2021 Interim Results August 2021 Presentation - Hostelworld Group PLC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
2021 Interim Results August 2021 Presentation
Key Messages
Although trading remains depressed versus FY 2019 (pre-COVID), demand is recovering quickly
1 when travel restrictions are eased
Continued progress on core platform competitiveness, platform modernisation and longer term
2 growth strategy
Strong liquidity position: operating cash burn reducing to €1.6m/month, with €33.7m cash on
3 hand as of 30 June 2021
4 Well positioned to capitalize on market opportunities as normal travel patterns resume
2
H1 ’21 Financial Summary
Net Bookings Net Revenue Admin. Expenses2
0.3m €2.9m €13.5m
Net Bookings: -73% YoY Net Revenue: -76% YoY1 Total Spend: -43% YoY
EBITDA2 Free Cash Flow 3 Cash 4
– €9.7m – €9.7m €33.7m
EBITDA H1 '20: - €8.3m FCF H1 '20: - €2.8m As at 30/06/2020: €32.9m
1 Decline in YoY net revenue higher than decline in net bookings due to increase in deferred revenue
2 Administrative expenses including exceptional items (€0.6m)
3 EBITDA adjusted for exceptional and non-cash items / 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
3 4 Net cash position as at 30/06/2021: €7.5m (€26.2m of long-term debt)
All travel segments gradually improving
Quarterly Net Bookings, by destination type
(as a % of 2019* Net Bookings)
Long-Haul Short-Haul Domestic
80% 80%
80%
70% 70% 70%
60% 60% 60%
50% 50% 50%
40% 40% 40%
30% 30% 30%
20% 20% 20%
10% 10% 10%
0% 0% 0%
Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21
-10% -10%
Long-Haul: Source IP Continent does not equal Destination Continent
Short-Haul: Source IP Continent equals Destination Continent (excludes Domestic)
Domestic: Source IP Country equals Destination Country
4
* 2019 figures used as pre-COVID comparable
North & Central America leading the recovery
Net Bookings, H1 '21 by Source Net Bookings, H1 '21 by Destination
(as a % of 2019 Net Bookings) (as a % of 2019 Net Bookings)
North &
Central America
33%
North &
Central America
20%
Oceania
South Oceania South 12%
Europe UK America Europe
9% UK America
8% 5% 6% Africa 7%
Asia 6% 6% Asia Africa
2% 7% 1% 7%
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 100%
80%
Split % H1 '19 Bookings Split % H1 '19 Bookings
▪ Overall group net bookings declined -91% in H1 '21 compared to H1 '19
▪ North & Central America domestic bookings fared better than all other regions declining -58% (H1 '21 vs H1 '19)
▪ COVID continuing to severely impact bookings however improvements seen in Q2 '21 (most notably domestic and short-haul bookings within North & Central
America, Oceania and Europe)
5
Where travel restrictions have eased,
demand has recovered
▪ Mexico has some of the world's least stringent restrictions
in place with no prior requirement for
vaccination, negative COVID test or quarantine
Net Bookings, 2021 by Destination 36%
▪ Greece also opened its borders in mid-May'21 to
(as a % of 2019 Net Bookings) EU travellers (and other select countries) with similar
travel requirements. The Greek government's policy to
prioritise the Greek islands for vaccination is likely to have
impacted its strong recovery since reopening
▪ USA continues to have travel restrictions in place for
international tourists, however, domestic travel sector has
performed well
▪ Italy and Spain have opened their borders to EU
travellers (and other select countries) from May/June.
