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2017
ABN: 60 091 214 998 ASX CODE: HLO
Helloworld Travel Limited and Controlled Entities
Annual Report for the year ended 30 June 2017
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 Auditor’s Report
ASX Additional Information
2
3
4
6
9
10
43
44
52
53
54
55
56
121
122
128
1
CORPORATE INFORMATION
Directors
Auditor
Garry Hounsell (Chairman)
Andrew Burnes (Chief Executive Officer)
Cinzia Burnes
Peter Spathis
Mike Ferraro
Andrew Finch
Company Secretary
Michael Burnett
Registered and principal office
Level 10
338 Pitt Street
Sydney NSW 2000
Telephone: +61 2 8229 4000
Facsimile: +61 2 8290 4009
PricewaterhouseCoopers (PwC) Australia
2 Riverside Quay
Southbank VIC 3006
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 expense, tax, depreciation and amortisation
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 Travel Limited
EPS
FAR
FY14
FY15
FY16
FY17
FY18
GM
Group
HTS
HTSH
KMP
LTIP
MTA
Qantas
QBT
QH
SMEs
STIP
TTV
Earnings per share
Fixed Annual Remuneration
Financial Year ended 30 June 2014
Financial Year ended 30 June 2015
Financial Year ended 30 June 2016
Financial Year ended 30 June 2017
Financial Year ended 30 June 2018
General Manager
The Helloworld Travel Group, comprising Helloworld Travel 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
Mobile Travel Holdings Pty Limited and its subsidiaries
Qantas Airways Limited
QBT Pty Limited
Qantas Holidays Limited
Small and medium enterprises
Short Term Incentive Plan
Total Transaction Value
3
CHAIRMAN’S REPORT
On behalf of the Board of Directors
I am delighted to be presenting
my first report as Chairman
of Helloworld Travel Limited.”
It has been a year of significant progress and positive results for
Helloworld Travel Limited (HLO).
The merger of HLO and AOT has been the catalyst for the business
turnaround that we have seen this year and we will continue to focus
and drive the merged business forward to even greater heights.
A number of strategic acquisitions have been successfully completed
this year as well as our continued investment in technologies, the roll
out of our co-investment strategy, and our continued focus on the
Helloworld Travel family.
We have undergone substantial work on our brand, with a new brand
identity, tagline and jingle launched for our franchise networks.
Personally seeing it unveiled at the Owner Managers Conference
(OMC) in May on the Gold Coast was a highlight.
Strength in 2016/17
For the year ended 30 June 2017, Helloworld Travel Limited achieved
an EBITDA of $55.2 million, an increase of 118% from FY2016.
TTV increased 3.1% to $5.9 billion for the year ended 30 June 2017.
Revenue was $326.4 million, an 8.6% increase on the previous year.
helloworldlimited.com.au Profit before income tax was $31.0 million for the year
ended 30 June 2017, an eight fold increase on the year
prior of $3.5 million.
Net profit after tax for the year was $21.6m, a $19.9m
increase on $1.7m in the prior year.
Basic earnings for the year was a profit of 18.8 cents
per share, building on the steps taken to return the
Group to profitability in the previous year. The Group
has returned 14.0 cents per share as dividends for the
year, building on recommencement of paying share
dividends in the previous year (2.0 cents per share).
Further details of the financial performance of the Group
are included in the Operating and Financial Review on
pages 16 to 29.
This year Helloworld Travel Limited was again recognised
as big winners at the 2017 Australian Federation of Travel
Agents (AFTA) National Travel Industry Awards (NTIA)
winning the highly coveted ‘Best Travel Agency Group’
(50 outlets or more) for the second year running.
Our Wholesale brands also took home big awards
with Sunlover Holidays receiving the ‘Best Wholesaler
Australian Product’ award also for the second year
running and Qantas Holidays & Viva Holidays awarded
‘Best Wholesaler International Product’. Members of
the Helloworld Travel Group took home an additional
6 awards this year in Australia.
In New Zealand, Go Holidays was awarded the 2016
TAAANZ NITA ‘Best Wholesaler’ award for the third
year running.
Looking ahead
We have started this financial year in a position of
strength and have a very solid foundation for the future.
We are poised to build on the recent successes by
identifying and harnessing opportunities as we continue
to achieve positive results for the future of the company.
On behalf of the Board I would like to take this
opportunity to thank the Senior Leadership Group, all of
our network members, suppliers, industry partners, staff
and shareholders for your continued support as we move
forward with the long-term success of this business.
I would also like to thank and acknowledge my fellow
Directors for their invaluable contribution over the past
year and their ongoing commitment to the business.
Through the leadership of the Board and Senior
Leadership Group in conjunction with our staff, network
members and stakeholders we are well positioned to build
on our success and continue the momentum into FY18.
We are confident that we will see further positive results
across the Group as we work on the initiatives already
in place while developing the best practice strategies
going forward to maximise the potential and the value
of the business.
I am pleased to be a part of such a dynamic company
and look forward to continuing the journey as we
achieve great results for all of the Helloworld Travel
Limited Group.
Garry Hounsell
Chairman
Helloworld Travel Limited
Melbourne, 23 August 2017
5
CHIEF EXECUTIVE OFFICER’S REPORT
I am delighted to present
this report and the results
for the year ended 30 June
2017 as CEO of Helloworld
Travel Limited.”
A year of strength and success
Results
FY17 has been a year of strong business performance, revenue
growth and significant cost reduction through the continuation of the
integration of the Helloworld Travel and AOT Group businesses. TTV
increased to $5.9 billion, we achieved solid revenue growth of 8.6% to
$326.4 million as a result of both TTV growth and margin improvement
and a strong focus on profitable growth. We have productively
restructured our operating costs across all segments and have
over-delivered on the previously identified merger synergies and
cost reduction program.
As a result, Helloworld Travel Limited has successfully implemented
a significant business turnaround with a reported EBITDA of $55.2
million, an increase of 118% or $29.9 million from the prior year.
The net profit after tax attributable to owners was $21.5 million,
an increase of 1,116% or $19.8 million from the prior year. As a result,
our Earnings Per Share was 18.8 cents, which enabled us to declare
a final dividend of 8.0 cents per share to our shareholders, bringing
our total dividends in FY17 to 14.0 cents per share, fully franked.
In FY16, we declared dividends of 2.0 cents per share, which was
the first dividend payment since 2013.
From a segment perspective, the Australia, New Zealand and Rest
of World segments have all delivered EBITDA growth compared with
the prior year. Our results in Australia reflect strong improvement in
margins, productivity and right sizing of the cost base. New Zealand
has delivered strong revenue growth from its wholesale brands and
larger retail member network and the Rest of World segment has
benefited from its cost base restructure.
helloworldlimited.com.au We have continued to focus on implementing key
technology initiatives to further align our bricks and
mortar franchise network with online distribution
platforms, creating an integrated ‘clicks and mortar’
travel solution. These developments include the re-launch
of the helloword.com.au site in September 2016 and the
launch of the Resworld agency portal in October 2016.
We will continue to build on these and other technologies
to provide the best experiences for customers, staff
and consultants throughout the network to drive greater
productivity and increased yield outcomes.
The continued integration of the Helloworld Travel and
the AOT Group businesses has also resulted in improved
economies of scale and productivity efficiencies
for our wholesale and inbound divisions with the
introduction of a new online booking tool, 24/7 call
centre service for customer care and booking queries,
and an enhanced accommodation portal that provides a
more comprehensive product range and easier booking
process. These developments have ultimately increased
our product offerings and customer service support.
We have also achieved success in our corporate
businesses, with QBT in Australia securing major new
accounts including the Northern Territory Government
and PwC during FY17. In August 2017 Helloworld
Travel Limited’s Hotel Program Management business,
“AOT Hotels”, successfully re-tendered for the Whole
of Australian Government (“WoAG”) Accommodation
Program Management (“APM”) contract and entered
into a new Deed with the Commonwealth for the on-going
provision of the APM services, securing the contract for
a period of 3 years with further extension options.
Brand
The retail network has increased to over 2,000 members
across Australia and New Zealand, reflecting the
stabilisation of our pre-existing network, the addition of
MTA in Australia and the addition of the World Travellers
Group in New Zealand to our network.
We have strengthened the relationship with our
member networks, invested in new consumer marketing,
advertising and sponsorships, and through our successful
rebrand to Helloworld Travel – The Travel Professionals
with a new tagline, jingle and in-store branding. Our recent
rebrand was very well received by members, gaining
immediate traction with eight stores converting to fully
branded Helloworld Travel outlets in July 2017.
Awards
In July 2017 the Helloworld Travel Group was again
recognised with multiple awards at the 2017 Australian
Federation of Travel Agents (AFTA) National Travel
Industry Awards (NTIA). Helloworld Travel was awarded
the Best Travel Agency Group (50 outlets or more) for
the second year running while our wholesale business,
Sunlover Holidays was recognised as the Best Wholesaler
Australian Product, also for the second year running and
Qantas Holidays and Viva Holidays were recognised as
the best Wholesaler International Product.
Helloworld Travel agency network members were also
recognised as winners across multiple categories with
numerous awards across the group. In New Zealand,
Go Holidays was awarded the 2016 TAAANZ NITA
‘Best Wholesaler’ award for the third year running.
Investment
We have now rolled out the co-investment strategy as
announced at our Owner Managers Conference in 2016
and have made some significant investments through the
strategy. We have acquired a minority shareholding in
Newcastle based Hunter Travel Group (HTG) that operate
seven fully branded Helloworld Travel stores in Newcastle
and surrounding areas together with two Cruise Travel
Centres. The HTG business employs over 100 staff and
has TTV of over $120 million per annum. Aligned with
the partnership was an additional agreement to sell a
75% stake in HLO’s seven wholly owned retail outlets
to HTG. We have also acquired a minority shareholding in
Queensland based company Cooney Investments Pty Ltd,
7
We expect to improve our current year performance for
the year ended 30 June 2018 as we are well positioned
for sustainable long term growth.
