricing and
Transfer Pricing and
The Group as a global business operates in an increasingly complex
The Group as a global business operates in an increasingly complex
International Taxation
International Taxation
international corporate tax environment. It is subject to taxation in a
international corporate tax environment. It is subject to taxation in a
Environment
Environment
number of jurisdictions and cross–border transactions can be challenged
number of jurisdictions and cross–border transactions can be challenged
by tax authorities. The Group has a number of intercompany agreements
by tax authorities. The Group has a number of intercompany agreements
within its Group structure including management services, marketing
within its Group structure including management services, marketing
services, research and development and intellectual property licence
services, research and development and intellectual property licence
agreements.
agreements.
The Group seeks regular updates from its tax advisors, EY, on any new
The Group seeks regular updates from its tax advisors, EY, on any new
developments in the international tax environment, particularly the
developments in the international tax environment, particularly the
policy efforts being led by the OECD around the Base Erosion and Profit
policy efforts being led by the OECD around the Base Erosion and Profit
Shifting initiative (“BEPS”).
Shifting initiative (“BEPS”).
The Audit Committee also discussed this matter with the external
The Audit Committee also discussed this matter with the external
auditors and their transfer pricing specialist team. The Audit Committee
auditors and their transfer pricing specialist team. The Audit Committee
considers that the tax provisions and related disclosures which have
considers that the tax provisions and related disclosures which have
been made are reasonable.
been made are reasonable.
The Group is required to comply with the provisions of the UK Corporate
The Group is required to comply with the provisions of the UK Corporate
Governance Code or explain reasons for non-compliance. The more
Governance Code or explain reasons for non-compliance. The more
significant of the disclosure requirements include those in relation to
significant of the disclosure requirements include those in relation to
principal risks and uncertainties, the fair, balanced and understandable
principal risks and uncertainties, the fair, balanced and understandable
statement and the viability statement.
statement and the viability statement.
The Audit Committee has reviewed the disclosures in the Annual Report,
The Audit Committee has reviewed the disclosures in the Annual Report,
and, having discussed them with management and the Group’s auditors,
and, having discussed them with management and the Group’s auditors,
is satisfied that the additional reporting and disclosure requirements
is satisfied that the additional reporting and disclosure requirements
have been met.
have been met.
Corporate
Corporate
Governance
Governance
Other Matters
Other Matters
The Audit Committee has also considered a number of other judgements
The Audit Committee has also considered a number of other judgements
which have been made by management including those relating to
which have been made by management including those relating to
revenue recognition, accruals and estimates and deferred tax and
revenue recognition, accruals and estimates and deferred tax and
considers that the judgements which have been made are reasonable.
considers that the judgements which have been made are reasonable.
External Auditors
External Auditors
On behalf of the Board the Audit Committee
On behalf of the Board the Audit Committee
has primary responsibility for overseeing the
has primary responsibility for overseeing the
relationship with, and performance of, the
relationship with, and performance of, the
external auditor.
external auditor.
require Hostelworld to put its audit out to tender
require Hostelworld to put its audit out to tender
by 17 June 2023. This is on the basis of Deloitte
by 17 June 2023. This is on the basis of Deloitte
Ireland LLP, the existing auditor, being in place for
Ireland LLP, the existing auditor, being in place for
a period of between 11 and 20 years. Accordingly,
a period of between 11 and 20 years. Accordingly,
the Group will need to run a tender process by 17
the Group will need to run a tender process by 17
June 2023.
June 2023.
Deloitte Ireland LLP were first appointed auditor
Deloitte Ireland LLP were first appointed auditor
to the Hostelworld Group in 2004. However, the
to the Hostelworld Group in 2004. However, the
first year that they were appointed as external
first year that they were appointed as external
auditor to Hostelworld Group plc as a listed
auditor to Hostelworld Group plc as a listed
plc entity was in relation to the audit for the
plc entity was in relation to the audit for the
financial year ended 31 December 2015. In the
financial year ended 31 December 2015. In the
UK, mandatory audit tendering is required every
UK, mandatory audit tendering is required every
ten years with mandatory rotation of auditors of
ten years with mandatory rotation of auditors of
Public Interest Entities (“PIEs”) required at least
Public Interest Entities (“PIEs”) required at least
every twenty years. Transitional arrangements
every twenty years. Transitional arrangements
The Audit Committee will, however, continue to
The Audit Committee will, however, continue to
review the relationship with the external auditor
review the relationship with the external auditor
and may re-tender its audit contract prior to this
and may re-tender its audit contract prior to this
date if it considers this necessary.
date if it considers this necessary.
The external auditor is required to rotate the
The external auditor is required to rotate the
audit partner responsible for the Group audit
audit partner responsible for the Group audit
every five years. In this regard, Daniel Murray
every five years. In this regard, Daniel Murray
acted as audit partner for the year ended 31
acted as audit partner for the year ended 31
December 2018, his second year as audit partner.
December 2018, his second year as audit partner.
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
To ensure there can be no reason for audit
To ensure there can be no reason for audit
Internal Controls and Risk Management
Internal Controls and Risk Management
In the Board’s view, the ongoing information it
In the Board’s view, the ongoing information it
Whistleblowing
Whistleblowing
independence to be impacted, the Company has
independence to be impacted, the Company has
in place a policy on the provision of non-audit
in place a policy on the provision of non-audit
services. Under the policy, except in exceptional
services. Under the policy, except in exceptional
circumstances, non-audit fees to the audit firm
circumstances, non-audit fees to the audit firm
should not exceed 70% of the amount of the audit
should not exceed 70% of the amount of the audit
fee for the current financial year.
fee for the current financial year.
All requirements to engage the external auditors
All requirements to engage the external auditors
for material non-audit services must be notified
for material non-audit services must be notified
to the Chairperson of the Audit Committee in
to the Chairperson of the Audit Committee in
advance, and non-audit work with an expected
advance, and non-audit work with an expected
cost in excess of €30,000 must be subject to
cost in excess of €30,000 must be subject to
competitive tender and approved by the Audit
competitive tender and approved by the Audit
Committee. During 2018, Deloitte Ireland LLP
Committee. During 2018, Deloitte Ireland LLP
were engaged to provide non-audit services to
were engaged to provide non-audit services to
the Group totalling €1.5k (2017: €4k). The Audit
the Group totalling €1.5k (2017: €4k). The Audit
Committee will continue to monitor the type
Committee will continue to monitor the type
and level of non-audit services provided by the
and level of non-audit services provided by the
external auditors to prevent any perceived or
external auditors to prevent any perceived or
actual impact on the auditors’ independence.
actual impact on the auditors’ independence.
The Audit Committee assesses the independence
The Audit Committee assesses the independence
of the external auditor and the effectiveness
of the external auditor and the effectiveness
of the external audit process before making
of the external audit process before making
The Directors recognise that the monitoring and
The Directors recognise that the monitoring and
assessment of the internal controls environment
assessment of the internal controls environment
is a necessary step to ensure the Board can place
is a necessary step to ensure the Board can place
reliance on the reported financial position and
reliance on the reported financial position and
prospects of the Group.
prospects of the Group.
Responsibility for the ongoing monitoring of the
Responsibility for the ongoing monitoring of the
effectiveness of the Group’s risk management
effectiveness of the Group’s risk management
and internal control systems is delegated by the
and internal control systems is delegated by the
Board to the Audit Committee.
Board to the Audit Committee.
Management note that risks cannot necessarily
Management note that risks cannot necessarily
be eliminated, hence the Group’s internal control
be eliminated, hence the Group’s internal control
environment is designed to identify, evaluate,
environment is designed to identify, evaluate,
mitigate and monitor the risks faced by the
mitigate and monitor the risks faced by the
business, and report to the Board in a timely
business, and report to the Board in a timely
manner. To assist in managing risk, the Group
manner. To assist in managing risk, the Group
has:
has:
► a clear organisational structure with
► a clear organisational structure with
appropriate lines of responsibility;
appropriate lines of responsibility;
► a comprehensive annual planning and
► a comprehensive annual planning and
recommendations to the Board in respect of their
recommendations to the Board in respect of their
budgeting process;
budgeting process;
appointment or re-appointment. In assessing
appointment or re-appointment. In assessing
the effectiveness of the external auditor, the
the effectiveness of the external auditor, the
Audit Committee assesses the expertise and
Audit Committee assesses the expertise and
industry knowledge of the audit partner and
industry knowledge of the audit partner and
team and their response to dealing with areas of
team and their response to dealing with areas of
risk, as well as receiving feedback from executive
risk, as well as receiving feedback from executive
management on the audit process.
management on the audit process.
In assessing independence and objectivity, the
In assessing independence and objectivity, the
Audit Committee considers the level and nature
Audit Committee considers the level and nature
of services provided by the external auditor
of services provided by the external auditor
as well as the confirmation from the external
as well as the confirmation from the external
auditor that it has remained independent within
auditor that it has remained independent within
the meaning of the APB Ethical Standards for
the meaning of the APB Ethical Standards for
Auditors. The Audit Committee’s assessment of
Auditors. The Audit Committee’s assessment of
the external auditor’s independence took into
the external auditor’s independence took into
account the non-audit services provided during
account the non-audit services provided during
the year. The Audit Committee concluded that the
the year. The Audit Committee concluded that the
nature and extent of the non-audit fees did not
nature and extent of the non-audit fees did not
compromise the independence of the auditor.
compromise the independence of the auditor.
► clear delegations of authority for the Board
► clear delegations of authority for the Board
for relevant matters, and a comprehensive
for relevant matters, and a comprehensive
schedule of matters reserved for the Board;
schedule of matters reserved for the Board;
► internal control systems and procedures
► internal control systems and procedures
to implement and monitor the use of these
to implement and monitor the use of these
delegated authorities;
delegated authorities;
► financial control, budgeting and forecasting
► financial control, budgeting and forecasting
systems, with regular reporting, variance
systems, with regular reporting, variance
analysis and reviews of key performance
analysis and reviews of key performance
indicators;
indicators;
► robust systems by which the Group’s financial
► robust systems by which the Group’s financial
statements are prepared, which included
statements are prepared, which included
assessment of key financial reporting risks
assessment of key financial reporting risks
arising through complexity of transactions,
arising through complexity of transactions,
changes to the business, and changes in
changes to the business, and changes in
accounting standards;
accounting standards;
The external auditors have unrestricted access to
The external auditors have unrestricted access to
the Chairperson of the Audit Committee.
the Chairperson of the Audit Committee.
► an experienced and suitably qualified finance
► an experienced and suitably qualified finance
function that is fully conversant with the
function that is fully conversant with the
operations of the business;
operations of the business;
Having reviewed the auditor’s independence and
Having reviewed the auditor’s independence and
performance, the Audit Committee recommends
performance, the Audit Committee recommends
that Deloitte Ireland LLP be re-appointed as the
that Deloitte Ireland LLP be re-appointed as the
Company’s auditor at the next Annual General
Company’s auditor at the next Annual General
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64
Meeting.
Meeting.
► a code of conduct setting out behavioural
► a code of conduct setting out behavioural
and ethical standards, supported by clear
and ethical standards, supported by clear
anti-bribery and corruption guidelines, and
anti-bribery and corruption guidelines, and
a whistleblowing policy with an external
a whistleblowing policy with an external
independent hotline.
independent hotline.
For the annual term commencing on 1 January
For the annual term commencing on 1 January
2018, the Audit Committee was responsible
2018, the Audit Committee was responsible
for ensuring that the Group maintains suitable
for ensuring that the Group maintains suitable
whistleblowing arrangements for the Group’s
whistleblowing arrangements for the Group’s
employees. The Group’s whistleblowing policy
employees. The Group’s whistleblowing policy
contains arrangements for an independent
contains arrangements for an independent
external service provider to receive complaints
external service provider to receive complaints
in confidence should staff not feel comfortable
in confidence should staff not feel comfortable
raising them through existing internal channels.
raising them through existing internal channels.
The Audit Committee reviewed the Group’s
The Audit Committee reviewed the Group’s
whistleblowing procedures during the year to
whistleblowing procedures during the year to
ensure that it continues to meet the needs of the
ensure that it continues to meet the needs of the
Group and was satisfied with the procedures in
Group and was satisfied with the procedures in
place. Confidential reports from the independent
place. Confidential reports from the independent
external service provider are provided to the
external service provider are provided to the
Company Secretary and the Audit Committee
Company Secretary and the Audit Committee
Chairperson for investigation. No concerns
Chairperson for investigation. No concerns
were raised during 2018. The Audit Committee
were raised during 2018. The Audit Committee
noted the provisions of the updated UK
noted the provisions of the updated UK
Corporate Governance Code (July 2018) on ‘Board
Corporate Governance Code (July 2018) on ‘Board
Leadership and Company Purpose’ to the effect
Leadership and Company Purpose’ to the effect
that it is a matter for the Board to ensure that the
that it is a matter for the Board to ensure that the
workforce should be able to raise any matters
workforce should be able to raise any matters
of concern. The Audit Committee approved an
of concern. The Audit Committee approved an
amendment to the Audit Committee’s Terms of
amendment to the Audit Committee’s Terms of
Reference in December 2018 to align with the
Reference in December 2018 to align with the
requirements of the updated code in this regard.
requirements of the updated code in this regard.
Annual Evaluation of Performance
Annual Evaluation of Performance
The Audit Committee’s effectiveness was
The Audit Committee’s effectiveness was
reviewed as part of an internal formal annual
reviewed as part of an internal formal annual
evaluation process in the final quarter of 2018.
evaluation process in the final quarter of 2018.
The Audit Committee and the Board considered
The Audit Committee and the Board considered
the outcome of the evaluation and is satisfied
the outcome of the evaluation and is satisfied
that it is performing effectively.
that it is performing effectively.
I will be available at the AGM to answer any
I will be available at the AGM to answer any
questions on the work of the Audit Committee.
questions on the work of the Audit Committee.
Éimear Moloney
Éimear Moloney
Chairperson, Audit Committee
Chairperson, Audit Committee
1 April 2019
1 April 2019
receives is sufficient to enable it to review the
receives is sufficient to enable it to review the
effectiveness of the Group’s system of internal
effectiveness of the Group’s system of internal
control. The Directors confirm that they have
control. The Directors confirm that they have
reviewed the effectiveness of internal control
reviewed the effectiveness of internal control
and considered the significant risks affecting the
and considered the significant risks affecting the
business and the way in which these risks are
business and the way in which these risks are
managed as part of its responsibility to monitor
managed as part of its responsibility to monitor
the Company’s risk management and internal
the Company’s risk management and internal
control systems. The risks identified on pages 30
control systems. The risks identified on pages 30
to 34 are those that could have a material adverse
to 34 are those that could have a material adverse
impact on the Group’s prospects, its financial
impact on the Group’s prospects, its financial
condition and the results of its operations. The
condition and the results of its operations. The
actions taken to mitigate the risks described
actions taken to mitigate the risks described
in the Principal Risks and Uncertainties cannot
in the Principal Risks and Uncertainties cannot
provide assurance that other risks will not
provide assurance that other risks will not
materialise and/or adversely affect the operating
materialise and/or adversely affect the operating
results and financial position of the Group.
results and financial position of the Group.
Internal Audit
Internal Audit
The Audit Committee is responsible for
The Audit Committee is responsible for
monitoring and reviewing the operation and
monitoring and reviewing the operation and
effectiveness of the internal audit function
effectiveness of the internal audit function
including its plans, activities and resources. At
including its plans, activities and resources. At
each scheduled meeting the Audit Committee
each scheduled meeting the Audit Committee
assesses the findings arising from the internal
assesses the findings arising from the internal
auditor’s reviews. In particular, the Audit
auditor’s reviews. In particular, the Audit
Committee considers any control weaknesses
Committee considers any control weaknesses
identified and the remedial action to be taken.
identified and the remedial action to be taken.
The 2018 internal audit plan, setting out areas
The 2018 internal audit plan, setting out areas
of internal audit focus, was agreed by the Audit
of internal audit focus, was agreed by the Audit
Committee with PwC, the internal auditors.
Committee with PwC, the internal auditors.
In 2018, the Audit Committee received four
In 2018, the Audit Committee received four
reports from PwC covering a data protection
reports from PwC covering a data protection
compliance follow up review, a new booking
compliance follow up review, a new booking
model review, IT change management and
model review, IT change management and
information security. The Audit Committee
information security. The Audit Committee
subsequently follows up to ensure internal
subsequently follows up to ensure internal
audit findings or recommendations are acted
audit findings or recommendations are acted
upon by management. There were four overdue
upon by management. There were four overdue
internal audit findings from 2018 at year end,
internal audit findings from 2018 at year end,
two of which have been successfully closed out
two of which have been successfully closed out
and the remaining two being addressed to our
and the remaining two being addressed to our
satisfaction.
satisfaction.
The internal audit plan for 2019 was agreed
The internal audit plan for 2019 was agreed
with PwC following consultation with the Audit
with PwC following consultation with the Audit
Committee. The 2019 internal audit plan focusses
Committee. The 2019 internal audit plan focusses
on a review of product development governance,
on a review of product development governance,
cloud computing risk assessment processes, new
cloud computing risk assessment processes, new
payments key controls and a follow up review on
payments key controls and a follow up review on
the effectiveness of management actions taken
the effectiveness of management actions taken
in response to previous findings raised in internal
in response to previous findings raised in internal
audit reports between 2016 and 2018.
audit reports between 2016 and 2018.
65
65
YIM HUAI KHWANG HOSTEL
BANGKOK
REPORT OF THE
NOMINATION COMMITTEE
Dear Shareholders
I am pleased to present the Report
of the Nomination Committee outlining
the work of the Nomination Committee
during 2018.
Membership of the Nomination Committee
is comprised of the following Non-Executive
years, provided the majority of the Nomination
Committee members remain independent and
subject to review of the Nomination Committee’s
composition by the Board. There is no age limit
for Directors.
The Company Secretary acts as Secretary to the
Nomination Committee, and other executives
may be invited to attend when deemed
Directors:
appropriate.
► Michael Cawley (Chairman)
Role of the Nomination Committee
► Andy McCue
► Carl Shepherd
► Éimear Moloney (appointed 9 February 2018)
The Nomination Committee is responsible for all
aspects of the appointment of Directors of the
Company. This includes, but is not limited to:
Under its Terms of Reference, the Nomination
Committee must have a minimum of three
members appointed by the Board, of whom a
majority should be independent non-executive
directors. The Terms of Reference of the
Nomination Committee, as updated in December
2018 to align with the requirements of the UK
Corporate Governance Code (July 2018), are
available on the Company’s website at
www.hostelworldgroup.com.
Appointments to the Nomination Committee are
for a period of up to three years, which may be
extended for two further periods of up to three
66
► Regularly reviewing the structure, size and
composition of the Board, including the
balance of skills, experience, independence,
knowledge and diversity to ensure optimum
size and composition, taking into account the
Company’s current requirements, the results
of the Board performance evaluation, its
status as a UK and Irish listed plc, the future
development of the Company, and making
recommendations to the Board with regard
to any changes;
► Reviewing succession plans for the Directors,
► Chief Executive Officer and Chief Financial
including the Chairman, Chief Executive Officer
Officer succession
and senior management;
There is a formal, rigorous and transparent
► Making recommendations to the Board
procedure determining the nomination for
regarding the Board’s policy on boardroom
appointment of new Executive and Non-Executive
diversity and reviewing its implementation;
Directors to the Board. Candidates are identified
► Identifying and nominating candidates for
and with due regard to the benefits of diversity
approval by the Board to fill Board vacancies,
on the Board. The Nomination Committee
taking into account the need for diversity and
engages specialist recruitment consultants
a balance of skills, experience, independence
to assist in the identification and selection
and selected on merit against objective criteria
and knowledge;
process. The Nomination Committee makes
recommendations to the Board concerning
► Reviewing annually the time needed to fulfil
appointments of Executive or Non-Executive
the roles of Chairman, Senior Independent
Directors, having considered the blend of skills,
Director and each Non-Executive Director
experience, independence and diversity deemed
(taking into account Committee memberships)
appropriate and reflecting the international
and ensuring that each individual has sufficient
nature of the Group.
time available to devote to their role; and
► Making recommendations to the Board on
thorough succession planning process for the
the appointment and re-appointment of both
new Chief Executive Officer. The Up Group, an
Executive and Non-Executive Directors.
independent external search agency, assisted
During 2018 the Nomination Committee led a
Key Activities of the Nomination
Committee in 2018
The Nomination Committee met on four
occasions during 2018 and separately dealt
with the appointment of the Group’s new
Chief Financial Officer through a unanimous
written resolution. Individual attendance at
these meetings is set out on page 52. The
principal activities of the Nomination Committee
throughout the year are detailed below:
with this process. A Chief Executive Officer role
profile was created with the requirements and
skill-set that a potential successor would be
required to have. A list of suitable candidates
was identified and subsequently reduced to a
shortlist who were interviewed by members
of the Nomination Committee. Following
recommendation by the Nomination Committee,
Gary Morrison was unanimously appointed by
the Board. The Board’s selection of Gary reflects
his experience as a proven online travel executive
with a unique combination of travel and digital
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
consumer expertise. The Up Group had no other
consumer expertise. The Up Group had no other
align with the requirements of the updated UK
align with the requirements of the updated UK
a Board policy on diversity (the “Diversity Policy”)
a Board policy on diversity (the “Diversity Policy”)
Diversity is embraced at Hostelworld and the
Diversity is embraced at Hostelworld and the
connection with the Group in 2018.
connection with the Group in 2018.
Corporate Governance Code (July 2018).
Corporate Governance Code (July 2018).
to ensure that the Group continues to derive the
to ensure that the Group continues to derive the
Group strives to create a culture that values and
Group strives to create a culture that values and
During 2018 the Nomination Committee also
During 2018 the Nomination Committee also
Board Composition and Succession
Board Composition and Succession
led a thorough succession planning process for
led a thorough succession planning process for
the new Chief Financial Officer. Pinnacle HR, an
the new Chief Financial Officer. Pinnacle HR, an
independent external search agency, assisted
independent external search agency, assisted
with this process. A Chief Financial Officer role
with this process. A Chief Financial Officer role
profile was created with the requirements and
profile was created with the requirements and
the skill-set that a potential successor would be
the skill-set that a potential successor would be
required to have. A list of suitable candidates
required to have. A list of suitable candidates
was identified and subsequently reduced to a
was identified and subsequently reduced to a
shortlist who were interviewed by members
shortlist who were interviewed by members
of the Nomination Committee. Following
of the Nomination Committee. Following
recommendation by the Nomination Committee,
recommendation by the Nomination Committee,
TJ Kelly was unanimously appointed by the
TJ Kelly was unanimously appointed by the
Board. The Board’s selection of TJ reflects his
Board. The Board’s selection of TJ reflects his
prior experience with another listed company
prior experience with another listed company
and his track record working in an international
and his track record working in an international
consumer-focussed business. Pinnacle HR had no
consumer-focussed business. Pinnacle HR had no
other connection with the Group in 2018.
other connection with the Group in 2018.
► During 2018 the Nomination Committee
► During 2018 the Nomination Committee
considered Board composition and succession
considered Board composition and succession
and senior management succession plans to
and senior management succession plans to
ensure that the Company has the appropriate
ensure that the Company has the appropriate
level of skills and diversity.
level of skills and diversity.
► During the reporting period the Nomination
► During the reporting period the Nomination
Committee met and recommended to the
Committee met and recommended to the
Board the appointment of Éimear Moloney as
Board the appointment of Éimear Moloney as
a member of both the Nomination Committee
a member of both the Nomination Committee
and the Remuneration Committee so that
and the Remuneration Committee so that
there would be a balance of skills, knowledge,
there would be a balance of skills, knowledge,
experience and diversity of membership on
experience and diversity of membership on
each of those Committees. Éimear’s strong
each of those Committees. Éimear’s strong
investment management experience will be of
investment management experience will be of
significant benefit to the Group as we execute
significant benefit to the Group as we execute
on our strategic objectives and continue to
on our strategic objectives and continue to
grow the business.
grow the business.
► An internal evaluation of the Board, Board
► An internal evaluation of the Board, Board
Committees and individual Directors took
Committees and individual Directors took
place in 2018. The Nomination Committee
place in 2018. The Nomination Committee
considered the outcome of this evaluation and
considered the outcome of this evaluation and
any area identified relevant to the Nomination
any area identified relevant to the Nomination
Committee will form part of the agenda of the
Committee will form part of the agenda of the
Nomination Committee for the coming year;
Nomination Committee for the coming year;
and
and
Board composition and succession has been an
Board composition and succession has been an
important consideration for the Group during
important consideration for the Group during
2018. On an ongoing basis, the Nomination
2018. On an ongoing basis, the Nomination
Committee reviews and assesses the structure,
Committee reviews and assesses the structure,
size, composition and overall balance of the
size, composition and overall balance of the
Board and makes recommendations to the
Board and makes recommendations to the
Board with regard to succession planning. As
Board with regard to succession planning. As
part of the Nomination Committee’s succession
part of the Nomination Committee’s succession
planning work during 2018, the individual and
planning work during 2018, the individual and
collective skills, experience and knowledge of the
collective skills, experience and knowledge of the
Non-Executive Directors was assessed in detail
Non-Executive Directors was assessed in detail
and the Nomination Committee recommended
and the Nomination Committee recommended
to the Board that no additional non-executive
to the Board that no additional non-executive
appointments to the Board were currently
appointments to the Board were currently
necessary (with the matter to be kept under
necessary (with the matter to be kept under
on-going review and reassessed in 2019). The
on-going review and reassessed in 2019). The
Nomination Committee also assessed the internal
Nomination Committee also assessed the internal
talent pipeline in the Group to ensure appropriate
talent pipeline in the Group to ensure appropriate
management development and comprehensive
management development and comprehensive
succession planning for the Executive Leadership
succession planning for the Executive Leadership
Team and other key executives was in place.
Team and other key executives was in place.
Board Evaluation and Re-Election
Board Evaluation and Re-Election
of Directors
of Directors
The Nomination Committee carried out an
The Nomination Committee carried out an
evaluation of its own performance for the year
evaluation of its own performance for the year
ended 31 December 2018 and concluded it was
ended 31 December 2018 and concluded it was
satisfactory. The results of the Board evaluation
satisfactory. The results of the Board evaluation
and Director appraisal process as described on
and Director appraisal process as described on
page 54 and 55 were also noted. The process
page 54 and 55 were also noted. The process
established that the Board is operating effectively
established that the Board is operating effectively
and cohesively with a good balance of support
and cohesively with a good balance of support
and challenge and that there was sufficient
and challenge and that there was sufficient
diversity on the Board. It recommended to the
diversity on the Board. It recommended to the
Board, after evaluating the balance of skills,
Board, after evaluating the balance of skills,
knowledge, independence and experience of
knowledge, independence and experience of
each Director, that all Directors will seek re-
each Director, that all Directors will seek re-
election/election at the Company’s forthcoming
election/election at the Company’s forthcoming
AGM.
AGM.
Board Diversity
Board Diversity
The Nomination Committee aims to have a Board
The Nomination Committee aims to have a Board
that is well-balanced and has the appropriate
that is well-balanced and has the appropriate
skills, knowledge, experience and diversity for
skills, knowledge, experience and diversity for
► The Nomination Committee reviewed its Terms
► The Nomination Committee reviewed its Terms
the needs of the business. Diversity is considered
the needs of the business. Diversity is considered
of Reference during the year to ensure the
of Reference during the year to ensure the
contents remained relevant and updated the
contents remained relevant and updated the
Terms of Reference in December 2018 to
Terms of Reference in December 2018 to
in its broadest sense and includes age, gender,
in its broadest sense and includes age, gender,
cultural background, geographical diversity and
cultural background, geographical diversity and
business background. During 2018, we reviewed
business background. During 2018, we reviewed
and recommended the adoption by the Board of
and recommended the adoption by the Board of
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68
benefits of a diverse Board.
benefits of a diverse Board.
respects diversity and inclusion, not only gender
respects diversity and inclusion, not only gender
diversity but also cultural and age diversity.
diversity but also cultural and age diversity.
The stated aim of the Diversity Policy is for the
The stated aim of the Diversity Policy is for the
Company to have a balanced Board that has
Company to have a balanced Board that has
The Group will continue to monitor diversity
The Group will continue to monitor diversity
the appropriate skills, knowledge, experience
the appropriate skills, knowledge, experience
both on the Board, its Committees and across
both on the Board, its Committees and across
and diversity for the needs of the business. The
and diversity for the needs of the business. The
the business to ensure diversity and equal
the business to ensure diversity and equal
stated objectives of the Diversity Policy are (1) to
stated objectives of the Diversity Policy are (1) to
opportunities.
opportunities.
Availability of Terms and Conditions
Availability of Terms and Conditions
of Appointment of Non-Executive
of Appointment of Non-Executive
Directors
Directors
The terms and conditions of appointment of the
The terms and conditions of appointment of the
Company’s Non-Executive Directors are available
Company’s Non-Executive Directors are available
for inspection at the Company’s registered office.
for inspection at the Company’s registered office.
I will be available at the AGM to answer any
I will be available at the AGM to answer any
questions that shareholders may have on the
questions that shareholders may have on the
work of the Nomination Committee.
work of the Nomination Committee.
Michael Cawley
Michael Cawley
Chairman, Nomination Committee
Chairman, Nomination Committee
1 April 2019
1 April 2019
ensure that the possibilities for maximising the
ensure that the possibilities for maximising the
Company’s success and achieving its strategic
Company’s success and achieving its strategic
goals are optimised by having a broad range of
goals are optimised by having a broad range of
perspectives on the Board; and (2) that diversity
perspectives on the Board; and (2) that diversity
provides the basis for improving the quality of
provides the basis for improving the quality of
decision making on the Board by reducing the risk
decision making on the Board by reducing the risk
of ‘group think’. The provisions of the Diversity
of ‘group think’. The provisions of the Diversity
Policy require that its effectiveness is subject to
Policy require that its effectiveness is subject to
annual review by the Nomination Committee.
annual review by the Nomination Committee.
In addition, as part of the annual performance
In addition, as part of the annual performance
evaluation of the effectiveness of the Board,
evaluation of the effectiveness of the Board,
Board Committees and individual Directors,
Board Committees and individual Directors,
the Diversity Policy requires the Nomination
the Diversity Policy requires the Nomination
Committee to specifically consider and assess
Committee to specifically consider and assess
the adequacy of the diversity representation on
the adequacy of the diversity representation on
the Board. The policy statement included in the
the Board. The policy statement included in the
Diversity Policy provides that an effective Board
Diversity Policy provides that an effective Board
will include and make good use of differences
will include and make good use of differences
in the skills, regional and industry experience,
in the skills, regional and industry experience,
background, race, gender and other distinctions
background, race, gender and other distinctions
between Directors and emphasises that in
between Directors and emphasises that in
identifying suitable candidates for appointment
identifying suitable candidates for appointment
to the Board, the Nomination Committee are
to the Board, the Nomination Committee are
required to consider candidates on merit against
required to consider candidates on merit against
objective criteria, with due regard for the benefits
objective criteria, with due regard for the benefits
of diversity on the Board.
of diversity on the Board.
Although the appointment of Éimear Moloney to
Although the appointment of Éimear Moloney to
the Nomination Committee and Remuneration
the Nomination Committee and Remuneration
Committee in February 2018 occurred prior to
Committee in February 2018 occurred prior to
the formal adoption of the Diversity Policy, the
the formal adoption of the Diversity Policy, the
recommendation to the Board that Eimear be
recommendation to the Board that Eimear be
appointed to the respective Committees was
appointed to the respective Committees was
on the basis that there would be a balance of
on the basis that there would be a balance of
skills, knowledge, experience and diversity of
skills, knowledge, experience and diversity of
membership of those Committees. Although the
membership of those Committees. Although the
appointments of Gary Morrison and TJ Kelly as
appointments of Gary Morrison and TJ Kelly as
Directors of the Company likewise occurred prior
Directors of the Company likewise occurred prior
to the formal adoption of the Diversity Policy, the
to the formal adoption of the Diversity Policy, the
Nomination Committee had specific regard to
Nomination Committee had specific regard to
the benefits of diversity on the Board (including
the benefits of diversity on the Board (including
gender) when conducting the searches and
gender) when conducting the searches and
proposing the appointments of the Company’s
proposing the appointments of the Company’s
new Chief Executive Officer and Chief Financial
new Chief Executive Officer and Chief Financial
Officer, respectively, during 2018.
Officer, respectively, during 2018.
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
CHAIRMAN OF THE
CHAIRMAN OF THE
REMUNERATION COMMITTEE’S
REMUNERATION COMMITTEE’S
ANNUAL STATEMENT
ANNUAL STATEMENT
Dear Shareholder
Dear Shareholder
As Chairman of the Remuneration
As Chairman of the Remuneration
Committee, I am pleased to present the
Committee, I am pleased to present the
Company’s Remuneration Report for the
Company’s Remuneration Report for the
year to 31 December 2018.
year to 31 December 2018.
2018 was a busy year for the Remuneration
2018 was a busy year for the Remuneration
Committee. In addition to the usual
Committee. In addition to the usual
Remuneration Committee activities, we
Remuneration Committee activities, we
undertook a detailed review of the Directors’
undertook a detailed review of the Directors’
► Agreed the structure of the 2018 annual bonus
► Agreed the structure of the 2018 annual bonus
scheme for the Executive Directors, including
scheme for the Executive Directors, including
bonus opportunity, metrics and specific
bonus opportunity, metrics and specific
targets to be employed;
targets to be employed;
► Agreed the approach to the award made
► Agreed the approach to the award made
under the Company’s Long Term Incentive
under the Company’s Long Term Incentive
Plan (“LTIP”) in 2018, including the quantum,
Plan (“LTIP”) in 2018, including the quantum,
metrics, targets and award population. As
metrics, targets and award population. As
noted on page 90, the 2018 awards were
noted on page 90, the 2018 awards were
structured in a similar manner to the awards
structured in a similar manner to the awards
Remuneration Policy ahead of the requirement to
Remuneration Policy ahead of the requirement to
made in 2016 and 2017;
made in 2016 and 2017;
seek shareholder approval for a new policy at the
seek shareholder approval for a new policy at the
AGM in 2019. We also determined the recruitment
AGM in 2019. We also determined the recruitment
► Determined the appropriate termination
► Determined the appropriate termination
packages for the new Chief Executive Officer and
packages for the new Chief Executive Officer and
arrangements for Feargal Mooney, the
arrangements for Feargal Mooney, the
Chief Financial Officer and agreed the termination
Chief Financial Officer and agreed the termination
outgoing Chief Executive Officer;
outgoing Chief Executive Officer;
arrangements for their predecessors. Full details
arrangements for their predecessors. Full details
are set out below and in the Annual Report on
are set out below and in the Annual Report on
► Agreed the recruitment packages for Gary
► Agreed the recruitment packages for Gary
Remuneration.
Remuneration.
Members of the Remuneration
Members of the Remuneration
Committee
Committee
Remuneration Committee membership is as
Remuneration Committee membership is as
follows:
follows:
► Andy McCue (Chairman)
► Andy McCue (Chairman)
► Michael Cawley
► Michael Cawley
► Carl Shepherd
► Carl Shepherd
► Éimear Moloney
► Éimear Moloney
Key Activities of the Remuneration
Key Activities of the Remuneration
Committee in 2018
Committee in 2018
The Remuneration Committee met five times
The Remuneration Committee met five times
during 2018 and, among other things, undertook
during 2018 and, among other things, undertook
the following activities:
the following activities:
► Finalised the 2017 Remuneration Report;
► Finalised the 2017 Remuneration Report;
► Determined the salary increases for the
► Determined the salary increases for the
Executive Directors that applied for 2018,
Executive Directors that applied for 2018,
as reported last year;
as reported last year;
Morrison and TJ Kelly, the incoming Chief
Morrison and TJ Kelly, the incoming Chief
Executive Officer and Chief Financial Officer;
Executive Officer and Chief Financial Officer;
► Reviewed the Directors’ remuneration policy
► Reviewed the Directors’ remuneration policy
and consulted with major shareholders
and consulted with major shareholders
and proxy voting agencies on the proposed
and proxy voting agencies on the proposed
changes to the policy; and
changes to the policy; and
► Started to consider the implications for our
► Started to consider the implications for our
remuneration reporting and practices of the
remuneration reporting and practices of the
new UK legislation and the updated 2018 UK
new UK legislation and the updated 2018 UK
Corporate Governance Code.
Corporate Governance Code.
Subsequent to the financial year end, the
Subsequent to the financial year end, the
Remuneration Committee met to review salaries
Remuneration Committee met to review salaries
for 2019, the final outturn of the 2018 annual
for 2019, the final outturn of the 2018 annual
bonus scheme and the structure and targets of
bonus scheme and the structure and targets of
the annual bonus scheme and LTIP for 2019. The
the annual bonus scheme and LTIP for 2019. The
Remuneration Committee also made the final
Remuneration Committee also made the final
decisions in relation to the new remuneration
decisions in relation to the new remuneration
policy.
policy.
The New Remuneration Policy
The New Remuneration Policy
The Directors’ Remuneration Policy is designed
The Directors’ Remuneration Policy is designed
► Agreed the final outturn of the 2017 annual
► Agreed the final outturn of the 2017 annual
to support the Company’s culture and
to support the Company’s culture and
bonus scheme for the Executive Directors, as
bonus scheme for the Executive Directors, as
strategic objectives while offering competitive
strategic objectives while offering competitive
reported last year;
reported last year;
remuneration to enable the business to attract,
remuneration to enable the business to attract,
retain and motivate the high-calibre talent
retain and motivate the high-calibre talent
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USA HOSTELS OCEAN BEACH
USA HOSTELS OCEAN BEACH
SAN DIEGO
SAN DIEGO
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
needed to help ensure we are successful, aligning
needed to help ensure we are successful, aligning
performance against other KPIs and progress
performance against other KPIs and progress
these routes at this stage although we will keep
these routes at this stage although we will keep
a 6% pension contribution and a standard
a 6% pension contribution and a standard
all stakeholders’ interests. This is achieved
all stakeholders’ interests. This is achieved
against the achievement of strategic goals. In
against the achievement of strategic goals. In
these matters under review during the lifetime
these matters under review during the lifetime
benefits package. TJ’s salary was set at a slight
benefits package. TJ’s salary was set at a slight
by the strong focus on performance-related
by the strong focus on performance-related
addition, the Remuneration Committee will
addition, the Remuneration Committee will
of the policy. In particular, the Committee will
of the policy. In particular, the Committee will
premium to that of Mari Hurley, his predecessor,
premium to that of Mari Hurley, his predecessor,
compensation and the use of appropriate
compensation and the use of appropriate
continue to reserve the right to adjust the
continue to reserve the right to adjust the
continue to give active consideration as to
continue to give active consideration as to
reflecting his experience and wider market
reflecting his experience and wider market
performance conditions.
performance conditions.
provisional bonus outturn if it is not deemed
provisional bonus outturn if it is not deemed
to be a fair and accurate reflection of business
to be a fair and accurate reflection of business
As noted above, the Remuneration Committee
As noted above, the Remuneration Committee
performance.
performance.
undertook a major review of the remuneration
undertook a major review of the remuneration
how best to approach the issue of ensuring
how best to approach the issue of ensuring
comparatives. He was not entitled to participate
comparatives. He was not entitled to participate
that incumbent executive directors’ interests
that incumbent executive directors’ interests
in the annual bonus scheme for 2018. He was
in the annual bonus scheme for 2018. He was
remain aligned to shareholders after cessation
remain aligned to shareholders after cessation
granted an LTIP award at a level of 75% of basic
granted an LTIP award at a level of 75% of basic
of employment, and will update investors on the
of employment, and will update investors on the
salary following his appointment (subject to the
salary following his appointment (subject to the
policy during the year ahead of the requirement
policy during the year ahead of the requirement
► We reviewed the Chief Financial Officer’s
► We reviewed the Chief Financial Officer’s
results of its deliberations at the appropriate
results of its deliberations at the appropriate
same performance targets as applied to all 2018
same performance targets as applied to all 2018
to seek shareholder approval for a revised
to seek shareholder approval for a revised
package in the context of the change of
package in the context of the change of
time. As it stands, the new policy incorporates a
time. As it stands, the new policy incorporates a
awards), which was lower than the award level
awards), which was lower than the award level
policy at the 2019 AGM. We concluded that the
policy at the 2019 AGM. We concluded that the
individual in the role during the year. Under the
individual in the role during the year. Under the
significant enhancement to long term alignment
significant enhancement to long term alignment
for the Chief Financial Officer in prior years given
for the Chief Financial Officer in prior years given
policy remained broadly fit for purpose but that
policy remained broadly fit for purpose but that
revised policy, the annual bonus opportunity
revised policy, the annual bonus opportunity
between management and shareholders given
between management and shareholders given
the fact TJ joined Hostelworld relatively late in the
the fact TJ joined Hostelworld relatively late in the
a number of changes were required. The key
a number of changes were required. The key
for the Chief Financial Officer has been
for the Chief Financial Officer has been
the introduction of the post-vesting holding
the introduction of the post-vesting holding
financial year.
financial year.
changes are set out below:
changes are set out below:
increased from 72% to 100% of basic salary,
increased from 72% to 100% of basic salary,
with his normal award level under the LTIP
with his normal award level under the LTIP
period in the LTIP and the increase to the
period in the LTIP and the increase to the
shareholding requirement.
shareholding requirement.
► With effect from the LTIP awards to be granted
► With effect from the LTIP awards to be granted
increased to 100% (from the past practice of
increased to 100% (from the past practice of
in 2019, the shares which vest after the end
in 2019, the shares which vest after the end
90%). This new bonus opportunity aligns the
90%). This new bonus opportunity aligns the
of the three-year performance period (net
of the three-year performance period (net
Chief Financial Officer’s bonus potential with
Chief Financial Officer’s bonus potential with
of those required to be sold to pay tax) will
of those required to be sold to pay tax) will
that of the Chief Executive Officer (which is
that of the Chief Executive Officer (which is
be subject to an additional two-year holding
be subject to an additional two-year holding
being reduced from 102.6% of salary). It is
being reduced from 102.6% of salary). It is
period. This brings the structure of the plan
period. This brings the structure of the plan
also consistent with the market median bonus
also consistent with the market median bonus
We consulted with major shareholders and
We consulted with major shareholders and
proxy voting agencies on the proposed changes
proxy voting agencies on the proposed changes
towards the end of 2018, and received a number
towards the end of 2018, and received a number
of supportive comments in response. The
of supportive comments in response. The
revised policy will now be subject to a binding
revised policy will now be subject to a binding
into line with the expectations of many
into line with the expectations of many
level for other companies in the FTSE SmallCap
level for other companies in the FTSE SmallCap
shareholder vote at the AGM.
shareholder vote at the AGM.
institutional investors and the provisions
institutional investors and the provisions
index, as is the revised LTIP award level. While
index, as is the revised LTIP award level. While
of the 2018 UK Corporate Governance Code.
of the 2018 UK Corporate Governance Code.
the Remuneration Committee is very cognisant
the Remuneration Committee is very cognisant
of investor concerns surrounding increases to
of investor concerns surrounding increases to
► The shareholding requirement which applies
► The shareholding requirement which applies
pay quantum, it is important that we are able
pay quantum, it is important that we are able
to Executive Directors will be increased from
to Executive Directors will be increased from
to offer a package which reflects the market,
to offer a package which reflects the market,
150% to 200% of basic salary.
