2015 ANNUAL REPORT
Helloworld Limited
Helloworld Limited and Controlled Entities
Annual Report for the year ended 30 June 2015
ABN 60 091 214 998 ASX CODE: HLO
CONTENTS
2 Corporate Information
3 Glossary
4
Chairman’s Report
6 Chief Executive Officer’s Address
8 Financial Performance Summary
10 Directors’ Report
41 Auditor’s Independence Declaration
42 Corporate Governance Statement
50 Consolidated Income Statement
51
Consolidated Statement of Comprehensive Income
52 Consolidated Statement of Financial Position
53
Consolidated Statement of Changes in Equity
54 Consolidated Statement of Cash Flows
55 Notes to the Financial Statements
120 Directors’ Declaration
121
Independent Auditor’s Report
123 ASX Additional Information
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Directors
B Johnson Chairman
E Gaines CEO
A Cummins
A John
J M Millar
J McKellar
P Spathis
Company Secretary
S Belton
Registered and
principal office
Level 3
77 Berry Street
North Sydney NSW 2060
Telephone: + 61 2 8229 4000
Facsimile: + 61 2 8920 0110
Auditor
PricewaterhouseCoopers
Darling Park Tower 2
201 Sussex Street
Sydney NSW 2000
Stock exchange
ASX Limited
Level 4
20 Bridge Street
Sydney NSW 2000
ASX code
HLO
Share registry
Computershare
Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford VIC 3067
Telephone: +61 3 9415 5000
Facsimile: + 61 3 9473 2500
Website
www.helloworld.com.au
2015 Annual General Meeting
The Annual General Meeting of Helloworld Limited
will be held at the Company’s offices
Level 3, 77 Berry Street, North Sydney, NSW
at 9:30am on Friday 20 November 2015.
helloworldlimited.com.au
GLOSSARY
The following terms have been used throughout this Annual Report:
Adjusted EBITDAI
Earnings before interest expense, tax, share–based payments, depreciation, amortisation and impairment
adjusted for significant and/or unusual items of revenue or expense
Adjusted Profit before tax Profit before tax and impairment
AGM
ASIC
ASX
CEO
CFO
Company
CVC
EBITDAI
EPS
FAR
FY12
FY13
FY14
FY15
FY16
GM
Group
HLO
JTL
KMP
LTIP
Merger
Plan
PR
Qantas
QBT
QH
RNC
SMEs
STIP
STS
STSH
TTV
Annual General Meeting
Australian Securities & Investments Commission
Australian Securities Exchange
Chief Executive Officer
Chief Financial Officer
The parent entity, Helloworld Limited
Means any of CVC Capital Partners and its controlled entities
Earnings before interest expense, tax, share–based payments, depreciation, amortisation and impairment
Earnings per share
Fixed Annual Remuneration
Financial Year ended 30 June 2012
Financial Year ended 30 June 2013
Financial Year ended 30 June 2014
Financial Year ended 30 June 2015
Financial Year ended 30 June 2016
General Manager
The Helloworld Group, comprising HLO and its subsidiaries
Helloworld Limited
Jetset Travelworld Limited
Key Management Personnel
Long Term Incentive Plan
The merger between STS and HLO (JTL at the time of merger)
Helloworld Limited Performance Rights Plan
Performance Rights
Qantas Airways Limited
QBT Pty Limited
Qantas Holidays Limited
Remuneration and Nominations Committee
Small and medium enterprises
Short Term Incentive Plan
Stella Travel Services Holdings Pty Ltd and its subsidiaries
Stella Travel Services Holdings Pty Ltd
Total Transaction Value
UBSAHL
UBS Australia Holdings Ltd
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On behalf of the Board
of Directors, I am pleased to
present my first report
as Chairman of Helloworld.”
The past year has been focussed on building on our business
transformation. This includes: the ongoing development of Australia’s
largest franchise based travel agent network, helloworld; the increasing
consumer awareness of the helloworld brand which supports this
high-calibre network of corporate and leisure travel agencies;
our significant investment in helloworld.com.au; the appointment
of QBT as the sole provider of travel management services to the
Whole of Australian Government; and focusing our wholesale business
(Qantas Holidays and Viva! Holidays) on delivering what consumers
are demanding from packaged holidays.
Our New Zealand business continues to perform well and we have
decided to launch the helloworld brand in New Zealand during 2016.
helloworldlimited.com.au
It is the Board’s strong belief that our agents,
customers, employees, supplier partners and
shareholders are best served by Helloworld continuing
its strategy of future-proofing our business through
continued investments in technology, training, product
and profile. Ultimately, these will be the drivers of
long-term sustainable growth by Helloworld and
its members and will support the creation of
shareholder value.
Prior to finalising Helloworld’s 2015 financial
results, management and the Board undertook a
comprehensive review of the intangible assets on
the Group’s Balance Sheet. The Balance Sheet had
included a number of intangible assets which arose
from a number of legacy transactions including
the 2010 merger between Stella Travel Services
Holdings Pty Ltd and Jetset Travelworld Limited.
Based on a number of factors including estimated
cashflows from future operations and Helloworld’s
market capitalisation, the Board resolved that it was
prudent to write down the goodwill balance and incur
a non-cash impairment charge of $205.3 million.
The Adjusted Profit before tax1 was $6.9 million
($1.7 million loss in 2014). The Board expects this
improvement to continue over the next few years.
I would like to take this opportunity to thank
Elizabeth Gaines for her significant contribution
to the Group over more than 7 years. While her
decision to depart as CEO was a disappointment,
Elizabeth has successfully led the Company
through a period of significant transformation
and established the strong foundation upon which
we are building Helloworld’s future success.
One of the key enablers to deliver on our future
strategy and operational plans is our talented
management and employee team. I would like
to thank all of them for their continued hard work
and exceptional dedication.
In addition, I would also like to thank you, our
shareholders, for your patience during the
transformation period. The Board is committed
to drive the business and pursue long-term,
sustainable growth. Our investment in innovation,
productivity enhancements, cost containment and
the strengthening of our outstanding network of the
highest-calibre agents will ensure the fundamentals
of our business remain strong, and continue to
generate value and growth in the years ahead.
Brett Johnson
Chairman, Helloworld Limited
Sydney, 28 August, 2015
1 Adjusted Profit before tax represents Profit before tax and impairment.
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I am pleased to present
the Helloworld Limited
results for the year ended
30 June 2015.”
A Year of Achievements
With the foundations now in place following the successful transformation
of our business in 2013, our focus this year has been on consolidating our
network, our business and our advantage.
For the year ending 30 June 2015, the Group achieved an Adjusted EBITDAI1
of $27.5 million, a result that was within the range of previously stated
market guidance. The Group’s Loss before tax of $198.4 million was
impacted by the non-cash goodwill impairment of $205.3 million. The Group
recorded an Adjusted Profit before tax2 of $6.9 million.
We are bringing our recently launched vision, “Creating the future of travel,
with each journey” to life through our ongoing investment in profile, product,
technology and training. Our prompted brand awareness has continued to
build, and has tripled to 34% since our February 2014 launch with those
Australians 25 years or older who are looking to travel within the next
12 months.
1 Adjusted EBITDAI is earnings before interest expense, tax, share-based payments,
depreciation, amortisation and impairment adjusted for significant and/or unusual items of
revenue or expense. Further details are disclosed in note 6 to the Financial Statements.
2 Adjusted Profit before tax represents Profit before tax and impairment.
helloworldlimited.com.au
The helloworld retail network consists of high-calibre,
high-performing corporate and leisure agencies,
supported by our omni-channel strategy which ensures
we capture a share of the online market for our
business and our members. The quality of our network
was again reflected in our strong performance at the
2015 National Travel Industry Awards. In addition to
dominating the finalists’ list, helloworld franchisees
and members this year won an impressive 75% of both
the agent and agency awards – further proof of our
“Experts in Everywhere” positioning and the benefit
of our investment in training, including our proprietary
hello You customer service training. An additional 30
Ambassador Stores are to be completed by the end of
the year, building on our network-wide store refresh.
Our continued investment in helloworld.com.au is
paying off. Our mobile app has already received
industry acclaim and named by both Apple® and
Business Spectator as a “Top 5 must-have travel app”
while our online business is already one of Australia’s
top-10 online travel agents1. Key metrics continue to
improve including 2H15 growth in online sales with
Hotel Total Transaction Value increasing by 245% and
Air by 95%.
We launched helloworld in the midst of industry
deregulation. Considerable time and effort was
invested in the design and establishment of our
Consumer Protection Framework, and our unique
Consumer Protection Insurance Policy which is held by
Helloworld Limited covers all travel agents carrying
the helloworld brand. Through our Customer Charter,
our franchise system, our insurance policy and our
network of expert travel agents, helloworld provides
our customers with a trusted way to book travel.
In December 2014, our wholly owned subsidiary,
QBT Pty Limited (QBT) was appointed sole provider
of travel management services to the Whole of
Australian Government, supporting 142 Australian
Government agencies. This reflects QBT’s extensive
travel management expertise and provides a powerful
platform for QBT’s ongoing success.
This, combined with a constant focus on cost control
and margin maximisation, means a leaner, more
efficient wholesale business model focusing on online
fulfilment and capturing a greater share of growth
markets such as Cruise. In February this year, our
specialist wholesaler rebranded from Travel Indochina
to Insider Journeys reflecting the broader range of
destinations and a greater focus on tailored holiday
experiences. Insider Journeys was named Australia’s
Best Specialty Wholesaler 20152. We also continue to
invest in strategic partnerships such as our long-term
commercial arrangements with Cover-More, Amadeus
and Travelport.
Outlook
While market uncertainties continue and consumer
sentiment fluctuates, we remain focused on delivering
for our shareholders, our agents, our partners and
consumers. Total tourism spend (excluding inbound)
in Australia is estimated at around $128 billion and
expected to grow at around 3.2% pa over the next
5 years. Our research shows travellers are 5 times
more likely to use an agent for more complex bookings.
Future-proofing our agents, and our business
through technology, training, product and profile
supported by our omni-channel strategy remains
our priority. We have already made great progress
in positioning our agents and business for success
through growth in revenue from marketing
initiatives and product offerings, our focus on
cost containment, productivity enhancements and
margin optimisation. While it is too early to predict
the trading environment for the next financial year,
we anticipate a substantial increase on our FY15
Adjusted Profit before tax result of $6.9 million.
The transition next year of our New Zealand business
to helloworld will deliver further synergies across
staffing, branding and technology. The benefits of
these synergies are expected to be realised in the
financial years beyond FY16.
We have realigned our Wholesale businesses. Qantas
Holidays/Viva! Holidays continues to refine its model
to meet the demands of this “need it now” environment.
I leave this role, proud of the progress we have
achieved and knowing that the business has a strong
management team and a clear strategy for success.
1 Hitwise, April 2015
2 NTIA 2015
Elizabeth Gaines
Chief Executive Officer, Helloworld Limited
Sydney, 28 August, 2015
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FINANCIAL
PERFORMANCE SUMMARY
FOR THE YEAR ENDED 30 JUNE 2015
Summary Group Results
For the
year ended
30 June 2015
$’000
For the
year ended
30 June 2014
$’000
Change
$’000
Change
%
Total transaction value (TTV)1
4,696,169
4,861,032
Revenue
Adjusted EBITDAI2
Loss before tax
Loss after tax attributable to members
Basic loss per share
Diluted loss per share
Interim dividend per share
Final dividend per share
RECONCILIATION OF ADJUSTED EBITDAI
TO LOSS BEFORE INCOME TAX
ADJUSTED EBITDAI
Gain/(loss) on disposal of investments
Business transformation costs
Share-based payments
Costs relating to GST matter
Costs relating to disposal of investments
Actuarial adjustment on defined benefit pension
Former CEO resignation/retirement costs
Depreciation and amortisation expense
Impairment of goodwill
Finance costs
LOSS BEFORE INCOME TAX
279,223
27,455
(198,397)
(201,121)
291,671
40,561
(61,166)
(63,347)
For the
year ended
30 June 2015
Cents
For the
year ended
30 June 2014
Cents
(45.66)
(45.66)
–
–
(14.38)
(14.38)
–
–
For the
year ended
30 June 2015
$’000
For the
year ended
30 June 2014
$’000
27,455
340
(2,101)
(83)
(617)
–
(710)
(233)
(13,921)
(205,300)
(3,227)
(198,397)
40,561
(5,473)
(15,847)
(115)
(2,738)
(60)
–
(608)
(14,032)
(59,500)
(3,354)
(61,166)
(164,863)
(12,448)
(13,106)
(137,231)
(137,774)
Change
Cents
(31.28)
(31.28)
–
–
Change
$’000
(13,106)
5,813
13,746
32
2,121
60
(710)
375
111
(145,800)
127
(137,231)
(3%)
(4%)
(32%)
224%
218%
Change
%
218%
218%
–
–
Change
%
(32%)
(106%)
(87%)
(28%)
(77%)
(100%)
–
(62%)
(1%)
245%
(4%)
224%
1 Total Transaction Value (TTV) does not represent revenue in accordance with Australian Accounting Standards. TTV represents the price at
which travel products and services have been sold across the Group, as agents for various airlines and other service providers, plus revenue
from other sources. The Group’s revenue is, therefore, derived from TTV. Total TTV does not represent Group cash inflows as some transactions
are settled directly between the customer and the supplier. This information has been extracted from note 6 of the accompanying Financial
Statements.
2 Adjusted EBITDAI is earnings before interest expense, tax, share-based payments, depreciation, amortisation and impairment adjusted
for significant and/or unusual items of revenue or expense. Adjusted EBITDAI is a financial measure which is not prescribed by Australian
Accounting Standards but is the measure used by the Board to assess the financial performance of the Group and operating segments. This
information has been extracted from note 6 of the accompanying Financial Statements.
helloworldlimited.com.au Shareholder returns
In accordance with the Company’s dividend policy, the Board has determined that the Company will not pay a dividend
for the 2015 financial year.
Explanation of results
This information should be read in conjunction with the Directors’ Report, Financial Report and Auditor’s Report for the
year ended 30 June 2015 and any public announcements made by the Company since that time.
The information provided in this report contains all the information required by ASX Listing Rule 4.3A.
Net tangible assets
Net Tangible Assets per ordinary share
June
2015
Cents
3.65
June
2014
Cents
3.75
Net Tangible Assets is calculated as Net Assets less total Intangible Assets.
Net Tangible Assets per ordinary share is based on HLO’s issued capital as the legal parent entity and issuer of this
financial information as at the balance sheet date.
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The Directors of Helloworld Limited
(HLO) present their Report together
with the Financial Statements of
the Consolidated Entity (Group),
being HLO and the entities it
controlled at the end of, or during,
the year ended 30 June 2015 and
the Independent Auditor’s Report.
Directors
The Directors of the Company in
office at any time during or since
the end of the financial year are
as follows:
Brett Johnson
Non-Executive Director and Chairman
Appointment
Mr Johnson was appointed to the Board on 27 February
2009 and was appointed as Chairman on 1 October 2014.
Experience and expertise
Mr Johnson is a professional Non-Executive Director.
He was admitted as a solicitor of the Supreme Court of
New South Wales in 1982 and has more than 30 years
legal experience in Australia and overseas. He has served
on listed company boards for more than 10 years.
Mr Johnson was General Counsel of Qantas from July
1995 to December 2012 where he was responsible
for legal risk management in the Qantas Group and
management of the Qantas legal department. Mr Johnson
was also a member of the Qantas Executive Committee
involved in the day-to-day management of the Qantas
Group with particular responsibility for providing
commercial legal support to the Qantas CEO and Board.
Other current directorships of listed entities
• Nil
Former directorships of listed entities in last 3 years
• Scott Corporation Limited (from March 2005 to
March 2014)
• IM Medical Limited (from December 2013 to
August 2014)
Special responsibilities
• Chairman of the Board
• Member of the Remuneration and Nominations
Committee
• Member of the Audit Committee
Interests in shares
• 200,000 fully paid ordinary shares in Helloworld
Limited held legally and beneficially in the name of
Brett Stuart Johnson.
helloworldlimited.com.au
Andrew Cummins
Non-Executive Director
Appointment
Elizabeth Gaines
Chief Executive Officer and Executive Director
Appointment
Mr Cummins was appointed to the Board on
30 September 2010.
Ms Gaines was appointed Chief Executive Officer of
Helloworld Limited on 28 March 2014.
Experience and Expertise
Mr Cummins was formerly Chairman, CVC Capital
Partners Pan Asian Team, and a director of a number
of CVC portfolio companies. Mr Cummins worked as
a consultant with CVC Capital Partners in 1998 and
1999, and joined the partnership of CVC Asia Pacific in
Hong Kong when it was formed in 2000. He retired from
CVC in February this year. Prior to working with CVC,
Mr Cummins was a director of Inchcape Plc in the UK, and
an executive director of Fosters Brewing Group/Elders
IXL, and a partner of McKinsey & Company.
Mr Cummins is currently a director of the hotel company
Mantra Group Limited in Australia and a director of
a number of private investment holding companies.
He was Chairman of Stella Travel Services UK Limited
from 2008 to 2014, a director of Nine Entertainment
Company from 2008 to 2013, RCTI Inc. from 1998 to
2013, I-Med Holdings from 2006 to 2011, Pacific Brands
Limited from 2004 to 2009, and Inchcape Plc from
1992 to 1997.
Mr Cummins has a Bachelor’s degree in Engineering
from Monash University, Australia, a Graduate Business
Degree from the University of Newcastle, Australia, and
a MBA from Stanford University in the USA.
Other current directorships of listed entities
• Mantra Group Limited (from July 2009)
Former directorships of listed entities in last 3 years
• Nil
Prior to this, Ms Gaines served as Chief Financial Officer
of Helloworld Limited from 1 October 2010 and, from
October 2012, as Chief Operating Officer and Chief
Financial Officer.
Ms Gaines was appointed to the Board on 30 June 2011.
Ms Gaines tendered her resignation as Chief Executive
Officer on 19 June 2015 and will continue in the role
during the term of her 6 month notice period until such
time as the Board has appointed her successor.
Experience and Expertise
Prior to joining Helloworld Limited, Ms Gaines was the
Chief Financial Officer of the Stella Group, Chief Finance
and Operations Director of UK-based Entertainment
Rights Plc. and was previously Chief Executive Officer
of Heytesbury Pty Limited. Ms Gaines has held senior
treasury and finance roles at Bankwest in Australia and
Kleinwort Benson in the UK and qualified as a Chartered
Accountant with Ernst & Young. Ms Gaines is a member
of Chartered Accountants Australia and New Zealand,
the Australian Institute of Company Directors and
Chief Executive Women. Ms Gaines holds a Bachelor of
Commerce degree and Master of Applied Finance degree.
Ms Gaines is a Director and Joint Vice Chair of the
Australian Federation of Travel Agents Limited.
Other Current Directorships of listed entities
• Fortescue Metals Group Limited (from February 2013)
• NEXTDC Limited (from June 2015)
Special responsibilities
• Chairman of the Remuneration and Nominations
Former Directorships of listed entities in last 3 years
• Mantra Group Limited (from June 2009 until
Committee
Interests in shares
• 952,998 fully paid ordinary shares in Helloworld
Limited held legally and beneficially in the name of
Gladstone Investments Limited.
November 2014)
Special Responsibilities
• Chief Executive Officer
Interests in shares
• 1,219,318 fully paid ordinary shares in Helloworld
Limited held legally and beneficially in the name of
E A Gaines.
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Adrian John
Non-Executive Director
Appointment
Mr John was appointed to the Board on 26 May 2011.
Experience and Expertise
Mr John joined Qantas in 2010 and is currently
Executive Manager, Transactions, Airports & Fleet.
In that role he is responsible for leading Qantas’
internal mergers and acquisitions team which
advises Qantas’ Executive Committee in relation to
transactions generally, its Airports Infrastructure
team which has responsibility for managing Qantas’
commercial relations with airports, and Qantas’ Group
Fleet Planning and Fleet Procurement functions.
Prior to joining Qantas, Mr John had been a partner
in Ernst & Young (EY) where he advised a wide range
of listed and unlisted companies and private equity
across multiple industry sectors on a variety of
corporate finance and strategic matters including
mergers and acquisitions, transaction due diligence,
valuations, capital management and strategy
development. Mr John also served a period of time
as a member of the Board of Partners of EY, EY’s
peak governance body. Mr John received a BSc (Hons)
in Civil Engineering from Manchester University,
and is a Member of the Institute of Chartered
Accountants in Australia and a Fellow of the Institute
of Chartered Accountants in England & Wales.
Other Current Directorships of listed entities
• Nil
Former Directorships of listed entities in last 3 years
• Nil
Special Responsibilities
• Member of the Audit Committee
Interests in shares
• Nil
James M Millar AM
Independent Non-Executive Director
Appointment
Mr Millar was appointed to the Board on
30 September 2010.
Experience and Expertise
Mr Millar is the former Chief Executive Officer of
Ernst & Young (EY) in the Oceania Region, and was
a director on their Global Board.
Mr Millar commenced his career in the Insolvency
and Reconstruction practice at EY, conducting some
of the largest corporate workouts of the early 1990’s.
He is Chairman of both the Export Finance and
Insurance Corporation (appointed December 2014)
and Forestry Corporation of NSW (appointed
March 2013).
Mr Millar serves a number of charities. He is the
Chairman of The Smith Family, and is a Trustee of
the Australian Cancer Research Foundation and the
Vincent Fairfax Family Foundation.
Other Current Directorships of listed entities
• Mirvac Limited (from November 2009)
• Fairfax Media Limited (from July 2012)
• Macquarie Radio Network Limited (from April 2015)
Former Directorships of listed entities in last 3 years
• Chairman, Fantastic Holdings Limited
(from May 2012 to June 2014)
Special Responsibilities
• Chairman of the Audit Committee
Interests in shares
• 40,000 fully paid ordinary shares in Helloworld
Limited held legally and non-beneficially in the
name of Sofeta Pty Ltd – Millar Super Fund A/c.
helloworldlimited.com.au Low resolution photo
Jane McKellar
Independent Non-Executive Director
Appointment
Ms McKellar was appointed to the Board on
17 December 2014.
Experience and Expertise
Ms McKellar is an experienced international senior
executive with extensive customer-focused, brand,
marketing and digital experience across a number of
high-profile, global brands.
Ms McKellar commenced her career at Unilever in
London and her subsequent roles have included global
CEO of Stila Corporation, USA; Managing Director of
Elizabeth Arden Australia; Founding CEO of Excite.com.
au Asia Pacific, Director of Sales and Marketing for
Microsoft (MSN) and Founding Director of Ninemsn.
Ms McKellar has a Bachelor of Arts and a Master of
Arts with Honours from the University of Aberdeen.
Other Current Directorships of listed entities
• McPhersons Limited (from February 2015)
Former Directorships of listed entities in last 3 years
• Nil
Special Responsibilities
• Member of the Remuneration and Nominations
Committee
Interests in shares
• Nil
Peter Spathis
Non-Executive Director
Appointment
Mr Spathis was re-appointed to the Board on
18 May 2015. Previously he served on the Board from
June 2002 to November 2012.
Experience and Expertise
Mr Spathis is an accountant and registered tax agent.
Currently a corporate executive with the Consolidated
Travel group of companies, he has responsibility for the
financial management of that group. Having begun his
career in audit and taxation fields in private practice, he
has developed a special interest for the travel industry
where he has held a number of senior financial positions
since 1990. With more than 25 years’ experience in
finance and accounting, he has accumulated significant
and valuable experience in the commercial aspects of
the travel industry.
Mr Spathis is a Fellow of CPA Australia, holds a
Bachelor of Business from the Royal Melbourne
Institute of Technology and completed a graduate
diploma in Public Accounting (Taxation) at the Phillips
Institute of Technology.
Other Current Directorships of listed entities
• Nil
Former Directorships of listed entities in last 3 years
• Helloworld Limited (then Jetset Travelworld Limited)
(from June 2002 to November 2012)
Special Responsibilities
• Member of the Audit Committee
Interests in shares
• Mr Spathis has a beneficial interest in 500,000 fully
paid ordinary shares held legally in the name of Vortex
TV Pty Ltd as trustee for the Consolidated Travel
(NSW) Superannuation Fund.
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Stephanie Belton
Directors’ meetings
During the year, 11 meetings of the Board were held.
The number of meetings attended by each director are
as follows:
Board meetings
S Bennett
A Cummins
T Dery
E Gaines
A John
B Johnson
J M Millar
J McKellar
P Spathis
Eligible
to attend
Attended
9
11
3
11
11
11
11
6
2
8
10
3
11
11
11
10
6
2
Committee membership
As at the date of this report, the Company has an
Audit Committee and Remuneration and Nominations
Committee of the Board.
During the year, the members of the Committees were:
Audit
Committee
Remuneration and
Nominations Committee
J M Millar (Chairman)
A Cummins (Chairman)
T Dery (until 30 September
B Johnson
2014)
A John
B Johnson
S Bennett (from 24 February
2015 until 18 May 2015)
P Spathis (from June 2015)
S Bennett (until 24 February 2015)
J McKellar (from 24 February
2015)
T Dery (until 30 September 2014)
General Counsel and Group Company Secretary
Ms Belton was appointed General Counsel for the Group
in September 2010 and Group Company Secretary on
17 July 2013. Ms Belton was previously employed by
Qantas Airways, initially as Group General Manager in
the Freight division and latterly as Senior Legal Counsel,
acting for the former Jetset Travelworld Group. Prior
to joining Qantas, Ms Belton was Senior Counsel and
Director of Projects for the P&O Group in Sydney and
London and a senior solicitor with Linklaters, Solicitors,
in London.
Ms Belton holds a Bachelor of Law from the University
of Strathclyde, Scotland and a Masters of Business
Administration from the University of Oxford.
Tom Dery AM
Former Independent Non-Executive Director and
Chairman.
Mr Dery served as a Non-Executive Director
from 17 September 2008 until his resignation on
30 September 2014. Mr Dery was Chairman from
27 February 2009.
Mr Dery commenced his career with Qantas in 1967.
Mr Dery subsequently joined Ansett rising to the role of
Assistant General Manager. In 1995, Mr Dery established
the advertising agency Whybin Dery & Partners and
following its acquisition by DDB Needham, he was
appointed Managing Director of that firm’s Melbourne
operations.
Mr Dery is currently Chairman of M&C Saatchi Worldwide.
Mr Dery has a Bachelor of Commerce (Economics) from
the University of New South Wales and a Master of
Business Administration from Stanford University.
Stephen Bennett
Former Independent Non-Executive Director.
Mr Bennett served as a Non-Executive Director from
28 April 2011 until his resignation on 18 May 2015.
Mr Bennett has more than 31 years’ corporate and
investment banking experience having held senior
management positions with the Commonwealth Bank,
Bankers Trust and UBS. He is currently Group Treasurer
for Consolidated Press Holdings Limited.
Mr Bennett holds an Accounting Diploma and a Graduate
Diploma in Management from Macquarie University.
helloworldlimited.com.au During the year, five meetings of the Audit Committee
were held. The number of meetings attended by each
member of the Committee are as follows:
Dividends
No dividends have been paid or are recommended to be
paid for the 2015 year.
Audit Committee
J M Millar
T Dery
A John
B Johnson
Eligible
to attend
Attended
5
2
5
5
4
2
5
5
During the year, three meetings of the Remuneration
and Nominations Committee were held. The number of
meetings attended by each member of the Committee
are as follows:
Remuneration and
Nominations Committee
Eligible
to attend
Attended
A Cummins
B Johnson
S Bennett
J McKellar
T Dery
3
3
2
1
2
3
3
2
1
2
Retirement in office of Directors
Brett Johnson and Andrew Cummins are the directors
retiring by rotation. Being eligible, they intend to offer
themselves for re-election at the 2015 AGM.
In accordance with the Company’s Constitution and
the ASX Listing Rules, Jane McKellar and Peter
Spathis, having been appointed as directors by the
Board, will automatically retire and stand for election
by shareholders at the 2015 AGM.
Loss per share
Basic loss per share
Diluted loss per share
Cents
per share
2015
(45.66)
(45.66)
Cents
per share
2014
(14.38)
(14.38)
Principal activities
The principal activities during the year of the entities in
the Group were the selling of international and domestic
travel products and services and the operation of a
franchised network of travel agents.
Helloworld Group is one of the leading integrated travel
companies in Australia and New Zealand, operating
several wholesale travel businesses (holiday packaging),
franchise-based and affiliate retail agency networks,
air ticket consolidation, airline representation and travel
management services.
The Group has three operating segments within its
structure, those being Retail, Wholesale and Travel
Management. Within each of these segments the Group
also has an online presence. These operations are located
in Australia, New Zealand, Asia, the United States of
America, and the United Kingdom.
The Group’s brands include helloworld, helloworld.com.au,
Qantas Holidays, Viva! Holidays, Insider Journeys, Atlantic
Pacific Business Travel and QBT.
15
OPERATING AND
FINANCIAL REVIEW
Summary of Results
The results for the year ended 30 June 2015 are summarised as follows:
Total transaction value (TTV)1
Revenue
Adjusted EBITDAI2
Loss before tax
Loss after tax attributable to members
Basic loss per share
Diluted loss per share
Interim dividend per share
Final dividend per share
30 June
2015
$ million
4,696.2
279.2
27.5
(198.4)
(201.1)
Cents
per share
(45.66)
(45.66)
–
–
30 June
2014
$ million
4,861.0
291.7
40.6
(61.2)
(63.3)
Cents
per share
(14.38)
(14.38)
–
–
Change
$ million
(164.8)
(12.5)
(13.1)
(137.2)
(137.8)
Change
cents
(31.28)
(31.28)
–
–
Change %
(3%)
(4%)
(32%)
224%
218%
Change %
218%
218%
–
–
1 Total Transaction Value (TTV) does not represent revenue in accordance with Australian Accounting Standards. TTV
represents the price at which travel products and services have been sold across the Group, as agents for various
airlines and other service providers, plus revenue from other sources. The Group’s revenue is, therefore, derived
from TTV. Total TTV does not represent the Group cash inflows as some transactions are settled directly between
the customer and the supplier. This information has been extracted from note 6 of the accompanying Financial
Statements.
2 Adjusted EBITDAI is earnings before interest expense, tax, share-based payments, depreciation, amortisation and
impairment adjusted for significant and/or unusual items of revenue or expense. Adjusted EBITDAI is a financial
measure which is not prescribed by Australian Accounting Standards but is the measure used by the Board to assess
the financial performance of the Group and operating segments. A reconciliation of Adjusted EBITDAI to (Loss)
before tax is contained in note 6 of the accompanying Financial Statements.
helloworldlimited.com.au Year in Review – Key Highlights:
• TTV decreased 3% to $4.7 billion for the year ended
30 June 2015.
• Adjusted EBITDAI for 2015 was $27.5 million.
• HLO revenue from operating activities for the year
ended 30 June 2015 was $279.2 million.
• The HLO result was a Loss before income tax of
$198.4 million for the year ended 30 June 2015.
The loss after tax is stated after non-cash goodwill
impairment of $205.3 million.
• The Adjusted Profit before tax1 was $6.9 million,
a significant improvement on the prior year loss of
$1.7 million.
• The tax expense for the year was $2.7 million.
• Basic earnings per share for the year was a loss of
46 cents per share.
• The Group continued the positive momentum in the
business with key achievements including:
– Bricks and mortar network of high calibre agents on
a like for like basis, generated TTV in line with the
prior year, a pleasing result given market conditions;
– 75% of both the agent and agency award winners
at the 2015 National Travel Industry Awards were
members of helloworld;
– QBT appointed as sole provider of travel
management services for Whole of Australian
Government;
– Increased profitability of the Travel Management
segment;
– Brand awareness has more than tripled, driven
by ongoing marketing investment in helloworld;
– Strong growth in helloworld.com.au continues with
Hotel and Air TTV up 245% and 95% respectively in
the second half of the year;
– Successful execution of cost management
programs; and
– Travel Indochina rebranded to Insider Journeys
and won the 2015 NTIA award for Best Specialty
Wholesaler.
For the year ending 30 June 2015, the Group achieved
an Adjusted EBITDAI of $27.5 million, a result that was
within the range of previously stated market guidance.
The full year result reflects the full year impact of the
8% reduction in agent numbers following the helloworld
transformation that commenced in July 2013, the
ongoing investment in marketing to grow helloworld’s
brand presence in the Australian market and the
investment in helloworld.com.au to support the Group’s
omni-channel strategy. Despite this investment HLO’s
successful execution of cost management programs
has kept operating costs flat from the prior year.
The Group’s Loss before tax of $198.4 million includes a
non-cash goodwill impairment charge of $205.3 million.
The Group’s balance sheet included a number of intangible
assets such as goodwill, which arose from several legacy
transactions including the 2010 merger of Stella Travel
Services Holdings Pty Ltd and Jetset Travelworld Limited.
The preparation of the full year results included an
assessment of the carrying value of intangible assets to
ensure that the balances are appropriately supported.