We are proud of the developments we have made so far
in fostering a strong and unified Helloworld Travel family.
We are listening to our stakeholders and doing all we can
to build a supportive and vibrant future for us all. Our
members are happy with the direction and new initiatives
and improvements in the business. Especially the new and
refreshed brand identity in our fully branded agencies.
I would like to thank the many people involved in
Helloworld Travel Limited who are integral to our success,
the board, our senior leadership group, all of our agency
network members, our wonderful staff, our supplier
partners and our business partners for their support
and commitment to the business over the past year
of evolution and continued development.
The outlook is exciting for Helloworld Travel and I look
forward to working together to harness the many
opportunities for the business that lie ahead.
operators of branded network member agencies
Helloworld Travel Mackay and Helloworld Travel Mount
Pleasant, and also Hosted Journeys Group Travel and
Events products. Owned and operated by Managing
Director John Cooney, the two Queensland based
agencies have a successful track record and history
with the Helloworld Travel group, having been members
of the branded network for 31 years.
Dividend
The Board has resolved that the company will pay a final
dividend of 8.0 cents per share. The dividend is to be
paid on 20 September 2017. This brings the total
dividends declared, fully franked, for the current year
to 14.0 cents per share compared with 2.0 cents per
share in the prior year.
Outlook
The outlook is very positive. Business fundamentals are
heading in the right direction in our key segments with
demand for our integrated service offering continuing to
develop and grow. We will continue to focus on increasing
revenue and margins and maximising efficiencies in
operations across the Group.
We remain focused on delivering results for shareholders,
agents, partners and consumers with the objective
to future proof our agents and the business through
technology, training, product and profile supported by
an omni-channel strategy.
Andrew Burnes
Chief Executive Officer and Managing Director
Helloworld Travel Limited
Melbourne, 23 August 2017
helloworldlimited.com.au FINANCIAL PERFORMANCE SUMMARY
FOR THE YEAR ENDED 30 JUNE 2017
Summary Group Results
Total transaction value (TTV) 1
5,872,329
5,694,338
177,991
For the
year ended
30 June 2017
$’000
For the
year ended
30 June 2016
$’000
Change
$’000
Revenue
EBITDA 2
Profit before income tax expense
Profit after income tax expense attributable to owners
Basic earnings per share
Diluted earnings per share
Interim dividend per share
Final dividend per share
RECONCILIATION OF EBITDA TO PROFIT BEFORE INCOME TAX
EBITDA 2
Depreciation and amortisation expense
Finance expense
Profit before income tax expense
326,433
55,179
31,037
21,510
300,549
25,290
3,450
1,699
For the
year ended
30 June 2017
Cents
For the
year ended
30 June 2016
Cents
18.8
18.4
6.0
8.0
1.9
1.9
-
2.0
For the
year ended
30 June 2017
$’000
For the
year ended
30 June 2016
$’000
55,179
(21,076)
(3,066)
31,037
25,290
(18,459)
(3,381)
3,450
25,884
29,889
27,587
19,811
Change
Cents
16.9
16.5
6.0
6.0
Change
$’000
29,889
(2,617)
315
27,587
Change
%
3.1%
8.6%
118%
800%
1,166%
Change
%
889%
868%
N/A
300%
Change
%
118%
(14.2%)
9.3%
800%
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 and amortisation. 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 8.0 cents per share for the 2017 financial year. This results in total dividends
declared of 14.0 cents per share for the 2017 financial year, compared with 2.0 cents per share for the 2016 financial
year. All dividends are fully franked.
Explanation of results
This information should be read in conjunction with the Director’s Report, Financial Report and Auditor’s Report for
the year ended 30 June 2017 and any public announcements made by the Company since that time.
9
DIRECTORS’
REPORT
The Directors of Helloworld Travel Limited (Helloworld
Travel), present their Report together with the Financial
Statements of the Consolidated Entity (Group) being
Helloworld Travel Limited and the entities that it
controlled at the end of, or during, the year ended
30 June 2017 and the Independent Auditor’s Report.
On 10 April 2017, Helloworld Limited held a General
Meeting and its shareholders resolved to change the
name of the listed entity from Helloworld Limited to
Helloworld Travel Limited.
Directors
The Directors of the Company in office at any time during
or since the end of the financial year follows:
Garry Hounsell B Bus (Acc), FCA, FAICD
Non-Executive Director and Chairman
Appointment
Mr Hounsell was appointed to the Board and as Chairman
on 4 October 2016.
Experience and Expertise
Apart from his extensive director experience on a wide
range of highly successful Boards, Garry was formerly
Senior Partner of Ernst & Young, Chief Executive Officer
and Country Managing Partner of Arthur Andersen,
a Board member of Freehills (now Herbert Smith Freehills)
as well as Deputy Chairman of the Board of Mitchell
Communication Group Limited.
Mr Hounsell is a Fellow of the Australian Institute of
Company Directors and the Chartered Accountants
in Australia and New Zealand.
Other current directorships of listed entities:
• Treasury Wine Estates Limited (since 2012).
• Dulux Group Limited (since 2010).
• Spotless Group Holdings Limited (since 2014)
and Chairman (since February 2017).
Former directorships of listed entities in the last 3 years:
• Integral Diagnostics Limited (2015 to 2017).
• Chairman of PanAust Limited (2008 to 2015).
• Qantas Airways Limited (2005 to 2015).
Special Responsibilities:
• Chairman of the Board.
• Chairman of the Remuneration Committee.
• Chairman of the Nominations & Governance Committee.
Interests in Shares:
• A beneficial and or legal interest in 59,000 fully paid
ordinary shares.
helloworldlimited.com.au Andrew Burnes LLB, B Com
Cinzia Burnes
Chief Executive Officer and Managing Director
Appointment
Mr Burnes was appointed Chief Executive Officer and
Managing Director of Helloworld Travel 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 in February 2016,
he was appointed Chief Executive Officer and Managing
Director of Helloworld Travel 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.
Group General Manager – Wholesale & Inbound,
Executive Director
Appointment
Mrs Burnes was appointed Group General Manager –
Wholesale and Inbound, Helloworld Travel Limited and
to the Board on 1 February 2016.
Experience and Expertise
Mrs Burnes brings extensive sector and management
experience to the Board.
Mrs Burnes has qualifications in Tourism and Commerce
from the Metastasio Institute of Commerce (Rome).
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
Travel Limited in 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
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Group General Manager – Wholesale & Inbound
Special Responsibilities:
• Chief Executive Officer and Managing Director
Interests in Shares:
• A legal and beneficial interest in 12,858,058 fully paid
ordinary shares.
• In conjunction with Mrs Burnes a beneficial interest in
18,490,105 fully paid ordinary shares.
Interests in Shares:
• A legal and beneficial interest in 12,638,014 fully paid
ordinary shares.
• In conjunction with Mr Burnes a beneficial interest
in 18,490,105 fully paid ordinary shares.
11
Peter Spathis FCPA
Non-Executive Director
Appointment
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
Special Responsibilities:
• Member of the Audit & Risk Committee and formerly
Acting Chairman of the Audit Committee.
• Member of the Remuneration Committee.
• Member of the Nominations & Governance Committee.
Interests in Shares:
• A beneficial interest in 83,333 fully paid ordinary
shares.
Mike Ferraro LLB (Hons)
Non-Executive Director
Appointment
Mr Ferraro was appointed to the Board on 1 January 2017.
Experience and Expertise
Mr Ferraro is currently Chief Executive Officer and
Managing Director of Alumina Limited, having been
appointed on 1 June 2017. He was previously a non-
executive director of Alumina Limited. Mr Ferraro
was previously a partner and member of the executive
management team at global law firm Herbert Smith
Freehills (HSF) and global head of the Corporate group
at HSF. Prior to that he was chief legal counsel at BHP
Billiton Limited from 2008 to mid 2010.
Other current directorships of listed entities:
• Alumina Limited
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Chairman of the Audit & Risk Committee.
• Member of the Remuneration Committee.
• Member of the Nominations & Governance Committee.
Interests in Shares:
• Nil
helloworldlimited.com.au Andrew Finch B Com, LLB, LLM (Hons 1), MBA
Michael Burnett B Com, CA
Non-Executive Director
Appointment
Mr Finch was appointed to the Board on 1 January 2017.
Experience and Expertise
Mr Finch is General Counsel and Company Secretary at
Qantas Airways Limited and is a member of the Qantas
Group Management Committee. He was previously a
partner with Allens Linklaters (including 2 years in London)
where he specialized in mergers and acquisitions, equity
capital markets and general corporate advice.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Member of the Audit & Risk Committee.
• Member of the Remuneration Committee.
• Member of the Nominations & Governance Committee.
Chief Financial Officer and Group Company Secretary
Mr Burnett joined Helloworld Travel 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.
Mr Burnett is a Chartered Accountant and holds a
Bachelor of Commerce from the University of Melbourne.
Interests in Shares:
• Nil
Rob Marcolina
Former Non-Executive Director and former
Acting Chairman
Mr Marcolina served as a Non-Executive Director from
18 September 2015 until his resignation on 31 December
2016. He was Acting Chairman from 20 November 2015
to 4 October 2016.
Andrew Cummins
Former Non-Executive Director
Mr Cummins served as a Non-Executive Director from
September 2010 and did not stand for re-election at
the company’s 2016 Annual General Meeting held on
22 November 2016.
13
Directors’ meetings
During the year, 8 meetings of the Board, 4 meetings of the Audit & Risk Committee, 3 meetings of the Remuneration
Committee and 1 meeting of the Nominations & Governance Committee were held.