150% to 200% of basic salary.
recognising that pay levels for the Chief
recognising that pay levels for the Chief
Financial Officer role have historically been
Financial Officer role have historically been
► For new Executive Directors appointed after
► For new Executive Directors appointed after
conservative. Performance conditions for the
conservative. Performance conditions for the
shareholder approval of the remuneration
shareholder approval of the remuneration
bonus plan and LTIP will be set each year and
bonus plan and LTIP will be set each year and
policy, we now specify that the maximum
policy, we now specify that the maximum
will remain suitably challenging.
will remain suitably challenging.
pension contribution will be in line with the
pension contribution will be in line with the
contribution level provided to the majority
contribution level provided to the majority
► To correct an anomaly, we have included a
► To correct an anomaly, we have included a
of the workforce.
of the workforce.
policy provision which permits Executive
policy provision which permits Executive
Directors to participate in the Company’s Save
Directors to participate in the Company’s Save
► The financial underpin in the annual bonus
► The financial underpin in the annual bonus
As You Earn (“SAYE”) plan on the same basis as
As You Earn (“SAYE”) plan on the same basis as
scheme has been amended so that payment
scheme has been amended so that payment
other employees.
other employees.
of any bonus will require a Remuneration
of any bonus will require a Remuneration
Committee assessment of overall performance
Committee assessment of overall performance
► The flexibility for the Remuneration Committee
► The flexibility for the Remuneration Committee
during the year. This replaces the inflexible
during the year. This replaces the inflexible
to provide additional sign-on compensation
to provide additional sign-on compensation
provision in the current policy which requires
provision in the current policy which requires
for new recruits has been removed. We
for new recruits has been removed. We
a threshold level of adjusted profit before tax
a threshold level of adjusted profit before tax
appreciate that this level of flexibility goes
appreciate that this level of flexibility goes
(“Adjusted PBT”) to be achieved before any
(“Adjusted PBT”) to be achieved before any
beyond standard market practice and
beyond standard market practice and
bonus is paid. In making this change, we wish
bonus is paid. In making this change, we wish
that some investors have concerns with
that some investors have concerns with
to enshrine an approach that reflects our belief
to enshrine an approach that reflects our belief
remuneration policies which allow for too
remuneration policies which allow for too
that other factors over and above an Adjusted
that other factors over and above an Adjusted
much Remuneration Committee discretion.
much Remuneration Committee discretion.
PBT hurdle should be taken into account to
PBT hurdle should be taken into account to
determine whether or not it is appropriate
determine whether or not it is appropriate
The Remuneration Committee did consider
The Remuneration Committee did consider
to pay a bonus. That said, when considering
to pay a bonus. That said, when considering
whether now was the right time to introduce a
whether now was the right time to introduce a
whether a minimum level of performance
whether a minimum level of performance
number of additional changes, such as requiring
number of additional changes, such as requiring
has been achieved to justify the payment of
has been achieved to justify the payment of
a portion of the annual bonus to be deferred into
a portion of the annual bonus to be deferred into
the bonus, the Remuneration Committee will
the bonus, the Remuneration Committee will
shares or making the shareholding requirement
shares or making the shareholding requirement
review factors such as underlying financial
review factors such as underlying financial
apply for a period beyond the cessation of
apply for a period beyond the cessation of
performance (including Adjusted PBT),
performance (including Adjusted PBT),
employment. We have decided not to go down
employment. We have decided not to go down
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72
Departure of Former Executive
Departure of Former Executive
Directors
Directors
Feargal Mooney stepped down as Chief Executive
Feargal Mooney stepped down as Chief Executive
Officer and as a Director on 11 June 2018. He
Officer and as a Director on 11 June 2018. He
remains employed during his 12 month notice
remains employed during his 12 month notice
period, which ends on 11 June 2019. During this
period, which ends on 11 June 2019. During this
period he will continue to receive salary, pension
period he will continue to receive salary, pension
and benefits, including any period of garden
and benefits, including any period of garden
leave. He was eligible to participate in the 2018
leave. He was eligible to participate in the 2018
bonus plan on a pro-rata basis. As set out below,
bonus plan on a pro-rata basis. As set out below,
Recruitment of new Executive Directors
Recruitment of new Executive Directors
The remuneration packages for the new
The remuneration packages for the new
no bonus was ultimately payable to Feargal for
no bonus was ultimately payable to Feargal for
management team were set in line with the
management team were set in line with the
2018 performance.
2018 performance.
existing remuneration policy.
existing remuneration policy.
Feargal was treated as a good leaver for the
Feargal was treated as a good leaver for the
Gary Morrison joined Hostelworld as Chief
Gary Morrison joined Hostelworld as Chief
purposes of the LTIP in light of the circumstances
purposes of the LTIP in light of the circumstances
Executive Officer and as a Director on 11 June
Executive Officer and as a Director on 11 June
of his departure and his willingness and desire
of his departure and his willingness and desire
2018. His remuneration package on appointment
2018. His remuneration package on appointment
to ensure a smooth transition to his successor.
to ensure a smooth transition to his successor.
was consistent with that of Feargal Mooney,
was consistent with that of Feargal Mooney,
Therefore, in line with the remuneration policy
Therefore, in line with the remuneration policy
his predecessor, and included a basic salary
his predecessor, and included a basic salary
and the rules of the LTIP, the Remuneration
and the rules of the LTIP, the Remuneration
of €418,200, a 10% pension contribution and a
of €418,200, a 10% pension contribution and a
Committee determined that his subsisting LTIP
Committee determined that his subsisting LTIP
standard benefits package. His annual bonus
standard benefits package. His annual bonus
awards will continue until the normal time of
awards will continue until the normal time of
opportunity was set at 100% of basic salary,
opportunity was set at 100% of basic salary,
vesting, at which point they will vest subject to
vesting, at which point they will vest subject to
slightly below the level of 102.6% available to
slightly below the level of 102.6% available to
performance against the relevant targets. No pro
performance against the relevant targets. No pro
his predecessor. The Remuneration Committee
his predecessor. The Remuneration Committee
rata reduction was applied to his 2016 LTIP award
rata reduction was applied to his 2016 LTIP award
exercised its discretion to grant Gary an LTIP
exercised its discretion to grant Gary an LTIP
as the date of cessation of employment (11 June
as the date of cessation of employment (11 June
award at a level of 150% of basic salary following
award at a level of 150% of basic salary following
2019) occurs after the vesting date for the award
2019) occurs after the vesting date for the award
his appointment, in line with the limit as set
his appointment, in line with the limit as set
(although, as noted later, this award has zero
(although, as noted later, this award has zero
out in the remuneration policy. We made an
out in the remuneration policy. We made an
vesting due to the performance targets not being
vesting due to the performance targets not being
award at this level in order to help attract
award at this level in order to help attract
achieved). His 2017 award will be pro-rated to the
achieved). His 2017 award will be pro-rated to the
Gary to Hostelworld, to aid in his motivation
Gary to Hostelworld, to aid in his motivation
date of cessation. The Remuneration Committee
date of cessation. The Remuneration Committee
and retention over the next few years and to
and retention over the next few years and to
has exercised its discretion to take a different
has exercised its discretion to take a different
provide an immediate long term alignment with
provide an immediate long term alignment with
approach for the 2018 award, with the date on
approach for the 2018 award, with the date on
Hostelworld shareholders. The award will vest
Hostelworld shareholders. The award will vest
which Feargal stepped down from the Board
which Feargal stepped down from the Board
subject to the performance conditions applied to
subject to the performance conditions applied to
(11 June 2018) being used as the basis for the
(11 June 2018) being used as the basis for the
other LTIP awards in 2018, which we believe are
other LTIP awards in 2018, which we believe are
calculation of the pro rata reduction as opposed
calculation of the pro rata reduction as opposed
suitably challenging.
suitably challenging.
to his actual cessation of employment. This
to his actual cessation of employment. This
means that the potential value of the 2018 award
means that the potential value of the 2018 award
TJ Kelly’s appointment was announced on 21
TJ Kelly’s appointment was announced on 21
at vesting will be significantly lower than had we
at vesting will be significantly lower than had we
August 2018. His remuneration package on
August 2018. His remuneration package on
used the default position of cessation
used the default position of cessation
appointment included a basic salary of €295,000,
appointment included a basic salary of €295,000,
of employment to calculate the reduction.
of employment to calculate the reduction.
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
We believe that this was a fair approach in the
We believe that this was a fair approach in the
The three-year performance period for the
The three-year performance period for the
context of internal and external expectations
context of internal and external expectations
shareholder vote at the AGM.
shareholder vote at the AGM.
context of Feargal’s departure and appropriately
context of Feargal’s departure and appropriately
2016 LTIP award ended in 2018. Following an
2016 LTIP award ended in 2018. Following an
of our performance over the coming years. On
of our performance over the coming years. On
recognised the relatively short period between
recognised the relatively short period between
assessment of the Adjusted Earnings per Share
assessment of the Adjusted Earnings per Share
TSR, we are aware that some investors have a
TSR, we are aware that some investors have a
I hope that you find the information in this Report
I hope that you find the information in this Report
the grant of the 2018 award and the date on
the grant of the 2018 award and the date on
(“Adjusted EPS”) and absolute Total Shareholder
(“Adjusted EPS”) and absolute Total Shareholder
preference for this to be measured on a relative
preference for this to be measured on a relative
helpful and informative and I look forward to
helpful and informative and I look forward to
which Feargal’s departure was announced.
which Feargal’s departure was announced.
Return (“TSR”) performance conditions attached
Return (“TSR”) performance conditions attached
basis. This was considered by the Remuneration
basis. This was considered by the Remuneration
your continued support at the AGM.
your continued support at the AGM.
Mari Hurley’s resignation as Chief Financial
Mari Hurley’s resignation as Chief Financial
vesting conditions were met and as a result none
vesting conditions were met and as a result none
sufficiently large group of relevant listed peers to
sufficiently large group of relevant listed peers to
I am always happy to hear from the Company’s
I am always happy to hear from the Company’s
Officer was announced on 19 December 2017.
Officer was announced on 19 December 2017.
of these awards will vest in April 2019.
of these awards will vest in April 2019.
form the basis for a useful comparison. There is
form the basis for a useful comparison. There is
shareholders and you can contact me via the
shareholders and you can contact me via the
to this award, it was determined that none of the
to this award, it was determined that none of the
Committee, but we have been unable to identify a
Committee, but we have been unable to identify a
She left the Board and the Company during
She left the Board and the Company during
2018 and her termination arrangements were
2018 and her termination arrangements were
How we will apply the policy in 2019
How we will apply the policy in 2019
disclosed in last year’s report.
disclosed in last year’s report.
Remuneration Outcomes for 2018
Remuneration Outcomes for 2018
The Remuneration Committee reviewed Gary
The Remuneration Committee reviewed Gary
Morrison’s salary and determined that an
Morrison’s salary and determined that an
increase of 3% with effect from 1 January 2019
increase of 3% with effect from 1 January 2019
As described earlier in this Annual Report,
As described earlier in this Annual Report,
was warranted (which is in line with the typical
was warranted (which is in line with the typical
2018 was a year of significant activity and
2018 was a year of significant activity and
salary increase across the wider workforce). No
salary increase across the wider workforce). No
change for Hostelworld Group. In addition we
change for Hostelworld Group. In addition we
review of TJ Kelly’s salary was undertaken given
review of TJ Kelly’s salary was undertaken given
experienced challenging industry conditions
experienced challenging industry conditions
his recent appointment to the Group.
his recent appointment to the Group.
during the summer months. Despite this our
during the summer months. Despite this our
core Hostelworld brand grew by 4% although
core Hostelworld brand grew by 4% although
The maximum annual bonus opportunity for
The maximum annual bonus opportunity for
the expected decline in our supporting brands
the expected decline in our supporting brands
Gary Morrison will remain at 100% of basic
Gary Morrison will remain at 100% of basic
resulted in overall Group bookings being flat.
resulted in overall Group bookings being flat.
salary. Subject to shareholder approval of
salary. Subject to shareholder approval of
The introduction of a free cancellation booking
The introduction of a free cancellation booking
the new remuneration policy, the maximum
the new remuneration policy, the maximum
option led to a deferral of revenue recognition,
option led to a deferral of revenue recognition,
potential bonus payable to TJ Kelly will also be
potential bonus payable to TJ Kelly will also be
which has impacted reported earnings in 2018,
which has impacted reported earnings in 2018,
100% of salary. The bonus will be subject to
100% of salary. The bonus will be subject to
although this has not had an impact on cash
although this has not had an impact on cash
the achievement of challenging performance
the achievement of challenging performance
receipts.
receipts.
targets in the following areas (which, for 2019, the
targets in the following areas (which, for 2019, the
Committee has agreed should be based solely on
Committee has agreed should be based solely on
In light of the Company’s performance over
In light of the Company’s performance over
financial/operational metrics i.e. with no personal
financial/operational metrics i.e. with no personal
the financial year, there were no payments to
the financial year, there were no payments to
bonus element):
bonus element):
Executive Directors or senior management under
Executive Directors or senior management under
the annual bonus scheme set up at the start of
the annual bonus scheme set up at the start of
► Adjusted PBT (70% weighting); and
► Adjusted PBT (70% weighting); and
2018. The requirement for a threshold level of
2018. The requirement for a threshold level of
► Total bednights (30% weighting).
► Total bednights (30% weighting).
Adjusted PBT to be met before any bonuses were
Adjusted PBT to be met before any bonuses were
paid was not met, with this threshold set at the
paid was not met, with this threshold set at the
As noted above, the payment of any bonus will
As noted above, the payment of any bonus will
start of the year. As a result, Feargal Mooney did
start of the year. As a result, Feargal Mooney did
be subject to the Remuneration Committee
be subject to the Remuneration Committee
not receive any bonus for the year.
not receive any bonus for the year.
being satisfied that the Company has delivered
being satisfied that the Company has delivered
an acceptable level of performance, taking
an acceptable level of performance, taking
For Gary Morrison, the Remuneration Committee
For Gary Morrison, the Remuneration Committee
into account underlying financial performance
into account underlying financial performance
used its discretion under the remuneration policy
used its discretion under the remuneration policy
(including Adjusted PBT), performance against
(including Adjusted PBT), performance against
to set different bonus performance conditions
to set different bonus performance conditions
other KPIs and progress against the achievement
other KPIs and progress against the achievement
that reflected circumstances existing at the time
that reflected circumstances existing at the time
of strategic goals.
of strategic goals.
of his appointment. Metrics relating to Adjusted
of his appointment. Metrics relating to Adjusted
EBITDA, total bednights (booked by customers)
EBITDA, total bednights (booked by customers)
Gary Morrison will receive an LTIP award at a
Gary Morrison will receive an LTIP award at a
and personal performance were agreed, with the
and personal performance were agreed, with the
level of 125% of basic salary. TJ Kelly will receive
level of 125% of basic salary. TJ Kelly will receive
specific financial targets set reflecting trading
specific financial targets set reflecting trading
an LTIP award at a level of 100% of basic salary.
an LTIP award at a level of 100% of basic salary.
conditions that existed at the time. As disclosed in
conditions that existed at the time. As disclosed in
The award to Gary is lower than the 150% of
The award to Gary is lower than the 150% of
the Annual Report on Remuneration, in line with
the Annual Report on Remuneration, in line with
salary award he received in 2018. The award to
salary award he received in 2018. The award to
achievement of certain of these targets, a payout
achievement of certain of these targets, a payout
TJ is consistent with his revised remuneration
TJ is consistent with his revised remuneration
of 19.3% of salary was made to Gary Morrison
of 19.3% of salary was made to Gary Morrison
package, as explained above. The performance
package, as explained above. The performance
(19.3% of his maximum bonus opportunity).
(19.3% of his maximum bonus opportunity).
conditions will be based 70% on Adjusted EPS
conditions will be based 70% on Adjusted EPS
TJ Kelly was not eligible to participate in the
TJ Kelly was not eligible to participate in the
over a three-year period, as set out later in
over a three-year period, as set out later in
performance and 30% on absolute TSR measured
performance and 30% on absolute TSR measured
bonus plan for 2018.
bonus plan for 2018.
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this report. We have set EPS targets which are
this report. We have set EPS targets which are
challenging yet potentially achievable in the
challenging yet potentially achievable in the
also relatively little historical correlation between
also relatively little historical correlation between
Company Secretary if you have any questions on
Company Secretary if you have any questions on
Hostelworld’s share price performance and that
Hostelworld’s share price performance and that
this report or more generally in relation to the
this report or more generally in relation to the
of the broader Travel & Leisure sector, or that of a
of the broader Travel & Leisure sector, or that of a
Company’s remuneration.
Company’s remuneration.
Andy McCue
Andy McCue
Chairman, Remuneration Committee
Chairman, Remuneration Committee
1 April 2019
1 April 2019
broader index, suggesting that such comparators
broader index, suggesting that such comparators
would be of limited use.
would be of limited use.
In line with the new remuneration policy, a
In line with the new remuneration policy, a
two-year post-vesting holding period will apply
two-year post-vesting holding period will apply
to the 2019 LTIP awards.
to the 2019 LTIP awards.
Legislative and Regulatory
Legislative and Regulatory
Developments
Developments
The Remuneration Committee has started
The Remuneration Committee has started
to consider the impact of the legislative and
to consider the impact of the legislative and
regulatory changes which formally apply
regulatory changes which formally apply
to Hostelworld from the 2019 financial year
to Hostelworld from the 2019 financial year
onwards. In our report next year, we envisage
onwards. In our report next year, we envisage
complying in full with the new remuneration
complying in full with the new remuneration
reporting requirements mandated by law. We
reporting requirements mandated by law. We
also intend to comply with the provisions of the
also intend to comply with the provisions of the
2018 UK Corporate Governance Code, but we
2018 UK Corporate Governance Code, but we
reserve the right to explain any area of non-
reserve the right to explain any area of non-
compliance if it is decided that compliance would
compliance if it is decided that compliance would
not be in the best interests of Hostelworld or its
not be in the best interests of Hostelworld or its
shareholders.
shareholders.
Structure of this Report
Structure of this Report
This report has been prepared in accordance with
This report has been prepared in accordance with
The Large and Medium-sized Companies and
The Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment)
Groups (Accounts and Reports) (Amendment)
Regulations 2013, the UKLA Listing Rules and the
Regulations 2013, the UKLA Listing Rules and the
UK Corporate Governance Code. The report is
UK Corporate Governance Code. The report is
split into three parts:
split into three parts:
► This Annual Statement.
► This Annual Statement.
► The new Directors’ Remuneration Policy. The
► The new Directors’ Remuneration Policy. The
policy will be subject to a binding shareholder
policy will be subject to a binding shareholder
vote at the AGM on 31 May 2019.
vote at the AGM on 31 May 2019.
► The Annual Report on Remuneration, which
► The Annual Report on Remuneration, which
sets out payments made to the Directors and
sets out payments made to the Directors and
details the link between Company performance
details the link between Company performance
and remuneration for the 2018 financial year.
and remuneration for the 2018 financial year.
The Annual Report on Remuneration together
The Annual Report on Remuneration together
with this statement is subject to an advisory
with this statement is subject to an advisory
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
DIRECTORS’
DIRECTORS’
REMUNERATION POLICY
REMUNERATION POLICY
Introduction
Introduction
The Directors’ Remuneration Policy as
The Directors’ Remuneration Policy as
set out below will be put to a binding
set out below will be put to a binding
shareholder vote at the Annual General
shareholder vote at the Annual General
Meeting on 31 May 2019 and will apply
Meeting on 31 May 2019 and will apply
for the period of three years from the
for the period of three years from the
date of approval. The policy will replace
date of approval. The policy will replace
the policy approved at the AGM on 26
the policy approved at the AGM on 26
May 2016.
May 2016.
Policy Summary
Policy Summary
The Remuneration Committee has designed the
The Remuneration Committee has designed the
► Changing practice in the markets where the
► Changing practice in the markets where the
Company competes for talent;
Company competes for talent;
► Pay structure and levels in the Company as a
► Pay structure and levels in the Company as a
whole; and
whole; and
► Changing views of institutional shareholders
► Changing views of institutional shareholders
and their representative bodies.
and their representative bodies.
Changes to the Policy
Changes to the Policy
The policy as set out below incorporates a
The policy as set out below incorporates a
number of changes to the policy approved
number of changes to the policy approved
by shareholders in 2016. These changes are
by shareholders in 2016. These changes are
listed below and are explained further in the
listed below and are explained further in the
Annual Statement from the Chairman of the
Annual Statement from the Chairman of the
policy around the following key principles:
policy around the following key principles:
Remuneration Committee:
Remuneration Committee:
► Shareholder alignment – Ensure alignment of
► Shareholder alignment – Ensure alignment of
► With effect from the LTIP awards to be granted
► With effect from the LTIP awards to be granted
the interests of the Executive Directors, senior
the interests of the Executive Directors, senior
management and employees to the long term
management and employees to the long term
interests of shareholders;
interests of shareholders;
in 2019, shares which vest after the end of the
in 2019, shares which vest after the end of the
three-year performance period (net of those
three-year performance period (net of those
required to be sold to pay tax) will be subject to
required to be sold to pay tax) will be subject to
an additional two-year holding period;
an additional two-year holding period;
► Competitive remuneration – Maintain a
► Competitive remuneration – Maintain a
competitive package against businesses of a
competitive package against businesses of a
► The shareholding requirement which applies
► The shareholding requirement which applies
comparable size and nature in order to attract,
comparable size and nature in order to attract,
to Executive Directors will be increased from
to Executive Directors will be increased from
retain and motivate high-calibre talent to help
retain and motivate high-calibre talent to help
150% to 200% of basic salary;
150% to 200% of basic salary;
ensure the Company performs successfully;
ensure the Company performs successfully;
► Strategic and cultural alignment – Provide a
► Strategic and cultural alignment – Provide a
package with an appropriate balance between
package with an appropriate balance between
short and longer term performance targets
short and longer term performance targets
linked to the delivery of the Company’s
linked to the delivery of the Company’s
► For new Executive Directors appointed after
► For new Executive Directors appointed after
shareholder approval of the remuneration
shareholder approval of the remuneration
policy, we now specify that the maximum
policy, we now specify that the maximum
pension contribution will be in line with the
pension contribution will be in line with the
contribution level provided to the majority of
contribution level provided to the majority of
business plan and is aligned to and reflective
business plan and is aligned to and reflective
the workforce;
the workforce;
of the Company’s culture;
of the Company’s culture;
► Performance-focussed compensation –
► Performance-focussed compensation –
Encourage and support a high-performance
Encourage and support a high-performance
culture; and
culture; and
► Set appropriate performance conditions in line
► Set appropriate performance conditions in line
► The financial underpin in the annual bonus
► The financial underpin in the annual bonus
scheme has been amended so that payment
scheme has been amended so that payment
of any bonus will require a Remuneration
of any bonus will require a Remuneration
Committee assessment of overall performance
Committee assessment of overall performance
during the year (rather than merely the
during the year (rather than merely the
achievement of a specific threshold profit
achievement of a specific threshold profit
with the agreed risk profile of the business.
with the agreed risk profile of the business.
target);
target);
The Remuneration Committee reviews annually
The Remuneration Committee reviews annually
► The annual bonus opportunity for the Chief
► The annual bonus opportunity for the Chief
the remuneration arrangements for the Executive
the remuneration arrangements for the Executive
Financial Officer has been increased from 72%
Financial Officer has been increased from 72%
Directors and key senior management, taking
Directors and key senior management, taking
to 100% of basic salary;
to 100% of basic salary;
into consideration:
into consideration:
► Business strategy over the period;
► Business strategy over the period;
► Overall corporate performance;
► Overall corporate performance;
► To correct an anomaly, we have included a
► To correct an anomaly, we have included a
policy provision which permits Executive
policy provision which permits Executive
Directors to participate in the Company’s SAYE
Directors to participate in the Company’s SAYE
► The flexibility for the Remuneration Committee
► The flexibility for the Remuneration Committee
to provide additional sign-on compensation for
to provide additional sign-on compensation for
new recruits has been removed.
new recruits has been removed.
The following table sets out each element of remuneration and how it supports the Company’s short and long term
The following table sets out each element of remuneration and how it supports the Company’s short and long term
strategic objectives.
strategic objectives.
Element and link to our
Element and link to our
strategic objectives
strategic objectives
Base Salary
Base Salary
Operation
Operation
Opportunity
Opportunity
Performance
Performance
metrics, weighting
metrics, weighting
and assessment
and assessment
Provides a base level of
Provides a base level of
Salaries are reviewed annually and any
Salaries are reviewed annually and any
Base salaries will be set at an
Base salaries will be set at an
None
None
remuneration to support
remuneration to support
changes are effective from 1 January
changes are effective from 1 January
appropriate level within a comparator
appropriate level within a comparator
recruitment and retention
recruitment and retention
in the financial year.
in the financial year.
group of comparably sized listed
group of comparably sized listed
of Executive Directors with
of Executive Directors with
companies and will normally increase
companies and will normally increase
the necessary experience
the necessary experience
When determining an appropriate
When determining an appropriate
in line with increases made to the
in line with increases made to the
and expertise to deliver the
and expertise to deliver the
level of salary, the Remuneration
level of salary, the Remuneration
wider employee workforce.
wider employee workforce.
Company’s strategy.
Company’s strategy.
Committee considers:
Committee considers:
Individuals who are recruited or
Individuals who are recruited or
► remuneration practices within the
► remuneration practices within the
promoted to the Board may, on
promoted to the Board may, on
Company;
Company;
occasion, have their salaries set below
occasion, have their salaries set below
► the performance of the individual
► the performance of the individual
the targeted policy level until they
the targeted policy level until they
Executive Director;
Executive Director;
become established in their role. In
become established in their role. In
► the individual Executive Director’s
► the individual Executive Director’s
such cases subsequent increases
such cases subsequent increases
experience and responsibilities;
experience and responsibilities;
in salary may be higher than the
in salary may be higher than the
► the general performance of the
► the general performance of the
average until the target positioning is
average until the target positioning is
Company;
Company;
achieved.
achieved.
► salaries within the ranges paid by
► salaries within the ranges paid by
the companies in the comparator
the companies in the comparator
group used for remuneration
group used for remuneration
benchmarking; and
benchmarking; and
► the economic environment.
► the economic environment.
Benefits
Benefits
Provides a market competitive
Provides a market competitive
The Executive Directors receive
The Executive Directors receive
The maximum will be set at the cost
The maximum will be set at the cost
None
None
level of benefits to support
level of benefits to support
benefits which include, but are not
benefits which include, but are not
of providing the benefits described.
of providing the benefits described.
recruitment and retention
recruitment and retention
limited to, family private health cover
limited to, family private health cover
of Executive Directors with
of Executive Directors with
and life assurance cover (including tax
and life assurance cover (including tax
the necessary experience
the necessary experience
if any).
if any).
and expertise to deliver the
and expertise to deliver the
Company’s strategy.
Company’s strategy.
The Remuneration Committee
The Remuneration Committee
recognises the need to maintain
recognises the need to maintain
suitable flexibility in the determination
suitable flexibility in the determination
of benefits that ensure it is able to
of benefits that ensure it is able to
support the objective of attracting
support the objective of attracting
and retaining personnel. Accordingly,
and retaining personnel. Accordingly,
the Remuneration Committee would
the Remuneration Committee would
expect to be able to adopt other
expect to be able to adopt other
benefits including (but not limited to)
benefits including (but not limited to)
relocation expenses, tax equalisation
relocation expenses, tax equalisation
and support in meeting specific costs
and support in meeting specific costs
incurred by Directors.
incurred by Directors.
Pensions
Pensions
Provide market competitive
Provide market competitive
The Remuneration Committee
The Remuneration Committee
For existing Executive Directors, the
For existing Executive Directors, the
None
None
retirement benefits to support
retirement benefits to support
maintains the ability to provide
maintains the ability to provide
maximum pension contribution as a
maximum pension contribution as a
recruitment and retention
recruitment and retention
pension funding in the form of a
pension funding in the form of a
percentage of basic salary is 10%.
percentage of basic salary is 10%.
of Executive Directors with
of Executive Directors with
salary supplement, which would
salary supplement, which would
For new Executive Directors appointed
For new Executive Directors appointed
the necessary experience
the necessary experience
not form part of the salary for the
not form part of the salary for the
after approval of this policy, the
after approval of this policy, the
and expertise to deliver the
and expertise to deliver the
purposes of determining the extent
purposes of determining the extent
maximum pension contribution
maximum pension contribution
Company’s strategy.
Company’s strategy.
of participation in the Company’s
of participation in the Company’s
will be in line with the contribution
will be in line with the contribution
incentive arrangements.
incentive arrangements.
level provided to the majority of the
level provided to the majority of the
workforce.
workforce.
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► Market conditions affecting the Company;
► Market conditions affecting the Company;
plan; and
plan; and
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Element and link to our
Element and link to our
strategic objectives
strategic objectives
Save As You Earn (“SAYE”) plan
Save As You Earn (“SAYE”) plan
To encourage share ownership
To encourage share ownership
among Hostelworld employees
among Hostelworld employees
and increase the alignment with
and increase the alignment with
shareholders.
shareholders.
Shareholding Requirement
Shareholding Requirement
To support long term
To support long term
commitment to the Company
commitment to the Company
and the alignment of Executive
and the alignment of Executive
Director interests with those of
Director interests with those of
shareholders.
shareholders.
Operation
Operation
Opportunity
Opportunity
Performance metrics,
Performance metrics,
weighting and assessment
weighting and assessment
The maximum participation
The maximum participation
limit is as set out in the relevant
limit is as set out in the relevant
legislation.
legislation.
None (as is the norm for
None (as is the norm for
approved all-employee plans).
approved all-employee plans).
200% of salary
200% of salary
None
None
The plan permits employees to
The plan permits employees to
purchase shares at the end of a
purchase shares at the end of a
three-year period at a discount of
three-year period at a discount of
up to 20% of the market value of
up to 20% of the market value of
the shares at grant.
the shares at grant.
The Remuneration Committee
The Remuneration Committee
has adopted formal shareholding
has adopted formal shareholding
guidelines that will encourage
guidelines that will encourage
the Executive Directors to build
the Executive Directors to build
up and then subsequently hold a
up and then subsequently hold a
shareholding equivalent to 200%
shareholding equivalent to 200%
of their base salary. Adherence
of their base salary. Adherence
to these guidelines is a condition
to these guidelines is a condition
of continued participation in the
of continued participation in the
equity incentive arrangements.
equity incentive arrangements.
Non-Executive Director Fees
Non-Executive Director Fees
The Company provides a level
The Company provides a level
of fees to support recruitment
of fees to support recruitment
and retention of Non-Executive
and retention of Non-Executive
Directors with the necessary
Directors with the necessary
experience to advise and assist
experience to advise and assist
with establishing and monitoring
with establishing and monitoring
the Company’s strategic
the Company’s strategic
objectives.
objectives.
The Board as a whole is
The Board as a whole is
responsible for setting the
responsible for setting the
remuneration of the
remuneration of the
Non-Executive Directors, other
Non-Executive Directors, other
than the Chairman whose
than the Chairman whose
remuneration is considered by
remuneration is considered by
the Remuneration Committee
the Remuneration Committee
and recommended to the Board.
and recommended to the Board.
Non-Executive Directors are paid
Non-Executive Directors are paid
a base fee and additional fees
a base fee and additional fees
for acting as Senior Independent
for acting as Senior Independent
Director and as Chairperson of
Director and as Chairperson of
Board committees (or to reflect
Board committees (or to reflect
other additional responsibilities
other additional responsibilities
and/or additional/unforeseen
and/or additional/unforeseen
time commitments).
time commitments).
Non-Executive Directors
Non-Executive Directors
do not participate in any of
do not participate in any of
the Company’s incentive
the Company’s incentive
arrangements.
arrangements.
The base fees for Non-
The base fees for Non-
Executive Directors are set at an
Executive Directors are set at an
appropriate rate.
appropriate rate.
None
None
In general, the level of fee
In general, the level of fee
increase for the Non-Executive
increase for the Non-Executive
Directors will be set taking
Directors will be set taking
account of any change in
account of any change in
responsibility and will take
responsibility and will take
into account the general rise in
into account the general rise in
salaries across the workforce.
salaries across the workforce.
The Company will pay reasonable
The Company will pay reasonable
vouched expenses incurred by
vouched expenses incurred by
the Chairman and Non-Executive
the Chairman and Non-Executive
Directors, together with other
Directors, together with other
benefits where considered
benefits where considered
necessary (and any related tax
necessary (and any related tax
that may be payable).
that may be payable).
Element and link to our
Element and link to our
strategic objectives
strategic objectives
Operation
Operation
Opportunity
Opportunity
Performance metrics,
Performance metrics,
weighting and assessment
weighting and assessment
Annual Bonus Plan
Annual Bonus Plan
The Annual Bonus Plan provides an
The Annual Bonus Plan provides an
incentive to the Executive Directors
incentive to the Executive Directors
linked to achievement in delivering
linked to achievement in delivering
goals that are closely aligned with
goals that are closely aligned with
the Company’s strategy and the
the Company’s strategy and the
creation of value for shareholders.
creation of value for shareholders.
In particular, the Plan supports the
In particular, the Plan supports the
Company’s objectives allowing the
Company’s objectives allowing the
setting of annual targets based on
setting of annual targets based on
the business’ strategic objectives
the business’ strategic objectives
at that time, meaning that a wide
at that time, meaning that a wide
range of performance metrics can
range of performance metrics can
be used.
be used.
Long Term Incentive Plan (“LTIP”)
Long Term Incentive Plan (“LTIP”)
Awards are designed to incentivise
Awards are designed to incentivise
the Executive Directors to
the Executive Directors to
maximise returns to shareholders
maximise returns to shareholders
by successfully delivering the
by successfully delivering the
Company’s objectives over the long
Company’s objectives over the long
term.
term.
The Remuneration Committee
The Remuneration Committee
will determine the bonus payable
will determine the bonus payable
after the year end based on
after the year end based on
performance against targets.
performance against targets.
The maximum bonus
The maximum bonus
opportunity as a % of base
opportunity as a % of base
salary is 100%.
salary is 100%.
Annual bonuses are paid in cash
Annual bonuses are paid in cash
after the end of the financial year
after the end of the financial year
to which they relate.
to which they relate.
On change of control, the
On change of control, the
Remuneration Committee may
Remuneration Committee may
pay bonuses on a pro rata basis
pay bonuses on a pro rata basis
measured on performance up to
measured on performance up to
the date of change of control.
the date of change of control.
Malus will apply up to the date
Malus will apply up to the date
of the bonus determination
of the bonus determination
and clawback will apply for two
and clawback will apply for two
years from the date of bonus
years from the date of bonus
determination.
determination.
Awards are granted annually to
Awards are granted annually to
Executive Directors under the
Executive Directors under the
LTIP. These vest at the end of
LTIP. These vest at the end of
a three-year period, normally
a three-year period, normally
subject to:
subject to:
► the Executive Director’s
► the Executive Director’s
continued employment at the
continued employment at the
date of vesting; and
date of vesting; and
► satisfaction of the
► satisfaction of the
performance conditions.
performance conditions.
The Remuneration Committee
The Remuneration Committee
may award dividend equivalents
may award dividend equivalents
on awards to the extent that they
on awards to the extent that they
vest.
vest.
Awards granted from 2019
Awards granted from 2019
onwards which vest after the end
onwards which vest after the end
of the three-year performance
of the three-year performance
period will be subject to an
period will be subject to an
additional two-year holding
additional two-year holding
period. During this period the
period. During this period the
shares cannot be sold (other than
shares cannot be sold (other than
as required for tax purposes).
as required for tax purposes).
The LTIP rules contain standard
The LTIP rules contain standard
provisions to satisfy awards/
provisions to satisfy awards/
dividend equivalents in shares.
dividend equivalents in shares.
Malus will apply for the three-
Malus will apply for the three-
year period from grant to vesting
year period from grant to vesting
with clawback applying for the
with clawback applying for the
two-year period post vesting.
two-year period post vesting.
Awards may be made up to
Awards may be made up to
150% of base salary.
150% of base salary.
If exceptional circumstances
If exceptional circumstances
arise, including (but not
arise, including (but not
limited to) the recruitment
limited to) the recruitment
of an individual, the
of an individual, the
Remuneration Committee
Remuneration Committee
may grant awards outside
may grant awards outside
this limit up to a maximum
this limit up to a maximum
of 200% of a participant’s
of 200% of a participant’s
annual basic salary.
annual basic salary.
No more than 25% of the
No more than 25% of the
award will vest for threshold
award will vest for threshold
performance. 100% of the
performance. 100% of the
award will vest for maximum
award will vest for maximum
performance.
performance.
Bonus payouts are determined
Bonus payouts are determined
on the satisfaction of a range of
on the satisfaction of a range of
key financial and non-financial
key financial and non-financial
objectives set annually by the
objectives set annually by the
Remuneration Committee.
Remuneration Committee.
In addition, the payment of
In addition, the payment of
any bonus will require the
any bonus will require the
Remuneration Committee
Remuneration Committee
determining that the Company has
determining that the Company has
delivered an acceptable level of
delivered an acceptable level of
performance during the year.
performance during the year.
The Remuneration Committee
The Remuneration Committee
retains discretion in exceptional
retains discretion in exceptional
circumstances to change
circumstances to change
performance measures and targets
performance measures and targets
and the weightings attached to
and the weightings attached to
performance measures part-way
performance measures part-way
through a performance year if there
through a performance year if there
is a significant and material event
is a significant and material event
which causes the Remuneration
which causes the Remuneration
Committee to believe the original
Committee to believe the original
measures, weightings and targets
measures, weightings and targets
are no longer appropriate.
are no longer appropriate.
Discretion may also be exercised
Discretion may also be exercised
in cases where the Remuneration
in cases where the Remuneration
Committee believes that the bonus
Committee believes that the bonus
outcome is not a fair and accurate
outcome is not a fair and accurate
reflection of business performance.
reflection of business performance.
LTIP awards vest subject to the
LTIP awards vest subject to the
achievement of challenging
achievement of challenging
performance conditions set by the
performance conditions set by the
Remuneration Committee prior
Remuneration Committee prior
to each grant. Awards granted in
to each grant. Awards granted in
2019 will be subject to performance
2019 will be subject to performance
measures based on Adjusted EPS
measures based on Adjusted EPS
and absolute TSR performance.
and absolute TSR performance.
The Remuneration Committee
The Remuneration Committee
may change the balance of
may change the balance of
the measures, or use different
the measures, or use different
measures for subsequent awards
measures for subsequent awards
during the policy period, as
during the policy period, as
appropriate. No material change
appropriate. No material change
will be made to the type of
will be made to the type of
performance conditions without
performance conditions without
prior shareholder consultation.
prior shareholder consultation.
The Remuneration Committee
The Remuneration Committee
retains discretion in exceptional
retains discretion in exceptional
circumstances to change
circumstances to change
performance measures and targets
performance measures and targets
and the weightings attached
and the weightings attached
to performance measures part
to performance measures part
way through a performance
way through a performance
period if there is a significant
period if there is a significant
and material event which causes
and material event which causes
the Remuneration Committee to
the Remuneration Committee to
believe the original measures,
believe the original measures,
weightings and targets are no
weightings and targets are no
longer appropriate.
longer appropriate.
Discretion may also be exercised
Discretion may also be exercised
in cases where the Remuneration
in cases where the Remuneration
Committee believes that the vesting
Committee believes that the vesting
outcome is not a fair and accurate
outcome is not a fair and accurate
reflection of business performance.
reflection of business performance.
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Choice of Performance Measures
Choice of Performance Measures
Each year, the Remuneration Committee will
Each year, the Remuneration Committee will
choose the appropriate performance measures
choose the appropriate performance measures
and targets to apply to the annual bonus scheme
and targets to apply to the annual bonus scheme
and LTIP. The measures will be closely aligned
and LTIP. The measures will be closely aligned
with Hostelworld’s strategy and business
with Hostelworld’s strategy and business
priorities at the time.
priorities at the time.
cases, incentive structures and performance
cases, incentive structures and performance
conditions apply which are different to those
conditions apply which are different to those
used for Executive Directors. The Remuneration
used for Executive Directors. The Remuneration
Committee takes into account workforce
Committee takes into account workforce
remuneration and related policies when setting
remuneration and related policies when setting
the policy for Executive Directors’ remuneration.
the policy for Executive Directors’ remuneration.
Recruitment Policy
Recruitment Policy
For the 2019 LTIP grant, the performance
For the 2019 LTIP grant, the performance
conditions for awards will be split between
conditions for awards will be split between
Adjusted EPS growth (70%) and absolute TSR
Adjusted EPS growth (70%) and absolute TSR
The approach when setting the remuneration
The approach when setting the remuneration
of any newly recruited Executive Director will
of any newly recruited Executive Director will
be assessed in line with the same principles
be assessed in line with the same principles
(30%). The use of Adjusted EPS ensures Executive
(30%). The use of Adjusted EPS ensures Executive
for the Executive Directors, as set out above.
for the Executive Directors, as set out above.
Directors are focussed on achieving earnings
Directors are focussed on achieving earnings
The Remuneration Committee’s approach to
The Remuneration Committee’s approach to
growth over the longer term. The use of absolute
growth over the longer term. The use of absolute
recruitment remuneration is to pay no more
recruitment remuneration is to pay no more
TSR reflects Hostelworld’s dividend policy and
TSR reflects Hostelworld’s dividend policy and
measures the extent to which there is market
measures the extent to which there is market
confidence in the business strategy.
confidence in the business strategy.
Malus and Clawback
Malus and Clawback
Malus and clawback provisions within the annual
Malus and clawback provisions within the annual
bonus scheme and the LTIP apply in the following
bonus scheme and the LTIP apply in the following
circumstances:
circumstances:
► Material misstatement of results;
► Material misstatement of results;
► Gross misconduct;
► Gross misconduct;
► Error in calculating the number of shares subject
► Error in calculating the number of shares subject
to an award or the amount of cash paid;
to an award or the amount of cash paid;
► Corporate failure; or
► Corporate failure; or
► Serious reputational damage.
► Serious reputational damage.
Discretion
Discretion
The Remuneration Committee has discretion in
The Remuneration Committee has discretion in
several areas of policy as set out in this report.
several areas of policy as set out in this report.
The Remuneration Committee may also exercise
The Remuneration Committee may also exercise
operational and administrative discretions under
operational and administrative discretions under
relevant plan rules approved by shareholders
relevant plan rules approved by shareholders
as set out in those rules. In addition, the
as set out in those rules. In addition, the
Remuneration Committee has the discretion
Remuneration Committee has the discretion
to amend the policy with regard to minor or
to amend the policy with regard to minor or
administrative matters where it would be, in
administrative matters where it would be, in
the opinion of the Remuneration Committee,
the opinion of the Remuneration Committee,
disproportionate to seek or await shareholder
disproportionate to seek or await shareholder
approval.
approval.