Based on this assessment, the Board determined and
announced in August that it was prudent for the Group
to write down the goodwill balance and incur a non-cash
impairment charge of $205.3 million. The goodwill write
down is a non-cash charge which will be recognised in the
statutory results with no impact on HLO’s cashflows or
ongoing operations.
The Group recorded an Adjusted Profit before tax of
$6.9 million, representing a significant increase on the
prior year loss of $1.7 million.
At 30 June 2015, the Company held a cash balance of
$176.1 million comprised of general cash of $27.4 million
and client cash of $148.7 million. HLO had a positive
net cash position and headroom in its debt facilities of
$60.8 million. The Company has a strong balance sheet
and is positioned for long-term sustainable growth.
Since the July 2013 launch of helloworld, the business
has made significant investment in consumer marketing
to strategically accelerate helloworld’s brand presence.
This investment has tripled prompted brand awareness
to 34% since the February 2014 consumer launch. This
momentum sets a solid platform for growth and remains
a focus for the business.
35%
30%
25%
20%
15%
10%
5%
0
26%
34%
10%
MAY 2014
NOV 2014
JUNE 2015
1 Adjusted Profit before tax represents Profit before tax and impairment
17
During the year, a further 50 legacy brand agents in
Australia converted to the helloworld network while
the New Zealand network grew by 13%. Our network
of high-calibre, high-performing corporate and leisure
agencies remains stable and totals almost 1,700 stores
across Australia and New Zealand. On a like for like basis,
our retail network’s performance is line with the prior
year, a pleasing result given subdued market conditions.
HLO’s digital offering, helloworld.com.au, has
experienced substantial growth. Hotel and Air TTV have
grown 245% and 95% respectively in the second half
of the financial year. The website and new mobile app
are highly acclaimed in the industry and investment in
the online platform will continue in the next financial
year to continue the growth trajectory. The investment
in helloworld.com.au, to create a truly digital platform
from the ground up, impacted the Adjusted EBITDAI
result by $4.2 million for the year.
In December 2014, HLO’s wholly owned subsidiary,
QBT, was appointed sole provider of travel
management services to the Whole of Australian
Government, supporting 142 Australian Government
agencies. QBT transitioned all entities by July 2015
and achieved revenue growth from the appointment
during the transition phase. This has contributed much
of the Travel Management segment’s growth in the
financial year.
The Wholesale segment continues to refine its model
with a continued focus on cost management and margin
maximisation. This has delivered operating cost savings
of 5% year-on-year (adjusted for the disposal of the
ATS Inbound business in the prior financial year).
In February this year, HLO’s specialty wholesaler
rebranded from Travel Indochina to Insider Journeys
to reflect the broader range of destinations and
growing consumer focus on tailored experiences.
The business was also named Best Specialty
Wholesaler at the July 2015 NTIA awards, a
significant achievement following the rebrand.
Segmental Review
HLO operates across three segments within the travel
industry: Retail, Wholesale and Travel Management.
The operations of Retail primarily comprise acting
as a franchisor of retail travel agency networks
including helloworld, helloworld for business, and
United Travel. The Retail segment includes the online
travel agency helloworld.com.au which is an important
part of HLO’s omni-channel strategy. The primary
purpose of Wholesale is to procure air, cruise and land
product for packaging and sale through retail travel
agency networks and other third party retailers. Travel
Management provides travel management services to
corporate and government customers including booking
flights and accommodation.
Corporate charges are only allocated to operating
segments to the extent that they are considered part
of the core operations of any segments.
HLO operates websites and online distribution through
all segments.
The Board assesses the performance of the segments
based on a measure of Adjusted EBITDAI. Adjusted
EBITDAI is earnings before interest expense, tax,
share-based payments, depreciation, amortisation and
impairment adjusted for significant and/or unusual items
of revenue or expense. A reconciliation of Adjusted
EBITDAI to Loss before tax is included in note 6 to the
Financial Statements. The segmental results for Retail,
Wholesale and Travel Management have been extracted
from note 6 to the Financial Statements. Revenue margin
has been calculated as Revenue as a percentage of TTV.
helloworldlimited.com.au Retail Segment
HLO operates as the franchisor for multiple retail
travel agency networks, including helloworld,
helloworld for business and the Concorde Agency
Network (CAN – an independent network affiliated to
the Group) in Australia. In New Zealand the Group also
operates as the franchisor for Harvey World Travel,
United Travel and The Travel Brokers.
HLO has built a network of high performing brand-
carrying and independent agents as evidenced in
helloworld’s dominance of the 2015 National Travel
Industry Awards. helloworld members won 75% of
both the agent and agency NTIA awards. This success
is strong validation of the strength of HLO’s network
of expert travel agents and the HLO franchise model
value proposition. The HLO NTIA winners are:
Australia
• Best Travel Agency Retail – Single Location,
Bicton Travel, WA (2 years running)
• Best Travel Agency Retail – Multi Location,
helloworld Hunter Travel Group/RACT Travel,
NSW (2 years running)
• Best Travel Agency Corporate – Single Location,
Goldman Travel, NSW (2 years running)
• Best Travel Consultant – Retail,
Phil Smethurst, Bicton Travel, WA
• Best Travel Agency Manager – Retail Single Location,
Uschi Howard, The Travel Authority Northern Beaches,
NSW
• Best Travel Agency Manager – Retail Multi Location,
Lisa Tjandi, helloworld Hunter Travel Group, NSW
• Rookie of the Year Agent,
Jonathan Pichaloff, helloworld Newcastle Corporate, NSW
• Emirates Travel Consultant Scholarship,
Jaime-Lee Holloway, helloworld Kotara, NSW
New Zealand
• Best Brand Corporate – Multi Location,
APX Travel Management, NZ
• Best Wholesaler, Go Holidays, NZ
• Best Travel Agency Manager – Retail,
Chris Harrop, United Travel Mairangi Bay, NZ
Included in the helloworld network is helloworld for
business representing Australia’s largest independent
Travel Management Company network. helloworld
Total transaction value (TTV)
Revenue
Operating expenses
Adjusted EBITDAI
Revenue Margin (%)
for business was recognised as a finalist in the 2015
NTIA awards.
HLO owns and operates a ticketing facility, Air Tickets,
which services the helloworld, Concorde Agency and
over 400 independent travel agents.
Air Tickets operates in all Australian states with
technology allowing agents to issue tickets 24 hours
a day, seven days a week. Air Tickets technology also
operates within New Zealand via Stella Travel Services
(NZ) Ltd. Air Tickets continues to invest in innovative
ticketing technology and is considered one of Australia’s
leading airfare distribution and ticketing services
consolidator. Air Tickets was again recognised as a
finalist at this year’s NTIA awards.
HLO’s digital offering, helloworld.com.au, extends the
agent reach, grows the HLO profile and captures a
growing share of this important market. The website
offers the convenience of researching and booking online
and an agent finder for customers to locate their nearest
helloworld agent, creating a multichannel environment
and convenience for consumers. The investment in
helloworld.com.au, as part of the omni-channel strategy
to ensure the business is where consumers want it to
be, has impacted the Retail Adjusted EBITDAI segment
result by $4.2 million for the year. helloworld.com.au was
an NTIA award finalist for Best Travel Agent Technology
Innovation and Best Online Travel Agency.
The Retail segment earns revenue from franchise fees,
commissions from airline and leisure partners derived
from the arrangement of tours and travel and override
commission revenue. Further details on the revenue
recognition policies of the Group are contained in
note 3(e) of the Financial Statements.
The Retail segment generated TTV of $3.4 billion for
the year ended 30 June 2015, representing a reduction
of 4% compared to the prior year. The Retail segment
generated Adjusted EBITDAI of $31.9 million which is a
37% decrease on the prior year result of $50.5 million.
Revenue decreased by 5% to $151.9 million with
operating costs increasing by 9% to $120.0 million for
the year. The increase in operating costs of $9.9 million
is attributable to the enhanced agent incentive structure
and the investment in marketing to grow helloworld’s
brand presence in the Australian market.
June 2015
$’000
3,429,056
151,933
(120,039)
31,894
4.4%
June 2014
$’000
3,586,527
160,686
(110,148)
50,538
4.5%
Change
$’000
(157,471)
(8,753)
(9,891)
(18,644)
Change
%
(4%)
(5%)
9%
(37%)
19
Wholesale Segment
Major initiatives for the year include:
HLO operates several wholesale brands:
• the rebranding of Travel Indochina to Insider
• Qantas Holidays is one of Australia’s leading travel
wholesalers and has been providing holiday packages
for more than 39 years. The flight component for
Qantas Holidays packages is provided predominantly
by Qantas Airways.
• Viva! Holidays sells packages where the flight
component is provided by major airlines (excluding
Qantas Airways) servicing the Australian market.
• Ready Rooms provides an online solution for dynamic
and traditional wholesale inventory for preferred
travel agents to sell to their customer base.
• Insider Journeys (previously Travel Indochina)
specialises in guided small group journeys and
bespoke tailor-made independent itineraries to key
destinations in Asia, including Vietnam, Cambodia,
Laos, Thailand, China, Mongolia, Japan, India,
Sri Lanka, Bhutan and Burma. Insider Journeys is a
vertically integrated business with operations globally
across Asia, Australia, UK and North America.
• GO Holidays is a New Zealand based wholesale
business that sells outbound packaged holiday
products for destinations around the world.
• Qantas Vacations (a brand of Stella Travel Services
USA Inc) provides customised tour and travel
arrangements for visitors from North America to
Australia, New Zealand, Fiji and Tahiti.
• The Cruise Team is a cruise wholesaler and delivers
tailor-made cruise packages.
In July 2015 Insider Journeys won the NTIA Award for
Best Specialty Wholesaler, a significant achievement
following the rebranding earlier this year. Qantas
Holidays and Viva! Holidays were named as finalists.
The focus across the wholesale brands during the year
has been on cost containment and margin optimisation.
Journeys to better reflect the wider geographic
focus and tailored travel itineraries
• investment in a dedicated Philippines-based team
to provide additional support for The Cruise Team
in meeting the rapidly growing appetite for cruising.
According to CLIA1, Australia is the first source
market to exceed 4% penetration with Australia
hitting its one million passenger forecast six years
ahead of schedule with an average 20% year-on-
year growth for the last 12 years.
The Wholesale segment earns revenue commissions
from airline and leisure partners derived from
the arrangement of tours and travel and override
commission revenue.
Adjusted EBITDAI for the Wholesale segment for
the year ended 30 June 2015 was $13.1 million
representing an increase of 6%, with TTV decreasing
by 6% from $708 million to $667 million. Revenue
of $82.3 million decreased by 7% compared to the
prior year with operating costs decreasing by 9%.
The results for the year ended 30 June 2014 include
three months of trading of the ATS Inbound business
(disposed on 30 September 2013). When the Inbound
business trading is excluded TTV and Revenue both
decreased by 3% with operating costs decreasing
by 5%. The operating cost reduction reflects the
continued focus on cost management, primarily
through employee cost savings, with the ongoing
investment in technology improving productivity.
The Revenue Margin for the year ended 30 June 2015
remains at 12.3% (prior year Revenue Margin is
12.3% excluding the ATS Inbound business).
Total transaction value (TTV)
Revenue
Operating expenses
Adjusted EBITDAI
Revenue Margin (%)
June 2015
$’000
June 2014
$’000
667,135
82,276
(69,148)
13,128
12.3%
708,229
88,596
(76,189)
12,407
12.5%
Change
$’000
(41,094)
(6,320)
7,041
721
Change
%
(6%)
(7%)
(9%)
6%
1 CLIA – Cruise Lines International Association
helloworldlimited.com.au Corporate – Multi Location at the TAANZ NTIA in 2014
and was a finalist in the same category in the 2015
awards. APX has a mix of global and local corporate
clients with a significant Government portfolio. APX
is an approved member of the All of Government panel
in New Zealand with its appointment being extended
for a further two years to June 2017.
The Travel Management segment generated an
Adjusted EBITDAI of $5.3 million representing an
increase of $4.7 million on the prior year.
TTV attributable to the Travel Management segment
increased by 6% to $600 million for the year ended
30 June 2015. The growth in TTV primarily reflects
the appointment of QBT as the sole provider of travel
management services to the Whole of Australian
Government during the year. The services provided
to the Whole of Australian Government include travel
management, an online portal and booking tool,
reporting and offline booking services. The appointment
is also the key driver of the Travel Management
segment’s Revenue increase of 10% from the prior year.
Operating expenses in the Travel Management segment
decreased by $1.1 million or 3% during the year as
a result of restructuring initiatives and productivity
improvements. The Travel Management segment has
continued to invest in innovative technology in order to
drive efficiency and automation through the business.
Travel Management Segment
Within the Travel Management segment, HLO
operates the following brands:
• QBT
• Atlantic & Pacific American Express (APX)
in New Zealand.
QBT is one of the largest travel management
businesses in Australia, arranging business travel for
Federal and State government departments, large
corporations and SMEs. QBT provides a full travel
management service, including a 24-hour booking
facility for air, land and cars for corporate customers,
and offers online corporate travel bookings through
a choice of online booking tools and state-of-the-art
reporting and expense management. In December
2014 QBT was appointed to be the sole provider of
travel management services to the Whole of Australian
Government. Ongoing momentum in this segment
is expected following the transition of all of the
Australian Government agencies effective 1 July 2015.
This contract is for an initial period of four years, with
certain extension provisions.
QBT is a global partner of GlobalStar. GlobalStar is a
worldwide Travel Management Company (TMC) owned
and managed by local entrepreneurs with over 85 market
leading enterprises, representing over US$14 billion
in sales. This partnership enables QBT to combine
GlobalStar’s expertise, strength and commitment with
QBT’s strengths in the Australian market to deliver
multinational solutions to global clients.
APX is a leading New Zealand based travel management
specialist providing full end-to-end travel management
services and has been the New Zealand Travel Partner
Network representative for American Express Business
Travel since 2006. APX was awarded the Best Brand,
Total transaction value (TTV)
Revenue
Operating Expenses
Adjusted EBITDAI
Revenue Margin (%)
June 2015
$’000
599,978
41,148
(35,898)
5,250
6.9%
June 2014
$’000
566,276
37,505
(36,992)
513
6.6%
Change
$’000
33,702
3,643
1,094
4,737
Change
%
6%
10%
(3%)
923%
21
• Competition and Margin Risk
The highly competitive nature of the travel industry,
combined with the risk of new entrants in the online
market, may impact on revenue margins and the results
of the Group. This is mitigated by managing margins
and by working with key suppliers. The Group closely
monitors product availability and pricing against a
range of other travel providers to ensure it remains
competitive.
• Foreign Exchange Exposure
Within the Wholesale segment, a significant amount
of international travel product is sold in local currency
and suppliers are paid in foreign currencies. In order
to mitigate the resulting exchange fluctuation risk,
HLO has a hedging policy and enters into forward
exchange contracts to match expected future
cash flows.
• Key customers and suppliers
Changes in key customers and suppliers could have
an impact on the financial results of HLO. HLO
mitigates this risk by ensuring, where possible,
formal agreements are in place and by working
closely with key customers and suppliers to ensure
that HLO responds to any changes in their economic
circumstances or business requirements.
• Technological advances
Advances in technology including new ‘smart’ devices
allow consumers to access travel information and
make travel arrangements more easily 24 hours
a day. Such technological advances could have
an impact on the financial results should HLO
not continue to invest in systems development.
HLO mitigates this risk by continuing to commit
significant resources to systems development as is
demonstrated by the growth in helloworld.com.au
and with Air Tickets setting the industry standard
for ticketing technology.
Outlook
While market uncertainties continue and consumer
sentiment fluctuates, HLO remains focused on delivering
for shareholders, agents, partners and consumers.
Total tourism spend (excluding inbound) in Australia
is estimated at around $128 billion and expected to
grow at around 3.2% pa over the next 5 years. Research
shows travellers are 5 times more likely to use an agent
for more complex bookings. Future-proofing HLO’s
agents, and the business through technology, training,
product and profile supported by the omni-channel
strategy remains HLO’s priority. HLO has already made
great progress in positioning its agents and business
for success through a growth in revenue from marketing
initiatives and product offerings, a focus on cost
containment, productivity enhancements and margin
optimisation. While it is too early to predict the trading
environment for the next financial year, we anticipate
a substantial increase on the FY15 Adjusted Profit
before tax result of $6.9 million. The transition of the
New Zealand business to helloworld, during the course
of the FY16 financial year, will deliver further synergies
across staffing, branding and technology. The benefits
of these synergies are expected to be realised in the
financial years beyond FY16. The Company has a strong
balance sheet, a stable network of high-performing
agents, a growing and strategic online presence and is
positioned for long-term sustainable growth.
Business Risks
There are a number of factors, both specific to HLO
and of a general nature, which may impact the future
operating and financial performance of HLO. The
specific material risks faced by HLO, and how HLO
manages these risks, are set out below:
• Consumer Discretionary Spending
Operating in the Travel industry, HLO relies on
consumer discretionary spend, consumer sentiment
and corporate expenditure. As a result, adverse
changes to the general economic environment may
impact financial results. HLO mitigates this risk by
keeping abreast of global economic and consumer
data and industry trends and managing expenses in
line with changes in the environment.
helloworldlimited.com.au FTE Breakdown by Country
FTE Breakdown by Segment
62%
27%
4%
4%
3%
Australia
New Zealand
USA
Vietnam
Other
26%
41%
24%
9%
Retail
Wholesale
Travel Management
Corporate
People
Liquidity and funding
At 30 June 2015, HLO has 1,474 Full Time Equivalent
employees (FTE). This compares to 1,469 at 30 June 2014.
Employee expenditure for the year ended 30 June
2015 decreased by 8% or $10.3 million. When the ATS
Inbound business is excluded from prior year, employee
expenditure reduced by 6% or $8.1 million.
While the majority of the Group’s employees are based
in either Australia or New Zealand, the Group has
employees in the United States of America, Vietnam,
Cambodia, Laos and the United Kingdom. This regional
analysis, and the FTE breakdown by Segment, is
illustrated graphically above.
Review of financial condition
Capital structure
At 30 June 2015 HLO had 440,356,3341 shares on
issue of which QH Tours Limited (a subsidiary of Qantas
Airways Limited) holds 28.9%, Europe Voyager NV
holds 23.3%, Sintack Pty Limited and its associates
hold 19.9%, The Burnes Group Pty Ltd and its
associates hold 10.2%, UBS Australia Holdings Limited
holds 7.0% with the remaining 10.7% being held by
other shareholders including management.
Dividend
HLO has previously stated that its policy is to pay a
dividend payout ratio in the range of 40-60% of net
profit after tax. As HLO made a loss for the year ended
30 June 2015 due to the goodwill impairment charge,
and in accordance with the dividend policy, the Board
determined that HLO will not pay a final dividend
in 2015.
The Group maintains a strong balance sheet with net
assets of $177.5 million and a positive net cash position
at 30 June 2015.
At 30 June 2015 the Group has long term debt of
$23.2 million (2014: $23.3 million), net of $1.6 million
of deferred borrowing costs (2014: $2.0 million) and
remaining headroom available in the finance facilities
of $60.8 million.
Total cash as at 30 June 2015 for the Group was
$176.1 million (2014: $184.3 million). General cash
at 30 June 2015 was $27.4 million compared to
$28.5 million at 30 June 2014. This is a positive
result considering that during the year the Group
funded the remaining costs to complete the strategic
transformation.
Net cash inflow from operating activities was $4.7 million
(2014: outflow $30.8 million). The operating cash inflow
for 30 June 2015 was primarily as a result of improved
working capital management during the year and the
reduction in strategic transformation costs.
On-market share buy-back program
On 27 August 2014, Helloworld Limited announced
an on-market share buy-back program of up to 2.5%
of the Company’s issued share capital. The Board
considered that it was appropriate to establish a
buy-back program to give the Company flexibility
to repurchase shares on an opportunistic basis,
particularly in times of market or share price volatility.
The buyback concluded on 27 August 2015. A total of
218,374 ordinary shares or 0.05% of the Company’s
issued share capital was acquired by the Company
under the buyback and subsequently cancelled.
1 This number includes 26,136 shares bought back under the Company’s on-market share buyback and cancelled on 28 August 2015.
23
Significant events after the
balance date
Indemnification and insurance
of Directors and officers
The Directors are not aware of any matter or
circumstance that has arisen between 30 June 2015 and
the date of signing of this report that has significantly,
or may significantly, affect the operations of the Group,
the results of the operations of the Group or the state
of the Group’s affairs in future financial years.
Likely developments
The economic outlook for 2016 continues to be
uncertain due to a variety of economic circumstances
and it is difficult to predict the outlook for demand.
More information on likely developments is included in
the Operating and Financial Review on page 22.
Environmental regulation
The Group’s operations are not subject to any
significant environmental regulations under either
Commonwealth or State legislation.
Indemnification
The Company has agreed to indemnify the Directors
and executive officers (or former Directors or executive
officers) of the Company against:
(a)
any liability (other than for legal costs) incurred
by the Director or executive officer;
(b)
any legal costs (not limited to taxed costs)
reasonably incurred by the Director or executive
officer in connection with:
(i)
any claim brought against or by the Director
or executive officer of the Company; or
(ii)
any investigative proceeding, including (without
limitation) in obtaining legal advice for the
purposes of responding to, preparing for or
defending any of the above; and
(c)
any legal costs (not limited to taxed costs)
reasonably incurred by the Director or executive
officer in or in connection with the discharge of the
Director or executive officer’s duties as an officer of
the Company, provided that the advice is obtained
in accordance with the Board Charter which requires
approval from the Chairman who will facilitate the
obtaining of the advice and, where appropriate,
disseminate the advice to all Directors.
Insurance premiums
The Company has paid insurance premiums of $83,413
during the financial year to cover current and former
Directors’ and officers’ liability and legal expenses.
The insurance premiums relate to:
• costs and expenses incurred by the relevant officers
in defending proceedings, whether civil or criminal and
whatever their outcome; and
• other liabilities that may arise from their position,
with the exception of conduct involving a wilful breach
of duty or improper use of information or position to
gain a personal advantage.
helloworldlimited.com.au
LETTER FROM THE
REMUNERATION AND NOMINATIONS
COMMITTEE CHAIRMAN
Dear Shareholder
On behalf of the Board, I am pleased to present
Helloworld’s Remuneration Report for 2015.
The Helloworld Board is committed to an executive
remuneration framework that is focused on driving
a performance culture, and linking executive pay to
the achievement of Company strategy and business
objectives and, ultimately, generating satisfactory
returns to shareholders.
Company performance + remuneration
outcomes in 2015
As a result of Company performance being below
target in 2015, the Board determined that no Short
Term Incentive Plan (STIP) payment would be awarded
to executive Key Management Personnel for 2015
notwithstanding that in some instances, executives
achieved satisfactory outcomes related to non-financial
and business unit objectives. However, a bonus in
relation to the delivery of the Whole of Australian
Government (WoAG) contract was awarded to Russell
Carstensen (refer section 2.5).
Further to this, none of the Long Term Incentive Plan
(LTIP) grants with performance periods ending 30 June
2015 met their relevant EPS targets and, as a result,
none of these performance rights will vest.
Changes to executive remuneration
in 2016
The Board received feedback following last year’s
remuneration report, and this has been taken into
consideration for changes to be implemented for 2016.
During the year, the Board undertook a review of the
remuneration framework to ensure it continues to
drive performance and align executive reward with
shareholders’ interests.
As a result of the review, the Board determined the
following for 2016:
• No increase to fixed remuneration for all employees
not covered by a collective agreement, except to
address individual anomalies.
• STIP performance conditions to be strengthened with
no payment to be made unless and until the Company
achieves its EPS target.
• LTIP EPS performance condition will not be adjusted
for exceptional items. This will ensure that outcomes
under the LTIP will align with shareholder experience.
• In addition, LTIP grants will be subject to a single three
year vesting period. This better aligns executives’
remuneration outcomes with shareholder experience
and reflects expectations for completion of the
transformation process.
We are confident that the changes will complement
our existing focus on alignment of executive reward
to delivery of Company strategy and ultimately
shareholder value.
The Board recommends the Remuneration Report to
you and asks that you support our remuneration policies
and practices by voting in favour of this Report at our
2015 Annual General Meeting.
Yours faithfully
Andrew Cummins
Chairman of the Remuneration and
Nominations Committee
25
REMUNERATION REPORT
(AUDITED)
This 2015 Remuneration Report outlines the
remuneration arrangements for the Key Management
Personnel (‘KMP’) of the Helloworld Group (Group) in
accordance with the requirements of the Corporations
Act 2001 and its Regulations.
The report contains the following sections:
1
REMUNERATION GOVERNANCE
& FRAMEWORK
1.1 Persons to whom this report relates
1.2 Remuneration governance
1.3 Executive remuneration framework
1.4 Executive remuneration mix
1.5 Remuneration changes for 2016
2 EXECUTIVE REMUNERATION
1
REMUNERATION GOVERNANCE
& FRAMEWORK
1.1 Persons to whom this report relates
This report covers the remuneration arrangements for
the Key Management Personnel (KMP) of the Group.
KMP are defined as those persons having authority and
responsibility for planning, directing and controlling
the major activities of the Group, directly or indirectly,
including any Director (whether executive or otherwise).
For the purposes of this report, the term ‘executive’
encompasses the CEO (unless otherwise specified) and
all Executive KMP.
Directors and other KMP disclosed in this report are:
Name
Position
2.1 Company performance and remuneration
Non-Executive Directors
outcomes for 2015
2.2 Executive remuneration structure in 2015
2.3 LTIP in detail
2.4 Summary of performance rights held under
the LTIP
2.5 Legacy remuneration and other items
2.6 Executive remuneration (statutory tables)
2.7 Executive shareholdings
2.8 Executive service agreements
3 NON-EXECUTIVE DIRECTOR REMUNERATION
3.1 Non-Executive director remuneration
governance
3.2 Non-Executive director remuneration structure
3.3 Non-Executive director remuneration
(statutory tables)
3.4 Non-Executive director shareholdings
Brett Johnson (appointed
Chairman 1 October 2014)
Andrew Cummins
Peter Spathis
(appointed 18 May 2015)
Adrian John
James M Millar
Jane McKellar (appointed
17 Dec 2014)
Executive Directors
Elizabeth Gaines
(six months’ notice of
resignation advised on
19 June 2015)
Executive KMP
Jenny Macdonald
(appointed 18 August
2014)
Russell Carstensen
Peter Egglestone
Greig Leighton
Former KMP
Tom Dery (ceased
30 September 2014)
Stephen Bennett (ceased
18 May 2015)
Rob Gurney1 (ceased
28 September 2014)
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Managing Director
& Chief Executive Officer
(CEO)
Chief Financial Officer
General Manager,
Air Services
Head of Wholesale
Chief Executive Officer,
New Zealand
Former Non-Executive
Chairman
Former Non-Executive
Director
Former CEO & Executive
Director
1 Notice of resignation given 28 March 2014, ceased employment
28 September 2014
helloworldlimited.com.au
1.2 Remuneration governance
1.3 Executive remuneration framework
The Remuneration and Nominations Committee (RNC)
of the Board is responsible for reviewing remuneration
arrangements and making recommendations to the
Board in respect of the Directors and executives. The
RNC assesses the nature and amount of remuneration of
executives on a periodic basis by reference to relevant
employment market conditions, with the overall objective
of ensuring maximum stakeholder benefit from the
retention of a high quality, high performing Board of
Directors and executive team. The Corporate Governance
Statement provides further information on the role and
composition of this Committee.
In determining the level and make-up of executive
remuneration, the RNC considers advice from external
consultants from time to time and reviews market levels
of remuneration for comparable executive roles.
In 2015, 3 degrees consulting was engaged by the
RNC to provide assistance in relation to a review of
Helloworld’s remuneration arrangements. Remuneration
recommendations from 3 degrees consulting were
provided directly to the Chairman of the Group and/or
Chairman of the RNC. 3 degrees consulting’s fees that
related to a remuneration recommendation were $59,000
(exclusive of GST). 3 degrees consulting provided
other services to Helloworld including assisting with a
Non-Executive director search, general remuneration
and corporate governance advice and assisting with the
preparation of the remuneration report. Total amount
for 3 degrees consulting’s fees for these services, which
did not contain a remuneration recommendation, was
$116,700 (exclusive of GST). The Board is satisfied that
all remuneration recommendations were made free from
undue influence of management. In addition, 3 degrees
consulting provided a declaration to the RNC that the
remuneration recommendations it made were free
from undue influence.
The Group aims to reward executives with a level and mix
of remuneration commensurate with their position and
responsibilities within the Group and to reflect their level
of experience and their performance. The remuneration
framework of the Group embodies the following
principles:
• provide competitive rewards to attract high calibre
executives;
• have a portion of remuneration ‘at risk’, dependent upon
meeting pre-determined performance benchmarks;
• link executive rewards to shareholder value; and
• establish appropriate, demanding performance hurdles
in relation to variable executive remuneration.
To achieve these principles, the remuneration
arrangements of the CEO and executives are made up of
the following three elements:
• Fixed annual remuneration (FAR)
Set to attract, retain and motivate the right talent
to deliver on the Group’s strategy, the Board takes in
to account individual performance, skills, expertise
and experience as well as external benchmarking to
determine executive’s fixed remuneration.
Executives may receive their FAR in a variety of forms
including cash and fringe benefits. It is intended that
the manner in which FAR is paid will be optimal for the
recipient without creating extra cost for the Group.
Salary, as disclosed in the remuneration tables, is the
remuneration remaining after the deduction of salary
sacrifice components such as motor vehicles and
superannuation which are shown in a separate category.
• Short Term Incentive and Long Term Incentive (‘at risk’
remuneration)
The ‘at risk’ components are based on performance
against key financial and non-financial measures
that are linked to generating satisfactory returns for
shareholders. More detail on the ‘at risk’ remuneration
components and their link to Company performance is
included in section 2 of this report.
27
1.4 Executive remuneration mix
The Board aims to find a balance between the
different elements of remuneration to attract, retain
and motivate the right talent to deliver on the Group’s
strategy while also linking pay to performance via
incentive plans to motivate executives to achieve
outcomes beyond the standard expected in the normal
course of ongoing employment.
The target mix of FY15 remuneration components are
shown below.
Executive Remuneration Mix
CEO
42%
42%
16%
Executive KMPs
58%
30%
12%
0%
20%
40%
60%
80% 100%
Fixed
STIP
LTIP
1.5 Remuneration changes for 2016
Following a review of the Group’s incentive arrangements
undertaken during 2015, the RNC recommended that, in
light of the status of the transformation process and the
level of performance achieved to date, it is appropriate
to vary the basis on which performance measures for
both the STIP and the LTIP are determined. As a result
the Board has resolved the following will apply for FY16.
Short Term Incentive Plan (STIP)
Performance measures will remain broadly the same
as 2015 with one key change being that no payment will
be made in 2016 unless the Group’s audited financial
results meet or exceed a Board approved Earnings
Per Share target (EPS Target). This will act as a financial
performance gateway so that no payments will be
made unless satisfactory financial performance has
been achieved. One further change to the 2015 use
of EPS is that, when calculating EPS there will be no
adjustments/exceptions made. If the EPS Target is met:
• up to 50% of the STIP opportunity may be payable
to the extent executives have met or exceeded
individual KPIs.
• up to 50% of the STIP opportunity may be payable
with the financial component being paid on a straight-
line basis between the EPS Target (where none of
the financial component is payable) and 200% of the
EPS Target (where the full financial component will
be payable).
EPS continues to be selected as the appropriate
measure (but with no adjustments/exceptions) because
it represents the most appropriate measure of progress
in implementing the transformation plan. The Board
also considers that EPS, as an internal measure, better
reflects the current make-up of the share registry.
Long Term Incentive Plan (LTIP) – 2016 Award
The Board has determined that each grant should have
a single vesting point at the end of year 3. The Board
considers that this single vesting period better aligns
executives’ outcomes with shareholder experience
and reflects expectations for completion of the
transformation process. Other key aspects of the 2016
LTIP award are:
• Participants will be granted Performance Rights (PRs)
based on the face value of shares measured over the
three months to end September 2015.
• There will be a three year vesting period with no
tranche vesting at the end of years 1 and 2.
• The performance measure target will be the aggregate
EPS contained in the Board approved three year plan
with a stretch being 200% of that level.
• There will be no adjustments to EPS targets for
exceptional/one off items.
• Where actual aggregate EPS equals the approved
target, 50% of the PRs will vest. Where actual
aggregate EPS equals or exceeds the stretch level,
100% of the PRs will vest. Actual aggregate EPS
between the target and stretch will result in vesting
on a straight-line basis between 50% and 100% of
PRs granted.
Underpinning these changes is that executives will only be
rewarded where targets have been achieved or exceeded.
Change in control
The change in control policy provides that all of a
participant’s PRs will vest even if applicable performance
conditions have not been satisfied at that time.
The Board has reviewed this approach and intends to
amend the policy in FY16 to the effect that, in the event
of another party gaining control over 50% plus one share
in HLO, at the Board’s discretion, a performance test
would be carried out to measure aggregate EPS to the
change of control date relative to the aggregated EPS
target and stretch levels pro-rated to the same date.
