2016
Annual Report
Helloworld Limited
For the year ended 30 June 2016
ABN: 60 091 214 998 ASX CODE: HLO
i
CONTENTS
Corporate Information
Glossary
Chairman’s Report
Chief Executive Officer’s Report
Financial Performance Summary
Directors’ Report
Auditors Independence Declaration
Corporate Governance Statement
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors Report
ASX Additional Information
2
3
4
6
8
9
38
39
46
47
48
49
50
112
113
115
1
CORPORATE INFORMATION
Directors
Auditor
Rob Marcolina (Chairman)
Andrew Burnes (Chief Executive Officer)
Cinzia Burnes
Peter Spathis
Andrew Cummins
Company Secretary
Michael Burnett
Registered and principal office
Level 14
80 Pacific Highway
North Sydney NSW 2060
Telephone: +61 2 8229 4000
Facsimile: +61 2 8290 4009
PricewaterhouseCoopers (PwC) Australia
Darling Park Tower 2
201 Sussex St
Sydney NSW 2000
Stock exchange
ASX Limited
Level 4
20 Bridge Street
Sydney NSW 2000
ASX code
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.helloworldlimited.com.au
helloworldlimited.com.au GLOSSARY
The following terms have been used through this Annual Report:
EBITDA
Earnings before interest, tax, depreciation, amortisation and impairment
AGM
AOT
ASIC
ASX
CEO
CFO
Annual General Meeting
AOT Group Pty Ltd and it’s controlled entities
Australian Securities & Investments Commission
Australian Securities Exchange
Chief Executive Officer
Chief Financial Officer
Company
The parent entity, Helloworld Limited
CVC
EPS
FAR
FY13
FY14
FY15
FY16
FY17
GM
Group
HLO
HTS
HTSH
KMP
LTIP
Plan
PR
Qantas
QBT
QH
RNC
SMEs
STIP
TTV
Means any of CVC Capital Partners and its controlled entities
Earnings per share
Fixed Annual Remuneration
Financial Year ended 30 June 2013
Financial Year ended 30 June 2014
Financial Year ended 30 June 2015
Financial Year ended 30 June 2016
Financial Year ended 30 June 2017
General Manager
The Helloworld Group, comprising Helloworld and its controlled entities
Helloworld Limited and its controlled entities
Helloworld Travel Services Holdings Pty Ltd and its subsidiaries
Helloworld Travel Services Holdings Pty Ltd
Key Management Personnel
Long Term Incentive Plan
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
Total Transaction Value
3
CHAIRMAN’S REPORT
On behalf of the Board of Directors
I am very pleased to present my
first report as Chairman of
Helloworld Limited.”
The financial year ended 30 June 2016 has been one of evolution for
Helloworld Limited (Helloworld) with the achievement of a number of
key highlights.
The merger of Helloworld Limited with the AOT Group to create the
second largest integrated travel distribution business in Australia
and New Zealand markets, offering a broader range of products and
services and generating increased sales and earnings. The merger
exceeded the previously identified $7.6 million of merger synergies
with the streamlining and consolidation of various departments.
For the year ended 30 June 2016, Helloworld Limited Group achieved
an EBITDA of $25.3 million, an increase of 5.2% from FY2015. TTV
increased 8.3% to $5.09 billion for the year ended 30 June 2016.
Revenue from operating activities was $297.9 million, a 6.7% increase
on the previous year.
helloworldlimited.com.au Profit before income tax was $3.5 million for the year
ended 30 June 2016, a significant improvement on the
prior year loss of $198.4 million. The 2015 loss after tax
is stated after non-cash goodwill impairment of $205.3
million.
Basic earnings for the year was a profit of 1.89 cents
per share and the Group announced a 2.0 cents per share
dividend, the first time a dividend has been provided
since 2013.
Further details of the financial performance of the Group
are included in the Operating and Financial Review on
pages 14 to 23.
Earlier this year helloworld was awarded multiple Awards
at the Australian Federation of Travel Agents (AFTA)
National Travel Industry Awards (NTIA) including the
highly coveted ‘Best Travel Agency Group (50 outlets or
more) and the ‘Best Non-Branded Travel Agency Group’
for helloworld for business. As well as an additional four
agent and agency winners at the 2016 NTIA awards in
Australia and four at the 2015 TAANZ NTIA awards in
New Zealand.
Sunlover Holidays was awarded ‘Best Wholesaler –
Australian Product’ at the Australia 2016 NTIA awards
and Go Holidays was awarded the 2015 TAANZ NTIA
award for Best Wholesaler in New Zealand.
Looking ahead
Looking ahead, Helloworld Limited has started the
new financial year with a strong position and strong
opportunities for growth. Under the leadership of CEO
and Managing Director Andrew Burnes and Executive
Director Cinzia Burnes, the newly created, yet highly
experienced senior leadership group will build on recent
successes and continue to achieve positive results for
our future.
I would like to take this opportunity to congratulate the
senior leadership team for their substantial contribution
in getting the company into the position we are in now. I
would also like to acknowledge my fellow Board Members
for their contribution during this time.
Thank you to the shareholders for your continued support.
Helloworld Limited is in a strong position to consolidate
on the hard work undertaken this year and the board
and management team are committed to maximising
our potential and growing shareholder value in the
years ahead.
We will all be working together to achieve great things for
the long-term future of Helloworld Limited.
Rob Marcolina
Chairman
Helloworld Limited
Sydney, 25 August 2016
5
CHIEF EXECUTIVE OFFICER’S REPORT
I am very pleased to present
my first report as CEO of
Helloworld Limited, and the
results for the year ended
30 June 2016”
A Year of Evolution
The FY16 year has been a year of change for Helloworld Limited
following the merger with the AOT Group on 1 February 2016. AOT
brings a long tradition of outstanding financial performance and
tight cost management to the Helloworld business and the identified
synergies and cost reductions which have been and are being
implemented will continue to see improved financial performance for
Helloworld in the years ahead. Our retail networks in Australia and New
Zealand are strong, our wholesale and inbound businesses are doing
very well and our corporate travel businesses are continuing to grow.
In FY17 we will align our bricks and mortar franchise network
distribution with our online distribution platforms to create an
integrated solution giving our customers the best of both worlds – full
service agency advice and protection combined with fully functional
and easy to use online tools. Customers will have the choice of in-
person (store or phone) or online (web or app) to make their travel
bookings in the knowledge that they have the support and back up of
our agency network at all times.
The retail segment has seen a stabilisation in network numbers
across Australia and New Zealand. Agents are continuing to generate
significant transactional value despite the drop in air fares and
demand from the travelling public remains strong. Issues surrounding
competition from the helloworld.com.au site with our helloworld
branded agency networks are now over and a change in direction in our
advertising and promotions strategy has been very well received by
consumers, by our agents and by our supplier partners.
helloworldlimited.com.au Online Travel Agents (OTA’s) can never match the 24/7
service our network offers with over 700 network
members in our branded and associate networks in
Australia and New Zealand and over 7,000 retail travel
consultants crafting, monitoring and managing travel
arrangements for over 2 million customers annually.
In our Wholesale division we are focused on expanding
our product offering, amalgamating the brochure range
and delivering on efficiency with the combined teams
from Qantas Holidays, Sunlover Holidays, Viva! Holidays,
Go Holidays, Insider Journeys, The Cruise Team and
Rail Tickets. Our inbound businesses, with clients in 73
countries, are seeing increased demand globally for our
Australian, New Zealand and South Pacific destinations.
Our Travel Management division is also going from
strength to strength with increased demand from existing
and new clients, strategic tie ups with major technology
partners including Amadeus, Serko and Concur and our
membership of Global Star.
We were recently recognised at the Australian Federation
of Travel Agents (AFTA) National Travel Industry Awards
(NTIA) with multiple Awards across our business. ‘Best
Travel Agency Group’ (50 outlets or more) and ‘Best
Non-Branded Travel Agency Group’ for helloworld and
helloworld for business. ‘Best Wholesaler – Australian
Product’ for Sunlover Holidays and in New Zealand, Go
Holidays was awarded the 2015 TAANZ NTIA award for
‘Best Wholesaler’.
The board has determined that the company will pay a
fully franked final dividend of 2.0 cents per share. This is
the first dividend since 2013.
Outlook
The outlook for Helloworld is very positive. The
fundamentals of the business are sound and we see
continued demand in our retail, wholesale/inbound
and corporate divisions. Margins are holding and we
expect to see some margin improvement in the year
ahead. Tighter cost management including delivery on
identified synergies and cost savings will deliver much
stronger fiscal outcomes for the business. At the same
time we have realigned executive remuneration to more
appropriate levels and have resumed paying dividends,
a welcome outcome for our shareholders.
Our agency networks are pleased with the new
developments in the business, particularly in terms of
our brand strategies, our revamped advertising
strategies and our online activities, which are now fully
aligned with the interests of the brand carrying networks.
Suppliers and destination partners are also pleased
to see a new focus on delivering sales from our joint
marketing initiatives and have re-engaged with
the business.
In the corporate travel space, we expect our TTV to
continue to grow in the year ahead and to significantly
expand this business in the future.
Travel continues to be both a necessity and a pursuit for
just about everyone and the demand for our services in
the retail, wholesale, inbound and corporate segments
continues to grow. As we refine our offerings and align
our new digital platforms with our traditional bricks and
mortar businesses, we expect to see demand for our
fundamental value proposition to significantly increase.
In closing, I would like to thank all the many people and
organisations involved in Helloworld Limited, the board,
senior leadership group, all our staff, our suppliers,
network members and business partners for their
commitment and hard work over this period of transition
and development.
The future is bright for us all at Helloworld Limited
and I look forward to driving our future success in the
years ahead.
Andrew Burnes
Chief Executive Officer and Managing Director
Helloworld Limited
Sydney, 25 August 2016
7
FINANCIAL PERFORMANCE SUMMARY
FOR THE YEAR ENDED 30 JUNE 2016
Summary Group Results
For the
year ended
30 June 2016
$’000
For the
year ended
30 June 2015
$’000
Change
$’000
Change
%
Total transaction value (TTV)1
5,087,974
4,696,169
Revenue
EBITDA2
Profit/(loss) before tax
Profit/(loss) after tax attributable to members
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Interim dividend per share
Final dividend per share
RECONCILIATION OF EBITDA TO
PROFIT/(LOSS) BEFORE INCOME TAX
EBITDA
Depreciation and amortisation expense
Impairment of goodwill
Finance costs
Profit/(loss) before income tax
297,923
25,290
3,450
1,699
279,223
24,051
(198,397)
(201,121)
For the
year ended
30 June 2016
Cents
For the
year ended
30 June 2015
Cents
1.89
1.89
-
2.0
(273.99)
(273.99)
-
-
For the
year ended
30 June 2016
$’000
For the
year ended
30 June 2015
$’000
25,290
(18,459)
-
(3,381)
3,450
24,051
(13,921)
(205,300)
(3,227)
(198,397)
391,805
18,700
1,239
201,847
202,820
Change
Cents
275.88
275.88
-
2.0
Change
$’000
1,239
(4,538)
205,300
(154)
201,847
8.3%
6.7%
5.2%
101.7%
100.8%
Change
%
100.7%
100.7%
N/A
N/A
Change
%
5.2%
(32.6%)
100.0%
(4.8%)
101.7%
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.
2 EBITDA is earnings before interest expense, tax, depreciation, amortisation and impairment. EBITDA 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.
Shareholder returns
The Board has declared a final dividend of 2.0 cents per share for the 2016 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 2016 and any public announcements made by the Company since that time.
helloworldlimited.com.au DIRECTORS’ REPORT
The Directors of Helloworld Limited
(Helloworld) present their Report
together with the Financial Statements
of the Consolidated Entity (Group)
being Helloworld and the entities that
it controlled at the end of, or during,
the year ended 30 June 2016 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 follows.
As at the date of this report the
Board is in the process of finalising
the appointment of an independent
Chairman and an independent Audit
Committee Chairman.
Rob Marcolina
Non-Executive Director and Chairman
Appointment
Mr Marcolina was appointed to the Board on 18 September
2015 and Chairman from 20 November 2015.
Experience and Expertise
Mr Marcolina is Group Executive – Strategy,
Transformation and IT with Qantas and has responsibility
for driving the overall strategy of the Qantas Group, and its
transformation program. Mr Marcolina also has day-to-day
responsibility for Qantas’ IT systems, including innovation
and their ongoing efficiency and effectiveness. He is a
member of Qantas’ Group Management Committee.
Prior to joining Qantas, Mr Marcolina was a Partner of
Bain & Company in Los Angeles and Sydney working
across multiple industries and latterly developed a focus
on media, technology and telecom businesses.
Mr Marcolina has a Bachelor of Commerce (Economics)
from the University of Melbourne and a Master of
Business Administration from the Kellogg School of
Management at Northwestern University in the USA.
Mr Marcolina is also Chair of Basketball Australia.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Chairman.
• Member of the Remuneration and Nominations
Committee.
• Member of the Audit Committee.
Interests in Shares:
• Nil
9
Andrew Cummins
Non-Executive Director
Appointment
Peter Spathis
Non-Executive Director
Appointment
Mr Cummins was appointed to the Board on 30
September 2010.
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 2015. 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 Spathis was appointed to the Board on 18 May 2015.
He previously served as a director 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 the audit and taxation fields in private practice,
he has developed a special interest in 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.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Mr Cummins has a Bachelor’s degree in Engineering from
Monash University, a graduate business degree from
the University of Newcastle, and an MBA from Stanford
University in the USA.
Special Responsibilities:
• Chairman of the Audit Committee.
Interests in Shares:
• A beneficial interest in 83,333 ordinary shares held
by Vortex TV Pty Ltd as trustee for the Consolidated
Travel (NSW) Superannuation Fund.
Other current directorships of listed entities:
• Mantra Group Limited
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Chairman of the Remuneration and Nominations
Committee.
• Member of the Audit Committee.
Interests in Shares:
• 158,833 fully paid ordinary shares in Helloworld
Limited held legally and beneficially in the name of
Gladstone Investments Limited.
helloworldlimited.com.au
Andrew Burnes
Cinzia Burnes
Chief Executive Officer and Managing Director
Appointment
Mr Burnes was appointed Chief Executive Officer and
Managing Director of Helloworld Limited and to the
Board on 1 February 2016.
Experience and Expertise
Upon completing his studies in Law and Commerce at
Melbourne University, Mr Burnes was employed by Blake
Dawson Waldron where he completed his articles and
worked as a solicitor.
On 1 November 1987, Mr Burnes founded The Australian
Outback Travel Company (The AOT Group) at the age
of 26. After the merger of AOT and Helloworld he was
appointed Chief Executive Officer and Managing Director
of Helloworld Limited on 1 February 2016.
Mr Burnes was appointed as the Honorary Federal
Treasurer of the Liberal Party of Australia in July 2015.
Prior to his appointment he was the State Treasurer
of the Victorian Liberal Party from May 2009 to early
2011. He was appointed as a Director of Tourism
Australia in July 2004 serving as Deputy Chairman from
2005 to 2009. Mr Burnes chaired the Audit and Finance
Committee of Tourism Australia during this period, was
a Trustee of the Travel Compensation Fund from 2005
to 2009 and a Board member of the Australian Tourism
Export Council (‘ATEC’) from 1998 and served as the
organisation’s National Chairman from 1999 to 2003.
Other current directorships of listed entities:
• Nil
Group General Manager – Wholesale & Inbound and
Executive Director
Appointment
Mrs Burnes was appointed Group General Manager –
Wholesale & Inbound, Helloworld Limited and to the
Board on 1 February 2016.
Experience and Expertise
Mrs Burnes brings extensive sector and management
experience to the Board.
In 1982, she commenced her career in travel and after
working as a wholesaler in Italy for 9 years she has
played a pivotal role over 26 years in growing AOT from
a regional safari operator into one of Australasia’s
leading travel distribution businesses with 550 staff in
15 locations worldwide with annual revenues in excess
of $360 million. The AOT Group was privately owned by
Andrew and Cinzia Burnes until its merger with Helloworld
Limited on 1 February 2016.
Mrs Burnes was a Director of Tourism Victoria from
2013 to 2015. She has also served as a Board member
of Health Services Australia from 2005 to 2007 and the
Australian Tourist Commission from 2001 to 2004.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Group General Manager – Wholesale & Inbound
Former directorships of listed entities in the last 3 years:
Interests in Shares:
• Nil
Special Responsibilities:
• Chief Executive Officer
Interests in Shares:
• A legal and beneficial interest in 12,828,654 fully paid
ordinary shares.
• A beneficial interest in 18,480,105 fully paid ordinary
shares held by The Burnes Group Pty Ltd as trustee for
The Burnes Group Service Trust.
• A legal and beneficial interest in 12,638,014 fully paid
ordinary shares.
• A beneficial interest in 18,480,105 fully paid ordinary
shares held by The Burnes Group Pty Ltd as trustee for
The Burnes Group Service Trust.
11
Michael Burnett
Elizabeth Gaines
Chief Financial Officer and Company Secretary
Mr Burnett joined Helloworld Limited in April 2016 from the
Transurban Group where he had been their Chief Financial
Officer in North America since August 2013. Before this role
he was Transurban Group’s General Manager of Finance for
six years. Over his time at Transurban he played key roles in
the financial management of the Group including capital and
debt management, large acquisitions and mergers, and more
recently, the development, restructuring and management
of businesses in the USA.
Prior to joining Transurban, Mr Burnett spent three
and half years in various global finance roles at CSL
Behring. He completed his professional qualifications
at PricewaterhouseCoopers in Melbourne, before being
seconded to London, where he spent eight years before
returning to Melbourne.
Former Executive Director, Chief Financial Officer, Chief
Operating Officer and Chief Executive Officer
Ms Gaines resigned on 19 December 2015.
Adrian John
Former Non-Executive Director
Mr John served as a Non-Executive Director from 26 May
2011 until his resignation on 18 September 2015.
James Millar
Former Non-Executive Director
Mr Millar served as a Non-Executive Director from
30 September 2010 until his resignation on
22 January 2016.
Mr Burnett is a Chartered Accountant and holds a
Bachelor of Commerce from the University of Melbourne.
Jane McKellar
Brett Johnson
Former Non-Executive Director and Chairman
Mr Johnson served as a Non-Executive Director from 27
February 2009 until his resignation on 22 January 2016.
He was Chairperson from 1 October 2014.
Directors’ meetings
Former Non-Executive Director
Ms McKellar served as a Non-Executive Director from
17 December 2014 and did not stand for re-election at
the company’s 2015 Annual General Meeting on
20 November 2015.
During the year, 20 meetings of the Board, 5 meetings of the Audit Committee and 2 meetings of the Remuneration and
Nominations Committee were held. Attendance at Board and Board Committee Meetings during FY2016 is set out in
the table below:
DIRECTOR
Rob Marcolina
Andrew Cummins
Peter Spathis
Andrew Burnes
Cinzia Burnes
Brett Johnson
Elizabeth Gaines
Adrian John
James Millar
Jane McKellar
Board
Audit
Remuneration and
Nominations
A
14
20
20
4
4
16
10
6
16
10
B
14
17
20
4
4
15
9
5
15
10
A
3
3
4
-
-
2
-
1
2
1
B
3
3
4
-
-
2
-
1
2
-
A
1
2
-
-
-
1
-
-
-
1
B
1
2
-
-
-
1
-
-
-
1
Column A: Indicates the number of scheduled and ad-hoc meetings held during the period the Director was a member
of the Board and/or Committee.
Column B: Indicates the number of scheduled and ad-hoc meetings attended by the Director during the period the
Director was a member of the Board and/or Committee.
helloworldlimited.com.au Committee membership
At the date of this report, the Company has an Audit
Committee and a Remuneration and Nominations
Committee of the Board.
During the year, the members of the Committees were:
Since the year end the Directors have resolved to pay
a 2.0 cents per fully paid share (2015: nil) fully franked
final dividend. The dividend is to be paid during the 2017
financial year out of retained profits at 30 June 2016, but
is not recognised as a liability at year end.