Differences in Policy from the Wider
Differences in Policy from the Wider
Employee Population
Employee Population
than is necessary to attract candidates of the
than is necessary to attract candidates of the
appropriate calibre and experience needed for
appropriate calibre and experience needed for
the role from the market in which the Company
the role from the market in which the Company
competes. The Remuneration Committee is
competes. The Remuneration Committee is
mindful that it wishes to avoid paying more than
mindful that it wishes to avoid paying more than
it considers necessary to secure the preferred
it considers necessary to secure the preferred
candidate and will have regard to guidelines and
candidate and will have regard to guidelines and
shareholder sentiment regarding enhanced short
shareholder sentiment regarding enhanced short
term or long term incentive payments made
term or long term incentive payments made
on recruitment and the appropriateness of any
on recruitment and the appropriateness of any
performance measures associated with an award.
performance measures associated with an award.
Subject to the paragraph below, the incentive
Subject to the paragraph below, the incentive
awards that can be received in any one year will
awards that can be received in any one year will
not exceed the maximum individual limits as set
not exceed the maximum individual limits as set
out in the Remuneration Policy Table.
out in the Remuneration Policy Table.
The Remuneration Committee’s policy is not
The Remuneration Committee’s policy is not
to provide sign-on compensation. In addition,
to provide sign-on compensation. In addition,
the Remuneration Committee’s policy is not to
the Remuneration Committee’s policy is not to
provide buyouts as a matter of course. However,
provide buyouts as a matter of course. However,
should the Remuneration Committee determine
should the Remuneration Committee determine
that the individual circumstances of recruitment
that the individual circumstances of recruitment
justified the provision of a buyout, the equivalent
justified the provision of a buyout, the equivalent
value of any incentives that will be forfeited on
value of any incentives that will be forfeited on
cessation of a director’s previous employment
cessation of a director’s previous employment
will be calculated. This will take into account,
will be calculated. This will take into account,
among other things, the performance conditions
among other things, the performance conditions
attached to the vesting of these incentives, the
attached to the vesting of these incentives, the
likelihood of vesting and the nature of the awards
likelihood of vesting and the nature of the awards
(cash or equity). The Remuneration Committee
(cash or equity). The Remuneration Committee
may then grant a buyout up to the same value
may then grant a buyout up to the same value
as the lapsed value, where possible, under the
as the lapsed value, where possible, under the
Company’s incentive plans. To the extent that it
Company’s incentive plans. To the extent that it
is not possible or practical to provide the buyout
is not possible or practical to provide the buyout
The Group aims to provide a remuneration
The Group aims to provide a remuneration
within the terms of the Company’s existing
within the terms of the Company’s existing
package for all employees that is market
package for all employees that is market
incentive plans the Remuneration Committee
incentive plans the Remuneration Committee
competitive and operates the same reward
competitive and operates the same reward
may, in exceptional circumstances consider it
may, in exceptional circumstances consider it
and performance philosophy throughout the
and performance philosophy throughout the
appropriate to grant an award under a different
appropriate to grant an award under a different
business. As with many companies, the Group
business. As with many companies, the Group
structure to facilitate a buyout of outstanding
structure to facilitate a buyout of outstanding
operates variable pay plans primarily focussed
operates variable pay plans primarily focussed
awards held by an individual on recruitment.
awards held by an individual on recruitment.
80
80
on mid to senior management level. In some
on mid to senior management level. In some
Where an existing employee is promoted to
Where an existing employee is promoted to
to shareholders in the Annual Report on
to shareholders in the Annual Report on
the Board, the policy set out above would apply
the Board, the policy set out above would apply
Remuneration for the relevant financial year.
Remuneration for the relevant financial year.
from the date of promotion but there would
from the date of promotion but there would
be no retrospective application of the policy
be no retrospective application of the policy
The Company’s policy when setting fees for the
The Company’s policy when setting fees for the
in relation to subsisting incentive awards or
in relation to subsisting incentive awards or
appointment of new Non-Executive Directors is
appointment of new Non-Executive Directors is
remuneration arrangements. Accordingly,
remuneration arrangements. Accordingly,
to apply the policy which applies to current Non-
to apply the policy which applies to current Non-
prevailing elements of the remuneration package
prevailing elements of the remuneration package
Executive Directors.
Executive Directors.
for an existing employee would be honoured
for an existing employee would be honoured
and form part of the ongoing remuneration of
and form part of the ongoing remuneration of
the person concerned. These would be disclosed
the person concerned. These would be disclosed
Service Agreements and Letters of Appointment
Service Agreements and Letters of Appointment
Executive Directors
Executive Directors
Each of the Executive Directors has entered into a service contract with the Company.
Each of the Executive Directors has entered into a service contract with the Company.
Name
Name
Position
Position
Date of service
Date of service
agreement
agreement
Notice period by
Notice period by
Company (months)
Company (months)
Notice period by
Notice period by
Director (months)
Director (months)
Gary Morrison
Gary Morrison
TJ Kelly
TJ Kelly
CEO
CEO
CFO
CFO
11 June 2018
11 June 2018
21 November 2018
21 November 2018
12
12
6
6
12
12
6
6
Non-Executive Directors
Non-Executive Directors
The Non-Executive Directors have each entered into letters of appointment with the Company.
The Non-Executive Directors have each entered into letters of appointment with the Company.
Each independent Non-Executive Director’s term of office runs for an initial period of three years unless
Each independent Non-Executive Director’s term of office runs for an initial period of three years unless
terminated earlier upon written notice or upon their resignations. Non-Executive Directors are also
terminated earlier upon written notice or upon their resignations. Non-Executive Directors are also
subject to re-election at each AGM.
subject to re-election at each AGM.
The dates of appointment of each Non-Executive Director is set out below:
The dates of appointment of each Non-Executive Director is set out below:
Name
Name
Effective Date
Effective Date
of appointment
of appointment
Notice periods by
Notice periods by
Company (months)
Company (months)
Notice periods by
Notice periods by
Director (months)
Director (months)
Michael Cawley
Michael Cawley
14 October 2015
14 October 2015
Andy McCue
Andy McCue
14 October 2015
14 October 2015
Carl Shepherd
Carl Shepherd
1 October 2017
1 October 2017
Éimear Moloney
Éimear Moloney
27 November 2017
27 November 2017
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
81
81
LUB D KOH SAMUI CHAWENG BEACH
KOH SAMUI
Payment for Loss of Office
A good leaver reason may include cessation in the following circumstances:
The Remuneration Committee will honour Executive Directors’ contractual entitlements. Service
contracts do not contain liquidated damages clauses. If a contract is to be terminated, the
Remuneration Committee will determine such mitigation as it considers fair and reasonable in each
case. There are no contractual arrangements that would guarantee a pension with limited or no
abatement on severance or early retirement. There is no agreement between the Company and its
Executive Directors or employees providing for compensation for loss of office or employment that
occurs because of a takeover bid. The Remuneration Committee reserves the right to make additional
payments where such payments are made in good faith in discharge of an existing legal obligation (or
by way of damages for breach of such an obligation); or by way of settlement or compromise of any
claim arising in connection with the termination of an Executive Director’s office or employment; or in
relation to the provision of outplacement or similar services.
When determining any loss of office payment for a departing individual the Remuneration Committee
will always seek to minimise cost to the Company whilst seeking to address the circumstances at the
time.
► Death;
► Ill-health;
► Injury or disability;
► Redundancy;
► Retirement with agreement of employer;
► Employing company ceasing to be a Group company;
► Employing company transferred to a person who is not a Group Member; or
► At the discretion of the Remuneration Committee (as described above).
Cessation of employment in circumstances other than those set out above is cessation for other
reasons.
Change of Control
The Remuneration Committee’s policy on the vesting of incentives on a change of control is summarised
below:
Remuneration element
Treatment on exit
Name of Incentive Plan
Change of Control
Discretion
Salary, benefits and pension
Annual Bonus Plan
LTIP
Salary, benefits and pension will be paid over the notice period. The Company has
discretion to make a lump sum payment on termination equal to the salary, value of
benefits and value of company pension contributions payable during the notice period.
In all cases the Company will seek to mitigate any payments due.
Good leaver reason – pro-rated to time and performance for year of cessation.
Other reason – no bonus payable for year of cessation.
Good leaver reason – Pro-rated to time and performance in respect of each subsisting
LTIP award.
Other reason – Lapse of any unvested LTIP awards.
The Remuneration Committee has the following elements of discretion:
► to determine that an executive is a good leaver. It is the Remuneration Committee’s
intention to only use this discretion in circumstances where there is an appropriate
business case which will be explained in full to shareholders;
► to measure performance over the original performance period or at the date of
cessation. The Remuneration Committee will make this determination depending on
the type of good leaver reason resulting in the cessation;
► The Remuneration Committee’s policy is generally to pro-rate to time from the date
of grant to the date of cessation. It is the Remuneration Committee’s intention to
only use its discretion to adopt a different approach to pro-rating in circumstances
where there is an appropriate business case which will be explained in full to
shareholders.
82
Annual Bonus Plan
Pro-rated to time and performance to the date
of the change of control.
The Remuneration Committee has discretion to
continue the operation of the Plan to the end of
the bonus year.
LTIP
The number of shares subject to subsisting LTIP
awards vesting on a change of control will be
pro-rated to time and performance.
The Remuneration Committee retains absolute
discretion regarding the proportion vesting,
taking into account time and performance.
Options to the extent vested may be exercised
at any time during the period of six months
following the change of control and if not
so vested will lapse at the end of such
period unless the Remuneration Committee
determines that a longer period shall apply.
There is a presumption that the Remuneration
Committee will pro-rate to time. The
Remuneration Committee will only waive
pro-rating in exceptional circumstances where
it views the change of control as an event
which has provided a material enhanced value
to shareholders which will be fully explained
to shareholders. In all cases the performance
conditions must be satisfied.
83
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Illustrations of the Application of the Remuneration Policy
Illustrations of the Application of the Remuneration Policy
Statement of Conditions elsewhere in the Company
Statement of Conditions elsewhere in the Company
The charts below illustrate the remuneration that would be paid to each of the Executive Directors,
The charts below illustrate the remuneration that would be paid to each of the Executive Directors,
The Remuneration Committee considers pay and employment conditions across the Company when
The Remuneration Committee considers pay and employment conditions across the Company when
based on salaries with effect from 1 January 2019, under three different performance scenarios: (i)
based on salaries with effect from 1 January 2019, under three different performance scenarios: (i)
reviewing the remuneration of the Executive Directors and other senior employees. In particular, the
reviewing the remuneration of the Executive Directors and other senior employees. In particular, the
Minimum; (ii) On-target; and (iii) Maximum. The elements of remuneration have been categorised into
Minimum; (ii) On-target; and (iii) Maximum. The elements of remuneration have been categorised into
Remuneration Committee considers the range of base pay increases across the Group as well as wider
Remuneration Committee considers the range of base pay increases across the Group as well as wider
three components: (i) Fixed; (ii) Annual Bonus; and (iii) LTIP, with the assumptions set out below:
three components: (i) Fixed; (ii) Annual Bonus; and (iii) LTIP, with the assumptions set out below:
workforce remuneration and related policies. While the Company has not to date directly consulted
workforce remuneration and related policies. While the Company has not to date directly consulted
Element
Element
Minimum
Minimum
On-Target
On-Target
Maximum
Maximum
Salary, benefits and
Salary, benefits and
pension
pension
Included
Included
Included
Included
Included
Included
with employees as part of the process of reviewing executive pay and formulating the remuneration
with employees as part of the process of reviewing executive pay and formulating the remuneration
policy set out in this report, the Company does receive updates from the Executive Directors on their
policy set out in this report, the Company does receive updates from the Executive Directors on their
discussions and reviews with senior management and employees. In addition, the Remuneration
discussions and reviews with senior management and employees. In addition, the Remuneration
Committee will be reviewing its approach in light of the publication of the 2018 UK Corporate
Committee will be reviewing its approach in light of the publication of the 2018 UK Corporate
Governance Code, which recommends that engagement with the workforce takes place to explain
Governance Code, which recommends that engagement with the workforce takes place to explain
how executive remuneration aligns with wider Company pay policy.
how executive remuneration aligns with wider Company pay policy.
Annual bonus
Annual bonus
No variable payable
No variable payable
CEO: 56% of salary
CEO: 56% of salary
CFO: 56% of salary
CFO: 56% of salary
CEO: 100% of salary
CEO: 100% of salary
CFO: 100% of salary
CFO: 100% of salary
Consideration of Shareholder Views
Consideration of Shareholder Views
The Remuneration Committee takes the views of shareholders seriously and these views are taken
The Remuneration Committee takes the views of shareholders seriously and these views are taken
into account in shaping remuneration policy and practice. Shareholder views are considered when
into account in shaping remuneration policy and practice. Shareholder views are considered when
evaluating and setting remuneration strategy and the Remuneration Committee commits to consulting
evaluating and setting remuneration strategy and the Remuneration Committee commits to consulting
with key shareholders prior to any significant changes to its remuneration policy. The Remuneration
with key shareholders prior to any significant changes to its remuneration policy. The Remuneration
Committee consulted with major shareholders during the formulation of this revised remuneration
Committee consulted with major shareholders during the formulation of this revised remuneration
policy.
policy.
LTIP
LTIP
No LTIP vesting
No LTIP vesting
CEO: 62.5% of maximum
CEO: 62.5% of maximum
opportunity
opportunity
CFO: 62.5% of maximum
CFO: 62.5% of maximum
opportunity
opportunity
CEO: 125% of salary
CEO: 125% of salary
CFO: 100% of salary
CFO: 100% of salary
The level of annual bonus payment for on-target performance reflects (i) the stretching nature of
The level of annual bonus payment for on-target performance reflects (i) the stretching nature of
the performance targets (i.e. on-target performance should not be viewed as the level of reward for
the performance targets (i.e. on-target performance should not be viewed as the level of reward for
“average” performance), (ii) the relatively modest annual bonus opportunity of 100% of salary and (iii)
“average” performance), (ii) the relatively modest annual bonus opportunity of 100% of salary and (iii)
the fact that total target remuneration of the Executive Directors is around median at this level
the fact that total target remuneration of the Executive Directors is around median at this level
of potential bonus outturn for on-target performance.
of potential bonus outturn for on-target performance.
Dividend equivalents have not been added to LTIP share awards. In line with the new UK reporting
Dividend equivalents have not been added to LTIP share awards. In line with the new UK reporting
regulations, the maximum column has been extended to reflect the potential impact of 50% share price
regulations, the maximum column has been extended to reflect the potential impact of 50% share price
appreciation on the shares which vest.
appreciation on the shares which vest.
CEO(€000’s)
CEO(€000’s)
€1,453k
€1,453k
€1,722k
€1,722k
Maximum
Maximum
33%
33%
30%
30%
37%
37%
On-Target
On-Target
46%
46%
23%
23%
32%
32%
€1,062k
€1,062k
Fixed
Fixed
100%
100%
€484k
€484k
€-
€-
€200
€200
€400
€400
€600
€600
€800
€800
€1,000
€1,000
€1,200
€1,200
€1,400
€1,400
€1,600
€1,600
€1,800
€1,800
€2,000
€2,000
CFO(€000’s)
CFO(€000’s)
€906k
€906k
€1,054k
€1,054k
Maximum
Maximum
35%
35%
33%
33%
33%
33%
On-Target
On-Target
47%
47%
25%
25%
29%
29%
€666k
€666k
Fixed
Fixed
100%
100%
€316k
€316k
Fixed
Fixed
Annual Bonus
Annual Bonus
LTIP
LTIP
LTIP value with 50%
LTIP value with 50%
share price growth
share price growth
€-
€-
€200
€200
€400
€400
€600
€600
€800
€800
€1,000
€1,000
€1,200
€1,200
84
84
AKTION ERICEIRA SURF HOSTEL
AKTION ERICEIRA SURF HOSTEL
ERICEIRA
ERICEIRA
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
ANNUAL REPORT
ON REMUNERATION
Single Total Figure of Remuneration
Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Executive
Director in respect of the 2018 financial year. Comparative figures for the 2017 financial year have also
been provided. Figures provided have been calculated in accordance with The Large and Medium-Sized
Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (Schedule 8 to the
Regulations).
Name
Salary
(€’000)
Benefits (1)
(€’000)
Bonus (2)
(€’000)
LTIP
(€’000)
Pension
(€’000)
Total
(€’000)
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Gary
Morrison(3)
233.2
TJ Kelly(4)
33.6
-
-
5.7
0.4
-
-
Feargal
Mooney(5)
Mari
Hurley(6)
187.0
410.0
3.8
8.9
87.3
282.0
1.4
4.8
45.0
-
-
-
-
-
308.9
-
-
-
-
-
-
-
-
-
23.3
2.0
-
-
307.2
36.0
-
-
18.7
41.0
209.5
768.8
4.7
16.9
93.4
303.7
(1) Benefits represent payments for health insurance and life assurance policies.
(2) An explanation of the bonuses paid for 2018 is set out later in this report.
(3) Gary Morrison was appointed to the Board on 11 June 2018.
(4) TJ Kelly was appointed to the Board on 21 November 2018.
(5)
Feargal Mooney stepped down from the Board on 11 June 2018. As explained in the section on payments to past Directors below, he remains
employed by (and continues to be available to) the Company until 11 June 2019.
(6) Mari Hurley stepped down from the Board on 10 April 2018. She remained in employment until the expiry of her notice period on 17 June 2018.
Non-Executive Directors
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive
Director.
Name
Michael
Cawley(1)
Andy
McCue(2)
Carl
Shepherd(3)
Éimear
Moloney(4)
Fees
145.0
74.0
60.0
67.0
Former Directors
Richard
Segal(5)
-
2018
(€’000)
2017
(€’000)
Taxable
Benefits
Other
payments
Total
Fees
Taxable
Benefits
Other
payments
Total
-
-
-
-
-
-
-
-
-
-
145.0
74.0
74.0
67.0
60.0
15.0
67.0
5.9
-
145.0
-
-
-
-
-
-
-
-
-
-
74.0
67.0
15.0
5.9
145.0
(1)
Chairman of the Board and Chair of the Nominations Committee since 1 December 2017. Previously Senior Independent Director and Chair of Audit
Committee.
(2) Chair of Remuneration Committee and, from 1 December 2017, Senior Independent Director.
(3) Appointed to the Board on 1 October 2017.
(4) Appointed to the Board on 27 November 2017 and Chair of the Audit Committee from 1 December 2017.
(5)
Company Chairman and Chair of Nominations Committee until 1 December 2017. Stepped down from the Board on 31 December 2017.
LAVENDER CIRCUS HOSTEL
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Additional Information Regarding Single Figure Table
Additional Information Regarding Single Figure Table
Annual Bonus – Feargal Mooney
Annual Bonus – Feargal Mooney
Performance
Performance
metric
metric
Weighting
Weighting
Threshold
Threshold
performance
performance
level
level
% of max
% of max
payout
payout
of relevant
of relevant
element at
element at
threshold
threshold
Maximum
Maximum
performance
performance
level
level
% of max
% of max
payout of
payout of
relevant
relevant
element at
element at
max
max
Actual
Actual
performance
performance
Resulting
Resulting
payout
payout
(% of award)(2)
(% of award)(2)
Feargal Mooney was entitled to consideration for a bonus for 2018, pro-rated to reflect his service as
Feargal Mooney was entitled to consideration for a bonus for 2018, pro-rated to reflect his service as
a Director until 11 June 2018. The bonus was subject to the achievement of performance conditions
a Director until 11 June 2018. The bonus was subject to the achievement of performance conditions
based on Adjusted PBT (50% weighting), bookings (30% weighting) and personal performance (20%
based on Adjusted PBT (50% weighting), bookings (30% weighting) and personal performance (20%
Adjusted
Adjusted
EBITDA(1)
EBITDA(1)
40%
40%
€21.4m
€21.4m
weighting). The table below sets out the details of the performance targets that were used to determine
weighting). The table below sets out the details of the performance targets that were used to determine
Total Bednights
Total Bednights
30%
30%
27.1m
27.1m
the annual bonus outcome.
the annual bonus outcome.
Performance
Performance
metric
metric
Weighting
Weighting
Threshold
Threshold
performance
performance
level
level
% of max
% of max
payout
payout
of relevant
of relevant
element at
element at
threshold
threshold
Maximum
Maximum
performance
performance
level
level
% of max
% of max
payout
payout
of relevant
of relevant
element
element
at max
at max
Actual
Actual
performance
performance
Resulting
Resulting
payout
payout
(% of award)
(% of award)
Adjusted Profit
Adjusted Profit
Before Tax
Before Tax
50%
50%
€24.2m
€24.2m
6.8%
6.8%
€28.3m
€28.3m
100%
100%
€21.7m
€21.7m
Bookings
Bookings
30%
30%
7.5m
7.5m
6.8%
6.8%
8.3m
8.3m
100%
100%
7.6m
7.6m
Personal
Personal
Performance
Performance
20%
20%
€24.2m
€24.2m
Adjusted PBT
Adjusted PBT
and personal
and personal
performance
performance
targets
targets
25.0%
25.0%
100%
100%
achievement
achievement
of personal
of personal
performance
performance
targets
targets
100%
100%
€21.7m
€21.7m
Adjusted PBT
Adjusted PBT
0%
0%
0%
0%
0%
0%
For the 2018 financial year, Adjusted PBT (before bonus payments and adjusting for the deferred
For the 2018 financial year, Adjusted PBT (before bonus payments and adjusting for the deferred
revenue balance at 31 December 2018 that resulted from the introduction of free cancellation booking
revenue balance at 31 December 2018 that resulted from the introduction of free cancellation booking
option) was used as an underpin on which any payout under the annual bonus is contingent. For
option) was used as an underpin on which any payout under the annual bonus is contingent. For
personal performance, the bonus was based on the achievement of individual objectives and the
personal performance, the bonus was based on the achievement of individual objectives and the
resulting performance rating. As the threshold level of Adjusted PBT was not achieved, no bonus was
resulting performance rating. As the threshold level of Adjusted PBT was not achieved, no bonus was
payable to Feargal Mooney under any of the performance metrics.
payable to Feargal Mooney under any of the performance metrics.
Mari Hurley was not eligible to participate in the bonus plan for 2018.
Mari Hurley was not eligible to participate in the bonus plan for 2018.
Annual Bonus – Gary Morrison
Annual Bonus – Gary Morrison
Gary Morrison was appointed to the Board on 11 June 2018 and was entitled to consideration for a
Gary Morrison was appointed to the Board on 11 June 2018 and was entitled to consideration for a
bonus for the year, pro-rated to reflect his period of service during the year. The maximum potential
bonus for the year, pro-rated to reflect his period of service during the year. The maximum potential
bonus Gary was eligible to receive was 100% of his pro-rated salary. The Remuneration Committee
bonus Gary was eligible to receive was 100% of his pro-rated salary. The Remuneration Committee
used its discretion under the remuneration policy to set different performance conditions than those
used its discretion under the remuneration policy to set different performance conditions than those
which were set for Feargal Mooney at the start of 2018 that reflected circumstances existing at the time
which were set for Feargal Mooney at the start of 2018 that reflected circumstances existing at the time
of his appointment. Gary’s bonus was subject to the achievement of performance conditions based on
of his appointment. Gary’s bonus was subject to the achievement of performance conditions based on
Adjusted EBITDA (40% weighting), total bednights (30% weighting) and personal performance (30%
Adjusted EBITDA (40% weighting), total bednights (30% weighting) and personal performance (30%
weighting).
weighting).
The table below sets out the details of the performance targets that were used to determine the annual
The table below sets out the details of the performance targets that were used to determine the annual
bonus outcome.
bonus outcome.
TJ Kelly was not eligible to participate in the bonus plan for 2018.
TJ Kelly was not eligible to participate in the bonus plan for 2018.
Personal
Personal
Performance(3)
Performance(3)
30%
30%
€17.3m
€17.3m
Adjusted PBT
Adjusted PBT
and personal
and personal
performance
performance
0%
0%
0%
0%
0%
0%
€23.5m
€23.5m
100%
100%
€21.9m
€21.9m
23.7%
23.7%
29.8m
29.8m
100%
100%
27.3m
27.3m
7.5%
7.5%
100%
100%
achievement
achievement
of personal
of personal
performance
performance
targets
targets
100%
100%
25%
25%
achievement
achievement
of personal
of personal
performance
performance
targets
targets
25.0%
25.0%
1. Adjusted EBITDA is calculated before any bonus payments for the 2018 financial year.
1. Adjusted EBITDA is calculated before any bonus payments for the 2018 financial year.
2.
2.
For the 2018 financial year, any annual bonus payout was contingent on an Adjusted PBT underpin being met. The Adjusted PBT underpin set for Gary
For the 2018 financial year, any annual bonus payout was contingent on an Adjusted PBT underpin being met. The Adjusted PBT underpin set for Gary
Morrison required the achievement of Adjusted PBT of €17.3m after any bonus payments. This reflected circumstances that existed at the time of his
Morrison required the achievement of Adjusted PBT of €17.3m after any bonus payments. This reflected circumstances that existed at the time of his
appointment and so was different to the underpin applied to Feargal Mooney’s bonus, which was set earlier in the year. The Remuneration Committee is
appointment and so was different to the underpin applied to Feargal Mooney’s bonus, which was set earlier in the year. The Remuneration Committee is
satisfied that the underpin was appropriate in the specific context.
satisfied that the underpin was appropriate in the specific context.
3.
3.
Further detail of the personal element of Gary’s bonus is set out below (with the Remuneration Committee considering that disclosing any further
Further detail of the personal element of Gary’s bonus is set out below (with the Remuneration Committee considering that disclosing any further
information would raise issues of commercial sensitivity and so would not be in shareholders’ interests):
information would raise issues of commercial sensitivity and so would not be in shareholders’ interests):
Objective/Metrics
Objective/Metrics
Performance achieved
Performance achieved
Strategic objectives - Growth in Hostelworld app bookings
Strategic objectives - Growth in Hostelworld app bookings
See note below
See note below
Culture objectives
Culture objectives
Fully achieved: enhanced career development framework
Fully achieved: enhanced career development framework
of the Employee Value Proposition
of the Employee Value Proposition
Finance objectives e.g. Realignment of finance resources
Finance objectives e.g. Realignment of finance resources
Supply objectives e.g. Trial new ancillary revenue services
Supply objectives e.g. Trial new ancillary revenue services
Not achieved
Not achieved
See note below
See note below
Strategy and supply objectives were not achieved in the period, although it is worth noting that the
Strategy and supply objectives were not achieved in the period, although it is worth noting that the
business was determining focus areas throughout the period as the new Chief Executive Officer
business was determining focus areas throughout the period as the new Chief Executive Officer
undertook a strategic review. The Remuneration Committee determined that no bonus was payable for
undertook a strategic review. The Remuneration Committee determined that no bonus was payable for
these objectives.
these objectives.
Based on overall performance, the table below summarises the annual bonus awarded to Gary
Based on overall performance, the table below summarises the annual bonus awarded to Gary
Morrison in respect of 2018:
Morrison in respect of 2018:
Director
Director
Maximum bonus
Maximum bonus
opportunity
opportunity
(% of salary)
(% of salary)
Bonus awarded
Bonus awarded
(% of maximum)
(% of maximum)
Bonus awarded
Bonus awarded
(% of salary)
(% of salary)
Bonus awarded
Bonus awarded
(€)
(€)
Gary Morrison
Gary Morrison
100% (1)
100% (1)
19.3%
19.3%
19.3%
19.3%
45,000
45,000
1. Pro-rated for the period from 11 June 2018 to 31 December 2018.
1. Pro-rated for the period from 11 June 2018 to 31 December 2018.
Long Term Incentives Vesting Subject to Performance Period ending in 2018
Long Term Incentives Vesting Subject to Performance Period ending in 2018
Feargal Mooney holds the following LTIP award granted on 5 April 2016, with vesting subject to the
Feargal Mooney holds the following LTIP award granted on 5 April 2016, with vesting subject to the
satisfaction of performance conditions to the end of 31 December 2018. Mari Hurley was also granted
satisfaction of performance conditions to the end of 31 December 2018. Mari Hurley was also granted
an LTIP award in April 2016, which lapsed on her cessation of employment.
an LTIP award in April 2016, which lapsed on her cessation of employment.
Director
Director
LTIP
LTIP
Value
Value
of award
of award
Face value of
Face value of
award at grant
award at grant
(€’000)
(€’000)
Number
Number
of shares
of shares
awarded (1)
awarded (1)
Exercise Price
Exercise Price
(€)
(€)
Percentage of
Percentage of
award vesting
award vesting
at threshold
at threshold
performance
performance
Performance
Performance
period end
period end
date
date
Weighting
Weighting
Feargal
Feargal
Mooney
Mooney
LTIP – nil
LTIP – nil
cost option
cost option
125% of salary
125% of salary
500.0
500.0
215,918
215,918
Nil
Nil
25%
25%
31 December
31 December
2018
2018
Adjusted EPS
Adjusted EPS
(70%)
(70%)
Absolute TSR
Absolute TSR
(30%)
(30%)
88
88
1. The number of shares awarded was calculated using the closing share price on Admission, which was 185.00p, as disclosed in the Admission document.
1. The number of shares awarded was calculated using the closing share price on Admission, which was 185.00p, as disclosed in the Admission document.
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Vesting of this award was subject to achievement of an Adjusted EPS performance condition (applying
Vesting of this award was subject to achievement of an Adjusted EPS performance condition (applying
to 70% of the awards) and an absolute TSR performance condition (applying to 30% of the awards).
to 70% of the awards) and an absolute TSR performance condition (applying to 30% of the awards).
Subsequent to the year end, the performance conditions for the award were tested, leading to a nil
Subsequent to the year end, the performance conditions for the award were tested, leading to a nil
vesting level, as set out below.
vesting level, as set out below.
Adjusted EPS condition (70%)
Adjusted EPS condition (70%)
Annual average Adjusted EPS growth
Annual average Adjusted EPS growth
Vesting
Vesting
Less than 6.6% p.a.
Less than 6.6% p.a.
6.6% p.a.
6.6% p.a.
14.0% p.a. or above
14.0% p.a. or above
0%
0%
25%
25%
100%
100%
Long Term Incentives Awarded in 2017
Long Term Incentives Awarded in 2017
The table below sets out the details of the LTIP award granted to Feargal Mooney on 29 March 2017.
The table below sets out the details of the LTIP award granted to Feargal Mooney on 29 March 2017.
(Mari Hurley was also granted an LTIP award in March 2017, which lapsed upon her cessation of
(Mari Hurley was also granted an LTIP award in March 2017, which lapsed upon her cessation of
employment.)
employment.)
Director
Director
LTIP
LTIP
Value of
Value of
Face value of
Face value of
award
award
award (€’000)
award (€’000)
Number
Number
of shares
of shares
awarded (1)
awarded (1)
Percentage of
Percentage of
Exercise
Exercise
award vesting
award vesting
Performance
Performance
Price (€)
Price (€)
at threshold
at threshold
period end date
period end date
Weighting (2)
Weighting (2)
performance
performance
Feargal
Feargal
LTIP – nil cost
LTIP – nil cost
125% of
125% of
Mooney
Mooney
option
option
salary
salary
512.5
512.5
194,121
194,121
Nil
Nil
25%
25%
31 December
31 December
Adjusted EPS (70%)
Adjusted EPS (70%)
2019
2019
Absolute TSR (30%)
Absolute TSR (30%)
Between 6.6% p.a. and 14.0% p.a.
Between 6.6% p.a. and 14.0% p.a.
Straight line vesting between 25% and 100%
Straight line vesting between 25% and 100%
Outcome:
Outcome:
(5.9%)
(5.9%)
0%
0%
1.
1.
The number of shares awarded was calculated using the closing share price on 28 March 2017, which was 228.25p. To the extent the awards vest,
The number of shares awarded was calculated using the closing share price on 28 March 2017, which was 228.25p. To the extent the awards vest,
a dividend equivalent award will be made at the end of the vesting period.
a dividend equivalent award will be made at the end of the vesting period.
2.
2.
The performance targets for this award are the same as those applying to the award granted in 2016, as set out in the tables above.
The performance targets for this award are the same as those applying to the award granted in 2016, as set out in the tables above.
Absolute TSR condition (30%)
Absolute TSR condition (30%)
Annualised TSR of the Company over the
Annualised TSR of the Company over the
three- year period to 31 December 2018
three- year period to 31 December 2018
Less than 10.0% p.a.
Less than 10.0% p.a.
10.0% p.a.
10.0% p.a.
15.0% p.a. or above
15.0% p.a. or above
Vesting
Vesting
0%
0%
25%
25%
100%
100%
Between 10.0% and 15.0% p.a.
Between 10.0% and 15.0% p.a.
Straight line vesting between 25% and 100%
Straight line vesting between 25% and 100%
Outcome:
Outcome:
2.14%
2.14%
0%
0%
Based on the above performance outcome, the awards have vested as follows:
Based on the above performance outcome, the awards have vested as follows:
Director
Director
Number of
Number of
shares awarded
shares awarded
Number of
Number of
shares vesting
shares vesting
Number of
Number of
shares lapsing
shares lapsing
Dividend
Dividend
equivalent award (1)
equivalent award (1)
Total estimated
Total estimated
value (€)
value (€)
Feargal Mooney
Feargal Mooney
215,918
215,918
-
-
215,918
215,918
Nil
Nil
Nil
Nil
1. Dividend equivalents are paid on vested shares to reflect the value of dividends which would have been paid during the performance period.
1. Dividend equivalents are paid on vested shares to reflect the value of dividends which would have been paid during the performance period.
Long Term Incentives Awarded in 2018
Long Term Incentives Awarded in 2018
The table below sets out the details of the LTIP awards granted in the 2018 financial year.
The table below sets out the details of the LTIP awards granted in the 2018 financial year.
Director
Director
LTIP
LTIP
Value of
Value of
Face value of
Face value of
award
award
award (€’000)
award (€’000)
Number
Number
of shares
of shares
awarded
awarded
Percentage of
Percentage of
Exercise
Exercise
award vesting
award vesting
Performance
Performance
Price (€)
Price (€)
at threshold
at threshold
period end date
period end date
Weighting (1)
Weighting (1)
performance
performance
Feargal
Feargal
Mooney
Mooney
LTIP – nil
LTIP – nil
125% of
125% of
cost option
cost option
salary
salary
522.8
522.8
117,612 (2)
117,612 (2)
Nil
Nil
25%
25%
31 December
31 December
Adjusted EPS (70%)
Adjusted EPS (70%)
2020
2020
Absolute TSR (30%)
Absolute TSR (30%)
Gary
Gary
LTIP – nil
LTIP – nil
150% of
150% of
Morrison
Morrison
cost option
cost option
salary
salary
627.3
627.3
175,723 (3)
175,723 (3)
Nil
Nil
25%
25%
31 December
31 December
Adjusted EPS (70%)
Adjusted EPS (70%)
2020
2020
Absolute TSR (30%)
Absolute TSR (30%)
TJ Kelly
TJ Kelly
LTIP – nil
LTIP – nil
cost option
cost option
75% of
75% of
salary
salary
221.25
221.25
98,520 (4)
98,520 (4)
Nil
Nil
25%
25%
31 December
31 December
Adjusted EPS (70%)
Adjusted EPS (70%)
2020
2020
Absolute TSR (30%)
Absolute TSR (30%)
1. The performance targets for these awards are the same as those applying to the award granted in 2016, as set out in the tables above.
1. The performance targets for these awards are the same as those applying to the award granted in 2016, as set out in the tables above.
2. This award was granted on 11 April 2018. The number of shares awarded was calculated using the closing share price on 10 April 2018, which was 387.50p.
2. This award was granted on 11 April 2018. The number of shares awarded was calculated using the closing share price on 10 April 2018, which was 387.50p.
3. This award was granted on 29 June 2018. The number of shares awarded was calculated using the closing share price on 28 June 2018, which was 316.00p.
3. This award was granted on 29 June 2018. The number of shares awarded was calculated using the closing share price on 28 June 2018, which was 316.00p.
4.
4.
This award was granted on 5 December 2018. The number of shares awarded was calculated using the closing share price on 4 December 2018, which was
This award was granted on 5 December 2018. The number of shares awarded was calculated using the closing share price on 4 December 2018, which was
90
90
200.00p.
200.00p.
5. To the extent any of the above awards vest, a dividend equivalent award will be made at the end of the vesting period.
5. To the extent any of the above awards vest, a dividend equivalent award will be made at the end of the vesting period.
Recruitment Arrangements for New Directors
Recruitment Arrangements for New Directors
Gary Morrison
Gary Morrison
Gary Morrison joined as Chief Executive Officer and as a Director on 11 June 2018. His remuneration on
Gary Morrison joined as Chief Executive Officer and as a Director on 11 June 2018. His remuneration on
appointment included a basic salary of €418,200, a 10% pension contribution and a standard benefits
appointment included a basic salary of €418,200, a 10% pension contribution and a standard benefits
package in line with the remuneration policy. He has an annual bonus opportunity of 100% of basic
package in line with the remuneration policy. He has an annual bonus opportunity of 100% of basic
salary, which for 2018 was pro-rated to reflect his period of service on the Board during the year. As
salary, which for 2018 was pro-rated to reflect his period of service on the Board during the year. As
explained in the Annual Statement from the Chairman of the Remuneration Committee, he was granted
explained in the Annual Statement from the Chairman of the Remuneration Committee, he was granted
an LTIP award in June 2018 at a level of 150% of basic salary.
an LTIP award in June 2018 at a level of 150% of basic salary.
TJ Kelly
TJ Kelly
TJ Kelly joined as Chief Financial Officer and as a Director on 21 November 2018. His remuneration on
TJ Kelly joined as Chief Financial Officer and as a Director on 21 November 2018. His remuneration on
appointment included a basic salary of €295,000, a 6% pension contribution and a standard benefits
appointment included a basic salary of €295,000, a 6% pension contribution and a standard benefits
package in line with the remuneration policy. He was not entitled to participate in the annual bonus
package in line with the remuneration policy. He was not entitled to participate in the annual bonus
scheme for 2018. From 2019, and subject to shareholder approval of the new remuneration policy at the
scheme for 2018. From 2019, and subject to shareholder approval of the new remuneration policy at the
AGM, he will be entitled to an annual bonus opportunity of 100% of basic salary. He was granted an LTIP
AGM, he will be entitled to an annual bonus opportunity of 100% of basic salary. He was granted an LTIP
award in December 2018 at a level of 75% of basic salary.
award in December 2018 at a level of 75% of basic salary.
Payments to Past Directors / Payments for Loss of Office
Payments to Past Directors / Payments for Loss of Office
Feargal Mooney
Feargal Mooney
On 14 May 2018, it was announced that Feargal Mooney would step down as Chief Executive Officer
On 14 May 2018, it was announced that Feargal Mooney would step down as Chief Executive Officer
and as a Director with effect from 11 June 2018. He will remain employed by (and continue to be
and as a Director with effect from 11 June 2018. He will remain employed by (and continue to be
available to) the Company until the expiry of his 12-month notice period on 11 June 2019. The following
available to) the Company until the expiry of his 12-month notice period on 11 June 2019. The following
arrangements have been agreed in connection with his departure:
arrangements have been agreed in connection with his departure:
► Salary, benefits and pension – pursuant to his contract of employment and the remuneration
► Salary, benefits and pension – pursuant to his contract of employment and the remuneration
policy, he will continue to receive salary, benefits and pension until 11 June 2019 (including any
policy, he will continue to receive salary, benefits and pension until 11 June 2019 (including any
period of garden leave). For the period from 12 June 2018 until 31 December 2018, this amounted to
period of garden leave). For the period from 12 June 2018 until 31 December 2018, this amounted to
salary of €231,172, benefits with a value of €4,694 and pension of €23,117. The remaining payments
salary of €231,172, benefits with a value of €4,694 and pension of €23,117. The remaining payments
until 11 June 2019 are anticipated to be salary of €185,510, benefits with a value of €3,663 and
until 11 June 2019 are anticipated to be salary of €185,510, benefits with a value of €3,663 and
pension of €18,551.
pension of €18,551.
► Annual bonus – the Remuneration Committee determined that he was eligible to receive an annual
► Annual bonus – the Remuneration Committee determined that he was eligible to receive an annual
bonus for the 2018 financial year, subject to the achievement of the applicable performance targets
bonus for the 2018 financial year, subject to the achievement of the applicable performance targets
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and with his bonus opportunity reduced on a pro-rata basis to cover the period from 1 January 2018
and with his bonus opportunity reduced on a pro-rata basis to cover the period from 1 January 2018
The number of shares held by the former Executive Directors as at the date of their departure from the
The number of shares held by the former Executive Directors as at the date of their departure from the
to 11 June 2018. As disclosed above, no bonus was payable to Feargal for 2018 as the threshold level
to 11 June 2018. As disclosed above, no bonus was payable to Feargal for 2018 as the threshold level
Board is set out below.
Board is set out below.
of Adjusted PBT was not achieved. He will not participate in the 2019 bonus plan.
of Adjusted PBT was not achieved. He will not participate in the 2019 bonus plan.
► LTIP – pursuant to the remuneration policy and the rules of the LTIP, the Remuneration Committee
► LTIP – pursuant to the remuneration policy and the rules of the LTIP, the Remuneration Committee
determined that Feargal’s subsisting LTIP awards will continue until the normal time of vesting, at
determined that Feargal’s subsisting LTIP awards will continue until the normal time of vesting, at
which point they will vest subject to performance against the relevant targets. The rules of the plan
which point they will vest subject to performance against the relevant targets. The rules of the plan
state that, unless the Remuneration Committee determines otherwise, awards will be pro-rated up
state that, unless the Remuneration Committee determines otherwise, awards will be pro-rated up
to the date of cessation of employment (i.e. 11 June 2019 in Feargal’s case). For Feargal’s 2016 LTIP
to the date of cessation of employment (i.e. 11 June 2019 in Feargal’s case). For Feargal’s 2016 LTIP
award, his date of cessation is after the vesting date in April 2019 and so no pro rating is applicable
award, his date of cessation is after the vesting date in April 2019 and so no pro rating is applicable
(although, as noted above, this award will lapse in full due to the performance conditions not being
(although, as noted above, this award will lapse in full due to the performance conditions not being
met). Feargal’s 2017 award will be pro-rated using his date of cessation to calculate the reduction in
met). Feargal’s 2017 award will be pro-rated using his date of cessation to calculate the reduction in
shares as per the LTIP rules and policy. The Remuneration Committee determined to use a different
shares as per the LTIP rules and policy. The Remuneration Committee determined to use a different
approach for the pro-rating of Feargal’s 2018 LTIP award, with the date on which Feargal stepped
approach for the pro-rating of Feargal’s 2018 LTIP award, with the date on which Feargal stepped
down from the Board (11 June 2018) being used to calculate the pro rata reduction, rather than the
down from the Board (11 June 2018) being used to calculate the pro rata reduction, rather than the
later date of cessation, resulting in a lower potential vesting value. Details of the vesting of the 2017
later date of cessation, resulting in a lower potential vesting value. Details of the vesting of the 2017
Director
Director
Beneficially owned shares
Beneficially owned shares
Unvested LTIP interests subject
Unvested LTIP interests subject
to performance conditions
to performance conditions
Feargal Mooney
Feargal Mooney
Mari Hurley
Mari Hurley
240,033
240,033
19,504
19,504
527,651(1)
527,651(1)
203,011(2)
203,011(2)
1.
1.
Feargal Mooney stepped down from the Board on 11 June 2018. The treatment of his unvested LTIP awards is set out above in the section on payments
Feargal Mooney stepped down from the Board on 11 June 2018. The treatment of his unvested LTIP awards is set out above in the section on payments
to past Directors.
to past Directors.