Subject to the test, the PRs would vest at that date
according to the vesting schedule.
helloworldlimited.com.au
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2015
The Group’s results for the 2015 financial year represented a decrease in Adjusted EBITDAI compared to the previous
year, and was not in line with the Board approved operating budget.
As a result of the shortfall in Adjusted EBITDAI, executives did not receive any short term incentive payments for
2015, with the exception of a bonus paid to Russell Carstensen in relation to the delivery of the Whole of Australian
Government (WoAG) contract (refer section 2.5). This is notwithstanding the fact that a number of executives achieved
satisfactory outcomes relating to individual objectives. However, due to the Company performance overall, the Board
determined that no bonus payments would be made.
In addition, performance conditions for LTIP grants with a performance period ending 30 June 2015 (Tranche 3 of the
FY12 PRs, Tranche 2 of the FY13 PRs, Tranche 1 of the FY14 and FY15 PRs) were not met and, following testing, these
PRs lapsed.
The Board has also resolved that there will be no increase to executives’ fixed remuneration in 2016 unless the Board
determines an increase for nominated executives is warranted to address an anomaly.
Please also see table below that provides relevant Company performance information for the key financial measures
over the last four years (as due to the merger in September 2010 Company performance prior to financial year ended
30 June is not comparable).
Net (Loss)/Profit After Tax (NPAT $’000)
Earnings Per Share (EPS cents)
Earnings before interest expense, taxes, share based payments,
depreciation, amortisation and impairment adjusted for significant
2015
(201,111)
(45.66)
2014
(63,243)
(14.38)
2013
16,360
3.68
2012
5,572
1.24
and/or unusual items of revenue and expense (Adjusted EBITDAI $’000)
27,455
40,561
54,141
50,525
Dividends paid per share (cents)
Opening share price at 1 July ($)
Closing share price at 30 June ($)
–
0.28
0.36
–
0.33
0.28
1.50
0.37
0.33
1.10
0.80
0.37
29
2.2 Executive Remuneration Structure in 2015
‘At Risk’ Remuneration – Short Term Incentive Plan (STIP) 2015
STIP
Description
Conditions
The STIP is an annual incentive cash-settled plan. The STIP is reviewed annually by the RNC.
Executives (other than the CEO)
There were three categories of performance targets set for each participating executive in 2015.
Financial
1. Business Unit or specific Operating/Functional Segment to achieve its overall profit target (Adjusted
EBITDAI) for the financial year as set by the Board (weighted 30% for Jenny Macdonald and Greig Leighton
and 72% for Russell Carstensen. Peter Egglestone did not have business unit specific financial targets but
higher weighting to individual non-financial targets).
2. An overdrive payment based on 50% of the excess over budget of actual Group profit before tax up to a limit
of the maximum target bonus opportunity (weighted 50% for Jenny Macdonald, Greig Leighton and Peter
Egglestone and 20% for Russell Cartensen).
Non-financial
3. Non-financial KPIs or targets for 2015 included targets which are relevant to each executive. For example,
assessment of on-time performance in relation to internal projects and successful delivery of business unit
initiatives designed to add value to the core operations of the Group (weighted 20% for Jenny Macdonald
and Greig Leighton, 8% for Russell Carstensen, and 50% for Peter Egglestone).
CEO
The CEO had two categories of performance targets in 2015.
Financial
1. Actual Adjusted EBITDAI, Adjusted Group profit before tax and Revenue (weighted 50%).
Non-financial
Link to Company
strategy
2. Non-financial KPIs or targets for 2015 included transforming the existing business model and brand,
strategy and other operational and organisational objectives (weighted 50%).
The balanced scorecard approach was designed to align remuneration with the key value drivers for HLO and
complement short-term financial targets.
The use of a combination of Group profit before tax, Operating Segment/Business Unit Adjusted EBITDAI and
non-financial targets ensured variable rewards are only available when value has been created for shareholders
and when profit is consistent with the Group’s business plans.
Performance period
To 30 June 2015.
Amount that can
be earned
Executives (other than the CEO).
Opportunity ranged between 30% – 100% of FAR depending on each executives’ role accountability, impact on
the organisation and operating segment or business unit performance.
CEO
Opportunity was 100% of FAR.
Delivery of STIP
Incentives were determined after the preparation of the financial statements for 2015 (in respect of the
financial measures) and after a review of performance against non-financial measures by the CEO (and in the
case of the CEO, by the Board) at the end of the financial year.
The Board confirms final awards have been based on overall personal and Group performance and the Board
has the discretion to adjust short-term incentives in light of unexpected or unintended circumstances.
As outlined in section 2.1, no STIP payments were awarded for FY15, with the exception of Russell Carstensen’s
payment (refer section 2.5).
helloworldlimited.com.au ‘At Risk’ Remuneration – Long Term Incentive Plan (LTIP) 2015
LTIP
Description
The LTIP is delivered in the form of PRs. For the 2015 award, PRs were subject to a one, two and three year
performance period. The plan is administered by the RNC.
Conditions
PRs were subject to performance conditions linked to growth in the Company’s Adjusted EPS.
Adjusted EPS is EPS adjusted for significant, non-recurring and/or unusual items as approved by the RNC.
Adjusted EPS is a financial measure which is not prescribed by Australian Accounting Standards but is a
measure used by the RNC to assess the vesting of PRs.
The Adjusted EPS performance targets are set by management and approved by the Board. They are
determined by reference to cumulative basic Adjusted EPS, aggregated over the applicable performance
period, measured against a specified Adjusted EPS target approved by the RNC.
Link to Company
strategy
LTIP is designed to reward executives of the Group for driving long-term prosperity as measured by growth in
EPS performance adjusted for abnormal and exceptional items. This was seen as acknowledging the impact on
EPS outcomes beyond the control or influence of executives.
Performance period
Each award made under the Plan for the years ending 30 June 2011, 2012, 2013 and 2014 comprises
3 tranches, each with a separate Performance Period of 2, 3 or 4 years.
Awards made for year ending 30 June 2015 also comprise 3 tranches, each with a separate Performance Period
of 1, 2 or 3 years.
Amount that can
be earned
Executives are eligible to receive LTIP awards in the range of 14% to 24% of FAR.
Vesting
To achieve vesting, Adjusted EPS performance for each performance period must meet or exceed the
applicable targets determined by the RNC.
The following vesting schedule applies:
Target pool determined by cumulative compound
Portion of grant vesting
Adjusted EPS growth over performance period
＜90% of target
90% of target
＞90% but ＜110% of target
＞110% of target
0%
50%
Pro-rata on a straight line basis from 50% to 100%
100%
No amount is to be paid or payable by participants in respect of the award of PRs or on acquisition of shares
pursuant to the vesting PRs. Note also that PRs do not carry dividend or voting rights.
Unless otherwise determined by the RNC, all unvested PRs held by a participant will lapse in certain
circumstances, including if:
•
any applicable performance conditions are not satisfied, met or reached by the end of the applicable
performance period (or any extended performance period); or
•
the participant voluntarily resigns from their employment or is dismissed from their employment for a
reason which entitles the employer to terminate the employment without notice.
If a participant ceases employment in various other circumstances before the end of the performance period
applicable to their unvested PRs, then (unless the RNC determines otherwise) only a proportion of those PRs
will lapse. This proportion will be determined by reference to the fraction of the performance period during
which the employee will not be an employee.
Change of control
Refer Section 1.5.
Share Trading Policy
The trading of shares issued to participants under the LTIP arrangements is subject to, and conditional upon,
compliance with the Company’s employee share trading policy. The Company would consider a breach of this
policy as gross misconduct which may lead to disciplinary action and, potentially, dismissal.
31
2.3 LTIP in detail
Awards were made under the LTIP for the years ending 30 June 2011, 2012, 2013, 2014 and 2015. The details of each
grant of PRs under the LTIP affecting the amount of remuneration disclosed in current or future reporting periods are
set out in the table below.
GRANT NAME
2011 – Tranche 3
Grant date
Performance period
1 October 2010
1 July 2010 to 30 June 2014
2012 – Tranche 3
26 June 2012
1 July 2011 to 30 June 2015
2013 – Tranche 2
2013 – Tranche 3
26 June 2012
26 June 2012
1 July 2012 to 30 June 2015
1 July 2012 to 30 June 2016
2013 – Former CEO Sign-on bonus
27 August 2012
27 August 2012 to 27 August 2014
2014 – Tranche 12
2014 – Tranche 22
2014 – Tranche 32
22 November 2013
22 November 2013
22 November 2013
1 July 2013 to 30 June 2015
1 July 2013 to 30 June 2016
1 July 2013 to 30 June 2017
2014 – Special Performance
Incentive
22 November 2013
1 July 2013 to 30 June 2015
2015 – Tranche 1
2015 – Tranche 2
2015 – Tranche 3
27 February 20153
1 July 2014 to 30 June 2015
27 February 20153
27 February 20153
1 July 2014 to 30 June 2016
1 July 2014 to 30 June 2017
Exercise
price
Fair value
per PR at
grant date
% Vested
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$0.80
50.5%1
$0.36
$0.36
$0.36
0%
0%
n/a
$0.46
100%
$0.34
$0.34
$0.34
$0.40
$0.27
$0.27
$0.27
0%
0%
0%
0%
0%
n/a
n/a
1 As previously disclosed in the FY14 report, 50.5% of the 2011 – Tranche 3 grant was tested after 30 June 2014 and 50.5% of this grant vested
on 27 August 2014.
2 2014 – Tranches 1 to 3 have now lapsed as a result of Elizabeth Gaines’ resignation received on 19 June 2015 (these tranches were granted
only to Ms Gaines in the first instance).
3 Performance rights for all executives were granted on 27 February 2015, except for Elizabeth Gaines’ rights, which were granted subsequent
to the AGM on 22 December 2014. The fair value of PRs granted to Ms Gaines was $0.33. Ms Gaines’ performance rights have lapsed following
receipt of her resignation.
helloworldlimited.com.au 2.4 Summary of performance rights held under the LTIP
Number
of PRs at
1 July
2014
Number
of PRs
granted
during
this year
Value of PRs
expensed
& shown as
remuneration
during the
year2
$
Value
of PRs
at grant
date1
$
Maximum
value of
grant
yet to
vest
$
Number
of PRs
actually
vested
during the
year3
Value
of PRs
actually
vested
during the
year
$
Number
of PRs
lapsed
during the
year
Value
of PRs
that lapsed
at lapse
date
$
Number
of PRs at
30 June
2015
EXECUTIVES
AND EXECUTIVE
DIRECTORS
E Gaines (CEO & Executive Director)4
2011 Grant
2012 Grant
2013 Grant
2014 Grant
2015 Grant
37,500
135,002
201,499
369,162
–
–
–
–
–
–
–
–
– 1,111,111 300,000
–
(16,442)
(28,290)
(45,185)
–
–
–
–
–
–
18,945
–
–
–
–
5,210
5,103
18,555
51,976
– 135,002
– 201,499
77,577
– 369,162 142,127
– 1,111,111 427,778
–
–
–
–
–
J Macdonald (CFO)
2015 Grant
– 425,926 115,000
32,008
45,042
–
–
140,556
50,600 285,370
R Carstensen (GM Air Services)
27,250
98,103
146,423
2011 Grant
2012 Grant
2013 Grant
2015 Grant
–
–
–
– 296,296
P Egglestone (Head of Wholesale)
2011 Grant
2012 Grant
2013 Grant
2015 Grant
45,000
61,314
91,514
–
–
–
– 277,778
G Leighton (CEO New Zealand)
2011 Grant
2012 Grant
2013 Grant
2015 Grant
43,269
54,494
81,334
–
–
–
– 296,296
R Gurney5 (Former CEO & Executive Director)
–
–
–
80,000
–
(11,948)
(7,116)
22,266
–
–
–
75,000
–
–
–
80,000
–
(7,468)
(4,448)
20,876
–
(6,637)
(3,953)
22,267
–
–
4,481
31,333
–
–
2,800
29,375
–
–
2,489
31,333
13,767
–
–
–
7,578
–
–
–
7,286
–
–
–
3,786
–
–
–
2,084
–
–
–
2,004
–
–
–
13,483
98,103
96,639
97,778
37,422
61,314
60,399
91,667
35,983
54,494
53,680
97,778
–
3,708
–
35,317
34,790
49,784
35,200 198,518
–
10,291
–
22,073
21,744
31,115
33,000 186,111
–
9,895
–
19,618
19,325
27,654
35,200 198,518
Sign-on Grant5
815,217
–
–
15,625
–
815,217
224,185
–
–
–
1 Calculated in accordance with AASB 2 Share-based Payment. The assessed value at grant date of PRs granted to the individual is allocated
by tranche evenly over the period from grant date to vesting date and the amount is included in the remuneration tables above. Fair values at
grant date are calculated by taking into account the share price on grant date and the exercise price.
2 Calculated in accordance with AASB 2 Share-based Payment. Shown as a component of current year remuneration.
3 The Performance conditions of the 2011 - Tranche 3 were met with 50.5% vesting. These PRs vested on 27 August 2014. The Performance
conditions of 2012 - Tranche 3, 2013 - Tranche 2 and 2015 – Tranche 1 were not met and, following testing, these PRs lapsed.
4 Elizabeth Gaines resigned as CEO & Executive Director on 19 June 2015, resulting in a lapse of all PRs which had not previously lapsed during
the year.
5 The conditions of the sign-on grant were met and the grant vested on 27 August 2014.
33
2.5 Legacy remuneration and other items
Former CEO Rob Gurney sign-on bonus
Rob Gurney was awarded a ‘sign-on bonus’ when he was appointed Managing Director and Chief Executive Officer
effective 27 August 2012 in the form of PRs under the LTIP. The PRs awarded were subject to a time-based vesting
condition with the vesting date being the second anniversary of his commencement date with the Company, that is,
on 27 August 2014. No performance conditions applied to these PRs as they were granted as an incentive for the now
former CEO to join the Company. Mr Gurney resigned as CEO and director on 28 March 2014, though continued to be
employed by the Company due to the notice period in his contract. As a result of his continuing employment up until
28 September 2014, the sign-on bonus was satisfied by the purchase of 815,217 fully paid ordinary shares which
were awarded to Mr Gurney on 29 August 2014.
Awards made in relation to the appointment of CEO Elizabeth Gaines on 28 March 2014
Following receipt of shareholder approval at the 2014 AGM, CEO Elizabeth Gaines was awarded PRs to the value of
40% of FAR deliverable through the Helloworld Limited Long Term Incentive Plan on the following terms:
• number of PRs to be calculated as 40% of FAR divided by the HLO share price on a date determined by the Board;
• vesting in three equal, annual instalments at no cost to the CEO; and
• performance hurdle of Adjusted EPS growth of 10% per annum for each of the years ending 30 June 2015, 30 June
2016 and 30 June 2017.
Following Ms Gaines’ resignation received 19 June 2015, all remaining PRs lapsed.
GM Air Services bonus
The GM Air Services, Russell Carstensen, had a bonus related to delivery of the WoAG contract. The contract was
awarded to QBT in December 2014 and therefore Mr Carstensen was entitled to receive the $100,000 bonus in
December 2014.
helloworldlimited.com.au 2.6 Executive remuneration (statutory tables)
Short-term
benefits
Long-term
benefits
Post-employment
benefits
Share-based
payments
Termination
benefits
Short-
term
incentive
$
Salary
$
Other
$
Leave
$
Super-
annuation
$
Other
benefits
$
E Gaines (CEO & Executive Director)1,2
2015
2014
J Macdonald (CFO)3
718,144
–
646,404
400,000
2015
506,801
–
R Carstensen (GM Air Services)
2015
2014
539,182
100,000
516,740
326,600
P Egglestone (Head of Wholesale)
2015
2014
305,917
–
287,474
60,000
G Leighton (CEO New Zealand)
2015
309,904
–
2014
R Gurney (Former CEO & Executive Director)4
100,500
322,989
2015
2014
233,146
–
821,283
284,750
–
–
–
–
–
–
–
(6,806)
4,669
18,783
17,775
6,771
2,981
18,783
17,775
14,141
11,595
18,783
17,775
4,588
4,466
–
–
–
–
–
–
–
–
4,696
17,775
–
18,783
32,008
557,592
6%
LTIP
Share-
based
payments
$
(89,917)
36,768
Termination
payments
$
Percentage
performance
related5
$
Total
$
640,204
1,105,616
0%
39%
3,202
(6,116)
8,960
(3,452)
11,677
(3,268)
15,625
79,500
15%
37%
3%
15%
4%
23%
6%
30%
667,938
857,980
347,801
373,392
326,169
424,687
253,467
1,203,308
2,793,171
3,964,983
2015 TOTAL
2014 TOTAL
2,613,094
100,000
2,594,890 1,171,850
4,588
4,466
14,106
19,245
79,828
71,100
(18,445)
103,432
1 E Gaines resigned as CEO on 19 June 2015. Ms Gaines continues to be employed by the Group until December 2015 as she is serving her
contracted notice period.
2 An entity within the consolidated Group has an amount of $101,454 receivable from E Gaines in relation to a previous share option plan. This
bears interest at 5.65% being the benchmark interest rate for Fringe Benefits Tax purposes as published by the Australian Taxation Office (ATO).
The amount is only repayable on sale of certain shares associated with the plan which are currently subject to escrow and transfer restrictions.
3 J Macdonald was appointed as CFO on 18 August 2014.
4 R Gurney resigned as CEO and director of the Group on 28 March 2014. R Gurney continued to be employed by the Group until 28 September
2014 as he was serving his contracted notice period.
5 The proportion of remuneration that is performance based is calculated as the sum of the STIP cash bonus, LTIP share-based payment and
other bonus amounts included in other benefits as a proportion of total remuneration. For all executives, except for Russell Carstensen, this
percentage also represents the value of remuneration that consists of performance rights (as no STIP or other bonus amounts were paid). For
Russell Carstensen, the percentage value of remuneration that consisted of performance rights was 0.5%.
EXECUTIVES
E Gaines
CEO & Executive Director
J Macdonald
CFO
R Carstensen
GM Air Services
P Egglestone
Head of Wholesale
G Leighton
CEO New Zealand
R Gurney
Former CEO & Executive Director
% of potential
annual bonus
earned during
the year
% of potential
annual bonus
forfeited during
the year
2015
2014
2015
2015
2014
2015
2014
2015
2014
2015
2014
0%
59%
0%
18%
60%
0%
50%
0%
100%
0%
45%
100%
41%
100%
82%
40%
100%
50%
100%
0%
100%
55%
35
2.7 Executive shareholdings
EXECUTIVES
E Gaines
J Macdonald
R Carstensen
P Egglestone
G Leighton
R Gurney
TOTAL
Number of
Shares at
1 July 2014
Received
on the vesting
of PRs
Other
changes during
the year
Number of
Shares at
30 June 2015
CEO & Executive Director
CFO
GM Air Services
Head of Wholesale
CEO New Zealand
Former CEO & Executive Director
1,200,373
–
491,707
483,870
440,576
–
2,616,526
18,945
–
13,767
7,578
7,286
815,217
862,793
–
–
–
–
–
–
–
1,219,318
–
505,474
491,448
447,862
815,217
3,479,319
2.8 Executive service agreements
Remuneration and other terms of employment for KMP are formalised in continuing-term contracts of employment.
These contracts specify the components of remuneration, benefits and notice periods. All contracts may be terminated
by either party subject to notice periods and subject to termination payments or benefits as detailed in table the below:
EXECUTIVE
E Gaines
J Macdonald
R Carstensen
P Egglestone
G Leighton
Notice period
to be given
to KMP
Notice period
to be given
by Company
Termination payments or
benefits payable if termination
is by the Company
CEO & Executive Director
6 months
6 months
CFO (appointed 18 August 2014) 6 months
3 months
GM Air Services
3 months
Head of Wholesale
3 months
CEO New Zealand
6 months
3 months
3 months
3 months
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
+ 6 months
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
helloworldlimited.com.au 3 NON-EXECUTIVE DIRECTOR REMUNERATION
3.1 Non-Executive Director remuneration governance
As detailed in section 1.2, the RNC is responsible for reviewing remuneration arrangements and making
recommendations to the Board in respect of Directors. In relation to Directors’ remuneration arrangements, the Board
seeks to set aggregate remuneration at a level which provides the Group with the ability to attract and retain Directors
of the highest calibre, at a cost which is acceptable to shareholders. In accordance with best practice corporate
governance, the structure of Non-Executive Director remuneration is separate and distinct from executive remuneration
and is further detailed below.
3.2 Non-Executive Director remuneration structure
The aggregate remuneration of Non-Executive Directors is determined from time to time by a general meeting. The
latest determination was at the 2010 Annual General Meeting when shareholders approved an aggregate remuneration
of $1,500,000 per year. The amount of aggregate remuneration to be approved by shareholders, together with the fee
structure, is reviewed annually. The Board considers advice from external consultants from time-to-time as well as fees
paid to Non-Executive Directors of comparable companies when undertaking the annual review process. The Board is
not proposing any change to the aggregate level of remuneration. See break down of director fees below.
Role
Chairman
Fee
$225,000
Non–Executive Director $100,000
Committee fee
$10,000 (Chairman of Audit
Summary
The payment of the higher fee to the Chairman recognises the additional time
commitment required by him, and also covers all Board Committee fees.
Fee paid in recognition of time commitment and service to the Group’s Board.
Additional fees for serving on or chairing a committee recognises the additional
Committee receives $25,000)
time commitment required by Directors who serve on one or more Committees.
Fees paid in respect of Directors appointed by major shareholders are generally paid to those major shareholders rather
than to the individual Director unless specified otherwise. The Directors’ fees have not increased since 1 July 2011 and
there is no intention to increase the individual Director fees for the year ended 30 June 2016. Non-Executive Directors
do not receive any performance related remuneration or retirement allowances. The remuneration of Non-Executive
Directors for the year ended 30 June 2015 and 30 June 2014 is detailed in the following statutory tables. The process
for review of Non-Executive Directors’ performance is explained in the Corporate Governance Statement.
37
3.3 Non-Executive Director remuneration (statutory tables)
Short-term
benefits
Post-employment
benefits
NON-EXECUTIVES DIRECTORS
B Johnson (Chairman)
2015
2014
A Cummins
2015
2014
P Spathis
2015
2014
A John1
2015
2014
J M Millar
2015
2014
J McKellar
2015
2014
T Dery (Former Chairman)
2015
2014
S Bennett (Former Director)
2015
2014
2015 TOTAL
2014 TOTAL
Cash
salary
$
182,060
109,840
100,457
100,686
11,234
–
110,000
110,000
114,155
114,417
49,964
–
51,554
207,225
88,498
100,686
707,922
742,854
Super-
annuation
$
16,690
10,160
9,543
9,314
1,067
–
–
–
10,845
10,583
4,747
–
4,696
17,775
8,407
9,314
55,995
57,146
Total
$
198,750
120,000
110,000
110,000
12,301
–
110,000
110,000
125,000
125,000
54,711
–
56,250
225,000
96,905
110,000
763,917
800,000
1 Amounts disclosed in the table as salary and fees in relation to A John were paid to Qantas Airways Limited rather than A John and therefore
did not attract a superannuation contribution.
helloworldlimited.com.au 3.4 Non-Executive Director shareholdings
EXECUTIVES
B Johnson
A Cummins1
P Spathis2,3
A John
J M Millar
J McKellar4
T Dery
S Bennett 5
TOTAL
Chairman
Former Chairman
Former Director
Number of
Shares at
1 July 2014
Other
changes during
the year
Number of
Shares at
30 June 2015
–
952,998
–
–
40,000
–
–
50,000
1,042,998
200,000
–
500,000
–
–
–
–
–
700,000
200,000
952,998
500,000
–
40,000
–
–
50,000
1,742,998
1 These shares are held legally and beneficially in the name of Gladstone Investments Limited.
2 Mr Spathis was appointed as a director on 18 May 2015.
3 Mr Spathis has a beneficial interest in 500,000 fully paid ordinary shares held legally in the name of Vortex TV Pty Ltd as trustee for the
Consolidated Travel (NSW) Superannuation Fund.
4 Ms McKellar was appointed a director on 17 December 2014.
5 Held legally and non-beneficially in the name Invia Custodian P/L – Stephen John Bennett A/c.
39
AUDITOR
INDEPENDENCE
AND NON-AUDIT
SERVICES
The Directors received the declaration of independence
on page 41 from PricewaterhouseCoopers, the
auditor of HLO. This declaration confirms the auditor’s
independence and forms part of the Directors’ Report.
Non-Audit Services
During the year PricewaterhouseCoopers, has performed
certain other services in addition to its statutory
duties. Consistent with written advice provided by the
Audit Committee, the Directors have resolved and are
satisfied that the provision of these non-audit services
is compatible with, and did not compromise, the general
standard of independence of auditors imposed by the
auditor independence requirements of the Corporations
Act 2001. The reasons for this are that all non-audit
services were subject to the corporate governance
procedures adopted by the Company and have been
reviewed by the Audit Committee to ensure they do not
impact the integrity and objectivity of the auditor. The
non-audit services provided do not undermine the general
principles relating to auditor independence, as set out in
APES 110 Codes of Ethics for Professional Accountants,
as they did not involve reviewing or auditing the auditor’s
own work, acting in a management or decision-making
capacity for the Company, acting as an advocate for the
Company or jointly sharing risks and rewards.
The lead auditor’s independence declaration, as required
under section 307C of the Corporations Act 2001, is set
out on page 41 and forms part of the Directors’ Report
for the financial year ended 30 June 2015. Details of the
amounts paid to PricewaterhouseCoopers, for audit and
non-audit services are set out in note 22 of the Financial
Statements on page 95 of the Financial Report.
Rounding
The amounts contained in this Directors’ Report and in
the Financial Report have been rounded to the nearest
$1,000 (where rounding is applicable) under the option
available to the Company under Australian Securities and
Investments Commission (ASIC) Class Order 98/100. The
Company is an entity to which the Class Order applies.
Made in accordance with a resolution of the Directors.
Brett Johnson
Chairman, Helloworld Limited
Sydney, 28 August, 2015
helloworldlimited.com.au
AUDITOR’S
INDEPENDENCE
DECLARATION
As lead auditor for the audit of Helloworld Limited for the year ended 30 June 2015, I declare that
to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001
in relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Helloworld Limited and the entities it controlled during the period.
Kristin Stubbins
Partner
PricewaterhouseCoopers
Sydney
28 August 2015
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 2000
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
41
CORPORATE
GOVERNANCE
STATEMENT
Overview
The Board of Helloworld Limited (HLO or Company)
governs the business on behalf of shareholders as a whole
with the prime objective of protecting and enhancing
shareholder value. The Board is committed to the highest
standards of ethics and integrity and ensures that senior
management run the Group in accordance with these
standards. The Board monitors the Company’s governance
framework and practices to ensure it fulfils its corporate
governance obligations.
This statement has been approved by the Board and
outlines the main corporate governance practices
employed by the Board of HLO. HLO endorses the ASX
Corporate Governance Principles and Recommendations
(3rd Edition) released in March 2014 by the ASX
Corporate Governance Council (ASX CGP) and where it
has not adopted a particular recommendation, a detailed
explanation is provided.
The Board’s key responsibilities and those matters
expressly reserved to the Board are set out in the Board
Charter and include:
• Setting and monitoring the strategic direction of the
Company and monitoring the implementation of that
strategy by management;
• Oversight of the Company, including its control and
accountability systems;
• Appointing and removing the CEO, CFO and Company
Secretary;
• Board and Executive Management development and
succession planning;
• Approving the annual operating budget;
• Approving and monitoring the progress of major capital
expenditure, capital management and acquisitions/
divestitures;
• Monitoring compliance with legal, tax and regulatory
obligations;
• Reviewing and ratifying systems of risk management,
governance internal compliance and controls, codes of
conduct, continuous disclosure, legal compliance and
other significant corporate policies;
• Reviewing the effectiveness of the Company’s risk
management systems;
• Approving and monitoring financial and other reporting
to the market; and
This statement is current at 28 August 2015.
• Appointment, reappointment or replacement of the
1
Laying solid foundations for
management and oversight
The relationship between the Board and senior
management is critical to the Company’s long term
success. The Board is responsible for the performance
of the Company in both the short and longer term and
seeks to balance sometimes competing objectives in the
best interests of the Group as a whole. The key aims of
the Board are to ensure that the Company is properly
managed and has an appropriate corporate governance
structure to ensure the creation and protection of
shareholder value.
The role and responsibilities of the Board, the Chairman
and individual Directors are set out in the Company’s
Board Charter. A copy of the Board Charter is available
from the Corporate Governance section of the Company’s
website at www.helloworldlimited.com.au.
external auditor.
Day-to-day management of the Company’s affairs
and the implementation of the corporate strategy and
policy initiatives are formally delegated by the Board to
the Chief Executive Officer (CEO), the Chief Financial
Officer (CFO) and other senior executives. Authority for
these matters is delegated to the CEO, CFO and senior
management under the Delegations of Authority Policy
and the delegations are subject to certain specified value
thresholds. These matters include:
• Incurring budgeted and unbudgeted operating
expenditure;
• Incurring budgeted and unbudgeted capital
expenditure;
• Write-downs, bad debts, asset or equity disposals
and acquisitions; and
• Approval of entry into contracts.
helloworldlimited.com.au To ensure that Non-Executive Directors clearly
understand the requirements of their role, formal letters
of appointment are provided to them which they are
required to countersign to acknowledge and agree their
responsibilities and the terms of their appointment. The
majority of the Non-Executive Directors have extensive
knowledge of the whole or part of the Company’s
operations. New Non-Executive Directors are provided
with all material, relevant information and documents
relating to the Company including the Constitution,
group structure, financial statements and the various
Board policies and charters and undertake an induction
program under which they meet with each member of
the Executive Committee (Exco) to further develop their
understanding of the business. The Directors are provided
with appropriate professional development opportunities
to develop and maintain the skills and knowledge needed
to perform their roles as directors of the Company
effectively, including receiving presentations from
external experts in relation economic, regulatory and
technology related matters.
Prior to their appointment, the Board ensures that
appropriate checks including background and reference
checks are conducted on candidates for the role of
director (these may be conducted by external consultants
and by other Directors). Candidates also meet with
each existing director prior to the Board’s decision to
appoint them.
To ensure that Executive Directors clearly understand
the requirements of the role, service contracts and
formal job descriptions are provided to them.
Senior Executive Performance
The CEO undertakes an annual review of the performance
of her direct reports against key performance indicators
and provides a report to the Remuneration and
Nominations Committee for further consideration. The
Senior Executive review for the year ended 30 June 2015
was undertaken througout the year in accordance with
this process.
The Chairman undertakes an annual review of the
performance of the CEO against key performance
indicators and provides a report to the Remuneration
and Nominations Committee for further consideration.
The CEO resigned on 19 June 2015 and for this reason
the CEO review for the year ended 30 June 2015 was
not concluded.
2 Structure of the Board
Board composition
The Directors determine the composition and size of the
Board in accordance with the Company’s Constitution.
The Constitution empowers the Board to set upper and
lower limits with the number of Directors not permitted
to be less than three. There are currently seven Directors
appointed to the Board. The skills, experience and
expertise of each Director and their period of office at
the date of the 2015 Annual Report are set out in the
Directors’ Report on pages 10 to 14.
Under the Board Charter, the appointment and removal
of the Company Secretary is the responsibility of the
Board. The Company Secretary reports directly to the
Chairman in relation to all matters relating to the proper
functioning of the Board.
The Company uses a Board Skills Matrix to ensure that
its membership includes an appropriate mix of skills,
experience and expertise and to assist in identifying
the skills most desired in potential candidates for
appointment to the Board.
A summary of the skills and experience of the Directors
is included below:
Board Skills Matrix
Travel Related Industries
Franchise Operations
Digital, IT
Brand Development, Marketing
Governance & Compliance
Professional Services
Equity, Capital Markets, Mergers & Acquisitions
Remuneration, Human Resources
Executive Leadership
Global Experience
(Number out
of 7 directors)
5
4
4
3
5
7
6
7
7
6
More details regarding the Directors’ qualifications,
special responsibilities, skills and expertise (including the
period of office held by each Director) is set out in the
Directors’ Report on pages 10 to 14.
43
QH Tours Ltd, Europe Voyager NV and Sintack have
each nominated members to the current Board. Those
nominees bring to the Board the requisite skills which
are complementary to those of the other Directors
and enable them to adequately discharge their
responsibilities as Non-Executive Directors. All Directors
bring independent judgement to bear on their decisions.
The materiality thresholds used to assess director
independence are set out in the Board Charter. The Board
believes that the interests of the shareholders are best
served by:
• the current Chairmanship and composition of the Board
which is regarded as balanced with a complementary
range of skills, diversity and experience as detailed in
the Directors’ Report; and
• the Independent Directors providing an element of
balance as well as making a considerable contribution in
their respective fields of expertise.