Attendance at Board and Board Committee meetings during FY17 is set out in the table below:
Board
Audit &
Risk Committee
Remuneration
Committee
Nominations &
Governance Committee
DIRECTOR
Garry Hounsell
Rob Marcolina
Andrew Cummins
Peter Spathis
Andrew Burnes
Cinzia Burnes
Mike Ferraro
Andrew Finch
A
6
5
4
8
8
8
3
3
B
6
5
3
8
8
8
3
3
A
3
2
2
4
4
-
2
2
B
3
1
2
4
4
-
2
1
A
2
2
2
3
3
-
1
1
B
2
2
2
3
3
-
1
1
A
1
-
-
1
1
1
1
1
B
1
-
-
1
1
1
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 or was invited to attend.
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 or attended by invitation.
Committee membership
At the date of this report, the Company has an Audit
& Risk Committee, a Remuneration Committee and a
Nominations & Governance Committee of the Board.
During the year, the members of the Committees were:
Audit & Risk Committee
Mike Ferraro (Chairman and member from 1 January 2017)
Andrew Finch (from 1 January 2017)
Peter Spathis (member for the full year and Acting
Chairman to 31 December 2016)
Nominations & Governance
Committee (established on
28 October 2016)
Garry Hounsell (Chairman)
Rob Marcolina (until 31 December 2016)
Andrew Cummins (until 22 November 2016)
Peter Spathis
Andrew Burnes
Cinzia Burnes
Mike Ferraro (from 1 January 2017)
Rob Marcolina (until 31 December 2016)
Andrew Finch (from 1 January 2017)
Andrew Cummins (until 22 November 2016)
Remuneration Committee
Garry Hounsell (Chairman from 1 January 2017)
Rob Marcolina (member until 31 December 2016 and
Chairman from 23 November 2016 until 31 December 2016)
Andrew Cummins (member and Chairman until
22 November 2016)
Andrew Finch (from 1 January 2017)
Peter Spathis
Mike Ferraro (from 1 January 2017)
Retirement in office of Directors
In accordance with the Company’s Constitution and
the ASX Listing Rules, Mr Mike Ferraro and Mr Andrew
Finch, having been appointed Directors by the Board
subsequent to the 2016 AGM, will automatically retire
and stand for election by shareholders at the 2017 AGM.
In addition, and in accordance with the company’s
constitution, the longest serving director will retire
at the 2017 AGM.
helloworldlimited.com.au Dividends
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 Travel 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 including Helloworld Travel,
comprising of Australia’s largest network of branded
franchised travel agents, as well as the Helloworld Travel
associate network, Helloworld Business Travel,
My Travel Group and Mobile Travel Agents (MTA).
The Group has three main operating segments within its
structure based on the geographical location of where
the business is managed:
• Australia Segment, consisting of Australian operations;
• New Zealand Segment, consisting of New Zealand
operations; and
• Rest of the World Segment, consisting of Insider
Journeys, Tourist Transport Fiji (TTF), Inbound Fiji and
Qantas Vacations.
Helloworld Travel 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
Travel, helloworld.com.au, Qantas Holidays,
Viva! Holidays, AOT Inbound, ATS Pacific, ETA,
Insider Journeys, Air Tickets, Sunlover Holidays,
GO Holidays, QBT, APX Travel Management and
Qantas Vacations (USA).
During the current financial year, the following 100%
franked dividends were paid on fully paid Helloworld
Travel Limited ordinary shares:
Type
Final 2016 dividend, paid on
16 September 2016
Interim 2017 dividend, paid on
20 March 2017
Total dividends paid during the
current year
Cents
per share
Dividend
amount $m
2.0
6.0
8.0
2.2
7.2
9.4
There were no dividends paid during the prior financial
year ended 30 June 2016.
On the 23 August 2017, Helloworld Travel declared a fully
franked final dividend of 8.0 cents per share. This brings
the total dividends declared in relation to the year ended
30 June 2017 to 14.0 cents per ordinary share.
The final dividend for the year ended 30 June 2017 will be
paid during the 2018 financial year out of 30 June 2017
current year profits, but is not recognised as a liability
at year end.
Further detail on dividends paid or proposed during
the year ended 30 June 2017 is set out in note 7 to the
financial statements.
Earnings per share
Basic earnings per share was 18.8c (2016: 1.9c). Diluted
earnings per share was 18.4c (2016: 1.9c)
The increase in basic earnings per share reflects the
strong net profit after tax performance in the current
year. This reflects the full year inclusion of the AOT
business and the implementation of the AOT merger
synergies and cost reduction program.
In the current year, Helloworld Travel Limited issued
new shares under the franchise loyalty bonus program to
certain franchisees and also issued shares under the new
long term incentive plan to certain members of the senior
management team. As these shares are subject to future
years vesting conditions, the shares issued under both
these arrangements have been excluded from the basic
earnings per share calculation, but included in the diluted
earnings per share calculation.
15
OPERATING AND FINANCIAL REVIEW
Summary of results
Total Transaction Value (TTV)
Revenue
Operating expenses
Equity accounted profits
EBITDA
Depreciation/amortisation expense
Finance expense
Profit before income tax expense
Profit after income tax expense attributable to owners
Revenue margin %
EBITDA margin %
Basic earnings per share
Diluted earnings per share
Interim dividend per share
Final dividend per share
Total dividends per share
FY17
$000’s
5,872,329
326,433
(272,113)
859
55,179
(21,076)
(3,066)
31,037
21,510
5.6%
16.9%
FY17
Cents
18.8
18.4
6.0
8.0
14.0
FY16
$000’s
5,694,338
300,549
(275,259)
-
25,290
(18,459)
(3,381)
3,450
1,699
5.3%
8.4%
FY16
Cents
1.9
1.9
-
2.0
2.0
Change
$000’s
177,991
25,884
3,146
859
29,889
(2,617)
315
27,587
19,811
0.3%
8.5%
Change
Cents
16.9
16.5
6.0
6.0
12.0
Change
%
3.1%
8.6%
1.1%
N/A
118%
(14.2%)
9.3%
800%
1,166%
5.7%
101%
Change
%
889%
868%
N/A
300%
600%
The Board assesses the performance of the group and its segments based on several measures including TTV, Revenue
and EBITDA (being earnings before interest expense, tax, depreciation and amortisation), net profit before tax and
associated key 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.
Revenue margin has been calculated as revenue as a percentage of TTV. EBITDA margin has been calculated as EBITDA
as a percentage of revenue.
helloworldlimited.com.au YEAR IN REVIEW
Overview of results
The Group has delivered a $19.8 million or 1,166%
increase in its profit attributable to owners for the year
ended 30 June 2017. During FY17, the Group achieved
a significant business performance turnaround, growing
revenue and significantly reducing cost base, whilst
integrating the Helloworld Travel and AOT businesses.
Helloworld Travel is now in a stronger position to deliver
future benefits to customers, agents, suppliers and
shareholders.
The increase in profit was underpinned by TTV growth
of 3.1% to $5,872.3 million and revenue growth of
8.6% to $326.4 million. The Group result reflects the
full year benefits from the merger with the AOT Group
on 1 February 2016. The effect of declining airfares
experienced across the industry has been partially
offset by increased volumes and better contracting with
suppliers and partners. In addition, revenues this year
were also affected by the exit from the unprofitable retail
online arrangement with Orbitz.
Revenue margin was 5.6%, an increase of 0.3% reflecting
the Groups renewed focus on margin growth. The margin
has benefited from a better mix of products reflecting
the full year effect of the broader portfolio following the
merger with AOT Group.
Significant progress was also made on reducing the cost
structure during the year. Following the merger with the
AOT Group, Helloworld Travel identified $17.6 million
of annualised merger synergies and cost reductions.
By 30 June 2017, Helloworld Travel has exceeded this
commitment by actioning $18.6 million of identifiable
annualised merger synergies and cost reductions at a
lower one off cost of $2.5 million. This, along with
a greater discipline towards all costs, has significantly
benefited the FY17 result.
As a result of these revenue and cost improvements, the
Group has been able to deliver a $29.9 million or 118%
increase in EBITDA to $55.2 million. From a segment
perspective, the Australia segment EBITDA was up
93.4% to $50.3 million; the New Zealand segment was
up 229% to $6.2 million; and the Rest of World segments
loss improved by 48.2% to a loss of $1.4 million.
A detailed review of the segment operational results
is on pages 20 to 26.
Depreciation and amortisation expense increased by
$2.6 million to $21.1 million in FY17, reflecting the higher
capital spend levels of prior years, full year inclusion of
the AOT business in FY17 and accelerated depreciation/
amortisation on previous assets no longer required due
to the introduction of new capital initiatives to deliver
future business growth. During FY17, Helloworld Travel
introduced robust control procedures to reduce capital
expenditure levels from its historical spend levels and
re-focus its capital spend on customer, agent and supplier
performance initiatives to deliver future growth.
Finance expense declined 9.3% to $3.1 million in FY17,
reflecting reduced debt and debt facility levels. In May,
the Group entered into a new 5 year facility with Westpac
on more attractive terms that will deliver further cost
savings to the business.
The group’s profit before tax is $31.0 million, an
improvement of $27.6 million compared with the prior
year, which ultimately delivered a profit after tax
attributable to owners of $21.5 million for the year
ended 30 June 2017.
17
helloworldlimited.com.au
Shareholder returns
Capital expansion and network growth
The Group’s strong business performance has delivered
an earnings per share of 18.8 cents compared with 1.9
cents in the prior year. Diluted earnings per share was
18.4 cents compared with 1.9 cents in the prior year. The
diluted earnings per share include those shares granted in
FY17 under the long term incentive plan and the franchise
loyalty bonus plan, with vesting conditions to be met in
future financial years.