2. Mari Hurley stepped down from the Board on 10 April 2018. Her unvested LTIPs awards lapsed upon the cessation of her employment on 17 June 2018.
2. Mari Hurley stepped down from the Board on 10 April 2018. Her unvested LTIPs awards lapsed upon the cessation of her employment on 17 June 2018.
Details of the interests held in shares by Non-Executive Directors as at 31 December 2018 are set out
Details of the interests held in shares by Non-Executive Directors as at 31 December 2018 are set out
below. Non-Executive Directors are not subject to a shareholding requirement.
below. Non-Executive Directors are not subject to a shareholding requirement.
and 2018 LTIP awards will be disclosed in future years following the end of the relevant performance
and 2018 LTIP awards will be disclosed in future years following the end of the relevant performance
Director
Director
Beneficially owned shares
Beneficially owned shares
periods.
periods.
Mari Hurley
Mari Hurley
On 19 December 2017, it was announced that Mari Hurley intended to resign from the Board. She
On 19 December 2017, it was announced that Mari Hurley intended to resign from the Board. She
stepped down from the Board on 10 April 2018 and remained in employment with Hostelworld until the
stepped down from the Board on 10 April 2018 and remained in employment with Hostelworld until the
expiry of her six-month notice period on 17 June 2018. As disclosed in last year’s remuneration report,
expiry of her six-month notice period on 17 June 2018. As disclosed in last year’s remuneration report,
her termination arrangements were as follows:
her termination arrangements were as follows:
Michael Cawley
Michael Cawley
Andy McCue
Andy McCue
Carl Shepherd
Carl Shepherd
Éimear Moloney
Éimear Moloney
81,000
81,000
25,000
25,000
-
-
-
-
► Salary, benefits and pension – pursuant to her contract of employment and the remuneration policy,
► Salary, benefits and pension – pursuant to her contract of employment and the remuneration policy,
she continued to receive salary, benefits and pension during her notice period to 17 June 2018.
she continued to receive salary, benefits and pension during her notice period to 17 June 2018.
of this report.
of this report.
No changes in the above Directors’ interests have taken place between 31 December 2018 and the date
No changes in the above Directors’ interests have taken place between 31 December 2018 and the date
► Annual bonus – the Remuneration Committee determined that Mari would not receive a bonus for
► Annual bonus – the Remuneration Committee determined that Mari would not receive a bonus for
2017 and would not be eligible to participate in the 2018 bonus plan.
2017 and would not be eligible to participate in the 2018 bonus plan.
► LTIP – the Remuneration Committee determined that Mari’s subsisting awards would lapse upon her
► LTIP – the Remuneration Committee determined that Mari’s subsisting awards would lapse upon her
cessation of employment. She did not receive an LTIP award in 2018.
cessation of employment. She did not receive an LTIP award in 2018.
Statement of Directors’ Shareholdings and Share Interests
Statement of Directors’ Shareholdings and Share Interests
The number of shares of the Company in which the current Executive Directors had a beneficial interest
The number of shares of the Company in which the current Executive Directors had a beneficial interest
and details of long term incentive interests as at 31 December 2018 are set out in the table below. As set
and details of long term incentive interests as at 31 December 2018 are set out in the table below. As set
out in the revised remuneration policy, the Remuneration Committee has adopted formal shareholding
out in the revised remuneration policy, the Remuneration Committee has adopted formal shareholding
guidelines that encourage the Executive Directors to build up and hold a shareholding equivalent to
guidelines that encourage the Executive Directors to build up and hold a shareholding equivalent to
200% of basic salary. This has been increased from the previous guideline level of 150% of basic salary.
200% of basic salary. This has been increased from the previous guideline level of 150% of basic salary.
Director
Director
Beneficially owned
Beneficially owned
shares
shares
Shareholding
Shareholding
requirement
requirement
(% of salary)
(% of salary)
Current
Current
shareholding
shareholding
(% of salary)(1)
(% of salary)(1)
Shareholding
Shareholding
requirement
requirement
Unvested LTIP
Unvested LTIP
interests subject
interests subject
to performance
to performance
conditions
conditions
Gary Morrison
Gary Morrison
TJ Kelly
TJ Kelly
-
-
-
-
200%
200%
200%
200%
0%
0%
0%
0%
No
No
No
No
175,723
175,723
98,520
98,520
1.
1.
Unvested LTIP awards do not count towards satisfaction of the shareholding guidelines.
Unvested LTIP awards do not count towards satisfaction of the shareholding guidelines.
Comparison of Overall Performance and Pay (TSR graph)
Comparison of Overall Performance and Pay (TSR graph)
The graph below shows the value of £100 invested in the Company’s shares since listing compared
The graph below shows the value of £100 invested in the Company’s shares since listing compared
to the FTSE SmallCap index. The graph shows the Total Shareholder Return generated by both
to the FTSE SmallCap index. The graph shows the Total Shareholder Return generated by both
the movement in share value and the reinvestment of dividend income over the same period. The
the movement in share value and the reinvestment of dividend income over the same period. The
Remuneration Committee considers that the FTSE SmallCap index is the appropriate index given the
Remuneration Committee considers that the FTSE SmallCap index is the appropriate index given the
current magnitude and nature of operations and market capitalisation. This graph has been calculated
current magnitude and nature of operations and market capitalisation. This graph has been calculated
in accordance with the Regulations. It should be noted that the Company listed on 28 October 2015
in accordance with the Regulations. It should be noted that the Company listed on 28 October 2015
(with grey market trading until 2 November 2015) and therefore only has a listed share price for the
(with grey market trading until 2 November 2015) and therefore only has a listed share price for the
period from 28 October 2015 to 31 December 2018.
period from 28 October 2015 to 31 December 2018.
Total Shareholder Return (£)
Total Shareholder Return (£)
240
240
220
220
200
200
180
180
160
160
140
140
120
120
100
100
80
80
92
92
93
93
Dec 2015
Dec 2015
Dec 2016
Dec 2016
Dec 2017
Dec 2017
Dec 2018
Dec 2018
Hostelworld Group
Hostelworld Group
FTSE Small Cap
FTSE Small Cap
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Chief Executive Officer Historical Remuneration
Chief Executive Officer Historical Remuneration
Relative Importance of the Spend on Pay
Relative Importance of the Spend on Pay
The table below sets out the total remuneration delivered to the Chief Executive Officer over the
The table below sets out the total remuneration delivered to the Chief Executive Officer over the
The table below sets out the relative importance of spend on pay in the 2017 and 2018 financial years
The table below sets out the relative importance of spend on pay in the 2017 and 2018 financial years
last four years valued using the methodology applied to the single total figure of remuneration. The
last four years valued using the methodology applied to the single total figure of remuneration. The
compared with other disbursements. All figures provided are taken from the relevant Company
compared with other disbursements. All figures provided are taken from the relevant Company
Remuneration Committee does not believe that the remuneration payable in its more formative years
Remuneration Committee does not believe that the remuneration payable in its more formative years
Accounts.
Accounts.
as a private company bears any comparative value to that paid in its later years and therefore the
as a private company bears any comparative value to that paid in its later years and therefore the
Remuneration Committee has chosen to disclose remuneration only for the five most recent financial
Remuneration Committee has chosen to disclose remuneration only for the five most recent financial
years (reflecting the disclosures made in previous reports):
years (reflecting the disclosures made in previous reports):
2014
2014
2015
2015
2016
2016
2017
2017
2018
2018
Chief Executive Officer
Chief Executive Officer
Feargal
Feargal
Mooney
Mooney
Feargal
Feargal
Mooney
Mooney
Feargal
Feargal
Mooney
Mooney
Feargal
Feargal
Mooney
Mooney
Feargal
Feargal
Mooney
Mooney
Gary
Gary
Morrison
Morrison
Total Single Figure (€’000)
Total Single Figure (€’000)
413.1
413.1
395.0
395.0
1,298.7
1,298.7
768.8
768.8
209.5
209.5
307.2
307.2
Annual bonus payment level
Annual bonus payment level
achieved
achieved
(% of maximum opportunity)
(% of maximum opportunity)
LTIP vesting level achieved
LTIP vesting level achieved
(% of maximum opportunity)
(% of maximum opportunity)
14.9%
14.9%
0%
0%
0%
0%
73.4%
73.4%
0%
0%
19.3%
19.3%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0%
0%
n/a
n/a
It should be noted that the Company only introduced the LTIP on Admission.
It should be noted that the Company only introduced the LTIP on Admission.
Change in Chief Executive Officer’s Remuneration Compared with Employees
Change in Chief Executive Officer’s Remuneration Compared with Employees
The following table sets out the change in the remuneration paid to the Chief Executive Officer from
The following table sets out the change in the remuneration paid to the Chief Executive Officer from
2017 to 2018 compared with the average percentage change for all employees.
2017 to 2018 compared with the average percentage change for all employees.
Disbursements from profit in 2018
Disbursements from profit in 2018
financial year (€m)
financial year (€m)
Disbursements from profit in 2017
Disbursements from profit in 2017
financial year (€m)
financial year (€m)
% change
% change
Profit distributed by
Profit distributed by
way of dividend/share
way of dividend/share
buybacks
buybacks
Overall spend on pay
Overall spend on pay
including Executive
including Executive
Directors
Directors
16.1
16.1
18.3
18.3
Shareholder Voting at General Meeting
Shareholder Voting at General Meeting
24.8
24.8
19.0
19.0
(35.1%)
(35.1%)
(3.7%)
(3.7%)
The table below sets out the results of voting on the Annual Report on Remuneration at the AGM held
The table below sets out the results of voting on the Annual Report on Remuneration at the AGM held
on 11 June 2018, the results of which were as follows:
on 11 June 2018, the results of which were as follows:
Resolution
Resolution
For
For
Against
Against
Withheld
Withheld
Ordinary Resolution to approve
Ordinary Resolution to approve
the Directors’ remuneration report for
the Directors’ remuneration report for
the year ended 31 December 2017
the year ended 31 December 2017
82,397,515
82,397,515
(96.74%)
(96.74%)
2,777,512
2,777,512
(3.26%)
(3.26%)
1,325,878
1,325,878
The results of the voting on the Directors’ Remuneration Policy at the AGM held on 26 May 2016 are set
The results of the voting on the Directors’ Remuneration Policy at the AGM held on 26 May 2016 are set
out below:
out below:
Salary
Salary
Taxable Benefits
Taxable Benefits
Bonus
Bonus
Resolution
Resolution
For
For
Against
Against
Withheld
Withheld
2018
2018
(€’000)
(€’000)
2017
2017
(€’000)
(€’000)
%
%
change
change
2018
2018
(€’000)
(€’000)
2017
2017
(€’000)
(€’000)
%
%
change
change
2018
2018
(€’000)
(€’000)
2017
2017
(€’000)
(€’000)
%
%
change
change
Ordinary Resolution to approve
Ordinary Resolution to approve
the Directors’ Remuneration Policy
the Directors’ Remuneration Policy
69,030,425
69,030,425
(89.63%)
(89.63%)
7,987,337
7,987,337
(10.37%)
(10.37%)
330
330
Chief Executive
Chief Executive
Officer
Officer
418.2
418.2
410.0
410.0
2.0%
2.0%
10.2
10.2
8.9
8.9
14.6%
14.6%
80.4
80.4
308.9
308.9
(74.0%)
(74.0%)
Implementation of Remuneration Policy in Financial Year 2019
Implementation of Remuneration Policy in Financial Year 2019
Total pay
Total pay
15,373
15,373
14,385
14,385
6.9%
6.9%
362.9
362.9
307.6
307.6
18.0%
18.0%
311.3
311.3
1,367.3
1,367.3
(77.2%)
(77.2%)
Subject to shareholder approval of the new remuneration policy at the AGM, the Remuneration
Subject to shareholder approval of the new remuneration policy at the AGM, the Remuneration
Average
Average
number of
number of
employees
employees
Average per
Average per
employee
employee
294
294
254
254
15.7%
15.7%
294
294
254
254
15.7%
15.7%
294
294
254
254
15.7%
15.7%
52.3
52.3
56.6
56.6
(7.6%)
(7.6%)
1.2
1.2
1.2
1.2
0%
0%
1.1
1.1
5.4
5.4
(79.6%)
(79.6%)
The Chief Executive Officer’s remuneration disclosed in the table above has been calculated to take
The Chief Executive Officer’s remuneration disclosed in the table above has been calculated to take
into account base salary, taxable benefits and annual bonus. We have provided annualised data for
into account base salary, taxable benefits and annual bonus. We have provided annualised data for
the Chief Executive Officer for 2018 so as to ensure comparability with 2017. To reflect the relevant
the Chief Executive Officer for 2018 so as to ensure comparability with 2017. To reflect the relevant
regulations, the employee pay figures (on which the average percentage change is based) is calculated
regulations, the employee pay figures (on which the average percentage change is based) is calculated
using the increase in the earnings of all Group employees (i.e. those based in Ireland, the UK and other
using the increase in the earnings of all Group employees (i.e. those based in Ireland, the UK and other
jurisdictions) from calendar years 2017 and 2018 which, for base salary, gives a reduction of 7.6%.
jurisdictions) from calendar years 2017 and 2018 which, for base salary, gives a reduction of 7.6%.
Committee proposes to implement the policy for 2019 as set out below:
Committee proposes to implement the policy for 2019 as set out below:
Salary
Salary
Executive Directors’ salaries have been reviewed and the following increases agreed, with effect from
Executive Directors’ salaries have been reviewed and the following increases agreed, with effect from
1 January 2019:
1 January 2019:
Name
Name
Salary (€)
Salary (€)
2019
2019
2018
2018
Gary Morrison
Gary Morrison
430,700
430,700
418,200
418,200
TJ Kelly
TJ Kelly
295,000
295,000
295,000
295,000
Percentage Change
Percentage Change
3%
3%
0%
0%
The salary increase for Gary Morrison is in line with the typical salary increase across the wider
The salary increase for Gary Morrison is in line with the typical salary increase across the wider
workforce.
workforce.
Pension
Pension
Pension contributions for the Executive Directors will continue at the rate of 10% of basic salary for Gary
Pension contributions for the Executive Directors will continue at the rate of 10% of basic salary for Gary
Morrison and 6% of basic salary for TJ Kelly.
Morrison and 6% of basic salary for TJ Kelly.
94
94
95
95
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Changes to Non-Executive Directors’ Fees
Changes to Non-Executive Directors’ Fees
No changes are proposed to the current fee components in place. The breakdown of fee components
No changes are proposed to the current fee components in place. The breakdown of fee components
Annualised TSR of the Company over the three
Annualised TSR of the Company over the three
year period to 31 December 2021
year period to 31 December 2021
will remain as follows:
will remain as follows:
Role
Role
Chairman Fee
Chairman Fee
Base Non-Executive Director Fee
Base Non-Executive Director Fee
Senior Independent Director Fee
Senior Independent Director Fee
Chair of Audit Committee Fee
Chair of Audit Committee Fee
Chair of Remuneration Committee Fee
Chair of Remuneration Committee Fee
Annual Bonus Plan
Annual Bonus Plan
Fees (€)
Fees (€)
145,000
145,000
60,000
60,000
7,000
7,000
7,000
7,000
7,000
7,000
The maximum bonus opportunity for Gary Morrison will remain at 100% of basic salary, the level which
The maximum bonus opportunity for Gary Morrison will remain at 100% of basic salary, the level which
applied to him following his appointment to the Board during 2018. The maximum bonus opportunity
applied to him following his appointment to the Board during 2018. The maximum bonus opportunity
for TJ Kelly will also be 100% of basic salary. The annual bonus for the 2019 financial year will be subject
for TJ Kelly will also be 100% of basic salary. The annual bonus for the 2019 financial year will be subject
to the achievement of challenging performance targets in the following areas:
to the achievement of challenging performance targets in the following areas:
► Adjusted PBT (70% weighting); and
► Adjusted PBT (70% weighting); and
► Total bednights (30% weighting).
► Total bednights (30% weighting).
Therefore, the Committee has agreed that performance against solely financial/operational metrics will
Therefore, the Committee has agreed that performance against solely financial/operational metrics will
be used to determine the 2019 bonus outturn (i.e. there will be no personal bonus element) to reflect
be used to determine the 2019 bonus outturn (i.e. there will be no personal bonus element) to reflect
key strategic priorities for the year.
key strategic priorities for the year.
The payment of any bonus will be subject to the Remuneration Committee being satisfied that the
The payment of any bonus will be subject to the Remuneration Committee being satisfied that the
Company has delivered an acceptable level of performance, taking into account underlying financial
Company has delivered an acceptable level of performance, taking into account underlying financial
performance (including Adjusted PBT), performance against other KPIs and progress against the
performance (including Adjusted PBT), performance against other KPIs and progress against the
achievement of strategic goals.
achievement of strategic goals.
The Remuneration Committee is of the opinion that given the commercial sensitivity arising in relation
The Remuneration Committee is of the opinion that given the commercial sensitivity arising in relation
to the detailed targets used for the annual bonus, disclosing precise targets for the bonus plan in
to the detailed targets used for the annual bonus, disclosing precise targets for the bonus plan in
advance would not be in shareholders’ interests. The targets will be disclosed on a retrospective basis
advance would not be in shareholders’ interests. The targets will be disclosed on a retrospective basis
in next year’s remuneration report alongside an explanation of performance achieved and bonus
in next year’s remuneration report alongside an explanation of performance achieved and bonus
payments made.
payments made.
LTIP award
LTIP award
Grants under the LTIP will be made during 2019. Gary Morrison will receive an LTIP award at a level
Grants under the LTIP will be made during 2019. Gary Morrison will receive an LTIP award at a level
of 125% of basic salary (which is lower than the 150% of salary award he received in 2018). TJ Kelly will
of 125% of basic salary (which is lower than the 150% of salary award he received in 2018). TJ Kelly will
receive an LTIP award at a level of 100% of basic salary.
receive an LTIP award at a level of 100% of basic salary.
The performance conditions will be based 70% on Adjusted EPS performance and 30% on absolute TSR
The performance conditions will be based 70% on Adjusted EPS performance and 30% on absolute TSR
measured over a three-year period as follows:
measured over a three-year period as follows:
Annual average Adjusted EPS growth
Annual average Adjusted EPS growth
Vesting
Vesting
Less than 5.0% p.a.
Less than 5.0% p.a.
5.0% p.a.
5.0% p.a.
11.0% p.a. or above
11.0% p.a. or above
0%
0%
25%
25%
100%
100%
Between 5.0% p.a. and 11.0% p.a.
Between 5.0% p.a. and 11.0% p.a.
Straight line vesting between 25% and 100%
Straight line vesting between 25% and 100%
96
96
Less than 10.0% p.a.
Less than 10.0% p.a.
10.0% p.a.
10.0% p.a.
15.0% or above
15.0% or above
Vesting
Vesting
0%
0%
25%
25%
100%
100%
Between 10.0% and 15.0%
Between 10.0% and 15.0%
Straight line vesting between 25% and 100%
Straight line vesting between 25% and 100%
The Remuneration Committee recognises that the target range of 5-11% annual Adjusted EPS growth
The Remuneration Committee recognises that the target range of 5-11% annual Adjusted EPS growth
is lower than the range of 6.6-14% applied to LTIP awards in previous years. We set the range taking
is lower than the range of 6.6-14% applied to LTIP awards in previous years. We set the range taking
into account a number of factors. These included internal expectations of likely performance over
into account a number of factors. These included internal expectations of likely performance over
the medium term, including the impact of our investment plan, and changes to external market
the medium term, including the impact of our investment plan, and changes to external market
forecasts. These inputs suggested that maintaining an Adjusted EPS range of 6.6-14% would not be
forecasts. These inputs suggested that maintaining an Adjusted EPS range of 6.6-14% would not be
appropriate given Hostelworld’s current position. In the interests of ensuring that the target range
appropriate given Hostelworld’s current position. In the interests of ensuring that the target range
remains challenging but potentially achievable – and thus fulfils its goal as an incentive – we opted for
remains challenging but potentially achievable – and thus fulfils its goal as an incentive – we opted for
an adjusted range for the 2019 grant. As normal, ahead of making LTIP awards in future years we will
an adjusted range for the 2019 grant. As normal, ahead of making LTIP awards in future years we will
review the range in the context of the situation prevailing at the time.
review the range in the context of the situation prevailing at the time.
The 2019 awards will be granted with a requirement that any shares which vest after the end of the
The 2019 awards will be granted with a requirement that any shares which vest after the end of the
three-year performance period are required to be held for a further two years before they can be sold
three-year performance period are required to be held for a further two years before they can be sold
(subject to any sales required for tax purposes).
(subject to any sales required for tax purposes).
Composition and Terms of Reference of the Remuneration Committee
Composition and Terms of Reference of the Remuneration Committee
The Board has delegated to the Remuneration Committee, under agreed terms of reference,
The Board has delegated to the Remuneration Committee, under agreed terms of reference,
responsibility for the remuneration policy and for determining specific packages for the Chairman,
responsibility for the remuneration policy and for determining specific packages for the Chairman,
Executive Directors and such other senior employees of the Group as the Board may determine from
Executive Directors and such other senior employees of the Group as the Board may determine from
time to time. The terms of reference for the Remuneration Committee are available on the Company’s
time to time. The terms of reference for the Remuneration Committee are available on the Company’s
website, www.hostelworldgroup.com, and from the Company Secretary at the registered office.
website, www.hostelworldgroup.com, and from the Company Secretary at the registered office.
The Remuneration Committee is comprised of Andy McCue (Chairman of the Remuneration Committee),
The Remuneration Committee is comprised of Andy McCue (Chairman of the Remuneration Committee),
Carl Shepherd and Éimear Moloney (all of whom are independent Non-Executive Directors) and Michael
Carl Shepherd and Éimear Moloney (all of whom are independent Non-Executive Directors) and Michael
Cawley (who was independent upon his appointment as Chairman of the Board). The Remuneration
Cawley (who was independent upon his appointment as Chairman of the Board). The Remuneration
Committee receives assistance from the Chief Executive Officer, Chief Financial Officer, Chief HR Officer
Committee receives assistance from the Chief Executive Officer, Chief Financial Officer, Chief HR Officer
and Company Secretary, who attend meetings by invitation, except when issues relating to their own
and Company Secretary, who attend meetings by invitation, except when issues relating to their own
remuneration are being discussed. The Remuneration Committee met five times during 2018. Meeting
remuneration are being discussed. The Remuneration Committee met five times during 2018. Meeting
attendance is shown on page 52 of the Annual Report.
attendance is shown on page 52 of the Annual Report.
Advisors to the Remuneration Committee
Advisors to the Remuneration Committee
The Remuneration Committee’s independent advisors are Korn Ferry, who were appointed in October
The Remuneration Committee’s independent advisors are Korn Ferry, who were appointed in October
2017. Korn Ferry has advised the Remuneration Committee on all aspects of remuneration policy
2017. Korn Ferry has advised the Remuneration Committee on all aspects of remuneration policy
for Executive Directors and members of the Executive team, and has assisted in the review of the
for Executive Directors and members of the Executive team, and has assisted in the review of the
remuneration policy undertaken during the year. The Remuneration Committee is satisfied that
remuneration policy undertaken during the year. The Remuneration Committee is satisfied that
the advice received was objective and independent. Korn Ferry is a member of the Remuneration
the advice received was objective and independent. Korn Ferry is a member of the Remuneration
Consultants Group and the voluntary code of conduct of that body is designed to ensure objective and
Consultants Group and the voluntary code of conduct of that body is designed to ensure objective and
independent advice is given to remuneration committees. Korn Ferry received fees of £71,590 for their
independent advice is given to remuneration committees. Korn Ferry received fees of £71,590 for their
advice during the year. Fees were charged on a cost incurred basis. A separate practice within Korn
advice during the year. Fees were charged on a cost incurred basis. A separate practice within Korn
Ferry provided candidate assessment and testing services to the Company during the year.
Ferry provided candidate assessment and testing services to the Company during the year.
On behalf of the Board
On behalf of the Board
Andy McCue
Andy McCue
Chairman, Remuneration Committee
Chairman, Remuneration Committee
1 April 2019
1 April 2019
97
97
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors have pleasure in
The Directors have pleasure in
submitting their Annual Report
submitting their Annual Report
and the audited Financial Statements
and the audited Financial Statements
of Hostelworld Group plc and its
of Hostelworld Group plc and its
subsidiaries for the financial year
subsidiaries for the financial year
to 31 December 2018.
to 31 December 2018.
Statutory Information
Statutory Information
This section of the Annual Report includes
This section of the Annual Report includes
additional information required to be disclosed
additional information required to be disclosed
under the Companies Act 2006 (the “Companies
under the Companies Act 2006 (the “Companies
Act”), the UK Corporate Governance Code, the
Act”), the UK Corporate Governance Code, the
Disclosure and Transparency Rules (“DTRs”) and
Disclosure and Transparency Rules (“DTRs”) and
the Listing Rules (“Listing Rules”) of the Financial
the Listing Rules (“Listing Rules”) of the Financial
Conduct Authority.
Conduct Authority.
Certain information required to be included in the
Certain information required to be included in the
Directors’ Report can be found elsewhere in this
Directors’ Report can be found elsewhere in this
Annual Report, as highlighted throughout this
Annual Report, as highlighted throughout this
report and also including:
report and also including:
► The Strategic Report, which can be found on
► The Strategic Report, which can be found on
pages 17 to 40, which sets out the development
pages 17 to 40, which sets out the development
and performance of the Group’s business
and performance of the Group’s business
during the financial year, the position of the
during the financial year, the position of the
Group at the end of the year and a description
Group at the end of the year and a description
of the principal risks and uncertainties
of the principal risks and uncertainties
(including the financial risk management
(including the financial risk management
position);
position);
► The Corporate Governance Statement on
► The Corporate Governance Statement on
pages 48 to 56, which sets out the Company’s
pages 48 to 56, which sets out the Company’s
statement with regard to its adoption of the UK
statement with regard to its adoption of the UK
Corporate Governance Code. The Corporate
Corporate Governance Code. The Corporate
Governance Statement forms part of this
Governance Statement forms part of this
Directors’ Report and is incorporated into it
Directors’ Report and is incorporated into it
by reference;
by reference;
► The Audit Committee Report on pages 59 to 65;
► The Audit Committee Report on pages 59 to 65;
and
and
► The Directors’ Remuneration Report on pages
► The Directors’ Remuneration Report on pages
71 to 97.
71 to 97.
► This Directors’ Report, on pages 98 to 105,
► This Directors’ Report, on pages 98 to 105,
together with the Strategic Report on pages
together with the Strategic Report on pages
17 to 40, form the Management Report for the
17 to 40, form the Management Report for the
purposes of DTR 4.1.5R.
purposes of DTR 4.1.5R.
Disclosures under Listing Rule 9.8.4R
Disclosures under Listing Rule 9.8.4R
The table below is included to comply with the disclosure requirements under LR 9.8.4R. The
The table below is included to comply with the disclosure requirements under LR 9.8.4R. The
information required by the Listing Rules can be found in the Annual Report at the location stated
information required by the Listing Rules can be found in the Annual Report at the location stated
below:
below:
Requirement
Requirement
Referenced
Referenced
Details of any long-term incentive schemes as required by LR
Details of any long-term incentive schemes as required by LR
Directors’ Remuneration Report
Directors’ Remuneration Report
9.4.3R
9.4.3R
on pages 71 to 97
on pages 71 to 97
Details of any post balance sheet events
Details of any post balance sheet events
Directors’ Report on pages 98 to 105,
Directors’ Report on pages 98 to 105,
note 23 to the Consolidated Financial
note 23 to the Consolidated Financial
Statements on page 155
Statements on page 155
Details of any allotment for cash of equity securities made
Details of any allotment for cash of equity securities made
No such share allotments made
No such share allotments made
during the period otherwise than to holders of the Company’s
during the period otherwise than to holders of the Company’s
equity shares in proportion to their holdings, which has not
equity shares in proportion to their holdings, which has not
been specifically authorised by the Company’s shareholders
been specifically authorised by the Company’s shareholders
Details of any allotment for cash of equity securities made
Details of any allotment for cash of equity securities made
No such allotments made
No such allotments made
during the period otherwise than to holders of a major
during the period otherwise than to holders of a major
subsidiary undertaking’s equity shares in proportion to their
subsidiary undertaking’s equity shares in proportion to their
holdings, which has not been specifically authorised by the
holdings, which has not been specifically authorised by the
major subsidiary undertaking’s shareholders
major subsidiary undertaking’s shareholders
Details of any contract of significance subsisting during the
Details of any contract of significance subsisting during the
Annual Report on Remuneration on
Annual Report on Remuneration on
year, between the Company or one of its subsidiaries and
year, between the Company or one of its subsidiaries and
pages 86 to 97, Directors’ Report on
pages 86 to 97, Directors’ Report on
any party of which a director has an interest; and between
any party of which a director has an interest; and between
pages 98 to 105
pages 98 to 105
the Company or one of its subsidiaries, and a controlling
the Company or one of its subsidiaries, and a controlling
shareholder
shareholder
Details of contracts for the provision of services to the
Details of contracts for the provision of services to the
No such services provided
No such services provided
Company or any of its subsidiary undertakings by a controlling
Company or any of its subsidiary undertakings by a controlling
shareholder
shareholder
Board of Directors
Board of Directors
The appointment and replacement of Directors
The appointment and replacement of Directors
of the Company is governed by the Articles of
of the Company is governed by the Articles of
Association.
Association.
The Directors who served on the Board
The Directors who served on the Board
throughout the year, except as noted, were as
throughout the year, except as noted, were as
follows:
follows:
► Michael Cawley (Non-Executive Chairman)
► Michael Cawley (Non-Executive Chairman)
► Gary Morrison (Chief Executive Officer
► Gary Morrison (Chief Executive Officer
appointed on 11 June 2018)
appointed on 11 June 2018)
► Andy McCue (Non-Executive Senior
► Andy McCue (Non-Executive Senior
Independent Director (“SID”))
Independent Director (“SID”))
► Éimear Moloney (Non-Executive Director)
► Éimear Moloney (Non-Executive Director)
► Carl Shepherd (Non- Executive Director)
► Carl Shepherd (Non- Executive Director)
► Feargal Mooney (former Chief Executive
► Feargal Mooney (former Chief Executive
Officer, resigned as Chief Executive Officer and
Officer, resigned as Chief Executive Officer and
as a Director of the Company on 11 June 2018).
as a Director of the Company on 11 June 2018).
► Mari Hurley (former Chief Financial Officer,
► Mari Hurley (former Chief Financial Officer,
resigned as a Director of the Company on
resigned as a Director of the Company on
10 April 2018).
10 April 2018).
DIE WOHNGEMEINSCHAFT
DIE WOHNGEMEINSCHAFT
COLOGNE
COLOGNE
► TJ Kelly (Chief Financial Officer appointed on 21
► TJ Kelly (Chief Financial Officer appointed on 21
November 2018)
November 2018)
Biographical details of the current Directors
Biographical details of the current Directors
together with membership of the various
together with membership of the various
Committees are set out on pages 46 to 47.
Committees are set out on pages 46 to 47.
99
99
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Amendment of Articles of Association
Amendment of Articles of Association
The Directors are also seeking authority from
The Directors are also seeking authority from
The Company’s Articles of Association may
The Company’s Articles of Association may
only be amended by way of a special resolution
only be amended by way of a special resolution
at a general meeting of the shareholders. No
at a general meeting of the shareholders. No
amendments are proposed to be made at the
amendments are proposed to be made at the
forthcoming Annual General Meeting.
forthcoming Annual General Meeting.
Incorporation, Share Capital and
Incorporation, Share Capital and
Structure
Structure
The Company was incorporated and registered
The Company was incorporated and registered
in England and Wales as a public limited
in England and Wales as a public limited
company with registration number 9818705.
company with registration number 9818705.
The Company’s issued share capital comprises
The Company’s issued share capital comprises
ordinary shares of €0.01 each which are traded
ordinary shares of €0.01 each which are traded
on the London Stock Exchange’s main market for
on the London Stock Exchange’s main market for
listed securities and on Euronext Dublin’s main
listed securities and on Euronext Dublin’s main
securities market.
securities market.
The liability of the members of the Company is
The liability of the members of the Company is
limited.
limited.
The Company is tax resident in Ireland and its
The Company is tax resident in Ireland and its
principal place of business is at 2nd Floor, One
principal place of business is at 2nd Floor, One
Central Park, Leopardstown, Dublin 18, Ireland.
Central Park, Leopardstown, Dublin 18, Ireland.
The Company’s registered office is at High
The Company’s registered office is at High
Holborn House, 52-54 High Holborn, London
Holborn House, 52-54 High Holborn, London
WC1V 6RL.
WC1V 6RL.
As at 31 December 2018 and as at the date of
As at 31 December 2018 and as at the date of
this Directors’ Report, the Company’s issued
this Directors’ Report, the Company’s issued
share capital comprises 95,570,778 ordinary
share capital comprises 95,570,778 ordinary
shares of €0.01 (“shares”). The ISIN of the shares
shares of €0.01 (“shares”). The ISIN of the shares
is GB00BYYN4225. Further information on the
is GB00BYYN4225. Further information on the
Company’s share capital are provided in note 15
Company’s share capital are provided in note 15
to the Group’s Financial Statements contained
to the Group’s Financial Statements contained
on page 146. All the information detailed in note
on page 146. All the information detailed in note
15 on page 146 forms part of this Directors’
15 on page 146 forms part of this Directors’
Report and is incorporated into it by reference.
Report and is incorporated into it by reference.
shareholders to allot ordinary shares for
shareholders to allot ordinary shares for
cash without first offering them to existing
cash without first offering them to existing
shareholders in proportion to their existing
shareholders in proportion to their existing
shareholdings. The resolution seeks authority
shareholdings. The resolution seeks authority
to disapply pre-emption rights over 5% of the
to disapply pre-emption rights over 5% of the
Company’s issued ordinary share capital. The
Company’s issued ordinary share capital. The
power will expire at the earlier of 31 August
power will expire at the earlier of 31 August
2020 and the conclusion of the Annual General
2020 and the conclusion of the Annual General
Meeting of the Company held in 2020.
Meeting of the Company held in 2020.
The Directors intend to follow the Pre-Emption
The Directors intend to follow the Pre-Emption
Group’s Statement of Principles regarding
Group’s Statement of Principles regarding
cumulative usage of authority within a rolling
cumulative usage of authority within a rolling
3-year period. The principles provide that usage
3-year period. The principles provide that usage
in excess of 7.5% of issued ordinary share capital
in excess of 7.5% of issued ordinary share capital
of the Company (excluding treasury shares)
of the Company (excluding treasury shares)
should not take place without prior consultation
should not take place without prior consultation
with shareholders. The power will expire at the
with shareholders. The power will expire at the
earlier of 31 August 2020 and the conclusion of
earlier of 31 August 2020 and the conclusion of
the Annual General Meeting of the Company held
the Annual General Meeting of the Company held
in 2020.
in 2020.
Authority to Purchase Own Shares
Authority to Purchase Own Shares
The Directors will seek authority from
The Directors will seek authority from
shareholders at the forthcoming Annual General
shareholders at the forthcoming Annual General
Meeting for the Company to purchase, in the
Meeting for the Company to purchase, in the
market, up to a maximum of 10% of its own
market, up to a maximum of 10% of its own
ordinary shares either to be cancelled or retained
ordinary shares either to be cancelled or retained
as treasury shares. The Directors will only use
as treasury shares. The Directors will only use
this power after careful consideration, taking into
this power after careful consideration, taking into
account the financial resources of the Company,
account the financial resources of the Company,
the Company’s share price and future funding
the Company’s share price and future funding
opportunities. The Directors will also take into
opportunities. The Directors will also take into
account the effects on earnings per share and the
account the effects on earnings per share and the
interests of shareholders generally.
interests of shareholders generally.
Rights Attaching to Shares
Rights Attaching to Shares
All shares have the same rights (including voting
All shares have the same rights (including voting
At the Annual General Meeting of the Company
At the Annual General Meeting of the Company
and dividend rights and rights on a return of
and dividend rights and rights on a return of
to be held on 31 May 2019, the Directors will seek
to be held on 31 May 2019, the Directors will seek
capital) and restrictions as set out in the Articles,
capital) and restrictions as set out in the Articles,
authority from shareholders to allot shares in
authority from shareholders to allot shares in
described below. Except in relation to dividends
described below. Except in relation to dividends
the capital of the Company (i) up to a maximum
the capital of the Company (i) up to a maximum
which have been declared and rights on a
which have been declared and rights on a
nominal amount of €318,569.26 (31,856,926
nominal amount of €318,569.26 (31,856,926
shares of €0.01 each) being one-third of the
shares of €0.01 each) being one-third of the
liquidation of the Company, the shareholders
liquidation of the Company, the shareholders
have no rights to share in the profits of the
have no rights to share in the profits of the
Company’s issued share capital and (ii) up to a
Company’s issued share capital and (ii) up to a
Company.
Company.
further €318,569.26 (31,856,926 shares of €0.01
further €318,569.26 (31,856,926 shares of €0.01
each) where the allotment is in connection with
each) where the allotment is in connection with
The Company’s shares are not redeemable.
The Company’s shares are not redeemable.
a rights issue, being one-third of the Company’s
a rights issue, being one-third of the Company’s
However, following any grant of authority from
However, following any grant of authority from
issued share capital. The power will expire at the
issued share capital. The power will expire at the
shareholders, the Company may purchase or
shareholders, the Company may purchase or
earlier of 31 August 2020 and the conclusion of
earlier of 31 August 2020 and the conclusion of
contract to purchase any of the shares on or off
contract to purchase any of the shares on or off
the Annual General Meeting of the Company held
the Annual General Meeting of the Company held
market, subject to the Companies Act and the
market, subject to the Companies Act and the
in 2020.
in 2020.
100
100
requirements of the Listing Rules.
requirements of the Listing Rules.
No shareholder holds shares in the Company
No shareholder holds shares in the Company
relating to close periods) and requirements of
relating to close periods) and requirements of
which carry special rights with regard to control
which carry special rights with regard to control
the Market Abuse Regulation and the Company’s
the Market Abuse Regulation and the Company’s
of the Company.
of the Company.
Voting Rights
Voting Rights
Securities Dealing Code whereby Directors and
Securities Dealing Code whereby Directors and
all employees of the Company require advance
all employees of the Company require advance
clearance to deal in the Company’s securities.
clearance to deal in the Company’s securities.
Each ordinary share entitles the holder to vote at
Each ordinary share entitles the holder to vote at
general meetings of the Company. A resolution
general meetings of the Company. A resolution
Change of Control
Change of Control
put to the vote of the meeting shall be decided on
put to the vote of the meeting shall be decided on
Save in respect of a provision of the Company’s
Save in respect of a provision of the Company’s
a show of hands unless a poll is demanded. On a
a show of hands unless a poll is demanded. On a
share schemes which may cause options
share schemes which may cause options
show of hands, every member who is present in
show of hands, every member who is present in
and awards granted to employees under
and awards granted to employees under
person or by proxy at a general meeting of the
person or by proxy at a general meeting of the
such schemes to vest on takeover, there are
such schemes to vest on takeover, there are
Company shall have one vote. On a poll, every
Company shall have one vote. On a poll, every
no agreements between the Company and
no agreements between the Company and
member who is present in person or by proxy
member who is present in person or by proxy
its Directors or employees providing for
its Directors or employees providing for
shall have one vote for every share of which they
shall have one vote for every share of which they
compensation for loss of office or employment
compensation for loss of office or employment
are a holder. The Articles provide a deadline for
are a holder. The Articles provide a deadline for
(whether through resignation, purported
(whether through resignation, purported
submission of proxy forms of not less than 48
submission of proxy forms of not less than 48
redundancy or otherwise) because of a takeover
redundancy or otherwise) because of a takeover
hours before the time appointed for the holding
hours before the time appointed for the holding
bid.
bid.
of the meeting or adjourned meeting.
of the meeting or adjourned meeting.
No member shall be entitled to vote at any
No member shall be entitled to vote at any
2019 Annual General Meeting
2019 Annual General Meeting
general meeting either in person or by proxy,
general meeting either in person or by proxy,
in respect of any share held, unless all amounts
in respect of any share held, unless all amounts
presently payable in respect of that share
presently payable in respect of that share
have been paid. Save as noted, there are no
have been paid. Save as noted, there are no
restrictions on voting rights nor any agreement
restrictions on voting rights nor any agreement
that may result in such restrictions.
that may result in such restrictions.
Restrictions on Transfer of Securities
Restrictions on Transfer of Securities
The Annual General Meeting (“AGM”) will be held
The Annual General Meeting (“AGM”) will be held
at 12 noon on 31 May 2019 at Hostelworld Group
at 12 noon on 31 May 2019 at Hostelworld Group
plc, 2nd Floor, One Central Park, Leopardstown,
plc, 2nd Floor, One Central Park, Leopardstown,
Dublin 18, Ireland.
Dublin 18, Ireland.
The Notice of Meeting which sets out the
The Notice of Meeting which sets out the
resolutions to be proposed at the forthcoming
resolutions to be proposed at the forthcoming
AGM specifies deadlines for exercising voting
AGM specifies deadlines for exercising voting
The Articles do not contain any restrictions on the
The Articles do not contain any restrictions on the
rights and appointing a proxy or proxies to vote
rights and appointing a proxy or proxies to vote
transfer of ordinary shares in the Company other
transfer of ordinary shares in the Company other
in relation to resolutions to be passed at the AGM.
in relation to resolutions to be passed at the AGM.
than the usual restrictions applicable where any
than the usual restrictions applicable where any
All proxy votes will be counted and the numbers
All proxy votes will be counted and the numbers
amount is unpaid on a share. Certain restrictions
amount is unpaid on a share. Certain restrictions
for, against or withheld in relation to each
for, against or withheld in relation to each
are also imposed by laws and regulations (such
are also imposed by laws and regulations (such
resolution will be announced at the AGM and
resolution will be announced at the AGM and
as insider trading and market requirements
as insider trading and market requirements
published on the Company’s website.
published on the Company’s website.
HAKA LODGE
HAKA LODGE
AUCKLAND
AUCKLAND
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Substantial Shareholders
Substantial Shareholders
Transactions with Related Parties
Transactions with Related Parties
Research and Development
Research and Development
At 31 December 2018, the Company had been notified, in accordance with chapter 5 of the Financial
At 31 December 2018, the Company had been notified, in accordance with chapter 5 of the Financial
Please refer to note 19 to the Consolidated
Please refer to note 19 to the Consolidated
Innovation, specifically in the proposition on the
Innovation, specifically in the proposition on the
Conduct Authority’s Disclosure and Transparency Rules (“DTR5 Notification”), of the following significant
Conduct Authority’s Disclosure and Transparency Rules (“DTR5 Notification”), of the following significant
Financial Statements on pages 151 to 152.
Financial Statements on pages 151 to 152.
websites and mobile apps for both customers
websites and mobile apps for both customers
interests:
interests:
Shareholder
Shareholder
Number of ordinary shares /
Number of ordinary shares /
voting rights notified
voting rights notified
Percentage of voting rights
Percentage of voting rights
over ordinary shares
over ordinary shares
of €0.01 each and nature of
of €0.01 each and nature of
holding
holding
Standard Life Aberdeen plc
Standard Life Aberdeen plc
12,111,887
12,111,887
The Capital Group Companies,
The Capital Group Companies,
Inc.