The following measures are in place to ensure the
decision making process of the Board is subject to
independent judgement:
• a standard item on each Board Meeting agenda
requires Directors to focus on and declare any conflicts
of interest in addition to those already declared;
• Directors are permitted to seek the advice of
independent experts at the Company’s expense, subject
to the approval of the Chairman;
• all Directors must act at all times in the interests of the
Company; and
• Directors meet independently of executive
management on a regular basis.
Adoption of these measures ensures that the interests of
shareholders, as a whole, are pursued and not jeopardised
by a lack of independence.
Director Independence
As at 30 June 2015, based on the factors relevant to
assessing the independence of directors included in
the ASX CGP, only two Directors, James M Millar and
Jane McKellar, are deemed Independent Directors. The
remainder of the Board is not technically independent
for the following reasons:
• Adrian John is an executive of Qantas, the ultimate
holding company of QH Tours Ltd, a substantial
shareholder of HLO and has a material business
relationship with HLO as a supplier of product and a
customer for distribution services;
• Brett Johnson was until 31 December 2012 an
executive of Qantas and, from 1 January 2013 has been
paid a retainer by Qantas to be available to undertake
certain work unrelated to HLO. Mr Johnson did not
perform any work for Qantas during FY15 and the
retainer terminates on 31 December 2015. Qantas
is the ultimate holding company of QH Tours Ltd, a
substantial shareholder of HLO and has a material
business relationship with HLO as a supplier of product
and a customer for distribution services;
• Andrew Cummins was until February 2015 Chairman
of CVC Capital Partners Pan Asian Team. CVC has
an indirect majority interest in Europe Voyager NV,
a substantial shareholder of HLO;
• Peter Spathis is employed as Chief Financial Officer
of Consolidated Travel Pty Ltd, which operates in
the travel industry, and the Alysandratos Group of
Companies, which includes Sintack Pty Ltd (‘Sintack’),
a substantial shareholder of HLO; and
• Elizabeth Gaines is CEO of the Company.
The length of each Directors’ tenure as a director is set
out in the Directors’ Report on pages 10 to 14.
Independent Decision Making
The Chairman and a majority of the Board are not
independent and the Company recognises that these are
departures from Recommendations 2.4 and 2.5 of the
ASX CGP.
The Board consider that Brett Johnson is the
Director best qualified to fulfil the role of Chairman
notwithstanding the fact that he is not technically
independent. Mr Johnson exercises sound and
independent judgement on all matters that come before
the Board and acts at all times in the best interests of the
Company. Mr Johnson is a shareholder of the Company
and in this manner his interests are aligned with the
interests of other shareholders.
helloworldlimited.com.au Remuneration and Nominations Committee
Board performance
The Remuneration and Nominations Committee’s
specific responsibilities in relation to the nomination,
appointment and re-election of directors are set out
in the Committee’s charter, which is available in the
Corporate Governance section of the Company’s website.
During the reporting period, the following Non-Executive
Directors were members of the Remuneration and
Nominations Committee:
The Board undertakes an annual self-assessment of
its collective performance and the performance of
its committees, by way of a series of questionnaires
and interviews between the Chairman and individual
directors. The results are collated and discussed at a
Board meeting and any action plans are documented
together with specific performance goals which are
agreed for the coming year.
• A Cummins (Chairman)
• B Johnson
• S Bennett (until 24 February 2015)
• J McKellar (from 24 February 2015)
• T Dery (until 30 September 2014)
The terms of reference, role and responsibility of
the Remuneration and Nominations Committee are
consistent with ASX CGP 2.1 except that, due to the
small number of Independent Directors, the Committee
does not have a majority of Independent Directors
and the Chairman is not an independent director. The
Chairman and members are, however, considered to be
the best qualified to serve their respective roles on the
Committee given their background and experience.
More information regarding the Committee is set out on
page 49 in this Corporate Governance Statement under
the heading ‘Remunerating fairly and responsibly.’
Details of these Directors’ qualifications, their
attendance at Remuneration and Nominations Committee
meetings and the number of meetings held during FY15
are set out in the Directors’ Report on pages 10 to 15.
The Board seeks to ensure that collectively its
membership represents an appropriate balance between
Directors with experience and knowledge of the Company
and Directors with an external or fresh perspective.
It reviews the range of expertise of its members on a
regular basis and seeks to ensure that it has operational
and technical expertise relevant to the operations of
the Company.
Directors are nominated, appointed and re-elected
to the Board in accordance with the Board’s policy on
these matters set out in the Charter, the Company’s
Constitution and the ASX Listing Rules. In considering
appointments to the Board, the extent to which the skills
and experience of potential candidates complement
those of the Directors in office is considered along with
an assessment of the nature of the skills experience,
expertise, diversity and other attributes which would
benefit the Board.
The Chairman undertakes an annual assessment of the
performance of individual directors and meets privately
with each director to discuss this assessment. A director
is nominated to review the individual performance of
the Chairman and meets privately with him to discuss
this assessment.
The 2014 Board, Committee and Director performance
reviews were undertaken in December 2014, in
accordance with the process set out above, and a review
for 2015 will be undertaken in December 2015.
Access to information
Directors may access all relevant information required to
discharge their duties in addition to information provided
in Board papers and regular presentations delivered by
executive management on business performance and
issues. With the approval of the Chairman, Directors may
seek independent professional advice, as required, at the
Company’s expense.
3
Ethical and responsible decision
making
A Standards of Conduct Policy is in place to promote
ethical and responsible practices and standards for
Directors, employees and consultants of the Company in
the discharge of their responsibilities. This Policy reflects
the directors’ and senior executive’s intention to ensure
that their duties and responsibilities to the Company
are performed with the utmost integrity. A copy of the
Standards of Conduct Policy is available to all employees
and is also available in the Corporate Governance section
of the Company’s website.
Diversity
The Board has established a Diversity Policy which
supports the commitment of the Company to an inclusive
workplace that embraces and promotes diversity and
provides a framework for new and existing diversity-
related initiatives, strategies and programs within the
business. A copy of the policy is available in the Corporate
Governance section of the Company’s website.
45
In accordance with the Diversity Policy and ASX CGP,
the Board has established the following measurable
objectives in relation to gender diversity:
• The Board will actively seek suitable women applicants
for Board vacancies;
• The proportion of women on the Board should not fall
below current levels unless a transparent process fails
to succeed in attracting a suitable woman candidate;
• The proportion of women reporting to the CEO should
not fall below the current levels unless a transparent
process fails to succeed in attracting suitable women
candidates; and
• HLO has developed and implemented a ‘keep in touch’
program for employees on maternity leave including a
support program for transition back into the workplace.
This entails a formal program of the relevant staff
members meeting with their supervisor every 3 months,
invitations to staff functions, morning teas to keep in
touch and refresher courses offered where required.
For FY15, the Company discloses the following progress
against these objectives:
Share trading
A Share Trading Policy is in place for directors, senior
executives and employees. The objective of the policy is
to minimise the risk of directors and employees who may
hold material non-public information contravening the
laws against insider trading, ensure the Company is able
to meet its reporting obligations under the ASX Listing
Rules and increase transparency with respect to trading
in securities of the Company. A copy of the policy is
available in the Corporate Governance section of the
Company’s website.
Protected disclosures
The Group’s Whistleblower Policy encourages employees
to report concerns in relation to illegal, unethical or
improper conduct in circumstances where they may be
apprehensive about raising their concern because of fear
of possible adverse repercussions. The Whistleblower
Policy is available to all HLO employees and is also
available in the Corporate Governance section of the
Company’s website.
• Jane McKellar was appointed to the Board in December
2014 and the proportion of women directors on the
Board has increased from the level reported for FY14;
• At 30 June 2015 the following was recorded:
4
Integrity of financial reporting
The Board has an Audit Committee to assist the Board
in the discharge of its responsibilities.
Number of women on the Board
Proportion of women reporting to the CEO
Number
2
5
%
28.6
41.7
• The number of women reporting to the CEO has
reduced by two due to the exit of two women
executives. These roles have not been replaced and
no additional executives have been appointed.
Proportion of women in the organisation
There are 1,102 women employees (representing 71.8%)
in the Group and 34 women employees (representing
47.2%) who report to the CEO’s direct reports.
Gender Pay Equality
In April 2015, the Company conducted an in-depth review
of gender pay equality across all roles within the Group
and the Board has endorsed a number of proposals to
ensure that gender pay equality is enhanced, this includes
ongoing analysis and reporting and improvements to
Company policies and procedures.
During the reporting period, the following Non-Executive
Directors were members of the Audit Committee
• J M Millar (Chairman) (Independent)
• A John
• B Johnson
• P Spathis (appointed in June 2015)
• T Dery (until 30 September 2014)
• S Bennett (from 24 February 2015 until 18 May 2015)
The Audit Committee charter is available in the Corporate
Governance section of the Company’s website and the
composition, operations and responsibilities of the
Committee are consistent with ASX CGP 4.1, except that,
due to the small number of Independent Directors, the
Audit Committee does not have a majority of Independent
Directors. The members of the Audit Committee are
however considered to be the best qualified to serve on
the Committee given their background and experience.
The Committee is chaired by an Independent Director who
is not the Chairman of HLO, James M Millar.
Details of these Directors’ qualifications and attendance
at Audit Committee meetings are set out in the Directors’
Report on pages 10 to 15.
helloworldlimited.com.au
The Board and Audit Committee closely monitor the
independence of the external and internal auditors.
Regular reviews of the independence safeguards put in
place by the internal and external auditors are undertaken
including the rotation of the external audit engagement
partner every five years.
The lead audit partner responsible for the Group’s
external audit is required to attend each Annual General
Meeting and to be available to answer shareholder
questions about the conduct of the audit and the
preparation and content of the auditor’s report.
5 Timely and balanced disclosure
The Company has a written Continuous Disclosure Policy
in relation to the market disclosure of any information
concerning the Group that a reasonable person would
expect to have a material effect on the price of the
Company’s securities in order to ensure compliance with
its obligations under the ASX Listing Rules.
A copy of the Continuous Disclosure Policy is located
in the Corporate Governance section of the Company’s
website.
6 Rights of shareholders
The HLO Shareholder Communications Policy
promotes effective communication with the Company’s
shareholders and encourages shareholder participation
at Annual General Meetings. A copy of this Policy, which
deals with communication through the ASX, the Share
Registry, shareholder meetings and the Annual Report,
may be found in the Corporate Governance section of the
Company’s website. All of the Company’s announcements
to the market may also be accessed through the
Company’s website and the HLO Annual Reports since
2007 are posted here.
Copies of each of the charters and policies relevant to
the governance of the Company can also be found on the
Company’s website.
The Company ensures that the explanatory notes
accompanying its Notices of Annual General Meeting
provide shareholders with all material information in the
Company’s possession relevant to a decision on whether
or not to elect or re-elect a director at an Annual General
Meeting, including a recommendation from the Board.
These notices are available under Investor Centre and
ASX Releases on the Company’s website.
The Chairman ensures that shareholders are provided
with the opportunity to question the Board concerning
the operations of the Company at the Annual General
Meeting and other shareholder meetings. They are also
afforded the opportunity to question the Company’s
auditors at that meeting concerning matters related
to the audit of the Company’s financial statements.
Shareholders who are unable to attend the meeting are
provided with the opportunity to submit questions and
comments before the meeting to the Company or to
the auditor.
The CEO and CFO endeavor to respond to queries from
shareholders and analysts for information in relation
to the Company, provided the information requested is
not price sensitive.
Shareholders have the option to receive communications
from and send communications to the Company and its
share registrar electronically if they wish to do so. They
also have the option of voting online on resolutions to be
put at the Company’s Annual General Meetings.
7 Recognising and managing risk
The Company has a written policy in place for the
oversight and management of its material business
risks. The Group takes a proactive approach to risk
management. The Board and Audit Committee are
primarily responsible for ensuring that risks are
identified on a timely basis and receive an appropriate
and measured response. A copy of the Risk Management
Policy is located in the Corporate Governance section
of the Company’s website.
Under the Risk Management Policy, the Board is
responsible for
• Overseeing and approving the establishment and
implementation of the Company’s risk management,
internal controls and compliance systems; and
• Reviewing the effectiveness of the Company’s risk
management, internal control and compliance systems
at least annually, and satisfying itself that management
has developed and implemented a sound system of risk
management and internal control; and
• Approving the delegations of authority for day-to-day
management of the Company’s operations.
47
Under the Risk Management Policy, the Audit Committee
is responsible for assisting the Board in fulfilling its
corporate governance responsibilities with regard to:
The risk management performance of the Executive
Risk Governance Committee and Exco are monitored by
the Audit Committee.
• The reliability and integrity of information for inclusion
in the Company’s financial statements;
• Enterprise-wide risk management;
• Compliance with legal and regulatory obligations,
including audit, accounting, tax, and financial reporting
obligations;
• The integrity of the Company’s internal control
framework; and
• Safeguarding the independence of the external and
internal auditors.
The members of the Audit Committee are set out above
in section 4 of this Corporate Governance Statement.
The composition, operations and responsibilities
of the Committee are consistent with ASX CGP 4.1,
except that, due to the small number of Independent
Directors, the Audit Committee does not have a
majority of Independent Directors. The members of
the Audit Committee are however considered to be the
best qualified to serve on the Committee given their
background and experience. The Committee is chaired
by an independent director who is not the Chairman of
HLO, James M Millar.
During the reporting period, the Company undertook
a review of the strategic, operational, financial and
compliance related risks facing each Business Unit,
which included risk workshops with key executives. On
the basis of the review, the Company has prepared an
updated risk matrix which details the business’s key
risks, a residual risk rating for each risk and the means
by which the risks are managed by the Company. The risk
matrix has been reviewed by the Audit Committee and
will be reviewed on an annual basis.
The Company has also established an Executive Risk
Governance Committee comprised of members of the
Executive Committee and other senior managers with
responsibility for assisting the Board to ensure that
robust risk management exists across the organisation.
The Committee ensures that a sufficient level of risk
analysis is applied to critical decisions and provides
assurance to the Board that risk processes at all levels
are effective and compliant with the Company’s Risk
Management Policy.
The Company’s Executive Committee (Exco) also
plays a role in identifying, assessing, monitoring and
managing risks.
The Board has received a report from Management as to
the effectiveness of the Company’s management of its
material business risks.
The Board has also received from the CEO and CFO a
declaration that, in their opinion, the financial records
of the entity have been properly maintained and that
the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound
system of risk management and internal control which
is operating effectively.
Information in relation to the economic, environmental
and social sustainability risks facing the Company and
the manner in which these are managed are included in
the Operating and Financial Review on pages 16 to 24
of the Annual Report.
Internal Audit
The internal audit program is an important element
of the Company’s risk management processes. While
the Company does not have an in-house internal audit
function, it engages independent, expert consultants
to conduct internal audit work on its behalf on a case
by case basis. The consultants engaged are those
considered on the basis of their skill set to best able
to undertake a particular audit. Areas of focus for
internal audits are identified by reference to the
Company’s risk matrix.
The findings and recommendations generated by the
internal audits are evaluated and reviewed by the
Executive Risk Governance Committee and Audit
Committee.
During the reporting period, internal audits of the
following business functions in Australia and New
Zealand were conducted by external consultants who
reported to the Audit Committee:
• Payroll; and
• Treasury and foreign exchange accounting.
The objective of the internal audits in both cases was
the evaluation of the design and operating effectiveness
of the internal controls in place to ensure that the
functions are managed effectively and efficiently and in
accordance with contractual terms, legal and regulatory
requirements.
helloworldlimited.com.au Executive management
Remuneration packages for executive management
are generally set to be competitive so as to both retain
executives and attract experienced executives to the
Company. Packages comprise a fixed (cash) element and
variable incentive components. Payment of the variable
components will depend on the Company’s financial
performance and the executive’s personal performance.
An equity based remuneration scheme was approved
by shareholders at the 2011 AGM and implemented for
executive management during the year ended 30 June
2011. Executive Directors participate in this scheme
subject to shareholder approval.
The Company’s Share Trading Policy prohibits executives
participating in the equity based remuneration scheme
from entering into any arrangement that operates, or
is intended to operate, to limit their exposure to risk in
relation to the Company’s shares.
A copy of the Share Trading Policy is available from the
Corporate Governance section of the Company’s website.
The outcomes of the internal audits conducted
during the reporting period, have been used to
drive improvements in the risk management and
internal control processes applying to the business
functions audited.
8 Remunerating fairly and responsibly
The HLO remuneration philosophy, objectives and
arrangements are detailed in the Remuneration Report
which forms part of the Directors’ Report.
Directors
The annual total of fees paid to Non-Executive Directors
is set by the Company’s shareholders and allocated as
Directors’ Fees and Committee Fees by the Board on the
basis of the roles undertaken by the Directors. Full details
of Directors’ remuneration appear in the Remuneration
Report. These fees are inclusive of statutory
superannuation contributions. No retirement benefits
are paid to Non-Executive Directors and no equity-based
remuneration scheme exists for them.
Remuneration
The Board has established a Remuneration and
Nominations Committee to assist the Board in the
discharge of its duties in relation to remuneration.
The Non-Executive Directors who were members of
the Remuneration and Nominations Committee during
the reporting period are set above in section 2 of this
Corporate Governance Statement.
The Remuneration and Nominations Committee charter
is available in the Corporate Governance section of the
Company’s website. The composition of the Committee
is a departure from ASX CGP 8.1 on the basis that the
Remuneration and Nominations Committee does not have
a majority of independent directors and the Chairman is
not an independent director. The Chairman and members
of the Committee are however, considered to be the
best qualified to serve their respective roles on the
Committee given their background and experience.
Details of the Directors’ qualifications and attendance at
the Remuneration and Nominations Committee meetings
are set out in the Directors’ Report on pages 10 to 15.
49
CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2015
REVENUE
EXPENSES
Employee benefits expenses
Advertising, selling, and marketing expenses
Communication and technology expenses
Occupancy and rental expenses
Operating expenses
Depreciation and amortisation expense
Impairment of goodwill
Gain/(loss) on disposal of investments
Share of profits of associates accounted for using the equity method
OPERATING LOSS
Finance expense
LOSS BEFORE INCOME TAX EXPENSE
Income tax expense
LOSS AFTER INCOME TAX EXPENSE
LESS PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
LOSS ATTRIBUTABLE TO OWNERS OF HELLOWORLD LIMITED
LOSS PER SHARE ATTRIBUTABLE TO OWNERS OF HELLOWORLD LIMITED
Basic loss per share (cents)
Diluted loss per share (cents)
CONSOLIDATED
2015
$’000
2014
$’000
279,223
291,671
(122,191)
(132,527)
(75,551)
(19,139)
(12,788)
(26,005)
(13,921)
(205,300)
340
162
(195,170)
(3,227)
(198,397)
(2,714)
(201,111)
(10)
(66,578)
(18,160)
(13,908)
(39,470)
(14,032)
(59,500)
(5,473)
165
(57,812)
(3,354)
(61,166)
(2,077)
(63,243)
(104)
(201,121)
(63,347)
Cents
(45.66)
(45.66)
Cents
(14.38)
(14.38)
Note
4
4
4
4
31
12
5
7
9
9
The above consolidated income statement should be read in conjunction with the accompanying notes.
helloworldlimited.com.au CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
LOSS AFTER INCOME TAX EXPENSE
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss
Change in fair value of cash flow hedges
Income tax on cash flow hedges
Exchange differences on translation of foreign operations
Exchange differences on entities disposed of taken to profit
Items that will not be reclassified to profit or loss
Defined benefit plan actuarial gain
Deferred tax expense on defined benefit plan
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
TOTAL COMPREHENSIVE LOSS FOR THE YEAR IS ATTRIBUTABLE TO:
Owners of Helloworld Limited
Non-controlling interests
Note
21(d)
7(c)
21(d)
21(d)
16
7(c)
CONSOLIDATED
2015
$’000
2014
$’000
(201,111)
(63,243)
1,639
(492)
280
–
521
(344)
1,604
(2,457)
873
1,283
725
2,080
(494)
2,010
(199,507)
(61,233)
(199,517)
(61,337)
10
104
(199,507)
(61,233)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
51
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2015
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Income tax receivable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investments accounted for using the equity method
Investment properties
Property, plant and equipment
Intangible assets
Deferred tax asset
Defined benefit plan
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
Deferred revenue
Derivative financial instruments
Income tax payable
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liability
Provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to the owners of Helloworld Limited
Non-controlling interest
TOTAL EQUITY
Note
CONSOLIDATED
2015
$’000
2014
$’000
10
11
24
12
13
14
15
16
17
18
19
20
24
18
15
19
21
21
21
176,141
104,869
93
1,627
305
184,320
105,470
109
–
–
283,035
289,899
460
175
16,916
161,404
5,242
3,062
802
188,061
471,096
942
175
20,506
360,481
7,205
2,910
1,121
393,340
683,239
183,609
197,382
–
13,051
69,294
37
–
892
12,752
66,019
2,710
19
265,991
279,774
23,245
23,345
295
1,430
2,659
27,629
293,620
177,476
278,755
161,636
(263,014)
177,377
99
–
1,370
1,762
26,477
306,251
376,988
278,822
160,164
(62,070)
376,916
72
177,476
376,988
The above statement of financial position should be read in conjunction with the accompanying notes.
helloworldlimited.com.au CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Balance at 30 June 2014
278,822
160,164
(62,070)
376,916
72
376,988
Issued
capital
$’000
Reserves
$’000
Retained
Profits/
(Accumulated
Losses)
$’000
278,822
159,899
1,894
–
(63,347)
424
1,586
Non-
controlling
Interests
$’000
Total
Equity
$’000
1,268
441,883
104
(63,243)
–
2,010
Total
$’000
440,615
(63,347)
2,010
424
(61,761)
(61,337)
104
(61,233)
–
(2,203)
(2,203)
(246)
87
–
–
–
–
–
–
–
–
(246)
87
–
–
–
–
–
–
8
(324)
(984)
(2,203)
(246)
87
8
(324)
(984)
278,822
160,164
(62,070)
376,916
–
(201,121)
(201,121)
1,427
177
1,604
72
10
–
376,988
(201,111)
1,604
1,427
(200,944)
(199,517)
10
(199,507)
CONSOLIDATED
$’000
Balance at 1 July 2013
(Loss)/profit after income tax
Other comprehensive income
TOTAL COMPREHENSIVE INCOME/
(LOSS) FOR THE YEAR
Transactions with owners in their capacity
as owners net of tax:
Dividends paid1
Long term incentive plan
Shares purchased on the market
Expensed during the year
Transactions with non-controlling interests:
Acquisitions
Dividends paid
Disposals
Balance at 1 July 2014
(Loss)/profit after income tax
Other comprehensive income
TOTAL COMPREHENSIVE INCOME/
(LOSS) FOR THE YEAR
Transactions with owners in their capacity
as owners net of tax:
Long term incentive plan
Shares purchased on market
Expensed during the year
Share buy-back program
Transactions with non-controlling interests:
Acquisitions
Return of capital
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(67)
–
–
(45)
90
–
–
–
–
–
–
–
–
(45)
90
(67)
–
–
BALANCE AT 30 JUNE 2015
278,755
161,636
(263,014)
177,377
1 Dividends were paid from the retained earnings of the parent company, Helloworld Limited.
The above statement of changes in equity should be read in conjunction with the accompanying notes
–
–
–
37
(20)
99
(45)
90
(67)
37
(20)
177,476
53
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Interest paid
Income taxes paid
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
23
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for intangibles
Payments for investments in controlled entities
Proceeds from disposals of investments, net of client cash disposed
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangibles
Dividends paid to minority shareholder
Contributions from minority shareholder
Dividends received from associates
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Purchase of shares on market
Dividends paid
Borrowing costs paid and capitalised
NET CASH USED IN FINANCING ACTIVITIES
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
CONSOLIDATED
2015
$’000
2014
$’000
Note
2,511,880
2,731,200
(2,507,646)
(2,757,048)
4,362
(2,533)
(1,350)
4,713
(2,853)
(11,797)
–
2,105
60
–
–
17
574
5,073
(2,350)
(7,720)
(30,845)
(3,696)
(9,331)
(1,786)
(3,016)
200
84
(324)
8
48
8
(11,894)
(17,813)
1,008
(1,900)
(105)
–
(68)
(1,065)
(8,246)
184,320
67
3,675
(4,963)
(246)
(2,203)
(1,143)
(4,880)
(53,538)
234,934
2,924
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
10
176,141
184,320
For information on the Group’s non-cash financing and investing activities refer to note 23 in the financial statements.
The above statement of cash flows should be read in conjunction with the accompanying notes.
helloworldlimited.com.au NOTES TO THE
FINANCIAL STATEMENTS
1. Reporting entity
Helloworld Limited (“HLO” or the Company) is a
company limited by shares incorporated and domiciled
in Australia whose shares are publicly traded on
the ASX. The consolidated financial statements
for the year ended 30 June 2015 comprises Stella
Travel Services Holdings Pty Limited (STSH),
as the accounting parent, and its subsidiaries
(together referred to as “HLO”, the “Group” or the
“Consolidated Entity”).
The financial statements of the Group for the year
ended 30 June 2015 were authorised for issue in
accordance with a resolution of the directors on
28 August 2015. The directors have the power to
amend and reissue the financial statements.
The nature of the operations and principal activities
of the Group are described in the Directors’ Report.
HLO is a for-profit entity.
2. Basis of preparation
(a) Statement of compliance
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards (AASBs) (including Australian Accounting
Interpretations) adopted by the Australian Accounting
Standards Board (AASB) and the Corporations Act 2001.
The consolidated financial statements of the Group
comply with International Financial Reporting Standards
(IFRS) and interpretations adopted by the International
Accounting Standards Board (IASB).
(b) Historical cost convention
These financial statements have been prepared on a
historical cost basis, except for:
• available for sale financial assets, financial assets
and liabilities (including derivative instruments),
certain classes of property, plant and equipment and
investment property measured at fair value;
• assets held for sale – measured at fair value less cost
of disposal; and
• retirement benefit obligations – plan assets measured
at fair value.
(c) Functional and presentation
currency
The consolidated financial statements are presented in
Australian dollars, which is the Group’s functional and
presentation currency. Items included in the financial
statements of each of the Group’s entities are measured
using the currency of the primary economic environment
in which the entity operates (“the functional currency”).
(d) Rounding of amounts
The Company is of a kind referred to in Australian
Securities & Investments Commission Class Order (CO)
98/100 and in accordance with the CO, amounts in the
financial statements and Directors’ Report have been
rounded to the nearest thousand dollars, or in certain
cases the nearest dollar.
(e) Comparative periods
Where necessary, comparative figures have been
adjusted to conform with changes in presentation in the
current period.
(f) Use of critical accounting estimates
and judgements
The preparation of financial statements requires
management to make estimates, judgements and
assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from
these estimates. Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
Significant accounting estimates and
assumptions
Impairment of goodwill and intangibles with
(i)
indefinite useful lives
The Group determines whether goodwill and intangibles
with indefinite useful lives are impaired at least on
an annual basis. This requires an estimation of the
recoverable amount of the cash-generating units (CGUs)
to which the goodwill and intangibles with indefinite
useful lives are allocated.
55
The key assumptions used in this estimation of
recoverable amount of goodwill and intangibles with
indefinite useful lives are outlined in note 14.
(ii) Commission revenue
The Group estimates override commission revenue
generated by airlines and leisure partners. The
commission revenue accrual process is inherently
judgemental and is impacted significantly by factors
which are not completely under the control of HLO.
These factors include:
• a significant portion of commission contract periods
do not correspond to the Group’s financial year end.
Judgements and estimation techniques are required
to determine anticipated future flown revenues
over the remaining contract year and the associated
commission rates applicable to these forecast levels;
• the differing commencement dates of the commission
contracts mean that commissions may have to be
estimated for contracts for which the applicable
commission rates have not been finalised and agreed
between the parties; and
• periodic renegotiation of terms and contractual
arrangements with the suppliers of travel products
may result in additional volume/incentives, rebates
or other bonuses being received which relate to
past performance and are not specified in existing
contracts.
(iv) Accounting for the GST legal case
The Group was previously involved in a legal case with
the Australian Taxation Office in relation to a GST
matter, which was resolved in October 2014. Additional
information in relation to the matter is disclosed in
note 7(g).
3. Significant accounting policies
The principle accounting policies adopted in the
preparation of these consolidated financial statements
are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
The financial statements are for the consolidated entity
consisting of Helloworld Limited and its controlled entities.
(a) Principles of consolidation
(i) Reverse Acquisition Accounting
On 30 September 2010, HLO (at the time JTL) completed
a Merger with Stella Travel Services Holdings Pty Limited
(STSH). In accordance with accounting standards, this
merger has been accounted for as a reverse acquisition
business combination. This reverse acquisition business
combination supersedes the reverse acquisition business
combination that arose from the Merger of Helloworld
Limited (at the time JTL), Qantas Holidays Limited and
QBT Pty Limited in July 2008.
The accounting policy for commission revenue, incentives
and rebates is set out in note 3(e).
In applying the requirements of AASB 3 Business
Combinations to the Group:
(iii) Defined Pension benefits
The present value of pension obligations depends on a
number of factors that are determined on an actuarial
basis using a number of assumptions. The assumptions
used in determining the net cost (income) for pensions
include the discount rate. Any changes in these
assumptions will impact the carrying amount of the
pension obligations.
The Group determines the discount rate at the end of
each year. This is the interest rate that should be used to
determine the present value of the estimated future cash
outflows expected to be required to settle the pension
obligations. In determining the appropriate discount
rate the Group considers the interest rates of Australian
Dollar corporate bonds, and that have terms to maturity
approximating the terms of the related pension liability.
Other key assumptions for pension obligations are
based in part on current market conditions. Additional
information is disclosed in note 16.
(i)
(ii)
Helloworld Limited is the legal parent entity to the
Group; and
STSH, which is neither the legal parent nor legal
acquirer, is deemed to be the accounting acquirer.
The consolidated financial information incorporated the
assets and liabilities of all entities deemed to be acquired
by STSH including Helloworld Limited and its controlled
entities and the results of these entities for the period
from which those entities are accounted for as being
acquired by STSH. The assets and liabilities of Helloworld
Limited and its controlled entities acquired by STSH were
recorded at fair value whilst the assets and liabilities
of STSH and its controlled entities were maintained at
their book value. The impact of all transactions between
entities in the Group were eliminated in full.
AASB 3 Business Combinations requires that
consolidated financial statements prepared following
a reverse acquisition shall be issued under the name of
the legal parent (i.e. HLO), but be a continuation of the
financial statements of the legal subsidiary (i.e. STSH,
the acquirer for accounting purposes).
helloworldlimited.com.au (ii) Subsidiaries included in the
financial report
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Helloworld
Limited as at 30 June 2015 and the results of all
subsidiaries for the year then ended. Helloworld Limited
and its subsidiaries together are referred to in this
financial report as the Group or the consolidated entity.
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and
has the ability to affect those returns through its power
to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the Group (refer to
note 31).
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of
subsidiaries are shown separately in the consolidated
income statement, consolidated statement of
comprehensive income, consolidated statement of
changes in equity and the consolidated statement of
financial position respectively.
Investments in subsidiaries are accounted for at cost in
the separate financial statements of Helloworld Limited
and other individual entity financial statements within
the Group.
(iii) Accounting for associates
Associates are all entities over which the Group has
significant influence but not control or joint control,
generally accompanying a shareholding of between 20%
and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting,
after initially being recognised at cost. The Group’s
investment in associates includes goodwill (net of any
accumulated impairment loss) identified on acquisition.
The Group’s share of its associates’ post-acquisition
profits or losses is recognised in profit or loss, and
its share of post-acquisition movements in reserves
is recognised in other comprehensive income. The
cumulative post-acquisition movements are adjusted
against the carrying amount of the investment.
Dividends receivable from associates are adjusted
against the carrying amount of the investment.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any
other unsecured long-term receivables, the Group does
not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The Group reviews the carrying value of the investment
in associates for impairment annually. Any identified
impairment is recorded as an impairment charge in the
profit or loss.
Unrealised gains on transactions between the Group
and its associates are eliminated to the extent of the
Group’s interest in the associates. Unrealised losses
are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
(iv) Changes in ownership interests
The Group treats transactions with non-controlling
interests that do not result in a loss of control as
transactions with equity owners of the Group. A change
in ownership interest results in an adjustment between
the carrying value of the controlling and non-controlling
interests to reflect their relative interests in a subsidiary.
Any difference between the amount of the adjustment to
non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity
attributable to owners of Helloworld Limited.
When the Group ceases to have control, joint control or
significant influence, any retained interest in the entity
is remeasured to its fair value with the change in carrying
amount recognised in profit or loss. The fair value is the
initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate,
joint venture or financial asset. In addition, any amounts
previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group
had directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit
or loss.
57
If the ownership interest in a joint arrangement or an
associate is reduced but joint control or significant
influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive
income are reclassified to profit or loss where
appropriate.