Requirements differ in both countries but in general,
travellers must provide either proof
of vaccination, negative COVID test prior to travel or proof
of recovery from COVID
▪ Entry to Australia remains strictly controlled. As a
result, domestic travel saw some recovery from April to
early May but has declined recently due to a spike in
cases
▪ Thailand has implemented strict travel restrictions
throughout H1 '21. However, Phuket opened to
vaccinated tourists from the start of July as a trial for other
tourist hotspots
6
Resilient hostel supply despite extended impact of low demand
Growth in producing1 hostels as a % of 2019
producing hostels
+4.9%
-52.3% -53.0%
▪ The number of producing hostels in Q1 ’21 and Q2 ’21 slightly
-51.2%
ahead of Q2 ’20 (COVID low point)
-55.3%
-59.0%
▪ 16,700 hostels listed on our platform as of June 2021
(December 2020: 17,200) representing a net reduction of 3%
▪ We estimate ~6% of the hostels listed at December 2020 have
closed in H1 ‘21 with approximately a third occurring in Asia as a
result of the prolonged COVID impact
▪ These closures have been partially offset (3%) by new sign-ups
to our platform plus reactivations of hostels that were temporarily
Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21
closed in 2020
1 A Hostel is defined as producing if it has at least one gross booking during the given time period
7
Overall revenue remains depressed versus H1 ’19
Net Revenue Bridge (2YoY) Net ABV Bridge (2YoY)
-93% -6%
€0.61 €0.17
€2.43
€2.13
€33.4m
€38.8m
€12.47
€11.72
€2.6m
€2.9m
H1 20191 Bedprice - Bedprice - Cancellations Other H1 2021
Net Revenue H1 2019 Net Volume Effect Net ABV Net Revenue H1 2021
Underlying Dest Mix
▪ Net Volume Effect (-€33.4m) accounts for 93% of the overall revenue decline, ▪ Underlying bed price decline (-20%) driven by hostels competing for
of which: scarce demand, partially offset by favourable destination mix (+17%)
▪ Net booking volume impact (including cancellation impact) ▪ Higher cancellation rate driven by increased free cancellation booking
accounted for -€37.3m (-91% decline versus H1 ’19)
mix and increased cancellation rate on free cancellation bookings
▪ Partially offset by increased Deferred Revenue of €3.6m and ▪ 'Other' includes the favourable impact of longer length of stay bookings
Other2 drivers totalling €0.4m partially offset by reduction of Elevate
▪ The remaining 7% decline is driven by Net ABV contraction versus H1 ’19
1 Prior period Net ABV restated to exclude impact of credits
8
2 Other drivers include accounting adjustments, ancillary services and advertising revenue
Marketing costs remain elevated given continued uncertainty
Marketing costs1 per net booking (€) Marketing costs as a % of net revenue2
+67% +71%
€7.75
€6.54 76%
64%
€4.64
37%
H1 2019 H1 2020 H1 2021 H1 2019 H1 2020 H1 2021
▪ Marketing costs per net booking increased by 67% 2YoY, driven by continued travel restriction uncertainty
▪ Significant decrease in conversion levels across all source markets partially offset by lower cost-per-click
▪ Increase in overall cancellation rates driven by increased share of free cancellation bookings and increased cancellation rate
▪ Marketing costs as a % of net revenue increasing at a slightly higher rate due to decreased Net ABV (-6%) 2YoY
▪ Marketing costs reduced -85% 2YoY broadly in line with net revenue movement
▪ Marketing cost as a percentage of net revenue to gradually normalise over time
1 Defined as paid marketing + marketing overheads (brand marketing, software, contractor costs)
9 2 Excluding impact of deferred revenue
Continued reduction in operating costs
Staff & contractor costs Other opex costs
Annualised run rates by qtr, 2020 & H1 ’21 H1 ’19 vs H1 ’20 vs H1 ’21
-39%
-41%
-34%
€24.5m
€17.2m €16.2m €16.1m €14.8m €14.6m
03/2020 06/2020 09/2020 12/2020 03/2021 06/2021
▪ Reduced working hours, temporary lay-offs and headcount reduction have ▪ Discretionary spend cost-cutting and contract service negotiation maintained
resulted in lower staff and contractor costs; those actions continued in H1 '21 in H1 '21. In addition, lower credit card fees have contributed to a
significant further cost reduction on other operating cost lines
▪ Government subsidy schemes continue to be accessed in Ireland while the
UK furlough scheme is no longer being accessed since the end of May '21 ▪ Monthly average operating cash burn maintained in line with expectation, at