Audit Committee
Peter Spathis (Chairman from 19 February 2016,
committee member from 20 November 2015)
James Millar (Chairman until 22 January 2016)
Adrian John (until 18 September 2015)
Brett Johnson (until 22 January 2016)
Rob Marcolina (from 19 February 2016)
Andrew Cummins (from 19 February 2016)
Remuneration and Nominations
Committee
Andrew Cummins (Chairman)
Brett Johnson (until 22 January 2016)
Jane McKellar (until 20 November 2015)
Rob Marcolina (from 28 April 2016)
Retirement in office of Directors
Mr Andrew Cummins as the longest serving director is
retiring by rotation. Being eligible Mr Cummins offers
himself for re-election at the 2016 AGM.
In accordance with the Company’s Constitution and
the ASX Listing Rules, Mrs Cinzia Burnes having been
appointed a director by the Board, will automatically
retire and stand for election by shareholders at the
2016 AGM.
Dividends
Dividends paid or proposed.
Cents per
share
Dividends to be paid
subsequent to year end
Fully franked final dividend
2.0
$2.2 m
Earnings / (loss) per share
Basic earnings / (loss) per share was 1.89c
(2015: (273.99c))
Diluted earnings / (loss) per share was 1.89c
(2015: (273.99c))
The 2015 loss per share reflects the impairment of
goodwill of $205.3 million and has been restated to
reflect the 1 for 6 share consolidation undertaken in
January 2016.
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 Limited is a leading Australian and New
Zealand travel distribution company comprising retail
franchise travel businesses, destination management
services (for inbound Australian, New Zealand and
South Pacific travel), air ticket consolidation, wholesale
leisure (domestic and outbound), corporate and
online operations. Retail franchise operations include
‘Helloworld’, Australia’s largest network of branded
franchised travel agents, in addition to Corporate,
Associate and Affiliate networks.
The Group has three main operating segments within its
structure, Retail, Wholesale (including Inbound) and
Travel Management. Within each of these segments the
Group also has an online presence. These operations are
located in Australia, New Zealand, Fiji, South East Asia,
India, the United States of America, the United Kingdom
and Europe.
The Group’s brands include Helloworld, helloworld.com.au,
Qantas Holidays, Viva! Holidays, AOT Inbound,
ATS Pacific, ETA, Insider Journeys, Air Tickets,
Sunlover Holidays, GO Holidays, QBT, APX and
Qantas Vacations (USA).
13
OPERATING AND FINANCIAL REVIEW
Summary of results
Total Transaction Value (TTV)
Revenue
EBITDA
Profit / (loss) before income tax expense
Profit / (loss) after tax attributable to members
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Interim dividend
Final dividend per share
FY16
$5,088.0m
$297.9m
$25.3m
$3.5m
$1.7m
1.89c
1.89c
-
2.0c
FY15
$4,696.2m
$279.2m
$24.1m
($198.4m)
($201.1m)
(273.99c)
(273.99c)
-
-
Movement
$391.8m
Movement %
8.3%
$18.7m
$1.2m
$201.9m
$202.8m
275.88c
275.88c
-
2.0c
6.7%
5.2%
101.7%
100.8%
100.7%
100.7%
N/A
N/A
The Board assesses the performance of the segments based on several measures including TTV, Revenue and EBITDA
(being earnings before interest expense, tax, depreciation, amortisation and impairment), Net Profit and associated ratios.
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.
It should be noted that FY16 included several significant one off costs affecting its result including AOT merger costs
($3.8m), Business Transformation Costs ($2.9m) and Redundancy Costs ($1.8m).
helloworld Limited - Travel Portfolio
Online B2C
Tour Operating – Fiji
Wholesale - US
Corporate - Australia / NZ
Retail – Australia / NZ
DMC - Australia / NZ / SPAC / Asia
®
• Branded
• Associate
y
Wholesale – Australia / NZ/ Asia
helloworldlimited.com.au Year in Review - Key Highlights
• TTV increased 8.3% to $5.1 billion for the year ended
30 June 2016.
• EBITDA increased 5.1% to $25.3 million for the year
ended 30 June 2016.
• Helloworld revenue from operating activities for the
year ended 30 June 2016 was $297.9 million, a 6.7%
increase on the previous year.
• The Helloworld net result was a profit before income
tax of $3.5 million for the year ended 30 June 2016,
a significant improvement on the prior year loss of
$198.4 million. The 2015 $198.4 million loss after
tax is stated after a non-cash goodwill impairment of
$205.3 million.
• Basic earnings per share for the year was a profit of
1.89 cents per share.
• The Group announced a 2.0 cents per share dividend
for the year ended 30 June 2016, the first dividend
since 2013.
• The Group continued to improve the overall
performance of the business with key achievements
including:
– The merger of Helloworld and the AOT Group, two
complementary businesses, to create the second
largest integrated travel distribution business in
the Australian and New Zealand markets offering
a broader range of products and services and
generating increased scale and earnings;
– Exceeded the previously identified $7.6m of
merger synergies with the implementation of those
synergies well underway (including streamlining the
marketing division and consolidating technology,
administration and finance departments and other
operating divisions where appropriate);
– The launch of Helloworld in the New Zealand market
and the consolidation of two Australian Helloworld
affiliate networks under My Travel Group;
– Winning both the Best Travel Agency Group (50
outlets or more) and the Best Non Branded Travel
Agency Group awards at the 2016 National Travel
Industry Awards (NTIA) in Australia as well as an
additional four agent and agency award winners at
the 2016 NTIA in Australia and four at the 2015
TAANZ NTIA in New Zealand;
– Significantly increased profitability of the Wholesale
and Travel Management segments;
– Sunlover Holidays winning the Australia 2016 NTIA
award for Best Wholesaler – International Product
and GO Holidays winning the New Zealand 2015
TAANZ NTIA award for Best Wholesaler;
– The AOT Inbound business is one of the largest
providers of inbound travel services in Australia
and has seen strong growth in the financial year,
particularly from the strong network of offices in
Asia; and
– QBT fully embedding travel management services
for the Whole of Australian Government contract and
winning the Northern Territory Government and PwC
Australia accounts.
The Group recorded a profit before tax of $3.5 million,
compared with a prior year loss of $198.4 million.
At 30 June 2016, the Company held a cash balance of
$202.6 million (30 June 2015: $176.1 million) comprised
of general cash of $26.2 million (30 June 2015: $27.4
million) and client cash of $176.4 million (30 June 2015:
$148.8 million). Helloworld had a positive net cash
position and headroom in its debt facilities of $36.1
million. The Company has a strong balance sheet and
is positioned for long-term sustainable growth.
On 22 January 2016, the Company’s shareholders voted
in favour of the proposal to purchase 100% of the shares
of AOT Group Limited and its subsidiaries (AOT). On 1
February 2016, the conditions of the share purchase were
fulfilled and the Group completed the merger with AOT.
AOT is a leading travel services provider with operations
in Australia and internationally, operating in the inbound,
government and wholesale sectors of the travel industry.
The AOT merger integrated two complimentary travel
businesses to create a leading integrated travel group
in the Australian market offering a broad range of travel
products and services.
Total consideration of the transaction comprised $25.0
million cash consideration and the issue of 36,450,001
Helloworld Limited shares issued on 1 February 2016
valued at $87.5 million on that day. The issue of shares
increased the shareholding of Andrew Burnes, Cinzia
Burnes and The Burnes Group Pty Limited as trustee
for The Burnes Group Service Trust in the Company to
40.0% (pre-merger shareholding of 10.2%). Existing
shareholders had their shareholding diluted on the
allotment of the consideration shares.
Helloworld has continued to make significant investment
in consumer marketing, advertising and sponsorship to
strategically accelerate Helloworld’s brand presence. The
investment has increased prompted brand awareness
since the February 2014 consumer launch, the momentum
sets a solid platform for growth and remains a focus for
the business.
During the year, a further thirty (legacy or new) agents
converted to the Helloworld networks in Australia.
15
The New Zealand network reduced as a result of the
departure of the majority of the United Travel stores.
The network of high-calibre, high-performing corporate
and leisure members and agencies totals has stabilised at
approximately 1,600 across Australia and New Zealand.
Helloworld’s digital offering, helloworld.com.au, is
currently undergoing a complete realignment to ensure
the group’s retail online presence through the helloworld.
com.au site supports the activities and businesses of
the retail networks carrying the Helloworld brand. The
Company has brought to an end the Orbitz agreement
and is independently developing the next generation site
together with matching microsites for individual network
member agencies. In addition the Company is developing
ResWorld, which is being designed specifically as a user
interface for consultants to drive greater productivity
and greater yield outcomes across the agency networks.
By July 2015, QBT had successfully completed the
transition of the Whole of Australian Government
(supporting 142 Australian Government Agencies)
business secured in the previous year. In the current
financial year QBT won the Northern Territory
Government and PwC Australia travel business to further
achieve revenue growth.
The Wholesale segment continues to refine its model
with a continued focus on cost management, margin
improvement and product expansion, including new
destinations in 2017.
Segment Review
Helloworld 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 branded, Helloworld Associate, Helloworld for
Business, and the My Travel Group. The Retail segment
includes the online portal helloworld.com.au.
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.
Within the wholesale division, the inbound division offers
travel services in Australia, New Zealand, Fiji and the
Cook Islands to clients in 73 countries worldwide.
Travel Management provides corporate travel
management services to corporate and government
customers including booking flights and accommodation.
Helloworld operates websites and online distribution
platforms through all segments.
The Board assesses the performance of the segments
based on measures of TTV, Revenue, Costs, EBITDA and
associated ratios. EBITDA is defined as being earnings
before interest expense, tax, depreciation, amortisation
and impairment. A reconciliation of EBITDA to profit /
(loss) before tax is included in note 6 to the Financial
Statements. The segment 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, EBITDA
margin has been calculated as EBITDA as a percentage
of revenue.
Retail Segment
Helloworld operates as the franchisor for multiple
retail travel agency networks, including Helloworld
branded, Helloworld associate, Helloworld for Business
(representing Australia’s largest independent Travel
Management Company network) and the My Travel Group
(MTG – an independent buying network affiliated to the
Helloworld Group) in Australia.
Australia
Helloworld is a network of high performing brand-carrying
and independent agents. In July 2016 Helloworld Limited
won the Award for Best Travel Agency Group (50 outlets
or more) and Helloworld for Business won the Award for
Best Non Branded Travel Agency Group. This success is
strong validation of the strength of Helloworld’s network
of expert travel agents and the Helloworld franchise
model value proposition. The list of Retail NTIA winners is:
• Best Travel Agency Group (50 outlets or more)
– Helloworld Limited
• Best Non Branded Travel Agency Group
– Helloworld for business
• Best Travel Agency Retail – Single Location
– Bicton Travel, WA (3 years running)
• Best Travel Agency Retail – Multi Location
– Helloworld Hunter Travel Group / RACT Travel,
NSW (a member of the Helloworld branded network)
(3 years running)
• Best Travel Consultant
– Sam La Rosa – Show Group Enterprises (a member of
the Helloworld for Business network)
• Best Travel Agency Manager – Retail Multi Location
– Louise Dann, Helloworld Hunter Travel Group, NSW (a
member of the Helloworld branded network)
helloworldlimited.com.au On 4 April 2016 Helloworld Limited launched My Travel
Group to consolidate and strengthen the Helloworld
affiliate network and Concorde Agency Network (CAN).
Helloworld’s digital offering, helloworld.com.au, is being
re-launched in September to extend the networks
customer offering, to grow the Helloworld networks
digital profile and to provide a booking portal to
compliment the bricks and mortar service of Helloworld
agents. The website offers the convenience of both
researching and booking online, an agent finder for
customers to locate their nearest Helloworld agent and
the most up to date travel offerings.
New Zealand
On 14 February 2016 the Helloworld brand was launched
in the New Zealand market. As at 30 June 2016 the New
Zealand network numbered 158 with 52 branded and
6 associate agencies, 100 affiliates members and 80
members of “The Travel Brokers” network, Helloworld’s
home based consultant network in New Zealand.
In the September 2015 TAANZ NTIA Awards the New
Zealand business won the following awards:
• Best Brand Retail Multi Location
– APX Travel Management (2nd year running)
• Best Travel Consultant Corporate
– Amelia Glubb, APX Travel Management
• Best Travel Agency Manager Corporate
– Jackie Bell, APX Travel Management
• Best Wholesaler
– GO Holidays (2nd year running)
In July 2015 Helloworld sold its 50% interest in Harvey
World Travel South Africa to the remaining 50%
shareholder BidTravel, based in South Africa. Harvey
World Travel South Africa reported 72 stores at
30 June 2015.
Air Tickets
Helloworld owns and operates an air ticketing operation,
Air Tickets, which services both the Helloworld networks
and around 440 independent travel agents in Australia.
Air Tickets technology also operates within New Zealand
via Helloworld Travel Services (NZ) Ltd.
Air Tickets operates in all Australian states with
technology allowing agents to issue tickets 24 hours a
day, seven days a week. 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 in the Best Agency Support Service category at
the 2016 NTIA awards.
Retail Earnings
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 39
of the Financial Statements.
The Retail segment generated TTV of $3.6 billion for
the year ended 30 June 2016, representing an increase
of 3.5% compared to the prior year. The Retail segment
generated EBITDA before shared services of $33.0
million which is a 3.2% increase on the prior year result
of $31.9 million. Revenue decreased by 2.9% to $147.5
million primarily as a result of a reduction in margins
earned at Air Tickets. Operating costs decreased by 4.5%
to $114.5 million for the year as a result of better cost
management. The revenue margin for the year decreased
from 4.4% to 4.2% due to the increase in lower revenue
generating TTV. The EBITDA margin increased from
21.0% to 22.3% as the decrease in costs exceeded the
decrease in revenue. After allocation of shared services
net costs, the segment net profit amounted to $6.2 million.
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA before shared services
Shared service net costs, depreciation, interest
and amortisation
Net profit excluding impairment
Revenue margin %
EBITDA margin %
2016
$’000
3,550,013
147,516
(114,565)
32,951
2015
$’000
3,429,056
151,933
(120,012)
31,921
(26,729)
(21,179)
6,222
4.2%
22.3%
10,742
4.4%
21.0%
Change
$’000
120,957
(4,417)
5,447
1,030
(5,550)
(4,520)
(0.2%)
1.3%
Change
%
3.5%
(2.9%)
4.5%
3.2%
(26.2%)
(42.1%)
(4.5%)
6.2%
17
Wholesale Segment
On 1 February 2016 Helloworld merged with the AOT
Group which included the wholesale brands Sunlover
Holidays, Territory Discoveries, needitnow.com,
Best Rates, Need to Escape, Travelmate and New South
Wales Holidays.
Helloworld now operates a range of wholesale brands:
• 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 and Jetstar.
• Viva! Holidays sells packages where the flight
component is provided by major carriers servicing the
Australian outbound market.
• Sunlover Holidays is recognised as the leading travel
wholesaler selling Australia. Sunlover Holidays
distributes and sells Australian leisure products through
all major retail chains in Australia and New Zealand.
• Ready Rooms provides an online solution for dynamic
and traditional wholesale inventory for preferred travel
agents to sell to their leisure and corporate customers.
• Insider Journeys 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.
• GO Holidays is a New Zealand based wholesale
business that sells outbound packaged holiday
products for destinations around the world.
• Qantas Vacations provides customised tour and travel
arrangements for visitors from North America to
Australia, New Zealand, Fiji and Tahiti.
• The Cruise Team is a specialist cruise wholesaler
delivering tailor-made cruise packages.
• Territory Discoveries is the specialist for Australia’s
Northern Territory with access to more than 2,500
genuine outback experiences throughout the Top End
and Central Australia.
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA before shared services
Shared service net costs, depreciation, interest
and amortisation
Net loss excluding impairment
Revenue margin %
EBITDA %
• AOT Hotels is the officially appointed Accommodation
Program Manager by the Department of Finance
and Deregulation for the Australian Government to
exclusively contract and sell all commercial domestic
accommodation requirements in Australia for over
100 Federal agencies that operate under the Financial
Management and Accountability Act 1997.
The business operates a number of well-known online
accommodation and travel portals including
needitnow.com. This last minute portal is one of the best
last minute accommodation websites in Australia and
New Zealand offering over 4,500 hotels. Other portals
include Best Rates, Need to Escape, Travelmate and
New South Wales Holidays.
In July 2016 Sunlover Holidays won the NTIA Award
for Best Wholesaler – Australian Product, with Qantas
Holidays and Viva! Holidays also named as finalists.
The focus across the wholesale brands during the year
has been on cost containment, margin improvement and
product expansion. Major initiatives for the year include
the identification of synergy opportunities between the
existing Helloworld and AOT wholesale brands to deliver
further improved margins and reduced costs.
The Wholesale segment earned revenue commissions and
fees from airline, cruise and land partners derived from
the sale of packages and travel.
The AOT Inbound business is the largest provider
of inbound travel services in Australia. The business
includes AOT Inbound, AOT New Zealand, ATS Pacific and
Experience Tours Australia. These businesses have seen
strong growth in the financial year, particularly from the
strong network of offices in Asia.
EBITDA before shared services for the Wholesale
segment for the year ended 30 June 2016 was $16.6
million representing an increase of 33.6%, with TTV
increasing by 20.2% from $667.1 million to $801.8
million. Revenue of $96.7 million increased by 17.5%
compared to the prior year with operating costs
2016
$’000
801,762
96,689
(80,095)
16,594
2015
$’000
667,135
82,276
(69,858)
12,418
(20,728)
(13,612)
(4,134)
12.1%
17.2%
(1,194)
12.3%
15.1%
Change
$’000
134,627
14,413
(10,237)
4,176
(7,116)
(2,940)
(0.2%)
2.1%
Change
%
20.2%
17.5%
(14.6%)
33.6%
(52.3%)
(246.2%)
(1.6%)
13.9%
helloworldlimited.com.au increasing by 14.6%. After the allocation of shared
services net costs, the segment loss amounted to
$4.1million. The results include five months trading
of the AOT Group business (merged with Helloworld
on 1 February 2016).
The revenue margin for the year ended 30 June 2016
was 12.1% (prior year revenue margin was 12.3%).
The EBITDA margin increased from 15.1% to 17.2%, a
reflection of better cost management and the increased
efficiencies coming from the AOT merger.
Travel Management Segment
Within the Travel Management segment, Helloworld
operates the following brands:
• QBT in Australia
• APX in New Zealand.
QBT in Australia 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. QBT is 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 and the commencement of services to the
Northern Territory Government and PwC in 2016.
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$14billion
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.
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA before shared services
Shared service net costs, depreciation, interest
and amortisation
Net profit/(loss) excluding impairment
Revenue margin %
EBITDA %
APX Travel Management 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, Corporate – Multi Location at
the TAANZ NTIA in 2014 and 2015 and is a finalist in the
same category in the 2016 awards. Members of its team
were also winners of Best Agency Manager – Corporate
and Best Travel Consultant – Corporate in 2015. 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 to June 2017.
TTV attributable to the Travel Management segment
increased by 22.7% to $736.2 million for the year ended
30 June 2016. The growth in TTV primarily reflects
the appointment of QBT as the sole provider of travel
management services to the Whole of Australian
Government from the start of 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
as sole provider is also the key driver of the Travel
Management segment’s revenue increase of 22.7% from
the prior year.
Operating expenses in the Travel Management segment
increased by $3.4 million or 9.5% during the year as a
result of the business growth but contained by productivity
improvements. The Travel Management segment has
continued to invest in innovative technology in order to
drive efficiency and automation through the business.
The Travel Management segment generated EBITDA
before shared services of $11.1 million which is a 112.9%
increase on the prior year of $5.2 million. After
the allocation of shared services net costs, the segment
net profit amounted to $1.4 million.
The revenue margin remained consistent at 6.9%, whist
the EBITDA margin increased substantially from 12.7%
to 22.0%.