(b) New and amended standards
(i) New and amended standards adopted
by the Group
The Group has applied the following standards and
amendments for the first time for its annual reporting
period commencing 1 July 2014:
• AASB 2012-3 Amendments to Australian Accounting
Standards - Offsetting Financial Assets and Financial
Liabilities
• AASB 2013-3 Amendments to AASB 136 - Recoverable
Amount Disclosures for Non-Financial Assets
• Interpretation 21 Levies
• AASB 2014-1 Amendments to Australian Accounting
Standards (Parts A to C)
• Annual Improvements to IFRSs 2010-2012 Cycle.
The adoption of these standards did not have any impact
on the current period or any prior period and is not likely
to affect future periods.
(ii) New standards and interpretations not
yet adopted
Certain new accounting standards and interpretations
have been published that are not mandatory for the
30 June 2015 reporting period and have not been
early adopted by the Group. The following accounting
standards are most relevant to the Group:
AASB 9 Financial Instruments
AASB 9 Financial Instruments addresses the
classification, measurement and de-recognition of
financial assets and financial liabilities, partially
replacing AASB 139 Financial instruments: Recognition
and measurement. This standard is available for early
adoption however will not become mandatory for the
Group’s financial statements until the year ended
30 June 2019. The Group has not yet decided when to
adopt AASB 9 and has not yet determined the potential
effect of the standard.
AASB 15 Revenue from Contracts with Customers
The AASB has issued a new standard for the recognition
of revenue. This will replace AASB 118 Revenue, which
covers contracts for goods and services and AASB 111
Construction Contracts, which covers construction
contracts. The new standard is based on the principle that
revenue is recognised when control of a good or service
transfers to a customer. The notion of control in AASB 15
replaces the existing notion of risks and rewards.
The standard is applicable to reporting periods ending
30 June 2018. The standard permits a modified
retrospective approach for the adoption. Under this
approach entities will recognise transitional adjustments
in retained earnings on the date of initial application
without restating the comparative period. The Group will
only need to apply the new rules to existing contracts that
are not completed as of the date of initial application.
The Group has not yet decided when to adopt AASB 15
and has not yet determined the potential impact of
the standard.
There are no other standards that are not yet effective
and that are expected to have a material impact on the
Group in the current or future reporting periods and on
foreseeable future transactions.
(c) Segment reporting
The Group determines and presents Operating
Segments based on the information that is internally
provided to the Board, who are the Group’s chief
operating decision makers.
An Operating Segment is a component of the Group
that engages in business activities from which it may
earn revenues and incur expenses, including revenues
and expenses that relate to transactions with any of the
Group’s other components. The operating results of each
segment are regularly reviewed by the Company’s Board
to make decisions about resources to be allocated to
the segment and assess its performance, and for which
discrete financial information is available.
Corporate charges are only allocated to Operating
Segments to the extent that they are considered part of
the core operations of any segments.
helloworldlimited.com.au (d) Foreign currency translation
(i) Transactions and balances
Foreign currency transactions are translated to the
functional currency at the rates of exchange prevailing
at the date of each transaction. At balance date,
amounts receivable and payable in foreign currencies
are translated at the rates of exchange prevailing at
that date. Exchange rate differences resulting from the
settlement of such transactions and from translation
of monetary assets and liabilities are recognised in
the income statement in the year in which they occur,
except where they are deferred in equity if they relate to
qualifying cashflow hedges and qualifying net investment
hedges or are attributable to part of the net investment
in a foreign operation. Foreign exchange gains and
losses that relate to borrowings are presented in the
income statement within finance costs. All other foreign
exchange gains or losses are presented in the income
statement on a net basis within other income or expense.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss. Non-monetary assets and liabilities that are
measured in terms of historical cost in a foreign currency
are translated using the exchange rate at the date of
the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at
fair value are translated to Australian dollars at foreign
exchanges rates prevailing at the dates the fair value
was determined. All foreign exchange gains/losses are
presented in the income statement within revenue or
other expenses. Translation differences on assets and
liabilities carried at fair value are reported as part of the
fair value gain or loss.
Investments in foreign operations
(ii)
The results and financial position of foreign operations
that have a functional currency different from
the presentation currency are translated into the
presentation currency as follows:
• assets and liabilities for each consolidated statement
of financial position presented are translated at the
closing exchange rate of the reporting date;
• income and expenses for each consolidated
income statement and consolidated statement of
comprehensive income are translated at average
exchange rates, which approximate the rate at the date
of the transaction; and
• all resulting exchange differences are recognised in
other comprehensive income.
On consolidation, exchange differences arising from
the translation of any net investment in foreign entities
are recognised in other comprehensive income. When
a foreign operation is sold, the associated exchange
differences are reclassified to profit or loss. Goodwill
and fair value adjustments arising on the acquisition of a
foreign operation are treated as assets and liabilities of
the foreign operation and translated at the closing rate.
(e) Revenue recognition
The principal activities of the Group are those of
acting as an agent for tour, travel and accommodation
providers for which the Group earns service revenue
predominantly in the form of commissions, incentives
and rebates.
Revenue is recognised and measured at the fair value
of the consideration received or receivable. Amounts
disclosed as revenue are net of returns, trade allowances,
rebates and amounts collected on behalf of third parties.
The Group recognises revenue when the amount of
revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and
specific criteria have been met for each of the Group’s
activities as described below:
(i) Rendering of services
Commission from the arrangement of tours, travel and
travel-related products
Commissions from the arrangement of tours and
travel are recognised when tickets, itineraries or travel
documents are issued, consistent with an agency
relationship. Revenue is recognised as the net amount of
commission received or receivable by the Group.
Commissions from the arrangement of airline tickets
are recognised when the tickets are issued. Revenue is
disclosed as the net amount of commission received or
receivable by the Group.
Commissions from travel-related products (e.g. insurance
and foreign currency purchasing services) and incentives
from suppliers are recognised as revenue when they are
earned and the amount can be reliably measured. Revenue
is disclosed as the gross amount of income received or
receivable by the Group.
59
Override Commission Revenue
The Group recognises override commission revenue
once it is contractually entitled to receive this. Generally,
override commission revenue is recognised once the
passenger has flown/departed (for air and cruise) or the
passenger has commenced their hotel stay.
There are separate contractual agreements with each
supplier and the contractual periods of these agreements
vary depending on the supplier. For example, some
suppliers operate on a January to December contract
period whilst others may be April to March or July to June.
Override commission revenue is calculated for the
contract period, based on value of “Eligible Travel” during
the period and the “Override Rates” in the each of the
supplier contracts.
• The definition of Eligible Travel varies by supplier and
is defined in each supplier contract. Eligible Travel for
the financial year is calculated by the Group based on
detailed booking information and is reviewed in light of
current booking trends and historical information.
• The Override Rates applied to calculate the override
commission revenue are specified in each supplier
contract and often there are tiered override earning
rates based on differing levels of Eligible Travel
sales being achieved for the contractual period
(i.e. performance tiers). In order to estimate the
appropriate Override Rate, the expected Eligible
Travel sales for the contract period are estimated and
compared to the performance tiers. These forecasts
are based on actual sales, forecast bookings and
historical trends. In some instances judgement may
be required if a performance tier is close to being
achieved or missed. This is reviewed in light of current
sales trends and forecast sales and the rates are
adjusted as required.
Override commission revenue is disclosed as the gross
amount of override commissions received or receivable
by the Group.
Other revenue
Franchise, agency and license fees are recognised on
a straight-line basis over the term of the agreement.
Revenue is disclosed as the gross amount of fees
received by the Group.
In relation to marketing activities and conferences
where a principal rather than agency relationship exists,
amounts charged to third parties for advertising and
marketing contributions are recognised as revenue while
associated operating expenses are recorded within
advertising, marketing and selling expenses.
(ii) Dividends
Dividend revenue is recognised when the Group’s right
to receive the payment is established. This applies even
if the dividend is paid out of pre-acquisition profits.
However, the investment may need to be tested for
impairment as a consequence.
(iii) Finance income
Finance income comprises interest income on funds
invested (including available-for-sale financial assets).
Interest income is recognised as it accrues in revenue,
using the effective interest method.
(f) Cash and cash equivalents
Cash and cash equivalents in the statement of financial
position comprise cash at bank and in hand and short-
term deposits that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
For the purposes of the statement of cash flows,
cash and cash equivalents consist of cash and cash
equivalents as defined above.
Client cash includes all monies entrusted to the Group
by intending travellers or customers prior to travelling.
In Australia, client cash is deposited into an account
held exclusively for client funds, separate to the general
funds of the entity.
(g) Trade and other receivables
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Trade receivables are generally collected within 30 to
60 days. They are presented as current assets unless
collection is not expected within 12 months from the
reporting date. Bad debts are written off as incurred.
Non-current receivables are carried at the present value
of future net cash inflows expected to be received.
Collectability of trade receivables is reviewed on an
ongoing basis at an operating unit level. Individual debts
that are known to be uncollectable are written off
when identified. An impairment provision is recognised
when there is objective evidence that the Group will
not be able to collect the receivable. The amount of
helloworldlimited.com.au the impairment loss is the receivable carrying amount
compared to the present value of the estimated future
cash flows, discounted at the original effective interest
rate. The amount of the impairment loss is recognised
in profit or loss within other expenses. Subsequent
recoveries of amounts previously written off are
credited against other expenses in profit or loss.
De-recognition
An item of property, plant and equipment is de-
recognised upon disposal or when no further future
economic benefits are expected from its use.
Gains and losses on disposals are determined by
comparing proceeds with the asset carrying amount.
These are included in the income statement.
(h) Prepayments
Prepayments consist of travel products purchased for
bookings that have not yet been ticketed and prepaid
operating expenditure. Prepayments of travel products
are recognised as part of the net amount of commissions
received in the income statement at the ticketing date
of the applicable booking, in line with the revenue
recognition policy. Other amounts included in the balance
of prepayments relate to prepaid operating expenditure.
(i) Property, plant and equipment
Property, plant and equipment is stated at historical
cost less accumulated depreciation and any accumulated
impairment losses. Subsequent costs are included in
the assets carrying amount or recognised as separate
asset as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised
when replaced. All other repairs and maintenance are
recognised in profit or loss as incurred.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the specific asset as follows:
• Freehold buildings – 40 years
• Office equipment – 2.5 to 10 years
• Leasehold improvements – term of lease
• Leased plant and equipment – term of lease
The assets’ residual values, useful lives and depreciation
methods are reviewed, and adjusted if appropriate,
at each financial year end on a prospective basis. An
asset’s carrying amount is written down immediately if
the asset’s carrying value is greater than its estimated
recoverable amount.
Cost associated with make-good provisions are
capitalised into the cost of leasehold improvements and
amortised over the corresponding term of lease.
(j) Leases
The determination of whether an arrangement is or
contains a lease is based on the substance of the
arrangement and requires an assessment of whether
the fulfilment of the arrangement is dependent on the
use of a specific asset or assets and the arrangement
conveys a right to use the asset.
Finance leases, which transfer to the Group substantially
all the risks and benefits incidental to ownership of the
leased items, are capitalised at the inception of the lease
at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease
payments are apportioned between the finance charges
and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are recognised as an expense in
profit or loss.
Capitalised leased assets are depreciated over the
shorter of the estimated useful life of the asset and the
lease term if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term.
Leases in which a significant portion of the risks and
rewards of ownership are not transferred to the Group as
lessee are classified as operating leases.
Operating lease payments are recognised as an expense
in the income statement on a straight-line basis over the
lease term. Operating lease incentives are recognised as
a liability when received and subsequently recognised as
a reduction in the rental expense over the lease term.
(k) Investment property
Investment property is held for long term rental yields
and is not occupied by the Group. Investment property
is carried at fair value. When measuring the fair value of
investment property the Group ensures that the fair value
reflects, among other things, rental income from current
leases and other assumptions that market participants
would use when pricing the investment property under
current market conditions. Changes in fair values are
recorded in profit or loss as part of other income.
61
(l)
Intangible assets
Intangible assets acquired separately or in a business
combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination
is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets,
excluding capitalised software development costs, are
not capitalised and expenditure is charged against profit
or loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be
either finite or indefinite. Intangible assets with finite
lives are amortised over the useful life and tested for
impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation
period and the amortisation method for an intangible
asset with a finite useful life are reviewed at least at each
financial year end.
Intangible assets with indefinite useful lives are tested
for impairment annually either individually or at the CGU
level. These intangibles are not amortised. The useful life
of an intangible asset with an indefinite life is reviewed
each reporting period to determine whether indefinite
life assessment continues to be supportable. If not, the
change in the useful life assessment from indefinite
to finite is accounted for as a change in an accounting
estimate and is applied prospectively.
(i) Goodwill
All business combinations are accounted for by applying
the acquisition method, including those using the reverse
acquisition accounting method. Goodwill represents the
difference between the cost of the acquisition and the
fair value of the net identifiable assets acquired. Goodwill
is measured at cost less accumulated impairment losses
measured as per the methodology outlined in note 14.
(ii) Software and website development
costs
An intangible asset arising from development
expenditure on an internal project is recognised only
when the Group can demonstrate the technical feasibility
of completing the intangible asset so that it will be
available for use or sale, its intention to complete and its
ability to use or sell the asset, how the asset will generate
future economic benefits, the availability of resources
to complete the development and the ability to measure
reliably the expenditure attributable to the intangible
asset during its development. Costs capitalised include
external direct costs of materials and service, and direct
payroll and payroll related costs of employees’ time spent
on the project.
Following the initial recognition of the development
expenditure, the cost model is applied requiring the asset
to be carried at cost less any accumulated amortisation
and accumulated impairment losses. Any expenditure
so capitalised is amortised over the period of expected
benefits from the related project.
The carrying value of an intangible asset arising from
development expenditure is tested for impairment
annually when the asset is not yet in use, or more
frequently when an indication of impairment arises during
the reporting period. Once in use, software and website
development costs are depreciated over 2.5 to 5 years.
(iii) Brand names and trademarks
Brand names and trademarks that have finite lives are
amortised on a straight-line basis over their estimated
useful lives in accordance with the estimated timing of
benefits expected to be received from those assets. The
amortisation period for finite life trademarks that are
being amortised is between 7.3 and 20 years.
(iv) Franchise systems
Franchise systems are the integrated system of methods,
procedures, techniques and other systems which,
together with a network of franchisees, facilitate the day-
to-day running of a franchise business.
Franchise systems include access to products/ inventory,
brands, marketing, advertising, promotional techniques,
training and operational manuals of the network. Due
to the inter-relationship between the component
items of a franchise system as detailed above, the
Group considers that these complementary assets are
likely to have similar useful lives and are recorded as a
single identifiable asset in accordance with accounting
standards. The Group considers that franchise systems
have an indefinite useful life.
(m) Impairment of assets
The carrying amounts of the Group’s non-financial
assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists, then the asset’s recoverable amount
is estimated. For goodwill and intangible assets that
have indefinite lives or are not yet available for use, the
helloworldlimited.com.au recoverable amount is estimated each year at the same
time or more frequently if events or circumstances
indicate that the carrying amount may not be recoverable.
The recoverable amount of an asset, or the cash
generating unit (CGU), is the greater of its value in use
and its fair value less costs of disposal. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of
money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into
the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (CGUs).
The goodwill acquired in a business combination, for
the purpose of impairment testing, is allocated to CGUs
that are expected to benefit from the synergies of the
combination.
An impairment loss is recognised if the carrying amount
of an asset or its CGU exceeds its recoverable amount.
Impairment losses are recognised in the income
statement. Impairment losses recognised in respect of
CGUs are allocated first to reduce the carrying amount
of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit
(group of units) on a pro rata basis. An impairment loss
in respect of goodwill is not reversed. In respect of other
assets, impairment losses recognised in prior periods are
assessed at each reporting date for any indications that
the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the
estimates used to determine the recoverable amount.
(n) Investments and other financial
assets
Investments and other financial assets are categorised
as financial assets at fair value through profit or loss,
loans and receivables, held-to-maturity investments
or available for sale financial assets. The classification
depends on the purpose for which the investments were
acquired. Classification is re-evaluated at each financial
year end, but there are restrictions on reclassifying to
other categories.
When financial assets are recognised initially, they are
measured at fair value plus, in the case of assets not at
fair value through profit or loss, directly attributable
transaction costs.
Recognition and de-recognition
Purchases and sales of financial assets are recognised on
the trade date, that is, the date that the Group commits
to purchase or sell the asset. Regular purchases or sales
are purchases or sales of financial assets under contracts
that require delivery of the assets within the period
established generally by regulation or convention in the
market place.
Financial assets are de-recognised when the right to
receive cash flows from the financial assets has expired
or been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
(o) Non-current assets (or disposal
groups) held for sale and discontinued
operations
Non-current assets (or disposal groups) are classified as
held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through
continuing use and a sale is considered highly probable.
They are measured at the lower of their carrying amount
and fair value less costs to sell, except for assets such
as deferred tax assets, assets arising from employee
benefits, financial assets and investment property that
are carried at fair value and contractual rights under
insurance contracts, which are specifically exempt from
this requirement.
An impairment loss is recognised for any initial or
subsequent write-down of the asset (or disposal group)
to fair value less costs to sell. A gain is recognised for
any subsequent increases in fair value less costs to sell
of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain
or loss not previously recognised by the date of the sale
of the non-current asset (or disposal group) is recognised
at the date of derecognition.
Non-current assets (including those that are part of a
disposal group) are not depreciated or amortised while
they are classified as held for sale. Interest and other
expenses attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised. Non-
current assets classified as held for sale and the assets of
a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet.
The liabilities of a disposal group classified as held for
sale are presented separately from other liabilities in the
balance sheet.
63
A discontinued operation is a component of the entity
that has been disposed of or is classified as held for sale
and that represents a separate major line of business
or geographical area of operations, is part of a single
co-ordinated plan to dispose of such a line of business or
area of operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued
operations are presented separately in the income
statement.
(i) Dividends
Dividends are only recognised in the financial year in
which the dividend is actually paid. In accordance with
section 27.3 of the Company Constitution (in effect
from 30 November 2010), the Company does not incur
a debt merely by fixing the amount or time for payment
of a dividend. A debt arises only when the time fixed for
payment arrives. The decision to pay a dividend may be
revoked by the Board at any time before then.
(p) Trade and other payables
Trade and other payables are initially recognised at
their fair value and subsequently measured at their
amortised cost. Due to their short-term nature, they are
not discounted. They represent liabilities for goods and
services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of
the purchase of these goods and services.
Trade and other payables are presented as current
liabilities unless payment is not due within 12 months
from the reporting date. The amounts are unsecured and
are usually paid within 30 days of recognition.
The Group has agent incentive programs in place with its
retail travel agents. Participating retail travel agents earn
incentives based on the volume of completed sales made
with designated preferred suppliers of the Group. The
Group recognises a liability for the cost of the incentives
and these incentives are paid to the retail travel agents
when the liability falls due.
(q) Provisions
A provision is recognised when there is a present legal
or constructive obligation as a result of a past event, the
amount can be reliably measured and it is probable that
an outflow of economic benefits will be required to settle
the obligation, the timing or amount of which is uncertain.
Provisions are not recognised for future operating losses.
If the effect is material, a provision is determined by
discounting the expected future cash flows required
to settle the obligation at a pre-tax rate that reflects
current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the
discount is treated as a finance charge.
(ii) Onerous lease contracts
A provision for onerous lease contracts is recognised
when the expected benefits to be derived by the Group
from a contract are lower than the unavoidable cost of
meeting its obligations under the contract. The provision
is measured at the present value of the lower of the
expected cost of terminating the contract and the
expected net cost of continuing with the contract.
(r) Deferred revenue
Revenues received prior to the finalisation of the booking
are recorded on the statement of financial position as
revenue received in advance. The revenues are recognised
in the income statement at the time of document issue
(i.e. ticketing date), net of the cost of sale in accordance
with the accounting policy note outlined in note 3(e)(i).
(s) Derivatives and hedging
instruments
The Group holds derivative financial instruments to
hedge its foreign currency exposures.
On initial designation of the hedge, the Group formally
documents the relationship between the hedging
instruments and the hedged items, including the risk
management objectives and strategy in undertaking
the hedge transaction, together with the methods that
will be used to assess the effectiveness of the hedging
relationship. The Group makes an assessment, both
at the inception of the hedge relationship as well as
on an ongoing basis, whether the hedging instruments
are expected to be “highly effective” in offsetting the
changes in the fair value or cash flows of the respective
hedged items during the period for which the hedge is
designated, and whether the actual results of each hedge
are within a range of 80-125 percent. For a cash flow
hedge of a forecast transaction, the transaction should be
highly probable to occur and should present an exposure
to variations in cash flows that could ultimately affect
reported net income.
helloworldlimited.com.au Derivatives are recognised initially at fair value;
attributable transaction costs are recognised in profit
and loss as incurred. Subsequent to initial recognition,
derivatives are measured at fair value and changes
therein are accounted for as described below.
Cash flow hedges
Changes in the fair value of the derivative hedging
instrument designated as a cash flow hedge are
recognised in other comprehensive income to the extent
that the hedge is effective. To the extent that the hedge
is ineffective, changes in fair value are recognised in the
income statement.
If the hedging instrument no longer meets the criteria
for hedge accounting, expires or is sold, terminated or
exercised, or the designation is revoked, then hedge
accounting is discontinued prospectively. The cumulative
gain or loss previously recognised in other comprehensive
income and presented in the hedging reserve in equity
remains there until the forecast transaction affects
the income statement. When the hedged item is a
non-financial asset, the amount recognised in other
comprehensive income is transferred to the carrying
amount of the asset when the asset is recognised. If the
forecast transaction is no longer expected to occur, then
the balance in other comprehensive income is recognised
immediately in profit or loss. In other cases the amount
recognised in other comprehensive income is transferred
to profit or loss in the same period that the hedged item
affects the income statement.
(t) Employee leave benefits
(i) Short term benefits
Liabilities for wages and salaries, including non-monetary
benefits, and annual leave due to settle within 12 months
of the reporting date are recognised in respect of
employees’ services up to the reporting date. They are
measured at the amounts expected to be paid when the
liabilities are settled.
Liabilities for non-accumulating sick leave are recognised
when the leave is taken and are measured at the rates
paid or payable.
The liability for annual leave is recognised in the provision
for employee benefits. All other short term employee
benefit obligations are presented as payables.
(ii) Other long term employee benefit
obligations
The liabilities for long service leave and annual leave are
not expected to be settled wholly within 12 months after
the end of the period in which the employees render the
related service. They are therefore recognised in the
provision for employee benefits and measured as the
present value of expected future payments to be made in
respect of services provided by the employees up to the
end of reporting period using the projected unit credit
method. Consideration is given to expected future wage
and salary levels, experience of employee departures and
periods of service.
Expected future payments are discounted using market
yields at the end of the reporting period of corporate
bonds with terms and currencies that match, as closely as
possible, the estimated future cash outflows.
Remeasurements as a result of experience adjustments
and changes in actuarial assumptions are recognised in
profit or loss.
The obligations are presented as current liabilities in the
balance sheet if the entity does not have an unconditional
right to defer settlement for at least 12 months after the
reporting date, regardless of when the actual settlement
is expected to occur.
(iii) Share-based payments
Share-based compensation benefits are provided
to executives/employees via the Helloworld Limited
Performance Rights Plan. Information relating to these
schemes is set out in note 32.
The fair value of performance rights granted under the
scheme is recognised as an employee benefits expense
with a corresponding increase in equity. The total amount
to be expensed is determined by reference to the fair
value of the Performance Rights granted, which includes
any market performance conditions and the impact of any
non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions.
Non-market vesting conditions are included in
assumptions about the number of Performance Rights
that are expected to vest. The total expense is recognised
over the vesting period, which is the period over which all
the specified vesting conditions are to be satisfied. At the
end of each period, the entity revises its estimates of the
number of Performance Rights that are expected to vest
based on the non-market vesting conditions. It recognises
the impact of the revision to the original estimates, if
any, in profit or loss, with a corresponding adjustment
to equity.
65
The plan is administered by Helloworld Limited. When
the Performance Rights are exercised, the Company
transfers the appropriate amounts of shares to the
employee. The proceeds received (if any) net of any
directly attributable transactions costs are credited
directly to equity.
Where any Group company or trust purchases the
Company’s equity instruments, for example purchases
of shares by Helloworld Employee Share Trust, the
consideration paid, including any directly attributable
incremental costs (net of income taxes) is recorded in
the share-based payment trust reserve until the shares
are cancelled or reissued. Where such ordinary shares
are subsequently reissued, any consideration paid, net of
any directly attributable incremental transaction costs
and the related income tax effects, is transferred to the
share-based payments reserve.
(iv) Termination benefits
Termination benefits are payable when employment is
terminated before the normal retirement date, or when
an employee accepts voluntary redundancy in exchange
for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either
terminating the employment of current employees
according to a detailed formal plan without possibility
of withdrawal or to providing termination benefits
as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than 12 months
after the end of the reporting period are discounted to
present value.
(v) Bonus plans
The Group recognises a liability and expense for bonuses
based on a formula that takes into consideration the
profit attributable to the Group’s shareholders after
certain adjustments. The Group recognises a provision
where contractually obliged or where there is a past
practice that has created a constructive obligation.
(vi) Defined benefit and defined
contribution plans
As part of the merger arrangements, the Group entered
into a Superannuation Deed with Qantas Airways
Limited setting out the arrangements which would apply
(post-merger) to employees of the Group that are also
members of the Qantas Superannuation Plan (divisions
of which are in the nature of Defined Benefit Plan).
Under the deed, HLO assumed responsibility for the plan
assets and plan liabilities for these members in a new
Defined Benefit Plan controlled and managed by HLO.
The plan assets and liabilities were transferred to HLO
on 25 July 2011. On transfer to HLO, the plan was fair
valued using HLO specific assumptions which resulted in
the plan having a net asset position of $1.0m. This was
recorded as an adjustment against goodwill as part of the
final acquisition accounting for the merger transaction.
Following initial recognition, the Group has applied AASB
119 Employee Benefits to account for movements in plan
assets and liabilities with subsequent actuarial gains and
losses recognised directly in equity in accordance with
AASB 119.
The liability or asset recognised in the balance sheet in
respect of defined benefit superannuation plans is the
present value of the defined benefit obligation at the
end of the reporting period less the fair value of plan
assets. The defined benefit obligation is calculated
annually by independent actuaries using the projected
unit credit method.
The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows using market yields of corporate bonds that are
denominated in the currency in which the benefits will be
paid, and that have terms approximating to the terms of
the related obligation.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are
recognised in the period in which they occur, directly
in other comprehensive income. They are included in
retained earnings in the statement of changes of equity
and in the consolidated statement of financial position.
Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in profit or loss
as past service costs.
Contributions to the defined contribution section of
the Group’s superannuation fund and other independent
defined benefit contribution funds are recognised as an
expense as they become payable. Prepaid contributions
are recognised as an asset to the extent that a cash
refund or a reduction in the future payments is available.
helloworldlimited.com.au (u) Borrowings
(x) Business combinations
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the income statement over the
period of the borrowings using the effective interest
method. Fees paid on the establishment of the loan
facilities, which are not an incremental cost relating to
the actual drawing down of the facility, are netted against
the loan liability and amortised on a straight-line basis
over the term of the facility.
Borrowings are removed from the statement of financial
position when the obligation specified in the contract is
discharged, cancelled or expires. The difference between
the carrying amount of the financial liability that has
been extinguished or transferred to another party and
the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit
or loss as other income or finance costs.
Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the
reporting date.
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset
for its intended use or sale. Other borrowing costs are
recognised in profit or loss.
(v) Contributed equity
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
(w) Predecessor accounting reserve
Business combinations involving entities under common
control are accounted for using the predecessor
accounting method. Under this method, carrying values
are not restated in the accounts of the acquiring entity,
rather prior book values are maintained, including
any goodwill previously recognised in relation to the
acquired entities. As a result, no fair value adjustments
are recorded on the acquisition. Any difference between
consideration provided and the carrying value of net
assets acquired is recorded as a separate element
of equity.
The acquisition purchase method of accounting is used
to account for all business combinations, regardless of
whether equity instruments or other assets are acquired.
The consideration transferred for the acquisition of
a subsidiary comprises the fair values of the assets
transferred, the liabilities incurred and the equity interest
issued by the Group.
The consideration transferred also includes the fair value
of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are,
with limited exceptions, measured initially at their
fair values at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any non-
controlling interest in the acquiree, either at fair value
or at the non-controlling interest’s proportionate share
of the acquiree’s net identifiable assets. Where equity
instruments are issued in an acquisition, the instrument’s
fair value is its published market price at the date of
the exchange unless, in rare circumstances, it can be
demonstrated that the published price at the exchange
date is an unreliable indicator of fair value and that other
evidence and valuation methods provide a more reliable
measure of fair value. Transaction costs arising on the
issue of equity instruments are recognised directly
in equity.
The excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest
in the acquiree over the fair value of the Group’s share
of the net identifiable assets acquired is recorded as
goodwill. If those amounts are less than the fair value
of the net identifiable assets of the subsidiary acquired
and the measurement of all amounts has been reviewed,
the difference is recognised directly in profit or loss as a
bargain purchase.
Where settlement of any part of cash consideration is
deferred, future amounts payable are discounted to their
present value at the date of exchange. The discount rate
used is the entity’s incremental borrowing rate, being the
rate at which a similar borrowing could be obtained from
an independent financier under comparable terms and
conditions.
67
Contingent consideration is classified either as equity
or a financial liability. Amounts classified as financial
liabilities are subsequently remeasured to fair value, with
changes in fair value recognised in profit or loss.
If the business combination is achieved in stages,
the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquire is
remeasured to fair value on the acquisition date. Any
gains or losses arising from such remeasurement are
recognised in profit or loss.
(y) Earnings per share (EPS)
Basic EPS amounts are calculated by dividing net profit
for the year attributable to ordinary equity holders of the
parent entity by the weighted average number of ordinary
shares outstanding during the year.
Diluted EPS adjusts the weighted average number
of additional ordinary shares that would have been
outstanding assuming the conversion of all dilutive
potential ordinary shares.
(z) Income tax
Income tax expense or revenue on the profit or loss for
the year comprises current and deferred tax. Current
tax includes any adjustment to tax payable in respect of
previous years.
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities
based upon the current year’s taxable income. The tax
rates and tax laws used to compute the amount are those
that are enacted or substantively enacted by the balance
sheet date.
Deferred income tax is provided on all temporary timing
differences at the balance date between tax bases of
assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences except when:
• the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a
transaction that is not a business combination and
that, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• the taxable temporary difference is associated with
investments in subsidiaries, and the time of the
reversal of the temporary difference can be controlled
and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible
temporary differences, carry-forward or unused tax
credits and unused tax losses, to the extent that it is
probable that the taxable profit will be available against
which the deductible temporary differences, and the
carry-forward of unused tax credits and unused tax
losses can be utilised except when:
• the deferred tax assets relating to the deductible
temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss; or
• the deductible temporary difference is associated with
investments in subsidiaries, in which case a deferred
tax asset is only recognised to the extent that it is
probable that the temporary difference will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences can
be utilised.
The carrying amount of deferred tax assets is reviewed
at each balance date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax
asset to be utilised.
Unrecognised deferred tax assets are reassessed at each
balance sheet date and are recognised to the extent that
it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured based on
the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates
that are expected to apply to the year when the asset is
realised or the liability settled, based on tax rates and tax
laws that have been enacted or substantially enacted at
the balance sheet date.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in the income
statement.
Deferred tax assets and liabilities are offset only if a
legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred tax
assets and liabilities relate to the same taxable entity and
the same taxation authority.
helloworldlimited.com.au (i) Tax consolidation legislation
Helloworld Limited and its wholly owned Australian
controlled entities have implemented the tax
consolidation legislation.
The head entity, Helloworld Limited, and its 100%
wholly-owned subsidiaries in the Australian income tax
consolidated group account for their own current and
deferred tax amounts. These tax amounts are measured
as if each entity in the Australian income tax consolidated
group continues to be a standalone taxpayer in its
own right.
In addition to its own current and deferred tax amounts,
Helloworld Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from controlled entities in the Australian income tax
consolidated group where applicable.
Assets or liabilities arising under tax financing
arrangements with the Australian income tax
consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group.
(ii) Nature of tax funding arrangements
and tax sharing agreements
The head entity, in conjunction with the other 100%
wholly owned subsidiary members of the Australian
income tax consolidated group, has entered into a
tax funding arrangement which sets out the funding
obligations of members of the Australian income tax
consolidated group in respect of the group’s tax liability.
The tax funding arrangements require payments to/from
the head entity equal to the current tax liability/(asset)
assumed by the head entity and any tax loss deferred tax
asset assumed by the head entity, resulting in the head
entity recognising an intercompany receivable/(payable)
equal in amount to the tax liability/(asset) assumed. The
intercompany receivable/(payable) is at call.
of this agreement, as payment of any amounts by
subsidiary members under the tax sharing agreement is
considered remote.