Helloworld Travel has declared a final fully franked
dividend of 8.0 cents per share for the year ended 30 June
2017, payable on 20 September 2017. This brings total
dividends declared or proposed to 14.0 cents per share and
represents a dividend payout ratio equating to 78% for the
year ended 30 June 2017. In FY16, Helloworld Travel paid a
2.0 cents per share final dividend for the year ended 30 June
2016, which was the first dividend payment since 2013.
In assessing potential future dividends, management
will continually assess future cash flow generation
in the context of the company’s debt and equity
preferred capital structure mix, balancing the needs of
shareholders, creditors and external market confidence.
Acquisition and disposals
On 1 December 2016, the Group acquired 50% of Mobile
Travel Holdings Pty Ltd and its controlled entities (MTA) for
a total consideration of $14.2 million, including acquisition
costs. MTA was established over 25 years ago with over
350 mobile travel agents in Australia. MTA is Australia’s
leading home based travel consulting business and provides
Helloworld Travel with a significant footprint into a sector
that expects high growth in the short to medium term. The
Group expects the additional scale and operating leverage
to bring increased economies of scale.
On 28 February 2017, the Group completed its acquisition
of Cruise Factory, Seven Oceans Cruising, Cruise Abroad and
Worldwide Cruise Centres businesses (collectively referred
to as the Cruise Businesses) for a total consideration of $1.1
million. This business asset acquisition builds on Helloworld
Travel’s already established cruise presence with its internal
cruise team and increases the business wholesale offering.
On 23 January 2017, the Group disposed of its wholly owned
controlled entities, World Aviation Systems (Australia) Pty
Limited, Global Aviation Services Pty Limited and Global
Aviation Services (Australasia) Pty Limited, which formed
the previous air representation business. Helloworld
Travel recorded a profit on the sale of $0.4 million. The air
representation business was not considered core to the
broader Helloworld Travel business and does not have a
material impact on the consolidated results.
Helloworld Travel’s retail network has increased to over
2,000 members across Australia and New Zealand,
reflecting the stabilisation of the pre-existing network
and the addition of MTA in Australia and World Travellers
Group (WTG) in New Zealand.
The Group continues to strengthen its relationship with
the member networks, led by:
• a 50% ownership interest in MTA, which provides us a
strong footprint in the home based travel agent industry;
• the introduction of the franchise loyalty bonus program,
where branded and associate members were eligible to
participate in the issue of 666,000 Helloworld Travel
Limited shares at nil consideration subject to future
vesting conditions being met; and
• a co-investment strategy, where Helloworld Travel
has offered to purchase between 20% and 25% of
franchisee businesses, with the consideration to
be payable by way of fully paid ordinary shares in
Helloworld Travel Limited.
Helloworld Travel has continued to make significant
investment in consumer marketing, advertising and
sponsorship to strategically accelerate Helloworld
Travel’s brand presence. On 10 April 2017, the Group
held a General Meeting and its shareholders resolved
to change the name of the listed entity from Helloworld
Limited to Helloworld Travel Limited. This change was
critical to strengthening the brand awareness and
position within the travel industry. As part of this change,
a new logo and associated marketing initiatives were
developed that will be rolled out to the network in FY18.
The stronger relationship developed with the member
network since the AOT merger has ensured that
Helloworld Travel is aligned with its members to
provide enhanced customer service experiences
across the business.
In FY17, Helloworld Travel has continued to develop
key technological initiatives to further align the bricks
and mortar franchise network distribution with the
on-line distribution platforms, creating an integrated
travel solution. These developments include the
re-launch of helloword.com.au site in September 2016
and the launch of the Resworld agency portal in October
2016. The Group will continue to build on these and
other technologies to provide the best experiences
for customers, staff and consultants throughout the
network to drive greater productivity and increased
yield outcomes.
19
Equity issuance
In October 2016, 7,000,000 new shares were issued via
share placement to institutional investors raising $28.4
million after costs. The funds were used for the purchase
of 50% of MTA and the remainder to repay long term debt.
In addition to this capital raising, the Group issued
2,600,000 shares to senior executives under a long term
incentive plan and 666,000 shares to members of the
branded and associate networks as a part of the franchise
loyalty bonus plan. Both these issues have future vesting
conditions. A summary of the long term incentive plan is
included in the Remuneration Report.
The Group also issued 100,000 new shares to the
former owners of the Cruise Businesses acquired during
February 2017, as part of the purchase consideration for
these business assets.
Liquidity and funding
As at 30 June 2017, the Group held a cash balance of $198.1
million (30 June 2016: $202.6 million) comprised of general
cash of $34.7 million (30 June 2016: $26.2 million) and
client cash of $163.3 million (30 June 2016: $176.4 million).
As at 30 June 2017, the Group has external borrowings of
$20.4 million (30 June 2016: $46.6 million) with available
headroom on its debt facilities of $28.4 million (30 June
2016: $36.1 million).
In May 2017, Helloworld Travel refinanced its secured debt
facility with the Westpac Banking Corporation. The previous
facility was due to mature in April 2019. The new $60.0
million facility has a five year term. The refinancing of the
core debt facility was successfully executed on attractive
terms that will deliver cost savings to the business in FY18.
Helloworld Travel has generated strong operating cash
flows from trading activity of $29.1 million. During FY17,
the Group has introduced robust controls procedures to
improve capital expenditure discipline, ensuring capital
expenditure is carefully contained to drive future business
performance. This has led to free cash flow, representing
reported operating cash flow less net capital expenditure,
of $18.8 million generated in FY17, which has enabled the
Group to repay debt and pay dividends to shareholders.
The company has a strong balance sheet, improving
operating cash flows and secured long term debt facilities
with significant headroom. Helloworld Travel is well
positioned for long-term sustainable growth.
Segment review
During the current year, Helloworld Travel has
restructured its operating segments based on the
geographical location of where the businesses are
managed. Comparative information has been restated to
align with the current year segmentation.
The Group has three main operating segments within its
structure of:
• Australia Segment
• New Zealand Segment
• Rest of the World segment
The Board assesses the performance of the segments
based on several measures including TTV, Revenue and
EBITDA (being earnings before interest expense, tax,
depreciation and amortisation), net profit before tax and
associated key ratios. The segment results for Australia,
New Zealand and Rest of World segments have been
extracted from note 5 to the financial statements.
helloworldlimited.com.au 21
Australia Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
Equity accounted profits
EBITDA
Revenue margin
EBITDA margin
FY17
$’000
FY16
$’000
4,908,825
243,603
(194,150)
859
50,312
5.0%
20.7%
4,747,843
224,204
(198,194)
-
26,010
4.7%
11.6%
Change
$’000
160,982
19,399
4,044
859
24,302
0.3%
9.1%
Change
%
3.4%
8.7%
2.0%
N/A
93.4%
6.4%
78.4%
The Australia segment has retail franchise operations,
Air Tickets, wholesale & inbound, and travel management
operations. These operations work together to supply travel
products and services to customers and are supported by
shared support functions.
Overall EBITDA of $50.3 million, an excellent business
performance representing growth of $24.3 million or
93.4% from prior year, driven by growth in TTV, increased
revenue and margins as well as a re-alignment of the
operating cost base.
In Australia, the Group has a range of retail operations,
acting as a franchisor for multiple retail travel agency
networks, including Helloworld Travel Branded, Helloworld
Travel Associate and Helloworld Business Travel. The retail
operations also include an online channel, helloworld.com.au,
the My Travel Group network of agents, a ticketing division
Air Tickets, as well as a 50% investment in Mobile Travel
Agents (MTA).
The Group’s wholesale businesses in Australia operate a
range of brands including Qantas Holidays, Viva! Holidays,
Sunlover Holidays, Ready Rooms, The Cruise Team, Seven
Oceans, and Territory Discoveries. These businesses
package air, cruise and land product for sale through retail
travel agency networks as well as other third party retailers
in Australia and New Zealand. The inbound business is the
largest provider of inbound travel services in Australia,
offering travel services to clients in 73 countries worldwide.
These businesses include AOT Inbound, ATS Pacific and
Experience Tours Australia (ETA).
The Group’s corporate travel management services
division offers travel management services to corporate
and government customers including booking flights
and accommodation, through the QBT and AOT Hotels
businesses.
The Australia segment generated TTV of $4,908.8 million
for the year ended 30 June 2017, representing an increase
of 3.4% compared with the prior year. Revenue increased by
8.7% to $243.6 million reflecting the full year inclusion of
Sunlover Holidays, AOT Inbound, ATS Pacific, ETA and AOT
Hotels, which were merged into the segment as part of the
merger with the AOT Group. Despite the addition of those
new businesses to the segment, operating costs decreased
by 2.0% to $194.2 million as a result of improved cost
control and cost synergies actioned.
The revenue margin for the year increased from 4.7%
to 5.0% due to the change of product mix and improved
contracting outcomes across the businesses. As a result
of all of the above, the EBITDA margin increased from
11.6% to 20.7% in FY17 across the Australian operations.
The retail franchise operations performed well in 2017
despite declining airfare prices in both the international and
domestic air travel markets. Total airline ticketing volumes
continued to grow across the retail networks showing
consumer demand remains strong, however TTV and revenue
were negatively impacted by declining airfare prices.
Helloworld.com.au recorded a positive turnaround after
exiting the unprofitable Orbitz agreement and following a
realignment of the strategy to complement the bricks and
mortar service of Helloworld Travel agents. The Helloworld
Business Travel network of agents performed strongly by
leveraging its unique offerings with its global presence
through Globalstar and major partners such as Serko
and Amex, all of which provide a key value proposition to
independent corporate travel management companies.
Helloworld Travel has built a network of high performing
brand-carrying and independent agents. In May 2017, the
Helloworld brand evolution continued with the rebranding
to ‘Helloworld Travel – The Travel Professionals’ and a new
store look for fully branded outlets being well received by
members, gaining immediate traction in the market. In June
2017, eight stores converted to fully branded Helloworld
Travel outlets, the first since the rebrand. This success is
strong validation of the strength of the Helloworld Travel
network of expert travel agents and the franchise model
value proposition.