2016
$’000
736,199
50,440
(39,330)
11,110
(9,748)
1,362
6.9%
22.0%
2015
$’000
599,978
41,148
(35,930)
5,218
(7,863)
(2,645)
6.9%
12.7%
Change
$’000
136,221
9,292
(3,400)
5,892
(1,885)
4,007
-
9.3%
Change
%
22.7%
22.6%
(9.5%)
112.9%
(24.0%)
151.5%
-
73.2%
19
Shared Services
The Shared Services segment within Helloworld entails
Executive Management, IT, Systems, Finance, HR and
Payroll departments.
There is no TTV attributable to these departments.
Revenue decreased by $0.6 million mainly due to lower
interest rates on cash and cash equivalents. Operating
expenses increased by $9.3 million or 31.6% mainly due
to the inclusion of AOT shared services costs of $4.2m
for the five month period ended 30 June 2016, one
off merger costs of $3.8m resulting from the merger
transaction and additional synergy related one off costs
incurred in the current year.
The shared services costs will be continually reviewed
for future synergy benefits, process efficiencies, and
cost reductions.
Each operating division now has a proportion of the
shared service costs allocated to the division based
on revenue.
Total Transaction Value (TTV)
Revenue
Operating expenses
Net expenses
Depreciation, amortisation and interest expense
Net costs excluding impairment
2016
$’000
-
3,278
(38,643)
(35,365)
(21,840)
(57,205)
2015
$’000
-
3,866
(29,372)
(25,506)
(17,148)
(42,654)
Change
$’000
-
(588)
(9,271)
(9,859)
(4,692)
(14,551)
Change
%
-
(15.2%)
(31.6%)
(38.7%)
(27.4%)
(34.1%)
helloworldlimited.com.au Outlook
While market uncertainties continue, disruptors make a lot
of noise and consumer sentiment fluctuates, Helloworld
remains focused on delivering value for shareholders, for
agents, for our supplier partners and most particularly for
our customers in the retail and corporate travel sectors.
After a somewhat turbulent start, Helloworld is now on
track to roll out an aligned “clicks and mortar” strategy
across our retail distribution networks.
Bolstering Helloworld through technology, training,
product and profile supported by the omni-channel
strategy is Helloworld’s priority. Helloworld has already
made great progress in positioning its agents and
business for success through a growth in revenue from
enhanced advertising and product offerings, a focus
on cost containment, productivity gains and margin
optimisation.
The merger of Helloworld and the AOT Group has allowed
senior management to assess and identify a series of
operational and financial synergies. The benefits of these
synergies are expected to be continued to be realised in
the financial year ending 30 June 2017 and beyond. 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.
For the year ending 30 June 2017 Helloworld expects
to significantly improve its current year performance,
reflecting a full year including AOT results and additional
cost synergy benefits.
Business Risks
There are a number of factors, both specific to Helloworld
and of a general nature, which may impact the future
operating and financial performance of Helloworld. The
specific material risks faced by Helloworld, and how
Helloworld manages these risks, are set out below:
Demand risk
Helloworld may be affected by fluctuating levels of
demand for the travel services offered. Travel demand is
always sensitive relative to disposable consumer income,
which in turn is influenced by many variables including
changes in interest rates and mortgage repayments, levels
of unemployment, the fundamental price of travel in its
own right (including any impact that arises from increases
in the cost of oil or changes in foreign exchange rates),
bowser petrol price shocks, consumer confidence and the
buoyancy of the stock market.
Travel demand can also be affected by certain events that
can affect travellers’ preparedness to travel, including
pandemics, terrorism incidents, natural disasters, civil
unrest and wars.
To the extent possible, Helloworld 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.
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,
Helloworld has a hedging policy and enters into forward
exchange contracts based on expected future cash flows.
Key customers and suppliers
Changes in key customers and suppliers could have an
impact on the financial results of Helloworld. Helloworld
mitigates this risk by ensuring, where possible, formal
agreements are in place and by working closely with
key customers and suppliers to ensure that Helloworld
responds to any changes in their economic circumstances
or business requirements.
Technological advances
Advances in technology means that Helloworld is always
modifying the way it does business. Technological advances
could have an impact on the financial results should
Helloworld not continue to invest in systems development.
Helloworld mitigates this risk by continuing to commit
significant resources to systems development as is
demonstrated by the ongoing investment in technology.
Reliance on key personnel
The continued success of Helloworld will, in part, be reliant
on the future performance, abilities and expertise of its
key personnel. The ability to retain and attract key people
is important to the Group’s success.
21
People
As at 30 June 2016, Helloworld had 1,911 Full Time
Equivalent (FTE) employees. This is an increase of 437
from the 1,474 FTE at 30 June 2015. The increase has
been driven by the merger with AOT, partially offset by a
reduction as a result of synergy implementation.
Employee expenditure for the year ended 30 June 2016
increased by 10.0% or $12.2m. Combining Helloworld and
AOT employee expenditure for both FY15 and FY16 on a
like for like basis and excluding one off costs in FY16, the
employee expenditure for the year ended 30 June 2016
decreased by 1.0% or $1.2m.
While the majority of the Group’s employees are based
in either Australia, New Zealand or Fiji, the Group has
employees in Vietnam, the United States of America,
India, Cambodia, Laos, China, Continental Europe and the
United Kingdom. The regional analysis and breakdown by
segment is as below
FTE Breakdown by Country
56% 1,071
24% 459
9% 172
3% 57
3% 57
3% 57
2% 38
Australia
New Zealand
Fiji
Vietnam
USA
India
Other
FTE Breakdown by Segment
18% 344
49% 937
20% 382
13% 248
Retail
Wholesale
Travel Management
Corporate
Review of financial condition
Capital structure
At 30 June 2016 Helloworld had 109,838,418 shares on
issue of which the Executive Directors Andrew Burnes
and Cinzia Burnes, along with their Director related
entities, own 40.0%, Sintack Pty Limited hold 19.6%,
QH Tours Limited (a subsidiary of Qantas Airways
Limited) holds 19.3%, with the remaining 21.1% being
held by other shareholders including management.
On 29 January 2016 Helloworld underwent a 1 for 6 share
consolidation exercise whereby the existing 440,330,198
shares were reduced to 73,388,417. Subsequently on
1 February 2016 an additional 36,450,001 shares were
issued as part of the merger with the AOT Group.
Liquidity and funding
The Group maintains a strong balance sheet with net
assets of $267.2 million and a positive net cash position
at 30 June 2016.
At 30 June 2016 the Group has long term debt of
$46.4 million (2015: $23.2 million), net of $1.2 million
of deferred borrowing costs (2015: $1.6 million) and
remaining headroom available in the finance facilities of
$36.1 million (2015: $60.8m). The increase in long term
debt, and decline in facility headroom, is due primarily to
the costs and consideration required for the merger with
the AOT Group.
Total cash as at 30 June 2016 for the Group was $202.6
million (2015: $176.1 million). General cash at 30 June
2016 was $26.2 million compared to $27.4 million at 30
June 2015.
Net cash inflow from operating activities was $2.3 million
(2015: inflow $4.7 million).
On-market share buy-back program
On 27 August 2015 an on-market share buy-back
program initiated on 27 August 2014 concluded. The
program was established to acquire up to 2.5% of the
Company’s issued share capital. A total of 218,374
ordinary shares (or 0.05%) of the Company’s issued share
capital was acquired and were subsequently cancelled.
Significant events after the
balance date
With the exception of the items listed below, the
Directors are not aware of any matter or circumstance
that has arisen in the interval between 30 June 2016 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.
Final Dividend
The Directors have resolved to pay a 2.0 cents per fully
paid share (2015: nil) fully franked final dividend.
helloworldlimited.com.au Likely developments
Insurance premiums
The Company has paid insurance premiums of $110,991
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.
The Group’s focus in the 2017 year will be the continued
integration of the Helloworld and AOT Group. Continued
focus will be on growing revenues and margins and right
sizing the cost base of the organisation.
Environmental regulation
The Group’s operations are not subject to any significant
environmental regulations under either Commonwealth
or State legislation
Indemnification and insurance of
Directors and officers
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 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 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.
23
LETTER FROM THE REMUNERATION AND NOMINATIONS
COMMITTEE CHAIRMAN
Dear Shareholder
On behalf of the Board, I am pleased to present Helloworld Limited’s Remuneration Report for 2016.
The Helloworld Board is committed to an executive remuneration framework that is focused on driving organisational
performance, and linking executive remuneration to the achievement of company strategy and business objectives and,
ultimately, generating superior returns to shareholders.
Company performance and remuneration outcomes in 2016
As a result of company performance being below target in 2016, the Board determined that no Short Term Incentive
Plan (STIP) payment would be awarded to executive Key Management Personnel for 2016 notwithstanding that in some
instances, executives achieved satisfactory outcomes related to business unit objectives.
Further to this, none of the Long Term Incentive Plan (LTIP) grants with performance periods ended 30 June 2016 met
their relevant EPS targets and, as a result, none of these performance rights will vest.
Changes to executive remuneration in 2017
2016 has been a transformational year for the business, and for the Executives within it, and the Board has implemented
changes to remuneration strategy. One key factor has been to right size the level of Executive remuneration for an
organisation of our size and ensure the remuneration framework drives performance and aligns executive reward with
shareholders’ interests.
As a result of the review, the Board has:
• Right sized the level and mix of remuneration for the CEO and other KMPs.
• Approved a 1.75% fixed increase to remuneration for all eligible employees to recognise movement in the cost of
living. Eligibility includes those employees not covered by a collective agreement.
• Created a Results Based Performance Incentive (RBPI) Plan to be implemented to a targeted group of senior leaders,
linked to key threshold targets including achievement of Group results, Divisional profitability and individual KPIs.
• Created a LTIP program, consisting of a loan-based Share Plan to be implemented to a targeted group of senior
executives, directly linked to Total Shareholder Return (TSR).
We are confident that the changes will complement our existing focus on alignment of executive reward to delivery of
the company strategy and ultimately shareholder return.
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 2016 Annual General Meeting.
Yours faithfully
Andrew Cummins
Chairman of the Remuneration and
Nominations Committee
helloworldlimited.com.au REMUNERATION REPORT
(AUDITED)
This 2016 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 2017
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2016
2.2 Executive remuneration structure in 2016
2.3 LTIP in detail
2.4 Summary of performance rights held under the LTIP
2.5 LTIP for 2017
2.6 Executive remuneration
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
3.4 Non-Executive director shareholdings
25
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 Helloworld Group
(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
Non-Executive Directors
Position
Rob Marcolina (appointed 18 September 2015)
Non-Executive Director and Chairman
Andrew Cummins
Peter Spathis
Executive Directors
(appointed 20 November 2015)
Non-Executive Director
Non-Executive Director
Andrew Burnes (appointed 1 February 2016)
Chief Executive Officer and Managing Director
Cinzia Burnes (appointed 1 February 2016)
Group General Manager
– Wholesale & Inbound and Executive Director
Executive KMP
Michael Burnett (appointed 11 April 2016)
Chief Financial Officer and Company Secretary
Russell Carstensen
Group General Manager - Air Tickets and QBT
Former Non-Executive Directors
Brett Johnson (resigned 22 January 2016)
Former Chairperson and Non-Executive Director
Adrian John (resigned 18 September 2015)
James Millar (resigned 22 January 2016)
Jane McKellar (resigned 20 November 2015)
Former Non-Executive Director
Former Non-Executive Director
Former Non-Executive Director
Former Executive Directors
Elizabeth Gaines (resigned 19 December 2015)
Former Chief Executive Officer and Executive Director
Former Executive KMP
Jenny Macdonald (resigned 28 April 2016)
Former Chief Financial Officer
Peter Egglestone (replaced as a KMP by Cinzia Burnes on
Former Head of Wholesale
1 February 2016)
Greig Leighton (resigned 31 December 2015)
Former Chief Executive Officer, New Zealand
1.2 Remuneration governance
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.
Helloworld has undertaken an internal review of the executive remuneration to ensure it is in line with current market
practices.
helloworldlimited.com.au 1.3 Executive remuneration framework
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;
• directly linking 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 one or more of
the following 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.
• Long Term Incentive (‘at risk’ remuneration)
The ‘at risk’ components for certain KMPs are based on the Groups performance against Total Shareholder Return
metrics (threshold) and key financial and non-financial measures. More detail on the ‘at risk’ remuneration components
and their link to company performance is included in section 2 of this report.
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 FY16 remuneration components at the start of the year is as below:
Executive Remuneration Mix
CEO
42%
42%
16%
Executive KMPs
58%
30%
12%
0%
20%
40%
60%
80% 100%
Fixed Remuneration
STIP
LTIP
Whilst this target mix was appropriate at the beginning of the financial year, due to the transitional nature of the Group
throughout the year, including changes in executives and KMPs, the above target is considered no longer relevant, and
the current target mix is:
Executive Remuneration Mix
CEO
Group General Manager
– Wholesale & Inbound
CFO
Group General Manager
– Air Tickets and QBT
100%
100%
80%
90%
20%
10%
0%
20%
40%
60%
80% 100%
Fixed Remuneration
STIP
LTIP
27
1.5 Remuneration changes for 2017
The STIP and LTIP policies underwent a review and some significant changes to the schemes for FY2017 have been
made and are detailed below.
Short Term Incentive Plan (STIP) – 2017 Award
The previous STIP plan will cease to exist. STIP has been removed for the CEO and KMPs. A select group of senior
leaders will now participate in a Results Based Performance Incentive (RBPI) that is linked to a threshold target of the
achievement of Group results. If this is achieved, then the senior leader will be judged against divisional profitability and
individual KPIs. No KMP will take part in the RBPI in FY2017.
Long Term Incentive Plan (LTIP) – 2017 Award
Following a review of current practices, a new program has been established and targeted to a group of executives and
senior leaders within the business. Key criteria for the LTIP scheme are as follows:
• LTIP allocations are limited to key executives and senior leaders reporting to the CEO or senior leaders who are
considered critical to the ongoing success of the Group;
• LTIP replaces STIP for the CFO and Group General Manager – Air Tickets and QBT and other senior leaders reporting
to the CEO;
• The threshold performance criteria is directly linked to Total Shareholder Return (TSR) and provides reward on
successful marked improvement of Helloworld’s return to shareholders over a three year period;
• The executive or senior leader will need to meet individual KPIs as determined by the Board and CEO over the three
year period; and
• The initial allocation is for a three year period (it is currently not envisaged that participants who receive a grant in
2017 will receive further grants prior to the 2017 grant vesting or expiring).
This scheme replaces the previous program which was in place for a certain number of Helloworld executives.
The overall objectives of the LTIP scheme is to lock in key leaders for an extended period of time whilst at the same time
incentivising them to generate superior returns.
The key attributes included in the design of the plan are as follows;
Type of Scheme
Scheme Commencement
Scheme measurement and vesting date
Share VWAP at Scheme Commencement
Performance Criteria
50% Vesting
100% Vesting
KPIs
Loan
Loan Funded Scheme
1 July 2016
1 July 2019
$3.00 per share
Must meet both;
- TSR (based on share price), and
- Individual KPIs
$4.50 share price / TSR of 14% pa
$5.50 share price / TSR of 22% pa
Determined by the CEO periodically and the achievement of these
KPIs would be at the sole discretion of the CEO and Board
A loan will be given to the participant equal to share value at the
scheme commencement and the number of shares issued. The loan
is repaid to the company on the sale of vested shares.
Legacy LTIP Performance Right
One KMP is still a participant in the legacy LTIP Performance Right (PR) shareholding scheme. The 2015 Tranche 3 PRs
are due to lapse or vest in the Performance Period ending 30 June 2017 (refer Section 2.3).
Refer to note 37 Share-based Payments in the Financial Statements for further details on the PR scheme.
helloworldlimited.com.au Change in control
The change in control policy in the legacy LTIP scheme provides that all of a participant’s PRs will vest even if applicable
performance conditions have not been satisfied at that time. For the FY17 scheme, the Board will have sole discretion
about what happens to the shares on a change of control event.
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2016
The table below provides relevant Group performance information for the key financial measures over the last four years;
Net profit / (loss) after tax (NPAT)
Earnings before interest expense, tax, depreciation and amortisation
2016
$’000
1,676
2015
$’000
2014
$’000
(201,111)
(63,243)
2013
$’000
16,360
(and impairment in FY15) (EBITDA)
25,290
24,051
40,561
54,141
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Earnings / (loss) per share (EPS cents)
Total dividends declared (cents per share)
Opening share price at 1 July ($)
Closing share price at 30 June ($)
2016
1.89
2.00
2.16
3.08
2015
(273.99)
-
1.68
2.16
2014
(86.28)
-
1.98
1.68
2013
22.08
9.00
2.22
1.98
In January 2016 the Company undertook a 1 for 6 share consolidation exercise. The above has been restated as though
the consolidation had occurred at 30 June 2015.
The Group’s results for the 2016 financial year represented an increase in EBITDA compared to the previous year,
however the Group did not achieve the Board approved operating budget.
As a result of the shortfall in EBITDA, the Board determined with the exception of the below, Executives would not
receive any short term incentive payments for the financial year ended 30 June 2016. This is notwithstanding the fact
that a number of other executives achieved satisfactory outcomes relating to individual objectives.
Russell Carstensen was awarded STIP for 2015 in recognition of the successful transition of the Whole of Australian
Government into the QBT business. This was awarded after the publication of the FY15 results and therefore has been
accounted for and disclosed in FY16. In addition, certain former executives recieved a bonus for the completion of the
AOT merger. These are all disclosed in table 2.6 below.
In addition, performance conditions for LTIP grants with a performance period ended 30 June 2016 (Tranche 3 of
the FY13 Performance Rights (PRs) and Tranche 2 of the FY15 PRs) were not met and, following testing, these
PRs lapsed.
The 2017 executive remuneration expense is anticipated to be substantially reduced from 2016, both as a result of
reduced KMP members and as a result of salary realignment.
2.2 Executive remuneration structure in 2016
With the exception of Russell Carstensen no STIP has been paid for in FY16 due to the transitional nature of the year
and the change in senior management.
29
2.3 LTIP in detail
Awards were made under the LTIP for the years ended 30 June 2011 to 30 June 2015 inclusive however none were made
in the year ended 30 June 2016. 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
FY15
2012 – Tranche 3
2013 – Tranche 2
Grant Date
Performance Period
26 June 2012
26 June 2012
1 July 2011 to 30 June 2015
1 July 2012 to 30 June 2015
2013 – Former CEO Sign-on Bonus
27 August 2012
27 August 2012 to 27 August 2014
2014 – Tranche 1
2014 – Tranche 2
2014 – Tranche 3
2014 – Special Performance
Incentive
2015 – Tranche 1
FY16
2013 – Tranche 3
2015 – Tranche 2
FY17
2015 – Tranche 3
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
22 November 2013
1 July 2013 to 30 June 2015
27 February 2015
1 July 2014 to 30 June 2015
26 June 2012
1 July 2012 to 30 June 2016
27 February 2015
1 July 2014 to 30 June 2016
Exercise
Price
Fair Value
per PR at
Grant Date1
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$nil
$0.36
$0.36
$0.46
$0.34
$0.34
$0.34
$0.40
$0.27
$0.36
$0.27
% Vested
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
27 February 2015
1 July 2014 to 30 June 2017
$nil
$0.27
n/a
1 The above fair value at grant date is prior to the 1 for 6 share consolidation.
helloworldlimited.com.au 2.4 Summary of performance rights held under the LTIP
J Macdonald
R Carstensen
R Carstensen
P Egglestone
P Egglestone
G Leighton
G Leighton
2015 Grant
2013 Grant
2015 Grant
2013 Grant
2015 Grant
2013 Grant
2015 Grant
Executive and Grant
285,370
49,784
198,518
31,115
186,111
27,654
198,518
(285,370)
(49,784)
(97,777)
(31,115)
(186,111)
(27,654)
(198,518)
-
-
-
-
(84,445)
16,790
-
-
-
-
-
-
-
-
(77,050)
(17,922)
(26,400)
(11,201)
(50,250)
(9,955)
(35,467)
Number of PRs at
30 June 2015
Number of PRs
lapsed during
the year
Number of PRs
lapsed during the
year following
the 1 for 6 share
consolidation
Number of PRs at 30
June 2016
Value of PRs that
lapsed at lapse
date ($)
The value of PRs at grant date is 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. Fair values at grant date are calculated by taking into account the
share price on grant date and the exercise price.
