Hostelworld shares surge 9pc as it pays €10m extra dividend
Shares in Hostelworld, the online accommodation booking platform, soared more than 9pc at one stage yesterday after it said it would pay a supplementary dividend to shareholders on top of a final dividend.
It also said that it might pay further supplementary dividends or consider share buybacks to return cash to shareholders.
The share surge came despite adjusted after-tax profits at the company slipping last year to €19.4m from €21m in 2015, as it contended with a challenging environment that was punctuated by terror attacks and Brexit.
Hostelworld, which was sold by founder Ray Nolan in 2009 for €202m, enables online bookings for hostels, hotels and bed and breakfasts all over the world.
It said that its 2016 performance was in line with expectations, as total group bookings fell 1pc.
The company said that decline reflected reduced investment in lower margin bookings and "tough mid-year conditions".
Bookings in the second half of 2016 rose 2pc compared to the second half of 2015.
CEO Feargal Mooney (pictured) said that 2016 had been challenging for the travel industry. "Whilst our performance, particularly in our key European market during the second and third quarters of the year, was impacted by these events the group saw improved momentum in the latter part of 2016 which has continued through the first quarter of 2017," he said.
"Our continued focus on key strategic initiatives is supporting year-on-year bookings growth, and together with our highly cash generative business model, positions us well to benefit from continued market growth," he added.
Hostelworld said that on a constant currency basis, adjusted earnings before interest, tax, depreciation and amortisation (ebitda) were 7pc higher, at €23.9m, during 2016. On a reported basis, adjusted ebitda was up 1pc.
The company's Hostelworld brand accounted for 87pc, or 6.2m, of total group bookings last year.
Total group bookings fell 1pc, or 72,168 last year. Total revenue declined by 4pc, or €3m, to €80.5m, according to Mr Mooney.
The gross average booking value fell 4pc to €11.60. Hostelworld said that the decline was due to a number of factors, including its "evolving geographic mix", coupled with continued higher proportional growth in bookings of shorter duration, including from mobile devices, exchange rate movements, and a greater percentage of bookings being made for hostel dorm beds.
The company said it will pay out a final dividend of €9.9m, or 10.4 cent per share. That's in addition to a 4.8 cent interim dividend paid last September. It also said it will pay a supplementary dividend to shareholders of 10.4 cent per share.
"In the absence of other investment opportunities at present, and in recognition that the group's cash resources are currently greater than those required to meet the prudent requirements of the business, the board is proposing to distribute €10m of surplus cash to shareholders via a supplementary dividend," it said.
It said the supplemental dividend is "discretionary and non-recurring" and that the board will continue to review "the best method of returning cash to shareholders, including by way of a supplementary dividend or a share buyback".
Hostelworld had €24.6m in cash at the end of 2016, compared to €13.6m at the end of 2015.
Mr Nolan sold Hostelworld to private equity group Hellman and Friedman, personally netting him €100m. The company was floated on the stock market in 2015.