Retail and corporate member numbers in Australia have
grown to 1,715 at 30 June 2017, an increase of 292 since
June 2016, led by the strategic acquisition of MTA providing
helloworldlimited.com.au Helloworld Travel with a significant footprint into the home
based travel agent sector which is expected to see high
growth in the short-medium term.
The Group’s digital offering, helloworld.com.au, was re-
launched in September to extend the agent customer reach,
to grow the networks profile and to provide a booking
portal to compliment the bricks and mortar presence
of the Helloworld Travel agents. The website offers the
convenience of both researching and booking online,
an agent finder for customers to locate their nearest
Helloworld Travel agent and the most up to date offerings
throughout the networks.
The Group has continued to sharpen the focus on advertising
and promotions, increasing activities during the year. The
focus has been on offering unique and exclusive product,
improving brand awareness and corporate growth through
new sponsorships with Basketball Australia, Volleyball
Australia and the Carlton Football Club.
The Group owns and operates an air ticketing operation,
Air Tickets, which services both the Helloworld Travel
network of agents and over 600 independent travel agents.
Air Tickets operates in all Australian states with world
class 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. The business has seen significant growth
during the year with total transactions processed increasing
by more than 20%, to the highest level recorded.
The Australian wholesale & inbound operations have
performed strong during the year. The key focus has been
the continued integration of Helloworld Travel and AOT
businesses to benefit from economies of scale and improve
productivity efficiencies. Revenue margins have improved
reflecting the full year impact of the higher margins derived
from the AOT businesses and improved product offerings
in the underlying businesses. Costs remain well controlled
with the further identification of opportunities between the
existing Helloworld Travel and AOT brands to deliver further
improved margins and reduced costs.
During FY17, the wholesale operations expanded product
offerings to better meet agent needs including the launch of
a new China program, dedicated Canada brochure, increased
Australian product range and new Qantas Holidays ‘Luxury
Collection’ Maldives brochure. In addition, new destinations
and brochures are being continually assessed to further
enhance the product range.
Other key initiatives included the roll out of a new online
booking tool, introduction of Sunday trade for Qantas
Holidays, a 24/7 call centre service for customer care and
booking queries providing support to agencies trading over
the weekend, and the release of an enhanced Ready Rooms
accommodation portal, that provides a more comprehensive
product range and easier booking process.
In July 2016, QBT successfully completed the transition
of the Whole of Australian Government (supporting 142
Australian Government Agencies) business secured in FY16.
This positive momentum has continued into 2017 with the
successful implementation and delivery as the sole provider
of travel management services for the whole of Northern
Territory Government including the opening of a new office
in Darwin. QBT was also successful in winning the PwC
Australia account which commenced operation in October
2016. The QBT team is focussed on driving future business
growth and expansion opportunities, while achieving
productivity efficiencies achieved through investment
in technology innovation and automation throughout the
business. In addition, QBT has become the first carbon
neutral travel management company in the Australia
Pacific region.
AOT Hotels in conjunction with QBT has been appointed
the Accommodation Program Manager for the Northern
Territory Government. The transition of agencies to book
via AOT Hotels commenced in FY17 and will occur
progressively during FY18.
In August 2017, AOT Hotels successfully re-tendered
for the Whole of Australian Government contract for
accommodation program management. The new contract
is for a period of 3 years with further extension options
of up to 3 years subject to satisfactory delivery of the
contract services. It also includes, for the first time,
international accommodation requirements as well as
domestic requirements.
The Australia segment was well recognised at the July
2017 National Travel Industry Awards, with Helloworld
Travel named Best Travel Agency Group, Sunlover Holidays
named Best Wholesaler Australia Product and Qantas
Holidays / Viva Holidays named Best Wholesaler –
International Product.
23
New Zealand Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA
Revenue margin
EBITDA margin
The New Zealand segment has retail franchise operations,
Air Tickets, wholesale & inbound, and travel management
businesses. These operations work together to supply
travel products and services to customers and are
supported by shared support functions.
In New Zealand, the Group has a range of retail operations
acting as a franchisor of retail travel agency networks
including Helloworld Travel Branded and Helloworld
Travel Associate, My Travel Group and The Travel
Brokers network. The retail operations also include a
ticketing division, Air Tickets, and the online channel,
helloworld.co.nz.
The Group’s wholesale businesses, Go Holidays, procures
air, cruise and land product for packaging and sale
through retail travel agency networks and other third
party retailers. The Group’s inbound businesses of ATS
Pacific and AOT New Zealand offers travel services to
clients in 73 countries worldwide.
The Group’s APX business provides corporate travel
management services to corporate and government
customers throughout New Zealand including booking
flights and accommodation.
FY17
$’000
848,997
60,525
(54,307)
6,218
7.1%
10.3%
FY16
$’000
820,809
52,610
(50,720)
1,890
6.4%
3.6%
Change
$’000
28,188
7,915
(3,587)
4,328
0.7%
6.7%
Change
%
3.4%
15.0%
(7.1%)
229%
10.9%
186%
The New Zealand segment generated TTV of $849.0
million for the year ended 30 June 2017, representing
an increase of 3.4% compared with the prior year. The
increase primarily reflects the strong sales through
the network of the Group’s GO Holidays products,
which in turn can be attributed to the increase in sales
coming from the conversion of businesses carrying the
Helloworld brand. Revenue increased by 15.0% to $60.5
million mainly reflecting sales growth and improved
revenue margins from Go Holidays and the full year
inclusion of the New Zealand Inbound business that was
incorporated into this segment following the merger
with the AOT Group. Operating costs increased by 7.1%
to $54.3 million due to the increase in costs associated
with agent rewards and retention, partially offset by
productivity gains from centralisation of key functions.
The New Zealand segment generated EBITDA of
$6.2 million, which is a $4.3 million or a 229% increase
on the prior year result of $1.9 million. Prior year EBITDA
included $1.6m of one off significant item costs relating
to the rebranding to Helloworld.
helloworldlimited.com.au The revenue margin for the year increased from 6.4% to
7.1% due to the contribution of the inbound business and
the strong margin growth in Go Holidays. EBITDA margin
increased from 3.6% to 10.3% reflecting strong TTV
and revenue margin improvement. The increased costs
to support the revenue growth have been partially offset
by lower costs from productivity improvements, cost
structure re-sizing and reduced one off costs with the
FY16 rebranding.
Retail franchise operations TTV and revenue margins
were relatively stable compared with prior year, which
is a significant achievement given the departure of the
previously resigned 37 United Travel stores to another
retail brand. The New Zealand retail market faced similar
challenges to Australia with air fare prices falling by 13%
impacting TTV growth during the year, however this was
offset by growth in overall ticket volumes and an increase
in retail network members.
Retail and corporate member numbers in New Zealand
have grown to 300 as at 30 June 2017, an increase
of 57 since June 2016. This growth has been across
branded, associated and the My Travel Group network.
The My Travel Group network has grown by 62% during
the year as has the newly created associate network
with the World Travellers Group joining this network in
October 2016, adding significant TTV volumes across
air, wholesale and third party suppliers. During FY17,
the former independent buying group was re-branded to
the My Travel group to align with the Australia branding,
with increased benefits and loyalty programs to those
members who were part of this network.
Helloworld Travel has renewed its advertising and
marketing spend to promote the Helloworld brand since
the New Zealand launch in FY16. This has seen a significant
478% increase in brand awareness since the initial launch
of the brand (TRS Brand Survey) and also prompted
significant enquiry growth in the branded stores.
The New Zealand wholesale & inbound operations have
performed strongly during the year. TTV growth was
generated in the GO Holidays business from the addition
of the World Travellers Group to the Helloworld Travel
network and a significant increase in TTV of ‘in-house’
wholesale brands by the Helloworld Travel retail network.
This growth has been reflected in improved revenue
margins and EBITDA performance. Operating costs
have been well controlled. The wholesale and inbound
operations have benefited from the full year inclusion
of the inbound business, ATS Pacific New Zealand and
the associated economies of scale and product offering
following the AOT merger.
In September 2016, at the TAANZ NTIA Awards, the New
Zealand wholesale business, GO Holidays, won the award
for Best Wholesale Brand for the third consecutive year.
In corporate travel management, the APX business has
remained stable despite difficult trading conditions in
the market reflecting strong competition and low air fare
prices. It has been able to resize its cost base through
productivity and structural changes. APX continues
to invest in technology solutions to provide increased
customer service offerings and improved productivity
efficiencies, this includes the recent launch of the Serko
SME online booking tool under the APX brand.
25
Rest of World (ROW) Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA
Revenue margin
EBITDA margin
FY17
$’000
114,507
22,305
(23,656)
(1,351)
19.5%
(6.1%)
FY16
$’000
125,686
23,735
(26,345)
(2,610)
18.9%
(11.0%)
Change
$’000
(11,179)
(1,430)
2,689
1,259
0.6%
4.9%
Change
%
(8.9%)
(6.0%)
10.2%
48.2%
3.2%
44.5%
This segment consists of Insider Journeys (operating in
South East Asia), Tourist Transport Fiji (TTF) and Qantas
Vacations in North America, in addition to the ATS Pacific
inbound business in Fiji.
The ROW segment generated TTV of $114.5 million for the
year ended 30 June 2017, representing a decrease of 8.9%
compared with the prior year. Revenue decreased by 6.0% to
$22.3 million. The decline in TTV and revenues was primarily
a result of refocussing the distribution method used in the
Insider Journey’s business back to its traditional wholesale
market, instead of the direct to consumer market.