The value of PRs expensed and shown as remuneration during the year is calculated in accordance with AASB 2 Share-
based Payment. This amount is shown as a component of current year remuneration.
2.5 LTIP for 2017
A new LTIP has been implemented for the 2017 financial year, refer section 1.5 for details of the scheme.
The allocation of the LTIP to eligible KMP will be determined during the 2017 financial year.
31
2.6 Executive remuneration
Short term benefits
Salary
($)
STIP
($)
Other
($)
Long term
benefits Post-employment benefits
Other
benefits
($)
Super-
annuation
($)
Leave
($)
Share based
payments
LTIP
($)
Termination
benefits
Termination
payments
($)
Performance
related
percentage
Total
($)
A Burnes (CEO and Managing Director)
Appointed 1 February 2016
2016
202,873
-
-
3,165
8,045
C Burnes (Group General Manager – Wholesale & Inbound and Executive Director)
Appointed 1 February 2016
2016
202,873
M Burnett (CFO)
Appointed 11 April 2016
2016
95,952
-
-
-
-
3,165
8,045
-
4,023
R Carstensen (Group General Manager – Air Services and QBT)
2016
2015
549,541
233,855
539,182
100,000
-
-
28,459
6,771
19,308
18,783
E Gaines (Former CEO and Executive Director)
Resigned 19 December 2015
187,883 (15,955)
-
(6,806)
14,481
18,783
2016
2015
299,217
718,144
J Macdonald (Former CFO)
Resigned 28 April 2016
2016
2015
440,158
506,801
-
-
-
-
168,881
-
P Egglestone (Former Head of Wholesale)
Replaced as a KMP by C Burnes on 1 February 2016)
2016
2015
163,892
305,917
G Leighton (Former CEO New Zealand)
Resigned 31 December 2015
2016
2015
163,524
309,904
-
-
-
-
968
-
-
4,588
-
-
-
14,141
17,699
18,783
11,263
18,783
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(44,322)
3,202
-
-
-
-
-
214,083
0%
214,083
0%
99,975
0%
786,841
667,938
24%
15%
0%
-14%
-11%
6%
-54%
3%
-10%
4%
-
51,978
537,604
(89,917)
-
640,204
(77,050)
143,535
693,223
32,008
(61,451)
8,960
-
-
-
557,592
114,672
347,801
(36,355)
224,016
351,185
11,677
-
326,169
2016 TOTAL
2015 TOTAL
2,118,030
233,855
357,732
2,379,948
100,000
4,588
18,834
14,106
82,864
75,132
- (219,178)
419,529 3,011,666
-
(34,070)
- 2,539,704
Former Chief Executive Officer, Elizabeth Gaines, was awarded a bonus in FY16 in relation to the completion of the
merger with the AOT Group. Former Chief Financial Officer, Jenny Macdonald, was awarded two bonuses in FY16, one
was in relation to additional duties performed, and one was in relation to the completion of the merger with the AOT
Group. These are disclosed as “other - short term benefits” above.
The Group General Manager – Air Tickets and QBT, Russell Carstensen, was awarded a FY15 STIP that was paid in
FY16. This was not included in the FY15 Remuneration table (as it had not been approved at the date the 2015 Annual
Report was released) and consequently this amount is included in the 2016 STIP in the table above. In addition, Russell
Carstensen’s base salary has been recalibrated as a part of the review of executive remuneration and will be $450,000
per annum from 1 September 2016.
The proportion of remuneration that is performance based is calculated as the sum of the STIP bonus, LTIP share-based
payment and other bonus amounts as a proportion of total remuneration.
helloworldlimited.com.au The proportion of the cash bonus paid/payable or forfeited for the annual bonus is as follows:
Name
Executive Directors:
A Burnes
C Burnes
E Gaines
Other Key Management Personnel:
M Burnett
R Carstensen
J Macdonald
P Egglestone
G Leighton
2.7 Executive shareholdings
% of potential annual bonus
earned during the year
% of potential annual bonus
forfeited during the year
2016
2015
2016
2015
-
-
0%
-
0%
0%
0%
0%
-
-
0%
-
18%
0%
0%
0%
-
-
-
-
100%
100%
-
100%
100%
100%
100%
-
82%
100%
100%
100%
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Executive
A Burnes
C Burnes
The Burnes Group
Pty Limited as
trustee for
The Burnes Group
Service Trust
M Burnett
R Carstensen
E Gaines (Former
CEO and Executive
Director)
J Macdonald
(Former CFO)
P Egglestone
(Former Head of
Wholesale)
G Leighton (Former
CEO, New Zealand)
TOTAL
Number of
shares at
1 July 2015
Impact of share
consolidation
1 February 2016
Removal as no
longer KMP
Disposals
-
-
-
-
505,474
-
-
-
-
-
-
-
-
-
(421,228)
-
-
-
-
-
1,219,318
(1,211,020)
(6,915)
(1,383)
-
-
-
-
491,448
(291,448)
(166,667)
(33,333)
Shares held
at date of
appointment
Number of
shares at
30 June 2016
12,828,654
12,828,654
12,638,014
12,638,014
18,480,105
18,480,105
-
-
-
-
-
-
84,246
-
-
-
447,862
-
(373,218)
(74,644)
-
-
2,664,012
(1,502,468)
(968,028)
(109,360)
43,946,773
44,031,019
A Burnes and C Burnes each have a beneficial interest in The Burnes Group Pty Limited which acts as the Trustee of The
Burnes Group Service Trust.
33
2.8 Executive service agreements
Remuneration and other terms of employment for KMP are formalised in continuing 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 the table below:
EXECUTIVE
A Burnes
CEO and Managing Director
(appointed 1 February 2016)
Group General Manager – Wholesale
& Inbound and Executive Director
C Burnes
M Burnett
(appointed 1 February 2016)
CFO (appointed 11 April 2016)
Group General Manager,
Notice period
to be given by
KMP
Notice period
to be given by
the Company
Termination payments or benefits payable if
termination is by the Company
6 months
6 months
In accordance with normal statutory entitlements
6 months
6 months
6 months
6 months
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
R Carstensen
Air Services & QBT
3 months
3 months
In accordance with normal statutory entitlements
helloworldlimited.com.au 3 NON-EXECUTIVE 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
Non-Executive
Director
Committee Fee
Fee
$225,000
$100,000
Summary
The payment of the higher fee to the Chairman recognises the additional time
commitment required and also covers all Board Committee fees.
Fee paid in recognition of time commitment and service to the Group’s Board.
$10,000 (Chairman of Audit
Additional fees for serving on or chairing a committee required by Directors
Committee receives $25,000)
who serve on one or more Committees.
Amounts disclosed in the table as salary and fees in relation to R Marcolina and A John were paid to Qantas Airways
Limited rather than R Marcolina and A John and therefore did not attract a superannuation contribution.
The Directors’ fees have not increased since 1 July 2011 and there is no intention to increase the individual director
fees for the year ending 30 June 2017. Non-Executive Directors do not receive any performance related remuneration
or retirement allowances. The remuneration of Non-Executive Directors for the years ended 30 June 2016 and 30 June
2015 is detailed in the statutory tables below. The process for review of Non-Executive Directors’ performance is
explained in the Corporate Governance Statement.
35
3.3 Non-Executive Director remuneration
NON-EXECUTIVE DIRECTOR
R Marcolina (Chairman)
2016
A Cummins
2016
2015
P Spathis
2016
2015
B Johnson (Former Chairman)
2016
2015
A John (Former Non-Executive Director)
2016
2015
J Millar (Former Non-Executive Director)
2016
2015
J McKellar (Former Non-Executive Director)
2016
2015
2016 TOTAL
2015 TOTAL
Short-term benefits
Post-employment
benefits
Cash salary
($)
Other
($)
Superannuation
($)
Total
($)
87,083
100,457
100,457
97,032
11,234
100,455
182,060
22,917
110,000
64,326
114,155
38,052
49,964
510,322
567,870
-
-
-
-
-
180,000
-
-
-
-
-
-
-
180,000
-
-
87,083
9,543
9,543
9,218
1,067
10,260
16,690
-
6,111
10,845
3,615
4,747
38,747
42,892
110,000
110,000
106,250
12,301
290,715
198,750
22,917
110,000
70,437
125,000
41,667
54,711
729,069
610,762
B Johnson was paid an additional one off payment of $180,000 in recognition of his additional contribution to the Group
during the leadership transition.
3.4
Non-Executive Director shareholdings
NON-EXECUTIVE DIRECTOR
R Marcolina (Chairman)
A Cummins
(Shares held legally and beneficially in the name of
Gladstone Investments Limited)
P Spathis
(Has a beneficial interest in fully paid ordinary
shares held legally in the name of Vortex TV Pty
Ltd as trustee for the Consolidated Travel (NSW)
Superannuation Fund)
B Johnson (Former Chairman)
A John (Former Non-Executive Director)
J Millar (Former Non-Executive Director)
J McKellar (Former Non-Executive Director)
TOTAL
Number of shares
at 1 July 2015
-
Impact of
1 for 6 Share
Consolidation
Other
changes during
the year
952,998
(794,165)
Number of
shares at
30 June 2016
-
158,833
-
-
500,000
200,000
-
40,000
-
1,692,998
(416,667)
(166,667)
-
(33,333)
-
(1,410,832)
-
(33,333)
-
(6,667)
-
(40,000)
83,333
-
-
-
-
242,166
This concludes the remuneration report, which has been audited.
helloworldlimited.com.au Auditor Independence
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 &
Investments Commission ASIC Corporations (Rounding
in Financial/Directors’ Reports) Instrument 2016/191.
Made in accordance with a resolution of the Directors.
Rob Marcolina
Chairman
Helloworld Limited
Sydney, 25 August 2016
The Directors received the declaration of independence
on page 38 from PricewaterhouseCoopers, the auditor
of Helloworld. 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 38 and forms part of the Directors’ Report
for the financial year ended 30 June 2016. Details of the
amounts paid to PricewaterhouseCoopers, for audit and
non-audit services are set out in note 27 of the Financial
Statements on page 74 of the Financial Report.
37
AUDITOR’S
INDEPENDENCE
DECLARATION
As lead auditor for the audit of Helloworld Limited for the year ended 30 June 2016, I
declare that to the best of my knowledge and belief, there have been:
1.
2.
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
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.
Brett Entwistle
Partner
PricewaterhouseCoopers
Sydney
25 August 2016
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
helloworldlimited.com.au
CORPORATE
GOVERNANCE
STATEMENT
Overview
The Board of Helloworld Limited (the 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 Helloworld. Helloworld
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.
This statement is current at 25 August 2016.
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
Chairperson 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.
The Board’s key responsibilities and those matters
expressly reserved to the Board are set out in the Board
Charter and include:
• Setting 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, code 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
• Appointment, reappointment or replacement of the
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.
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.
39
To ensure that Executive Directors clearly understand the
requirements of the role, service contracts and formal job
descriptions are provided to them.
existing directors to develop and maintain the skills and
knowledge required to effectively perform their
role as directors.
Senior Executive Performance
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 previous CEO, Elizabeth Gaines, resigned on 19 June
2015 and concluded her role at the company in December
2015. For this reason her performance was not formally
reviewed during the period of the year ended 30 June
2016 during which she was CEO. The current CEO, Andrew
Burnes, commenced as CEO on 2 February 2016 and his
performance will be reviewed later in 2016.
The CEO undertakes an annual review of the performance
of their direct reports against key performance
indicators and provides a report to the Remuneration and
Nominations Committee for further consideration.
The formal Senior Executive review for the year ended
30 June 2016 was not conducted due to a change of
CEO in the second half of the year however senior
executive performance was discussed on a regular and
ongoing basis.
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 five Directors
appointed to the Board. The skills, experience and
expertise of each Director and their period of office at
the date of the 2016 Annual Report are set out in the
Directors’ Report on pages 9 to 12.
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. The matrix is also a tool for
identifying professional development opportunities for
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 5 directors)
5
4
3
3
5
4
4
5
5
4
Further detail 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 9 to 12.
Director Independence
As at 30 June 2016, based on the factors relevant to
assessing the independence of directors included in the
ASX CGP, only one Director, Andrew Cummins, is deemed
to be independent. Mr Cummins was until February
2015, Chairman of CVC Capital Partners Pan-Asian
Team, and while CVC has an indirect majority interest in
Europe Voyager NV, Europe Voyager NV ceased to be a
shareholder of the company on 20 June 2016.
The remainder of the Board is not independent for the
following reasons:
• Rob Marcolina is an executive of Qantas, the ultimate
holding company of QH Tours Ltd, a substantial shareholder
of Helloworld and a company having a material business
relationship with Helloworld as a supplier of product
and a customer for distribution services;
• Peter Spathis is employed as Chief Financial Officer
of Consolidated Travel Pty Ltd, which operates in the
travel industry, and within the Alysandratos Group of
Companies, which includes Sintack Pty Ltd (‘Sintack’), a
substantial shareholder of Helloworld; and
• Andrew Burnes is the Company’s Chief Executive
Officer and Managing Director, and a substantial
shareholder of the Company.
• Cinzia Burnes is the Company’s Group General Manager,
Wholesale and Inbound and a substantial shareholder
of the Company.
The length of each Directors’ tenure as a director is set
out in the Directors’ Report on pages 9 to 12.
helloworldlimited.com.au Independent Decision Making
During the reporting period, the role of Chairman was
held by Brett Johnson until 20 November 2015 and
from that date by Rob Marcolina. Mr Marcolina is not
independent and the Company recognises that this is a
departure from ASX CGP 2.4.
The Board considered Mr Marcolina the director
best qualified to fulfil the role as acting Chairman
notwithstanding he was not independent, whilst
undertaking the process of appointing an independent
Chairman. Mr Marcolina exercised sound and independent
judgement on matters coming before the Board and acted
at all times in the best interests of the Company.
As at the date of this Statement the Board is in the
process of finalising the appointment of an independent
Chairman and an independent Audit Committee Chairman.
A majority of the Board are not independent and the
Company recognises that this is a departure from
Recommendation 2.5 of the ASX CGP.
QH Tours Ltd 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. Europe Voyager NV nominated
Andrew Cummins to the Board but ceased to be a
shareholder of the Company on 20 June 2016. Mr Cummins
remains on the Board as an independent director.
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 Chairman 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 Director providing an element of
balance as well as making a considerable contribution in
his 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 not jeopardised by a lack of
independence.
Remuneration and Nominations Committee
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:
• A Cummins (Chairman)
• R Marcolina (from 28 April 2016)
• B Johnson (until 22 January 2016)
• J McKellar (until 20 November 2015)
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 currently
only consists of two members, rather than three, as
required by Helloworld’s own charter, and does not have
a majority of Independent Directors. 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 45 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 FY16 are set out
in the Directors’ Report on pages 9 to 13.
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.
41
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 in fulfilling
its responsibilities.
Board performance
The Board undertakes an annual self-assessment of
its collective performance and the performance of its
committees, by way of a series of questionnaires. 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.
Due to the Company’s impending merger with the AOT
Group, the Board and Committee performance review
scheduled to be undertaken in December 2015 was
postponed and commenced in June 2016 and completed in
July 2016. The outcomes from this Board and Committee
performance review were:
• The Board will increase its exposure to the company’s
operations through the scheduling of a future Board
meeting at a company operation such as an agency,
store or call centre.
• The Board will undertake regular detailed reviews
of particular parts of the business and meet with
senior management and staff of that business to
obtain greater insight into the factors which drive the
performance of the business.
• The next Board performance evaluation will be
conducted early in 2017 to benefit from the insights of
the new independent directors.
Due to the appointment of the Chairman and a number
of new Directors during the year, it was considered that
deferral of individual Director performance evaluations
until the 2017 year would generate a more valuable result.
Accordingly the company did not comply with Corporate
Governance Council recommendation 1.6.
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 and the
terms are consistent with ASX CGP3.
In accordance with this 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 females 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 females reporting to the CEO should
not fall below the current levels unless a transparent
process fails to succeed in attracting suitable women
candidates; and
• Helloworld 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.
2016 has been a transformational year within Helloworld,
and as at 30 June 2016, a selection process was underway
to fill current Board vacancies. This has impacted the
proportion of females on the Board and reporting to the
CEO and therefore, these levels have fallen below that of
30 June 2015.
helloworldlimited.com.au Proportion of women in the organisation
There are 1,391 female employees in the Group
representing 69.9 % of the workforce. In addition, there
are 39 female employees representing 48.2 % of the
workforce who report to the CEO and CEO’s direct reports.
There is one female on the Board which represents 20%
of the Board.
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 Helloworld employees and is also available in the
Corporate Governance section of the Company’s website.
4
Integrity of financial reporting
The Board has an Audit Committee to assist the Board in
the discharge of its responsibilities.
During the reporting period, the following Non-Executive
Directors were members of the Audit Committee:
• Peter Spathis (member from June 2015 and Chairman
from 19 February 2016)
• Rob Marcolina (from 19 February 2016)
• Andrew Cummins (from 19 February 2016)
• James Millar (Chairman until 22 January 2016)
• Brett Johnson (until 22 January 2016)
• Adrian John (until 18 September 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.
Until 22 January 2016, the Committee was chaired by James
Millar, an Independent Director who is not the Chairman
of Helloworld. From 22 January 2016 until the end of the
reporting period, Peter Spathis, a non-independent director
served as the Committee’s acting Chairman. The Company
recognises that this is a departure from Recommendation
4.1 of the ASX CGP. However, the Board considers that on
the basis of his skills and professional background, Peter
Spathis was the director best qualified to fulfil the role
of Acting Chairman given the composition of the Board
post the completion of the merger with the AOT Group,
notwithstanding that he is not independent.
As at the date of this Statement the Board is in the
process of finalising the appointment of an independent
Audit Committee Chairman.
Details of these Directors’ qualifications and attendance
at Audit Committee meetings are set out in the Directors’
Report on pages 9 to 13.
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 Helloworld 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,
43
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 Helloworld 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 endeavour 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 and reviewed on a timely basis. 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.
Under the Risk Management Policy, the Audit Committee
is responsible for assisting the Board in fulfilling its
corporate governance responsibilities with regard to:
• 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.
Details of the members of the Audit Committee are set
out above in the Integrity of financial reporting section of
this Corporate Governance Statement.
The Company has 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 Senior Leadership Team (SLT) also plays a
role in identifying, assessing, monitoring and managing risks.
The risk management performance of the Executive Risk
Governance Committee and SLT are monitored by the
Audit Committee.
The Board has received a report from Management as to
the effectiveness of the Company’s management of its
material business risks during the year.
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
helloworldlimited.com.au system of risk management and internal control which is
operating effectively.
Remuneration
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 14 to 23 of the
Annual Report.
Internal Audit
An 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, an internal audit of the
Company’s Payment Card Industry (PCI) Data Security
Standard compliance project was conducted by an
external consultant who reported to the Audit Committee.
The objective of this internal audit was to provide a
review of the Company’s PCI compliance project with a
specific focus on the project scope, approach, schedule,
resources and key compliance and technical requirements
and identify key risks to the project in meeting the
compliance deadline. The outcome of the internal audit
was used to drive improvements in the Company’s PCI
compliance project.
8 Remunerating fairly and responsibly
The Helloworld 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.
The Board has established a Remuneration and
Nominations Committee to assist the Board in the
discharge of its duties in relation to remuneration.
Details of the Non-Executive Directors who were
members of the Remuneration and Nominations
Committee during the reporting period are set out in
Remuneration and Nominations Committee section 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 9 to 13.
Executive management
Remuneration for executive management is generally
set to be competitive so as to both retain executives
and attract experienced executives to the Company.
Remuneration 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.