Inc.
Unicorn Asset Management
Unicorn Asset Management
Limited
Limited
Burgundy Asset Management
Burgundy Asset Management
Limited
Limited
9,511,068
9,511,068
5,410,000
5,410,000
5,252,294
5,252,294
Bailie Gifford & Co
Bailie Gifford & Co
5,163,599
5,163,599
Miton Group plc
Miton Group plc
4,813,812
4,813,812
Majedie Asset Management
Majedie Asset Management
Limited
Limited
4,722,404
4,722,404
Allianz Global Investors GmbH
Allianz Global Investors GmbH
4,046,400
4,046,400
Lizard Investors LLC
Lizard Investors LLC
3,829,689
3,829,689
Legal & General Group plc
Legal & General Group plc
3,069,505
3,069,505
As at the date of this report one further DTR5 Notification had been received from the following:
As at the date of this report one further DTR5 Notification had been received from the following:
12.67%
12.67%
(indirect)
(indirect)
9.95%
9.95%
(indirect)
(indirect)
5.66%
5.66%
(indirect)
(indirect)
5.50%
5.50%
(indirect)
(indirect)
5.40%
5.40%
(indirect)
(indirect)
5.03%
5.03%
(indirect)
(indirect)
4.94%
4.94%
(indirect)
(indirect)
4.23%
4.23%
(direct – 0.03%;
(direct – 0.03%;
indirect – 4.20%)
indirect – 4.20%)
4.0%
4.0%
(indirect)
(indirect)
3.21%
3.21%
(direct)
(direct)
Lizard Investors LLC notified the Company on 9 January 2019 of an increase in their holding to 5,121,406 ordinary shares representing 5.36% of the issued share
Lizard Investors LLC notified the Company on 9 January 2019 of an increase in their holding to 5,121,406 ordinary shares representing 5.36% of the issued share
capital of the Company (5.36% -indirect holding).
capital of the Company (5.36% -indirect holding).
102
102
Events Post Year End
Events Post Year End
As part of a Group reorganisation, certain assets
As part of a Group reorganisation, certain assets
were acquired by Hostelworld.com Limited
were acquired by Hostelworld.com Limited
from WRI Nominees DAC on 12 March 2019.
from WRI Nominees DAC on 12 March 2019.
WRI Nominees DAC was subsequently placed
WRI Nominees DAC was subsequently placed
in liquidation by way of members’ voluntary
in liquidation by way of members’ voluntary
and hostel partners, is a critical element of the
and hostel partners, is a critical element of the
strategy and therefore of the future success
strategy and therefore of the future success
of the Group. Accordingly the majority of the
of the Group. Accordingly the majority of the
Group’s research and development expenditure
Group’s research and development expenditure
is predominantly related to this area.
is predominantly related to this area.
Suppliers
Suppliers
winding up (see note 23 to the Consolidated
winding up (see note 23 to the Consolidated
The Group’s policy is to pay suppliers and
The Group’s policy is to pay suppliers and
Financial Statements).
Financial Statements).
Future Developments
Future Developments
The Group will continue to pursue new
The Group will continue to pursue new
developments to enhance shareholder value,
developments to enhance shareholder value,
through a combination of organic growth,
through a combination of organic growth,
product delivery, expansion of our technology
product delivery, expansion of our technology
team in Porto and other development and
team in Porto and other development and
investment opportunities.
investment opportunities.
Going Concern
Going Concern
The Directors have prepared cash flow forecasts
The Directors have prepared cash flow forecasts
that include key assumptions in respect of the
that include key assumptions in respect of the
trading subsidiary’s booking numbers, booking
trading subsidiary’s booking numbers, booking
profiles, commission rates and marketing costs.
profiles, commission rates and marketing costs.
In making their assessment, management have
In making their assessment, management have
performed sensitivity analysis on the forecasts.
performed sensitivity analysis on the forecasts.
After making appropriate enquiries, the Directors
After making appropriate enquiries, the Directors
have a reasonable expectation that the Company
have a reasonable expectation that the Company
and the Group as a whole have adequate
and the Group as a whole have adequate
resources to continue in operational existence for
resources to continue in operational existence for
creditors sums due in accordance with the
creditors sums due in accordance with the
payment terms agreed in the relevant contract
payment terms agreed in the relevant contract
with each such supplier/creditor, provided the
with each such supplier/creditor, provided the
supplier has complied with its obligations.
supplier has complied with its obligations.
Environmental
Environmental
Information on the Group’s greenhouse gas
Information on the Group’s greenhouse gas
emissions is set out in the Corporate Social
emissions is set out in the Corporate Social
Responsibility section on page 40 and forms
Responsibility section on page 40 and forms
part of this report by reference.
part of this report by reference.
Financial Instruments
Financial Instruments
Details of the financial risk management
Details of the financial risk management
objectives and policies of the Group, including
objectives and policies of the Group, including
exposure of the entity to price risk, credit risk,
exposure of the entity to price risk, credit risk,
liquidity risk and cash flow risk are given on
liquidity risk and cash flow risk are given on
pages 153 to 154 in note 20 to the Consolidated
pages 153 to 154 in note 20 to the Consolidated
Financial Statements.
Financial Statements.
Political Contributions
Political Contributions
the foreseeable future (at least one year from the
the foreseeable future (at least one year from the
During the year, no political donations were
During the year, no political donations were
date when Financial Statements are signed) on
date when Financial Statements are signed) on
made.
made.
both base case and sensitised forecasts.
both base case and sensitised forecasts.
Accordingly, the Financial Statements have been
Accordingly, the Financial Statements have been
prepared on a going concern basis.
prepared on a going concern basis.
Indemnities and Insurance
Indemnities and Insurance
External Branches
External Branches
Hostelworld Group plc is registered as a branch in
Hostelworld Group plc is registered as a branch in
Ireland with branch registration number 908295.
Ireland with branch registration number 908295.
Hostelworld Services Limited, a UK subsidiary
Hostelworld Services Limited, a UK subsidiary
The Company maintains appropriate insurance to
The Company maintains appropriate insurance to
of the Company, is registered as a branch in
of the Company, is registered as a branch in
cover Directors’ and Officers’ liability for itself and
cover Directors’ and Officers’ liability for itself and
Australia with Australian registered body number
Australia with Australian registered body number
its subsidiaries. The Company also indemnifies
its subsidiaries. The Company also indemnifies
613076556.
613076556.
the Directors under a qualifying indemnity for
the Directors under a qualifying indemnity for
the purposes of section 236 of the Companies
the purposes of section 236 of the Companies
Results and Dividends
Results and Dividends
Act 2006 and the Articles of Association.
Act 2006 and the Articles of Association.
Such indemnities contain provisions that are
Such indemnities contain provisions that are
permitted by the director liability provisions of
permitted by the director liability provisions of
the Companies Act and the Company’s Articles of
the Companies Act and the Company’s Articles of
Association.
Association.
The Group’s and Company’s audited Financial
The Group’s and Company’s audited Financial
Statements for the year are set out on pages 120
Statements for the year are set out on pages 120
to 161. In accordance with the Group’s dividend
to 161. In accordance with the Group’s dividend
policy, the Directors recommend the payment of
policy, the Directors recommend the payment of
a final dividend for the year ended 31 December
a final dividend for the year ended 31 December
2018 of 9.0 euro cent per share amounting to
2018 of 9.0 euro cent per share amounting to
103
103
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
€8.6m, to members appearing on the register at
€8.6m, to members appearing on the register at
approve the Financial Statements unless they are
approve the Financial Statements unless they are
The Directors are responsible for the
The Directors are responsible for the
► The Strategic Report includes a fair review
► The Strategic Report includes a fair review
close of business on 10 May 2019. This is to be
close of business on 10 May 2019. This is to be
satisfied that they give a true and fair view of the
satisfied that they give a true and fair view of the
maintenance and integrity of the corporate and
maintenance and integrity of the corporate and
of the development and performance of the
of the development and performance of the
approved by the shareholders at the 2019 AGM.
approved by the shareholders at the 2019 AGM.
state of affairs of the Group and Company and of
state of affairs of the Group and Company and of
financial information included on the Company’s
financial information included on the Company’s
business and the position of the Company and
business and the position of the Company and
The recommended full year dividend of 9.0 euro
The recommended full year dividend of 9.0 euro
the profit or loss of the Group for that period.
the profit or loss of the Group for that period.
website. Legislation in the United Kingdom
website. Legislation in the United Kingdom
the undertakings included in the consolidation
the undertakings included in the consolidation
cent per share together with the interim dividend
cent per share together with the interim dividend
In preparing the parent Company Financial
In preparing the parent Company Financial
governing the preparation and dissemination of
governing the preparation and dissemination of
taken as a whole, together with a description of
taken as a whole, together with a description of
of 4.8 euro cent per share paid in September 2018
of 4.8 euro cent per share paid in September 2018
Statements, the Directors are required to:
Statements, the Directors are required to:
Financial Statements may differ from legislation
Financial Statements may differ from legislation
the principal risks and uncertainties that they
the principal risks and uncertainties that they
brings the total dividend for the year ended 31
brings the total dividend for the year ended 31
in other jurisdictions.
in other jurisdictions.
face; and
face; and
December 2018 to 13.8 euro cent per share.
December 2018 to 13.8 euro cent per share.
► Select suitable accounting policies and then
► Select suitable accounting policies and then
apply them consistently;
apply them consistently;
Responsibility Statement
Responsibility Statement
We confirm that to the best of our knowledge:
We confirm that to the best of our knowledge:
► The Financial Statements, prepared in
► The Financial Statements, prepared in
accordance with the Relevant Financial
accordance with the Relevant Financial
Reporting Framework, give a true and fair
Reporting Framework, give a true and fair
view of the assets, liabilities, financial position
view of the assets, liabilities, financial position
and profit or loss of the Company and the
and profit or loss of the Company and the
undertakings included in the consolidation
undertakings included in the consolidation
taken as a whole;
taken as a whole;
Independent Auditor
Independent Auditor
Deloitte Ireland LLP has confirmed its willingness
Deloitte Ireland LLP has confirmed its willingness
to continue in office as Auditor of the Group. In
to continue in office as Auditor of the Group. In
accordance with section 489 of the Companies
accordance with section 489 of the Companies
Act 2006, separate resolutions for the re-
Act 2006, separate resolutions for the re-
appointment of Deloitte Ireland LLP as Auditors
appointment of Deloitte Ireland LLP as Auditors
of the Group and for the Audit Committee to
of the Group and for the Audit Committee to
determine the remuneration will be proposed at
determine the remuneration will be proposed at
the forthcoming AGM of the Company.
the forthcoming AGM of the Company.
Disclosure of Information to Auditor
Disclosure of Information to Auditor
Each of the Directors has confirmed that:
Each of the Directors has confirmed that:
i. So far as the Director is aware, there is no
i. So far as the Director is aware, there is no
relevant audit information of which the
relevant audit information of which the
Company’s Auditor is unaware; and
Company’s Auditor is unaware; and
ii. The Director has taken all the steps that he/she
ii. The Director has taken all the steps that he/she
ought to have taken as a Director to make him/
ought to have taken as a Director to make him/
her aware of any relevant audit information
her aware of any relevant audit information
and to establish that the Company’s auditor is
and to establish that the Company’s auditor is
aware of that information.
aware of that information.
This confirmation is given and should be
This confirmation is given and should be
interpreted in accordance with the provisions
interpreted in accordance with the provisions
of Section 418 of the Companies Act 2006.
of Section 418 of the Companies Act 2006.
Directors’ Responsibilities Statement
Directors’ Responsibilities Statement
► Make judgments and accounting estimates
► Make judgments and accounting estimates
that are reasonable and prudent;
that are reasonable and prudent;
► State whether financial reporting standard
► State whether financial reporting standard
101 reduced disclosures framework has been
101 reduced disclosures framework has been
followed, subject to any material departures
followed, subject to any material departures
disclosed and explained in the financial
disclosed and explained in the financial
statements; and
statements; and
► Prepare the Financial Statements on the going
► Prepare the Financial Statements on the going
concern basis unless it is inappropriate to
concern basis unless it is inappropriate to
presume that the Company will continue in
presume that the Company will continue in
business.
business.
In preparing the Group Financial Statements,
In preparing the Group Financial Statements,
International Accounting Standard 1 requires that
International Accounting Standard 1 requires that
Directors:
Directors:
► Properly select and apply accounting policies;
► Properly select and apply accounting policies;
► Present information, including accounting
► Present information, including accounting
policies, in a manner that provides relevant,
policies, in a manner that provides relevant,
reliable, comparable and understandable
reliable, comparable and understandable
information;
information;
► Provide additional disclosures when
► Provide additional disclosures when
compliance with the specific requirements
compliance with the specific requirements
in IFRSs are insufficient to enable users
in IFRSs are insufficient to enable users
The Directors are responsible for preparing the
The Directors are responsible for preparing the
to understand the impact of particular
to understand the impact of particular
Annual Report and the Financial Statements in
Annual Report and the Financial Statements in
transactions, other events and conditions on
transactions, other events and conditions on
accordance with applicable law and regulations.
accordance with applicable law and regulations.
the Group’s financial position and financial
the Group’s financial position and financial
performance; and
performance; and
Company law requires the Directors to prepare
Company law requires the Directors to prepare
Financial Statements for each financial year.
Financial Statements for each financial year.
► Make an assessment of the Company’s ability
► Make an assessment of the Company’s ability
Under that law the Directors are required to
Under that law the Directors are required to
to continue as a going concern.
to continue as a going concern.
prepare the Group Financial Statements in
prepare the Group Financial Statements in
accordance with International Financial Reporting
accordance with International Financial Reporting
The Directors are responsible for keeping adequate
The Directors are responsible for keeping adequate
Standards (IFRSs) as adopted by the European
Standards (IFRSs) as adopted by the European
accounting records that are sufficient to show and
accounting records that are sufficient to show and
Union and Article 4 of the IAS Regulation and
Union and Article 4 of the IAS Regulation and
explain the Company’s transactions and disclose
explain the Company’s transactions and disclose
have elected to prepare the parent Company
have elected to prepare the parent Company
with reasonable accuracy at any time the financial
with reasonable accuracy at any time the financial
Financial Statements in accordance with FRS
Financial Statements in accordance with FRS
position of the Company and enable them to ensure
position of the Company and enable them to ensure
101 Reduced Disclosure Framework (“Relevant
101 Reduced Disclosure Framework (“Relevant
that the Financial Statements comply with the
that the Financial Statements comply with the
Financial Reporting Framework”) and applicable
Financial Reporting Framework”) and applicable
Companies Act 2006. They are also responsible for
Companies Act 2006. They are also responsible for
law. Under company law the Directors must not
law. Under company law the Directors must not
safeguarding the assets of the Company and hence
safeguarding the assets of the Company and hence
104
104
for taking reasonable steps for the prevention and
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
detection of fraud and other irregularities.
► The Annual Report and Financial Statements,
► The Annual Report and Financial Statements,
taken as a whole, are fair, balanced and
taken as a whole, are fair, balanced and
understandable and provide the information
understandable and provide the information
necessary for shareholders to assess the
necessary for shareholders to assess the
Company’s position and performance,
Company’s position and performance,
business model and strategy.
business model and strategy.
This responsibility statement was approved by
This responsibility statement was approved by
the Board of Directors on 1 April 2019 and is
the Board of Directors on 1 April 2019 and is
signed on its behalf by:
signed on its behalf by:
John Duggan
John Duggan
Company Secretary
Company Secretary
1 April 2019
1 April 2019
URBAN HOUSE COPENHAGEN BY MEININGER
URBAN HOUSE COPENHAGEN BY MEININGER
COPENHAGEN
COPENHAGEN
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Summary of our audit approach
Summary of our audit approach
Key audit matters
Key audit matters
The key audit matters that we identified in the current year were:
The key audit matters that we identified in the current year were:
► Carrying value of intangible assets
► Carrying value of intangible assets
► Capitalisation of development costs
► Capitalisation of development costs
► Taxation provisions
► Taxation provisions
There have been no significant changes to the key audit matters since the
There have been no significant changes to the key audit matters since the
prior financial year report.
prior financial year report.
Materiality
Materiality
The materiality that we used for the Group financial statements was €975,000,
The materiality that we used for the Group financial statements was €975,000,
which was determined on the basis of approximately 5% of Adjusted profit
which was determined on the basis of approximately 5% of Adjusted profit
before tax (“Adjusted PBT”).
before tax (“Adjusted PBT”).
Scoping
Scoping
The structure of the Group’s finance function is such that the central Group
The structure of the Group’s finance function is such that the central Group
finance team in Dublin provides support to Group entities for the accounting
finance team in Dublin provides support to Group entities for the accounting
of the majority of transactions and balances. The audit work covering all of the
of the majority of transactions and balances. The audit work covering all of the
Group’s revenues and 99% its net assets is undertaken and performed by an
Group’s revenues and 99% its net assets is undertaken and performed by an
audit team based in Dublin.
audit team based in Dublin.
Significant changes
Significant changes
in our approach
in our approach
There are no significant changes to our approach. This is consistent with the
There are no significant changes to our approach. This is consistent with the
fact that the operations of the Group are largely unchanged from the previous
fact that the operations of the Group are largely unchanged from the previous
year.
year.
INDEPENDENT
INDEPENDENT
AUDITOR’S REPORT
AUDITOR’S REPORT
TO THE MEMBERS OF HOSTELWORLD GROUP PLC
TO THE MEMBERS OF HOSTELWORLD GROUP PLC
REPORT ON THE AUDIT OF THE
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Opinion
Opinion
In our opinion, the financial statements of
In our opinion, the financial statements of
Hostelworld Group plc (the ‘Parent Company’)
Hostelworld Group plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’):
and its subsidiaries (the ‘Group’):
► give a true and fair view of the assets, liabilities
► give a true and fair view of the assets, liabilities
and financial position of the Group and Parent
and financial position of the Group and Parent
Company as at 31 December 2018 and of the
Company as at 31 December 2018 and of the
profit of the Group for the financial year then
profit of the Group for the financial year then
ended; and
ended; and
► have been properly prepared in accordance
► have been properly prepared in accordance
with the relevant financial reporting
with the relevant financial reporting
frameworks and, in particular, with the
frameworks and, in particular, with the
requirements of the Companies Act 2006 and,
requirements of the Companies Act 2006 and,
as regards the Group financial statements,
as regards the Group financial statements,
The relevant financial reporting framework that
The relevant financial reporting framework that
has been applied in the preparation of the Group
has been applied in the preparation of the Group
financial statements is the Companies Act 2006,
financial statements is the Companies Act 2006,
International Financial Reporting Standards
International Financial Reporting Standards
(IFRS) as adopted by the European Union and
(IFRS) as adopted by the European Union and
IFRS as issued by the International Accounting
IFRS as issued by the International Accounting
Standards Board (“the relevant financial reporting
Standards Board (“the relevant financial reporting
framework”).
framework”).
The financial reporting framework that has
The financial reporting framework that has
been applied in the preparation of the Parent
been applied in the preparation of the Parent
Company financial statements is the Companies
Company financial statements is the Companies
Act 2006 and United Kingdom Accounting
Act 2006 and United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure
Standards, including FRS 101 “Reduced Disclosure
Framework” (“the relevant financial reporting
Framework” (“the relevant financial reporting
framework”).
framework”).
Basis for opinion
Basis for opinion
Article 4 of the IAS Regulation.
Article 4 of the IAS Regulation.
We conducted our audit in accordance with
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
International Standards on Auditing (UK) (ISAs
The financial statements we have audited
The financial statements we have audited
(UK) and applicable law. Our responsibilities
(UK) and applicable law. Our responsibilities
comprise:
comprise:
The Group financial statements:
The Group financial statements:
under those standards are described in the
under those standards are described in the
“Auditor’s responsibilities for the audit of the
“Auditor’s responsibilities for the audit of the
financial statements” section of our report.
financial statements” section of our report.
► the Consolidated Income Statement;
► the Consolidated Income Statement;
We are independent of the Group and Parent
We are independent of the Group and Parent
► the Consolidated Statement of Comprehensive
► the Consolidated Statement of Comprehensive
Company in accordance with the ethical
Company in accordance with the ethical
Income;
Income;
requirements that are relevant to our audit of
requirements that are relevant to our audit of
► the Consolidated Statement of Financial
► the Consolidated Statement of Financial
the financial statements in the UK, including
the financial statements in the UK, including
Position;
Position;
the Financial Reporting Council’s (the ‘FRC’s’)
the Financial Reporting Council’s (the ‘FRC’s’)
► the Consolidated Statement of Changes in
► the Consolidated Statement of Changes in
Ethical Standard, as applied to listed public
Ethical Standard, as applied to listed public
Equity;
Equity;
interest entities, and we have fulfilled our other
interest entities, and we have fulfilled our other
► the Consolidated Statement of Cash Flows;
► the Consolidated Statement of Cash Flows;
ethical responsibilities in accordance with these
ethical responsibilities in accordance with these
requirements. We confirm that the non-audit
requirements. We confirm that the non-audit
The Parent Company financial statements:
The Parent Company financial statements:
services prohibited by the FRC’s Ethical Standard
services prohibited by the FRC’s Ethical Standard
were not provided to the Group or Parent
were not provided to the Group or Parent
► the Company Statement of Financial Position;
► the Company Statement of Financial Position;
Company.
Company.
► the Company Statement of Changes in Equity;
► the Company Statement of Changes in Equity;
and; the related notes 1 to 30, including a
and; the related notes 1 to 30, including a
obtained is sufficient and appropriate to provide
obtained is sufficient and appropriate to provide
summary of significant accounting policies as set
summary of significant accounting policies as set
a basis for our opinion.
a basis for our opinion.
We believe that the audit evidence we have
We believe that the audit evidence we have
out in note 2 to the financial statements.
out in note 2 to the financial statements.
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106
M MONTREAL
M MONTREAL
MONTREAL
MONTREAL
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Conclusions relating to principal risks,
Conclusions relating to principal risks,
going concern and viability statement
going concern and viability statement
We have nothing to report in respect of the
We have nothing to report in respect of the
following information in the annual report, in
following information in the annual report, in
relation to which ISAs (UK) or the Listing Rules
relation to which ISAs (UK) or the Listing Rules
require us to report to you whether we have
require us to report to you whether we have
anything material to add or draw attention to:
anything material to add or draw attention to:
Company will be able to continue in operation
Company will be able to continue in operation
and meet its liabilities as they fall due over
and meet its liabilities as they fall due over
the period of their assessment, including any
the period of their assessment, including any
related disclosures drawing attention to any
related disclosures drawing attention to any
necessary qualifications or assumptions.
necessary qualifications or assumptions.
Key audit matters
Key audit matters
Key audit matters are those matters that, in
Key audit matters are those matters that, in
► the disclosures on pages 30 to 34 that describe
► the disclosures on pages 30 to 34 that describe
our professional judgement, were of most
our professional judgement, were of most
the principal risks and explain how they are
the principal risks and explain how they are
significance in our audit of the financial
significance in our audit of the financial
being managed or mitigated;
being managed or mitigated;
► the directors’ confirmation on page 35 that
► the directors’ confirmation on page 35 that
statements of the current financial year and
statements of the current financial year and
include the most significant assessed risks of
include the most significant assessed risks of
material misstatement (whether or not due to
material misstatement (whether or not due to
they have carried out a robust assessment of
they have carried out a robust assessment of
fraud) that we identified, including those which
fraud) that we identified, including those which
the principal risks facing the Group and Parent
the principal risks facing the Group and Parent
had the greatest effect on: the overall audit
had the greatest effect on: the overall audit
Company, including those that would threaten
Company, including those that would threaten
strategy, the allocation of resources in the audit;
strategy, the allocation of resources in the audit;
its business model, future performance,
its business model, future performance,
and directing the efforts of the engagement
and directing the efforts of the engagement
solvency or liquidity;
solvency or liquidity;
team.
team.
► the directors’ statement in note 1 to the
► the directors’ statement in note 1 to the
financial statements about whether the
financial statements about whether the
These matters were addressed in the context of
These matters were addressed in the context of
our audit of the financial statements as a whole,
our audit of the financial statements as a whole,
directors considered it appropriate to adopt
directors considered it appropriate to adopt
and in forming our opinion thereon, and we do
and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
not provide a separate opinion on these matters.
the going concern basis of accounting in
the going concern basis of accounting in
preparing the financial statements and
preparing the financial statements and
directors’ identification of any material
directors’ identification of any material
uncertainties to the Group and Parent
uncertainties to the Group and Parent
Company’s ability to continue to do so over
Company’s ability to continue to do so over
a period of at least twelve months from the
a period of at least twelve months from the
date of approval of the financial statements.
date of approval of the financial statements.
This included considering the nature of the
This included considering the nature of the
Group, its business model and related risks
Group, its business model and related risks
including where relevant the impact of Brexit,
including where relevant the impact of Brexit,
the requirements of the applicable financial
the requirements of the applicable financial
reporting framework and the system of
reporting framework and the system of
internal control. We evaluated the directors’
internal control. We evaluated the directors’
assessment of the Group’s ability to continue
assessment of the Group’s ability to continue
as a going concern, including challenging the
as a going concern, including challenging the
underlying data and key assumptions used
underlying data and key assumptions used
to make the assessment, and evaluated the
to make the assessment, and evaluated the
directors’ plans for future actions in relation to
directors’ plans for future actions in relation to
their going concern assessment;
their going concern assessment;
► whether the directors’ statement relating to
► whether the directors’ statement relating to
the prospects of the Group required by Listing
the prospects of the Group required by Listing
Rule 9.8.6R(3) is materially inconsistent with
Rule 9.8.6R(3) is materially inconsistent with
our knowledge obtained in the audit; or
our knowledge obtained in the audit; or
► the directors’ explanation on page 35 as to
► the directors’ explanation on page 35 as to
how they have assessed the prospects of the
how they have assessed the prospects of the
Group and Parent Company, over what period
Group and Parent Company, over what period
they have done so and why they consider that
they have done so and why they consider that
period to be appropriate, and their statement
period to be appropriate, and their statement
as to whether they have a reasonable
as to whether they have a reasonable
expectation that the Group and Parent
expectation that the Group and Parent
108
108
Carrying value of Intangible Assets
Carrying value of Intangible Assets
Key audit matter
Key audit matter
At 31 December 2018, intangible assets (including goodwill) had a
At 31 December 2018, intangible assets (including goodwill) had a
description
description
carrying value of €117.7m representing 79% of the Group’s total assets.
carrying value of €117.7m representing 79% of the Group’s total assets.
Group management have allocated goodwill to Cash Generating Units
Group management have allocated goodwill to Cash Generating Units
(CGUs) and have developed a model to calculate the value in use of the
(CGUs) and have developed a model to calculate the value in use of the
assets and to review the carrying value of goodwill and other intangibles
assets and to review the carrying value of goodwill and other intangibles
for impairment.
for impairment.
There is a risk that certain incorrect inputs or inappropriate assumptions,
There is a risk that certain incorrect inputs or inappropriate assumptions,
in particular projected cash flows, growth rate and discount rate
in particular projected cash flows, growth rate and discount rate
could be included in the impairment assessment model calculated
could be included in the impairment assessment model calculated
by management leading to an impairment charge that has not been
by management leading to an impairment charge that has not been
included in the Group’s financial statements.
included in the Group’s financial statements.
Small variances in key assumptions have the potential to reduce the value
Small variances in key assumptions have the potential to reduce the value
in use calculation and accordingly the headroom significantly.
in use calculation and accordingly the headroom significantly.
Intangible assets other than goodwill are amortised over their expected
Intangible assets other than goodwill are amortised over their expected
useful life. The expected useful life of an intangible asset is an area of
useful life. The expected useful life of an intangible asset is an area of
estimation and can have an impact on the amortisation charge for the
estimation and can have an impact on the amortisation charge for the
year.
year.
Refer to notes 3 and 11 to the financial statements.
Refer to notes 3 and 11 to the financial statements.
The Audit Committee has included their assessment of this risk on page 62.
The Audit Committee has included their assessment of this risk on page 62.
How the scope of our audit
How the scope of our audit
We evaluated the design and determined the implementation of the
We evaluated the design and determined the implementation of the
responded to the key audit
responded to the key audit
controls in place for determining when an impairment review is required
controls in place for determining when an impairment review is required
matter
matter
for intangible assets. As part of a Group reorganisation, valuations on
for intangible assets. As part of a Group reorganisation, valuations on
such assets were undertaken which were considered in our assessment
such assets were undertaken which were considered in our assessment
of whether or not an impairment was required for the current year.
of whether or not an impairment was required for the current year.
Where an impairment review was required, we challenged the underlying
Where an impairment review was required, we challenged the underlying
assumptions and obtained audit evidence to test those assumptions
assumptions and obtained audit evidence to test those assumptions
within the Group’s impairment model, including cashflow projections and
within the Group’s impairment model, including cashflow projections and
growth rates, which we compared to relevant industry data. We used our
growth rates, which we compared to relevant industry data. We used our
internal valuation experts to determine an acceptable range of discount
internal valuation experts to determine an acceptable range of discount
rates and compared our range to that determined by management. We
rates and compared our range to that determined by management. We
performed a sensitivity analysis on the underlying assumptions noted
performed a sensitivity analysis on the underlying assumptions noted
above to determine if there were any scenarios whereby a reasonably
above to determine if there were any scenarios whereby a reasonably
possible expectation of impairment could be present.
possible expectation of impairment could be present.
For intangible assets other than goodwill, we assessed the basis used by
For intangible assets other than goodwill, we assessed the basis used by
management in determining the expected useful lives and the resulting
management in determining the expected useful lives and the resulting
amortisation charge and performed an independent assessment of the
amortisation charge and performed an independent assessment of the
appropriateness of the expected useful lives used.
appropriateness of the expected useful lives used.
We assessed whether the disclosures in relation to goodwill and
We assessed whether the disclosures in relation to goodwill and
intangibles were appropriate and met the requirement of accounting
intangibles were appropriate and met the requirement of accounting
standards.
standards.
Key observations
Key observations
We have no observations that impact on our audit in respect of the
We have no observations that impact on our audit in respect of the
valuation of intangible assets.
valuation of intangible assets.
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Hostelworld Annual Report 2018 | Governance
Capitalisation of Development Costs
Capitalisation of Development Costs
Taxation Provisions
Taxation Provisions
Key audit matter
Key audit matter
At 31 December 2018, capitalised development costs amounted to €1.7m.
At 31 December 2018, capitalised development costs amounted to €1.7m.
Key audit matter
Key audit matter
The global nature of the Group’s business means it is subject to taxation
The global nature of the Group’s business means it is subject to taxation
description
description
Development expenditure in relation to internally generated intangible
Development expenditure in relation to internally generated intangible
assets is capitalised when all of the criteria as set out in IAS 38
assets is capitalised when all of the criteria as set out in IAS 38
“Intangible Assets” are met.
“Intangible Assets” are met.
There is a risk that additions are made to capitalised development costs
There is a risk that additions are made to capitalised development costs
before all the required capitalisation criteria are met.
before all the required capitalisation criteria are met.
Expenditure is capitalised from the date when the intangible asset
Expenditure is capitalised from the date when the intangible asset
first meets the recognition criteria and is amortised over its expected
first meets the recognition criteria and is amortised over its expected
economic useful life.
economic useful life.
In determining the amount to be capitalised management make
In determining the amount to be capitalised management make
judgements regarding expected future cash generation of the asset and
judgements regarding expected future cash generation of the asset and
expected period of benefit.
expected period of benefit.
Refer to notes 3 and 11 to the financial statements.
Refer to notes 3 and 11 to the financial statements.
The Audit Committee has included their assessment of this risk on page 62.
The Audit Committee has included their assessment of this risk on page 62.
How the scope of our audit
How the scope of our audit
In response to this key audit matter, we obtained an understanding of
In response to this key audit matter, we obtained an understanding of
responded to the key audit
responded to the key audit
the process and related controls for ensuring appropriate capitalisation
the process and related controls for ensuring appropriate capitalisation
matter
matter
of development costs. We evaluated the design and determined the
of development costs. We evaluated the design and determined the
description
description
in numerous jurisdictions and cross-border transactions can be
in numerous jurisdictions and cross-border transactions can be
challenged by taxation authorities resulting in tax exposures.
challenged by taxation authorities resulting in tax exposures.
As a result of the interaction of tax laws in different jurisdictions, there
As a result of the interaction of tax laws in different jurisdictions, there
is significant complexity in determining the most appropriate transfer
is significant complexity in determining the most appropriate transfer
pricing rates and thus the appropriate tax liabilities in each jurisdiction.
pricing rates and thus the appropriate tax liabilities in each jurisdiction.
There is a risk that tax authorities could have different interpretations
There is a risk that tax authorities could have different interpretations
to those of the Directors resulting in potential misstatement of taxation
to those of the Directors resulting in potential misstatement of taxation
provisions.
provisions.
Refer to notes 3 and 9 to the financial statements.
Refer to notes 3 and 9 to the financial statements.
The Audit Committee has included their assessment of this risk on page 63.
The Audit Committee has included their assessment of this risk on page 63.
How the scope of our audit
How the scope of our audit
We obtained an understanding of the Group’s tax strategy and
We obtained an understanding of the Group’s tax strategy and
responded to the key audit
responded to the key audit
management’s process for determining the appropriate transfer pricing
management’s process for determining the appropriate transfer pricing
matter
matter
rates applicable to cross-border transactions.
rates applicable to cross-border transactions.
Assisted by our transfer pricing tax specialists, who are part of the audit
Assisted by our transfer pricing tax specialists, who are part of the audit
team, we reviewed material cross-border intergroup agreements and
team, we reviewed material cross-border intergroup agreements and
transactions and the underlying data used in determining applicable
transactions and the underlying data used in determining applicable
royalty and mark-up rates and assessed the appropriateness of the
royalty and mark-up rates and assessed the appropriateness of the
implementation of the controls in place to separately identify the time on
implementation of the controls in place to separately identify the time on
royalties and mark-up rates being used.
royalties and mark-up rates being used.
development activities.
development activities.
We reviewed the capitalised project register and completed procedures
We reviewed the capitalised project register and completed procedures
to determine whether the expenditure was recorded accurately and
to determine whether the expenditure was recorded accurately and
whether it met the required capitalisation criteria in accordance with
whether it met the required capitalisation criteria in accordance with
IAS 38.
IAS 38.
We agreed the amount of development costs capitalised to underlying
We agreed the amount of development costs capitalised to underlying
documentation detailing cost per project, including timesheet data.
documentation detailing cost per project, including timesheet data.
Key observations
Key observations
No significant matters that impact on our audit arose from our work.
No significant matters that impact on our audit arose from our work.
We challenged and evaluated management’s assumptions and critical
We challenged and evaluated management’s assumptions and critical
estimates and judgements in respect of tax exposures, based on the
estimates and judgements in respect of tax exposures, based on the
royalty and mark-up rates utilised and their interpretation of the relevant
royalty and mark-up rates utilised and their interpretation of the relevant
tax laws in jurisdictions where the Group has significant operations.
tax laws in jurisdictions where the Group has significant operations.
Key observations
Key observations
We have no observations that impact on our audit in respect of the
We have no observations that impact on our audit in respect of the
amounts and disclosures related to the taxation provisions.
amounts and disclosures related to the taxation provisions.
Our audit procedures relating to these matters were designed in the context of our audit of the financial
Our audit procedures relating to these matters were designed in the context of our audit of the financial
statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion
statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion
on the financial statements is not modified with respect to any of the risks described above, and we do
on the financial statements is not modified with respect to any of the risks described above, and we do
not express an opinion on these individual matters.
not express an opinion on these individual matters.
110
110
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Our application of materiality
Our application of materiality
An overview of the scope of our audit
An overview of the scope of our audit
We have nothing to report in this regard.
We have nothing to report in this regard.
We define materiality as the magnitude of misstatement in the financial statements that makes it
We define materiality as the magnitude of misstatement in the financial statements that makes it
probable that the economic decisions of a reasonably knowledgeable person would be changed or
probable that the economic decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our audit work and in evaluating the results
influenced. We use materiality both in planning the scope of our audit work and in evaluating the results
of our work.
of our work.
Based on our professional judgement, we determined materiality for the Group to be €975,000, which
Based on our professional judgement, we determined materiality for the Group to be €975,000, which
is approximately 5% of Adjusted PBT. The items adjusted in the Adjusted PBT are explained further
is approximately 5% of Adjusted PBT. The items adjusted in the Adjusted PBT are explained further
in the Financial Review. We have considered the Adjusted PBT to be the appropriate benchmark
in the Financial Review. We have considered the Adjusted PBT to be the appropriate benchmark
for determining materiality because it is the most important measure for users of the Group’s
for determining materiality because it is the most important measure for users of the Group’s
financial statements. It is also a key measure used by the Group in reporting results to allow a better
financial statements. It is also a key measure used by the Group in reporting results to allow a better
understanding of the adjusted trading of the Group. We have considered quantitative and qualitative
understanding of the adjusted trading of the Group. We have considered quantitative and qualitative
factors such as understanding the entity and its environment, history of misstatements, complexity of
factors such as understanding the entity and its environment, history of misstatements, complexity of
the Group and reliability of the control environment. We determined materiality for the parent to be
the Group and reliability of the control environment. We determined materiality for the parent to be
€195,000.
€195,000.
The structure of the Group’s finance function
The structure of the Group’s finance function
is such that the central Group finance team in
is such that the central Group finance team in
Dublin provides support to Group entities for the
Dublin provides support to Group entities for the
accounting of the majority of transactions and
accounting of the majority of transactions and
balances. The audit work was undertaken and
balances. The audit work was undertaken and
performed by an audit team based in Dublin.
performed by an audit team based in Dublin.
Our Group audit was scoped on an entity level
Our Group audit was scoped on an entity level
basis, assessing components against the risk of
basis, assessing components against the risk of
material misstatement at the Group level. Based
material misstatement at the Group level. Based
on this assessment, we focused our work on four
on this assessment, we focused our work on four
legal entities covering 100% of revenue and 99%
legal entities covering 100% of revenue and 99%
of net assets. These legal entities, which were
of net assets. These legal entities, which were
subject to a full scope audit, were Hostelworld
subject to a full scope audit, were Hostelworld
Group plc, Hostelworld.com Limited, Hostelworld
Group plc, Hostelworld.com Limited, Hostelworld
Services Limited and WRI Nominees DAC. We
Services Limited and WRI Nominees DAC. We
also carried out specified audit procedures on
also carried out specified audit procedures on
Group materiality €975k
Group materiality €975k
Hostelworld Services Portugal.
Hostelworld Services Portugal.
Adjusted PBT
Adjusted PBT
€18,297k
€18,297k
Adjusted PBT
Adjusted PBT
Group materiality
Group materiality
Component materiality
Component materiality
range €195k to €926k
range €195k to €926k
Audit Committee reporting
Audit Committee reporting
threshold €48.7k
threshold €48.7k
We agreed with the Audit Committee that we would report to the Committee all audit differences in
We agreed with the Audit Committee that we would report to the Committee all audit differences in
excess of €48,750 (2017: €50,000) for the Group, as well as differences below that threshold that, in our
excess of €48,750 (2017: €50,000) for the Group, as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
matters that we identified when assessing the overall presentation of the financial statements.
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112
At the parent entity level, we also tested the
At the parent entity level, we also tested the
consolidation process and carried out review
consolidation process and carried out review
procedures to confirm our conclusion that there
procedures to confirm our conclusion that there
were no significant risks of material misstatement
were no significant risks of material misstatement
of the aggregated financial information of the
of the aggregated financial information of the
remaining components not subject to a full scope
remaining components not subject to a full scope
audit or specified audit procedures.
audit or specified audit procedures.
Other information
Other information
The directors are responsible for the other
The directors are responsible for the other
information. The other information comprises the
information. The other information comprises the
information included in the annual report, other
information included in the annual report, other
than the financial statements and our auditor’s
than the financial statements and our auditor’s
report thereon. Our opinion on the financial
report thereon. Our opinion on the financial
statements does not cover the other information
statements does not cover the other information
and, except to the extent otherwise explicitly
and, except to the extent otherwise explicitly
stated in our report, we do not express any form
stated in our report, we do not express any form
of assurance conclusion thereon.
of assurance conclusion thereon.
In connection with our audit of the financial
In connection with our audit of the financial
statements, our responsibility is to read the other
statements, our responsibility is to read the other
information and, in doing so, consider whether
information and, in doing so, consider whether
the other information is materially inconsistent
the other information is materially inconsistent
with the financial statements or our knowledge
with the financial statements or our knowledge
obtained in the audit or otherwise appears to
obtained in the audit or otherwise appears to
be materially misstated. If we identify such
be materially misstated. If we identify such
material inconsistencies or apparent material
material inconsistencies or apparent material
misstatements, we are required to determine
misstatements, we are required to determine
whether there is a material misstatement in the
whether there is a material misstatement in the
financial statements or a material misstatement
financial statements or a material misstatement
of the other information. If, based on the work
of the other information. If, based on the work
we have performed, we conclude that there is a
we have performed, we conclude that there is a
material misstatement of this other information,
material misstatement of this other information,
we are required to report that fact.
we are required to report that fact.
In this context, we also have nothing to report
In this context, we also have nothing to report
with regard to our responsibility to specifically
with regard to our responsibility to specifically
address the following items in the other
address the following items in the other
information and to report as uncorrected
information and to report as uncorrected
material misstatements of the other information
material misstatements of the other information
where we conclude that those items meet the
where we conclude that those items meet the
following conditions:
following conditions:
► Fair, balanced and understandable – the
► Fair, balanced and understandable – the
statement given by the directors that they
statement given by the directors that they
consider the annual report and financial
consider the annual report and financial
statements taken as a whole is fair, balanced
statements taken as a whole is fair, balanced
and understandable and provides the
and understandable and provides the
information necessary for shareholders to
information necessary for shareholders to
assess the Group and Parent Company’s
assess the Group and Parent Company’s
position and performance, business model and
position and performance, business model and
strategy, is materially inconsistent with our
strategy, is materially inconsistent with our
knowledge obtained in the audit; or
knowledge obtained in the audit; or
► Audit committee reporting – the section
► Audit committee reporting – the section
describing the work of the audit committee
describing the work of the audit committee
does not appropriately address matters
does not appropriately address matters
communicated by us to the audit committee; or
communicated by us to the audit committee; or
► Directors’ statement of compliance with the
► Directors’ statement of compliance with the
UK Corporate Governance Code – the parts
UK Corporate Governance Code – the parts
of the directors’ statement required under
of the directors’ statement required under
the Listing Rules relating to the Company’s
the Listing Rules relating to the Company’s
compliance with the UK Corporate Governance
compliance with the UK Corporate Governance
Code containing provisions specified for review
Code containing provisions specified for review
by the auditor in accordance with Listing Rule
by the auditor in accordance with Listing Rule
9.8.10R(2) do not properly disclose a departure
9.8.10R(2) do not properly disclose a departure
from a relevant provision of the UK Corporate
from a relevant provision of the UK Corporate
Governance Code.
Governance Code.