€1.6 million per month (excluding exceptional costs) in H1 ’21
▪ Redundancy costs and vacation accruals are excluded from the above
▪ Exceptional costs are excluded from the above
10Liquidity remains very strong
Cash at Bank
€32.9m €33.7m
€3.5m
▪ Management actions:
€14.5m1
€19.4m ▪ Entered FY 2020 with a strong cash balance and no debt
€18.2m
€28.8m1
€1.2m
▪ Liquidity measures taken in FY 2020 and H1 '21 include:
▪ Placing of 19.9% of issued share capital raised
€14.5 million net proceeds in June 2020
▪ Direct marketing costs brought in line with market demand
€19.4m
€17.0m and tight control over other costs
€14.9m
▪ Cancellation of FY 2019 final cash dividend and issuance
of a scrip dividend
€4.9m
▪ €30 million 5-year term loan facility signed in February
12/2019 06/2020 12/2020 06/2021
2021
Cash Equity Proceeds Invoice Finance Facility 5 Year Term Loan
▪ Sufficient reserves for a prolonged period of depressed demand
1 amount drawndown, net of arrangement fees
11Looking forward
credit:@MADMONKEYHOSTELSRemain optimistic for the future
Encouraging near term demand data Strong business fundamentals
▪ H1 '21 trading data demonstrates our customers are ▪ : Improved inventory competitiveness,
booking when restrictions are lifted user experience enhancements and stronger marketing
▪ Trading economics gradually improving capabilities vs 2019
▪ Bed price deflation reducing ▪ Counter growth rates ahead of expectations
▪ Longer length of stay bookings (vs 2019) ▪ Goki relationship restructured to align with their future
▪ Cancellation rates improving growth opportunities in the hotel market
▪ Conversion rates improving ▪ : growth strategy execution ramping
▪ Strongly believe the desire for gap year/gap semester ▪ Platform modernisation continuing at pace
travel remains intact ▪ Strong liquidity position (cost control & cash on hand)
Recovery drivers
▪ Progression of vaccination programmes, especially into lower age groups (18-35 cohort)
▪ Permanent lifting of travel restrictions – especially long-haul and short-haul
▪ Bed price recovery, driven by supply/demand normalisation
13
1 BPO = backpackers online, Hostelworld’s legacy property management systemMaking solid progress on our strategy (H1 '21 delivery)
▪ Continued delivery of hostel driven promotion plus…
features increasing inventory competitiveness
▪ Continued checkout experience improvements ▪ More experiences (inventory) which our
increasing conversion rates customers use as a means to meet other people
▪ New integrated discount system and CRM system ▪ More Social features to make it easier to meet
deployed other people across those experiences
▪ Rebuilt core parts of Hostelworld.com with ▪ Several experiments completed in H1 ’21 –
components-based Design System (iOS and confirms customer’s desire for these propositions
Android Apps to follow in Q4 '21)
PLATFORM MODERNISATION
▪ Retired several legacy platforms : BPO1 (replaced with Counter), Hostelbookers and HWG Booking Engine
▪ Migrated entire company to the Cloud, enabling faster strategy execution and lower costs in the mid term
▪ Migrated legacy payments platform to Stripe
▪ Targeting new backend platform to support overall business by Q1 ’22
14
1 BPO = backpackers online, Hostelworld’s legacy property management systemSignificant upgrade to website design, Apps to follow in Q4 15
While near term outlook remains uncertain, we remain confident
in our vision and execution ability
Latest trading trends H2 '21 outlook Beyond FY 2021
▪ Booking levels continuing to improve, No formal guidance Continue to execute on our strategy
mirroring changes in travel restrictions ▪ Outlook for travel industry remains ▪ Core business competitiveness
(both positive and negative) uncertain ▪ growth strategy
▪ Continued improvement in key net ▪ Expect net bookings and trading
ABV metrics: Reduction in underlying economics will remain at significantly ▪ Continued platform investment to
bed price deflation and longer length of reduced levels when compared to deliver lower mid-term costs and
stay bookings vs 2019 2019 faster innovation
▪ Marketing costs vs 2019 remain ▪ Will continue to invest in paid
elevated due to significantly lower channels as demand resumes
conversion rates, and higher
▪ Continued focus on cost control
cancellations (albeit improving)
▪ Hostel market remains
resilient despite prolonged adverse