Following a review of current practices, a new Long Term
Incentive Plan (LTIP) has been established and targeted
to a group of executives and senior leaders within the
business. LTIP allocations are limited to key executives
and senior leaders who are considered critical to the
ongoing success of the Group.
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 these shares.
A copy of the Share Trading Policy is available from the
Corporate Governance section of the Company’s website.
45
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
REVENUE
EXPENSES
Employee benefits expenses
Advertising and marketing expenses
Selling expenses
Communications and technology expenses
Occupancy and rental expenses
Operating expenses
Profit on disposal of investments
Share of profit of associates accounted for using the equity method
Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA)
Finance expense
Depreciation and amortisation expense
Impairment of goodwill
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
Income tax expense
PROFIT/(LOSS) AFTER INCOME TAX EXPENSE FOR THE YEAR
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that will not be reclassified subsequently to profit or loss
Defined benefit plan actuarial gain/(loss)
Deferred tax benefit/(expense) on defined benefit plan
Items that may be reclassified subsequently to profit or loss
Change in fair value of cash flow hedges
Income tax benefit/(expense) on cash flow hedges
Exchange differences on translation of foreign operations
OTHER COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR, NET OF TAX
CONSOLIDATED
2016
$’000
2015
$’000
297,923
279,223
(134,425)
(122,191)
Note
3
4
(39,355)
(31,549)
(19,917)
(14,065)
(33,701)
379
-
25,290
(3,381)
(40,773)
(34,778)
(19,139)
(12,788)
(26,005)
340
162
24,051
(3,227)
(18,459)
(13,921)
-
(205,300)
3,450
(198,397)
(1,774)
(2,714)
1,676
(201,111)
(2,405)
722
(826)
220
2,329
40
521
(344)
1,639
(492)
280
1,604
36
12
5
4
4
7
16
7
25
25
25
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
1,716
(199,507)
PROFIT/(LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Limited
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Limited
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
(23)
1,699
1,676
(23)
1,739
1,716
Cents
1.89
1.89
10
(201,121)
(201,111)
10
(199,517)
(199,507)
Cents
(273.99)
(273.99)
9
9
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
helloworldlimited.com.au CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2016
CONSOLIDATED
Note
2016
$’000
2015
$’000
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 liabilities
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
The above statement of financial position should be read in conjunction with the accompanying notes
10
11
29
12
13
14
15
16
17
18
19
20
29
21
22
23
24
25
26
202,621
134,233
191
-
-
176,141
104,869
93
1,627
305
337,045
283,035
1,563
175
19,560
285,856
1,203
-
196
460
175
16,916
161,404
5,242
3,062
802
308,553
188,061
645,598
471,096
220,783
183,609
287
13,830
82,967
1,526
1,419
-
13,051
69,294
37
-
320,812
265,991
46,352
23,245
3,576
3,233
4,007
295
1,430
2,659
57,168
27,629
377,980
293,620
267,618
177,476
366,235
163,051
278,755
161,636
(262,998)
(263,014)
266,288
177,377
1,330
99
267,618
177,476
47
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Issued
capital
$’000
Reserves
Accumulated
Losses
Non-
controlling
Interests
$’000
$’000
$’000
Total
Equity
$’000
278,822
160,164
(62,070)
-
(201,121)
1,427
177
72
10
-
376,988
(201,111)
1,604
1,427
(200,944)
10
(199,507)
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
BALANCE AT 1 JULY 2014
Profit/(loss) after income tax expense
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
-
-
-
-
-
-
-
-
BALANCE AT 30 JUNE 2015
278,755
161,636
(263,014)
Issued
capital
$’000
Reserves
Accumulated
Losses
Non-
controlling
Interests
$’000
$’000
$’000
Consolidated
BALANCE AT 1 JULY 2015
Profit/(loss) after income tax expense
Other comprehensive income/(loss)
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
Transactions with owners in their capacity as owners net of tax:
Long term incentive plan:
Expensed during the year
Issue of new shares
Transactions with non-controlling interest:
Acquisitions
BALANCE AT 30 JUNE 2016
278,755
161,636
(263,014)
-
-
-
-
87,480
-
-
1,723
1,723
1,699
(1,683)
16
(308)
-
-
-
-
-
366,235
163,051
(262,998)
-
-
-
37
(20)
99
99
(23)
-
(23)
(45)
90
(67)
37
(20)
177,476
Total
Equity
$’000
177,476
1,676
40
1,716
-
-
(308)
87,480
1,254
1,330
1,254
267,618
The above statement of changes in equity should be read in conjunction with the accompanying notes
helloworldlimited.com.au
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Interest paid
Income taxes paid
Note
CONSOLIDATED
2016
$’000
2015
$’000
2,617,955
2,511,880
(2,616,053)
(2,507,646)
3,638
(2,953)
(271)
4,362
(2,533)
(1,350)
NET CASH FROM OPERATING ACTIVITIES
28
2,316
4,713
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposals of investments, net of client cash disposed
Net cash acquired from acquisition of controlled entities
36
Payments for acquisitions of stores
Proceeds from disposal of property, plant and equipment
Contributions from minority shareholder
Dividends received from associates
(6,014)
(10,444)
739
15,040
(736)
188
-
-
(2,853)
(11,797)
2,105
-
-
60
17
574
NET CASH USED IN INVESTING ACTIVITIES
(1,227)
(11,894)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Purchase of shares on market
Borrowing costs paid and capitalised
NET CASH FROM/(USED IN) FINANCING ACTIVITIES
Net increase/(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
32,000
(10,000)
-
-
22,000
23,089
1,008
(1,900)
(105)
(68)
(1,065)
(8,246)
176,141
184,320
3,391
67
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
10
202,621
176,141
The above statement of cash flows should be read in conjunction with the accompanying notes
49
NOTES TO THE
FINANCIAL STATEMENTS
1. Reporting entity
(c) Functional and presentation currency
Helloworld Limited (the Company) is a company
limited by shares incorporated and domiciled in
Australia whose shares are publicly traded on
the ASX.
The financial statements of the Group for the year
ended 30 June 2016 were authorised for issue in
accordance with a resolution of the directors on 25
August 2016. 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. Helloworld 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.
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 ASIC
Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191. In accordance with
the instrument, 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 to 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.
helloworldlimited.com.au (i) Impairment of goodwill and intangibles with 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. 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
Helloworld. 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.
The accounting policy for commission revenue, incentives
and rebates is set out in note 39(e).
(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.
On 29 February 2016 the Helloworld managed defined
benefit superannuation scheme was closed. The
remaining members of the scheme agreed to transfer
to an Australian Super accumulation fund. The assets
and liabilities under this plan have been settled and
derecognised from our Statement of Financial Position.
51
3. Revenue
Rendering of services
Rents and sub-lease rentals
Finance income
Other revenue
REVENUE
4. Expenses
PROFIT/(LOSS) BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES:
Depreciation (note 13)
Amortisation (note 14)
Impairment of goodwill (note 14)
Impairment losses on trade receivables
Defined contribution superannuation expense
Defined benefit superannuation expense (note 16)
Employee benefits expense excluding superannuation
AOT merger costs
Business transformation costs
Redundancy costs
Recovery/(costs) relating to GST legal dispute
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
2016
$’000
2015
$’000
292,378
273,354
643
3,638
1,264
662
4,362
845
297,923
279,223
CONSOLIDATED
2016
$’000
2015
$’000
(8,102)
(10,357)
(5,928)
(7,993)
-
(205,300)
(169)
(7,482)
(640)
(138)
(6,415)
(776)
(126,303)
(115,000)
(3,822)
(2,904)
(1,801)
1,775
-
(1,638)
(39)
(617)
CONSOLIDATED
2016
$’000
2015
$’000
3,638
(3,381)
257
4,362
(3,227)
1,135
helloworldlimited.com.au 6. Operating segments
(a) Description of segments
The Group has identified the following three operating segments based on the internal reports that are reviewed
and used by the Chief Executive Officer and the Board, the Chief Operating Decision Makers (CODM), 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
branded, Helloworld Associate, Helloworld for Business, and the My Travel Group. The Retail segment includes the online
portal helloworld.com.au.
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. Within the wholesale division, the inbound division offers travel
services in Australia, New Zealand, Fiji and the Cook Islands to clients in 73 countries worldwide.
Travel Management provides travel management services to corporate and government customers including the
booking of flights and accommodation.
Corporate charges are fully allocated to operating segments.
There are no changes to the operating segments from prior year. On 1 February 2016, Helloworld merged with the AOT
Group and its controlled entities (AOT). The operating segments of AOT have been included in the wholesale segment.
The Board assess the performance of the operating segments based on a measure of EBITDA (earnings before interest
expense, tax, depreciation, amortisation and impairment). Interest income on client funds is included within segment
revenue and EBITDA according to Group accounting policy.
(b) Segment information provided to the Board
YEAR ENDED 30 JUNE 2016
Segment revenue
Operating expenses
EBITDA BEFORE SHARED SERVICES
Shared services net costs
EBITDA
Depreciation, amortisation and interest expense
NET PROFIT/(LOSS) BEFORE TAX
YEAR ENDED 30 JUNE 2015
Segment revenue
Operating expenses
EBITDA BEFORE SHARED SERVICES
Shared services net costs
EBITDA
Depreciation, amortisation and interest expense
Impairment expense
NET PROFIT/(LOSS) BEFORE TAX
Retail
$’000
Wholesale
$’000
Travel
Management
$’000
Corporate
Unallocated Consolidated
$’000
$’000
147,516
(114,565)
32,951
(16,416)
16,535
(10,313)
6,222
151,933
(120,012)
31,921
(12,584)
19,337
(8,595)
(147,800)
(137,058)
96,689
(80,095)
16,594
(12,925)
3,669
(7,803)
(4,134)
82,276
(69,858)
12,418
(8,169)
4,249
(5,443)
(57,500)
(58,694)
50,440
(39,330)
11,110
(6,024)
5,086
(3,724)
1,362
41,148
(35,930)
5,218
(4,753)
465
(3,110)
-
(2,645)
3,278
(38,643)
(35,365)
35,365
-
-
-
297,923
(272,633)
25,290
-
25,290
(21,840)
3,450
3,866
279,223
(29,372)
(25,506)
25,506
-
-
-
-
(255,172)
24,051
-
24,051
(17,148)
(205,300)
(198,397)
53
(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
$228.3 million (2015: $208.8 million), and the total revenue from external customers in other countries is $69.6 million
(2015: $70.4 million). 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 31.
(ii) EBITDA
A reconciliation of EBITDA to profit/(loss) before income tax is provided as follows:
EBITDA
Depreciation
Amortisation
Impairment of goodwill
Finance costs
PROFIT/(LOSS) BEFORE TAX
(iii) Segment assets
CONSOLIDATED
2016
$’000
25,290
(8,102)
(10,357)
2015
$’000
24,051
(5,928)
(7,993)
-
(205,300)
(3,381)
3,450
(3,227)
(198,397)
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 $261.6 million (2015: $147.0 million), and the total of these non-current assets located in other
countries is $45.7 million (2015: $32.7 million). 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 2016, we have reported segment EBITDA in our segment analysis. Comparative
information has been restated in the segment note to align with the current year results as reported to the Board.
helloworldlimited.com.au 7. Income tax expense
The major components of income tax expense recognised in the statement of profit or loss and other comprehensive
income are:
(a) Income tax expense
CURRENT INCOME TAX EXPENSE
Current income tax expense
Deferred income tax - relating to the origination and reversal of temporary differences
Adjustment in respect of current tax expense of previous year
INCOME TAX EXPENSE REPORTED IN THE STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Deferred tax included in income tax expense comprises:
(Increase)/decrease in deferred tax assets (note 15)
Increase/(decrease) in deferred tax liabilities (note 22)
Deferred income tax - relating to the origination and reversal of temporary differences
CONSOLIDATED
2016
$’000
2015
$’000
1,546
504
(276)
2,504
1,746
(1,536)
1,774
2,714
(795)
1,299
504
2,155
(409)
1,746
(b) Reconciliation between income tax expense and profit/(loss) before income tax
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
Tax at the statutory tax rate of 30%
Add/(deduct):
Current year tax losses not recognised
Amortisation
(Gain)/loss on disposal of investments
Impairment of goodwill
Merger costs not deductible
Differences in overseas tax rates
(Over)/under provision in prior year
Other
INCOME TAX EXPENSE REPORTED IN THE CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
3,450
1,035
113
64
(108)
-
1,142
(163)
(186)
(123)
(198,397)
(59,519)
60
376
(102)
61,590
-
(117)
248
178
1,774
2,714
(c) Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges
Defined benefit pension - actuarial gains/(losses)
(d) Tax losses not recognised
(220)
(722)
(942)
492
344
836
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
1,733
520
1,217
365
All unused tax losses were incurred by non-Australian entities that are not part of the tax consolidated group.
55
(e) Amounts recognised directly in equity
There is no deferred tax recognised directly in equity (2015: $24,772).
(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.
8. Dividends paid and proposed
(a) Dividends
There were no dividends paid during the financial year (2015: nil).
Since year-end, the directors have resolved to pay a 2.0 cents per paid share (2015: 0.0 cents) fully franked final
dividend. The dividend of $2,197,000 is to be paid during the 2017 financial year out of retained profits at 30 June
2016, but is not recognised as a liability at year-end.
(b) Franking credits
The franked portions of any future dividends paid after 30 June 2016 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 2017. 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 payable/(receivable) as at year end
Franking credits that will be utilised from the payment of the dividends declared
subsequent to the reporting date based on a tax rate of 30%
CONSOLIDATED
2016
$’000
27,614
747
(941)
27,420
2015
$’000
29,702
(843)
-
28,859
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.
helloworldlimited.com.au 9. Earnings per share
The calculation of basic EPS for the year ended 30 June 2016 was based on its profit attributable to ordinary
shareholders of $1.7 million (2015: loss of $201.1 million) and a weighted average number of ordinary shares
outstanding of 88,867,177 (2015: 73,405,096).
The weighted average number of ordinary shares for the prior year has been restated to reflect the 1 for 6 share
consolidation completed in January 2016 arising from the AOT merger.
(a) Basic earnings/(loss) per share
Total basic earnings/(loss) per share from continuing operations attributable
to ordinary equity holders of the Company
(b) Diluted earnings/(loss) per share
CONSOLIDATED
2016
cents
2015
cents
1.89
(273.99)
Total diluted earnings/(loss) per share from continuing operations attributable
to ordinary equity holders of the Company
1.89
(273.99)
(c) Reconciliation of earnings/(loss) used in calculating earnings/(loss) per share
Profit/(loss) after income tax
Non-controlling interest
NET PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS ATTRIBUTABLE
TO THE ORDINARY EQUITY HOLDERS OF THE COMPANY
(d) Weighted average number of shares used as the denominator
Weighted average number of shares used as the denominator in calculating
basic earnings/(loss) per share
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings/(loss) per share
CONSOLIDATED
2016
$’000
2015
$’000
1,676
(201,111)
23
(10)
1,699
(201,121)
2016
2015
Number of
shares
Number of
shares
88,867,177
73,405,096
88,867,177
73,405,096
For the year ended 30 June 2016, the Company had a weighted average number of potential ordinary shares of 413,118
(2015: 687,056) 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
As at 30 June 2016, Helloworld has 109,838,418 (2015: 440,330,198) fully paid ordinary shares on issue. On 29 January
2016, there was a 1 for 6 share consolidation and the restated prior year fully paid ordinary shares on issue would have
been 73,388,417.
57
10. Cash and cash equivalents
Cash at bank and on hand
Client cash
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS
CONSOLIDATED
2016
$’000
26,201
176,420
202,621
2015
$’000
27,365
148,776
176,141
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.
11. Trade and other receivables
Trade receivables
Less: Provision for impairment of receivables
Accrued income
Prepayments
Other receivables
CONSOLIDATED
2016
$’000
67,308
(701)
66,607
36,077
14,967
16,582
67,626
2015
$’000
53,587
(635)
52,952
31,227
15,362
5,328
51,917
TRADE AND OTHER RECEIVABLES
134,233
104,869
Trade receivables are non-interest bearing and are generally on 30 day terms.
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 29.
helloworldlimited.com.au 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 33 for further information on interests in associates.
(a) Movement in carrying amounts
Carrying amount at the beginning of the financial year
Share of profits after income tax
Increase due to associates acquired from business combinations
Dividends received/receivable
Decrease due to change in ownership interest
Other movements
CARRYING AMOUNT AT END OF THE FINANCIAL YEAR
(b) Contingent liabilities of associates
CONSOLIDATED
2016
$’000
1,617
(54)
1,563
2015
$’000
514
(54)
460
CONSOLIDATED
2016
$’000
460
-
1,727
-
(640)
16
1,563
2015
$’000
942
162
-
(574)
(68)
(2)
460
There are no contingent liabilities in associate investments for which the Group has a legal obligation to settle.
(c) Disposal of associate
On 10 July 2015, the Group disposed of its investment in Harvey World Travel Southern Africa (Pty) Limited for a
consideration of $0.7m. The disposal resulted in a profit before tax of $0.4 million in the period.
59
13. Property, plant and equipment
AT 30 JUNE 2014
Cost
Accumulated Depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2014
Additions
Disposals
Foreign currency differences
Transfer in/(out)
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2015
AT 30 JUNE 2015
Cost
Accumulated Depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2015
Additions
Additions through business combinations
Disposals
Foreign currency differences
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2016
AT 30 JUNE 2016
Cost
Accumulated Depreciation
NET BOOK AMOUNT
Land and
buildings
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
607
-
-
(4)
603
607
(4)
603
Office
Equipment
Leasehold
Improvements
$’000
22,738
(9,422)
13,316
13,316
2,476
(55)
18
(315)
(4,028)
11,412
23,953
(12,541)
11,412
11,412
3,067
4,120
(135)
184
(5,550)
13,098
21,486
(8,388)
13,098
$’000
13,697
(6,507)
7,190
7,190
217
(3)
(65)
65
(1,900)
5,504
12,768
(7,264)
5,504
5,504
2,531
464
(198)
106
(2,548)
5,859
8,355
(2,496)
5,859
Total
$’000
36,435
(15,929)
20,506
20,506
2,693
(58)
(47)
(250)
(5,928)
16,916
36,721
(19,805)
16,916
16,916
5,598
5,191
(333)
290
(8,102)
19,560
30,448
(10,888)
19,560
helloworldlimited.com.au 14. Intangible assets
Goodwill Franchise
systems
Agent
network
Supplier
agreements
Brand
names
Trademarks
Software
website and
other 1
Total
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
AT 30 JUNE 2014
Cost
Accumulated amortisation
and impairment
NET BOOK AMOUNT
324,810
97,400
(88,309)
-
236,501
97,400
BALANCE AT 1 JULY 2014
236,501
97,400
Additions
Additions through
business combinations
Impairment charge 2 (note 4)
-
1,740
(205,300)
Foreign currency differences
(410)
Transfer in/(out)
Amortisation charge (note 4)
-
-
-
-
-
-
-
-
BALANCE AT 30 JUNE 2015
32,531
97,400
AT 30 JUNE 2015
Cost
Accumulated amortisation
and impairment
NET BOOK AMOUNT
326,536
97,400
(294,005)
-
32,531
97,400
BALANCE AT 1 JULY 2015
32,531
97,400
Additions
Additions through business
combinations
Foreign currency differences
Amortisation charge (note 4)
-
106,607
2,110
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,310
2,634
-
-
-
(160)
2,474
3,460
5,561
33,838
465,069
(1,935)
(2,312)
(12,032)
(104,588)
1,525
3,249
21,806
360,481
1,525
3,249
21,806
360,481
59
-
-
-
250
(1,028)
806
-
-
-
-
12,286
12,345
-
-
1,740
(205,300)
291
-
(119)
250
(563)
2,686
(6,402)
(7,993)
27,981
161,404
3,529
5,561
45,866
478,892
(2,723)
(2,875)
(17,885)
(317,488)
806
2,686
27,981
161,404
806
14
-
-
(61)
759
2,686
27,981
161,404
-
-
-
10,675
10,689
4,273
121,824
186
2,296
(562)
2,124
(9,574)
(10,357)
33,541
285,856
BALANCE AT 30 JUNE 2016
141,248
97,400
8,310
AT 30 JUNE 2016
Cost
435,536
97,400
8,310
2,634
3,542
5,561
55,729
608,712
Accumulated amortisation
and impairment
(294,288)
-
-
NET BOOK AMOUNT
141,248
97,400
8,310
(160)
2,474
(2,783)
(3,437)
(22,188)
(322,856)
759
2,124
33,541
285,856
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 2015, the carrying value of the Retail segment and the Wholesale segment goodwill has been reduced to their
recoverable amounts through the recognition of impairment loss against goodwill.