Responsibilities of directors
Responsibilities of directors
As explained more fully in the Directors’
As explained more fully in the Directors’
Responsibilities Statement, the directors are
Responsibilities Statement, the directors are
responsible for the preparation of the financial
responsible for the preparation of the financial
statements and for being satisfied that they give
statements and for being satisfied that they give
a true and fair view, and for such internal control
a true and fair view, and for such internal control
as the directors determine is necessary to enable
as the directors determine is necessary to enable
the preparation of financial statements that are
the preparation of financial statements that are
free from material misstatement, whether due to
free from material misstatement, whether due to
fraud or error.
fraud or error.
In preparing the financial statements, the
In preparing the financial statements, the
directors are responsible for assessing the Group
directors are responsible for assessing the Group
and Parent Company’s ability to continue as a
and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters
going concern, disclosing, as applicable, matters
related to going concern and using the going
related to going concern and using the going
concern basis of accounting unless the directors
concern basis of accounting unless the directors
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
either intend to liquidate the Group and Parent
either intend to liquidate the Group and Parent
accounting estimates and related disclosures
accounting estimates and related disclosures
Where the auditor is required to report on key
Where the auditor is required to report on key
tax and valuations specialists regarding how
tax and valuations specialists regarding how
Company or to cease operations, or have no
Company or to cease operations, or have no
made by the directors.
made by the directors.
realistic alternative but to do so.
realistic alternative but to do so.
audit matters, from the matters communicated
audit matters, from the matters communicated
and where fraud might occur in the financial
and where fraud might occur in the financial
with those charged with governance, the
with those charged with governance, the
statements and any potential indicators of
statements and any potential indicators of
Auditor’s responsibilities for the audit
Auditor’s responsibilities for the audit
of the financial statements
of the financial statements
directors’ use of the going concern basis of
directors’ use of the going concern basis of
accounting and, based on the audit evidence
accounting and, based on the audit evidence
most significance in the audit of the financial
most significance in the audit of the financial
potential for fraud in the following areas:
potential for fraud in the following areas:
statements of the current period and are
statements of the current period and are
management override of controls and revenue
management override of controls and revenue
► Conclude on the appropriateness of the
► Conclude on the appropriateness of the
auditor determines those matters that were of
auditor determines those matters that were of
fraud. As part of this discussion, we identified
fraud. As part of this discussion, we identified
Our objectives are to obtain reasonable
Our objectives are to obtain reasonable
assurance about whether the financial
assurance about whether the financial
statements as a whole are free from material
statements as a whole are free from material
misstatement, whether due to fraud or error,
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our
and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of
opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will
conducted in accordance with ISAs (UK) will
always detect a material misstatement when it
always detect a material misstatement when it
exists. Misstatements can arise from fraud or
exists. Misstatements can arise from fraud or
error and are considered material if, individually
error and are considered material if, individually
or in the aggregate, they could reasonably be
or in the aggregate, they could reasonably be
expected to influence the economic decisions
expected to influence the economic decisions
of users taken on the basis of these financial
of users taken on the basis of these financial
statements.
statements.
Details of the extent to which the audit was
Details of the extent to which the audit was
considered capable of detecting irregularities,
considered capable of detecting irregularities,
including fraud are set out below.
including fraud are set out below.
As part of an audit in accordance with ISAs (UK),
As part of an audit in accordance with ISAs (UK),
we exercise professional judgment and maintain
we exercise professional judgment and maintain
professional scepticism throughout the audit.
professional scepticism throughout the audit.
We also:
We also:
► Identify and assess the risks of material
► Identify and assess the risks of material
misstatement of the consolidated financial
misstatement of the consolidated financial
statements, whether due to fraud or error,
statements, whether due to fraud or error,
design and perform audit procedures
design and perform audit procedures
responsive to those risks, and obtain audit
responsive to those risks, and obtain audit
evidence that is sufficient and appropriate
evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk
to provide a basis for our opinion. The risk
of not detecting a material misstatement
of not detecting a material misstatement
resulting from fraud is higher than for one
resulting from fraud is higher than for one
resulting from error, as fraud may involve
resulting from error, as fraud may involve
collusion, forgery, intentional omissions,
collusion, forgery, intentional omissions,
misrepresentations, or the override of internal
misrepresentations, or the override of internal
control.
control.
► Obtain an understanding of internal control
► Obtain an understanding of internal control
relevant to the audit in order to design
relevant to the audit in order to design
audit procedures that are appropriate in the
audit procedures that are appropriate in the
circumstances, but not for the purpose of
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of
expressing an opinion on the effectiveness of
the Group’s and Company’s internal control.
the Group’s and Company’s internal control.
► Evaluate the appropriateness of accounting
► Evaluate the appropriateness of accounting
policies used and the reasonableness of
policies used and the reasonableness of
114
114
obtained, whether a material uncertainty
obtained, whether a material uncertainty
exists related to events or conditions that
exists related to events or conditions that
may cast significant doubt on the Group’s
may cast significant doubt on the Group’s
and Company’s ability to continue as a going
and Company’s ability to continue as a going
concern. If we conclude that a material
concern. If we conclude that a material
uncertainty exists, we are required to draw
uncertainty exists, we are required to draw
attention in the auditor’s report to the related
attention in the auditor’s report to the related
disclosures in the financial statements or, if
disclosures in the financial statements or, if
such disclosures are inadequate, to modify
such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the
our opinion. Our conclusions are based on the
audit evidence obtained up to the date of the
audit evidence obtained up to the date of the
auditor’s report. However, future events or
auditor’s report. However, future events or
conditions may cause the Group to cease to
conditions may cause the Group to cease to
continue as a going concern.
continue as a going concern.
► Evaluate the overall presentation, structure
► Evaluate the overall presentation, structure
and content of the financial statements,
and content of the financial statements,
including the disclosures, and whether the
including the disclosures, and whether the
financial statements represent the underlying
financial statements represent the underlying
transactions and events in a manner that
transactions and events in a manner that
achieves fair presentation.
achieves fair presentation.
► Obtain sufficient appropriate audit evidence
► Obtain sufficient appropriate audit evidence
regarding the financial information of the
regarding the financial information of the
business activities within the Group to express
business activities within the Group to express
an opinion on the consolidated financial
an opinion on the consolidated financial
statements. The Group auditor is responsible
statements. The Group auditor is responsible
for the direction, supervision and performance
for the direction, supervision and performance
of the Group audit. The Group auditor remains
of the Group audit. The Group auditor remains
solely responsible for the audit opinion.
solely responsible for the audit opinion.
We communicate with those charged with
We communicate with those charged with
governance regarding, among other matters,
governance regarding, among other matters,
the planned scope and timing of the audit
the planned scope and timing of the audit
and significant audit findings, including any
and significant audit findings, including any
significant deficiencies in internal control that
significant deficiencies in internal control that
the auditor identifies during the audit.
the auditor identifies during the audit.
For listed entities and public interest entities,
For listed entities and public interest entities,
the auditor also provides those charged with
the auditor also provides those charged with
governance with a statement that the auditor
governance with a statement that the auditor
has complied with relevant ethical requirements
has complied with relevant ethical requirements
regarding independence, including the FRC’s
regarding independence, including the FRC’s
Ethical Standard, and communicates with them
Ethical Standard, and communicates with them
all relationships and other matters that may
all relationships and other matters that may
reasonably be thought to bear on the auditor’s
reasonably be thought to bear on the auditor’s
independence, and where applicable, related
independence, and where applicable, related
safeguards.
safeguards.
therefore the key audit matters. The auditor
therefore the key audit matters. The auditor
recognition; and
recognition; and
describes these matters in the auditor’s
describes these matters in the auditor’s
report unless law or regulation precludes
report unless law or regulation precludes
► obtaining an understanding of the legal and
► obtaining an understanding of the legal and
public disclosure about the matter or when,
public disclosure about the matter or when,
regulatory framework that the Group operates
regulatory framework that the Group operates
in extremely rare circumstances, the auditor
in extremely rare circumstances, the auditor
in, focusing on those laws and regulations
in, focusing on those laws and regulations
determines that a matter should not be
determines that a matter should not be
that had a direct effect on the financial
that had a direct effect on the financial
communicated in the auditor’s report because
communicated in the auditor’s report because
statements or that had a fundamental effect
statements or that had a fundamental effect
the adverse consequences of doing so would
the adverse consequences of doing so would
on the operations of the Group. The key laws
on the operations of the Group. The key laws
reasonably be expected to outweigh the public
reasonably be expected to outweigh the public
and regulations we considered in this context
and regulations we considered in this context
interest benefits of such communication.
interest benefits of such communication.
included the UK Companies Act, Listing Rules,
included the UK Companies Act, Listing Rules,
Extent to which the audit was
Extent to which the audit was
considered capable of detecting
considered capable of detecting
irregularities, including fraud
irregularities, including fraud
and tax legislation.
and tax legislation.
Audit response to risks identified
Audit response to risks identified
As a result of performing the above, we did not
As a result of performing the above, we did not
We identify and assess the risks of material
We identify and assess the risks of material
identify any key audit matters related to the
identify any key audit matters related to the
misstatement of the financial statements,
misstatement of the financial statements,
potential risk of fraud or non-compliance with
potential risk of fraud or non-compliance with
whether due to fraud or error, and then design
whether due to fraud or error, and then design
laws and regulations.
laws and regulations.
and perform audit procedures responsive to
and perform audit procedures responsive to
those risks, including obtaining audit evidence
those risks, including obtaining audit evidence
Our procedures to respond to risks identified
Our procedures to respond to risks identified
that is sufficient and appropriate to provide a
that is sufficient and appropriate to provide a
included the following:
included the following:
basis for our opinion.
basis for our opinion.
Identifying and assessing potential risks
Identifying and assessing potential risks
and testing to supporting documentation
and testing to supporting documentation
related to irregularities
related to irregularities
to assess compliance with relevant laws and
to assess compliance with relevant laws and
► reviewing the financial statement disclosures
► reviewing the financial statement disclosures
In identifying and assessing risks of material
In identifying and assessing risks of material
misstatement in respect of irregularities,
misstatement in respect of irregularities,
including fraud and non-compliance with laws
including fraud and non-compliance with laws
and regulations, our procedures included the
and regulations, our procedures included the
following:
following:
► enquiring of management and the audit
► enquiring of management and the audit
committee, including obtaining and reviewing
committee, including obtaining and reviewing
supporting documentation, concerning the
supporting documentation, concerning the
Group’s policies and procedures relating to:
Group’s policies and procedures relating to:
> identifying, evaluating and complying with
> identifying, evaluating and complying with
laws and regulations and whether they
laws and regulations and whether they
were aware of any instances of
were aware of any instances of
non-compliance;
non-compliance;
regulations discussed above;
regulations discussed above;
► enquiring of management concerning actual
► enquiring of management concerning actual
and potential litigation and claims;
and potential litigation and claims;
► reading minutes of meetings of those charged
► reading minutes of meetings of those charged
with governance and reviewing internal audit
with governance and reviewing internal audit
reports; and
reports; and
► in addressing the risk of fraud through
► in addressing the risk of fraud through
management override of controls, testing
management override of controls, testing
the appropriateness of journal entries and
the appropriateness of journal entries and
other adjustments; assessing whether the
other adjustments; assessing whether the
judgements made in making accounting
judgements made in making accounting
estimates are indicative of a potential bias;
estimates are indicative of a potential bias;
> detecting and responding to the risks of
> detecting and responding to the risks of
and evaluating the business rationale of any
and evaluating the business rationale of any
fraud and whether they have knowledge of
fraud and whether they have knowledge of
significant transactions that are unusual or
significant transactions that are unusual or
any actual, suspected or alleged fraud;
any actual, suspected or alleged fraud;
outside the normal course of business
outside the normal course of business
> the internal controls established to mitigate
> the internal controls established to mitigate
risks related to fraud or non-compliance
risks related to fraud or non-compliance
with laws and regulations;
with laws and regulations;
► discussing among the engagement team and
► discussing among the engagement team and
involving relevant internal specialists, including
involving relevant internal specialists, including
We also communicated relevant identified laws
We also communicated relevant identified laws
and regulations and potential fraud risks to all
and regulations and potential fraud risks to all
engagement team members including internal
engagement team members including internal
specialists, and remained alert to any indications
specialists, and remained alert to any indications
of fraud or non-compliance with laws and
of fraud or non-compliance with laws and
regulations throughout the audit.
regulations throughout the audit.
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Hostelworld Annual Report 2018 | Governance
Hostelworld Annual Report 2018 | Governance
REPORT ON OTHER LEGAL
REPORT ON OTHER LEGAL
AND REGULATORY REQUIREMENTS
AND REGULATORY REQUIREMENTS
remuneration report to be audited is not in
remuneration report to be audited is not in
agreement with the accounting records and
agreement with the accounting records and
returns.
returns.
Opinions on other matters prescribed
Opinions on other matters prescribed
by the Companies Act 2006
by the Companies Act 2006
In our opinion the part of the directors’
In our opinion the part of the directors’
remuneration report to be audited has been
remuneration report to be audited has been
properly prepared in accordance with the
properly prepared in accordance with the
Companies Act 2006.
Companies Act 2006.
In our opinion, based on the work undertaken in
In our opinion, based on the work undertaken in
the course of the audit:
the course of the audit:
► the information given in the strategic report
► the information given in the strategic report
and the directors’ report for the financial
and the directors’ report for the financial
year for which the financial statements are
year for which the financial statements are
prepared is consistent with the financial
prepared is consistent with the financial
statements; and
statements; and
► the strategic report and the directors’ report
► the strategic report and the directors’ report
have been prepared in accordance with
have been prepared in accordance with
applicable legal requirements.
applicable legal requirements.
In the light of the knowledge and understanding
In the light of the knowledge and understanding
of the Group and Parent Company and their
of the Group and Parent Company and their
environment obtained in the course of the
environment obtained in the course of the
audit, we have not identified any material
audit, we have not identified any material
misstatements in the strategic report or the
misstatements in the strategic report or the
directors’ report.
directors’ report.
Matters on which we are required
Matters on which we are required
to report by exception
to report by exception
We have nothing to report in respect of the
We have nothing to report in respect of the
provisions in the Companies Act 2006 which
provisions in the Companies Act 2006 which
require us to report to you if, in our opinion:
require us to report to you if, in our opinion:
► we have not received all the information and
► we have not received all the information and
explanations we require for our audit; or
explanations we require for our audit; or
► adequate accounting records have not been
► adequate accounting records have not been
kept by the Parent Company, or returns
kept by the Parent Company, or returns
adequate for our audit have not been received
adequate for our audit have not been received
from branches not visited by us; or
from branches not visited by us; or
Other matters which we are required to
Other matters which we are required to
address
address
Following the recommendation of the audit
Following the recommendation of the audit
committee, we were appointed by the Board
committee, we were appointed by the Board
at its annual general meeting in 2015 to audit
at its annual general meeting in 2015 to audit
the financial statements for the year ending 31
the financial statements for the year ending 31
December 2015 and subsequent financial periods.
December 2015 and subsequent financial periods.
The period of total uninterrupted engagement
The period of total uninterrupted engagement
including previous renewals and reappointments
including previous renewals and reappointments
of the firm is 4 years, covering the years ending
of the firm is 4 years, covering the years ending
31 December 2015 to 31 December 2018.
31 December 2015 to 31 December 2018.
Our audit opinion is consistent with the additional
Our audit opinion is consistent with the additional
report to the audit committee we are required to
report to the audit committee we are required to
provide in accordance with ISAs (UK).
provide in accordance with ISAs (UK).
Use of our report
Use of our report
This report is made solely to the company’s
This report is made solely to the company’s
members, as a body, in accordance with Chapter
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
work has been undertaken so that we might state
to the company’s members those matters we are
to the company’s members those matters we are
required to state to them in an auditor’s report
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
permitted by law, we do not accept or assume
responsibility to anyone other than the company
responsibility to anyone other than the company
and the company’s members as a body, for our
and the company’s members as a body, for our
audit work, for this report, or for the opinions we
audit work, for this report, or for the opinions we
have formed.
have formed.
Daniel Murray
Daniel Murray
(Senior Statutory Auditor)
(Senior Statutory Auditor)
For and on behalf of Deloitte Ireland LLP
For and on behalf of Deloitte Ireland LLP
Chartered Accountant and Statutory
Chartered Accountant and Statutory
Audit Firm
Audit Firm
► the Parent Company financial statements are
► the Parent Company financial statements are
not in agreement with the accounting records
not in agreement with the accounting records
Dublin, Ireland
Dublin, Ireland
01 April 2019
01 April 2019
and returns.
and returns.
We have nothing to report in respect of the
We have nothing to report in respect of the
provisions in the Companies Act 2006 which
provisions in the Companies Act 2006 which
require us to report to you if, in our opinion,
require us to report to you if, in our opinion,
certain disclosures of directors’ remuneration
certain disclosures of directors’ remuneration
have not been made or the part of the directors’
have not been made or the part of the directors’
116
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MEDELLÍN VIBES HOSTEL
MEDELLÍN VIBES HOSTEL
MEDELLÍN
MEDELLÍN
04
ONE80° HOSTEL - ALEXANDERPLATZ
Berlin
FINANCIAL
STATEMENTS
120
Consolidated Income Statement
121
122
123
124
125
156
157
158
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Revenue
Administrative expenses
Depreciation and amortisation
Operating profit
Financial income
Financial costs
Profit before taxation
Taxation
Profit for the year attributable to the equity owners
of the parent company
Notes
4
5
5
8
9
2018
€’000
82,087
(61,939)
(13,453)
2017
€’000
86,672
(60,380)
(14,395)
Profit for the year
5,691
11,249
2018
€’000
2017
€’000
6,695
11,897
Exchange differences on translation of foreign operations
(2)
3
Items that may be reclassified subsequently to profit or loss:
Total comprehensive income for the year attributable
to equity owners of the parent company
5,689
11,252
20
(63)
9
(75)
6,652
11,831
(961)
(582)
5,691
11,249
Basic earnings per share (euro cent)
10
5.95
11.77
CLINK 78
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
AS AT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
FOR THE YEAR ENDED 31 DECEMBER 2018
Share
Share
Capital
Capital
€’000
€’000
Retained
Retained
Earnings
Earnings
€’000
€’000
Other
Other
Reserves
Reserves
€’000
€’000
Notes
Notes
Foreign
Foreign
Currency
Currency
Translation
Translation
Reserve
Reserve
€’000
€’000
Share
Share
Based
Based
Payment
Payment
Reserve
Reserve
€’000
€’000
Total
Total
€’000
€’000
As at 1 January 2017
As at 1 January 2017
956
956
154,986
154,986
3,628
3,628
15
15
351
351
159,936
159,936
Total comprehensive
Total comprehensive
income for the year
income for the year
Dividends
Dividends
21
21
Release of merger reserve
Release of merger reserve
Credit to equity for
Credit to equity for
equity-settled share based
equity-settled share based
payments
payments
-
-
-
-
-
-
-
-
11,249
11,249
(24,848)
(24,848)
-
-
-
-
3,628
3,628
(3,628)
(3,628)
-
-
As at 31 December 2017
As at 31 December 2017
956
956
145,015
145,015
Total comprehensive
Total comprehensive
income for the year
income for the year
Dividends
Dividends
21
21
Debit to equity for
Debit to equity for
equity-settled share based
equity-settled share based
payments
payments
-
-
-
-
-
-
5,691
5,691
(16,056)
(16,056)
-
-
As at 31 December 2018
As at 31 December 2018
956
956
134,650
134,650
3
3
-
-
-
-
-
-
-
-
-
-
-
-
11,252
11,252
(24,848)
(24,848)
-
-
609
609
609
609
18
18
960
960
146,949
146,949
(2)
(2)
-
-
-
-
-
-
-
-
5,689
5,689
(16,056)
(16,056)
(330)
(330)
(330)
(330)
16
16
630
630
136,252
136,252
-
-
-
-
-
-
-
-
-
-
-
-
Notes
Notes
2018
2018
€’000
€’000
2017
2017
€’000
€’000
Non-current assets
Non-current assets
Intangible assets
Intangible assets
Property, plant and equipment
Property, plant and equipment
Deferred tax assets
Deferred tax assets
Current assets
Current assets
Trade and other receivables
Trade and other receivables
Cash and cash equivalents
Cash and cash equivalents
Total assets
Total assets
Issued capital and reserves attributable to equity
Issued capital and reserves attributable to equity
owners of the parent
owners of the parent
Share capital
Share capital
Foreign currency translation reserve
Foreign currency translation reserve
Share based payment reserve
Share based payment reserve
Retained earnings
Retained earnings
Total equity attributable to equity holders of the
Total equity attributable to equity holders of the
parent company
parent company
Non-current liabilities
Non-current liabilities
Deferred tax liabilities
Deferred tax liabilities
Current liabilities
Current liabilities
Trade and other payables
Trade and other payables
Corporation tax
Corporation tax
Total liabilities
Total liabilities
Total equity and liabilities
Total equity and liabilities
11
11
12
12
13
13
14
14
15
15
13
13
16
16
117,726
117,726
128,108
128,108
3,256
3,256
99
99
3,774
3,774
480
480
121,081
121,081
132,362
132,362
2,814
2,814
25,974
25,974
28,788
28,788
3,966
3,966
21,294
21,294
25,260
25,260
149,869
149,869
157,622
157,622
956
956
16
16
630
630
956
956
18
18
960
960
134,650
134,650
145,015
145,015
136,252
136,252
146,949
146,949
262
262
262
262
12,946
12,946
409
409
13,355
13,355
13,617
13,617
457
457
457
457
9,832
9,832
384
384
10,216
10,216
10,673
10,673
149,869
149,869
157,622
157,622
The financial statements were approved by the Board of Directors and authorised for issue on 1 April
The financial statements were approved by the Board of Directors and authorised for issue on 1 April
2019 and signed on its behalf by:
2019 and signed on its behalf by:
Gary Morrison
Gary Morrison
Chief Executive Officer
Chief Executive Officer
TJ Kelly
TJ Kelly
Chief Financial Officer
Chief Financial Officer
Hostelworld Group plc registration number 9818705 (England and Wales)
Hostelworld Group plc registration number 9818705 (England and Wales)
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MADRID
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
FOR THE YEAR ENDED 31 DECEMBER 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
FOR THE YEAR ENDED 31 DECEMBER 2018
Notes
Notes
2018
2018
€’000
€’000
2017
2017
€’000
€’000
5
5
5
5
8
8
18
18
Cash flows from operating activities
Cash flows from operating activities
Profit before tax
Profit before tax
Depreciation of property, plant and equipment
Depreciation of property, plant and equipment
Amortisation of intangible assets
Amortisation of intangible assets
Financial income
Financial income
Financial expense
Financial expense
Employee equity settled share based payment
Employee equity settled share based payment
(credit)/ expense
(credit)/ expense
Changes in working capital items:
Changes in working capital items:
Increase in trade and other payables
Increase in trade and other payables
Decrease/ (increase) in trade and other receivables
Decrease/ (increase) in trade and other receivables
Cash generated from operations
Cash generated from operations
Interest paid
Interest paid
Interest received
Interest received
Income tax paid
Income tax paid
Net cash from operating activities
Net cash from operating activities
Cash flows from investing activities
Cash flows from investing activities
Acquisition/ capitalisation of intangible assets
Acquisition/ capitalisation of intangible assets
Purchases of property, plant and equipment
Purchases of property, plant and equipment
Net cash used in investing activities
Net cash used in investing activities
Cash flows from financing activities
Cash flows from financing activities
6,652
6,652
1,232
1,232
12,221
12,221
(20)
(20)
63
63
(346)
(346)
3,129
3,129
1,152
1,152
24,083
24,083
(63)
(63)
20
20
(749)
(749)
23,291
23,291
(1,839)
(1,839)
(714)
(714)
(2,553)
(2,553)
11,831
11,831
1,064
1,064
13,331
13,331
(9)
(9)
75
75
623
623
149
149
(1,340)
(1,340)
25,724
25,724
(75)
(75)
9
9
(551)
(551)
25,107
25,107
(1,820)
(1,820)
(1,780)
(1,780)
(3,600)
(3,600)
Dividends paid
Dividends paid
21
21
(16,056)
(16,056)
(24,848)
(24,848)
Net cash used in financing activities
Net cash used in financing activities
(16,056)
(16,056)
(24,848)
(24,848)
Net increase/ (decrease) in cash and cash equivalents
Net increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes
Effect of foreign exchange rate changes
Cash and cash equivalents at end of year
Cash and cash equivalents at end of year
4,682
4,682
21,294
21,294
(2)
(2)
(3,341)
(3,341)
24,632
24,632
3
3
25,974
25,974
21,294
21,294
1. GENERAL INFORMATION AND BASIS OF PREPARATION
1. GENERAL INFORMATION AND BASIS OF PREPARATION
Hostelworld Group plc, hereinafter “the Company”, is a public limited company incorporated in the
Hostelworld Group plc, hereinafter “the Company”, is a public limited company incorporated in the
United Kingdom on the 9 October 2015. The registered office of the Company is High Holborn House,
United Kingdom on the 9 October 2015. The registered office of the Company is High Holborn House,
52 - 54 High Holborn, London, WC1V 6RL, United Kingdom.
52 - 54 High Holborn, London, WC1V 6RL, United Kingdom.
The Company and its subsidiaries (together “the Group”) provide software and data processing
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.
services that facilitate hostel, B&B, hotel and other accommodation bookings worldwide.
Basis of Preparation
Basis of Preparation
The consolidated financial statements incorporate the financial statements of the Company
The consolidated financial statements incorporate the financial statements of the Company
and its directly and indirectly owned subsidiaries, all of which prepare financial statements up
and its directly and indirectly owned subsidiaries, all of which prepare financial statements up
to 31 December. The consolidated financial statements have been prepared in accordance with
to 31 December. The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”), International Financial Reporting Interpretations
International Financial Reporting Standards (“IFRS”), International Financial Reporting Interpretations
Committee (“IFRIC”) interpretations and those parts of the Companies Act 2006, applicable to
Committee (“IFRIC”) interpretations and those parts of the Companies Act 2006, applicable to
companies reporting under IFRS. The Group financial statements have been prepared in accordance
companies reporting under IFRS. The Group financial statements have been prepared in accordance
with IFRSs adopted by the European Union (“the EU”) which comprise standards and interpretations
with IFRSs adopted by the European Union (“the EU”) which comprise standards and interpretations
approved by the International Accounting Standards Board (“IASB”).
approved by the International Accounting Standards Board (“IASB”).
The consolidated financial statements have been prepared on the historical cost basis. The principal
The consolidated financial statements have been prepared on the historical cost basis. The principal
accounting policies adopted are set out below.
accounting policies adopted are set out below.
The directors have assessed the ability of the Company and Group to continue as a going concern
The directors have assessed the ability of the Company and Group to continue as a going concern
and are satisfied that it is appropriate to prepare the financial statements on a going concern basis
and are satisfied that it is appropriate to prepare the financial statements on a going concern basis
of accounting. In doing so, the directors have assessed that there are no material uncertainties to
of accounting. In doing so, the directors have assessed that there are no material uncertainties to
the Company’s and Group’s ability to continue as a going concern for the foreseeable future, being a
the Company’s and Group’s ability to continue as a going concern for the foreseeable future, being a
period of at least 12 months from the date of approval of the financial statements.
period of at least 12 months from the date of approval of the financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the consolidated financial statements
The principal accounting policies applied in the preparation of the consolidated financial statements
are set out below. These policies have been consistently applied to all the years presented, unless
are set out below. These policies have been consistently applied to all the years presented, unless
otherwise stated.
otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical
The preparation of financial statements in conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of
accounting estimates. It also requires management to exercise its judgement in the process of
applying the Group’s accounting policies. The areas involving a higher degree of judgment or
applying the Group’s accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial
complexity, or areas where assumptions and estimates are significant to the consolidated financial
statements are disclosed in Note 3.
statements are disclosed in Note 3.
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Hostelworld Annual Report 2018 | Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New standards, amendments and interpretations issued, but not yet effective
New standards, amendments and interpretations issued, but not yet effective
At the date of authorisation of these financial statements, the following standards and interpretations
At the date of authorisation of these financial statements, the following standards and interpretations
which have not been applied in these financial statements were in issue but not yet effective:
which have not been applied in these financial statements were in issue but not yet effective:
IFRS 3 (Amendment) Definition of a Business
IFRS 3 (Amendment) Definition of a Business
IFRS 9 (Amendment) Prepayment Features with Negative Compensation
IFRS 9 (Amendment) Prepayment Features with Negative Compensation
IFRS 16 Leases
IFRS 16 Leases
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts
IAS 1 (Amendment) Definition of Material
IAS 1 (Amendment) Definition of Material
IAS 8 (Amendment) Definition of Material
IAS 8 (Amendment) Definition of Material
IAS 19 (Amendment) Plan Amendment, Curtailment or Settlement
IAS 19 (Amendment) Plan Amendment, Curtailment or Settlement
IAS 28 (Amendment) Long-term Interests in Associates and Joint Arrangements
IAS 28 (Amendment) Long-term Interests in Associates and Joint Arrangements
Annual Improvements to IFRS Standards 2015-2017 Cycle (Amendment)
Annual Improvements to IFRS Standards 2015-2017 Cycle (Amendment)
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 Uncertainty over Income Tax Treatments
Amendments to References to Conceptual Framework in IFRS Standards
Amendments to References to Conceptual Framework in IFRS Standards
Changes in accounting policies – IFRS 16
Changes in accounting policies – IFRS 16
1 January 2020
1 January 2020
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2021
1 January 2021
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2019
1 January 2020
1 January 2020
IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019 and replaces IAS
IFRS 16 Leases is effective for annual periods beginning on or after 1 January 2019 and replaces IAS
17 Leases and related interpretations. IFRS 16 provides guidance on the classification, recognition and
17 Leases and related interpretations. IFRS 16 provides guidance on the classification, recognition and
measurement of leases. The standard will primarily affect the accounting for the Group’s operating
measurement of leases. The standard will primarily affect the accounting for the Group’s operating
leases relating to office premises. The Group will apply IFRS 16 from its effective date.
leases relating to office premises. The Group will apply IFRS 16 from its effective date.
Under the new standard, the distinction between operating and finance leases is removed for lessees
Under the new standard, the distinction between operating and finance leases is removed for lessees
and almost all leases are reflected in the statement of financial position. As a result, an asset (the
and almost all leases are reflected in the statement of financial position. As a result, an asset (the
right-of-use of the leased item) and a financial liability to pay rental expenses are recognised. Fixed
right-of-use of the leased item) and a financial liability to pay rental expenses are recognised. Fixed
rental expenses are removed from the consolidated income statement and are replaced with finance
rental expenses are removed from the consolidated income statement and are replaced with finance
costs on the lease liability and depreciation on the right-of-use asset. The only exemptions are short-
costs on the lease liability and depreciation on the right-of-use asset. The only exemptions are short-
term and low-value leases. The standard introduces new estimates and judgemental thresholds
term and low-value leases. The standard introduces new estimates and judgemental thresholds
that affect the identification, classification and measurement of lease transactions. More extensive
that affect the identification, classification and measurement of lease transactions. More extensive
disclosures, both qualitative and quantitative, are also required.
disclosures, both qualitative and quantitative, are also required.
The Group will adopt the new standard by applying the modified retrospective approach and will avail
The Group will adopt the new standard by applying the modified retrospective approach and will avail
of the recognition exemption for short-term and low-value leases. Upon transition, the lease liability
of the recognition exemption for short-term and low-value leases. Upon transition, the lease liability
is based on the present value of remaining lease payments and the right-of-use asset is an amount
is based on the present value of remaining lease payments and the right-of-use asset is an amount
equal to the lease liability adjusted for prepaid/accrued payments.
equal to the lease liability adjusted for prepaid/accrued payments.
The adoption of the new standard will have the following impact on the Group’s consolidated income
The adoption of the new standard will have the following impact on the Group’s consolidated income
statement and consolidated statement of financial position in 2019:
statement and consolidated statement of financial position in 2019:
Consolidated Income Statement - Administrative expenses are expected to decrease by €1.1m as the
Consolidated Income Statement - Administrative expenses are expected to decrease by €1.1m as the
Group currently recognises rental expenses therein. Depreciation and finance costs will increase,
Group currently recognises rental expenses therein. Depreciation and finance costs will increase,
as a result of the requirement to capitalise a right-of-use asset and depreciate over the term of the
as a result of the requirement to capitalise a right-of-use asset and depreciate over the term of the
lease, and the resulting finance cost which will be applied annually to the lease liability. As a result,
lease, and the resulting finance cost which will be applied annually to the lease liability. As a result,
Operating Profit will be impacted by the implementation of IFRS 16. Total lease expenses will increase
Operating Profit will be impacted by the implementation of IFRS 16. Total lease expenses will increase
in the early years of implementation of IFRS 16 due to the front-loading effect of finance charges
in the early years of implementation of IFRS 16 due to the front-loading effect of finance charges
versus the existing straight-line rent expense under the current standard.
versus the existing straight-line rent expense under the current standard.
Changes in accounting policies – IFRS 16 (Continued)
Changes in accounting policies – IFRS 16 (Continued)
Consolidated Statement of Financial Position - At 1 January 2019, the Group has calculated the lease
Consolidated Statement of Financial Position - At 1 January 2019, the Group has calculated the lease
commitments outstanding and applied the appropriate discount rate to calculate the present value of
commitments outstanding and applied the appropriate discount rate to calculate the present value of
the lease commitment which will be recognised as a liability and a right-of-use asset on the Group’s
the lease commitment which will be recognised as a liability and a right-of-use asset on the Group’s
statement of financial position. As at the transition date, IFRS 16 will result in an increase in right-of-
statement of financial position. As at the transition date, IFRS 16 will result in an increase in right-of-
use assets of €4.3m and a corresponding increase in financial liabilities of €5.4m.
use assets of €4.3m and a corresponding increase in financial liabilities of €5.4m.
The Group is currently assessing the impact of other standards and interpretations that are effective
The Group is currently assessing the impact of other standards and interpretations that are effective
for the first time for the financial year beginning on 1 January 2019.
for the first time for the financial year beginning on 1 January 2019.
Aside from the adoption of IFRS 9 and 15, which are described below, since the last Annual Report
Aside from the adoption of IFRS 9 and 15, which are described below, since the last Annual Report
there are a number of amendments to existing accounting standards that have been adopted. These
there are a number of amendments to existing accounting standards that have been adopted. These
had no material impact on the financial statements.
had no material impact on the financial statements.
IFRIC 22 Foreign Currency Transactions and Advance Consideration is effective for the financial year
IFRIC 22 Foreign Currency Transactions and Advance Consideration is effective for the financial year
beginning on 1 January 2018. The adoption of IFRIC 22 did not have a material impact on the Group on
beginning on 1 January 2018. The adoption of IFRIC 22 did not have a material impact on the Group on
adoption and no other new IFRIC interpretations that are effective for the first time for the financial
adoption and no other new IFRIC interpretations that are effective for the first time for the financial
year beginning on 1 January 2018 have had a material impact on the Group.
year beginning on 1 January 2018 have had a material impact on the Group.
Changes in accounting policies – IFRS 9
Changes in accounting policies – IFRS 9
From 1 January 2018, the Group has applied IFRS 9 Financial Instruments and the related
From 1 January 2018, the Group has applied IFRS 9 Financial Instruments and the related
consequential amendments to other IFRSs. IFRS 9 Financial Instruments replaced the existing
consequential amendments to other IFRSs. IFRS 9 Financial Instruments replaced the existing
guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new
guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new
requirements for the classification and measurement of financial instruments, including a new
requirements for the classification and measurement of financial instruments, including a new
expected credit loss model for calculating impairment on financial assets and new general hedge
expected credit loss model for calculating impairment on financial assets and new general hedge
accounting requirements. There is no material impact on the Group in relation to the adoption of this
accounting requirements. There is no material impact on the Group in relation to the adoption of this
standard, as detailed below.
standard, as detailed below.
The Group’s accounting policy under IFRS 9 is as follows: The financial assets held are trade
The Group’s accounting policy under IFRS 9 is as follows: The financial assets held are trade
receivables and cash, which will continue to be carried at amortised cost. Trade and other receivables
receivables and cash, which will continue to be carried at amortised cost. Trade and other receivables
are non-derivative financial assets with fixed or determinable payments that are not quoted in an
are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for maturities greater than 12 months after
active market. They are included in current assets, except for maturities greater than 12 months after
the end of the reporting period, which are classified as non-current assets.
the end of the reporting period, which are classified as non-current assets.
In relation to the impairment of financial assets, as at 1 January 2018, the directors reviewed and
In relation to the impairment of financial assets, as at 1 January 2018, the directors reviewed and
assessed the Group’s existing trade receivables for impairment using reasonable and supportable
assessed the Group’s existing trade receivables for impairment using reasonable and supportable
information that is available without undue cost or effort in accordance with the requirements of IFRS
information that is available without undue cost or effort in accordance with the requirements of IFRS
9 to determine the credit risk of the respective items at the date they were initially recognised. There
9 to determine the credit risk of the respective items at the date they were initially recognised. There
is no additional credit loss recognised against retained earnings at 1 January 2018. In line with the
is no additional credit loss recognised against retained earnings at 1 January 2018. In line with the
transition guidance in IFRS 9 the Group has not restated the 2017 prior period on adoption.
transition guidance in IFRS 9 the Group has not restated the 2017 prior period on adoption.
The Group recognises lifetime expected credit losses for trade receivables. The expected credit losses
The Group recognises lifetime expected credit losses for trade receivables. The expected credit losses
on these financial assets are estimated using a provision matrix based on the Group’s historical credit
on these financial assets are 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
loss experience, adjusted for factors that are specific to the debtors, general economic conditions and
assessment of the current as well as the forecast direction of conditions at the reporting date. The
assessment of the current as well as the forecast direction of conditions at the reporting date. The
change from an incurred loss model under IAS 39 to an expected loss model has not had a material
change from an incurred loss model under IAS 39 to an expected loss model has not had a material
impact.
impact.
The directors determine the classification of the Group’s financial liabilities at initial recognition.
The directors determine the classification of the Group’s financial liabilities at initial recognition.
The Group’s financial liabilities are classified as trade and other payables and are carried at amortised
The Group’s financial liabilities are classified as trade and other payables and are carried at amortised
cost.
cost.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Changes in accounting policies – IFRS 15
Changes in accounting policies – IFRS 15
Basis of consolidation
Basis of consolidation
From 1 January 2018, the Group has adopted IFRS 15 Revenue from Contracts with Customers. The
From 1 January 2018, the Group has adopted IFRS 15 Revenue from Contracts with Customers. The
core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised
core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised
services to customers in an amount that reflects the consideration to which the entity expects to
services to customers in an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those services. The Group has adopted the five-step approach to the
be entitled in exchange for those services. The Group has adopted the five-step approach to the
timing of revenue recognition based on performance obligations in customer contracts. This involves
timing of revenue recognition based on performance obligations in customer contracts. This involves
identifying the contract with customers, identifying the performance obligations, determining
identifying the contract with customers, identifying the performance obligations, determining
the transaction price, allocating the price to the performance obligations within the contract and
the transaction price, allocating the price to the performance obligations within the contract and
recognising revenue when the performance obligations are satisfied.
recognising revenue when the performance obligations are satisfied.
The Group generates substantially all of its revenues from the technology and data processing fees
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
and service fees that it charges to accommodation providers and the transaction service fees it
charges to consumers.
charges to consumers.
The Group’s accounting policy under IFRS 15 is that revenue is recognised at the time the reservation
The Group’s accounting policy under IFRS 15 is that 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
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,
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
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
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
the last cancellation date has passed as one party can withdraw from the contract until such a date
has passed.
has passed.
The Group also generates revenues from technology and data processing fees that it charges
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
to providers of other travel products and associated transaction service fees, from cancellation
protection fees, payment protection fees and from advertising services.
protection fees, payment protection fees and from advertising services.
Where the Group provides an ancillary service to allow a flexible booking option which allows a
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
booking to be cancelled for no charge or a new booking to be made, such revenue is deferred, until
such time as the related cancellation date has passed or for a six month period from the date of
such time as the related cancellation date has passed or for a six month period from the date of
cancellation, at which time the credit expires.
cancellation, at which time the credit expires.
Ancillary advertising revenues are recognised over the period when the service is provided and
Ancillary advertising revenues are recognised over the period when the service is provided and
performance obligations are met. Revenue is measured at the fair value of the consideration received
performance obligations are met. Revenue is measured at the fair value of the consideration received
or receivable.
or receivable.
Revenue is stated net of discounts, sales taxes and value added taxes.
Revenue is stated net of discounts, sales taxes and value added taxes.
There is no material impact on the Group in relation to the adoption of this standard, due to the
There is no material impact on the Group in relation to the adoption of this standard, due to the
nature of the contracts in place with customers. In line with the transition guidance in IFRS 15 the
nature of the contracts in place with customers. In line with the transition guidance in IFRS 15 the
Group has not restated the 2017 prior period on adoption.
Group has not restated the 2017 prior period on adoption.
In 2018, the Group introduced a new free cancellation booking option to further broaden the Group’s
In 2018, the Group introduced a new free cancellation booking option to further broaden the Group’s
product offering. If the traveller cancels their free cancellation booking, within a specified period,
product offering. If the traveller cancels their free cancellation booking, within a specified period,
their deposit is refunded. The introduction of this booking option has led to a deferral of revenue
their deposit is refunded. The introduction of this booking option has led to a deferral of revenue
recognition. €2.9m of revenue generated during the year from free cancellation bookings has been
recognition. €2.9m of revenue generated during the year from free cancellation bookings has been
deferred (2017: €nil) and will be recognised in future years, net of any cancellations, when the last
deferred (2017: €nil) and will be recognised in future years, net of any cancellations, when the last
cancellation date has passed. All of the costs in relation to these bookings have been recognised in
cancellation date has passed. All of the costs in relation to these bookings have been recognised in
the current year.
the current year.
The consolidated financial statements incorporate the financial statements of the Company and
The consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company. Control is achieved where the Company:
entities controlled by the Company. Control is achieved where the Company:
► has power to govern the financial and operating policies of the investee;
► has power to govern the financial and operating policies of the investee;
► is exposed, or has rights, to variable return from its investment with the investee; and
► 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.
► has the ability to use its power to affect its returns.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Business combinations
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration
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
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
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
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 generally recognised in profit or loss as incurred.
control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
their fair value at the acquisition date, except that:
their fair value at the acquisition date, except that:
► deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
► 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
are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
Benefits respectively;
► liabilities or equity instruments related to share-based payment arrangements of the acquiree or
► 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
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
arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at
the acquisition date; and
the acquisition date; and
► assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-
► 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
current Assets Held for Sale and Discontinued Operations are measured in accordance with that
standard.
standard.
Revenue recognition
Revenue recognition
The Group generates substantially all of its revenues from the technology and data processing fees
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
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
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
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.
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
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.