market conditions
16Key investment highlights
1 Strong brand recognition across travellers and hostel owners
2 Asset light, historically highly cash generative business model operating in a growing market
3 Lean cost base with strong balance sheet going into H2 ‘21
4 Materially stronger platform is well positioned to capture demand when normal travel patterns resume
17Appendices
Credit:@clinkhostelsIncome Statement
€m H1 2021 H1 2020
Revenue 2.9 12.0
Administrative expenses (13.5) (23.7)
Depreciation and amortisation expenses (8.5) (6.9)
Operating loss (19.1) (18.6)
Finance income - -
Finance costs (1.4) (0.1) ▪ Net revenue declined by 76% to €2.9m (H1 '20: €12.0m). The Group's
net booking volumes declined by 73% in H1 '21 (H1 '20: 67%
Share of result of associate (0.2) (0.1) decline)1
Loss before taxation (20.7) (18.8)
Taxation 0.3 0.7 ▪ Administration expenses reduced 43% to €13.5m (H1 '20: €23.7m)
due to cost cutting measures across direct marketing, wages &
Loss for the period (20.4) (18.1) salaries ('W&S') and operating costs lines
▪ Includes marketing spend €2.4m (H1 '20: €7.5m)
Adjusted Loss measures ▪ Includes W&S spend €7.3m (H1 '20: €8.7m)
Adjusted EBITDA (9.7) (8.3)
▪ Financial costs increased by €1.3m to €1.4m (H1 '20: €0.1m) relating
Adjusted Loss after Taxation (14.0) (10.6) to interest costs recognised for the HPS term loan facility
▪ Adjusted EBITDA loss of €9.7m (H1 '20: €8.3m loss)
The Group uses Adjusted EBITDA to show loss/profit without the impact of non-cash and non-recurring items
Adjusted Loss/Profit After Taxation defined as Reported Loss/Profit for the period excluding exceptional costs, amortisation of acquired domain and technology
19 intangibles, impairment charges, net finance costs, share option charge and deferred taxation
1 Decline in YoY net revenue higher than decline in net bookings due to increase in deferred revenueBalance Sheet
€m H1 2021 H1 2020
Non-current assets
Intangible assets 79.7 105.6
Property, plant and equipment 3.4 5.7
Deferred tax assets 8.0 7.2
Investment in associate 2.2 2.6
93.3 121.1
Current assets
Trade and other receivables 2.0 2.3
Corporation tax - 0.1
Cash and cash equivalents 33.7 32.9 ▪ Reduction in carrying value of intangible assets from €105.6m to
35.7 35.3 €79.7m relates primarily to a €15.0m impairment recognised on
Total assets 129.0 156.4 Hostelworld’s intellectual property, as at 31 December 2020
Total equity 81.0 128.5 ▪ Cash totals €33.7m (H1 '20: €32.9m) of which €28.8m was receipted
Non-current liabilities from HPS in February 2021
Borrowings 26.2 0.0
Deferred tax liabilities - 0.1
Deferred consideration - 0.9 ▪ Borrowings of €26.2m as at 30 June 2021 represents HPS term loan
Lease liabilities 2.0 3.6 facility amount received net of transaction costs and original issue
28.2 4.6 discount (H1 '20: €3.5m with current liabilities relating to prompt pay
Current liabilities AIB facility. €1.2m outstanding at 31/12/2020 which was fully repaid
Trade and other payables 18.1 18.0 in H1 '21)
Borrowings - 3.5
Lease liabilities 1.4 1.8 ▪ Trade and other payables of €18.1m (H1 '20: €18.0m) includes debt
Corporation tax 0.3 - warehousing amounts for Irish payroll taxes of €6.4m (H1 '20: €1.9m)
19.8 23.3
Total equity and liabilities 129.0 156.4
20Cash Flow Statement
€m H1 2021 H1 2020
Adjusted EBITDA (9.7) (8.3)
Working capital movement 0.9 9.6
Capitalisation and acquisition of intangible assets (0.8) (2.2)
Exceptional costs (0.6) (3.0)
Purchase of property, plant and equipment - (0.1)
Net interest / income tax paid (0.1) (0.0)
Free cash flow before financing activities (10.2) (4.0)
Net proceeds from issue of share capital - 15.2 ▪ Adjusted EBITDA loss €9.7m (H1 '20: €8.3m loss) due to decline
Issue costs paid - (0.7) in revenue
Borrowings received 28.8 3.5
Borrowings repaid (1.2) -
▪ €0.9m increase in working capital movement due to:
Debt costs paid (0.9) -
Lease liabilities (IFRS 16) (0.9) (0.5) ▪ €1.2m increase in trade and other payables (Irish
payroll taxes payable has increased by €2.3m in H1 '21 offset
Deferred consideration (0.1) -
by payments made to creditors)
Net increase in cash and cash equivalents 15.5 13.5
Opening cash and cash equivalents 18.2 19.4 ▪ €0.3m decrease in trade and other receivables due to
a reduction in VAT receipts
Closing cash and cash equivalents 33.7 32.9
Free cash before financing activities (10.2) (4.0) ▪ €28.8m borrowings received from HPS term loan