61
Impairment tests for goodwill and other indefinite life intangibles
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
Impairment review
CONSOLIDATED
2016
$’000
24,063
117,185
141,248
2015
$’000
22,597
9,934
32,531
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 the value-in-use calculations. These calculations use cash flow
projections based on the board approved budget for the next financial year, internal segment level projections covering
the subsequent 4 years and a steady-state terminal value calculations at the end of year 5.
The impairment test undertaken for the year ended 30 June 2016 supported the carrying value of goodwill for both the
retail and wholesale business segments and the overall group goodwill.
The impairment test undertaken for the year ended 30 June 2015 required a prior year goodwill impairment charge of
$147.8 million to be recorded for the retail business segment and a goodwill impairment charge of $57.5 million was
recorded for the wholesale business segment. The prior year impairment charge was a result of the reassessment of
forecast earnings following a re-evaluation of the market growth assumptions.
Key assumptions used for value-in-use calculations
Internal segment level projections indicate that operating cash flows are expected to grow at 5.0% for both retail and
wholesale segments over the forecast period. The terminal value calculations have an equivalent revenue and operating
expense growth assumption of 2.0%, in line with inflation expectations. Revenue and operating expense growth
projections have been benchmarked against travel industry forecasts and general economic projections where available.
The post-tax cash flows have been discounted at a post-tax rate of 10.3% (2015: 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).
The equivalent pre-tax discount rate for the retail segment was 13.6% (2015: 14.5%) and for the wholesale segment
was 13.7% (2015: 14.2%).
Impact of possible change 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.
For the retail segment, the cash flow growth would need to decline to below 3.0% per annum for an impairment to be
recorded. There are no other reasonable possible assumption changes per the sensitivity analysis that would cause the
retail segment carrying value to exceed its recoverable amount as at 30 June 2016.
For the wholesale segment, there are no reasonable possible assumption changes per the sensitivity analysis that would
cause the wholesale segment carrying value to exceed its recoverable amount as at 30 June 2016.
helloworldlimited.com.au 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 39(l)(iv).
The recoverable amount has been assessed at 30 June 2016 using an excess earnings calculation, which is consistent
with the methodology originally used to value the asset. Based on the review undertaken as at 30 June 2016, the
recoverable amount of the Franchise System exceeds it carrying value. No impairment charge has been recorded for
the Franchise System in either the current or prior financial year.
Key assumptions used in excess earnings calculations
Operating cash flows are expected to grow at 5.0% for the forecast period. The terminal value calculations have an
equivalent revenue and operating expense growth assumptions of 2.0% in line with inflation expectations. Revenue and
operating expense growth projections have been benchmarked against travel industry forecasts and general economic
projections where available.
The post-tax cash flows have been discounted at a post-tax rate of 10.3% (2015: 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).
The equivalent pre-tax discount rate was 14.2% (2015:15.9%).
Other key assumptions used include EBITDA margin of 13.8% (2015: 14.4%) and capital charges that range from -0.4%
to 1.1% (2015: -0.5% to 1.2%).
Impact of possible changes in key assumptions
The assumptions used in the excess earnings calculation are the most sensitive to revenue growth projections and 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 below 1.0% per annum; or
• discount rate would need to increase to 12.3% post-tax.
63
15. Deferred tax asset
(a) Deferred tax assets
Tax losses
Property, plant and equipment
Employee benefits
Payables and accruals
Other
GROSS DEFERRED TAX ASSETS
Set-off of deferred tax assets and liabilities pursuant to set-off provisions
NET DEFERRED TAX ASSETS
Amount expected to be recovered within 12 months
Amount expected to be recovered after more than 12 months
(b) Movement in temporary differences during the year
CONSOLIDATED
2016
$’000
2,424
616
4,228
12,359
1,200
20,827
2015
$’000
2,174
159
3,410
11,541
1,129
18,413
(19,624)
(13,171)
1,203
5,242
14,333
6,494
20,827
14,345
4,068
18,413
Employee
benefits
$’000
Payables and
accruals
$’000
Property
plant and
equipment
$’000
Tax losses
$’000
Other
$’000
Total
$’000
4,061
13,336
313
1,841
1,408
20,959
(652)
(1,795)
(154)
333
-
-
-
-
-
-
-
-
113
(416)
25
(2,155)
(416)
25
3,409
11,541
159
2,174
1,130
18,413
3,409
11,541
159
2,174
1,130
18,413
DEFERRED TAX ASSETS
AT 1 JULY 2014
(Charged)/credited
- to profit or loss
- to other comprehensive income
- directly to equity
AT 30 JUNE 2015
AT 1 JULY 2015
(Charged)/credited
- to profit or loss
- to other comprehensive income
Acquisitions via business combination
AT 30 JUNE 2016
908
4,228
59
12,359
1
616
(89)
759
456
250
(581)
169
482
-
795
169
1,450
2,424
1,200
20,827
helloworldlimited.com.au
16. Defined benefit plan
Previously, the Group entered into a Superannuation Deed with Qantas Airways Limited setting out the arrangements
which would apply 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, Helloworld assumed responsibility for the plan assets
and plan liabilities for these members in the Defined Benefit Plan controlled and managed by Helloworld.
This Defined Benefit Plan has been wound up effective from 29 February 2016 with all the assets and liabilities under
this plan settled and derecognised from the Statement of Financial Position. The remaining members of the scheme
agreed to transfer to an Australian Super accumulation fund.
The following sets out details in respect of the defined benefit section up to the closure of the Plan on the 29 February
2016. The expense recognised in relation to the defined contribution plan is disclosed in note 4.
CHANGES IN THE PRESENT VALUE OF DEFINED BENEFIT OBLIGATION
Opening defined benefit obligation
Current service cost
Interest cost
Past service cost
Member contributions
Actuarial losses from other changes
Actuarial losses/(gains) from changes in financial assumptions
Payments from the plan
Settlements
CLOSING DEFINED BENEFIT OBLIGATION
CHANGES IN THE FAIR VALUE OF PLAN ASSETS:
Opening fair value of plan assets
Return on plan assets
Contributions by entities in the Group
Member contributions
Payments from the plan
Settlements
CLOSING FAIR VALUE OF PLAN ASSETS
EXPENSE RECOGNISED IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
Current service cost
Interest cost
Past service cost
Interest income
TOTAL INCLUDED IN EMPLOYEE BENEFITS EXPENSE
ACTUAL RETURN GAIN ON PLAN ASSETS
Actuarial (losses)/gains recognised during the year
Cumulative actuarial gains recognised
CONSOLIDATED
2016
$’000
2015
$’000
10,058
10,200
512
324
192
112
1,208
941
(2,061)
(11,286)
854
441
-
151
901
(753)
(1,736)
-
-
10,058
13,120
132
(17)
112
(2,061)
(11,286)
13,110
1,188
407
151
(1,736)
-
-
13,120
CONSOLIDATED
2016
$’000
512
324
192
(388)
640
2015
$’000
854
441
-
(519)
776
CONSOLIDATED
2016
$’000
(2,405)
2,001
2015
$’000
521
4,406
65
TOTAL AMOUNT RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION AT BEGINNING
OF THE 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 THE YEAR
GROUP PLAN ASSETS COMPRISE OF:
Property
International equities
Australian equities
Fixed interest, cash and indexed bonds
Cash
Private equity
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
Significant actuarial assumptions and sensitivity
The significant actuarial assumptions used (expressed as weighted averages) were as follows:
Discount rate
Future salary increases
CONSOLIDATED
2016
$’000
3,062
(2,405)
(640)
(17)
-
2015
$’000
2,910
521
(776)
407
3,062
CONSOLIDATED
2016
%
-
-
-
-
-
-
-
2015
%
21.9%
35.1%
27.2%
10.5%
2.0%
3.3%
100.00%
CONSOLIDATED
2016
$’000
2015
$’000
-
-
-
13,120
(10,058)
3,062
CONSOLIDATED
2016
%
3.8%
3.8%
2015
%
4.5%
3.5%
In the prior year, sensitivity analysis was performed around changes to key assumptions, however in the current year as
the plan has been closed, no sensitivity analysis has been performed. The plan exposed Helloworld to interest rate risk,
investment risk and inflation risk. These risks no longer exist with the plan closure.
Defined benefit asset and employer contributions
During the financial year, the Group made contributions to the plan which provides defined benefit amounts for
employees upon retirement. Before the plan was closed, employees were entitled to retirement benefits determined,
at least in part, by reference to a formula based on years of membership and salary levels.
The Group monitored the plan asset balance on an annual basis and contributed in line with the Plan actuary’s
recommendation in the most recent actuarial valuation as at 30 June 2014 (reported on 25 March 2015) as well as
subsequent actuarial advice. The plan closed effective 29 February 2016 and thereafter defined benefits ceased to
be provided to all employees. From that date all employer contributions have been made for all employees to defined
contribution arrangements.
helloworldlimited.com.au 17. Trade and other payables
Trade payables
Accruals
Other payables
TRADE AND OTHER PAYABLES
CONSOLIDATED
2016
$’000
2015
$’000
165,587
128,296
34,163
21,033
34,821
20,492
220,783
183,609
Trade creditors are non-interest bearing and are normally settled within 30 day terms. Non-trade payables and accruals
are non-interest bearing.
Foreign exchange risk
Details regarding foreign exchange risk exposure are disclosed in note 29.
18. Current borrowings
Unsecured financing
CURRENT BORROWINGS
Refer to note 29 for further information on financial risk management.
19. Current provisions
Employee benefits - annual leave
Employee benefits - long service leave
Lease make good
Straight line rent provision
Onerous lease contracts
Restructuring
Other
CURRENT PROVISIONS
CONSOLIDATED
2016
$’000
287
287
2015
$’000
-
-
CONSOLIDATED
2016
$’000
6,132
4,435
944
942
492
662
223
2015
$’000
4,949
4,671
1,353
912
57
925
184
13,830
13,051
67
(a) Movement in provisions
Movement in each class of provision (current and non-current) during the financial year, other than employee benefits,
are set out below.
CONSOLIDATED
Lease
make good
$’000
Restructuring
$’000
Onerous lease
contracts
$’000
Rent Straight
Line
$’000
Other
Provisions
$’000
Total
$’000
CONSOLIDATED - 2016
Balance at 1 July 2015
Provision charged to statement
of profit or loss
Unused amounts released
to statement of profit or loss
Payments made/transfers from provision
Additions through business combinations
Other
BALANCE AT 30 JUNE 2016
Current
Non-current
BALANCE AT 30 JUNE 2016
1,353
(30)
(61)
(391)
76
(3)
944
944
-
944
925
276
-
(539)
-
-
662
662
-
662
446
481
-
(95)
-
-
832
492
340
832
912
551
(342)
(239)
58
2
942
942
-
942
184
3,820
32
(4)
-
-
11
223
223
-
223
1,310
(407)
(1,264)
134
10
3,603
3,263
340
3,603
(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 period.
The amount of the provision of the future lease make good costs is capitalised and amortised in accordance with the
policy set out in note 39(j). 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.
The provision represents the present value of the estimated costs, net of any sub-lease revenue that will be incurred
until the end of the lease terms where the obligation is expected to exceed the economic benefit to be received.
Restructuring
Restructuring provisions are recognised as an expense when the Group has made a commitment to restructure a part of
the business. All payments are expected to be settled within the next accounting period.
Rent straight line
A provision for straight lining rent is recognised when the operating rental expense exceed the amount paid. The
provision represents operating lease incentives received. The incentives are allocated to profit or loss in such a manner
that the rent expense is recognised on a straight-line basis over the lease term.
helloworldlimited.com.au 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 39(r).
21. Non-current borrowings
Secured bank loan
Less: deferred borrowings costs
NON-CURRENT BORROWINGS
Financing arrangements
The following lines of credit were available at the balance date:
TOTAL FACILITIES
Secured bank loan – AUD1
Secured bank loan - AUD2
Secured bank loan - NZD $10m1
Secured multi-option credit facilities - multi-currency3
USED AT THE REPORTING DATE
Secured bank loan - AUD1
Secured bank loan - AUD2
Secured bank loan - NZD $10m1
Secured multi-option credit facilities - multi-currency3
UNUSED AT THE REPORTING DATE
Secured bank loan - AUD1
Secured bank loan - AUD2
Secured bank loan - NZD $10m1
Secured multi-option credit facilities - multi-currency3
CONSOLIDATED
2016
$’000
2015
$’000
82,967
69,294
CONSOLIDATED
2016
$’000
47,542
(1,190)
46,352
2015
$’000
24,861
(1,616)
23,245
CONSOLIDATED
2016
$’000
2015
$’000
32,100
14,000
9,542
40,000
95,642
24,000
14,000
9,542
11,979
59,521
8,100
-
-
28,021
36,121
32,100
15,000
8,861
40,000
95,961
16,000
-
8,861
10,345
35,206
16,100
15,000
-
29,655
60,755
1 AUD $32.1m secured loan and NZD $10m secured loan will mature on 17 April 2019.
2 $14 million secured loan matures on 17 April 2019. In the prior year this tranche was an amortising tranche but this has been converted to
bullet tranche as of 27th January 2016.
3 Multi-option facilities at 30 June 2016 and 30 June 2015 used entirely for bank guarantees and letters of credit. Multi-option credit facility
will mature on 17 April 2019 and can be drawn down at any time prior to maturity.
69
a) Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
Secured bank loan
(b) Set-off of assets and liabilities
CONSOLIDATED
2016
$’000
2015
$’000
47,542
24,861
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 29.
(d) Risk exposures
Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 29.
22. Deferred tax liabilities
(a) 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
2016
$’000
2015
$’000
18,171
-
5,028
23,199
(19,623)
3,576
11,365
11,834
23,199
10,123
918
2,425
13,466
(13,171)
295
9,688
3,778
13,466
helloworldlimited.com.au (b) Movement in temporary differences during the year
DEFERRED TAX LIABILITIES
AT 1 JULY 2014
Charged/(credited)
- to profit or loss
- to other comprehensive income
AT 30 JUNE 2015
AT 1 JULY 2015
Charged/(credited)
- to profit or loss
- to other comprehensive income
Acquisitions via business combination
AT 30 JUNE 2016
23. Non-current provisions
Long service leave
Onerous lease
NON-CURRENT PROVISIONS
Movements in provisions
Accrued
income
$’000
Property
plant and
equipment
$’000
Defined
benefit
asset
$’000
Other
$’000
Total
$’000
12,057
(1,934)
-
10,123
10,123
218
-
7,830
18,171
-
-
-
-
-
873
824
13,754
-
45
918
1,525
76
(409)
121
2,425
13,466
918
2,425
13,466
691
-
612
1,303
(196)
(722)
-
-
586
(76)
790
1,299
(798)
9,232
3,725
23,199
CONSOLIDATED
2016
$’000
2,893
340
3,233
2015
$’000
1,041
389
1,430
Movements in each class of provision (both current and non-current) during the current financial year, other than
employee benefits is set out in note 19 (a).
71
24. Issued capital
(a) Shares on issue
CONSOLIDATED
2016
Shares
2015
Shares
2016
$’000
2015
$’000
ISSUED CAPITAL
109,838,418
440,330,198
366,235
278,755
Helloworld Ordinary Shares
Holders of ordinary shares in Helloworld are entitled to receive dividends as declared from time to and time and are
entitled to one vote per share at Helloworld shareholders’ meetings. In the event of the winding up of Helloworld,
ordinary shareholders rank after creditors and are fully entitled to any proceeds on liquidation. There is only one class of
share on issues in Helloworld.
b) Movements in shares on issue
Details
Balance
Date
CONSOLIDATED
Number of
Shares
$’000
1 July 2014
440,548,572
278,822
On market buy-back and share cancellation
15 December 2014
On market buy-back of shares held by the Company but not yet cancelled
(192,238)
(26,136)
(59)
(8)
Balance
One for six shares consolidation
Shares offered as consideration for AOT Group
Balance
30 June 2015
440,330,198
278,755
29 January 2016
(366,941,781)
1 February 2016
30 June 2016
36,450,001
109,838,418
-
87,480
366,235
25. Reserves
Predecessor accounting reserve
Foreign currency translation reserve
Hedging reserve
Share-based payments reserve
RESERVES
Foreign currency translation reserve
CONSOLIDATED
2016
$'000
2015
$'000
156,400
156,400
4,814
451
1,386
2,485
1,057
1,694
163,051
161,636
Exchange differences arising on translation of the foreign operations are taken to the foreign currency translation
reserve, as described in note 39(d). The cumulative amount is reclassified to profit or loss when the net investment is
disposed of.
helloworldlimited.com.au 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 39(s). Amounts are
reclassified to the statement of profit or loss and other comprehensive income 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 39(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.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
CONSOLIDATED
$’000
$’000
$’000
$’000
$’000
Foreign
currency
translation
reserve
Hedging
reserve
Predecessor
accounting
reserve
Share-based
payment
reserve
Share-based
payment
trust reserve
Total
$’000
BALANCE AT 1 JULY 2014
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Transfer from share-based payment
trust reserve
Share-based payment expense/(credit)
On market purchase of shares
BALANCE AT 30 JUNE 2015
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Share-based payment expense/(credit)
BALANCE AT 30 JUNE 2016
2,205
(90)
156,400
1,895
(246)
160,164
-
-
280
-
-
-
2,485
-
-
2,329
-
4,814
1,639
(492)
-
-
-
-
1,057
(826)
220
-
-
-
-
-
-
-
-
-
-
-
(291)
90
-
156,400
1,694
-
-
-
-
-
-
-
(308)
1,386
451
156,400
-
-
-
291
-
(45)
-
-
-
-
-
-
1,639
(492)
280
-
90
(45)
161,636
(826)
220
2,329
(308)
163,051
73
26. Accumulated losses
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
Profit/(loss) after income tax expense for the year
Actuarial (loss)/gain on defined benefit plans, net of tax
CONSOLIDATED
2016
$’000
2015
$’000
(263,014)
(62,070)
1,699
(201,121)
(1,683)
177
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(262,998)
(263,014)
27. Auditor’s remuneration
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers
Australia (PwC), the auditor of the company, its related practices and unrelated firms:
PwC
Audit services - (PwC)
CONSOLIDATED
2016
$
2015
$
Audit or review of the financial statements
1,153,000
775,000
Other services - (PwC)
Taxation services
Other services
TOTAL OTHER SERVICES
TOTAL SERVICES - (PwC)
Related practices of PwC
Audit services
Taxation services
Other services
TOTAL - RELATED PRACTICES OF PwC
Unrelated firms to PwC
Audit services - unrelated firms
Taxation services
Other services
TOTAL - UNRELATED FIRMS TO PwC
93,110
118,000
105,350
91,600
211,110
196,950
1,364,110
971,950
202,492
113,544
5,301
156,103
58,364
93,854
321,337
308,321
70,965
22,879
1,517
36,730
-
-
95,361
36,730
The amounts included in 2016 cover both the audit of Helloworld Limited and the AOT Group for the year ended
30 June 2016.
helloworldlimited.com.au 28. Reconciliation of profit/(loss) after income tax to net cash
from operating activities
Profit/(loss) after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Non-controlling interest
Share-based payments
Gain/ (loss) on sale of non-current assets
Impairment losses on trade receivables
Share of profit in associates
(Gain) on disposal of investments
Impairment of goodwill
Amortisation of borrowing costs
Change in operating assets and liabilities:
(Increase) in inventories
Decrease/(increase) in trade and other financial assets
(Decrease)/increase in other provisions
Increase in other non-current liabilities
Movements in tax balances
(Increase) in trade and other payables
Increase/(decrease) in trade and other receivables
CONSOLIDATED
2016
$’000
2015
$’000
1,699
(201,121)
18,459
13,921
(23)
(360)
145
169
-
(379)
-
426
(98)
2,289
(374)
1,858
(390)
(33,855)
12,750
10
83
(29)
138
(162)
(340)
205,300
450
-
(2,660)
299
281
1,363
(11,990)
(830)
NET CASH FROM OPERATING ACTIVITIES
2,316
4,713
There were no non cash financing and investing activities undertaken during the year (2015: nil).