The ROW segment generated negative EBITDA of
$1.4 million, whist this is a trading loss, it represents
a significant improvement from the prior year position
of negative EBITDA of $2.6 million. The Group has
significantly re-sized the cost base of Insider Journey’s
and will continue to drive improved performance in all
these businesses.
The revenue margin for the year increased from 18.9% to
19.5% due to the strong contribution from ATS Pacific and
the EBITDA margin also improved reflecting the reduced
operating cost base.
As noted above, Insider Journeys performance did not
meet expectations, impacted by increased competition
for primary destinations with aggressive pricing and
heavy discounting eroding sales and margin. However, the
brand has completed a strong turnaround from prior year
with a change in customer focus back to its traditional
wholesale market. There has also been a significant focus
on cost base restructure, identifying group synergies and
productivity efficiencies. Alignment of business systems
with the other Helloworld Travel wholesale brands has
been actioned and is expected to provide significant
future benefits.
The USA based Qantas Vacations business focus has
benefited from the realignment of the cost base and
driving TTV growth through the restructure of the sales,
advertising & promotions teams to increase exposure
and coverage across all major accounts in the region.
The Group’s Fiji based business, ATS Pacific (Inbound)
and TTF Fiji (Transport) have been boosted by the increase
of incoming passenger numbers from strong cruise ship
arrival growth into Fiji which looks set to continue into the
next year.
helloworldlimited.com.au Outlook
The Group’s focus in the 2018 year will be on growing
revenue and margins and continually extracting
efficiencies in its operations and right sizing the cost
base of the organisation.
Helloworld Travel is focused on delivering for
shareholders, agents, partners and consumers. Helloworld
Travel’s priority remains to future proof its agents and
the business through technology, training, product and
profile supported by the omni-channel strategy. Great
progress has already been made in positioning agents
and the business for success through a growth in revenue
from enhanced advertising and product offerings, a focus
on cost containment, improvements to brand positioning,
productivity gains and margin optimisation.
The merger of Helloworld Limited and The AOT Group
during 2016 allowed senior management to assess and
identify a series of operational and financial synergies.
The benefits of these synergies were actioned in the
financial year ended 30 June 2017 and will continue
to generate benefits in future years. The Company has a
strong balance sheet, a stable network of high performing
agents and a growing and strategic online presence.
The Group expects to improve its current year
performance in the year ended 30 June 2018 and is
well positioned for sustainable long term growth.
Business risks
There are a number of factors, both specific to Helloworld
Travel and of a general nature, which may impact the
future operating and financial performance of the Group.
The specific material risks faced by Helloworld Travel and
how these risks are managed, are set out below:
Demand risk
The Group 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 prices, 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, the Group 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 business, a significant amount of
international travel product is sold in local currency while
suppliers are paid in foreign currencies. In order to mitigate
the resulting exchange fluctuation risk, Helloworld Travel
has a hedging policy and enters into forward exchange
contracts to match expected future cash flows.
Key customers and suppliers
Changes in key customers and suppliers could have
an impact on the financial results of the Group. This
risk is mitigated by ensuring, where possible, formal
agreements are in place and by working closely with
key customers and suppliers to ensure that Helloworld
Travel responds to any changes in their economic
circumstances or business requirements.
Technological advances
Advances in technology means that Helloworld
Travel is always modifying the way it does business.
Technological advances could have an impact on the
financial results should Helloworld Travel not continue
to invest in systems development. The Group 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 the Group 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.
Agent Network
The Group derives revenue from sales through its Agent
Network. Movements in and out of the network may impact
on revenues and costs. This risk is mitigated by the size
of the networks, their geographical spread and our close
management, monitoring and engagement of our members.
27
People
At 30 June 2017, the Group had 1,786 Full Time
Equivalent (FTE) employees. This was a decrease of 125
from the 1,911 FTE at 30 June 2016. The decrease has
been driven by a continual focus to right size the cost
base to align with business revenue and product offering.
Employee expenditure for the year ended 30 June 2017
increased by $5.8m or 4.3% to $139.8m, reflecting the
full year impact of the AOT business inclusion partially
offset by the reduction in FTE.
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 and the United Kingdom.
The regional analysis and breakdown by country is below:
Australia
1,023.8 (57.3%)
New Zealand
403.4 (22.6%)
Fiji
India
Vietnam
USA
Other
152.6 (8.5%)
71.0 (4.0%)
61.0 (3.4%)
52.0 (2.9%)
22.0 (1.2%)
Capital structure
At 30 June 2017, Helloworld Travel Limited had
120,204,418 shares on issue of which the Executive
Directors, Andrew Burnes and Cinzia Burnes, along with
their Director related entities, owned 36.6%. Sintack Pty
Limited and its associates held 18.4%, QH Tours Limited
(a subsidiary of Qantas Airways Limited) held 17.7%, with
the remaining 27.4% being held by other shareholders
including management.
During the current year, the number of shares increased
by 10,366,000 shares reflecting the following:
• Issue of 7,000,000 shares via book build placement to
fund the 50% purchase of Mobile Travel Holdings Pty
Ltd and its controlled entities (MTA) and repay long
term debt;
• Issue of 2,600,000 shares under the long term
incentive plan to certain senior managers;
• Issue of 666,000 shares as a performance and loyalty
bonus for franchisees; and
• Issue of 100,000 shares as part consideration for the
purchase of two cruise businesses.
Significant events after the
balance date
With the exception of the item listed below, the Directors
are not aware of any matter or circumstance that has
arisen in the interval between 30 June 2017 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
On 23 August 2017, the Directors resolved to pay a 100%
franked final dividend of 8.0 cents per fully paid share.
Likely developments
The Group’s focus in the 2018 year will be on growing
revenue and margins and continually extracting
efficiencies in its operations 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.
helloworldlimited.com.au 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.
Insurance premiums
The Company has paid insurance premiums of $129,772
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.
29
HELLOWORLD TRAVEL LIMITED - BRAND PORTFOLIO
Retail - Australia/NZ
DMC - Australia, NZ, SPAC & Asia
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helloworldlimited.com.au
LETTER FROM THE REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholder,
On behalf of the Board, I am pleased to present Helloworld Travel Limited’s Remuneration Report for 2017.
The 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 2017
Last year, the Board advised that all executive Key Management Personnel (KMP) would have their remuneration
packages re-baselined to allow them to participate in a Long Term Incentive Plan (LTIP), but receive no short term
incentive. As a result the Board determined that no short term incentives will be awarded to any KMP for the year ended
30 June 2017.
Changes to executive remuneration in 2017
During the 2017 year, the responsibility of the Group General Manager, New Zealand was reviewed in the context of how
the overall business was managed. Accordingly, the Group General Manager, New Zealand has been included as a KMP,
effective from 1 July 2016.
The Board believes the current remuneration strategy ensures the appropriate framework to drive long term
performance and aligns executive reward with shareholders’ interests.
The Board has continued its commitment to its new LTIP program, consisting of a loan-based share plan implemented,
directly linked to Total Shareholder Return (TSR) for executive KMP. We are confident that the LTIP program
complements 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 2017 Annual General Meeting.
Yours faithfully
Garry Hounsell
Chairman of the Remuneration Committee
Chairman of Helloworld Travel Limited
31
REMUNERATION REPORT
(AUDITED)
This 2017 Remuneration Report outlines the remuneration arrangements for the Key Management Personnel (KMP)
of the Helloworld Travel Limited 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 KMP 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 2017
2.2 Executive remuneration
2.3 Loan funded long term incentive plan
2.4 Historical LTIP
2.5 Executive shareholdings
2.6 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
helloworldlimited.com.au
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 Travel
Limited 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
Garry Hounsell (appointed 4 October 2016)
Chairman and Non-Executive Director
Mike Ferraro (appointed 1 January 2017)
Andrew Finch (appointed 1 January 2017)
Peter Spathis
Non-Executive Directors
Non-Executive Director
Non-Executive Director
Non-Executive Director
Rob Marcolina (resigned 31 December 2016)
Non-Executive Director and Acting Chairman
Andrew Cummins (retired 22 November 2016)
Non-Executive Director
Executive Directors
Andrew Burnes
Cinzia Burnes
Executive KMP
Michael Burnett
Russell Carstensen
Simon McKearney (effective 1 July 2016)
1.2 Remuneration governance
Chief Executive Officer and Managing Director
Group General Manager, Wholesale & Inbound and
Executive Director
Chief Financial Officer and Group Company Secretary
Group General Manager – Corporate
Group General Manager – New Zealand
The Remuneration Committee of the Board is responsible for reviewing remuneration arrangements and making
recommendations to the Board in respect of the directors and KMP executives. The Remuneration Committee assesses
the nature and amount of remuneration of Directors and KMP 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 KMP 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 Remuneration Committee considers advice from
external consultants from time to time and reviews market levels of remuneration for comparable Directors and KMP
executive roles.
33
1.3 KMP Executive remuneration framework
The Group aims to reward KMP 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 for KMP executives embodies the following principles:
• provide competitive rewards to attract and retain high calibre executives;
• have a portion of executive 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 KMPs 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 into 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 Group’s 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 FY17 remuneration components is as below:
Executive Remuneration Mix
CEO and
Managing Director
Group General Manager, Wholesale &
Inbound and Executive Director
100%
100%
CFO and Group Company Secretary
78%
22%
Group General Manager – Corporate
Group General Manager –
New Zealand
92%
90%
8%
10%
0%
20%
40%
60%
80% 100%
Fixed Remuneration LTIP
helloworldlimited.com.au
1.5 Remuneration changes for 2017
Short Term Incentive Plan (STIP)
There was no STIP for any KMP for the year ended 30 June 2017 and any KMP who had STIP plans under previous
arrangements have ceased.