(aa) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of
the amount of GST except where the GST incurred on
a purchase of goods and services is not recoverable
from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the statement of financial position.
Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which
is recoverable from, or payable to, the taxation authority
is classified as operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable, or payable to, the
taxation authority.
(ab) Parent entity financial information
On 30 September 2010, Helloworld Limited and its
controlled entities completed a 50-50 Merger with Stella
Travel Services Holdings Pty Limited and its controlled
entities (STS) in which the businesses of HLO and STS
were combined into one consolidated group (‘the Group”).
In accordance with accounting standards, this Merger
has been accounted for as a reverse acquisition with STS
being deemed the acquirer for accounting purposes. The
financial information for the (legal) parent entity, HLO is
disclosed in note 29 and has been prepared on the same
basis as the consolidated financial statements, except as
set out below.
Contributions to fund the current tax liabilities are
payable as per the tax funding arrangements and reflect
the timing of the head entity’s obligation to make
payments for tax liabilities to the relevant tax authorities.
Investments in subsidiaries and
(i)
associates
Investments in subsidiaries and associates are accounted
for at cost in the Financial Statements of the Company.
The head entity, in conjunction with the other members
of the Australian income tax consolidated group, has also
entered into a tax sharing arrangement which provides
for the determination of the allocation of income tax
liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have
been recognised in the financial statements in respect
(ii) Tax consolidation legislation
The Company and its wholly-owned Australia controlled
entities have implemented the tax consolidation
legislation.
69
(iii) Financial Guarantees
Where the parent has provided financial guarantees
in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of
the cost of investment.
(iv) Share-based payments
The grant by the Company (under the Helloworld Limited
Performance Rights Plan) of Performance Share Rights
(PRs) to acquire shares, to certain executives of the
Group is treated as a capital contribution to HLO. The
fair value of the PRs is calculated taking into account
the share price on grant date and the exercise price. The
PRs are subject to EPS Performance conditions. Further
detail of the Helloworld Limited Performance Rights Plan
is disclosed in note 32 and note 3(t)(iii).
Where any Group company or trust purchases the
Company’s equity instruments, for example purchases
of shares by Helloworld Employee Share Trust, the
consideration paid, including any directly attributable
incremental costs (net of income taxes) is recorded in
the share-based payment trust reserve until the shares
are cancelled or reissued. Where such ordinary shares
are subsequently reissued, any consideration paid, net of
any directly attributable incremental transaction costs
and the related income tax effects, is transferred to the
share-based payments reserve.
The head entity of the tax consolidated group is HLO,
which in addition to recognising its own current and
deferred tax amounts also recognises the current tax
liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
The consolidated tax balances are disclosed in the result
of HLO (legal parent) and are not recorded in the result of
the deemed acquirer STS.
The entities have also entered into a tax funding
agreement under which the wholly owned entities fully
compensate HLO for any current tax payable assumed
and are compensated by HLO for any current tax
receivable and deferred tax assets relating to unused
tax losses or unused tax credits that are transferred
to HLO under the tax consolidation legislation. The
funding amounts are determined by reference to the
amounts recognised in the wholly-owned entities
financial statements.
The amounts receivable/payable under the tax funding
arrangement are due upon receipt of the funding advice
from the head tax entity, which is issued as soon as
practicable after the end of each financial year. The
head tax entity may also require payment of interim
funding amounts to assist with its obligations to pay
tax instalments.
Under this tax consolidation arrangement, individual
legal entities continue to account for their own current
and deferred tax amounts. These amounts are measured
as if the entities were stand-alone tax payers in their own
right. Assets or liabilities arising from the tax funding
agreement with HLO are recognised as a current amount
receivable or payable to HLO. Any difference in the
amounts assumed and the amount receivable or payable
to HLO, are shown as a contribution to, (or distribution
from) the head tax entity HLO in the results of the
individual legal entities.
helloworldlimited.com.au 4. Revenues and expenses
(a) Revenue
Rendering of services
Finance income
Rents and sub-lease rentals
Other revenue
TOTAL REVENUE
(b) Expenses
Depreciation (note 13)
Amortisation (note 14)
Impairment losses on trade receivables
Net foreign exchange loss
Defined contribution superannuation expense
Defined benefit superannuation expense (note 16)
Employee benefits expense excluding superannuation
Business transformation costs
Former CEO resignation/retirement costs
Impairment of goodwill (note 14)
Costs relating to GST matter (note 7(g))
Net gain / (loss) on disposal of investments
5. Finance income and expense
Recognised in profit or loss
Finance income recognised in revenue
Finance expenses
NET FINANCE INCOME RECOGNISED IN PROFIT OR LOSS
CONSOLIDATED
2015
$’000
2014
$’000
273,354
4,362
662
845
285,707
5,073
106
785
279,223
291,671
(5,928)
(7,993)
(138)
(2,910)
(6,415)
(776)
(5,763)
(8,269)
(207)
(1,136)
(7,057)
(922)
(115,000)
(124,548)
(2,101)
(233)
(15,847)
(608)
(205,300)
(59,500)
(617)
340
(2,738)
(5,473)
CONSOLIDATED
2015
$’000
2014
$’000
4,362
(3,227)
1,135
5,073
(3,354)
1,719
71
6. Segment reporting
(a) Description of segments
The Group has identified the following three operating segments as reportable segments. Operating segments are
identified based on the internal reports that are reviewed and used by the Board in assessing performance and making
strategic decisions. There are no other operating segments other than the three below:
• Retail
• Wholesale
• Travel Management
The operations of Retail primarily comprise acting as a franchisor of retail travel agency networks including
helloworld, helloworld for business, the Concord Agency Network, Harvey World Travel, United Travel and The Travel
Brokers. Other businesses in the Retail segment include Air Tickets and helloworld.com.au. The primary purpose
of Wholesale is to procure air, sea and land product for packaging and sale through retail travel agency networks.
Travel Management provides travel management services to corporate and government customers including the
booking of flights and accommodation.
Corporate charges are only allocated to operating segments to the extent that they are considered part of the core
operations of any segments.
The Board assess the performance of the operating segments based on a measure of Adjusted EBITDAI (earnings
before interest expense, tax, depreciation, amortisation, impairment and share-based payments). This measurement
basis excludes the effects of significant unusual income and expenditure from the operating segments such as
fair value gains or losses on investments, restructuring and business transformation costs, legal fees, merger or
acquisition-related transaction costs and impairments when these items are outside the ordinary course of business
or are unusual due to their size, nature or incidence. Furthermore, the measure excludes the effects of any equity-
settled share-based payments. Interest income on client funds is included within segment revenue and Adjusted
EBITDAI according to Group accounting policy.
TTV
Total Transaction Value (TTV) does not represent revenue in accordance with Australian Accounting Standards.
TTV represents the price at which travel products and services have been sold across the Group’s various operations,
as agents for various airlines and other service providers, plus revenue from other sources. The Group’s revenue is,
therefore, derived from TTV. Total TTV does not represent the Group’s cash inflows as some transactions are settled
directly between the customer and the supplier.
(b) Segment information provided to the Board
ANALYSIS BY SEGMENT
YEAR ENDED 30 JUNE 2015
TTV
Total segment revenue
Operating expenses
ADJUSTED EBITDAI
YEAR ENDED 30 JUNE 2014
TTV
Total segment revenue
Operating expenses
ADJUSTED EBITDAI
Retail
$’000
Wholesale
$’000
Travel
Management
$’000
Corporate
Unallocated
$’000
Consolidated
$’000
3,429,056
151,933
(120,039)
31,894
3,586,527
160,686
(110,148)
50,538
667,135
82,276
(69,148)
599,978
41,148
(35,898)
13,128
5,250
–
4,696,169
3,866
(26,683)
(22,817)
279,223
(251,768)
27,455
708,229
88,596
(76,189)
12,407
566,276
37,505
(36,992)
513
–
4,861,032
4,884
(27,781)
(22,897)
291,671
(251,110)
40,561
helloworldlimited.com.au (c) Other segment information
(i) Segment revenue
The parent entity is domiciled in Australia. The amount of its revenue from external customers in Australia is
$208,809,627 (2014: $222,866,359), and the total revenue from external customers in other countries is $70,413,267
(2014: $68,804,272). Segment revenues are allocated based on the country in which the customer is located.
All segments derive a significant amount of revenue from Qantas Airways Limited, a related entity. Details of
transactions are outlined in note 26.
(ii) Adjusted EBITDAI
A reconciliation of Adjusted EBITDAI to Loss before income tax is provided as follows:
ADJUSTED EBITDAI
Gain/(loss) on disposal of investments
Business transformation costs
Share-based payments
Actuarial adjustment on defined benefit pension
Costs relating to GST matter (note 7(g))
Costs relating to disposal of investments
Former CEO resignation/retirement costs
EBITDAI
Depreciation
Amortisation
Impairment of goodwill
Finance costs
LOSS BEFORE INCOME TAX
CONSOLIDATED
2015
$’000
27,455
340
(2,101)
(83)
(710)
(617)
–
(233)
24,051
(5,928)
(7,993)
(205,300)
(3,227)
(198,397)
2014
$’000
40,561
(5,473)
(15,847)
(115)
–
(2,738)
(60)
(608)
15,720
(5,763)
(8,269)
(59,500)
(3,354)
(61,166)
(iii) Segment assets
The amounts provided to the Board with respect to total assets are measured in a manner consistent with that of the
Consolidated Financial Statements. These reports do not allocate assets based on the operations of each segment or by
geographical location.
The total of non-current assets other than financial instruments, deferred tax assets and defined benefit assets located
in Australia is $147,024,379 (2014: $349,928,856), and the total of these non-current assets located in other countries
is $32,734,117 (2014: $33,298,377). Under the current management reporting framework, total assets are not
allocated to a specific reporting segment or geographic location.
(iv) Segment liabilities
The amounts provided to the Board with respect to total liabilities are measured in a manner consistent with that of
the Consolidated Financial Statements. Under the current management reporting framework, total liabilities are not
allocated to a specific reporting segment or geographic location.
(v) Changes in accounting policy and restatement of error in prior period
During the year ended 30 June 2015 there have been no changes in the measurement methods used to determine
reported segment Adjusted EBITDAI.
73
7. Income tax
(a) Income tax expense
The major components of income tax expense recognised in the income statement are:
CURRENT TAX EXPENSE
Current income tax expense
Adjustments in respect of current tax expense of previous years
DEFERRED INCOME TAX
Relating to origination and reversal of temporary differences
INCOME TAX EXPENSE REPORTED IN THE INCOME STATEMENT
Deferred income tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (note 15)
(Decrease)/increase in deferred tax liabilities (note 15)
CONSOLIDATED
2015
$’000
2014
$’000
2,504
(1,536)
1,746
2,714
2,155
(409)
1,746
2,132
(248)
193
2,077
(44)
237
193
(b) Reconciliation between income tax expense and Loss before income tax:
(198,397)
LOSS BEFORE INCOME TAX EXPENSE
Prima facie income tax credit at 30% (2014: 30%)
(59,519)
(61,166)
(18,350)
Add/(deduct):
Non-deductible (taxable) items:
Amortisation
(Gain)/loss on disposal of investments
Impairment of goodwill
Assessable debt forgiveness between group members
Current year tax losses not recognised
Prior year tax losses recognised
Under/(over) provision in prior years
Other
INCOME TAX EXPENSE REPORTED IN THE INCOME STATEMENT
376
(102)
61,590
–
60
–
248
61
2,714
(c) Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges
Defined benefit pension – actuarial gains
(d) Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30%
492
344
836
1,217
365
All unused tax losses were incurred by non-Australian entities that are not part of the tax consolidated group.
673
1,650
17,850
445
221
(247)
(248)
83
2,077
(873)
494
(379)
586
176
(e) Amounts recognised directly in equity
There is $24,772 of deferred tax (2014: $nil) recognised directly in equity.
(f) Unrecognised temporary differences
The Group has undistributed earnings which if paid out as dividends would be non-assessable exempt income and not
subject to tax in the hands of the recipient. Therefore no deferred tax liability has been recorded in relation to the
undistributed earnings.
helloworldlimited.com.au
(g) Other tax matters
As previously disclosed in the Consolidated Interim Financial Report for the half year ended 31 December 2010 and in
each Financial Report thereafter, two entities within the tax consolidated group lodged claims in the Federal Court of
Australia against the Commissioner of Taxation (‘the Commissioner’) in relation to a GST matter. This matter was heard
in Federal Court on 26 June 2012 and judgement on the case received on 15 April 2013. The decision that was handed
down did not have a material impact on the Group’s earnings.
An appeal was lodged on 5 June 2013 and the matter was heard on 20 November 2013. The appeal judgement was
received on 27 March 2014 and found in favour of the Commissioner. The Group lodged an application for special leave
to appeal to the High Court of Australia, which was refused on 17 October 2014. Subject to the final determination of
interest, costs and penalties, this matter is now concluded. Legal expenses and other associated costs in relation to this
matter continue to be expensed as incurred as disclosed in note 4.
The GST claim related to the operations of the inbound travel business, ATS Pacific Pty Ltd. As disclosed in note 31,
this business was sold to the AOT Group Limited on 30 September 2013. There is no material ongoing impact on the
Consolidated Income Statement of the Group as a consequence of this decision given the Group no longer operates an
inbound travel business.
8. Dividends paid and proposed
(a) Final dividend
PRIOR YEAR FINAL DIVIDEND
Fully franked dividend (0.5 cents per share, paid 4 October 2013)
(b) Franking credits
The franked portions of any future dividends paid after 30 June 2015 will be franked out
of existing franking credits or out of franking credits arising from the payment of income
tax in the year ending 30 June 2016. The amount of franking credits available for the
subsequent financial years are:
Franking credits available at the reporting date based on a tax rate of 30%
Franking credits that will arise from income tax (receivable)/ payable as at year end
CONSOLIDATED
2015
$’000
2014
$’000
–
–
2,203
2,203
CONSOLIDATED
2015
$’000
2014
$’000
29,702
(843)
28,859
30,229
485
30,714
The Company has stated that its policy is to pay a dividend payout ratio in the range of 40-60% of net profit after tax.
In the first half of the financial year ended 30 June 2015, the Company generated a net loss after tax and did not pay an
interim dividend. In accordance with the Company’s dividend policy, the Board has determined that the Company will not
pay a final dividend in relation to the financial year ended 30 June 2015.
The tax rate at which dividends will be franked is 30%. The level of franking is expected to be 100%.
The ability to utilise the franking credits is dependent upon the Company meeting solvency based tests for payment
of dividends set out in the Corporations Amendments (Corporate Reporting Reform) Act 2010. In accordance with tax
consolidation legislation, the Company, as the head entity in the tax consolidated group, has assumed the benefit of
franking credits of all entities.
75
9. Earnings per share (EPS)
The calculation of basic EPS for the year ended 30 June 2015 was based on the loss attributable to ordinary
shareholders of $201.1 million (2014: loss of $63.3 million) and a weighted average number of ordinary shares
outstanding of 440,430,578 (2014: 440,418,163).
(a) Basic loss per share
Total basic loss per share from continuing operations attributable to
ordinary equity holders of the Company
(b) Diluted loss per share
Total diluted loss per share from continuing operations attributable to
ordinary equity holders of the Company
CONSOLIDATED
2015
cents
2014
cents
(45.66)
(14.38)
(45.66)
(14.38)
CONSOLIDATED
2015
$’000
2014
$’000
(c) Reconciliations of loss used in calculating loss per share
Net loss for the year from continuing operations attributable to
the ordinary equity holders of the Company
(201,121)
(63,347)
(d) Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating
basic loss per share
Adjustments for calculation of diluted earnings per share:
Weighted average number of potential ordinary shares issued as part of the
Group’s Long Term Incentive Plan
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted loss per share
440,430,578
440,418,163
–
–
440,430,578
440,418,163
For the year ended 30 June 2015, the Company had a weighted average number of potential ordinary shares of
4,083,908 (2014: 6,122,096) that could potentially dilute basic EPS in the future, but were not included in the
calculation of EPS because they were antidilutive.
(e) Information concerning the classification of securities
The Company has 440,330,198 fully paid ordinary shares on issue.
helloworldlimited.com.au 10. Cash and cash equivalents
Cash at bank and on hand
Client cash
CASH AND CASH EQUIVALENTS IN THE STATEMENTS OF CASH FLOWS
CONSOLIDATED
2015
$’000
27,365
148,776
176,141
2014
$’000
28,469
155,851
184,320
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Client cash includes all monies entrusted to the Group by intending travellers or customers prior to travelling.
A corresponding liability is recorded on the consolidated statement of financial position while the cash is held on the
clients’ behalf prior to being paid to principals. In Australia, client cash is deposited into an account held exclusively for
client funds, separate to the general funds of the Group.
The Group’s exposure to interest rate risk is disclosed in note 24. The maximum exposure to credit risk at the end of
the year is the carrying amount of each class of cash and cash equivalents disclosed above.
11. Trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Accrued income
Prepayments
Other receivables
CONSOLIDATED
2015
$’000
53,587
(635)
52,952
31,227
15,362
5,328
51,917
2014
$’000
52,722
(795)
51,927
35,338
12,207
5,998
53,543
104,869
105,470
Trade receivables are non-interest bearing and are generally on 30 day terms.
Related party receivables
For terms and conditions of related party receivables, refer to note 26.
Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk is the fair value of the receivables. Collateral is not held as security, nor is it the
Group’s policy to transfer receivables to special purpose entities.
Credit, foreign exchange and interest rate risk
Details regarding credit, foreign exchange and interest rate risk exposure are disclosed in note 24.
77
12. Investments accounted for using the equity method
Investment in associates
Provision for diminution in value
CARRYING AMOUNT AT END OF FINANCIAL YEAR
Refer to note 28 for further information on investments in associates.
(a) Movements in carrying amounts
CARRYING AMOUNT AT THE BEGINNING OF THE FINANCIAL YEAR
Share of profits after income tax
Dividends received/receivable
Other movements
Decreases due to change in ownership interest
CARRYING AMOUNT AT END OF FINANCIAL YEAR
CONSOLIDATED
2015
$’000
514
(54)
460
2014
$’000
1,580
(638)
942
CONSOLIDATED
2015
$’000
942
162
(574)
(2)
(68)
460
2014
$’000
821
165
(48)
4
–
942
(b) Contingent liabilities of Associates
There are no contingent liabilities in associate investments for which the Group has a legal obligation to settle.
helloworldlimited.com.au 13. Property, plant and equipment
AT 30 JUNE 2013
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2013
Additions
Disposals
Amounts included in business disposed of
Foreign currency differences
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2014
AT 30 JUNE 2014
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2014
Additions
Disposals
Foreign currency differences
Transfers in/(out)
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2015
AT 30 JUNE 2015
Cost
Accumulated depreciation
NET BOOK AMOUNT
Land and
buildings
Office
equipment
Leasehold
improvements
$’000
$’000
$’000
751
(87)
664
664
–
–
(661)
7
(10)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23,806
(8,562)
15,244
15,244
4,199
(35)
(2,184)
114
(4,022)
13,316
22,738
(9,422)
13,316
13,316
2,476
(55)
18
(315)
(4,028)
11,412
23,953
(12,541)
11,412
13,591
(5,265)
8,326
8,326
688
(165)
(88)
160
(1,731)
7,190
13,697
(6,507)
7,190
7,190
217
(3)
(65)
65
(1,900)
5,504
12,768
(7,264)
5,504
Non-current assets pledged as security
Refer to note 18 for non-current assets pledged as security by the Group.
Total
$’000
38,148
(13,914)
24,234
24,234
4,887
(200)
(2,933)
281
(5,763)
20,506
36,435
(15,929)
20,506
20,506
2,693
(58)
(47)
(250)
(5,928)
16,916
36,721
(19,805)
16,916
79
14. Intangible assets
Goodwill
Franchise
systems
Brand
names Trademarks
Software
website,
and other1
$’000
$’000
$’000
$’000
$’000
AT 30 JUNE 2013
Cost
Accumulated amortisation and impairment
NET BOOK AMOUNT
BALANCE AT 1 JULY 2013
Additions
Additions through business combinations
Disposals
Impairment charge2 (note 4)
Amounts included in businesses disposed of
Foreign currency differences
Amortisation charge (note 4)
330,211
(28,262)
301,949
97,400
–
97,400
301,949
97,400
–
–
–
(59,500)
(8,375)
2,427
–
–
–
–
–
–
–
–
BALANCE AT 30 JUNE 2014
236,501
97,400
AT 30 JUNE 2014
Cost
Accumulated amortisation and impairment
NET BOOK AMOUNT
BALANCE AT 1 JULY 2014
Additions
Additions through business combinations
Impairment charge2 (note 4)
Foreign currency differences
Transfers in/(out)
Amortisation charge (note 4)
324,810
(88,309)
236,501
97,400
–
97,400
236,501
97,400
–
1,740
(205,300)
(410)
–
–
–
–
–
–
–
–
BALANCE AT 30 JUNE 2015
32,531
97,400
AT 30 JUNE 2015
Cost
326,536
97,400
Accumulated amortisation and impairment
(294,005)
–
NET BOOK AMOUNT
32,531
97,400
3,003
(263)
2,740
2,740
457
–
–
–
–
–
5,561
24,062
(1,632)
(10,209)
3,929
13,853
3,929
–
–
–
–
–
–
13,853
11,332
2,555
(83)
–
–
66
(1,672)
1,525
(680)
3,249
(5,917)
21,806
Total
$’000
460,237
(40,366)
419,871
419,871
11,789
2,555
(83)
(59,500)
(8,375)
2,493
(8,269)
360,481
3,460
(1,935)
1,525
1,525
59
–
–
–
250
(1,028)
806
3,529
(2,723)
806
5,561
33,838
465,069
(2,312)
(12,032)
(104,588)
3,249
21,806
360,481
3,249
–
–
–
–
–
21,806
12,286
–
–
291
–
(563)
2,686
(6,402)
27,981
360,481
12,345
1,740
(205,300)
(119)
250
(7,993)
161,404
5,561
45,866
478,892
(2,875)
(17,885)
(317,488)
2,686
27,981
161,404
1 Software, website, and other includes capitalised software and development costs, as well as other costs associated with the development
and/or acquisition of rights to intellectual property.
2 For the year ended 30 June 2014, the carrying value of the Retail segment goodwill has been reduced to its recoverable amount through
recognition of an impairment loss against goodwill. For the year ended 30 June 2015, the carrying value of the Retail segment and the
Wholesale segment goodwill have been reduced to their recoverable amounts through the recognition of an impairment loss against goodwill.
These items have been disclosed as a separate item in the Consolidated Income Statement.
helloworldlimited.com.au Impairment tests for goodwill and other indefinite life intangible assets
Goodwill is allocated to the Group’s cash generating units (CGUs) identified according to operating segment. The
franchise system is an indefinite life intangible asset entirely allocated to the Retail segment. Indefinite life Brand
names have all been directly allocated to the Retail segment.
A segment level summary of the goodwill allocation is presented below:
Retail
Wholesale
CONSOLIDATED
2015
$’000
22,597
9,934
32,531
2014
$’000
169,473
67,028
236,501
Impairment review
The Group tests whether goodwill and other indefinite life intangible assets have suffered any impairment on an
annual basis.
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow
projections based on internal segment level projections for the next 5 financial years and a steady-state terminal value
calculation at the end of year 5 which has equivalent revenue and operating expense growth of 2%. Internal revenue and
operating expense growth projections have been benchmarked against travel industry forecasts and general economic
projections where available.
Although not the primary measure to assess the recoverable amount of a CGU, the Group also assessed the recoverable
amount based on a fair value less cost of disposal. The fair value was measured having regard to two large parcels of
shares traded between shareholders in the second half of the financial year. These trades were priced between 36 to
39 cents per share and effectively value the Group at approximately $159 million to $172 million.
Key assumptions used for value-in-use calculations
The post-tax cash flows have been discounted at a post-tax rate of 10.9% (2014: 10.9%) per annum which approximates
the Group’s Weighted Average Cost of Capital (WACC). This discount rate has been derived using the Capital Asset
Pricing Model (CAPM) with the following associated inputs:
• Risk free rate: 4.4% (2014: 5.0%)
• Equity market risk premium: 6.0% (2014: 6.0%)
• Beta: 1.2 (2014: 1.2)
• Pre-tax cost of debt: 4.8% (2014: 4.9%)
• Long-term debt ratio: 25% (2014: 25%)
• Business-specific risk premium: 2.0% (2014: 1.5%)
The equivalent pre-tax discount rate for the Retail segment was 14.5% (2014: 14.2%) and for the Wholesale segment
was 14.2% (2014: 14.3%).
Average nominal revenue growth projections over the forecast period approximate industry growth rates, with forecast
growth rates for Retail of 3.0% and Wholesale of 2.0% and inflationary increases of 2.0% to 2.4% for operating
expenses.
The recoverable amount of the assets for the Retail segment after the goodwill impairment of $147.8 million was
$131.8 million. The impairment charge was a result of a reassessment of forecast earnings following a re-evaluation
of market growth assumptions. For the year ended 30 June 2014, the carrying value of the assets was $277.4 million,
subsequent to an impairment charge of $59.5 million.
The recoverable amount of the assets for the Wholesale segment after the goodwill impairment of $57.5 million was
$22.0 million. The impairment charge was a result of a reassessment of forecast earnings following a re-evaluation of
market growth assumptions. For the year ended 30 June 2014, the carrying value of the assets was $75.8 million.
81
Impact of possible changes in key assumptions
Value in use assumptions used to consider the recoverable amount of the assets are highly sensitive to changes in
certain key assumptions.
A summary of the impact of changing the key assumptions for the Retail and Wholesale value in use calculations is
outlined below:
Retail Segment
Wholesale Segment
Decrease in forecast
cash flows of 10%
Increase in impairment
of $13.2m
Increase in impairment
of $2.2m
Increase in discount rate
from 10.9% to 11.5%
Increase in impairment
of $8.5m
Increase in impairment
of $1.4m
Terminal rate decrease
from 2.0% to 1.5%
Increase in impairment
of $5.4m
Increase in impairment
of $0.9m
Franchise System
The Franchise System is an indefinite life intangible asset entirely allocated to the Retail segment. A description of the
nature of the Franchise System asset is contained in note 3(l)(iv).
The recoverable amount has been assessed at 30 June 2015 using an excess earnings calculation, which is consistent
with the methodology originally used to value the asset.
For the year ended 30 June 2015, the recoverable amount of the Franchise System was estimated to be $110.7 million
(2014: $125.7 million). This exceeds the carrying amount at 30 June 2015 by $13.3 million (2014: $28.3 million).
• Post-tax discount rate: 10.9% (2014: 10.9%)
The post-tax discount rate reflects the risks associated with the asset. The discount rate has been derived using the
Capital Asset Pricing Model (CAPM) and the inputs used in the model are consistent with those outlined above.
• Average nominal revenue growth projections of 3% per annum over the first 5 years in the forecast period and then
0% per annum growth thereafter.
• Terminal growth rate: 0% (2014: 0%)
• EBITDA margin: 14.4% (2014: 16.3%)
• Capital charges: range from -0.5% to 1.2% (2014: -0.6% to 1.2%)
The equivalent pre-tax discount rate for the Franchise System was 15.9% (2014: 16.4%).
Impact of possible changes in key assumptions:
The assumptions used in the excess earnings calculation are the most sensitive to the revenue growth projections and
then post-tax discount rate.
In order for an impairment to be recorded in respect of the Franchise System asset:
• Revenue growth would need to decline to 0% per annum; or
• The discount rate would need to increase to 12.2% post-tax
helloworldlimited.com.au 15. Deferred tax assets and liabilities
Deferred income tax at 30 June relates to the following:
(a) Deferred tax assets
Employee benefits
Payables and accruals
Tax losses
Property, plant and equipment
Other
GROSS DEFERRED TAX ASSETS
Set-off of deferred tax assets and liabilities pursuant to set-off provisions
NET DEFERRED TAX ASSETS
Deferred tax assets expected to be recovered within 12 months
Deferred tax assets expected to be recovered after more than 12 months
(b) Deferred tax liabilities
Accrued income
Defined benefit asset
Other
GROSS DEFERRED TAX LIABILITIES
Set-off of deferred tax assets and liabilities pursuant to set-off provisions
NET DEFERRED TAX LIABILITIES
Deferred tax liabilities expected to be settled within 12 months
Deferred tax liabilities expected to be settled after more than 12 months
CONSOLIDATED
2015
$’000
2014
$’000
3,410
11,541
2,174
159
1,129
18,413
(13,171)
5,242
14,345
4,068
18,413
4,061
13,336
1,841
313
1,408
20,959
(13,754)
7,205
12,601
8,358
20,959
(10,123)
(12,057)
(918)
(2,425)
(13,466)
13,171
(295)
(9,688)
(3,778)
(873)
(824)
(13,754)
13,754
–
(9,820)
(3,934)
(13,466)
(13,754)
83
(c) Movement in temporary differences during the year
DEFERRED TAX ASSETS
At 1 July 2013
(Charged)/credited:
– to profit or loss
– to other comprehensive income
AT 30 JUNE 2014
AT 1 JULY 2014
(Charged)/credited:
– to profit or loss
– to other comprehensive income
– direct to equity
AT 30 JUNE 2015
DEFERRED TAX LIABILITIES
At 1 July 2013
Charged/(credited):
– to profit or loss
– to other comprehensive income
AT 30 JUNE 2014
AT 1 JULY 2014
Charged/(credited):
– to profit or loss
– to other comprehensive income
AT 30 JUNE 2015
Employee
benefits
Payables
and
accruals
Property,
plant and
equipment
$’000
$’000
$’000
Tax
losses
$’000
Other
$’000
Total
$’000
3,743
14,726
383
1,731
–
20,583
318 (1,390)
–
–
4,061
13,336
(70)
–
313
110
–
1,841
1,076
332
1,408
44
332
20,959
4,061
13,336
313
1,841
1,408
20,959
(651)
(1,795)
(154)
333
112
(2,155)
–
–
–
–
–
–
–
–
(416)
(416)
25
25
3,410
11,541
159
2,174
1,129
18,413
Accrued
income
Defined
benefit
asset
$’000
$’000
Other
$’000
Total
$’000
11,229
378
1,913
13,520
828
–
12,057
12,057
(1,934)
–
10,123
–
495
873
873
–
45
918
(591)
(498)
824
237
(3)
13,754
824
13,754
1,525
(409)
76
121
2,425
13,466
helloworldlimited.com.au 16. Defined Benefit Plan
As part of the Merger arrangement, the Group entered into a Superannuation Deed with Qantas Airways Limited setting
out the arrangements which would apply (post-merger) to employees of the Group that are also members of the Qantas
Superannuation Plan (divisions of which are in the nature of Defined Benefit Plan). Under the deed, HLO assumed
responsibility for the plan assets and plan liabilities for these members in a new Defined Benefit Plan controlled
and managed by HLO. The plan assets and liabilities were transferred to HLO on 25 July 2011. This plan is closed to
new members.
The following sets out details in respect of the defined benefit plan only. The expense recognised in relation to the
defined benefit contribution plan is disclosed separately in note 4.
CHANGES IN THE PRESENT VALUE OF DEFINED BENEFIT OBLIGATION
Opening defined benefit obligation
Current service cost
Interest cost
Member contributions
Actuarial gains from changes in financial assumptions
Actuarial losses/(gains) from other changes
Payments from the plan
CLOSING DEFINED BENEFIT OBLIGATION
CHANGES IN THE FAIR VALUE OF PLAN ASSETS
Opening fair value of plan assets
Interest income
Return on plan assets (excluding interest income)
Employer contributions
Member contributions
Payments from the plan
CLOSING FAIR VALUE OF PLAN ASSETS
EXPENSE RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT
Current service cost
Interest cost
Interest income
TOTAL INCLUDED IN EMPLOYEE BENEFITS EXPENSE
CONSOLIDATED
2015
$’000
2014
$’000
10,200
11,799
854
441
151
(753)
901
(1,736)
10,058
13,110
519
669
407
151
(1,736)
13,120
854
441
(519)
776
976
462
152
–
(842)
(2,347)
10,200
13,059
516
1,238
492
152
(2,347)
13,110
976
462
(516)
922
ACTUAL RETURN GAIN ON PLAN ASSETS
669
1,238
Actuarial gains recognised during the year
Cumulative actuarial gains recognised
TOTAL AMOUNT RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION AT BEGINNING OF YEAR
Amount recognised in the statement of comprehensive income
Total expense
Employer contributions
TOTAL AMOUNT RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION AT END OF YEAR
521
4,406
2,910
521
(776)
407
3,062
2,080
3,885
1,260
2,080
(922)
492
2,910
85
GROUP PLAN ASSETS COMPRISE:
International equities
Australian equities
Property
Fixed interest, cash and indexed bonds
Private equity
Cash
RECONCILIATION TO STATEMENT OF FINANCIAL POSITION
Fair value of plan assets
Present value of defined benefit obligation
RECOGNISED ASSET IN THE STATEMENT OF FINANCIAL POSITION
CONSOLIDATED
2015
%
35.1
27.2
21.9
10.5
3.3
2.0
2014
%
31.3
29.8
18.1
12.1
3.3
5.4
100.0
100.0
CONSOLIDATED
2015
$’000
2014
$’000
13,120
(10,058)
3,062
13,110
(10,200)
2,910
At present the Group has no legal obligation to settle this liability with an immediate contribution or additional one off
contributions.