75
29. 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 39.
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 21) and cash and cash equivalents (outlined in note 10) on the basis of expected cash flows. Financing
arrangements are outlined in note 21.
Contractual Cash flows
Carrying
amount
$’000
0–6
months
$’000
6–12
months
$’000
1–2
years
$’000
2–3
years
$’000
3–4
years
$’000
4–5
years
$’000
More
than
5 years
$’000
Total
$’000
2016
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Trade and other payables
186,620 186,620
-
-
-
Interest bearing liabilities - secured
47,542
1,510
1,474
2,914 49,828
Interest bearing liabilities - unsecured
287
143
144
-
-
-
-
-
-
-
-
- 186,620
- 55,726
-
287
Bank guarantee and letters of credit
-
4,052
3,495
289
1,136
156
1,210
1,621 11,959
DERIVATIVE FINANCIAL INSTRUMENTS
Cash flow hedges
1,526
1,497
29
-
-
-
-
-
1,526
TOTAL
235,975 193,822
5,142
3,203 50,964
156
1,210
1,621 256,118
Contractual Cash flows
Carrying
amount
$’000
0–6
months
$’000
6–12
months
$’000
1–2
years
$’000
2–3
years
$’000
3–4
years
$’000
4–5
years
$’000
More
than
5 years
$’000
Total
$’000
2015
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Trade and other payables
148,788 148,788
Interest bearing liabilities - secured
24,861
Bank guarantee and letters of credit
-
1,507
3,342
-
1,469
3,499
-
-
-
2,328
2,241 26,827
-
-
- 148,788
- 34,372
697
289
866
1,210
442 10,345
DERIVATIVE FINANCIAL INSTRUMENTS
Interest rate swaps2
37
37
-
-
-
-
-
-
37
TOTAL
173,686 153,674
4,968
3,025
2,530 27,693
1,210
442 193,542
1 Excludes deferred borrowing costs
2 The interest rate swap expired on 30 September 2015
Details on the interest bearing liabilities and facilities, including maturity dates are contained in note 21.
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 payments to overseas
suppliers in the 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 profit.
As at 30 June 2016, 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
2016
$’000
2015
$’000
AUD
equivalent
AUD
equivalent
(4,472)
(1,436)
(2,002)
(2,820)
11,189
(2,395)
(1,936)
(2,899)
(1,666)
(908)
(2,577)
(325)
(4,240)
(12,615)
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 10.0% increase and decrease in foreign exchange
rates. Sensitivity analysis assumes hedge effectiveness as at 30 June 2016. This analysis also assumes that all other
variables, including interest rates, remain constant.
10% increase
10% decrease
CONSOLIDATED
Impact on net profit
before tax
2016
$’000
718
(878)
2015
$’000
2,017
(2,465)
77
(ii) Interest rate risk
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 $54.0 million (2015: $62.0 million)
paying a weighted average fixed rate of 2.54% per annum (2015: 2.72%). Other funds are held in operational and foreign
currency bank accounts and during the year earned interest at market rates under normal commercial terms. The Group
has exposure to interest rate risk on the drawn down borrowings of $47.5m.
All short-term deposits are variable rate instruments and accordingly, a change of 100 basis points per annum in
interest rates at the reporting date would have an impact on the profit and the net equity of the Group of $540,000.
All borrowings are variable rate instruments and accordingly, a change in 100 basis points per annum in interest rates at
the reporting date would have an impact on the profit and net equity of the Group of $475,420.
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:
• Trade debtor counterparties: the credit risk is the recognised amount, net of any impairment loss. As at 30 June 2016,
this amounted to $66.6 million (2015: $53.0 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
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.
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
2016
$’000
47,637
10,217
5,579
2,216
911
47
2015
$’000
47,476
2,960
1,695
507
243
71
66,607
52,952
helloworldlimited.com.au As at 30 June 2016, trade receivables of $19.0 million (2015: $5.5 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:
Not past due
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
Movement in the allowance for impairment losses in respect of trade receivables are as follows:
BALANCE AT 1 JULY
Acquisitions through business combination
Additional provision recognised
Writeback of provision
Receivables written off during the year as uncollectable
Foreign currency differences
BALANCE AT 30 JUNE
CONSOLIDATED
2016
$’000
2015
$’000
-
3
6
92
143
457
701
10
-
58
277
5
285
635
CONSOLIDATED
2016
$’000
635
57
169
(136)
(111)
87
701
2015
$’000
795
-
138
(221)
(61)
(16)
635
An allowance for impairment losses is made when there is objective evidence that a trade receivable is impaired. In the
current year an additional $0.2 million (2015: $0.1 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.
The table below sets out the maximum exposure to credit risk as at 30 June:
Cash and cash equivalents
Trade and other receivables
CONSOLIDATED
Net profit before tax
2016
$’000
202,621
134,233
336,854
2015
$’000
176,141
104,869
281,010
79
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:
2016
2015
Carrying
amount
$’000
Net fair
value
$’000
Carrying
amount
$’000
Net fair
value
$’000
202,621
134,233
336,854
165,587
21,033
287
46,352
233,259
202,621
134,233
336,854
165,587
21,033
287
47,542
234,449
176,141
104,869
281,010
176,141
104,869
281,010
128,296
20,492
-
23,245
172,033
128,296
20,492
-
24,861
173,649
ASSETS
Cash and cash equivalents
Trade and other receivables
LIABILITIES
Trade payables
Other payables
Interest bearing liabilities – current
Interest bearing liabilties – non-current
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 - 2016
Liabilities
Net derivative financial liabilities
TOTAL LIABILITIES
CONSOLIDATED - 2015
Assets
Net derivative financial assets
TOTAL ASSETS
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
Level 1
$’000
-
-
1,526
1,526
Level 2
$’000
1,590
1,590
-
-
Level 3
$’000
-
-
Total
$’000
1,526
1,526
Total
$’000
1,590
1,590
helloworldlimited.com.au Capital management
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.
30. 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
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
Lease commitments - as lessee
CONSOLIDATED
2016
$’000
2015
$’000
12,038
27,382
2,753
42,173
6,817
10,661
26
17,504
740
1,370
2,110
848
1,257
2,105
The Group has entered into commercial leases on property. These leases have an average life of between 3 and 10
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 $11.4 million
in the period (2015: $10.5 million).
Lease commitments - as lessor
The Group recognised lease rental income of $0.6 million (2015: $0.7 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 35, Helloworld has on
issue at 30 June 2016 bank guarantees and letters of credit totalling $12.0 million (2015: $10.3 million).
Contingencies
There are no significant contingent assets or contingent liabilities.
81
31. Related party transactions
(a) Subsidiaries
Details relating to subsidiaries are included in note 32.
(b) Ultimate and direct parent
Helloworld Limited is the legal owner of the Group. However, under the applicable accounting standards, a reverse
acquisition by Helloworld Travel Services Holdings Pty Limited (HTSH) was deemed to have occurred on the merger of
HTSH with Helloworld in 2010. Consequently, for accounting purposes, HTSH is accounted for as the ultimate and direct
parent entity of the Group.
(c) Entities with significant influence
The following entities are considered to have significant influence over the Group:
• Andrew and Cinzia Burnes jointly and beneficially hold 40.0% (2015:10.2%) of the ordinary shares of Helloworld and
are two executive members on the Board of Helloworld. On 1 February 2016, the shareholding increased to 40.0%
following the merger with the AOT Group and its controlled entities and the issue of new shares in Helloworld to the
owners of the AOT Group.
• Sintack Pty Ltd holds 19.6% (2015: 19.5%) of the ordinary shares of Helloworld and have one Director on the Board
of Helloworld.
• QH Tours Limited (a wholly owned subsidiary of Qantas Airways Limited) holds 19.3% (2015: 28.9%) of the ordinary
shares of Helloworld and has one Board member on the Board of Helloworld.
• Europe Voyager NV, held 12.3% (2015: 23.3%) up until 20 June 2016 where it had an on-market sale of its total
shareholdings in Helloworld. As at 30 June 2016, Europe Voyager NV no longer holds any shares in Helloworld.
(d) Key management personnel (KMP) compensation
Short term employee benefits
Long term employee benefits
Share-based payment credit
Post-employment benefits
Termination benefits
Total KMP compensation
CONSOLIDATED
2016
$
2015
$
3,399,939
3,425,604
18,834
(219,178)
121,611
419,529
14,106
(18,445)
135,823
-
3,740,735
3,557,088
Detailed remuneration disclosures are provided in the remuneration report, contained within the Directors Report.
helloworldlimited.com.au (e) Transactions with related parties
The following transactions occurred with related parties:
TRADING TRANSACTIONS
(i) Revenue derived from:
Associates of the Group
Entities with significant influence over the Group
(ii) Expenses incurred as a result of transactions with:
Entities with significant influence over the Group 1
Other related parties
(iii) Dividends received from:
Associates of the Group
YEAR END BALANCES
(i) Assets:
Associates of the Group
Entities with significant influence over the Group
(ii) Liabilities:
Associates of the Group
Entities with significant influence over the Group
CONSOLIDATED
2016
$’000
2015
$’000
-
50,835
124
54,809
9,829
471
10,168
5
-
-
8,645
181
3,949
574
11
7,966
6
3,516
1 Helloworld has an umbrella agreement with Qantas Airways Limited (and its controlled entities). The agreement was intended to facilitate a
transition to arrangements directly between Helloworld 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.
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).
83
(f) Transactions with Director related entities
Year ended 30 June 2016
A Burnes and C Burnes, directors of Helloworld, jointly and beneficially hold 40.0% of the ordinary shares of Helloworld,
following the purchase of AOT Group by Helloworld. A and C Burnes are both trustees of Normanby Road Holdings
Pty Ltd (ATF 179 Normanby Road Trust), which owns and leases to Helloworld, office premises for some of the AOT
operations. Details of transactions since the merger at 1 February 2016 to 30 June 2016 (5 month period) with
Normanby Road Holdings Pty Ltd (ATF 179 Normanby Road Trust) are included in part (e).
Year ended 30 June 2016 and year ended 30 June 2015
A Cummins retired as a director of STS UK Holdco II Limited and Global Voyager Holdings Pty Limited on 17 June 2016.
Both entities are controlled by Europe Voyager NV, which was a shareholder deemed to have significant influence over
Helloworld during 2016, up until the date of share disposal on 20 June 2016.
In addition, A Cummins is a Non-Executive Director of Mantra Group Limited, which EV Hospitality NV is deemed to have
significant influence over. EV Hospitality NV is considered a related party of Helloworld as EV Hospitality NV and Europe
Voyager NV are commonly controlled entities. Details of transactions with STS UK Holdco II Limited and Mantra Group
Holdings Pty Limited are included in part (e).
P Spathis was reappointed as a Director of Helloworld 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 19.6% (2015: 19.5%) of the
ordinary shares of Helloworld. 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. Helloworld held a sub-lease
agreement with Consolidated Travel Pty Limited during 2016 for which $0.02 million of income was received (2015:
$0.02 million).
(g) Transactions with key management personnel
Detailed remuneration disclosures are provided in the remuneration report, contained within the Directors Report.
(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.
helloworldlimited.com.au 32. Particulars in relation to controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 39(a). The proportion of ownership interest is
equal to the proportion of voting power held.
Ownership interest
NAME
Helloworld Limited 1, 2
Jetset Travelworld Network Pty Limited 2
Jetset Pty Limited 2
JTG Corporate Pty Limited 2
Helloworld Services Pty Limited 2
National Cruise Centre Pty Limited 2
Helloworld Group Pty Limited 2
QBT Pty Limited 2
Qantas Holidays Limited
ACN 139 386 520 Pty Ltd
Travelworld Pty Limited 2
Retail Travel Investments Pty Limited 2
Harvey World Travel Group Pty Limited 2
Harvey World Travel Franchises Pty Limited 2
Travelscene Pty Limited 2
Harvey World Travel International Pty Limited 2
Travelscene Tickets Pty Limited
Transonic Travel Pty Limited
Retail Travel Investments (NZ) Limited
World No. 1 Limited
COUNTRY OF INCORPORATION
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Helloworld Travel Services (Australia) Pty Limited 2
Australia
Travel Indochina Limited
Best Flights Pty Limited 2
World Aviation Systems (Australia) Pty Limited 2
Global Aviation Services Pty Limited 2
Helloworld 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
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 2
Helloworld Travel Services Group Pty Limited 2
Betanza Pty Limited
ACN 003 683 967 Pty Ltd
United Kingdom
Australia
Australia
Australia
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
2016
%
N/A
100.0%
100.0%
100.0%
100.0%
-
100.0%
100.0%
100.0%
-
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
-
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
-
-
-
100.0%
100.0%
76.6%
100.0%
100.0%
-
100.0%
2015
%
N/A
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
76.6%
100.0%
100.0%
100.0%
100.0%
85
NAME
Travelscene Holidays Pty Limited 2
Concorde International Travel Inc.
Stella Travel Services USA Inc.
Harvey Holidays Pty Limited
Encore Business Tourism Pty Limited
Travel Indochina Vietnam Co. Ltd
Travel Indochina Lao Co Limited
Advanced Applications (UK) Limited
Helloworld Franchising Pty Limited 2
Helloworld Digital Pty Limited 2
Helloworld IP Pty Limited 2
Insider Journeys Limited
Helloworld Travel Services Holding Pty Limited 2
AOT Group Limited 2
Sunlover Holidays Pty Limited
AOT Business Consulting (Shanghai) Limited
ATS Pacific Pty Limited 2
AOT Inbound Pty Limited 2
AOT (NZ) Limited
Australian Travel Service (Pacific) Limited
Allied Tour Service (Pacific) Limited (Fiji)
Great Sights (Fiji) Limited
Tourist Transport (Fiji) Limited
Coral Sun (Fiji) Limited
Sunlover Holidays Limited New Zealand
Pacific Leisure Group Limited
Helloworld NZ Franchising Limited
Pacific Spirit Travel Pty Limited
Pillowpoints Pty Limited
Travelpoint Pty Limited
AOT Retail Pty Limited
Australian Online Travel Pty Limited 2
COUNTRY OF INCORPORATION
Australia
United States of America
United States of America
Australia
Australia
Vietnam
Laos
United Kingdom
Australia
Australia
Australia
United Kingdom
Australia
Australia
Australia
China
Australia
Australia
New Zealand
New Zealand
Fiji
Fiji
Fiji
Fiji
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Ownership interest
2016
%
-
100.0%
100.0%
100.0%
-
95.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
60.0%
60.0%
60.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
2015
%
100.0%
100.0%
100.0%
100.0%
100.0%
95.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Helloworld Limited is the legal owner of the Group. However, under applicable accounting standards, a reverse acquisition by Helloworld
Travel Services Holdings is deemed to occur on the merger at 30 September 2010. Consequently, for accounting purposes, Helloworld Travel
Services Holdings Pty Limited is the parent entity of the Group.
2 These entities are included in the Deed of Cross Guarantee (refer note 35). 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.
Controlled entities acquired during the current year
On 1 February 2016 Helloworld acquired for accounting purposes, several controlled entities as part of its merger with
the AOT Group. This included the following entities:
• AOT Group Limited
• Sunlover Holidays Pty Limited
• AOT Business Consulting (Shanghai) Limited
• ATS Pacific Pty Limited
• AOT Inbound Pty Limited
• AOT New Zealand Limited
• Australian Travel Service (Pacific) Limited
• Allied Tour Service (Pacific) Limited (Fiji)
• Great Sights (Fiji) Limited
• Tourist Transport (Fiji) Limited
• Coral Sun (Fiji) Limited
• Sunlover Holidays Limited (New Zealand)
• Pacific Leisure Group Limited
• Helloworld NZ Franchising Limited
• Pacific Spirit Travel Pty Limited
• Pillowpoints Pty Limited
• Travelpoint Pty Limited
• AOT Retail Pty Limited
• Australian Online Travel Pty Limited
helloworldlimited.com.au Controlled entities acquired during the current year (continued)
On 4 August 2015, Helloworld NZ Franchising Limited was established and incorporated.
Controlled entities disposed of or deregistered during the current year
On 20 June 2015, Helloworld deregistered Retail Travel Investments (NZ) Limited as the entity was dormant.
On 29 June 2016, Helloworld deregistered the following dormant entities:
• National Cruise Centre Pty Limited
• ACN 139 386 520 Pty Ltd
• Travel Co Investments No. 2 Pty Limited
• Montarge Pty Limited
• Travel Advantage Pty Limited
• Betanza Pty Limited
• Travelscene Holidays Pty Limited
• Encore Business Tourism Pty Limited
Other changes to controlled entities
World No.1 Limited company changed its name from Harvey World Travel New Zealand Limited on 20 August 2015.
On 11 August 2016 the following entities’ names changed as follows:
• Stella Travel Services Group Pty Ltd to Helloworld Travel Services Group Pty Ltd
• Stella Travel Services (Australia) Pty Ltd to Helloworld Travel Services (Australia) Pty Ltd
• Stella Travel Services Holdings Pty Ltd changed its name to Helloworld Travel Services Holdings Pty Ltd.
On 18 August 2016, Stella Travel Services (NZ) Limited changed its name to Helloworld Travel Services (NZ) Limited.
Transactions with non-controlling interests
There were no other transactions with non-controlling interests during the period, other than those disclosed in this
report.
33. Interests in associates
Information relating to associates is set out below:
NAME
Harvey World Travel Southern Africa (Pty) Limited1
Tour Managers (Fiji) Limited
Harvey World Travel Strategy Group Ltd
V & A Travel P/L 2
Down Under Answers, LLC 2
PRINCIPAL PLACE OF BUSINESS /
COUNTRY OF INCORPORATION
South Africa
Fiji
New Zealand
Australia
United States of America
Ownership interest
2016
%
-
33.0%
50.0%
50.0%
33.0%
2015
%
50.0%
33.0%
50.0%
-
-
1 The Group disposed of its investment in Harvey World Travel Southern Africa (Pty) Limited on 10 July 2015 for a consideration of $0.7 million.
This resulted in a profit before tax of $0.4m.
2 On 1 February 2016, Helloworld acquired the non-controlling ownership interest of these entities as part of its merger with the AOT Group.
87
34. Parent entity information
As at, and throughout the financial year ended 30 June 2016, the legal parent company of the Group was Helloworld
Limited. Set out below is the supplementary information about the parent entity.
Results of the parent entity
Loss after income tax
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
STATEMENT OF FINANCIAL POSITION OF PARENT ENTITY AT YEAR END
Current assets
Non-current assets
TOTAL ASSETS
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share-based payments reserve
Accumulated losses
TOTAL EQUITY
PARENT
2016
$’000
(27)
(27)
2015
$’000
(168,249)
(168,249)
40,348
150,352
190,700
15,464
15,464
72,901
150,992
223,893
48,318
48,318
175,236
175,575
435,688
435,688
1,286
1,598
(261,738)
(261,711)
175,236
175,575
An impairment review was undertaken at 30 June 2016. There was no impairment identified against the carrying value of
Helloworld Limited’s investments in subsidiaries (2015: $172.4 million).
Helloworld Limited is the legal owner of the Group. However, under the applicable accounting standards, a reverse
acquisition by Helloworld Travel Services Holdings Pty Limited (HTSH) is deemed to have occurred on the merger of
HTSH and Helloworld. For accounting purposes, HTSH 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 35.