Long Term Incentive Plan (LTIP)
A new LTIP was implemented in 2017 to a targeted group of senior leaders including executive KMP. The 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 replaced any previous short term incentive programs for our KMP. The CEO and Group General Manager,
Wholesale & Inbound do not participate in the LTIP;
• The threshold performance criteria is directly linked to Total Shareholder Return and provides reward on successful
marked improvement of Helloworld Travel’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 was for a three year period. It is currently not envisaged that participants who received a grant
in 2017 will receive further grants prior to the 2017 grant vesting or expiring.
This scheme replaces the previous LTIP program involving performance rights, which was in place for a certain number
of Helloworld Travel senior leaders including executive KMP.
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 upon the vesting of shares.
Refer to note 31 share based payments in the financial statements for further details on the nature of the LTIP. For
the LTIP scheme, the Board will have sole discretion about what happens to the shares on any change of control event.
Legacy LTIP Performance Rights
During the year one KMP was still a participant in the legacy LTIP Performance Rights Plan (PRP). The last of these
legacy performance rights (2015 Tranche 3 performance rights) lapsed in the performance period ended 30 June 2017,
refer section 2.4 for further details.
35
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2017
The table below provides relevant Group performance information for the key financial measures over the last five years;
Net profit / (loss) after tax (NPAT)
21,591
1,676 (201,111)
(63,243)
16,360
Earnings before interest expense, tax, depreciation and amortisation
(and impairment in FY15/FY14) (EBITDA)
55,179
25,290
24,051
40,561
54,141
2017
$’000
2016
$’000
2015
$’000
2014
$’000
2013
$’000
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Basic earnings / (loss) per share (EPS cents)
Total dividends declared (cents per share)
Opening share price at 1 July ($)
Closing share price at 30 June ($)
Total shareholder return (%)
2017
2016
2015
2014
2013
18.8
14.00
3.08
4.04
1.9
2.00
2.16
3.08
(274.0)
(86.3)
22.08
-
1.68
2.16
-
1.98
1.68
9.00
2.22
1.98
33.8%
42.6%
28.6% (15.2%)
(6.8%)
In FY17, key metrics including EBITDA, NPAT and Basic EPS have significantly increased from the prior year reflecting
the strong current year business performance and successful turnaround of the Helloworld Travel business after its
merger with the AOT Group in February 2016. No STIP was awarded in 2017 as executive KMP incentives are aligned
to long term performance and strategy via the LTIP.
helloworldlimited.com.au 2.2 Executive remuneration
Short term benefits
Salary
($)
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
2017
2016
455,384
202,873
-
-
-
-
7,392
3,165
19,616
8,045
C Burnes (Group General Manager – Wholesale & Inbound and Executive Director)
Appointed 1 February 2016
2017
2016
455,384
202,873
M Burnett (CFO)
Appointed 11 April 2016
2017
2016
425,000
95,952
-
-
-
-
R Carstensen (Group General Manager – Corporate)
2017
2016
468,765
-
549,541
233,855
-
-
-
-
-
-
7,392
3,165
19,616
8,045
-
-
19,616
4,023
8,625
28,459
19,616
19,308
S McKearney (Group General Manager – New Zealand)
KMP effective 1 July 2016
2017
319,908
-
-
-
9,597
E Gaines (Former CEO and Executive Director)
Resigned 19 December 2015
2016
299,217
-
187,883 (15,955)
14,481
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128,333
-
43,613
(44,322)
-
-
-
-
-
-
-
-
482,392
214,083
482,392
214,083
572,949
99,975
540,619
786,841
-
-
-
-
22.4%
-
8.1%
24.1%
38,500
-
368,005
10.5%
-
51,978
537,604
-
J Macdonald (Former CFO)
Resigned 28 April 2016
2016
440,158
-
168,881
P Egglestone (Former Head of Wholesale)
Replaced on KMP by C Burnes on 1 February 2016)
2016
163,892
G Leighton (Former CEO New Zealand)
Resigned 31 December 2016
2016
163,524
-
-
-
968
-
-
-
-
-
2017 TOTAL
2016 TOTAL
2,124,441
2,118,030
233,855
357,732
23,409
18,834
88,061
82,864
17,699
-
(77,050)
143,535
693,223
(11.1%)
11,263
-
(61,451)
-
114,672
(53.6%)
-
-
-
(36,355)
224,016
351,185
(10.4%)
210,446
- 2,446,357
- (219,178)
419,529 3,011,666
The proportion of remuneration that is performance based was calculated as the sum of the STIP bonus and LTIP
share-based payments as a proportion of total remuneration.
During FY17, Mr Carstensen’s base salary has been recalibrated as part of the review of executive remuneration and
was re-set to $450,000 per annum from 1 September 2016.
During FY16, as Group General Manager – Air Services and QBT, Mr Carstensen was awarded a FY15 STIP that was
paid in FY16. No STIP was awarded in FY17 and no STIP arrangement exists for any current KMP.
During FY16, former CEO, Ms Gaines was awarded a bonus in relation to the completion of the merger with the
AOT Group. Former CFO, Ms Macdonald, was paid an additional amount in relation to additional duties performed
and relation to the completion of the merger with the AOT Group. These are disclosed as “other – short term benefits”
in the table above. No bonuses were awarded for any KMP in FY17.
37
2.3 Loan funded long term incentive plan
As described at section 1.5, a new LTIP plan was established during the year. The overall objectives of the LTIP are to
lock in our key leaders for an extended period of time, whilst at the same time, incentivising them to generate superior
long term returns to shareholders.
The shares were issued and allocated under the plan to KMP at the start of FY17 at the market value at that time of
$3.00 per share. A loan was provided to each KMP participant equal to the number of shares issued at $3.00, amounting
to $2,700,000. The loan is to be repaid to Helloworld Travel after vesting conditions are met and can be repaid up until
1 July 2026 with any dividends offset against the loan value until the loan is repaid. If the KMP sells the shares after
vesting, the proceeds are firstly used to repay the loan, with any balance retained by the KMP. The loan is interest free
and non-recourse. The CEO and Group General Manager, Wholesale & Inbound do not participate in the LTIP.
The allocation of the LTIP to eligible KMP was as follows:
Name
Role
Number of
shares granted
Loan value
at grant date
Fair value
of instrument
at grant date
Loan value as
at 30 June 2017
M Burnett
Chief Financial Officer
500,000
$1,500,000
$385,000
$1,478,182
R Carstensen
Group General Manager –
Corporate
Group General Manager –
S McKearney
New Zealand
TOTAL
250,000
$750,000
$192,500
$739,071
150,000
900,000
$450,000
$2,700,000
$115,500
$693,000
$443,443
$2,660,696
The shares have a 3 year performance period from 1 July 2016 to 30 June 2019, with vesting date of 1 July 2019.
The vesting of the shares are subject to both market and non-market conditions being met. If the employee leaves
the Group, or the conditions are not met prior to the vesting date, the shares will be cancelled and the loan extinguished.
The fair value of the instrument was $0.77 per share, amounting to $693,000 on the 900,000 shares granted. This
amount will be amortised over its 3 year vesting period as a share based payment expense. The fair value is calculated in
accordance with applicable Australian Accounting Standards, using a version of the Black Scholes model incorporating
Monte Carlo simulation analysis to value the loan share instruments thus incorporating the market-based performance
conditions attached to the loan share instruments.
2.4 Historical LTIP
The last tranche (2015 – Tranche 3) of the former LTIP program involving performance rights lapsed during the year
ended 30 June 2017. Awards of performance rights were made under the legacy LTIP for the years ended 30 June 2011
to 30 June 2015 inclusive however none were made in the year ended 30 June 2016 nor 30 June 2017. The former LTIP
involving performance rights has now ceased with no further grants to be made under this program.
Mr Carstensen was the only KMP who had unvested performance rights under this legacy LTIP. The 16,790 performance
rights granted to Mr Carstensen on 25 February 2015 as part of 2015 Tranche 3, lapsed on 30 June 2017 as they did not
meet the vesting conditions for exercise.
helloworldlimited.com.au 2.5 Executive shareholdings
The number of shares in the company held during the financial year by executive 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
Longbush Nominees Pty Ltd as trustee for the Burnes
Superannuation Fund
M Burnett
R Carstensen
S McKearney
TOTAL
Number of
shares at
1 July 2016
12,828,654
12,638,014
18,480,105
-
-
84,246
-
Additions
29,404
-
-
10,000
-
-
-
44,031,019
39,404
Granted
under LTIP
-
-
-
-
500,000
250,000
150,000
900,000
Number of
shares at
30 June 2017
12,858,058
12,638,014
18,480,105
10,000
500,000
334,246
150,000
44,970,423
Mr Burnes and Mrs Burnes each have a beneficial interest in The Burnes Group Pty Limited which acts as the Trustee of
The Burnes Group Service Trust. Mr Burnes and Mrs Burnes also have an interest in Longbush Nominees Pty Ltd which
acts as the Trustee of the Burnes Superannuation Fund of which they are both members.
Shares granted under the 2017 LTIP to KMP, amounting to 900,000 shares, have been detailed in section 2.3.
2.6 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
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
A Burnes
CEO and Managing Director
6 months
6 months
In accordance with normal statutory entitlements
Group General Manager - Wholesale
C Burnes
& Inbound and Executive Director
6 months
M Burnett
CFO
6 months
R Carstensen Group General Manager - Corporate 3 months
6 months
6 months
3 months
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
Group General Manager -
S McKearney
New Zealand
3 months
3 months
In accordance with normal statutory entitlements
39
3 NON-EXECUTIVE DIRECTOR REMUNERATION
3.1 Non-Executive Director remuneration governance
As detailed in section 1.2, the Remuneration Committee 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. A break down of director fees is below.
Role
Fee
Summary
Chairperson
$175,000
The payment of the higher fee to the Chairman recognises the additional time
commitment required and also covers all Board Committee fees.