Significant estimates actuarial assumptions and sensitivity
The significant actuarial assumptions were as follows:
Discount rate
Expected rate of salary increases
4.50%
3.50%
4.00%
3.50%
IMPACT ON DEFINED
BENEFIT OBLIGATIONS
Increase
in assumption
Decrease
in assumption
Change
in assumption
2015
2014
2015
2014
2015
2014
Decrease
by 3.8%
Decrease
by 4.2%
Increase
by 3.9%
Increase
by 4.4%
Increase
by 3.9%
Increase
by 4.3%
Decrease
by 3.8%
Decrease
by 4.2%
0.25%
0.25%
0.25%
0.25%
Discount rate
Salary growth rate
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant.
In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the
sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the
defined benefit obligation calculated with the projected unit credit method at the end of the year) has been applied as
when calculating the defined benefit asset recognised in the balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the
prior year.
helloworldlimited.com.au Risk Exposure
The plan exposes HLO to risks such as interest rate risk, investment risk and inflation risk.
Interest Rate Risk
Interest rate risk results from the plan’s liabilities being discounted at a rate based on prevailing corporate bond yields
at each reporting date. Higher yields result in a lower value of the defined benefit obligation and lower yields result in a
higher value of the defined benefit obligation.
Investment Risk
The plan invests in a diversified investment strategy. Given the level of diversification in the underlying investments, the
plan is unlikely to suffer any significant loss from underperformance by the failure of an individual underlying security.
Salary Inflation Risk
The plan’s defined benefit obligations are linked to salary and therefore a higher than expected rate of salary inflation
results in higher defined benefit obligations, unless these inflationary increases are accompanied by compensating
higher rates of investment return.
The expected long-term rate of return is based on the weighted average of expected returns on each individual asset
class where the weightings reflect the proportion of defined benefit assets invested in each asset class. Each asset
class’ expected return is based on expectations of average returns over the next 10 years.
Actuarial gains and losses recognised in the Statement of Comprehensive Income arise as a result of changes in the
discount rate applied to calculate the net present value of employees’ benefits (due to changes in corporate bond rates
during the prevailing year), as well as fair value adjustments made to the value of plan assets, and changes in actuarial
assumptions around expected return on plan assets and expected rates of salary increases.
Defined benefit asset and employer contributions
The Group makes contributions to the plan which provides defined benefit amounts for employees upon retirement.
Under the plan, employees are entitled to retirement benefits determined, at least in part, by reference to a formula
based on years of membership and salary levels.
The Group monitors the plan asset balance on an annual basis and currently contributes at a rate of 14.7% of salaries
for Division 2 members and 10.9% for Division 3 members which is consistent with the plan actuary’s recommendation
in the most recent actuarial valuation as at 30 June 2014 (reported on 25 March 2015). The next actuarial valuation will
be as at 30 June 2017 and is expected to be completed by 31 December 2017.
Employer contributions are determined based on actuarial advice and are set to target the assets of the plan exceeding
the total of members’ vested benefits. Based on the contribution recommendations made in the most recent actuarial
investigation of the plan reported on 25 March 2015, the estimated net employer contributions will be approximately
$400,000 for the year ending 30 June 2016 (2015: $470,000).
The weighted average duration of the defined benefit obligation of the plan is estimated to be approximately 12 years
(2014: 12 years). A breakdown of plan liabilities by duration is as follows:
DEFINED BENEFIT OBLIGATION MATURITY ANALYSIS
30 June 2015 30 June 2014
Less than 5 years
Between 5 - 10 years
Between 10 - 20 years
Over 20 years
TOTAL
22.6%
17.2%
43.5%
16.7%
23.1%
16.0%
39.9%
21.0%
100.0%
100.0%
87
17. Trade and other payables
Trade payables
Accruals
Other payables
CONSOLIDATED
2015
$’000
2014
$’000
128,296
125,572
34,821
20,492
34,885
36,925
183,609
197,382
Trade creditors are non-interest bearing and are normally settled within 30 day terms. Non-trade payables and accruals
are non-interest bearing.
Related party payables
For terms and conditions of related party payables, refer to note 26.
Foreign exchange risk
Details regarding foreign exchange risk exposure are disclosed in note 24.
helloworldlimited.com.au 18. Borrowings
CURRENT
Unsecured financing
NON-CURRENT
Secured bank loan
Less: deferred borrowings costs
NET NON-CURRENT INTEREST BEARING LIABILITIES
Financing arrangements
The following lines of credit were available at balance date:
TOTAL FACILITIES
Secured bank loan – AUD
Secured bank loan – AUD1
Secured bank loan – NZD $10m
Secured multi-option credit facilities – multi currency2
USED AT THE REPORTING DATE
Secured bank loan – AUD
Secured bank loan – AUD1
Secured bank loan – NZD $10m
Secured multi-option credit facilities – multi currency2
UNUSED AT BALANCE DATE
Secured bank loan – AUD
Secured bank loan – AUD1
Secured bank loan – NZD $10m
Secured multi-option credit facilities – multi currency2
CONSOLIDATED
2015
$’000
2014
$’000
–
892
24,861
(1,616)
23,245
25,319
(1,974)
23,345
CONSOLIDATED
2015
$’000
2014
$’000
32,100
15,000
8,861
40,000
95,961
32,100
15,000
9,319
40,000
96,419
16,000
16,000
–
8,861
10,345
35,206
16,100
15,000
–
29,655
60,755
–
9,319
9,928
35,247
16,100
15,000
–
30,072
61,172
Maturity
17/04/2019
Amortising
17/04/2019
17/04/2019
1 $15 million amortising tranche. $1 million amortised in each of October 2015 and April 2016. Further $1.5 million amortised in each of
October 2016 and April 2017. Further $2.0 million amortised in each of October 2017, April 2018, and October 2018. Remaining $4.0 million
amortised on April 2019.
2 Multi-option facilities at 30 June 2015 and 30 June 2014 used entirely for Bank Guarantees and Letters of Credit.
89
(a) Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
Secured bank loan
CONSOLIDATED
2015
$’000
2014
$’000
24,861
25,319
The Australian and New Zealand bank loans are secured against the assets of those entities included in the Deed of
Cross Guarantee of the Group, as detailed in note 30. These entities do not operate as licensed travel agents and are not
subject to any other external regulation preventing them from providing encumbrances.
The multi-option multi-currency facility can be drawn at any time. The maturity dates for the facility and loans are
outlined above.
(b) Set-off of assets and liabilities
There are currently no contractual arrangements establishing a legal right to set-off assets and liabilities with any
financial institutions.
(c) Fair values
Information about the carrying amounts and fair values of interest bearing liabilities is disclosed in note 24.
(d) Risk exposures
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 24.
helloworldlimited.com.au 19. Provisions
CURRENT
Employee benefits – annual leave
Employee benefits – long service leave
Lease make good
Restructuring
Onerous lease contracts
Other
NON-CURRENT
Employee benefits – long service leave
Onerous lease contracts
(a) Movements in provisions
CONSOLIDATED
2015
$’000
2014
$’000
4,949
4,671
1,353
925
57
1,096
13,051
1,041
389
1,430
4,797
4,121
1,394
1,130
187
1,123
12,752
981
389
1,370
Total
$’000
4,223
330
(328)
48
(441)
(12)
3,820
3,431
389
3,820
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
CONSOLIDATED
Lease
make good
$’000
Restructuring
$’000
Onerous lease
contracts
$’000
NET BOOK AMOUNT
Balance at 1 July 2014
Provisions charged to income statement
1,394
–
1,130
22
Unused amounts released to income statement
(2)
–
Unwind of discount
–
–
576
–
(175)
48
Payments made/transfers from provision
(39)
(227)
–
Foreign currency differences
–
–
BALANCE AT 30 JUNE 2015
Current
Non-current
TOTAL
1,353
1,353
925
925
–
–
1,353
925
(3)
446
57
389
446
Other
$’000
1,123
308
(151)
–
(175)
(9)
1,096
1,096
–
1,096
(b) Nature and timing of provisions
Lease make good
A provision is recognised in respect of existing lease contracts for the estimated present value of expenditure required
to complete dismantling and site restoration obligations under those contracts at balance date. Future dismantling
and restoration costs are reviewed annually. Any changes are reflected in the present value of the lease make good
provision at the end of the reporting year.
The amount of the provision for future lease make good costs is capitalised and amortised in accordance with the
policy set out in note 3(i). The unwinding of the effect of discounting of the provision, where relevant, is recognised as a
finance expense.
Onerous lease contracts
A provision for onerous lease contracts is recognised when the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at
the present value of the expected cost of terminating the contract and the expected net cost of continuing the contract.
91
Restructuring
Restructuring and redundancy provisions are recognised as an expense when the Group has made a commitment to the
process, and this has been agreed and communicated to those affected.
(c) Amounts not expected to be settled within the next 12 months
The Group does not expect all employees to take the full amount of accrued leave or require payment within the next
12 months.
20. Deferred revenue
Deferred revenue
Details on the deferred revenue accounting policy are contained in note 3(r).
21. Capital and reserves
(a) Shares on issue
AS AT 30 JUNE 2015
Fully paid ordinary shares of Helloworld Limited
Less: shares bought back, not yet cancelled
CONTRIBUTED EQUITY
AS AT 30 JUNE 2014
Fully paid ordinary shares of Helloworld Limited
CONTRIBUTED EQUITY
CONSOLIDATED
2015
$’000
69,294
69,294
2014
$’000
66,019
66,019
CONSOLIDATED
Number
of Shares
$’000
440,356,334
278,763
(26,136)
(8)
440,330,198
278,755
440,548,572
440,548,572
278,822
278,822
HLO Ordinary Shares
Holders of ordinary shares in HLO are entitled to receive dividends as declared from time to and time and are entitled
to one vote per share at HLO shareholders’ meetings. In the event of the winding up of HLO, ordinary shareholders rank
after creditors and are fully entitled to any proceeds on liquidation. There is only one class of share on issues in HLO.
(b) Movements in shares on issue
OPENING BALANCE 1 JULY 2013
Issue to Long Term Incentive Plan participants on 19 September 2013
BALANCE 30 JUNE 2014
On market buy-back and share cancelation 15 December 2014
On market buy-back of shares held by the Company but not yet cancelled
BALANCE 30 JUNE 2015
CONSOLIDATED
Number
of Shares
$’000
439,953,581
278,822
594,991
–
440,548,572
278,822
(192,238)
(26,136)
(59)
(8)
440,330,198
278,755
helloworldlimited.com.au (c) Accumulated losses
(ACCUMULATED LOSSES) / RETAINED PROFITS AT THE BEGINNING OF THE FINANCIAL YEAR
Loss after income tax expense for the year
Dividends paid (note 8)
Actuarial gain on defined benefit plans, net of tax
CONSOLIDATED
2015
$’000
(62,070)
(201,121)
–
177
2014
$’000
1,894
(63,347)
(2,203)
1,586
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(263,014)
(62,070)
(d) Other reserves
RESERVES
Foreign currency translation reserve
Hedging reserve
Predecessor accounting reserve
Share-based payment reserve
Share-based payment trust reserve
Movements:
FOREIGN CURRENCY TRANSLATION RESERVE
BALANCE 1 JULY
Currency translation differences arising during the year
Amounts reclassified to profit or loss on disposal of net investment in foreign operations
BALANCE 30 JUNE
HEDGING RESERVE
BALANCE 1 JULY
Revaluation – gross
Deferred tax
BALANCE 30 JUNE
PREDECESSOR ACCOUNTING RESERVE
BALANCE 1 JULY
Revaluation
BALANCE 30 JUNE
SHARE-BASED PAYMENT RESERVE
BALANCE 1 JULY
Share-based payment expense
Transfer from share-based payment trust reserve
BALANCE 30 JUNE
SHARE-BASED PAYMENT TRUST RESERVE
BALANCE 1 JULY
On market purchases of shares
Transfer from share-based payment trust reserve
BALANCE 30 JUNE
2,485
1,057
2,205
(90)
156,400
156,400
1,694
–
1,895
(246)
161,636
160,164
2,205
280
–
2,485
(90)
1,639
(492)
1,057
197
1,283
725
2,205
1,494
(2,457)
873
(90)
156,400
156,400
–
–
156,400
156,400
1,895
90
(291)
1,694
(246)
(45)
291
–
1,808
87
–
1,895
–
(246)
–
(246)
93
Nature and currency of other reserves
Foreign currency translation reserve
Exchange differences arising on translation of the foreign operations are taken to the foreign currency translation
reserve, as described in note 3(d). The cumulative amount is reclassified to profit or loss when the net investment is
disposed of.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedging transactions that have not yet occurred, as described in note 3(s). Amounts are
reclassified to the income statement when the associated hedge transaction affects profit and loss.
Predecessor accounting reserve
Any differences between the net assets acquired and the consideration provided in relation to common control
transactions are recorded in the predecessor accounting reserve, as described in note 3(w). Under common control, the
Company has recorded the interest in the acquired company based on the book values of the assets and liabilities that
were previously attributable to the subsidiary at the highest level of consolidation. As a result, no fair value adjustments
are recorded on the acquisition.
Share-based payments reserve
The share-based payments reserve is used to recognise the grant date fair value of Performance Rights issued to
eligible employees but not exercised.
Share-based payments trust reserve
Where any Group company or trust purchases the Company’s equity instruments, for example purchases of shares by
the Helloworld Employee Share Trust, the consideration paid, including any directly attributable incremental costs (net
of income taxes) is recorded in the share based payments trust reserve until the shares are cancelled or reissued. Where
such ordinary shares are subsequently reissued, any consideration paid, net of any directly attributable incremental
transaction costs and the related income tax effects, is transferred to the share based payments reserve.
helloworldlimited.com.au 22. Auditors’ remuneration
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms.
AUDIT SERVICES
Auditor of the Company – PricewaterhouseCoopers (PwC) Australia
– Audit and review of Financial Statements
– Related practices of PwC Australia
– Non – PwC audit firms
OTHER SERVICES
Auditor of the Company – PwC Australia
– Taxation compliance services
– Other services
RELATED PRACTICES OF PwC AUSTRALIA
– Tax
– Other
CONSOLIDATED
2015
$
2014
$
775,000
156,103
36,730
967,833
105,350
91,600
196,950
58,364
93,854
152,218
710,000
157,089
18,245
885,334
62,000
100,237
162,237
65,364
30,560
95,924
TOTAL AUDITORS’ REMUNERATION
1,317,001
1,143,495
95
23. Reconciliation of Loss after income tax to net cash
from/(used in) operating activities
LOSS AFTER INCOME TAX EXPENSE FOR THE YEAR
Adjustments for:
Depreciation and amortisation
Non-controlling interests
Gain on sale of non-current assets
Impairment losses on trade receivables
Share of profit in associates
Share based payments expense
(Gain/)loss on disposal of investments
Amortisation of borrowing costs
Impairment of goodwill
Changes in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other financial assets
Decrease in trade and other payables
Increase/(decrease) in other provisions
Increase in other non-current liabilities
Movements in tax balances
NET CASH FROM/(USED IN) OPERATING ACTIVITIES
There were no non cash financing and investing activities undertaken during the year (2014: nil).
CONSOLIDATED
2015
$’000
2014
$’000
(201,121)
(63,347)
13,921
14,032
10
(29)
138
(162)
83
(340)
450
104
(7)
207
(165)
115
5,473
–
205,300
59,500
(830)
(2,660)
(11,990)
299
281
1,363
4,713
2,308
3,410
(45,781)
(1,611)
560
(5,643)
(30,845)
helloworldlimited.com.au 24. Financial risk management
The Group’s principal financial instruments comprise receivables, payables, cash, short-term deposits, borrowings and
derivatives. The Group manages its exposure to key financial risks, including currency risk in accordance with a set of
policies approved by the Board. The Group’s policy is to not enter into, issue or hold derivative financial instruments for
speculative trading purposes.
Financial Risk management is carried out by Group Treasury under policies approved by the Board of Directors. Group
Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 3.
The Group holds the following financial instruments:
FINANCIAL ASSETS
Cash and cash equivalents
Trade receivables
Derivative financial instruments
FINANCIAL LIABILITIES
Trade and other payables (excludes accruals)
Interest bearing liabilities
Derivative financial instruments
CONTINGENT FINANCIAL LIABILITIES
Bank Guarantees and Letters of Credit
CONSOLIDATED
2015
$’000
2014
$’000
176,141
52,952
1,627
184,320
51,927
–
230,720
236,247
148,788
24,861
37
162,497
26,211
2,710
173,686
191,418
10,345
10,345
9,928
9,928
97
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
Management monitors rolling forecasts of the Group’s liquidity reserves (comprising the undrawn facilities outlined
in note 18) and cash and cash equivalents (outlined in note 10) on the basis of expected cash flows. Financing
arrangements are outlined in note 18.
The following table summarises the contractual undiscounted cash flows of financial liabilities as at 30 June 2015 and
30 June 2014.
Carrying
amount
CONSOLIDATED
Contractual cash flows
0–6
months
$’000
6–12
months
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
$’000
More
than
5 years
$’000
Total
$’000
2015
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and other payables
148,788 148,788
–
–
–
–
Interest bearing liabilities – secured1
24,861
1,507
1,469
2,328
2,241 26,827
Interest bearing liabilities – unsecured
Bank Guarantees and Letters of Credit
–
–
–
–
3,342
3,499
–
697
–
289
DERIVATIVE FINANCIAL LIABILITIES
–
–
–
– 148,788
– 34,372
–
–
–
866
1,210
442 10,345
Interest rate swaps
37
37
–
–
–
–
–
–
37
173,686 153,674
4,968
3,025
2,530 27,693
1,210
442 193,542
Carrying
amount
CONSOLIDATED
Contractual cash flows
0–6
months
$’000
6–12
months
$’000
1 to 2
years
$’000
2 to 3
years
$’000
3 to 4
years
$’000
4 to 5
years
$’000
$’000
More
than
5 years
$’000
Total
$’000
2014
NON-DERIVATIVE FINANCIAL LIABILITIES
Trade and other payables
162,497 162,497
–
–
–
–
–
Interest bearing liabilities – secured1
25,319
1,523
1,528
3,128
3,199
2,774 27,516
Interest bearing liabilities – unsecured
892
–
892
–
–
–
–
– 162,497
– 39,668
–
892
Bank Guarantees and Letters of Credit
–
2,847
2,786
1,549
697
289
899
861
9,928
DERIVATIVE FINANCIAL LIABILITIES
Cash flow hedges
Interest rate swaps
1 Excludes deferred borrowing costs
2,551
2,374
159
–
177
–
–
159
–
–
–
–
–
–
–
–
2,551
159
191,418 169,241
5,383
4,836
3,896
3,063 28,415
861 215,695
Details on the interest bearing liabilities and facilities, including maturity dates are contained in note 18.
helloworldlimited.com.au
Market risk
The Group has exposure to market risk in the areas of foreign exchange and interest rates. The following section
summarises the Group’s approach to managing these risks.
(i) Foreign exchange risk
Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates. The source and nature of this risk arises predominantly from Wholesale
operations. In order to protect against exchange rate movements, the Group has entered into forward exchange
contracts to purchase foreign currencies. These contracts are hedging highly probable forecasted purchases for the
ensuing financial year and are timed to mature when payments to suppliers are scheduled to be made.
On initial designation of the hedge, the Group formally documents the relationship between the hedging instruments
and the hedged items, including the risk management objectives and strategy in undertaking the hedge transaction,
together with the methods that will be used to assess the effectiveness of the hedging relationship. Forward foreign
exchange contracts are used to hedge a portion of remaining foreign currency exposure within specific parameters. For
this to occur the Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing
basis, whether the hedging instruments are expected to be effective in offsetting the changes in the fair value or cash
flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results
of each hedge are within a range of 80-125%. For a cash flow hedge of a forecast transaction, the transaction should be
highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported
net income.
As at 30 June 2015, the Group’s net exposure to foreign currency risk is set out in the table below. The table includes
the following:
• foreign cash holdings as at year end;
• receivables denominated in foreign currencies as at year end;
• current trade payables and forward payment obligations in foreign currencies as at year end; and
• foreign currency exchange contracts outstanding as at year end.
CURRENCY
USD
EUR
GBP
FJD
NZD
Other currencies
NET TOTAL FOREIGN CURRENCY EXPOSURE LIABILITY
AUD EQUIVALENT
2015
$’000
(2,899)
(1,666)
(908)
(2,577)
(325)
(4,240)
(12,615)
2014
$’000
(2,325)
(1,240)
(337)
(1,661)
(195)
(1,571)
(7,329)
99
The following table summarises the impact of a reasonably possible change in foreign exchange rates on net profit.
For the purpose of this disclosure, the sensitivity analysis assumes a 10% increase and decrease in foreign exchange
rates. Sensitivity analysis assumes hedge effectiveness as at 30 June 2015. This analysis also assumes that all other
variables, including interest rates, remain constant.
10% increase
10% decrease
CONSOLIDATED
2015
$’000
2,017
(2,465)
2014
$’000
1,837
(2,245)
Interest rate risk
(ii)
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Group’s exposure to interest rate risk is on its cash assets and its cash
borrowings issued at variable rates. Cash includes short-term deposits amounting to $62.0 million (2014: $66.0 million)
paying a weighted average fixed rate of 2.72% per annum (2014: 3.27%). The Group has entered into interest rate
swaps to mitigate interest rate risk on its variable rate borrowings. Other funds are held in operational and foreign
currency bank accounts and during the year earned interest at market rates under normal commercial terms.
All short-term deposits are fixed rate instruments and accordingly, a change of 100 basis points per annum in interest
rates at the reporting date would have no impact on the profit and the net equity of the Group (2014: nil).
Credit risk
Credit risk is the potential loss from a transaction in the event of a default by the counterparty during the term of
the transaction or on settlement of the transaction. Credit exposure is measured as the cost to replace existing
transactions should a counterparty default.
The Group conducts transactions with the following major types of counterparties:
• Trade debtor counterparties: the credit risk is the recognised amount, net of any impairment loss. As at 30 June 2015,
this amounted to $53.0 million (2014: $51.9 million). The Group has credit risk associated with travel agents, airlines,
industry settlement organisations and direct suppliers. The Group minimises credit risk through the application of
stringent credit policies and accreditation of travel agents through industry programs; and
• HLO’s most significant supplier is Qantas Airways Limited and its subsidiaries, details of these transactions are
outlined in note 26.
Where specific credit risk is identified with a counterparty, the Group requires pre-payment for services provided.
A reservation for such a counterparty is not confirmed or ticketed prior to receiving payment in full. Due to the short
term nature of these receivables, their carrying amount is assumed to be their fair value.
The maximum exposure to credit risk is the fair value of the receivables. Collateral is not held as security, nor is it the
Group’s policy to transfer receivables to special purpose entities.
helloworldlimited.com.au The ageing of trade receivables not considered impaired, or provided for as impaired, at 30 June was:
Neither past due nor impaired
Past due 1 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past due 91 – 120 days
More than 120 days
TOTAL
CONSOLIDATED
2015
$’000
47,476
2,960
1,695
507
243
71
2014
$’000
44,965
2,612
1,003
791
1,149
1,407
52,952
51,927
As at 30 June 2015, trade receivables of $5.5m million (2014: $7.0 million) were past due but not impaired. These relate
to a number of independent counterparties for whom there is no recent history of default.
There are no significant other receivables, or other classes of receivables, that have been recognised that would
otherwise, without negotiation, have been past due or impaired. It is expected that these amounts will be received when
due. The Group does not hold any collateral in relation to these receivables.
The ageing of trade receivables identified as impaired at 30 June was:
Neither past due nor impaired
Past due 1 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past due 91 – 120 days
More than 120 days
TOTAL
Movements in the allowance for impairment losses in respect of trade receivables are as follows:
BALANCE AT 1 JULY
Additional provisions recognised
Writeback of provision
Receivables written off during the year as uncollectable
Foreign currency differences
BALANCE AT 30 JUNE
CONSOLIDATED
2015
$’000
2014
$’000
10
–
58
277
5
285
635
14
7
8
377
9
380
795
CONSOLIDATED
2015
$’000
795
138
(221)
(61)
(16)
635
2014
$’000
918
207
(299)
(62)
31
795
An allowance for impairment losses is made when there is objective evidence that a trade receivable is impaired. In the
current year an additional $0.1 million (2014: $0.2 million) provision has been recognised by the Group. The amount of
the allowance is measured as the difference between the carrying amount of the trade receivables and the estimated
future cash flows expected to be received from the relevant debtors.
101
The table below sets out the maximum exposure to credit risk at 30 June:
MAXIMUM CREDIT RISK EXPOSURE
Cash and cash equivalents
Trade and other receivables
CONSOLIDATED
2015
$’000
176,141
104,869
281,010
2014
$’000
184,320
105,470
289,790
The Group undertakes transactions with a large number of customers and other counterparties in various countries in
accordance with Board approved policy. Where a higher than acceptable credit risk is identified with a counterparty, the
Group looks to implement measures which minimise the risk of losses and in some cases seeks to renegotiate customer
trading terms by requiring the customer to prepay on purchases in advance of confirmation of a travel booking.
Net fair values
The net fair values of cash, cash equivalents and non-interest bearing financial assets and financial liabilities
approximate their carrying values due to their short maturity.
The fair values of financial assets and liabilities, together with their carrying amounts in the statement of financial
position, for the Group are as follows:
CONSOLIDATED
ASSETS
Cash and cash equivalents
Trade and other receivables
LIABILITIES
Trade creditors
Other payables
Interest bearing liabilities - current
Interest bearing liabilities – non-current
2015
2014
CARRYING
AMOUNT
$’000
NET FAIR
VALUE
$’000
CARRYING
AMOUNT
$’000
NET FAIR
VALUE
$’000
176,141
104,869
281,010
128,296
20,492
–
23,245
172,033
176,141
104,869
281,010
128,296
20,492
–
24,861
173,649
184,320
105,470
289,790
125,572
36,925
892
23,345
186,734
184,320
105,470
289,790
125,572
36,925
892
25,319
188,708
helloworldlimited.com.au Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
The Group’s forward exchange contracts are recognised at their fair value determined using forward exchange rates at
the balance sheet date, with the resulting value discounted back to present value.
CONSOLIDATED 2015
ASSETS
Net derivative financial assets
Total assets
CONSOLIDATED 2014
LIABILITIES
Net derivative financial liabilities
Total liabilities
Capital management
Level 1
$’000
–
–
Level 1
$’000
–
–
Level 2
$’000
1,590
1,590
Level 2
$’000
2,710
2,710
Level 3
$’000
–
–
Level 3
$’000
–
–
Total
$’000
1,590
1,590
Total
$’000
2,710
2,710
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. The Board monitors both the return on capital and the level of dividends to
ordinary shareholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders.
There were no other changes in the Group’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
103
25. Commitments and contingencies
Lease commitments - as lessee
Non-cancellable operating lease rentals are payable as follows:
Within one year
One to five years
More than five years
AGGREGATE LEASE EXPENDITURE CONTRACTED FOR AT YEAR END
CONSOLIDATED
2015
$’000
6,817
10,661
26
17,504
2014
$’000
7,925
15,407
148
23,480
The Group has entered into commercial leases on property and certain items of office equipment. These leases have an
average life of between 2 and 12 years and generally provide the Group with a right of renewal at which time all terms
are renegotiated. There are no restrictions placed upon the lessee by entering into these leases.
The Group recognised rent expenses of $10.5 million in the year (2014: $11.5 million).
Lease commitments - as lessor
The Group sub-leases surplus office space under operating leases. The Group also leases one investment property. The
future minimum lease receipts under these leases are as follows:
Within one year
One to five years
AGGREGATE LEASE INCOME CONTRACTED FOR AT YEAR END
CONSOLIDATED
2015
$’000
848
1,257
2,105
2014
$’000
636
1,245
1,881
The Group recognised lease rental income of $0.7 million (2014: $0.1 million). Rental income is derived from the sub
lease of surplus office space and lease of one investment property. In addition to this the Group received rental income
for which rent is derived from sub lease arrangements on a month by month contract basis. The future minimum lease
receipts above do not include expected future income from these arrangements owing to short term nature of the
arrangement.
Guarantees
Other than the Deed of Cross Guarantee entered into with its subsidiaries, as outlined in note 30, HLO has on issue at
30 June 2015 bank guarantees and letters of credit totalling $10.3 million (2014: $9.9 million).
Contingencies
There are no significant contingent liabilities.
GST Claim before the Federal Court of Australia
The Group was previously involved in a legal case in relation to a GST matter, which was concluded in October 2014.
Additional information in relation to the matter is disclosed in note 7(g).
helloworldlimited.com.au 26. Related party transactions
(a) Subsidiaries
Details relating to subsidiaries are included in note 27.
(b) Ultimate and direct parent
Helloworld Limited (HLO) is the legal owner of the Group. However, under the applicable accounting standards, a
reverse acquisition by Stella Travel Services Holdings Pty Limited (STSH) is deemed to have occurred on the Merger
of STSH with HLO. Consequently, for accounting purposes, STSH is accounted for as the ultimate and direct parent
entity of the Group.
(c) Entities with significant influence over the Group
QH Tours Limited (a wholly owned subsidiary of Qantas Airways Limited) holds 28.9% of the ordinary shares of HLO
and Europe Voyager NV holds 23.3% of the ordinary shares of HLO. Under the Merger agreement QH Tours Limited
and Europe Voyager NV were entitled to appoint two Board members each. In accordance with the Merger agreement,
in the event that these Board members resign from their directorship, the Merger agreement does not allow for these
shareholders to nominate an alternate Director. Currently, one of each of the QH Tours Limited and Europe Voyager NV
Directors appointed at the time of the Merger remain on the Board of HLO. At the time of the Merger, UBS Australia
Holdings Limited (UBSAHL) was also able appoint a Board member, and at 30 June 2014 held 17.9% of ordinary shares
of HLO and were therefore considered to have significant influence at that time. As at 30 June 2015, UBSAHL held
7.0% of ordinary shares and had no Board members appointed, and therefore no longer possessed significant influence
over HLO as at 30 June 2015.
As at 30 June 2015, Sintack Pty Ltd is also considered to have significant influence over the Group, holding 19.5% of
the ordinary shares of HLO and having one Director on the Board of HLO. There are no restrictions on changing Board
members. Sintack Pty Ltd was not part of the initial Merger agreement.
(d) Key management personnel compensation
Short term employee benefits
Long term employee benefits
Share-based payment benefits
Post-employment benefits
Detailed remuneration disclosures are provided in the remuneration report on pages 26 to 39.
CONSOLIDATED
2015
$
2015
$
3,425,604
4,514,060
14,106
(18,445)
135,823
19,245
103,432
128,246
3,557,088
4,764,983
105
(e) Transactions with related parties
The following transactions were carried out with related parties:
TRADING TRANSACTIONS
(i) Revenue derived from:
Associates of the Group
Entities with significant influence over the Group1
Other related parties3
(ii) Expenses incurred as a result of transactions with:
Entities with significant influence over the Group1
Other related parties3
(iii) Dividends received from:
Associates of the Group
YEAR END BALANCES
(i) Assets:
Associates of the Group
Entities with significant influence over the Group1
(ii) Liabilities:
Associates of the Group
Entities with significant influence over the Group1
TRANSACTIONS ASSOCIATED WITH THE MERGER
(i) Payments for employee related statutory entitlements2 to:
Entities with significant influence over the Group1
CONSOLIDATED
2015
$’000
2014
$’000
124
54,783
26
2,220
5
574
11
7,966
6
3,516
119
57,277
–
2,294
–
48
1,431
12,684
1,422
3,951
7,948
11,319
2
1 QH Tours Limited (a wholly owned subsidiary of Qantas Airways Limited) holds 28.9% of the ordinary shares of HLO and Europe Voyager NV
holds 23.3% of the ordinary shares of HLO. Sintack Pty Ltd held 19.5% of the ordinary shares of HLO at 30 June 2015 and is considered to
have significant influence from 18 May 2015 when a Director representing the entity was appointed.
In addition to ordinary trading transactions and as part of the Merger agreement, the Group entered into an umbrella agreement with Qantas
Airways Limited (and its controlled entities). The agreement was intended to facilitate a transition to arrangements directly between HLO and
relevant third party suppliers and provide for the continuation of the ordinary course of business activities of the Group. Services provided
under the agreement include shared services, national sales agency agreements, IT services, labour recharges, frequent flyer arrangements,
intellectual property rights and website agreements.
Includes transactions with Director related entities and key management personnel.