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
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,
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
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.
withdraw from the contract until such a date has passed.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition (Continued)
Revenue recognition (Continued)
Taxation (Continued)
Taxation (Continued)
Where the Group provides an ancillary service to allow a flexible booking option which allows a
Where the Group provides an ancillary service to allow a flexible booking option which allows a
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
booking to be cancelled for no charge or a new booking to be made, a portion of such revenue is
booking to be cancelled for no charge or a new booking to be made, a portion of such revenue is
settled or the asset is realised based on tax laws and rates that have been enacted or substantively
settled or the asset is realised based on tax laws and rates that have been enacted or substantively
deferred, until such time as the related cancellation date has passed or for a six month period from
deferred, until such time as the related cancellation date has passed or for a six month period from
enacted at the reporting date. Deferred tax is charged or credited in the consolidated income
enacted at the reporting date. Deferred tax is charged or credited in the consolidated income
the date of cancellation, at which time the credit expires. Advertising revenue and revenue from other
the date of cancellation, at which time the credit expires. Advertising revenue and revenue from other
statement, except when it relates to items charged or credited directly to equity, in which case the
statement, except when it relates to items charged or credited directly to equity, in which case the
services are recognised over the period when the service is performed. Revenue is measured at the
services are recognised over the period when the service is performed. Revenue is measured at the
deferred tax is also dealt with in equity.
deferred tax is also dealt with in equity.
fair value of the consideration received or receivable.
fair value of the consideration received or receivable.
Revenue is stated net of discounts, sales taxes and value added taxes.
Revenue is stated net of discounts, sales taxes and value added taxes.
Exceptional items
Exceptional items
Exceptional items by their nature and size can make interpretation of the underlying trends in the
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,
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 and
profit or loss on disposal or termination of operations, litigation settlements, legislative changes and
profit or loss on disposal of investments. Judgment is used by the Group in assessing the particular
profit or loss on disposal of investments. Judgment is used by the Group in assessing the particular
items which by virtue of their scale and nature should be disclosed as exceptional items.
items which by virtue of their scale and nature should be disclosed as exceptional items.
Operating leases
Operating leases
Leases where a significant proportion of the risks and rewards of ownership is retained by the lessor
Leases where a significant proportion of the risks and rewards of ownership is retained by the lessor
are classified as operating leases. Payments made under operating leases are recognised in the
are classified as operating leases. Payments made under operating leases are recognised in the
consolidated income statement on a straight-line basis over the term of the lease. Lease incentives
consolidated income statement on a straight-line basis over the term of the lease. Lease incentives
received are recognised in the consolidated income statement as an integral part of the total lease
received are recognised in the consolidated income statement as an integral part of the total lease
expense and are spread over the life of the lease.
expense and are spread over the life of the lease.
Taxation
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently
payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in
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
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
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
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.
enacted by the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
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
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
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
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
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
the extent that it is probable future taxable profits will be available against which the temporary
difference can be utilised.
difference can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
subsidiaries, except where the Group is able to control the reversal of the temporary difference and it
subsidiaries, 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.
is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the
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
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
the asset to be recovered. Such reductions are reversed when the probability of future taxable profits
improves.
improves.
Foreign currencies
Foreign currencies
The individual financial statements of each Group company are presented in the currency of the
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
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
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
expressed in euro, which is the functional currency of the parent company and the presentation
currency for the consolidated financial statements.
currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other
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
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
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.
denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.
Non-monetary items (including deferred revenue) at fair value that are denominated in foreign
Non-monetary items (including deferred revenue) 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
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
accordance with IFRIC 22. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of
Exchange differences arising on the settlement of monetary items, and on the retranslation of
monetary items, are included in the consolidated income statement for the period. For the purpose
monetary items, are included in the consolidated income statement for the period. For the purpose
of presenting consolidated financial statements, the assets and liabilities of the Group’s operations
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
are translated at exchange rates prevailing on the reporting date. Income and expense items are
translated at the appropriate exchange rates for the period. Exchange differences arising, if any,
translated at the appropriate exchange rates for the period. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in a separate component of equity
are recognised in other comprehensive income and accumulated in a separate component of equity
(foreign currency translation reserve). Goodwill and fair value adjustments arising on the acquisition
(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
of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the
closing rate.
closing rate.
Retirement benefits costs
Retirement benefits costs
Contributions made in respect of employees’ pension schemes are charged through the consolidated
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
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
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
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
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.
reduction in the future payments is available.
Property, plant and equipment
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated
impairment losses.
impairment losses.
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Hostelworld Annual Report 2018 | Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Intangible assets (Continued)
Intangible assets (Continued)
(b) Other intangible assets
(b) Other intangible assets
The Group has four classes of intangible asset: domain names, technology assets, affiliate contracts
The Group has four classes of intangible asset: domain names, technology assets, affiliate contracts
and development costs.
and development costs.
Other intangible assets including domain names and computer software are capitalised at their cost
Other intangible assets including domain names and computer software are capitalised at their cost
and amortised to the consolidated income statement, generally on a straight line basis over their
and amortised to the consolidated income statement, generally on a straight line basis over their
estimated useful lives except for the Hostelbookers domain name which is amortised on a reducing
estimated useful lives except for the Hostelbookers domain name which is amortised on a reducing
balance basis (see note 11):
balance basis (see note 11):
- Domain names
- Domain names
- Technology assets
- Technology assets
- Affiliate contracts
- Affiliate contracts
- Capitalised development costs
- Capitalised development costs
8-20 years
8-20 years
4 years
4 years
5 years
5 years
2-3 years
2-3 years
The residual value associated with all intangible assets is deemed to be €nil.
The residual value associated with all intangible assets is deemed to be €nil.
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
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
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
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 so that it will be available for use; the intention to complete the project to which the intangible
asset relates and use it; how the intangible asset will generate probable future economic benefits;
asset relates and use it; how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and
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
to use the intangible asset; and the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
intangible asset during its development.
The amount initially capitalised for internally-generated intangible assets is the sum of the
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
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
listed above. Where no internally-generated intangible asset can be recognised, development
expenditure is charged through the consolidated income statement in the period in which it is
expenditure is charged through the consolidated income statement in the period in which it is
incurred.
incurred.
Property, plant and equipment (Continued)
Property, plant and equipment (Continued)
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using
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
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
reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective
basis.
basis.
Depreciation is provided on the following basis:
Depreciation is provided on the following basis:
Leasehold property improvements
Leasehold property improvements
Computer equipment
Computer equipment
Fixtures and equipment
Fixtures and equipment
:
:
:
:
:
:
5-10 years straight line
5-10 years straight line
4-5 years straight line
4-5 years straight line
6-7 years straight line
6-7 years straight line
Leasehold improvements are improvements made to buildings leased by the Group when it has the
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
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.
to the lessor at the expiration of the lease.
The cost of a leasehold improvement is depreciated over the shorter of:
The cost of a leasehold improvement is depreciated over the shorter of:
1. the remaining lease term, or
1. the remaining lease term, or
2. the estimated useful life of the improvement.
2. the estimated useful life of the improvement.
Intangible assets
Intangible assets
(a) Goodwill
(a) Goodwill
Goodwill is initially measured as the excess of the cost of the business combination over the Group’s
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. Identifiable
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Identifiable
intangible assets, meeting either the contractual-legal or separability criterion are recognised
intangible assets, meeting either the contractual-legal or separability criterion are recognised
separately from goodwill. Following initial recognition, goodwill is measured at cost less any
separately from goodwill. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses.
accumulated impairment losses.
Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities
Where the fair value of the interest acquired in an entity’s assets, liabilities and contingent liabilities
exceeds the consideration paid, the excess is recognised immediately as a gain in the consolidated
exceeds the consideration paid, the excess is recognised immediately as a gain in the consolidated
income statement.
income statement.
Goodwill is reviewed for impairment annually or more frequently if events or changes in
Goodwill is reviewed for impairment annually or more frequently if events or changes in
circumstances indicated that the carrying value may be impaired.
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
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.
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
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
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
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 the consolidated income
asset in the unit. Any impairment loss for goodwill is recognised directly in the consolidated income
statement. An impairment loss recognised for goodwill is not reversed in subsequent periods.
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
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
the determination of the profit or loss on disposal.
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of tangible and intangible assets other than goodwill
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
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
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
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
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
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
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
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
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.
reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested
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.
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 to sell and value in use. In assessing value in
Recoverable amount is the higher of fair value less costs to sell 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
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
rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
asset.
If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its
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
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 the consolidated income
recoverable amount. An impairment loss is recognised immediately in the consolidated income
statement, unless the relevant asset is carried at a revalued amount, in which case the impairment
statement, unless the relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-
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
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
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
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 the consolidated income statement, unless the
of an impairment loss is recognised immediately in the consolidated income statement, unless the
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
treated as a revaluation increase.
Financial instruments
Financial instruments
(a) Financial assets
(a) Financial assets
The directors determine the classification of the Group’s financial assets at initial recognition based
The directors determine the classification of the Group’s financial assets at initial recognition based
on IFRS 9 categories and classification criteria. The Group has one financial asset held within ‘Trade
on IFRS 9 categories and classification criteria. The Group has one financial asset held within ‘Trade
and other receivables’.
and other receivables’.
After initial measurement at fair value plus transaction costs, financial assets are subsequently
After initial measurement at fair value plus transaction costs, financial assets are subsequently
carried at amortised cost using the effective interest method.
carried at amortised cost using the effective interest method.
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for maturities
that are not quoted in an active market. They are included in current assets, except for maturities
greater than 12 months after the end of the reporting period, which are classified as non-current
greater than 12 months after the end of the reporting period, which are classified as non-current
assets.
assets.
Financial instruments (Continued)
Financial instruments (Continued)
(b) Expected credit loss of financial assets
(b) Expected credit loss of financial assets
In accordance with IFRS 9, the directors assess the credit risk of financial assets on the date they are
In accordance with IFRS 9, the directors assess the credit risk of financial assets on the date they are
initially recognised. If objective evidence of a credit risk is identified, the Group recognises the lifetime
initially recognised. If objective evidence of a credit risk is identified, the Group recognises the lifetime
expected credit losses for those assets. Expected credit losses are reported in the consolidated
expected credit losses for those assets. Expected credit losses are reported in the consolidated
income statement.
income statement.
(c) Financial liabilities
(c) Financial liabilities
The directors determine the classification of the Group’s financial liabilities at initial recognition.
The directors determine the classification of the Group’s financial liabilities at initial recognition.
The Group’s financial liabilities are classified as trade and other payables and are carried at amortised
The Group’s financial liabilities are classified as trade and other payables and are carried at amortised
cost.
cost.
(d) Cash and cash equivalents
(d) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short-
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.
term highly liquid investments with original maturities of three months or less.
Share-based payments
Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the equity
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
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
conditions. Details regarding the determination of the fair value of equity-settled share-based
transactions are set out in note 18.
transactions are set out in note 18.
The fair value determined at the grant date of the equity-settled share-based payments is expensed
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
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
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.
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
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
statement such that the cumulative expense reflects the revised estimate, with a corresponding
adjustment to the share based payment reserve.
adjustment to the share based payment reserve.
Dividends
Dividends
Final dividends are recorded in the Group’s accounts in the period in which they are approved by the
Final dividends are recorded in the Group’s accounts 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.
Company’s shareholders. Interim dividends are recorded in the period in which they are paid.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
3. 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,
In the application of the Group’s accounting policies, the directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
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
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.
experience and other factors considered relevant. Actual results may differ from these estimates.
(a) The critical judgements that have been made that have the most significant effect on the amounts
(a) The critical judgements that have been made that have the most significant effect on the amounts
recognised in the consolidated financial statements are set out below:
recognised in the consolidated financial statements are set out below:
134
134
135
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3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
4. REVENUE & SEGMENTAL ANALYSIS
4. REVENUE & SEGMENTAL ANALYSIS
(CONTINUED)
(CONTINUED)
Capitalisation of development costs
Capitalisation of development costs
Development costs are capitalised in accordance with accounting policies in Note 2. Determining the
Development costs are capitalised in accordance with accounting policies in Note 2. Determining the
amount to be capitalised requires the directors to make assumptions regarding expected future cash
amount to be capitalised requires the directors to make assumptions regarding expected future cash
generation of the asset and expected period of benefit.
generation of the asset and expected period of benefit.
Tax provisioning
Tax provisioning
The Group, as a global business, is subject to both international and local transfer pricing legislation.
The Group, as a global business, is subject to both international and local transfer pricing legislation.
The directors review the transfer pricing position to ensure any potential exposure is adequately
The directors review the transfer pricing position to ensure any potential exposure is adequately
assessed.
assessed.
(b) Key sources of estimation that have been made that have the most significant effect on the amounts
(b) Key sources of estimation that have been made that have the most significant effect on the amounts
recognised in the consolidated financial statements are set out below:
recognised in the consolidated financial statements are set out below:
Useful lives for amortisation of intangible assets
Useful lives for amortisation of intangible assets
Intangible assets are disclosed in note 11. The amortisation charge is dependent on the estimated
Intangible assets are disclosed in note 11. The amortisation charge is dependent on the estimated
useful lives of the assets. The directors regularly review estimated useful lives of each type of
useful lives of the assets. The directors regularly review estimated useful lives of each type of
intangible asset and change them as necessary to reflect its current assessment of remaining lives
intangible asset and change them as necessary to reflect its current assessment of remaining lives
and the expected pattern of future economic benefit embodied in the asset. Changes in asset lives
and the expected pattern of future economic benefit embodied in the asset. Changes in asset lives
can have a significant impact on the amortisation charges for that year.
can have a significant impact on the amortisation charges for that year.
Impairment of goodwill and intangible assets
Impairment of goodwill and intangible assets
The Group is managed as a single business unit which provides software and data processing
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 online
services that facilitate hostel, hotel and other accommodation worldwide, including ancillary online
advertising revenue.
advertising revenue.
The directors determine and present operating segments based on the information that is provided
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
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
(“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
and average booking value. The objective in making resource allocation decisions is to maximise
consolidated financial results.
consolidated financial results.
The CODM assesses the performance of the business based on the consolidated adjusted profit/ (loss)
The CODM assesses the performance of the business based on the consolidated adjusted profit/ (loss)
after tax of the Group for the year. This measure excludes the effects of certain income and expense
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
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.
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
All revenue is derived wholly from external customers and is generated from a large number of
customers, none of whom is individually significant.
customers, none of whom is individually significant.
The Group’s major revenue-generating asset class comprises its software and data processing
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
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
managed as a single business unit, all other assets and liabilities have been allocated to the Group’s
single reportable segment.
single reportable segment.
There have been no changes to the basis of segmentation or the measurement basis for the segment
There have been no changes to the basis of segmentation or the measurement basis for the segment
The directors assess annually whether goodwill has suffered any impairment, in accordance with
The directors assess annually whether goodwill has suffered any impairment, in accordance with
profit or loss.
profit or loss.
the relevant accounting policy and intangible assets are assessed for possible impairment where
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
indicators of impairment exist. The recoverable amounts of cash-generating units (“CGUs”) are
Reportable segment information is presented as follows:
Reportable segment information is presented as follows:
determined based on value-in-use calculations that require the use of estimates.
determined based on value-in-use calculations that require the use of estimates.
The value-in-use calculations are prepared using cash flow projections based on three year budgets
The value-in-use calculations are prepared using cash flow projections based on three year budgets
approved by the directors and extended out for a further 2 years. The cash flow projections take into
approved by the directors and extended out for a further 2 years. The cash flow projections take into
account key assumptions including historical trading performance, anticipated changes in future
account key assumptions including historical trading performance, anticipated changes in future
market conditions, industry and economic factors and business strategies.
market conditions, industry and economic factors and business strategies.
Further details on the assumptions used are set out in note 11.
Further details on the assumptions used are set out in note 11.
Deferred Tax
Deferred Tax
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that
taxable profits will be available in future periods against which the losses can be utilised. Judgement
taxable profits will be available in future periods against which the losses can be utilised. Judgement
is required to determine the amount of deferred tax assets that can be recognised, based upon the
is required to determine the amount of deferred tax assets that can be recognised, based upon the
likely timing and level of future taxable profits.
likely timing and level of future taxable profits.
Europe
Europe
Americas
Americas
Asia, Africa and Oceania
Asia, Africa and Oceania
Total revenue
Total revenue
2018
2018
€’000
€’000
49,060
49,060
15,149
15,149
17,878
17,878
82,087
82,087
2017
2017
€’000
€’000
52,114
52,114
16,196
16,196
18,362
18,362
86,672
86,672
As at 31 December 2018, €2,892k of revenue relating to free cancellation bookings has been deferred
As at 31 December 2018, €2,892k of revenue relating to free cancellation bookings has been deferred
(2017: €nil).
(2017: €nil).
Disaggregation of revenue is presented as follows:
Disaggregation of revenue is presented as follows:
Technology and data processing fees
Technology and data processing fees
Advertising revenue and ancillary services
Advertising revenue and ancillary services
Total revenue
Total revenue
2018
2018
€’000
€’000
79,696
79,696
2,391
2,391
82,087
82,087
2017
2017
€’000
€’000
84,517
84,517
2,155
2,155
86,672
86,672
136
136
137
137
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4. REVENUE & SEGMENTAL ANALYSIS (CONTINUED)
4. REVENUE & SEGMENTAL ANALYSIS (CONTINUED)
5. OPERATING EXPENSES (CONTINUED)
5. OPERATING EXPENSES (CONTINUED)
In the year ended 31 December 2018, the Group generated 97% (2017: 98%) of its revenues from the
In the year ended 31 December 2018, the Group generated 97% (2017: 98%) of its revenues from the
Auditors’ remuneration
Auditors’ remuneration
technology and data processing fees that it charged to accommodation providers.
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
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.
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
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,
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
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
can withdraw from the contract until such a date has passed. Deferred revenue is expected to be
recognised within twelve months of initial recognition.
recognised within twelve months of initial recognition.
Advertising revenue and revenue generated from other services are recognised over the period when
Advertising revenue and revenue generated from other services are recognised over the period when
the service is performed.
the service is performed.
The Group’s non-current assets are located in Ireland, Luxembourg, Portugal and the UK. Out of the
The Group’s non-current assets are located in Ireland, Luxembourg, Portugal and the UK. Out of the
total non-current assets in the Group of €121,081k (2017: €132,362k), the non-current assets of the
total non-current assets in the Group of €121,081k (2017: €132,362k), the non-current assets of the
Group located in the UK are €1,654k (2017: €2,659k) and in Portugal are €623k (2017: €617k).
Group located in the UK are €1,654k (2017: €2,659k) and in Portugal are €623k (2017: €617k).
5. OPERATING EXPENSES
5. OPERATING EXPENSES
Profit for the year has been arrived at after charging/ (crediting) the following operating costs:
Profit for the year has been arrived at after charging/ (crediting) the following operating costs:
Marketing expenses
Marketing expenses
Staff costs
Staff costs
Credit card processing fees
Credit card processing fees
Exceptional items
Exceptional items
FX loss/ (gain)
FX loss/ (gain)
Other administrative costs
Other administrative costs
Total administrative expenses
Total administrative expenses
Depreciation of tangible fixed assets
Depreciation of tangible fixed assets
Amortisation of intangible fixed assets
Amortisation of intangible fixed assets
Total operating expenses
Total operating expenses
Notes
Notes
7
7
6
6
12
12
11
11
2018
2018
€’000
€’000
31,203
31,203
17,179
17,179
2,379
2,379
1,590
1,590
64
64
9,524
9,524
61,939
61,939
1,232
1,232
12,221
12,221
75,392
75,392
2017
2017
€’000
€’000
33,068
33,068
17,543
17,543
2,048
2,048
(494)
(494)
(102)
(102)
8,317
8,317
60,380
60,380
1,064
1,064
13,331
13,331
74,775
74,775
During the year, the Group obtained the following services from its Auditors:
During the year, the Group obtained the following services from its Auditors:
Fees payable for the statutory audit of the Company
Fees payable for the statutory audit of the Company
Fees payable for other services:
Fees payable for other services:
- statutory audit of subsidiary undertakings
- statutory audit of subsidiary undertakings
- tax advisory services
- tax advisory services
- other assurance services
- other assurance services
- corporate finance services
- corporate finance services
- other services
- other services
Total
Total
6. EXCEPTIONAL ITEMS
6. EXCEPTIONAL ITEMS
Restructuring costs
Restructuring costs
Merger and acquisition credit
Merger and acquisition credit
Total
Total
2018
2018
€’000
€’000
41
41
96
96
-
-
-
-
-
-
2
2
2017
2017
€’000
€’000
35
35
115
115
-
-
-
-
-
-
4
4
139
139
154
154
2018
2018
€’000
€’000
1,590
1,590
-
-
1,590
1,590
2017
2017
€’000
€’000
-
-
(494)
(494)
(494)
(494)
Restructuring costs of €1,590k include costs relating to the restructure of the senior management
Restructuring costs of €1,590k include costs relating to the restructure of the senior management
team and an internal reorganisation of the Group’s non-current assets (see note 23). The credit
team and an internal reorganisation of the Group’s non-current assets (see note 23). The credit
of €494k in 2017 relates to the release of an accrual relating to previously recognised merger and
of €494k in 2017 relates to the release of an accrual relating to previously recognised merger and
acquisition costs within the Group.
acquisition costs within the Group.
7. STAFF COSTS
7. STAFF COSTS
The average monthly number of people employed (including executive directors) was as follows:
The average monthly number of people employed (including executive directors) was as follows:
Average number of persons employed
Average number of persons employed
Administration and sales
Administration and sales
Development and information technology
Development and information technology
Total
Total
2018
2018
2017
2017
188
188
106
106
294
294
165
165
89
89
254
254
138
138
139
139
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Hostelworld Annual Report 2018 | Financial Statements
7. STAFF COSTS (CONTINUED)
7. STAFF COSTS (CONTINUED)
9. TAXATION (CONTINUED)
9. TAXATION (CONTINUED)
The aggregate remuneration costs of these employees is analysed as follows:
The aggregate remuneration costs of these employees is analysed as follows:
Notes
Notes
2018
2018
€’000
€’000
2017
2017
€’000
€’000
Staff costs comprise:
Staff costs comprise:
Wages and salaries
Wages and salaries
Social security costs
Social security costs
Pensions costs
Pensions costs
Other benefits
Other benefits
Long-term employee incentive (credit)/costs
Long-term employee incentive (credit)/costs
18
18
Capitalised development labour
Capitalised development labour
Total
Total
8. FINANCIAL COSTS
8. FINANCIAL COSTS
Bank charges
Bank charges
Total
Total
9. TAXATION
9. TAXATION
16,194
16,194
1,889
1,889
389
389
711
711
(346)
(346)
(1,658)
(1,658)
17,179
17,179
2018
2018
€’000
€’000
63
63
63
63
16,073
16,073
1,800
1,800
356
356
438
438
623
623
(1,747)
(1,747)
17,543
17,543
2017
2017
€’000
€’000
75
75
75
75
Notes
Notes
2018
2018
€’000
€’000
2017
2017
€’000
€’000
Corporation tax:
Corporation tax:
Current year
Current year
Adjustments in respect of prior years
Adjustments in respect of prior years
Total
Total
Deferred tax charge/ (credit)
Deferred tax charge/ (credit)
13
13
Total
Total
776
776
(1)
(1)
775
775
186
186
961
961
686
686
24
24
710
710
(128)
(128)
582
582
Corporation tax is calculated at 12.5% (2017: 12.5%) of the estimated taxable profit for the year.
Corporation tax is calculated at 12.5% (2017: 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
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The
charge for the year can be reconciled to the consolidated income statement as follows:
charge for the year can be reconciled to the consolidated income statement as follows:
Profit before tax on continuing operations
Profit before tax on continuing operations
Tax at the Irish corporation tax rate of 12.5% (2017: 12.5%)
Tax at the Irish corporation tax rate of 12.5% (2017: 12.5%)
Effects of :
Effects of :
Tax effect of expenses that are not deductible in determining taxable profit
Tax effect of expenses that are not deductible in determining taxable profit
Tax effect of utilisation of tax losses not previously recognised
Tax effect of utilisation of tax losses not previously recognised
Capital allowances in excess of depreciation
Capital allowances in excess of depreciation
Effect of different tax rates of subsidiaries operating in other jurisdictions
Effect of different tax rates of subsidiaries operating in other jurisdictions
Reversal of deferred tax asset on tax losses
Reversal of deferred tax asset on tax losses
Adjustments in respect of prior years
Adjustments in respect of prior years
Total
Total
The tax losses arise primarily from the previous capital structure of the Group.
The tax losses arise primarily from the previous capital structure of the Group.
2018
2018
€’000
€’000
2017
2017
€’000
€’000
6,652
6,652
11,831
11,831
832
832
1,479
1,479
622
622
(827)
(827)
(283)
(283)
201
201
417
417
(1)
(1)
961
961
515
515
(1,662)
(1,662)
(293)
(293)
299
299
220
220
24
24
582
582
The Group has an unrecognised deferred tax asset as at 31 December 2018 of €3,476k (31 December
The Group has an unrecognised deferred tax asset as at 31 December 2018 of €3,476k (31 December
2017: €3,125k) which has not been recognised in the consolidated financial statements as there is
2017: €3,125k) which has not been recognised in the consolidated financial statements as there is
insufficient evidence that the asset will be recovered in the foreseeable future.
insufficient evidence that the asset will be recovered in the foreseeable future.
10. EARNINGS PER SHARE
10. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the net profit for the year available to ordinary
Basic earnings per share is computed by dividing the net profit for the year available to ordinary
shareholders by the weighted average number of ordinary shares outstanding during the year.
shareholders by the weighted average number of ordinary shares outstanding during the year.
Weighted average number of shares in issue (‘000s)
Weighted average number of shares in issue (‘000s)
Profit for the year (€’000s)
Profit for the year (€’000s)
Basic earnings euro cent per share
Basic earnings euro cent per share
2018
2018
95,571
95,571
5,691
5,691
5.95
5.95
2017
2017
95,571
95,571
11,249
11,249
11.77
11.77
Diluted earnings per share is computed by dividing the net profit for the year by the weighted average
Diluted earnings per share is computed by dividing the net profit for the year by the weighted average
number of ordinary shares outstanding and, when dilutive, adjusted for the effect of all potentially
number of ordinary shares outstanding and, when dilutive, adjusted for the effect of all potentially
ordinary shares.
ordinary shares.
Weighted average number of ordinary shares in issue (‘000s)
Weighted average number of ordinary shares in issue (‘000s)
Effect of dilutive potential ordinary shares:
Effect of dilutive potential ordinary shares:
Share options (‘000s)
Share options (‘000s)
Weighted average number of ordinary shares for the purpose of
Weighted average number of ordinary shares for the purpose of
diluted earnings per share (‘000s)
diluted earnings per share (‘000s)
Diluted earnings euro cent per share
Diluted earnings euro cent per share
2018
2018
95,571
95,571
2017
2017
95,571
95,571
11
11
473
473
95,582
95,582
5.95
5.95
96,044
96,044
11.71
11.71
Actual earnings per share, calculated by dividing the net profit attributable to ordinary shareholders
Actual earnings per share, calculated by dividing the net profit attributable to ordinary shareholders
by the actual number of ordinary shares in issue at 31 December 2018, is 5.95 euro cent (2017:
by the actual number of ordinary shares in issue at 31 December 2018, is 5.95 euro cent (2017:
earnings per share of 11.77 euro cent).
earnings per share of 11.77 euro cent).
140
140
141
141
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
11. INTANGIBLE ASSETS
11. INTANGIBLE ASSETS
11. INTANGIBLE ASSETS (CONTINUED)
11. INTANGIBLE ASSETS (CONTINUED)
The table below shows the movements in intangible assets for the year:
The table below shows the movements in intangible assets for the year:
Goodwill
Goodwill
Goodwill
Goodwill
€’000
€’000
Domain
Domain
Names
Names
€’000
€’000
Technology
Technology
€’000
€’000
Affiliates
Affiliates
Contracts
Contracts
€’000
€’000
Capitalised
Capitalised
Development
Development
Costs
Costs
€’000
€’000
Total
Total
€’000
€’000
Cost
Cost
Balance at 1 January 2017
Balance at 1 January 2017
47,274
47,274
214,640
214,640
13,814
13,814
5,500
5,500
8,120
8,120
289,348
289,348
Additions
Additions
-
-
-
-
73
73
-
-
1,747
1,747
1,820
1,820
Balance at 31 December 2017
Balance at 31 December 2017
47,274
47,274
214,640
214,640
13,887
13,887
5,500
5,500
9,867
9,867
291,168
291,168
Balance at 1 January 2018
Balance at 1 January 2018
47,274
47,274
214,640
214,640
13,887
13,887
5,500
5,500
9,867
9,867
291,168
291,168
Additions
Additions
-
-
-
-
181
181
-
-
1,658
1,658
1,839
1,839
Balance at 31 December 2018
Balance at 31 December 2018
47,274
47,274
214,640
214,640
14,068
14,068
5,500
5,500
11,525
11,525
293,007
293,007
Accumulated amortisation
Accumulated amortisation
and impairment
and impairment
Balance at 1 January 2017
Balance at 1 January 2017
(29,426)
(29,426)
(96,304)
(96,304)
(13,445)
(13,445)
(5,500)
(5,500)
(5,054)
(5,054)
(149,729)
(149,729)
The goodwill balance at 31 December 2018 relates to an investment in Hostelworld.com Limited in
The goodwill balance at 31 December 2018 relates to an investment in Hostelworld.com Limited in
2009 which resulted in a goodwill amount of €17,848k. The carrying value of this balance as at 31
2009 which resulted in a goodwill amount of €17,848k. The carrying value of this balance as at 31
December 2018 is €17,848k (2017: €17,848k).
December 2018 is €17,848k (2017: €17,848k).
Goodwill, which has an indefinite useful life, is subject to annual impairment testing, or more frequent
Goodwill, which has an indefinite useful life, is subject to annual impairment testing, or more frequent
testing if there are indicators of impairment. The recoverable amounts of the cash generating units
testing if there are indicators of impairment. The recoverable amounts of the cash generating units
(“CGUs”) are determined from value in use calculations. The cash flow projections are initially based
(“CGUs”) are determined from value in use calculations. The cash flow projections are initially based
on the three year budgets approved by the directors and extended out for a further 2 years. The
on the three year budgets approved by the directors and extended out for a further 2 years. The
cash flow projections take into account key assumptions including historical trading performance,
cash flow projections take into account key assumptions including historical trading performance,
anticipated changes in future market conditions, industry and economic factors and business
anticipated changes in future market conditions, industry and economic factors and business
strategies.
strategies.
The pre-tax discount rate which has been applied in determining value in use is 10.8% (2017: 10.7%).
The pre-tax discount rate which has been applied in determining value in use is 10.8% (2017: 10.7%).
The discount rate is based on the Group estimated weighted average cost of capital adjusted for the
The discount rate is based on the Group estimated weighted average cost of capital adjusted for the
business specific risk of the CGU. The revised discount rate in 2018 was calculated from first principles
business specific risk of the CGU. The revised discount rate in 2018 was calculated from first principles
by a third party professional advisor. Growth rates are assessed based on the approved three year
by a third party professional advisor. Growth rates are assessed based on the approved three year
2019 budget and over the two year forecast period after 2021, they range from 5% to 6%. Cash flows
2019 budget and over the two year forecast period after 2021, they range from 5% to 6%. Cash flows
beyond the 5 year period are extrapolated using the estimated long- term growth rate of 2.8% (2017:
beyond the 5 year period are extrapolated using the estimated long- term growth rate of 2.8% (2017:
2.5%). This long term growth rate was calculated using global rates by a third party professional
2.5%). This long term growth rate was calculated using global rates by a third party professional
Charge for year
Charge for year
-
-
(10,149)
(10,149)
(257)
(257)
-
-
(2,925)
(2,925)
(13,331)
(13,331)
advisor.
advisor.
Balance at 31 December 2017
Balance at 31 December 2017
(29,426)
(29,426)
(106,453)
(106,453)
(13,702)
(13,702)
(5,500)
(5,500)
(7,979)
(7,979)
(163,060)
(163,060)
Balance at 1 January 2018
Balance at 1 January 2018
(29,426) (106,453)
(29,426) (106,453)
(13,702)
(13,702)
(5,500)
(5,500)
(7,979)
(7,979)
(163,060)
(163,060)
statements.
statements.
There are no reasonably possible or material changes to the assumptions presented above that
There are no reasonably possible or material changes to the assumptions presented above that
would result in any further impairment recorded in each of the years presented in these financial
would result in any further impairment recorded in each of the years presented in these financial
Charge for year
Charge for year
-
-
(10,247)
(10,247)
(106)
(106)
-
-
(1,868)
(1,868)
(12,221)
(12,221)
Balance at 31 December 2018
Balance at 31 December 2018
(29,426) (116,700)
(29,426) (116,700)
(13,808)
(13,808)
(5,500)
(5,500)
(9,847)
(9,847)
(175,281)
(175,281)
Carrying amount
Carrying amount
At 31 December 2017
At 31 December 2017
17,848
17,848
108,187
108,187
At 31 December 2018
At 31 December 2018
17,848
17,848
97,940
97,940
185
185
260
260
-
-
-
-
1,888
1,888
128,108
128,108
1,678
1,678
117,726
117,726
Following impairment testing, no impairment was recognised for goodwill in 2018.
Following impairment testing, no impairment was recognised for goodwill in 2018.
Other Intangible Assets
Other Intangible Assets
Additions during the year comprised of internally generated additions of €1,658k (2017: €1,747k) and
Additions during the year comprised of internally generated additions of €1,658k (2017: €1,747k) and
other separately acquired additions of €181k (2017: €73k).
other separately acquired additions of €181k (2017: €73k).
There were no indicators to require an impairment test of intangible assets in the current year.
There were no indicators to require an impairment test of intangible assets in the current year.
In 2018, as a result of a strategic review of the business by the directors, the estimated useful life
In 2018, as a result of a strategic review of the business by the directors, the estimated useful life
of the Hostels.com domain name was reduced to a period of 12 months from 1 July 2018, to be
of the Hostels.com domain name was reduced to a period of 12 months from 1 July 2018, to be
amortised on a straight line basis. This had a result of increasing the amortisation charge relating to
amortised on a straight line basis. This had a result of increasing the amortisation charge relating to
Hostels.com by €305k in 2018 and similarly increasing this amortisation charge by the same amount
Hostels.com by €305k in 2018 and similarly increasing this amortisation charge by the same amount
in 2019. Management considers that this change in relation to Hostels.com domain name does not
in 2019. Management considers that this change in relation to Hostels.com domain name does not
have implications on goodwill.
have implications on goodwill.
142
142
143
143
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
12. PROPERTY, PLANT AND EQUIPMENT
12. PROPERTY, PLANT AND EQUIPMENT
13. DEFERRED TAXATION
13. DEFERRED TAXATION
The table below shows the movements in property, plant and equipment for the year:
The table below shows the movements in property, plant and equipment for the year:
The following are the major deferred taxation liabilities and assets recognised by the Group and
The following are the major deferred taxation liabilities and assets recognised by the Group and
movements thereon during the current and prior reporting period:
movements thereon during the current and prior reporting period:
Leasehold
Leasehold
Property
Property
Improvements
Improvements
€’000
€’000
Fixtures &
Fixtures &
Equipment
Equipment
€’000
€’000
Computer
Computer
Equipment
Equipment
€’000
€’000
Cost
Cost
Balance at 1 January 2017
Balance at 1 January 2017
Additions
Additions
Disposals
Disposals
Balance at 31 December 2017
Balance at 31 December 2017
Balance at 1 January 2018
Balance at 1 January 2018
Additions
Additions
Disposals
Disposals
Balance at 31 December 2018
Balance at 31 December 2018
Accumulated depreciation
Accumulated depreciation
Balance at 1 January 2017
Balance at 1 January 2017
Charge for year
Charge for year
Disposals
Disposals
Balance at 31 December 2017
Balance at 31 December 2017
Balance at 1 January 2018
Balance at 1 January 2018
Charge for year
Charge for year
Disposals
Disposals
Balance at 31 December 2018
Balance at 31 December 2018
Carrying amount
Carrying amount
At 31 December 2017
At 31 December 2017
At 31 December 2018
At 31 December 2018
1,279
1,279
474
474
-
-
1,753
1,753
1,753
1,753
102
102
-
-
1,855
1,855
(213)
(213)
(167)
(167)
-
-
(380)
(380)
(380)
(380)
(272)
(272)
-
-
(652)
(652)
1,373
1,373
1,203
1,203
689
689
98
98
-
-
787
787
787
787
36
36
-
-
823
823
(189)
(189)
(126)
(126)
-
-
(315)
(315)
(315)
(315)
(120)
(120)
-
-
(435)
(435)
472
472
388
388
1,929
1,929
1,665
1,665
3,774
3,774
3,256
3,256
Total
Total
€’000
€’000
4,591
4,591
1,780
1,780
(85)
(85)
6,286
6,286
6,286
6,286
714
714
(83)
(83)
6,917
6,917
(1,533)
(1,533)
(1,064)
(1,064)
85
85
(2,512)
(2,512)
(2,512)
(2,512)
(1,232)
(1,232)
83
83
(3,661)
(3,661)
As at 1 January 2017
As at 1 January 2017
Credited/ (charged) to the income statement
Credited/ (charged) to the income statement
As at 1 January 2018
As at 1 January 2018
(Charged)/ credited to the income statement
(Charged)/ credited to the income statement
As at 31 December 2018
As at 31 December 2018
Accelerated
Accelerated
Taxation
Taxation
Depreciation
Depreciation
€’000
€’000
Taxation
Taxation
Losses
Losses
€’000
€’000
(742)
(742)
348
348
(394)
(394)
231
231
(163)
(163)
637
637
(220)
(220)
417
417
(417)
(417)
-
-
The following is the analysis of the deferred taxation balances for financial reporting purposes:
The following is the analysis of the deferred taxation balances for financial reporting purposes:
Deferred taxation assets
Deferred taxation assets
Deferred taxation liabilities
Deferred taxation liabilities
Net deferred taxation (liabilities)/ assets
Net deferred taxation (liabilities)/ assets
2018
2018
€’000
€’000
99
99
(262)
(262)
(163)
(163)
Total
Total
€’000
€’000
(105)
(105)
128
128
23
23
(186)
(186)
(163)
(163)
2017
2017
€’000
€’000
480
480
(457)
(457)
23
23
Deferred taxation assets and liabilities are measured at the tax rates that are expected to apply in the
Deferred taxation assets and liabilities are measured at the tax rates that are expected to apply in the
period when the asset is realised or the liability settled, based on tax rates that have been acted or
period when the asset is realised or the liability settled, based on tax rates that have been acted or
substantially enacted at the reporting date.
substantially enacted at the reporting date.
The Irish standard rate of corporation tax continued to be 12.5% through the period and comparative
The Irish standard rate of corporation tax continued to be 12.5% through the period and comparative
periods. The tax rate ruling in Luxembourg for 2018 was 26.01% (2017: 27.08%). The tax rate ruling in
periods. The tax rate ruling in Luxembourg for 2018 was 26.01% (2017: 27.08%). The tax rate ruling in
the UK was 20% up to 1 April 2017 when it reduced to 19%, and will reduce to 17% on 1 April 2020.
the UK was 20% up to 1 April 2017 when it reduced to 19%, and will reduce to 17% on 1 April 2020.
2,623
2,623
1,208
1,208
(85)
(85)
3,746
3,746
3,746
3,746
576
576
(83)
(83)
4,239
4,239
(1,131)
(1,131)
(771)
(771)
85
85
(1,817)
(1,817)
(1,817)
(1,817)
(840)
(840)
83
83
(2,574)
(2,574)
144
144
145
145
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
14. TRADE AND OTHER RECEIVABLES
14. TRADE AND OTHER RECEIVABLES
17. COMMITMENTS AND CONTINGENCIES
17. COMMITMENTS AND CONTINGENCIES
Amounts falling due within one year
Amounts falling due within one year
Trade receivables
Trade receivables
Prepayments
Prepayments
Value Added Tax
Value Added Tax
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
1,067
1,067
804
804
943
943
2,814
2,814
1,017
1,017
932
932
2,017
2,017
3,966
3,966
The carrying value of trade and other receivables also represents their fair value. Trade receivables
The carrying value of trade and other receivables also represents their fair value. Trade receivables
are non-interest bearing and trade receivable days are 5 days (2017: 4 days). Given the nature of the
are non-interest bearing and trade receivable days are 5 days (2017: 4 days). Given the nature of the
business, allowance for impairment of receivables is not material.
business, allowance for impairment of receivables is not material.
15. SHARE CAPITAL
15. SHARE CAPITAL
Allotted, Called-up and fully paid
Allotted, Called-up and fully paid
95,570,778 ordinary shares of €0.01 each
95,570,778 ordinary shares of €0.01 each
(2017: 95,570,778 ordinary shares of €0.01 each)
(2017: 95,570,778 ordinary shares of €0.01 each)
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
956
956
956
956
956
956
956
956
The Group has one class of ordinary shares which carry no right to fixed income. The share capital
The Group has one class of ordinary shares which carry no right to fixed income. The share capital
of the Group is represented by the share capital of the parent company, Hostelworld Group plc. This
of the Group is represented by the share capital of the parent company, Hostelworld Group plc. This
company was incorporated on 9 October 2015 to act as the holding company of the Group, and as a
company was incorporated on 9 October 2015 to act as the holding company of the Group, and as a
management services company.
management services company.
16. TRADE AND OTHER PAYABLES
16. TRADE AND OTHER PAYABLES
Amounts falling due within one year
Amounts falling due within one year
Trade payables
Trade payables
Accruals and other payables
Accruals and other payables
Deferred revenue
Deferred revenue
Payroll taxes
Payroll taxes
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
2,361
2,361
5,937
5,937
4,095
4,095
553
553
12,946
12,946
2,265
2,265
5,273
5,273
1,734
1,734
560
560
9,832
9,832
At 31 December 2018, €2,892k deferred revenue related to free cancellation bookings is included in
At 31 December 2018, €2,892k deferred revenue related to free cancellation bookings is included in
Deferred revenue (2017: €nil).
Deferred revenue (2017: €nil).
The average credit period for the Group in respect of trade payables is 21 days (2017: 20 days).
The average credit period for the Group in respect of trade payables is 21 days (2017: 20 days).
The directors consider that the carrying amount of trade payables approximates to their fair value.
The directors consider that the carrying amount of trade payables approximates to their fair value.
(i) Operating Leases
(i) Operating Leases
At the reporting date, the Group had commitments under non-cancellable operating leases which fall
At the reporting date, the Group had commitments under non-cancellable operating leases which fall
due as follows:
due as follows:
Operating leases
Operating leases
Within one year
Within one year
Within two to five years
Within two to five years
More than five years
More than five years
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
1,124
1,124
2,653
2,653
725
725
4,502
4,502
1,017
1,017
3,077
3,077
1,294
1,294
5,388
5,388
All operating lease commitments relate to buildings. These relate to four leases of office space
All operating lease commitments relate to buildings. These relate to four leases of office space
in Ireland, UK, Portugal and China. These leases are due to expire in 2035, 2025, 2022 and 2020
in Ireland, UK, Portugal and China. These leases are due to expire in 2035, 2025, 2022 and 2020
respectively. If the Group was to exercise available break options, the leases in Ireland and the UK
respectively. If the Group was to exercise available break options, the leases in Ireland and the UK
would expire in 2025 and 2020 respectively.
would expire in 2025 and 2020 respectively.
The operating lease charge included in the consolidated income statement was €1,144k in 2018 (2017:
The operating lease charge included in the consolidated income statement was €1,144k in 2018 (2017:
€1,040k).
€1,040k).