Exceptional costs paid 0.5 1.2 facility and €1.2m borrowings repaid to AIB for short term
Adjusted free cash flow (9.7) (2.8) invoice financing facility
Adjusted free cash flow conversion % (101%) (33%)
▪ H1 '20: €14.5m net proceeds raised through June
2020 equity process
▪ 101% adjusted free cash flow for H1 '21 (H1 '20: 33%)
21 Adjusted free cash conversion defined as Free cash flow before financing activities as a percentage of adjusted EBITDAKey Conditions of €30m
5-year Term Loan
▪ Pricing: margin of 9.0% per annum over EURIBOR (with a EURIBOR floor
of 0.25%)
▪ Year 1: capitalised interest
▪ Year 2 and 3: option to capitalise 4.0% of interest and 5.0% to be paid
in cash
▪ Year 4 and 5: cash interest only
▪ Financial Covenants:
▪ Minimum Liquidity: cash of at least €6.0 million
▪ Adjusted Net Leverage (from December 2023 on): 3.0x adjusted
EBITDA from 31 December 2023 to 30 September 2024, thereafter,
adjusted to 2.5x adjusted EBITDA
▪ Early Repayment:
▪ Before Year 2: all interest due, plus a 2.0% fee of the amount repaid
▪ Between Year 2 and 3: 2.0% of the amount repaid
▪ Between Year 3 and 4: 1.0% fee of the amount repaid
▪ Warrants: penny warrants issued over the equivalent of 2.85% of the
current issued share capital, exercisable at any time
22 Term Loan Facility announced on 19 February 2021Disclaimer
▪ NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN
OR INTO ANY JURISDICTION IN WHICH SUCH DISTRIBUTION OR RELEASE WOULD BE
UNLAWFUL.
▪ This presentation has been prepared by hostelworld group plc (the "company") for
informational and background purposes only.
▪ The following presentation is being made only to, and is only directed at, persons to whom
such presentation may lawfully be communicated (“relevant persons”). Any person who is not
a relevant person should not act or rely on this presentation or any of its contents. Information
in the following presentation relating to the price at which relevant investments have been
bought or sold in the past or the yield on such investments cannot be relied upon as a guide
to the future performance of such investments.
▪ This presentation does not constitute or form part of any offer or invitation to purchase, sell or
subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any
securities in the company nor shall this presentation or any part of it, or the fact of its
distribution, form the basis of, or be relied on in connection with, any contract therefor. The
distribution of this presentation or any information contained in it may be restricted by law in
certain jurisdictions, and any person into whose possession any document containing this
presentation or any part of it comes should inform themselves about, and observe, any such
restrictions.
▪ The company is under no obligation to update or keep current the information contained in
this presentation or to correct any inaccuracies which may become apparent, and any
opinions expressed in it are subject to change without notice. Neither the company nor any of
its respective directors, officers, partners, employees or advisers accept any liability
whatsoever for any loss howsoever arising from any use of this presentation or its contents or
otherwise arising in connection therewith.
▪ The presentation may contain forward-looking statements. These statements relate to the
future prospects, developments and business strategies of the company. Forward-looking
statements are identified by the use of such terms as "believe", "could", "envisage",
"estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the
negative thereof. Any forward-looking statements contained in the presentation are based on
current expectations and are subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by those statements. If one or more of
these risks or uncertainties materialise, or if underlying assumptions prove incorrect, the
company's actual results may vary materially from those expected, estimated or projected.
Any forward-looking statements speak only as at the date of the presentation. Except as
required by law, the company undertakes no obligation to publicly release any update or
revisions to any forward-looking statements contained in the presentation to reflect any
change in events, conditions or circumstances on which any such statements are based after
the time they are made.
23
Credit:@elmonalamaYou can also read