3
Terms and conditions of related party receivables and payables
Related party trade receivables are non-interest bearing and are generally on 30 day terms. The Group settles related
party trade payables according to the payment conditions confirmed by the supplier of services.
Qantas Airways Limited and Qantas Holidays Limited are party to the Qantas Frequent Flyer Program Participating
(Retail) Agreement (the Agreement).
helloworldlimited.com.au (f) Transactions with Director related entities
Year ended 30 June 2015
P Spathis was reappointed as a Director of HLO on 18 May 2015 (he was previously a director during the period
30 June 2002 to 28 November 2012). P Spathis represents Sintack Pty Ltd, which holds 19.5% of the ordinary shares
of HLO. P Spathis is a corporate executive with Consolidated Travel Pty Limited. Sintack Pty Ltd is controlled by
Mr Alysandratos. Mr Alysandratos also holds a controlling interest in Consolidated Travel Pty Limited and is a director
of Consolidated Travel Pty Limited and Chesters Nominees Pty Ltd. HLO held a sub-lease agreement with Consolidated
Travel Pty Limited during the year for which $0.02 million of income was received.
Year ended 30 June 2015 and year ended 30 June 2014
A Cummins is a director of STS UK Holdco II Limited, STS UK Holdco I Pty Limited and Global Voyager Holdings Pty
Limited which are controlled by Europe Voyager NV, also a shareholder which is deemed to have significant influence
over HLO. In addition, A Cummins is a director of Mantra Group Limited (formerly Mantra Group Holdings I Pty Limited)
which EV Hospitality NV is deemed to have significant influence over. EV Hospitality NV is considered a related party of
HLO as EV Hospitality NV and Europe Voyager NV are commonly controlled entities. Details of transactions with STS UK
Holdco II Limited and Mantra Group Limited are included in part (e).
E Gaines was a director of Global Voyager Holdings Pty Limited and STS UK Holdco I Pty Limited until 9 September
2014 and of Global Voyager Group Admin Pty Limited until 26 November 2014. These entities are controlled by Europe
Voyager NV, also a shareholder and deemed to have significant influence over HLO. In addition, E Gaines was a director
of Mantra Group Limited (formerly Mantra Group Holdings I Pty Limited) which EV Hospitality NV is deemed to have
significant influence over until 26 November 2014. EV Hospitality NV is considered a related party of HLO as EV
Hospitality NV and Europe Voyager NV are commonly controlled entities. Details of transactions with these companies
and their related entities are included in part (e).
(g) Transactions with key management personnel
Transactions with key management personnel are outlined in the Remuneration Report on pages 26 to 39.
(h) Terms and conditions
Sales to and purchases from related parties are made at arm’s length at normal market prices and on normal commercial
terms.
Transactions relating to dividends are on the same terms and conditions applicable to other shareholders. Outstanding
balances are unsecured and are repayable in cash.
(i) Guarantees
Guarantees provided or received for any related party receivables or payables have been disclosed in note 18.
107
27. Particulars in relation to controlled entities as at 30 June 2015
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 3(a). The proportion of ownership interest is
equal to the proportion of voting power held.
CONTROLLED ENTITIES
Helloworld Limited
Jetset Travelworld Network Pty Limited
Jetset Pty Limited
JTG Corporate Pty Limited
Helloworld Services Pty Limited
National Cruise Centre Pty Limited
Helloworld Group Pty Limited
QBT Pty Limited
Qantas Holidays Limited
ACN 139 386 520
Travelworld Pty Limited
Retail Travel Investments Pty Limited
Harvey World Travel Group Pty Limited
Harvey World Travel Franchises Pty Limited
Travelscene Pty Limited
Harvey World Travel International Pty Limited
Travelscene Tickets Pty Limited
Transonic Travel Pty Limited
Stella Travel Services (Australia) Pty Limited
Travel Indochina Limited
Best Flights Pty Limited
World Aviation Systems (Australia) Pty Limited
Global Aviation Services Pty Limited
Stella Travel Services (NZ) Limited
Atlantic and Pacific Business Travel Limited
GP Holiday Shoppe Limited
Gullivers Pacific Limited
Harvey World Travel (2008) Ltd
Just Tickets Limited
United Travel Limited
Harvey World Travel New Zealand Limited
Retail Travel Investments (NZ) Limited
Atlantic & Pacific Business Travel Pty Limited
Travel Co Investments No. 2 Pty Limited
Montarge Pty Limited
Travel Advantage Pty Limited
Helloworld NZ Limited
Global Aviation Services (Australasia) Limited
Biztrav Limited
Aus STS Holdco II Pty Limited
Stella Travel Services Group Pty Limited
Betanza Pty Limited
ACN 003 683 967
Travelscene Holidays Pty Limited
Concorde International Travel Inc.
Stella Travel Services USA Inc.
Note
1, 2
2
2
2
ABN/ACN
60 091 214 998
23 124 732 136
30 098 029 362
128 834 588
2
85 124 719 508
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
86 135 179 485
47 108 306 243
50 128 382 187
24 003 836 459
72 139 386 520
81 074 285 224
094 188 100
073 203 291
059 507 587
001 763 819
073 203 264
056 166 682
103 179 326
003 237 296
UK# 0525 0591
095 507 010
003 237 189
099 065 040
NZ# 182 9492
NZ# 519 813
NZ# 1953 053
NZ# 128 2538
NZ# 593 524
NZ# 155 6299
NZ# 100 6869
NZ#563 846
NZ# 115 681
061 265 610
111 633 624
100 625 607
004 009 296
NZ #92 083
NZ# 127 5961
NZ# 833 384
138 225 331
097 772 702
072 181 161
003 683 967
111 606 743
Helloworld Group
Ownership Interest
Country of
incorporation
2015
%
2014
%
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
UK
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
USA
USA
N/A
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
72
100
100
100
100
100
100
100
N/A
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
72
100
100
100
100
100
100
100
helloworldlimited.com.au
CONTROLLED ENTITIES
Harvey Holidays Pty Limited
Encore Business Tourism Pty Limited
QBT (NZ) Limited
Travel Indochina Vietnam Co. Ltd
Travel Indochina Lao Co Limited
Advanced Applications (UK) Limited
Helloworld Franchising Pty Limited
Helloworld Digital Pty Limited
Helloworld IP Pty Limited
Insider Journeys Limited
Helloworld Group
Ownership Interest
Country of
incorporation
2015
%
2014
%
Note
ABN/ACN
061 284 866
57 006 805 625
Australia
Australia
3
NZ# 3982078
New Zealand
2
2
2
4
UK# 067 33115
164 402 304
164 402 215
164 402 288
09367296
Vietnam
Laos
UK
Australia
Australia
Australia
UK
100
100
–
95
70
100
100
100
100
100
100
100
100
95
70
100
100
100
100
–
1 Helloworld Limited is the legal owner of the Group. However, under the applicable accounting standards, a reverse acquisition by Stella Travel
Services Holdings Pty Limited is deemed to have occurred on the Merger at 30 September 2010. Consequently, for accounting purposes,
Stella Travel Services Holdings Pty Limited is the parent entity of the Group.
2 Pursuant to ASIC Class Order 98/1418 (as amended), these controlled entities are relieved from the Corporations Act 2001 requirements for
preparation, audit and lodgement of financial statements.
3 QBT (NZ) Limited was deregistered on 20 January 2015.
4
Insider Journeys Limited was incorporated on 24 December 2014.
Transactions with non-controlling interests
There were no other transactions with non-controlling interests during the year, other than those disclosed in this report.
28. Investments in associates
Information relating to associates is set out below:
INVESTMENTS IN ASSOCIATES
Harvey World Travel Southern Africa (Pty) Limited
Merraford Pty Limited
Maridore Pty Limited
Resortpac Pty Limited
Vallane Pty Limited
Fine Travel Pty Limited
Travel Co Investments Pty Limited
Tour Managers (Fiji) Limited
Harvey World Travel Strategy Group Ltd
Note
1
2
3
4
5
6
7
ABN/ACN
Country of
incorporation
SA# 1981/00 1738/07
South Africa
100 625 581
100 625 572
064 579 273
100 625 643
109 344 587
110 761 923
Fiji# 16936
Australia
Australia
Australia
Australia
Australia
Australia
Fiji
NZ# 569 145
New Zealand
1 The Group disposed of its investment in Harvey World Travel Southern Africa (Pty) Limited on 10 July 2015.
2 The Group disposed of its investment in Merraford Pty Limited on 1 December 2014.
3 The Group disposed of its investment in Maridore Pty Limited on 30 April 2015.
4 The Group disposed of its investment in Resortpac Pty Limited on 9 January 2015.
5 The Group disposed of its investment in Vallane Pty Limited on 12 December 2014.
6 The Group disposed of its investment in Fine Travel Pty Limited on 8 July 2014.
7 The Group disposed of its investment in Travel Co Investments Pty Limited on 22 December 2014.
Helloworld Group
Ownership Interest
2015
%
50
–
–
–
–
–
–
33
50
2014
%
50
25
30
30
39
30
49
33
50
109
29. Parent entity information
As at, and throughout the financial year ended 30 June 2015, the legal parent company of the Group was Helloworld
Limited.
RESULT OF THE PARENT ENTITY
Loss after income tax
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
FINANCIAL POSITION OF PARENT ENTITY AT YEAR END
Current assets
Non-current assets
TOTAL ASSETS
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share-based payments reserve
Share-based payment trust reserve
Accumulated losses
TOTAL EQUITY
COMPANY
2015
$’000
2014
$’000
(168,249)
(105,056)
(168,249)
(105,056)
72,901
150,992
223,893
48,318
–
48,318
175,575
62,509
323,155
385,664
41,852
1
41,853
343,811
435,688
435,755
1,598
–
(261,711)
175,575
1,764
(246)
(93,462)
343,811
An impairment review was undertaken at 30 June 2015. The loss for the year includes impairment of $172.4 million
($2014: 104.0 million) recorded against the carrying value of Helloworld Limited’s investments in subsidiaries.
Helloworld Limited (HLO) is the legal owner of the Group. However, under the applicable accounting standards, a reverse
acquisition by Stella Travel Services Holdings Pty Limited (STSH) is deemed to have occurred on the Merger of STSH
and HLO. For accounting purposes, STSH is the deemed parent entity of the Group.
Parent entity guarantees in respect of debts of its subsidiaries
The legal parent Helloworld Limited has entered into a Deed of Cross Guarantee with the effect that the Company
guarantees debts in respect of its subsidiaries. Details of the Deed of Cross Guarantee and the subsidiaries subject to
the deed are disclosed in note 30.
Parent entity tax liabilities in respect of its subsidiaries
The parent entity has entered into a tax funding agreement with the effect that the Company guarantees tax liabilities
of other entities in the tax consolidated group. As at 30 June 2015 the tax consolidated group had a tax receivable due
of $0.8 million (2014: $0.3 million).
Parent entity commitments and contingencies
The parent entity has no contractual commitments for the acquisition of property, plant and equipment and no
contingent liabilities as at 30 June 2015 (2014: none).
helloworldlimited.com.au 30. Deed of cross guarantee
Pursuant to Class Order 98/1418, the entities identified in note 27 are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial statements and Directors’ reports.
As a condition of the Class Order, Helloworld Limited, Travelworld Pty Limited and Jetset Pty Limited (Closed Group)
entered into a Deed of Cross Guarantee on 25 May 2007. National Ticket Centre Pty Limited, Qantas Holidays
Limited and QBT Pty Limited joined the Deed of Cross Guarantee on 28 November 2008. Jetset Travelworld Network
Pty Limited, JTG Corporate Pty Limited, Helloworld Services Pty Limited, National Cruise Centre Pty Limited and
ACN 139 386 520 Pty Limited were added to the Deed on 2 December 2009. Following the Merger of STSH and HLO,
Stella Travel Services Group Pty Ltd, Aus STS Holdco II Pty Ltd, Stella Travel Service Holdings Pty Ltd, Transonic Travel
Pty Limited and Travelscene Pty Ltd joined the Deed of Cross Guarantee on 31 March 2011. The effect of the Deed is
that Helloworld Limited has guaranteed to pay any deficiency in the event of the winding up of the controlled entities or
if they do not meet their obligations under the terms of overdrafts, loans, leases or other liabilities subject to guarantee.
The controlled entities which are party to the Deed have also given a similar guarantee in the event Helloworld Limited
is wound up or if it does not meet its obligations under the terms of overdrafts, loans, leases or other liabilities subject
to guarantee.
On 31 March 2011 Travelworld Pty Limited, Jetset Pty Limited, National Ticket Centre Pty Limited, Qantas Holidays
Limited and QBT Pty Limited ceased to be members of the Closed Group, the class action applied to these members
for a period of up to 6 months following formal notice to ASIC of their intention to leave. These entities were de-
consolidated from the Closed Group in 2012.
On 15 June 2015, Helloworld Franchising Pty Limited, Helloworld IP Pty Limited, Helloworld Digital Pty Limited,
Helloworld Group Pty Limited, Global Aviation Services Pty Limited, Retail Travel Investments Pty Limited, Harvey World
Travel Group Pty Limited, Harvey World Travel International Pty Limited, Best Flights Pty Limited, and World Aviation
Systems (Australia) Pty Limited were added to the Deed. Jetset Pty Limited, Travelworld Pty Limited, and QBT Pty
Limited were also re-admitted to the Closed Group on this date.
The Closed Group consolidated income statement and statement of financial position have been prepared in accordance
with the accounting policy note 3(a), comprising the Company and the controlled entities which are party to the Deed,
after eliminating all transactions between parties to the Deed of Cross Guarantee and is set out below.
111
(a) Closed Group income statement, statement of comprehensive income and
summary of movements in retained earnings for the year ended 30 June
CLOSED GROUP INCOME STATEMENT
REVENUE
Employee benefits expenses
Advertising, selling and marketing expenses
Communication and technology expenses
Occupancy and rental expenses
Operating expenses
Impairment of investments
Depreciation and amortisation
Loss on disposal of investments
OPERATING LOSS
Finance expense
LOSS BEFORE INCOME TAX
Income tax benefit
LOSS AFTER INCOME TAX
Closed Group statement of comprehensive income
LOSS AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or loss:
Change in fair value of cash flow hedges net of income tax
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX
TOTAL COMPREHENSIVE LOSS FOR THE YEAR, NET OF INCOME TAX
2015
$’000
2014
$’000
58,387
17,234
(34,935)
(14,728)
(20,396)
(5,736)
(3,895)
(6,997)
(1,152)
(955)
(15,384)
(26,780)
(137,400)
(1,234)
(89)
–
(1,153)
(8,146)
(160,682)
(42,677)
(2,625)
(2,484)
(163,307)
(45,161)
10,868
11,711
(152,439)
(33,450)
(152,439)
(33,450)
85
85
114
114
(152,354)
(33,336)
Summary of movements in Closed Group retained earnings
(ACCUMULATED LOSSES)/RETAINED EARNINGS AT THE BEGINNING OF THE FINANCIAL YEAR
(28,313)
7,340
Retained earnings transferred in due to changes in Closed Group
Current year loss
Dividends paid
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
42,821
–
(152,439)
(33,450)
–
(2,203)
(137,931)
(28,313)
helloworldlimited.com.au (b) Closed Group statement of financial position as at 30 June
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Income tax receivable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Investments
Deferred tax assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Derivative financial instruments
Deferred revenue
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
Deferred tax liabilities
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Other reserves
Accumulated losses
TOTAL EQUITY
2015
$’000
2014
$’000
7,467
5,386
317,344
203,268
843
299
325,654
208,953
560
520
4,408
1,213
182,202
358,274
5,073
5,697
450
632
192,693
518,347
366,336
575,289
454,865
382,008
–
37
102
892
159
50
6,246
4,414
461,250
387,523
14,384
14,026
731
601
602
1,449
2,656
1,762
18,373
17,838
479,623
405,361
38,724
169,928
174,880
196,839
1,775
1,402
(137,931)
(28,313)
38,724
169,928
113
31. Business acquisitions and disposals
(a) Acquisition of company owned stores
During the year the Group acquired the assets of two businesses for a combined consideration of $1.7 million.
As a result of the aquisitions the Group recognised $1.7 million of intangible assets representing the goodwill acquired
on purchase of the businesses.
(b) Disposal of the Inbound operations in the prior year
On 29 August 2013, the Group announced the disposal of its investment in Allied Tour Services Pacific Limited,
Coral Sun Limited, Tourist Transport Fiji Limited, Great Sights Fiji Limited and Australian Travel Services (Pacific)
Limited. As part of the same transaction, the Group also disposed of the net assets associated with the ATS Pacific
Australia business.
These businesses have not been reclassified as discontinued operations as they were not material to the Group
Consolidated Income Statement or Group Consolidated Financial Position.
On 30 September 2013, the disposal of the investment in Australian Travel Services (Pacific) Limited (a company
incorporated in New Zealand) and the net assets associated with the ATS Pacific Australia business was completed.
The sale of the investment for the companies domiciled in Fiji (being Allied Tour Services Pacific Limited, Coral Sun
Limited, Tourist Transport Fiji Limited and Great Sights Fiji Limited) received regulatory approval from the Reserve
Bank of Fiji and the Fiji Revenue & Customs Authority on 4 April 2014.
The comparative figures as at 30 June 2014 includes the impact of the sale of the Australian, New Zealand and
Fijian businesses.
(i) Details of sale of the Inbound operations
CONSIDERATION RECEIVED OR RECEIVABLE:
Cash
Adjustment for working capital at completion date
Fair value of contingent consideration
TOTAL DISPOSAL CONSIDERATION
Carrying amount of net assets sold
Equity reserves brought to account
LOSS ON SALE BEFORE INCOME TAX
Income tax benefit
LOSS ON SALE AFTER INCOME TAX
$’000
2,637
924
900
4,461
(10,193)
259
(5,473)
192
(5,281)
The disposal was finalised during the year ended 30 June 2015 resulting in a profit before tax of $340,000 being
recognised in the Consolidated Income Statement in the current year.
helloworldlimited.com.au (ii) Carrying amounts of assets and liabilities associated with the Australian, New Zealand
and Fijian businesses
The carrying amounts of assets and liabilities at sale completion date were:
Client cash1
Receivables and other debtors (including client debtors)
Prepayments
Property, plant and equipment
Goodwill
TOTAL ASSETS
Creditors and other liabilities (including client creditors)
Provisions
Unearned income
TOTAL LIABILITIES
NET ASSETS DISPOSED
$’000
5,653
6,269
826
2,933
8,375
24,056
(10,178)
(1,737)
(1,948)
(13,863)
10,193
1
Client cash includes monies entrusted to the Group by intending travellers or customers prior to travelling. The amount of client cash disposed
by the business was equal to the net client liability position for the businesses disposed.
(c) Acquisition of Advanced Applications (UK) Limited in the prior year
On 1 November 2013, Helloworld Services Pty Limited (a wholly owned subsidiary) acquired 100% interest in the
business of Advanced Applications (UK) Limited (Advanced Applications) for consideration of $2.4 million. This
comprises cash consideration of $1.8 million and deferred consideration of $0.6 million payable on 31 October 2016.
As a result of the acquisition, the Group recognised intangible assets of $2.4 million representing intellectual property
owned by Advanced Applications which is used in the Group’s Air Tickets business.
115
32. Share-based payments
(a) Long Term Incentive Plan (LTIP)
Background
The Board has adopted the Helloworld Limited Performance Rights Plan (‘Plan’) and the Plan was approved by
Shareholders at the 2011 AGM. Under the Plan conditional rights to acquire shares in the Company (‘Performance
Rights’) are awarded to eligible senior executives of the Company as the long term incentive component of their
remuneration for each relevant financial year.
Each Performance Right (PR) generally gives the holder a conditional right to acquire one fully paid share in the Company
if any applicable performance or other vesting conditions are satisfied (or waived).
Administration and Awards made under the Plan
The Plan is administered by the Plan Committee, which is currently the Remuneration and Nominations Committee.
The Plan Committee determines the number of PRs to be granted to each eligible employee and the amount payable
by the holder of a PR on exercise. The current intention is that participants will not be required to pay any amount in
respect of the award of PRs or on acquisition of shares pursuant to the exercise or conversion of PRs.
Performance Criteria and Vesting
The Plan Committee may, in its absolute discretion, specify performance or other vesting conditions that must be
satisfied for a grant of PRs to vest, and may determine the performance period over which any such condition must be
satisfied.
If an Award of PRs specified any performance conditions, the PR will not vest and become a vested PR unless those
performance conditions have been satisfied, reached or met during the applicable performance period (unless otherwise
determined by the Plan Committee). The Plan Committee has retained the discretion under the Plan to vary the terms
of PRs by reducing or waiving any applicable performance conditions, reducing any applicable performance period,
determining a new share acquisition date or period end and, where applicable, determining a new first or last exercise
date (at any time and in any particular case).
Change of Control Provisions
Unless otherwise determined by the Plan Committee, if a change of control event occurs, all of a participant’s PRs will
vest and become Vested PRs even though any applicable performance conditions may not have been satisfied at that
time. A change of control event means:
• A person acquires voting power (within the meaning of section 610 of the Corporations Act) in more than 50% of
the shares in the Company as a result of a takeover bid or through a scheme of arrangement; or
• Any other event (including a merger of the Company with another company) which the Board determines in its
absolute discretion, to be a change of control event.
As outlined in the Remuneration Report, the Board is reviewing this policy in the year ended 2016.
helloworldlimited.com.au Lapse of PRs
Unless otherwise determined by the Plan Committee, all unvested PRs held by a participant will lapse in certain
circumstances, including if:
• the participant voluntarily resigns from their employment or is dismissed from their employment for a reason
which entitles their employer to terminate their employment without notice in circumstances that are, in the Plan
Committee’s opinion such that the PRs should lapse (including as a result of poor performance); or
• any applicable performance conditions are not satisfied, met or reached by the end of the applicable performance
period (or any extended performance period).
If a participant ceases employment in various other circumstances before the end of the performance period applicable
to their unvested PRs, then (unless the Plan Committee determines otherwise) only a proportion of those PRs will lapse.
This proportion will be determined by reference to the fraction of the performance period during which the employee
will not be an employee.
Performance Conditions for Awards made for the year ending 30 June 2011, 30 June 2012,
30 June 2013, 30 June 2014 and 30 June 2015
The PRs granted for the years ending 30 June 2011, 30 June 2012, 30 June 2013, 30 June 2014 and 30 June 2015 are
subject to performance conditions linked to growth in the Company’s Adjusted earnings per share (‘Adjusted EPS’).
Adjusted EPS is EPS adjusted for significant, non-recurring and/or unusual items as approved by the Remuneration and
Nominations Committee (RNC). Adjusted EPS is a financial measure which is not prescribed by Australian Accounting
Standards but is a measure used by the RNC to assess the vesting of PRs. The Adjusted EPS performance targets are
set by management and approved by the Board. They are determined by reference to cumulative basic Adjusted EPS,
aggregated over the applicable performance period, measured against a specified Adjusted EPS target approved by
the RNC.
To achieve vesting, the aggregate Adjusted EPS performance for each performance period must meet or exceed the
applicable targets determined by the Plan Committee.
Fifty per cent (50%) of each tranche of the PRs will vest at the minimum specified EPS performance, one hundred
per cent (100%) at or above the maximum specified performance, with ‘straight line’ vesting in between.
117
Awards and Performance Conditions made in relation to the former CEO sign-on bonus
Awards were made under the Plan to R Gurney as a ‘sign-on bonus’ following his appointment as Managing Director and
Chief Executive Officer (CEO) effective 27 August 2012. The vesting date of the PRs was the second anniversary of
R Gurney’s commencement date, that is, 27 August 2014. There were no performance conditions related to these rights
as they were granted as an incentive for the CEO to join the Company. The PRs vested on 27 August 2014 and he was
granted 815,217 shares which were purchased on market by the Group.
Set out below are summaries of PRs granted under the plan:
Start of
perfor-
mance
period
End of
perfor-
mance
period
Exercise
price1
Balance
at the
start of
the year
Grant
date
Granted
during
the year
Exercised
during
the year
Lapsed
during
the year
Balance
at the
end of
the year
Vested and
exercisable
at end of
the year
CONSOLIDATED
Tranche
2015-12
2015-2
2015-3
2014-12
2014-22
2014-32
27–Feb–153
1–Jul–14 30–Jun–15
27–Feb–153
1–Jul–14 30–Jun–16
27–Feb–153
1–Jul–14 30–Jun–17
22–Nov–13
1–Jul–13 30–Jun–15
22–Nov–13
1–Jul–13 30–Jun–16
22–Nov–13
1–Jul–13 30–Jun–17
$
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Number of shares
– 1,582,778
– 1,582,778
– 1,630,741
– (1,582,778)
–
– (397,223) 1,185,555
– (409,259) 1,221,482
121,823
121,823
125,516
–
–
–
– (121,823)
– (121,823)
– (125,516)
Former CEO’s
Sign-on bonus 27–Aug–12 27–Aug–12 27–Aug–14
$0.00
815,217
– (815,217)
–
2013-12
2013-22
2013-3
2012-1
2012-22
2012-32
2011-1
2011-2
2011-33
TOTAL
26–Jun–12
1–Jul–12 30–Jun–14
26–Jun–12
1–Jul–12 30–Jun–15
26–Jun–12
1–Jul–12 30–Jun–16
26–Jun–12
1–Jul–11 30–Jun–13
26–Jun–12
1–Jul–11 30–Jun–14
26–Jun–12
1–Jul–11 30–Jun–15
1–Oct–10
1–Jul–10 30–Jun–12
1–Oct–10
1–Jul–10 30–Jun–13
1–Oct–10
1–Jul–10 30–Jun–14
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
474,380
716,722
738,441
–
474.381
521,420
–
–
–
–
–
–
–
–
–
–
287,740
– (145,366)
(142,374)
4,397,463 4,796,297 (960,583)(5,448,023) 2,785,154
WEIGHTED AVERAGE EXERCISE PRICE
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
1 Vested PRs automatically convert when performance targets are met and vesting date is realised. The PRs are not subject to an exercise price.
2 The performance conditions for 2011-3 were met with 50.5% vesting on 27 August 2014. The performance conditions for the 2012-2 and
2013-1 were not met and, following testing, these PRs lapsed. The performance conditions for the 2012-3, 2013-2, and 2015-1 tranches
were not met and, following testing, these PRs lapsed. Tranches 2014-1, 2014-2, and 2014-3 are considered to have lapsed prior to 30 June
2015 as a result of Elizabeth Gaines’ resignation.
3 The PRs for all executives were granted on 27 February 2015, except for Elizabeth Gaines’ rights, which were granted subsequent to the AGM
on 22 December 2014.
During the period 960,583 (2014: 594,991) PRs converted into ordinary shares. These shares were purchased by the
Group on the open market at a weighted average price of 30 cents per share.
The weighted average remaining contractual life of PRs outstanding at the end of the year was 1.44 years.
–
–
–
–
–
–
–
–
–
–
–
–
– (474,380)
– (716,722)
– (360,324)
378,117
–
–
– (474,381)
– (521,420)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
helloworldlimited.com.au Fair value of PRs granted
The assessed fair value at grant date of PRs granted during the year ended 30 June 2015 was:
• 2015 Tranches 1, 2, and 3, 27 cents per share
Fair value of PRs granted
The assessed fair value at grant date of PRs granted during the year ended 30 June 2014 was:
• 2014 Tranches 1, 2, and 3, 34 cents per share
• Former CEO Special Performance Incentive, 40 cents per share.
The fair value at grant date is calculated taking into account the share price on grant date and the exercise price.
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefits
expense were $0.1 million (2014: $0.1 million).
33. Events after the reporting period
No matter or circumstance has arisen since 30 June 2015 that has significantly affected, or may significantly affect the
Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years.
119
DIRECTORS’
DECLARATION
In the directors’ opinion:
(a)
The consolidated financial statements and notes that are set out on pages 50 to 119 and the
Remuneration report in the Directors’ Report set out on pages 26 to 39, are in accordance with
the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), other mandatory professional reporting requirements and the
Corporations Regulations 2001; and
(b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
(c)
At the date of this declaration there are reasonable grounds to believe that the Company and
the Group entities identified in note 27 will be able to meet any obligations or liabilities to
which they are or may become subject to by virtue of the deed of cross guarantee between the
Company and those Group entities pursuant to ASIC Class Order 98/1418.
Note 2(a) confirms that the consolidated financial statements also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Brett Johnson
Chairman, Helloworld Limited
Sydney, 28 August, 2015
helloworldlimited.com.au
Independent auditor’s report
to the members of Helloworld Limited
Report on the financial report
We have audited the accompanying financial report of Helloworld Limited (the Company),
which comprises the consolidated statement of financial position as at 30 June 2015, the
consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for
the year ended on that date, a summary of significant accounting policies, other explanatory
notes and the directors’ declaration for Helloworld Group (the consolidated entity). The
consolidated entity comprises the Company and the entities it controlled at year’s end or
from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In note 2(a), the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit.
We conducted our audit in accordance with Australian Auditing Standards. Those standards
require that we comply with relevant ethical requirements relating to audit engagements
and plan and perform the audit to obtain reasonable assurance whether the financial report
is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the consolidated entity’s preparation and fair presentation of the financial report
in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 2000
T +61 2 8266 0000, F +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation
121
An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Helloworld Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at
30 June 2015 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
(ii)
(b)
the financial report and notes also comply with International Financial Reporting
Standards as disclosed in note 2(a).
Report on the Remuneration Report
We have audited the remuneration report included in pages 26 to 39 of the directors’ report for
the year ended 30 June 2015. The directors of the Company are responsible for the preparation
and presentation of the remuneration report in accordance with section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of Helloworld Limited for the year ended 30 June
2015, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Kristin Stubbins
Partner
Sydney
28 August 2015
helloworldlimited.com.au
ASX ADDITIONAL
INFORMATION
Additional information required by the ASX and not shown elsewhere in this report is as follows.
The information is current as at 11 August 2015.
(a) Distribution of equity securities
The number of shareholders, by size of holding, are:
SHARES RANGE
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
TOTAL
Number
of holders
133
263
152
304
74
926
Number
of Shares
58,445
749,784
1,274,837
9,423,391
428,849,877
440,356,334
%
0.01
0.17
0.29
2.14
97.39
100.00
All issued ordinary shares carry one vote per share and carry the right to dividends. The number of holders holding a less
than marketable parcel of ordinary shares based on the market price as at 11 August 2015 was 180 holders holding
120,443 shares.
(b) Twenty largest holders of quoted equity securities
The names of the 20 largest registered holders of quoted shares are:
FULLY PAID ORDINARY SHARES AS AT 11 AUGUST 2015
ORDINARY SHAREHOLDERS
Q H TOURS LTD
EUROPE VOYAGER NV
SINTACK PTY LTD
THE BURNES GROUP PTY LTD
UBS AUSTRALIA HOLDINGS PTY LIMITED
AOT GROUP LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
EDWRITE PTY LTD
ELIZABETH ANNE GAINES
BERNE NO 132 NOMINEES PTY LTD
JUST SUPER CO PTY LTD
ZARN NOMINEES PTY LTD
MR CRAIG GRAEME CHAPMAN
CHESTERS NOMINEES PTY LTD
GOLDEN VENTURE PTY LTD
MRS DANA ANDREA ROSENZWEIG
MR LEO DIMOS + MRS HELEN DIMOS
HERITAGE CARE PTY LTD
Number
of Shares
127,340,726
102,568,377
86,040,096
31,000,000
30,632,738
13,980,629
5,278,584
4,808,678
4,070,330
1,815,251
1,219,318
1,195,300
1,173,886
1,165,782
1,000,000
800,000
602,230
580,000
550,000
538,681
416,360,606
%
28.92
23.30
19.54
7.04
6.96
3.18
1.20
1.09
0.92
0.41
0.28
0.27
0.27
0.26
0.23
0.18
0.14
0.13
0.12
0.12
94.56
123
(c) Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
SUBSTANTIAL SHAREHOLDER
QH Tours Ltd
Europe Voyager NV
Sintack Pty Ltd
The Burnes Group Pty Ltd
UBS Australia Holdings Pty Ltd
Number
of Shares
127,340,726
102,568,377
88,013,982
44,980,629
30,632,738
%
28.92
23.30
19.99
10.21
6.96
(d) On-market share buy-back program
On 27 August 2014, Helloworld Limited announced an on-market share buy-back program of up to 2.5% of the
Company’s issued share capital. The buyback concluded on 27 August 2015. A total of 218,374 ordinary shares or
0.05% of the Company’s issued share capital was acquired by the Company under the buyback and cancelled.
(e) On-market purchases of securities for employee incentive scheme
The Company purchased 146,336 ordinary shares on-market during the reporting period to satisfy the vesting of
performance rights under its Long Term Incentive Plan.
The average price per ordinary share paid by the Company for these shares was $0.30.
(f) Details of restricted securities
The Company has 8,298 ordinary shares subject to escrow and transfer restrictions. These restrictions relate to an
historical share option plan and an associated loan from an entity with the consolidated group to the Chief Executive
Officer. The restrictions will cease on repayment of the loan.
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