IFRS 16 Impact
IFRS 16 Impact
Note 2 contains details of the impact of IFRS 16 Leases on the Group, which is effective from 1 January
Note 2 contains details of the impact of IFRS 16 Leases on the Group, which is effective from 1 January
2019.
2019.
(ii) Contingencies
(ii) Contingencies
In the normal course of business the Group may be subject to indirect taxes on its services in certain
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
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
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
provision has been made in relation to these taxes as the directors believe that it is not probable that
a material liability will arise.
a material liability will arise.
146
146
147
147
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
18. SHARE-BASED PAYMENTS
18. SHARE-BASED PAYMENTS
Long Term Incentive Plan (“LTIP”) scheme
Long Term Incentive Plan (“LTIP”) scheme
18. SHARE-BASED PAYMENTS (CONTINUED)
18. SHARE-BASED PAYMENTS (CONTINUED)
Fair value of options granted during the year:
Fair value of options granted during the year:
In April 2016, the Group introduced a Long Term Incentive Plan for executive directors and selected
In April 2016, the Group introduced a Long Term Incentive Plan for executive directors and selected
At the grant date, the fair value per conditional award and the assumptions used in the calculations
At the grant date, the fair value per conditional award and the assumptions used in the calculations
management. The proportion of each award which vests, will depend on the Adjusted Earnings per
management. The proportion of each award which vests, will depend on the Adjusted Earnings per
are as follows:
are as follows:
Share (“EPS”) performance and Total Shareholder Return (“TSR”) of the Group over a three year period
Share (“EPS”) performance and Total Shareholder Return (“TSR”) of the Group over a three year period
(“the performance period”).
(“the performance period”).
Up to 70% of the shares/options subject to an award will vest according to the Group’s adjusted
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
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
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.
period measured against the TSR performance indicators approved by the Remuneration Committee.
An award will lapse if a participant ceases to be an employee or an officer within the Group before the
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.
vesting date and is not subject to good leaver provisions.
During the year ended 31 December 2018, the Remuneration Committee approved the grant of
During the year ended 31 December 2018, the Remuneration Committee approved the grant of
773,797 share options pursuant to the terms and conditions of the Group’s LTIP Rules. These were
773,797 share options pursuant to the terms and conditions of the Group’s LTIP Rules. These were
granted in three separate offerings. In 2018, €141k was expensed in the consolidated income
granted in three separate offerings. In 2018, €141k was expensed in the consolidated income
statement in relation to these awards. €608k was credited to the consolidated income statement for
statement in relation to these awards. €608k was credited to the consolidated income statement for
the year ended 31 December 2018 for the awards made in 2016 and 2017. This credit is mainly due to
the year ended 31 December 2018 for the awards made in 2016 and 2017. This credit is mainly due to
the forfeiture of the 2016 awards which will not vest in April 2019 due to vesting conditions not being
the forfeiture of the 2016 awards which will not vest in April 2019 due to vesting conditions not being
satisfied and a change in the estimate of shares that will vest under the EPS component of the 2017
satisfied and a change in the estimate of shares that will vest under the EPS component of the 2017
awards.
awards.
Details of the share options outstanding during the year are as follows:
Details of the share options outstanding during the year are as follows:
Outstanding at beginning of year
Outstanding at beginning of year
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Exercised during the year
Exercised during the year
Expired during the year
Expired during the year
2018
2018
No. of share
No. of share
options
options
2017
2017
No. of share
No. of share
options
options
1,324,039
1,324,039
773,797
773,797
928,464
928,464
847,663
847,663
(1,221,879)
(1,221,879)
(452,088)
(452,088)
-
-
-
-
-
-
-
-
Outstanding at the end of the year
Outstanding at the end of the year
875,957
875,957
1,324,039
1,324,039
Exercisable at the end of the year
Exercisable at the end of the year
-
-
-
-
Included in the number of options forfeited in 2018, are 562,626 options of the 2016 awards which
Included in the number of options forfeited in 2018, are 562,626 options of the 2016 awards which
did not meet the vesting conditions based on performance conditions from 1 January 2016 to 31
did not meet the vesting conditions based on performance conditions from 1 January 2016 to 31
December 2018.
December 2018.
The remaining awards will vest on the later of the 3rd anniversary of the grant and the determination
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 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
of grant, provided the individual remains an employee or officer of the Group or is subject to good
December
December
2018
2018
June
June
2018
2018
April
April
2018
2018
March
March
2017
2017
Year of potential vesting
Year of potential vesting
2021
2021
2021
2021
2021
2021
2020
2020
Number of share options granted
Number of share options granted
98,520
98,520
175,723
175,723
499,554
499,554
847,663
847,663
Share price at grant date
Share price at grant date
Exercise price per share option
Exercise price per share option
£1.99
£1.99
£nil
£nil
£3.15
£3.15
£nil
£nil
£3.86
£3.86
£nil
£nil
£2.33
£2.33
£nil
£nil
Expected volatility of Company share price
Expected volatility of Company share price
41.5%
41.5%
47.0%
47.0%
46.0%
46.0%
46.0%
46.0%
Expected life
Expected life
Expected dividend yield
Expected dividend yield
Risk free interest rate
Risk free interest rate
Weighted average fair value at grant date
Weighted average fair value at grant date
Remaining weighted average life of options (years)
Remaining weighted average life of options (years)
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
7.6%
7.6%
0.75%
0.75%
£1.48
£1.48
2.93
2.93
4.8%
4.8%
0.76%
0.76%
£2.64
£2.64
2.50
2.50
3.8%
3.8%
0.88%
0.88%
£3.35
£3.35
2.28
2.28
5.7%
5.7%
0.21%
0.21%
£1.92
£1.92
1.24
1.24
Expected volatility was determined in line with market performance of the Company and comparator
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
companies as there was insufficient historic data available for the Company at the grant date of
the awards up to and including the June 2018 awards. The expected volatility for the December
the awards up to and including the June 2018 awards. The expected volatility for the December
2018 awards was determined based on the market performance of the Company over 2.07 years,
2018 awards was determined based on the market performance of the Company over 2.07 years,
corresponding to the remaining time left of the measurement period. Market based vesting
corresponding to the remaining time left of the measurement period. Market based vesting
conditions, such as the TSR condition, have been taken into account in establishing the fair value of
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,
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
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
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 eventually vest.
amount recognised is based on the number of equity instruments that eventually vest.
Save As You Earn (“SAYE”) scheme
Save As You Earn (“SAYE”) scheme
During the year ended 31 December 2018, the Remuneration Committee approved the granting
During the year ended 31 December 2018, the Remuneration Committee approved the granting
of share options under a SAYE scheme for all eligible employees across the Group. 24 employees in
of share options under a SAYE scheme for all eligible employees across the Group. 24 employees in
Ireland availed of the scheme in 2018 (2017: 73 employees availed of the 2017 scheme). The scheme
Ireland availed of the scheme in 2018 (2017: 73 employees availed of the 2017 scheme). The scheme
will last three years and employees may choose to purchase shares at the end of the three year period
will 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%
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
discount for Irish and UK based employees in line with amounts permitted under tax legislation in
both jurisdictions.
both jurisdictions.
The total expected cost of the 2018 SAYE scheme was estimated at €41k of which €7k has been
The total expected cost of the 2018 SAYE scheme was estimated at €41k of which €7k has been
recognised in the consolidated income statement for the year ended 31 December 2018. The
recognised in the consolidated income statement for the year ended 31 December 2018. The
remaining €34k will be charged against profit or loss in equal instalments over the remainder of the
remaining €34k will be charged against profit or loss in equal instalments over the remainder of the
three year vesting period. The total expected cost of the 2017 SAYE scheme was estimated at €200k of
three year vesting period. The total expected cost of the 2017 SAYE scheme was estimated at €200k of
which €115k (2017: €37k) has been recognised in the consolidated income statement for the current
which €115k (2017: €37k) has been recognised in the consolidated income statement for the current
leaver provisions. The measurement period for the 2017 and 2018 awards for performance conditions
leaver provisions. The measurement period for the 2017 and 2018 awards for performance conditions
year.
year.
is over 3 years from 1 January 2017 to 31 December 2019 and from 1 January 2018 to 31 December
is over 3 years from 1 January 2017 to 31 December 2019 and from 1 January 2018 to 31 December
2020 respectively.
2020 respectively.
Share options under the LTIP scheme have an exercise price of £nil. The fair value, at the grant date, of
Share options under the LTIP scheme have an exercise price of £nil. The fair value, at the grant date, of
the TSR-based conditional awards was measured using a Monte Carlo simulation model.
the TSR-based conditional awards was measured using a Monte Carlo simulation model.
148
148
149
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
18. SHARE-BASED PAYMENTS (CONTINUED)
18. SHARE-BASED PAYMENTS (CONTINUED)
Outstanding at beginning of year
Outstanding at beginning of year
Granted during the year
Granted during the year
Forfeited during the year
Forfeited during the year
Outstanding share options granted at end of year
Outstanding share options granted at end of year
Fair value of options granted during the year:
Fair value of options granted during the year:
Number of SAYE share options granted
Number of SAYE share options granted
2018
2018
171,333
171,333
90,819
90,819
(96,990)
(96,990)
165,162
165,162
2017
2017
-
-
181,208
181,208
(9,875)
(9,875)
171,333
171,333
19. RELATED PARTY TRANSACTIONS
19. RELATED PARTY TRANSACTIONS
SUBSIDIARIES
SUBSIDIARIES
The following is a list of the Company’s current investments in subsidiaries, including the name,
The following is a list of the Company’s current investments in subsidiaries, including the name,
country of incorporation, and proportion of ownership interest:
country of incorporation, and proportion of ownership interest:
Company
Company
Holding Nature of Business
Holding Nature of Business
Registered Office
Registered Office
WRI Nominees DAC
WRI Nominees DAC
100%*
100%*
Holding of IP
Holding of IP
Floor 2, One Central Park,
Floor 2, One Central Park,
Leopardstown, Dublin 18, Ireland
Leopardstown, Dublin 18, Ireland
15, Boulevard Friedrich Wilhelm
15, Boulevard Friedrich Wilhelm
Raiffeisen, L-2411 Luxembourg **
Raiffeisen, L-2411 Luxembourg **
At the grant date, the fair value per conditional award and the assumptions used in the calculations
At the grant date, the fair value per conditional award and the assumptions used in the calculations
Hostelworld.com Limited
Hostelworld.com Limited
100%
100%
are as follows:
are as follows:
Scheme
Scheme
Grant date
Grant date
Year of potential vesting
Year of potential vesting
Share price at grant date
Share price at grant date
Exercise price per share option
Exercise price per share option
Expected volatility of company share price
Expected volatility of company share price
Expected life
Expected life
Expected dividend yield
Expected dividend yield
Risk free interest rate
Risk free interest rate
Weighted average fair value at grant date
Weighted average fair value at grant date
Irish office
Irish office
UK office
UK office
Irish office
Irish office
September 2018
September 2018
July 2017
July 2017
July 2017
July 2017
2021
2021
€2.40
€2.40
€2.56
€2.56
47.5%
47.5%
3 years
3 years
6.9%
6.9%
(0.40%)
(0.40%)
€0.45
€0.45
2020
2020
£3.37
£3.37
£2.78
£2.78
45.0%
45.0%
2020
2020
€4.00
€4.00
€3.24
€3.24
44.6%
44.6%
3 years
3 years
3 years
3 years
4.0%
4.0%
0.38%
0.38%
£0.99
£0.99
4.0%
4.0%
0.38%
0.38%
€1.10
€1.10
Valuation model
Valuation model
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Expected volatility was determined in line with market performance of the Company and comparator
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
companies as there was insufficient historic data available for the Company at the grant date of the
awards.
awards.
The charge of €121k (2017: €37k) in relation to the SAYE schemes, together with the credit in respect of
The charge of €121k (2017: €37k) in relation to the SAYE schemes, together with the credit in respect of
the long-term incentive plan for the year of €467k (2017: €586k expense) is the total charge in respect
the long-term incentive plan for the year of €467k (2017: €586k expense) is the total charge in respect
of share-based payments, which has been recognised directly in equity. The LTIP and SAYE schemes
of share-based payments, which has been recognised directly in equity. The LTIP and SAYE schemes
are accounted for as equity-settled in the financial statements.
are accounted for as equity-settled in the financial statements.
The Group recognised a credit of €346k (2017: €623k expense) relating to equity-settled share-based
The Group recognised a credit of €346k (2017: €623k expense) relating to equity-settled share-based
payment transactions in the consolidated income statement during the year.
payment transactions in the consolidated income statement during the year.
Cash settled share-based payments
Cash settled share-based payments
During 2018, the Group issued to certain individuals share appreciation rights (“SARs”), in the form
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.
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 €3k and a corresponding expense of €3k in relation to these
The Group has recorded liabilities of €3k and a corresponding expense of €3k in relation to these
SARs as at 31 December 2018 (2017: €nil). The fair value of these SARs was determined by using a
SARs as at 31 December 2018 (2017: €nil). The fair value of these SARs was determined by using a
Black Scholes model.
Black Scholes model.
Technology trading
Technology trading
company
company
Floor 2, One Central Park,
Floor 2, One Central Park,
Leopardstown, Dublin 18, Ireland
Leopardstown, Dublin 18, Ireland
Hostelworld Services
Hostelworld Services
Portugal LDA
Portugal LDA
100%
100%
Marketing and research
Marketing and research
and development services
and development services
company
company
Aviz Trade Center, Rua Engenheiro
Aviz Trade Center, Rua Engenheiro
Ferreira Dias, 924, 2nd Andar, Sala E27,
Ferreira Dias, 924, 2nd Andar, Sala E27,
4100-246 Porto, Portugal
4100-246 Porto, Portugal
Hostelworld Services Limited 100%*
Hostelworld Services Limited 100%*
Marketing services and
Marketing services and
technology trading company
technology trading company
High Holborn House, 52 - 54 High
High Holborn House, 52 - 54 High
Holborn, London, WC1V 6RL, United
Holborn, London, WC1V 6RL, United
Kingdom
Kingdom
* held directly by the Company
* held directly by the Company
** WRI Nominees DAC is dually incorporated in Luxembourg and Ireland with registered offices in both locations. Its place of business is in Luxembourg.
** WRI Nominees DAC is dually incorporated in Luxembourg and Ireland with registered offices in both locations. Its place of business is in Luxembourg.
On 12 March 2019, WRI Nominees DAC was placed in liquidation by way of members’ voluntary winding up.
On 12 March 2019, WRI Nominees DAC was placed in liquidation by way of members’ voluntary winding up.
All subsidiaries have the same reporting date as the Company being 31 December.
All subsidiaries have the same reporting date as the Company being 31 December.
On 30 November 2018, Hostelworld Korea Limited was placed into voluntary liquidation.
On 30 November 2018, Hostelworld Korea Limited was placed into voluntary liquidation.
On 24 March 2017, Hostelworld Services LDA was incorporated in Portugal. On 13 November 2017,
On 24 March 2017, Hostelworld Services LDA was incorporated in Portugal. On 13 November 2017,
Wings Lux 3 S.à r.l. and Cornetto Bidco Limited transferred their shares in Hostelworld Services
Wings Lux 3 S.à r.l. and Cornetto Bidco Limited transferred their shares in Hostelworld Services
Limited to the Company. On 21 December 2017, WRI Nominees DAC purchased 96 ordinary shares
Limited to the Company. On 21 December 2017, WRI Nominees DAC purchased 96 ordinary shares
in Hostelworld.com Limited which represents a 49% ownership. Hostelworld Group plc owns the
in Hostelworld.com Limited which represents a 49% ownership. Hostelworld Group plc owns the
remaining 51% directly.
remaining 51% directly.
During 2017, as part of a group reorganisation, Wings Lux 2 S.à r.l., Wings Lux 3 S.à r.l., Wings Holdco
During 2017, as part of a group reorganisation, Wings Lux 2 S.à r.l., Wings Lux 3 S.à r.l., Wings Holdco
Limited and Cornetto Bidco Limited were liquidated/ wound up.
Limited and Cornetto Bidco Limited were liquidated/ wound up.
150
150
151
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Hostelworld Annual Report 2018 | Financial Statements
19. RELATED PARTY TRANSACTIONS (CONTINUED)
19. RELATED PARTY TRANSACTIONS (CONTINUED)
Directors’ remuneration
Directors’ remuneration
20. FINANCIAL RISK MANAGEMENT
20. FINANCIAL RISK MANAGEMENT
20.1 Financial risk factors
20.1 Financial risk factors
Salaries, fees, bonuses and benefits in kind
Salaries, fees, bonuses and benefits in kind
Amounts receivable under long-term incentive schemes
Amounts receivable under long-term incentive schemes
Termination benefits
Termination benefits
Pension contributions
Pension contributions
Total
Total
2018
2018
€’000
€’000
1,004
1,004
44
44
467
467
52
52
2017
2017
€’000
€’000
1,321
1,321
207
207
-
-
58
58
The directors manage the Group’s capital, consisting of both debt and equity, to ensure that the
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.
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
As part of this process, the directors review financial risks such as liquidity risk, credit risk, foreign
exchange risk and interest rate risk regularly.
exchange risk and interest rate risk regularly.
Liquidity risk
Liquidity risk
1,567
1,567
1,586
1,586
Cash flow forecasting is monitored by rolling forecasts of the Group’s liquidity requirements to
Cash flow forecasting is monitored by rolling forecasts of the Group’s liquidity requirements to
Retirement benefit charges of €52k (2017: €58k) arise from pension payments relating to 4 executive
Retirement benefit charges of €52k (2017: €58k) arise from pension payments relating to 4 executive
directors (2017: 2).
directors (2017: 2).
Key management personnel
Key management personnel
The Group’s key management comprise the Board of Directors and senior management having
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.
authority and responsibility for planning, directing and controlling the activities of the Group.
Short term benefits
Short term benefits
Share based payments (credit)/ charge
Share based payments (credit)/ charge
Termination benefits
Termination benefits
Post employment benefits
Post employment benefits
Total
Total
2018
2018
€’000
€’000
2,892
2,892
(253)
(253)
1,121
1,121
123
123
2017
2017
€’000
€’000
2,882
2,882
420
420
-
-
112
112
3,883
3,883
3,414
3,414
In 2018, it was determined that the non-market vesting condition of the 2016 LTIPs was not satisfied
In 2018, it was determined that the non-market vesting condition of the 2016 LTIPs was not satisfied
and there was a change in vesting estimate for the non-market vesting condition of the 2017 LTIPs, as
and there was a change in vesting estimate for the non-market vesting condition of the 2017 LTIPs, as
disclosed in note 18. This led to a reversal of the cumulative expense recognised in 2016 and 2017 in
disclosed in note 18. This led to a reversal of the cumulative expense recognised in 2016 and 2017 in
relation to this element of these awards in accordance with the requirements of IFRS 2 and as a result,
relation to this element of these awards in accordance with the requirements of IFRS 2 and as a result,
there is a negative expense included for share based payments in the Key Management Personnel
there is a negative expense included for share based payments in the Key Management Personnel
disclosure.
disclosure.
ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its
ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its
undrawn committed borrowing facilities at all times so that the Group does not breach borrowing
undrawn committed borrowing facilities at all times so that the Group does not breach borrowing
limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into
limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into
consideration the Group’s debt financing plans.
consideration the Group’s debt financing plans.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based
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
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
derivative financial liabilities in the current or prior year. The amounts disclosed in the table are the
contractual undiscounted cash flows.
contractual undiscounted cash flows.
Up to 1 year
Up to 1 year
Trade and other payables
Trade and other payables
Total up to 1 year
Total up to 1 year
Over 5 years
Over 5 years
Trade and other payables
Trade and other payables
Total over 5 years
Total over 5 years
Total
Total
Notes
Notes
16
16
Notes
2018
2018
€’000
€’000
11,190
11,190
11,190
11,190
2018
2018
€’000
€’000
-
-
-
-
2017
2017
€’000
€’000
9,832
9,832
9,832
9,832
2017
2017
€’000
€’000
-
-
-
-
11,190
11,190
9,832
9,832
152
152
153
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
20. FINANCIAL RISK MANAGEMENT (CONTINUED)
20. FINANCIAL RISK MANAGEMENT (CONTINUED)
21. DIVIDENDS
21. DIVIDENDS
20.1 Financial risk factors (Continued)
20.1 Financial risk factors (Continued)
Interest rate risk
Interest rate risk
The Group is not materially exposed to interest rate risk.
The Group is not materially exposed to interest rate risk.
Credit risk and foreign exchange risk
Credit risk and foreign exchange risk
The directors monitor the credit rate risks associated with loans, trade receivables and cash and cash
The directors monitor the credit rate risks 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
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
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
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
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
relatively short period of time, which reduces any potential foreign exchange exposure risk. At 31
December 2018, all material cash balances are held with banks with a minimal credit rating of BBB-, as
December 2018, all material cash balances are held with banks with a minimal credit rating of BBB-, as
assigned by international credit rating agencies. As a result, the credit risk on cash balances is limited.
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
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,
approximation of their fair value. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
including derivative financial instruments, for speculative purposes.
Amounts recognised as distributions to equity holders in the financial year:
Amounts recognised as distributions to equity holders in the financial year:
Final 2017 dividend of €0.12 per share (paid 14 June 2018)
Final 2017 dividend of €0.12 per share (paid 14 June 2018)
Interim 2018 dividend of €0.048 per share (paid 21 September 2018)
Interim 2018 dividend of €0.048 per share (paid 21 September 2018)
Final 2016 dividend of €0.104 per share (paid 6 June 2017)
Final 2016 dividend of €0.104 per share (paid 6 June 2017)
Supplementary 2016 dividend of €0.105 per share (paid 6 June 2017)
Supplementary 2016 dividend of €0.105 per share (paid 6 June 2017)
Interim 2017 dividend of €0.051 per share (paid 22 September 2017)
Interim 2017 dividend of €0.051 per share (paid 22 September 2017)
Proposed final dividend for the year ended 31 December 2018
Proposed final dividend for the year ended 31 December 2018
of €0.09 per share (2017: €0.12 per share)
of €0.09 per share (2017: €0.12 per share)
2018
2018
€’000
€’000
11,468
11,468
4,588
4,588
2017
2017
€’000
€’000
9,939
9,939
10,035
10,035
4,874
4,874
16,056
16,056
24,848
24,848
8,601
8,601
11,468
11,468
In accordance with the Group’s dividend policy, the directors recommend the payment of a final
In accordance with the Group’s dividend policy, the directors recommend the payment of a final
dividend for 2018 of €0.09 per share amounting to €8.6m (2017: €0.12 per share amounting to €11.5m).
dividend for 2018 of €0.09 per share amounting to €8.6m (2017: €0.12 per share amounting to €11.5m).
20.2 Capital management
20.2 Capital management
The proposed dividends are to be approved by the shareholders at the 2019 AGM on 31 May 2019.
The proposed dividends are to be approved by the shareholders at the 2019 AGM on 31 May 2019.
The directors’ objectives when managing capital are to safeguard the Group’s ability to continue as a
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
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.
to maintain an optimal capital structure to reduce the cost of capital.
22. PARENT COMPANY EXEMPTION
22. PARENT COMPANY EXEMPTION
The Company has taken advantage of the exemption provided under section 408 of the Companies
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.
Act 2006 not to publish its individual income statement and related notes.
In order to maintain or adjust the capital structure, the directors may adjust the amount of dividends
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.
paid to shareholders, return capital to shareholders, issue new shares or sell assets.
23. EVENTS AFTER THE BALANCE SHEET DATE
23. EVENTS AFTER THE BALANCE SHEET DATE
The directors believe the Group’s capital requirement will be met from retained earnings.
The directors believe the Group’s capital requirement will be met from retained earnings.
The Group is not subject to any externally imposed capital requirements.
The Group is not subject to any externally imposed capital requirements.
The Group will ensure it retains sufficient reserves to manage its day to day cash requirements,
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
including capital expenditure requirements, whilst ensuring appropriate dividends are distributed to
shareholders.
shareholders.
As part of a group reorganisation, Hostelworld.com Limited acquired certain assets from WRI
As part of a group reorganisation, Hostelworld.com Limited acquired certain assets from WRI
Nominees DAC for a consideration of €151m on 12 March 2019. On 12 March 2019, WRI Nominees DAC
Nominees DAC for a consideration of €151m on 12 March 2019. On 12 March 2019, WRI Nominees DAC
was subsequently placed in liquidation by way of members’ voluntary winding up.
was subsequently placed in liquidation by way of members’ voluntary winding up.
There were no other significant events after the balance sheet date.
There were no other significant events after the balance sheet date.
154
154
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Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
COMPANY STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
AS AT 31 DECEMBER 2018
COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
FOR THE YEAR ENDED 31 DECEMBER 2018
Share Capital
Share Capital
€’000
€’000
Retained
Retained
Earnings
Earnings
€’000
€’000
Share Based
Share Based
Payment
Payment
Reserve
Reserve
€’000
€’000
Total
Total
€’000
€’000
As at 1 January 2017
As at 1 January 2017
956
956
207,179
207,179
362
362
208,497
208,497
Total comprehensive income
Total comprehensive income
for the year
for the year
Dividends
Dividends
Credit to equity for equity-settled
Credit to equity for equity-settled
share based payments
share based payments
As at 31 December 2017
As at 31 December 2017
Total comprehensive expense
Total comprehensive expense
for the year
for the year
Dividends
Dividends
Debit to equity for equity-settled
Debit to equity for equity-settled
share based payments
share based payments
-
-
-
-
-
-
4,235
4,235
(24,848)
(24,848)
-
-
-
-
4,235
4,235
(24,848)
(24,848)
-
-
623
623
623
623
956
956
186,566
186,566
985
985
188,507
188,507
-
-
-
-
-
-
(1,847)
(1,847)
(16,056)
(16,056)
-
-
-
-
(1,847)
(1,847)
(16,056)
(16,056)
-
-
(346)
(346)
(346)
(346)
As at 31 December 2018
As at 31 December 2018
956
956
168,663
168,663
639
639
170,258
170,258
Non-current assets
Non-current assets
Investments
Investments
Current assets
Current assets
Trade and other receivables
Trade and other receivables
Cash and cash equivalents
Cash and cash equivalents
Total assets
Total assets
EQUITY
EQUITY
Share capital
Share capital
Share based payment reserve
Share based payment reserve
Retained Earnings
Retained Earnings
Total equity attributable to equity holders of the parent
Total equity attributable to equity holders of the parent
Current liabilities
Current liabilities
Trade and other payables
Trade and other payables
Total liabilities
Total liabilities
Total equity and liabilities
Total equity and liabilities
Notes
Notes
2018
2018
€’000
€’000
2017
2017
€’000
€’000
27
27
205,630
205,630
206,306
206,306
205,630
205,630
206,306
206,306
28
28
29
29
30
30
225
225
19
19
244
244
239
239
291
291
530
530
205,874
205,874
206,836
206,836
956
956
639
639
956
956
985
985
168,663
168,663
186,566
186,566
170,258
170,258
188,507
188,507
35,616
35,616
35,616
35,616
35,616
35,616
18,329
18,329
18,329
18,329
18,329
18,329
205,874
205,874
206,836
206,836
The Company reported a loss for the financial year ended 31 December 2018 of €1,847k (2017: €4,235k
The Company reported a loss for the financial year ended 31 December 2018 of €1,847k (2017: €4,235k
profit).
profit).
The financial statements of Hostelworld Group plc were approved by the Board of Directors and
The financial statements of Hostelworld Group plc were approved by the Board of Directors and
authorised for issue on 1 April 2019 and signed on its behalf by:
authorised for issue on 1 April 2019 and signed on its behalf by:
Gary Morrison
Gary Morrison
Chief Executive Officer
Chief Executive Officer
TJ Kelly
TJ Kelly
Chief Financial Officer
Chief Financial Officer
Hostelworld Group plc registration number 9818705 (England and Wales)
Hostelworld Group plc registration number 9818705 (England and Wales)
156
156
QUEEN HOSTEL
QUEEN HOSTEL
MILAN
MILAN
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
FOR THE YEAR ENDED 31 DECEMBER 2018
24. ACCOUNTING POLICIES
24. ACCOUNTING POLICIES
The significant accounting policies adopted by the Company are as follows:
The significant accounting policies adopted by the Company are as follows:
Basis of preparation
Basis of preparation
The separate financial statements are presented as required by the Companies Act 2006. The
The separate financial statements are presented as required by the Companies Act 2006. The
Company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100)
Company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100)
issued by the Financial Reporting Council. The financial statements have therefore been prepared
issued by the Financial Reporting Council. The financial statements have therefore been prepared
in accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced Disclosure Framework’ as
in accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced Disclosure Framework’ as
issued by the Financial Reporting Council.
issued by the Financial Reporting Council.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to financial instruments, fair value measurements, capital
available under that standard in relation to financial instruments, fair value measurements, capital
management, presentation of comparative information in respect of certain assets, presentation of
management, presentation of comparative information in respect of certain assets, presentation of
a cash flow statement, standards not yet effective, financial risk management, impairment of assets,
a cash flow statement, standards not yet effective, financial risk management, impairment of assets,
related party transactions and where required, equivalent disclosures are given in the consolidated
related party transactions and where required, equivalent disclosures are given in the consolidated
financial statements. Significant accounting policies specifically applicable to these individual
financial statements. Significant accounting policies specifically applicable to these individual
Company financial statements and which are not reflected within the accounting policies for the
Company financial statements and which are not reflected within the accounting policies for the
Group consolidated financial statements are detailed below.
Group consolidated financial statements are detailed below.
The financial statements are prepared on the historical cost basis.
The financial statements are prepared on the historical cost basis.
Investments in subsidiaries
Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less any allowance for impairment.
Investments in subsidiary undertakings are stated at cost less any allowance for impairment.
Dividends
Dividends
Final dividends are recorded in the Group’s accounts in the period in which they are approved by the
Final dividends are recorded in the Group’s accounts 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.
Company’s shareholders. Interim dividends are recorded in the period in which they are paid.
Details of interim and final dividends are disclosed in note 21 to the consolidated financial statements.
Details of interim and final dividends are disclosed in note 21 to the consolidated financial statements.
Accounting estimates and judgements
Accounting estimates and judgements
The preparation of financial statements in conformity with FRS 101 (as issued by the FRC) requires
The preparation of financial statements in conformity with FRS 101 (as issued by the FRC) requires
management to make judgements, estimates and assumptions that affect the application of
management to make judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets and liabilities, income and expenses. The
accounting policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors
estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form the basis
that are believed to be reasonable under the circumstances, the results of which form the basis
of making judgements about carrying values of assets and liabilities that are not readily apparent
of making judgements about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates. The estimates and underlying
from other sources. Actual results may differ from these estimates. The estimates and underlying
assumptions are reviewed on an ongoing basis. There were no significant judgements applied in the
assumptions are reviewed on an ongoing basis. There were no significant judgements applied in the
preparation of the Company financial statements.
preparation of the Company financial statements.
Key sources of estimation that have been made that have the most significant effect on the amounts
Key sources of estimation that have been made that have the most significant effect on the amounts
recognised in the financial statements are set out below:
recognised in the financial statements are set out below:
Carrying value of investments in subsidiaries
Carrying value of investments in subsidiaries
The directors assess annually whether the carrying value of the investments in subsidiaries has
The directors assess annually whether the carrying value of the investments in subsidiaries has
suffered any impairment, in accordance with the relevant accounting policy and the recoverable
suffered any impairment, in accordance with the relevant accounting policy and the recoverable
amounts of cash generating units (“CGUs”) are determined based on value-in-use calculations that
amounts of cash generating units (“CGUs”) are determined based on value-in-use calculations that
24. ACCOUNTING POLICIES (CONTINUED)
24. ACCOUNTING POLICIES (CONTINUED)
Carrying value of investments in subsidiaries (continued)
Carrying value of investments in subsidiaries (continued)
The value-in-use calculations are prepared using cash flow projections based on a three year budget
The value-in-use calculations are prepared using cash flow projections based on a three year budget
approved by the directors and extended out for a further 2 years. The cash flow projections take into
approved by the directors and extended out for a further 2 years. The cash flow projections take into
account key assumptions including historical trading performance, anticipated changes in future
account key assumptions including historical trading performance, anticipated changes in future
market conditions, industry and economic factors and business strategies.
market conditions, industry and economic factors and business strategies.
25. LOSS/ PROFIT FOR THE YEAR
25. LOSS/ PROFIT FOR THE YEAR
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own
income statement or statement of comprehensive income for the year. The loss/ profit attributable to
income statement or statement of comprehensive income for the year. The loss/ profit attributable to
the Company is disclosed in the footnote to the Company’s statement of financial position.
the Company is disclosed in the footnote to the Company’s statement of financial position.
The auditor’s remuneration for the audit and other services is disclosed in note 5 to the consolidated
The auditor’s remuneration for the audit and other services is disclosed in note 5 to the consolidated
financial statements.
financial statements.
26. STAFF COSTS
26. STAFF COSTS
The average monthly number of full time people employed by the Company (including executive
The average monthly number of full time people employed by the Company (including executive
directors) during the year was 3 (2017: 3).
directors) during the year was 3 (2017: 3).
The aggregate remuneration costs of these employees is analysed as follows:
The aggregate remuneration costs of these employees is analysed as follows:
Staff costs comprise:
Staff costs comprise:
Wages and salaries
Wages and salaries
Social security costs
Social security costs
Pensions costs
Pensions costs
Other benefits
Other benefits
Long-term employee incentive (credit)/costs
Long-term employee incentive (credit)/costs
Total
Total
27. INVESTMENTS
27. INVESTMENTS
2018
2018
€’000
€’000
2017
2017
€’000
€’000
820
820
1,681
1,681
98
98
69
69
21
21
(189)
(189)
819
819
114
114
75
75
23
23
273
273
2,166
2,166
The carrying value of the Company’s subsidiaries at 31 December 2018 are as follows:
The carrying value of the Company’s subsidiaries at 31 December 2018 are as follows:
At 1 January
At 1 January
Additions
Additions
Impairment
Impairment
Disposal
Disposal
At 31 December
At 31 December
2018
2018
€’000
€’000
2017
2017
€’000
€’000
206,306
206,306
211,122
211,122
-
-
5,199
5,199
(520)
(520)
-
-
(156)
(156)
(10,015)
(10,015)
205,630
205,630
206,306
206,306
158
158
require the use of estimates.
require the use of estimates.
159
159
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
Hostelworld Annual Report 2018 | Financial Statements
27. INVESTMENTS (CONTINUED)
27. INVESTMENTS (CONTINUED)
29. SHARE CAPITAL
29. SHARE CAPITAL
The Company’s subsidiaries directly owned by the Company, are disclosed in note 19. Additions
The Company’s subsidiaries directly owned by the Company, are disclosed in note 19. Additions
Details of the Company’s share capital are disclosed in note 15 to the consolidated financial
Details of the Company’s share capital are disclosed in note 15 to the consolidated financial
relate to investments in Hostelworld Services Portugal Lda, Hostelworld Services Limited and capital
relate to investments in Hostelworld Services Portugal Lda, Hostelworld Services Limited and capital
statements.
statements.
contributions arising from the administration of the Group’s share option schemes.
contributions arising from the administration of the Group’s share option schemes.
30. TRADE AND OTHER PAYABLES
30. TRADE AND OTHER PAYABLES
Amounts falling due within one year
Amounts falling due within one year
Trade payables
Trade payables
Accruals and other payables
Accruals and other payables
Amount due to related parties
Amount due to related parties
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
58
58
423
423
113
113
863
863
35,135
35,135
17,353
17,353
35,616
35,616
18,329
18,329
The amounts due to related parties are unsecured loans from group undertakings that are repayable
The amounts due to related parties are unsecured loans from group undertakings that are repayable
on demand.
on demand.
In 2018, following a review of Hostelworld Services Limited’s trading performance and the changes
In 2018, following a review of Hostelworld Services Limited’s trading performance and the changes
in its senior management, the directors reassessed the estimated cash flows associated with
in its senior management, the directors reassessed the estimated cash flows associated with
its investment in the company. The recoverable amounts of cash generating units (“CGUs”) are
its investment in the company. The recoverable amounts of cash generating units (“CGUs”) are
determined based on value-in-use calculations that require the use of estimates. The value-in-use
determined based on value-in-use calculations that require the use of estimates. The value-in-use
calculations are prepared using cash flow projections based on three year budgets approved by
calculations are prepared using cash flow projections based on three year budgets approved by
the directors and extended out for a further 2 years. The cash flow projections take into account
the directors and extended out for a further 2 years. The cash flow projections take into account
key assumptions including historical trading performance, anticipated changes in future market
key assumptions including historical trading performance, anticipated changes in future market
conditions, industry and economic factors and business strategies.
conditions, industry and economic factors and business strategies.
The pre-tax discount rate which was applied in determining value in use was 10.8% which was
The pre-tax discount rate which was applied in determining value in use was 10.8% which was
calculated from first principles by a third party professional advisor.
calculated from first principles by a third party professional advisor.
Following impairment testing, an impairment charge of €520k was recognised in relation to the
Following impairment testing, an impairment charge of €520k was recognised in relation to the
Company’s investment in Hostelworld Services Limited (2017: €nil). This impairment charge was
Company’s investment in Hostelworld Services Limited (2017: €nil). This impairment charge was
recognised in the Company’s income statement as an impairment loss. There were no indicators to
recognised in the Company’s income statement as an impairment loss. There were no indicators to
require an impairment test of other investments in 2018.
require an impairment test of other investments in 2018.
The disposal in 2018 relates to the previously recognised capital contribution for the 2016 LTIP awards
The disposal in 2018 relates to the previously recognised capital contribution for the 2016 LTIP awards
which did not meet the vesting conditions and to the change in vesting estimate in relation to the
which did not meet the vesting conditions and to the change in vesting estimate in relation to the
2017 LTIP awards (note 18). The disposal in 2017 relates to a subsidiary, Wings Lux 2 S.à r.l., which was
2017 LTIP awards (note 18). The disposal in 2017 relates to a subsidiary, Wings Lux 2 S.à r.l., which was
liquidated during that year.
liquidated during that year.
28. TRADE AND OTHER RECEIVABLES
28. TRADE AND OTHER RECEIVABLES
Amounts falling due within one year
Amounts falling due within one year
Prepayments
Prepayments
Value Added Tax
Value Added Tax
Amount due from related parties
Amount due from related parties
Other debtors
Other debtors
Total
Total
2018
2018
€’000
€’000
2017
2017
€’000
€’000
135
135
9
9
81
81
-
-
225
225
182
182
23
23
28
28
6
6
239
239
The carrying value of trade and other receivables also represents their fair value. Trade receivables
The carrying value of trade and other receivables also represents their fair value. Trade receivables
are non-interest bearing and there is no expected credit loss recognised in relation to these balances.
are non-interest bearing and there is no expected credit loss recognised in relation to these balances.
160
160
SELINA MANUEL ANTONIO
SELINA MANUEL ANTONIO
MANUEL ANTONIO
MANUEL ANTONIO
05
VALENCIA LOUNGE HOSTEL
VALENCIA
ADDITIONAL
INFORMATION
164
Shareholder Information
165
Advisers
Hostelworld Annual Report 2018 | Additional Information
Hostelworld Annual Report 2018 | Additional Information
Hostelworld Annual Report 2018 | Additional Information
Hostelworld Annual Report 2018 | Additional Information
SHAREHOLDER
SHAREHOLDER
INFORMATION
INFORMATION
Financial Calendar
Financial Calendar
Shareholder’s Enquiries
Shareholder’s Enquiries
AGM
AGM
31 May 2019
31 May 2019
All administrative enquiries relating to
All administrative enquiries relating to
shareholdings (for example, notification of
shareholdings (for example, notification of
change of address, loss of share certificates,
change of address, loss of share certificates,
dividend payments) should be addressed to the
dividend payments) should be addressed to the
5 June 2019
5 June 2019
Company’s registrars:
Company’s registrars:
20 August 2019
20 August 2019
Computershare Investor Services plc
Computershare Investor Services plc
UK Registrar
UK Registrar
Payment of 2018
Payment of 2018
Final Dividend
Final Dividend
Announcement of 2019
Announcement of 2019
Interim Results
Interim Results
Share Price
Share Price
During the year ended 31 December 2018, the
During the year ended 31 December 2018, the
range of the market prices of the Company’s
range of the market prices of the Company’s
ordinary shares on the London Stock Exchange
ordinary shares on the London Stock Exchange
was:
was:
Last price as at 31
Last price as at 31
December 2018
December 2018
Lowest price
Lowest price
during the year
during the year
Highest price
Highest price
during the year
during the year
£2.01
£2.01
£1.69
£1.69
£4.17
£4.17
Daily information on the Company’s share
Daily information on the Company’s share
price can be obtained on our website:
price can be obtained on our website:
www.hostelworldgroup.com
www.hostelworldgroup.com
The Pavilions
The Pavilions
Bridgwater Road
Bridgwater Road
Bristol BS99 6ZZ
Bristol BS99 6ZZ
United Kingdom
United Kingdom
Irish Registrar
Irish Registrar
Computershare Investor Services (Ireland) Ltd
Computershare Investor Services (Ireland) Ltd
3100 Lake Drive
3100 Lake Drive
Citywest Business Campus
Citywest Business Campus
Dublin 24
Dublin 24
D24 AK82
D24 AK82
Ireland
Ireland
Company Secretary and
Company Secretary and
Registered Office
Registered Office
Mr. John Duggan
Mr. John Duggan
Hostelworld Group plc
Hostelworld Group plc
High Holborn House
High Holborn House
52-54 High Holborn
52-54 High Holborn
London WC1V 6RL
London WC1V 6RL
United Kingdom
United Kingdom
Company Registration Number
Company Registration Number
9818705
9818705
ADVISERS
ADVISERS
Solicitors
Solicitors
McCann FitzGerald
McCann FitzGerald
Riverside One
Riverside One
Independent Auditors
Independent Auditors
Deloitte
Deloitte
Chartered Accountants and Statutory Audit Firm
Chartered Accountants and Statutory Audit Firm
Sir John Rogerson’s Quay
Sir John Rogerson’s Quay
Deloitte & Touche House
Deloitte & Touche House
Dublin D02 X576
Dublin D02 X576
Ireland
Ireland
Travers Smith LLP
Travers Smith LLP
10 Snow Hill
10 Snow Hill
London EC1A 2AL
London EC1A 2AL
United Kingdom
United Kingdom
Financial Public Relations
Financial Public Relations
Powerscourt
Powerscourt
25 Lower Leeson Street
25 Lower Leeson Street
Dublin D02 XD77
Dublin D02 XD77
Ireland
Ireland
Banking
Banking
Allied Irish Banks plc
Allied Irish Banks plc
1-4 Lower Baggot Street
1-4 Lower Baggot Street
Dublin D02 X342
Dublin D02 X342
Ireland
Ireland
Earlsfort Terrace
Earlsfort Terrace
Dublin D02 AY28
Dublin D02 AY28
Ireland
Ireland
Brokers
Brokers
Numis Securities Limited
Numis Securities Limited
10 Paternoster Square
10 Paternoster Square
London EC4M 7LT
London EC4M 7LT
United Kingdom
United Kingdom
J&E Davy
J&E Davy
Davy House
Davy House
49 Dawson Street
49 Dawson Street
Dublin D02 PY05
Dublin D02 PY05
Ireland
Ireland
164
164
165
165