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 2016 the tax consolidated group had a tax payable due of
$0.7 million (2015: receivable $0.8 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 2016 (2015: none).
helloworldlimited.com.au 35. Deed of cross guarantee
Pursuant to Class Order 98/1418, the entities identified in note 32 are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial statements and Directors’ reports. Helloworld has a
Deed of Cross Guarantee in place since 25 May 2007.
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.
During the current year, the following entities were added to the deed:
• AOT Group Limited (28 June 2016)
• AOT Inbound Pty Limited (28 June 2016)
• ATS Pacific Pty Limited (28 June 2016)
• Australian Online Travel Pty Limited (28 June 2016)
During the current year, the following entities were removed from the deed:
• ACN 139 386 520 Pty Limited (29 June 2016)
• National Cruise Centre Pty Limited (29 June 2016)
The consolidated statement of profit or loss and other comprehensive income and statement of financial position have
been prepared in accordance with the accounting policy note 39 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.
89
(a)
Closed Group Statement of profit or loss and other comprehensive income and
summary of movements in retained earnings for the year ended 30 June
REVENUE
Employee benefits expenses
Advertising, selling and marketing expenses
Communication and technology expenses
Occupancy and rental expenses
Operating expenses
Profit/(loss) on disposal of investments
Earnings before interest, tax, depreciation and amortisation and impairment (EBITDA)
Finance expense
Depreciation and amortisation expense
Impairment of investments
LOSS BEFORE INCOME TAX
Income tax benefit
LOSS AFTER INCOME TAX
Closed Group statement of comprehensive income
LOSS AFTER INCOME TAX
OTHER COMPREHENSIVE INCOME
Cash flow hedges transferred to profit or loss, net of tax
Other comprehensive income for the year, net of tax
2016
$’000
72,644
(44,158)
(17,455)
(6,172)
(5,213)
2015
$’000
58,387
(34,935)
(20,396)
(5,736)
(3,895)
(20,213)
(15,384)
332
(89)
(20,235)
(22,048)
(2,626)
(2,250)
(2,625)
(1,234)
-
(137,400)
(25,111)
(163,307)
8,249
10,868
(16,862)
(152,439)
(16,862)
(152,439)
23
23
85
85
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(16,839)
(152,354)
SUMMARY OF MOVEMENT IN CLOSED GROUP RETAINED EARNINGS
Equity - retained profits
Accumulated losses at the beginning of the financial year
Loss after income tax benefit
Retained earnings transferred in due to changes in Closed Group
2016
$'000
2015
$'000
(137,931)
(28,313)
(16,862)
(152,439)
-
42,821
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(154,793)
(137,931)
helloworldlimited.com.au (b) Closed Group statement of financial position as at 30 June
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Income tax receivable
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Investments
Deferred tax asset
Other non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Deferred revenue
Income tax payable
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liability
Provisions
Other non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Other reserves
Accumulated losses
TOTAL EQUITY
2016
$’000
2015
$’000
10,865
365,944
-
7,467
317,344
843
376,809
325,654
1,719
105,113
206,086
6,604
301
560
4,408
182,202
5,073
450
319,823
192,693
696,632
518,347
501,530
454,865
287
3
7,255
3,011
1,813
-
37
6,246
102
-
513,899
461,250
37,044
14,384
7,962
2,444
4,057
51,507
602
731
2,656
18,373
565,406
479,623
131,226
38,724
284,187
174,880
1,832
1,775
(154,793)
(137,931)
131,226
38,724
91
36. Business acquisitions and disposals
(a) Merger with AOT Group Limited
On 1 February 2016, Helloworld acquired 100% of the share capital of the AOT Group and its controlled entities (AOT).
The merger of these two complementary businesses is treated as an acquisition for Helloworld accounting purposes
under applicable accounting standards. The merger was approved by the Helloworld shareholders on 22 January 2016 at
an extraordinary general meeting.
The merger creates a leading integrated travel group that is larger, stronger and more competitive and offers a broad
range of travel products and services. The integration of the two businesses is expected to increase the scale and
earnings of the enlarged Helloworld Group, resulting in accounting goodwill recognised, allowing the enlarged Helloworld
Group to compete more effectively with larger participants in the retail, wholesale, and corporate travel industry and
with global online competitors.
The total consideration amounted to $104.2m comprising the issue of 36,450,001 new Helloworld shares to the
shareholders of AOT on 1st February 2016 at the published share price and cash consideration of $16.7m. The cash
consideration was settled in full by April 2016 and was adjusted to reflect the debt free, cash free basis of the transaction.
The assets and liabilities of AOT acquired for accounting purposes are recorded at fair value, resulting in goodwill of
$105.6m. The goodwill was provisionally determined at 30 June 2016 and subsequent adjustments may potentially arise
including the impact of the Australian tax consolidation finalisation.
FAIR VALUE OF NET ASSETS
Cash and cash equivalents
Trade receivables
Other current assets
Investments accounted for under equity accounting
Property, plant and equipment
Identifiable intangible assets
Deferred tax asset
Trade and other payables
Tax related payables
Provisions
Deferred tax liability
Non-controlling interests
Net assets acquired (excluding goodwill)
Goodwill resulting from the accounting acquisition
TOTAL CONSIDERATION
Cash paid to owners of AOT
Shares issued to owners of AOT
Cash consideration, net of cash acquired:
Cash paid to owners of AOT
Cash and cash equivalents acquired from controlled entities
NET INFLOW OF CASH – INVESTING ACTIVITIES
Fair value
$’000
31,770
37,155
4,851
1,727
4,907
15,217
2
(82,264)
(2,907)
(2,855)
(7,784)
(1,254)
(1,435)
105,645
104,210
16,730
87,480
104,210
(16,730)
31,770
15,040
Cash and cash equivalents relates mainly to AOT client trust account cash, utilised in the repayment of AOT client
creditors.
helloworldlimited.com.au Revenue and profit before tax contribution
From the date of the merger, 1 February 2016 to 30 June 2016 (5 month period), AOT contributed revenue of $19.6m
and net profit before tax of $3.0m to the Helloworld Group results.
If the date of the AOT merger was 1 July 2015, the enlarged Helloworld group revenue would have been $334.5m and
group net profit before tax of $16.6m for the year ended 30 June 2016. These results are based on the aggregation of
the Helloworld and AOT results, excluding certain significant items not in the ordinary course of business.
(b) Acquisition of company owned stores
During the year ended 30 June 2016, Helloworld acquired the assets of six retail stores in New Zealand for a combined
consideration of $0.7 million. As a result, Helloworld recognised $0.7 million of intangible assets representing the
goodwill arising on purchase of the business.
During the year ended 30 June 2015, Helloworld acquired the assets of two businesses for a combined consideration of
$1.7m. As a result, Helloworld recognised $1.7m of intangible assets representing the goodwill arising on purchase of
the business.
(c) Disposal of associate
On 10 July 2015, the Group disposed of its investment in Harvey World Travel Southern Africa (Pty) Limited for a
consideration of $0.7 million. The disposal resulted in a profit before tax of $0.4 million in the period.
37. Share-based payments
(a) 2016 Long Term Incentive Plan (LTIP)
During the year ended 30 June 2016, there were no grants under a long term incentive plan.
(b) Expenses arising from share-based payment transactions
Total (write-back)/expense arising from share based payment transactions during the year as part of employee benefits
were $(0.4) million (2015: $0.1 million).
(c) Legacy LTIP – Year ended 30 June 2015 and prior
Background
The Board has adopted the Helloworld Limited Performance Rights Plan (‘Plan’) and the Plan was approved by
Shareholders at the 2011 Annual General Meeting. Under the Plan conditional rights to acquire shares in the Company
(‘Performance Rights’) were 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 Remuneration and Nominations Committee (RNC). The RNC determined the number of
PRs to be granted to each eligible employee and the amount payable by the holder of a PR on exercise. Participants were
not 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.
93
Performance Criteria and Vesting
The RNC specifies 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.
Change of Control Provisions
Unless otherwise determined by the RNC, if a change of control event occurs under this plan, 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.
Lapse of PRs
Unless otherwise determined by the RNC, 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 each of the 2011 - 2015 financial years
ended on 30 June
The PR granted for each of the 2011 - 2015 financial years ended on 30 June 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 Performance Rights. 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. The EPS targets have been adjusted in accordance with the 1 for
6 share consolidation that took place on 27 January 2016 as identified in note 24.
Fifty per cent (50%) of each tranche of the Performance Rights 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. No
PRs were granted in the year ended 30 June 2016.
helloworldlimited.com.au Set out below are summaries of options granted under the plan:
Tranche
Grant Date
Start of
performance
period
End of
performance
period
Exercise
Price 1
Balance at the
start of the
year 2
Lapsed
during
the year 3
Balance at
the end of
the year
2015-2
2015-3
2013-3
TOTAL
27-Feb-15
27-Feb-15
1-Jul-14
30-Jun-15
1-Jul-14
30-Jun-17
26-Jun-12
1-Jul-12
30-Jun-16
$
0.00
0.00
0.00
197,593
203,580
63,020
Number of shares
(197,593)
-
(92,346)
(63,020)
111,234
-
464,193
(352,959)
111,234
Vested and
exercisable
at end of
the year
-
-
-
-
WEIGHTED AVERAGE EXERCISE PRICE
$0.00
$0.00
$0.00
$0.00
Vested PRs automatically convert when performance targets are met and vesting date is realised. The PRs are not subject to an exercise price.
1
2 Balance at the start of the year has been adjusted for the 1 for 6 share consolidation. Please refer to note 24.
3 During the year, these PRs lapsed as none of the vesting conditions were met.
During the period, no PRs converted into ordinary shares (2015: 960,583). The prior year 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 year.
Fair value of PRs granted
The assessed fair value at grant date of PR’s granted during the year ended 30 June 2015 was:
• 2015 Tranches - 27 cents per share. This price was prior to the 1 for 6 share consolidation and its calculation took into
account the share price on grant date and exercise price.
38. Events after the reporting period
No matter or circumstance has arisen since 30 June 2016 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 year except:
Dividends
Since year-end, the Board has resolved to pay a 2.0 cents per paid share fully franked final dividend. The dividend is
to be paid during the 2017 financial year out of retained profits at 30 June 2016, but is not recognised as a liability at
year-end.
39. Significant accounting policies
The principal accounting policies adopted in the preparation of the 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, Helloworld completed a merger with Helloworld Travel Services Holdings Pty Limited (HTSH).
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, Qantas Holidays Limited and QBT Pty Limited in July 2008.
95
In applying the requirements of AASB 3 Business Combinations to the Group:
• Helloworld Limited is the legal parent entity to the Group; and
• HTSH, 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 HTSH 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 HTSH. The assets and liabilities of Helloworld Limited and
its controlled entities acquired by HTSH were recorded at fair value whilst the assets and liabilities of HTSH 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. Helloworld), but be a continuation of the financial
statements of the legal subsidiary (i.e. HTSH, the acquirer for accounting purposes).
(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 2016 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.
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 statement
of profit or loss and other 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 that carrying value of the investment in associates for
impairment annually. Any identified impairment is recorded as an impairment charge in the profit or loss.
helloworldlimited.com.au 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.
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 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 2015:
• AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial
Instruments (Part C: Financial Instruments)
• AASB 2014-1 Amendments to Australian Accounting Standards (Part E: Financial Instruments)
• AASB 2014-8 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) – Application
of AASB 9 (December 2009) and AASB 9 (December 2010)
• AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031
Materiality
• AASB 2015-4 Amendments to Australian Accounting Standards – Financial Reporting Requirements for Australian
Groups with a Foreign Parent.
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.
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 as it has not yet determined the potential effect of the standard.
97
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 AASB15 as it has not yet determined the potential impact of the standard.
AASB 16 Leases
The AASB has issued a new standard for the recognition, measurement and classification of leases. This will replace
AASB 117 Leases. The new standard eliminates the classification of leases as either operating leases or finance leases
for a lessee. Operating leases will be capitalised on the Statement of Financial Position by recognising the present value
of the lease, similar to a finance lease under the existing standard. The impact on the Statement of Comprehensive
Income is that all operating leases will no longer be operational expenditure, rather it will comprise of depreciation on
the right of use and interest on its lease liability.
AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019. Early application is permitted
for entities that apply AASB 15 Revenue from Contracts with Customers at or before the date of initial application of
AASB 16.
The Group has not yet decided when to adopt AASB 16 as it 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 fully allocated to Operating Segments.
(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 brought to account as exchange gains or losses in the statement
of profit or loss and other comprehensive income in the year in which the exchange rates change, 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
helloworldlimited.com.au presented in the statement of profit or loss and other comprehensive income within finance costs. All other foreign
exchange gains or losses are presented in the statement of profit or loss and other comprehensive income 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 exchange rates prevailing at the
dates the fair value was determined. All foreign exchange gains/losses are presented in the statement of profit or loss
and other comprehensive income 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.
(ii) Investments in foreign operations
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 statement of profit or loss and other 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.
Override commission revenue
The Group recognises override commission based on its expectations of amounts to be received from suppliers.
99
There are separate contractual agreements with each supplier and the contractual periods of these agreements vary
depending on the supplier.
Override commission 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 the detailed booking
information and is reviewed in light of currently 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 licence 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. 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 days. They are
presented as current assets unless collection is not expected within 12 months from the reporting date. Cash flows
helloworldlimited.com.au relating to short-term receivables are not discounted if the effect of discounting is immaterial. 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 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.
(h) Prepayments
Prepayments primarily 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 statement of profit or loss and other comprehensive income 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
pre-paid 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 a 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. This is generally 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.
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 statement of profit or loss and other comprehensive income.
(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 fulfillment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
101
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 statement of profit or loss and other comprehensive
income 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.
(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
helloworldlimited.com.au 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 amortised over their useful life, generally 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 generally between 7 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.
(v) Agent network
The Agent network represents the agreements with travel agents for the provision of domestic travel product. The
Agent network is similar to the franchise system and Helloworld has determined that the Agent network should also
have an indefinite useful life. There is no indication that these relationships will not continue to remain strong in the
long-term.
(vi) Supplier Agreements
Supplier agreements are valued on acquisition and amortised over the life of the expected future economic benefits
that the contracts will deliver. A renewal period is included in the expected useful life based on an assessment of the
likelihood of such a renewal.
(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 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
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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 statement of profit or loss and other comprehensive income. 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) Investment 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.
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 statement of profit or loss and other comprehensive
income.
helloworldlimited.com.au (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.
(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, 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.
(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 statement of profit or loss and other comprehensive income
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 39(e)(i).
(s) Derivative financial 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
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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.
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 statement of profit or loss and other comprehensive income.
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 statement of profit or loss and other comprehensive income. 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 statement of
profit or loss and other comprehensive income.
(t) Employee benefits
(i) Short-term employee 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) Long-term employee benefits
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.
helloworldlimited.com.au (iii) Share-based payments
Share-based compensation benefits are provided to employees.
The fair value of the share based payment 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 instrument 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 instruments 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 instruments
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.
When the instrument vests, the Company releases 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.
(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 expected amounts payable.
(vi) Defined benefit and defined contribution plans
Previously, the Group entered into a Superannuation Deed with Qantas Airways Limited setting out the arrangements
which would apply 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, Helloworld assumed responsibility for the plan assets and plan liabilities for these members in a new
Defined Benefit Plan controlled and managed by Helloworld.
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.
The Defined Benefit Plan controlled by Helloworld has been wound up effective from 29 February 2016 with all assets
and liabilities under this Plan settled and derecognised from the Statement of Financial Position.
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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.
(u) Borrowings
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 statement of profit or loss and other comprehensive income 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.
(x) Business combinations
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.
helloworldlimited.com.au The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree 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.
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/loss 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.
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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 statement of profit
or loss and other comprehensive income.
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.
(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.
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.
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 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.
helloworldlimited.com.au 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 Helloworld
Travel Services Holdings Pty Limited and its controlled entities (HTS) in which the businesses of Helloworld and HTS
were combined into one consolidated group (‘the Group”). In accordance with accounting standards, this merger has
been accounted for as a reverse acquisition with HTS being deemed the acquirer for accounting purposes. The financial
information for the legal parent entity, Helloworld is disclosed in note 35 and has been prepared on the same basis as
the consolidated financial statements, except as set out below.
(i) Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for at cost in the Financial Statements of Helloworld.
(ii) Tax consolidation legislation
Helloworld and its wholly-owned Australia controlled entities have implemented the tax consolidation legislation.
The head entity of the tax consolidated group is Helloworld, 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 Helloworld, as the legal parent and are not recorded in the result
of the deemed acquirer HTS.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate
Helloworld for any current tax payable assumed and are compensated by Helloworld for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Helloworld 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 Helloworld are recognised as a current amount
receivable or payable to Helloworld. Any difference in the amounts assumed and the amount receivable or payable to
Helloworld, are shown as a contribution to, (or distribution from) the head tax entity Helloworld in the results of the
individual legal entities.
(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.
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DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
The consolidated financial statements and notes that are set out on pages 46 to 111 and the Remuneration report
in the Directors’ Report set out on pages 25 to 36, 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 2016 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)
The attached financial statements and notes give a true and fair view of the Group’s financial position as at 30 June
2016 and of its performance for the financial year ended on that date; and
(d)
At the date of this declaration there are reasonable grounds to believe that the Company and the Group entities
identified in note 32 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 and Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
Rob Marcolina
Chairman, Helloworld Limited
Sydney, 25 August 2016
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 2016, the
Consolidated statement of profit or loss and other 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, 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
PricewaterhouseCoopers, ABN 52 780 433 757
Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
113
of the entity’s internal control. 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 2016
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note 2.
Report on the Remuneration Report
We have audited the remuneration report included in pages 25 to 36 of the directors’ report for the
year ended 30 June 2016. 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 2016
complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Brett Entwistle
Partner
Sydney
25 August 2016
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 1 August 2016.
(a) Distribution of equity securities
The number of shareholders, by size of holding, are:
SHARE RANGE
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL
Number
of holders
441
351
66
89
25
972
Number
of shares
174,408
863,269
512,700
2,683,161
105,604,880
109,838,418
%
0.16
0.79
0.47
2.44
96.14
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 1 August 2016 was 111 holders holding
6,161 shares.
(b) Twenty largest holders of quoted equity securities
The names of the 20 largest registered holders of quoted shares are:
Ordinary shareholders
SINTACK PTY LTD
Q H TOURS LTD
THE BURNES GROUP PTY LTD
MR ANDREW JAMES BURNES
MRS CINZIA BURNES
J P MORGAN NOMINEES AUSTRALIA LIMITED
RBC INVESTOR SERVICES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MR BRETT WILLIAM FISHER PATON + MRS VICKI ANNE PATON
BNP PARIBAS NOMS PTY LTD
EDWRITE PTY LTD
MAPLESTONE PTY LTD
MS ROSALIE CATHERINE VAUGHAN
JUST SUPER CO PTY LTD
ZARN NOMINEES PTY LTD
CHESTERS NOMINEES PTY LTD
Number
of shares
21,540,016
21,223,454
18,480,105
12,828,654
12,638,014
4,810,690
4,377,775
2,712,531
2,538,133
1,505,492
425,022
320,000
269,964
257,466
244,209
202,561
200,000
195,648
194,297
133,333
105,097,364
%
19.61
19.32
16.82
11.68
11.51
4.38
3.99
2.47
2.31
1.37
0.39
0.29
0.25
0.23
0.22
0.18
0.18
0.18
0.18
0.12
95.68
115
(c) Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
Substantial shareholder
SINTACK PTY LTD
Q H TOURS LTD
THE BURNES GROUP PTY LTD
MR ANDREW JAMES BURNES
MRS CINZIA BURNES
Number
of shares
21,540,016
21,223,454
18,480,105
12,828,654
12,638,014
%
19.61
19.32
16.82
11.68
11.51
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helloworldlimited.com.au
ABN: 60 091 214 998 ASX CODE: HLO