Non-Executive Director
$100,000
Fee paid in recognition of time commitment and service to the Group’s Board.
Committee Fee
$10,000 (Chairman of Audit
Additional fee to Non-Executive Directors for serving on or chairing one
& Risk Committee receives
or more Committees. A committee fee is not paid to the Board Chairman.
$25,000)
The Directors’ fees have not increased since 1 July 2011 and there is no intention to increase the individual director
fees for the year ended 30 June 2018. Non-Executive Directors do not receive any performance related remuneration
or retirement allowances. The remuneration of Non-Executive Directors for the years ended 30 June 2017 and 30 June
2016 is detailed in the following statutory table. The process for review of Non-Executive Directors’ performance is
explained in the Corporate Governance Statement.
helloworldlimited.com.au 3.3 Non-Executive Director remuneration
NON-EXECUTIVE DIRECTOR
G Hounsell (Chairman) - appointed 4 October 2016
2017
P Spathis
2017
2016
M Ferraro - appointed 1 January 2017
2017
A Finch - appointed 1 January 2017
2017
R Marcolina (Former Acting Chairman)
2017
2016
A Cummins (Former Non-Executive Director)
2017
2016
B Johnson (Former Chairman)
2016
A John (Former Non-Executive Director)
2016
J Millar (Former Non-Executive Director)
2016
J McKellar (Former Non-Executive Director)
2016
2017 TOTAL
2016 TOTAL
Short-term benefits
Cash salary
($)
Post-employment
benefits
Superannuation
($)
Other
($)
Total
($)
130,577
100,457
97,032
62,500
-
55,000
87,083
39,925
100,457
-
-
-
-
-
-
-
-
-
12,405
142,982
9,543
9,218
5,938
-
-
-
3,793
9,543
110,000
106,250
68,438
-
55,000
87,083
43,718
110,000
100,455
180,000
10,260
290,715
22,917
64,326
38,052
388,459
510,322
-
-
-
-
180,000
-
22,917
6,111
3,615
31,679
38,747
70,437
41,667
420,138
729,069
On 1 January 2017, Mr Finch was appointed to the Board. By agreement, no fees were paid to Mr Finch or Qantas
Airways Limited in relation to his directorship. Amounts in the above table in relation to Mr Marcolina and Mr John were
paid to Qantas Airways Limited.
During 2016, Mr Johnson was paid an additional one off payment of $180,000 in recognition of his additional
contribution to the Group during the leadership transition involving the Helloworld Limited merger with the AOT Group.
3.4
Non-Executive Director shareholdings
NON-EXECUTIVE DIRECTOR
G Hounsell (Chairman)
M Ferraro
A Finch
R Marcolina (Former Acting Chairman)
A Cummins (Former Non-Executive Director)
P Spathis
TOTAL
Number of shares
at 1 July 2016
-
-
-
-
158,833
83,333
242,166
Additions
59,000
-
-
-
-
-
Removal as no
longer KMP
-
-
-
-
(158,833)
-
59,000
(158,833)
Number of
shares at
30 June 2017
59,000
-
-
-
-
83,333
142,333
This concludes the remuneration report, which has been audited.
41
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.
Garry Hounsell
Chairman
Helloworld Travel Limited
Melbourne, 23 August 2017
The Directors received the declaration of independence
on page 43 from PricewaterhouseCoopers, the auditor of
Helloworld Travel. 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 43 and forms part of the Directors’ Report for
the financial year ended 30 June 2017. Details of the
amounts paid to PricewaterhouseCoopers, for audit and
non-audit services are set out in note 22 of the Financial
Statements on page 83 of the Financial Report.
helloworldlimited.com.au Auditor’s Independence Declaration
As lead auditor for the audit of Helloworld Travel Limited for the year ended 30 June 2017, I declare
that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Helloworld Travel Limited and the entities it controlled during the
period.
Andrew Cronin
Partner
PricewaterhouseCoopers
Melbourne
23 August 2017
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
43
CORPORATE
GOVERNANCE
STATEMENT
Overview
The Board of Helloworld Travel 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 Company. The Company 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 23 August 2017.
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 existing
directors prior to the Board’s decision to appoint them.
helloworldlimited.com.au
To ensure that Directors clearly understand the
requirements of the role, a formal letter of appointment
including terms, conditions and responsibilties of the role
are provided to them.
Further details regarding the Directors’ qualifications,
special responsibilities, skills, experience and expertise
(including the period of office held by each Director) is
set out in the Directors’ Report on pages 10 to 13.
Senior executive performance
Director Independence
With the assistance of the Remuneration Committee, the
Chairman undertakes an annual review of the performance
of the CEO against key performance indicators.
The CEO reviews the performance of their direct reports
against key performance indicators and reports this to
the Remuneration Committee.
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 six Directors
appointed to the Board.
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 existing
directors to develop and maintain the skills and knowledge
required to effectively perform their role as directors.
Board Skills Matrix
Travel Industry Experience - Australia
Travel Industry Experience - International
Franchise Operations
Technology & Digital Economy
Brand Development, Marketing
Governance & Compliance
Listed Company Experience
Relationship/Stakeholder Management
Remuneration, Human Resources
Legal
Wide Industry Experience
Financial Experience
Strategic Planning & Risk
Health & Safety
Number out
of 6 directors
5
5
3
1
3
5
5
6
6
3
2
4
6
6
As at 30 June 2017, based on the factors relevant to
assessing the independence of directors included in the
ASX CGP, two Directors, Garry Hounsell and Mike Ferraro,
are deemed to be independent.
The remainder of the Board is not independent for the
following reasons:
• Andrew Finch is an executive of Qantas Airways
Limited, the ultimate holding company of QH Tours Ltd,
a substantial shareholder of Helloworld Travel Limited
and a company having a material business relationship
with the Company 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 Travel Limited;
• Andrew Burnes is the Company’s Chief Executive
Officer and Managing Director, and a substantial
shareholder of the Company; and
• Cinzia Burnes is the Company’s Group General Manager
- Wholesale and Inbound, Executive Director 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 10 to 13.
Independent Decision Making
During the reporting period, the role of Chairman was
held by Rob Marcolina until 4 October 2016 and from that
date by Garry Hounsell. Mr Hounsell is an independent
director of the Company.
During the year to 4 October 2016, the Board considered
Mr Marcolina the director best qualified to fulfil the role
as Chairman notwithstanding he was not independent,
whilst undertaking the process of appointing an
independent Chairman. During this time 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.
45
QH Tours Ltd and Sintack Pty Ltd 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.
As Executive Directors, Mr Burnes in his role as CEO
and Managing Director and Mrs Burnes in her role as
Group General Manager - Wholesale and Inbound, are
not considered by the Board to be Independent Directors.
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 composition of the Board which is regarded
as balanced with a complementary range of skills,
diversity and experience as detailed in the Directors’
Report; and
• the Independent Directors providing an element of
balance as well as making a considerable contribution in
their fields of expertise.
The following measures are in place to ensure the
decision making process of the Board is subject to
independent judgement:
• a standing 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
• the directors meet regularly without management
present.
Adoption of these measures ensures that the interests
of shareholders, as a whole, are not jeopardised by a lack
of independence.
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.
Nominations and Governance Committee
On 28 October 2016 a separate and stand-alone
Nominations & Governance Committee was established.
The former Remuneration and Nominations Committee’s
specific responsibilities in relation to the nomination,
appointment and re-election of directors were taken up
by this new committee and are set out in the Nominations
and Governance Committee’s charter, which is available
in the Corporate Governance section of the Company’s
website.
The remuneration responsibilities of the Remuneration
and Nominations Committee were retained by this
Committee and it was renamed the Remuneration
Committee.
From 28 October 2016, the following Non-Executive
Directors were members of the Nominations and
Governance Committee:
• G Hounsell (Chairman)
• R Marcolina (until 31 December 2016)
• A Burnes
• C Burnes
• P Spathis
• M Ferraro (from 1 January 2017)
• A Finch (from 1 January 2017)
The terms of reference, role and responsibility of the
Nominations and Governance Committee are consistent
with ASX CGP 2.1 except that it does not have a
majority of Independent Directors. The Chairman of the
Committee is an independent director and the Committee
members are considered to have the appropriate
experience to serve on the Committee.
More information regarding the Committee is set out on
page 50 in this Corporate Governance Statement under
the heading ‘Remunerating fairly and responsibly’.
For the year to 27 October 2016, the following Non-
Executive Directors were members of the Remuneration
and Nominations Committee:
• A Cummins (Chairman)
• R Marcolina
Details of these Directors’ qualifications, their
attendance at Remuneration Committee and Nominations
and Governance Committee meetings, and the number of
meetings held during FY17 are set out in the Directors’
Report on pages 10 to 14.
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.
helloworldlimited.com.au 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
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 executives’ 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.
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.
The outcomes from this Board and Committee
performance review were:
• Provide the environment and professional development
opportunities for the relatively new Board to continue
to develop and grow as individual Directors and to
maximise their contribution to the Board functioning
as an effective and cohesive unit as they continue to
work together; and
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 CGP 3.
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
• Consider further measures the Board can adopt to
for Board vacancies;
maximize director participation in Board discussions
while appropriately managing potential conflicts
of interest.
An assessment of individual Director’s performance was
undertaken during the year. This assessment consisted
of a self-assessment questionnaire completed by each
Director and an individual discussion with the Board
Chairman. The assessment and discussion in relation
to the Chairman’s performance was undertaken by the
Chairman of the Audit & Risk Committee.
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.
• 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;
and
• 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.
The Group 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 three
months, invitations to staff functions, morning teas
to keep in touch and refresher courses offered where
required.
During the 2017 financial year, three new Directors were
appointed, including a new Chairman, with two Directors
retiring. A transparent selection process was undertaken
to fill the Board vacancies. As the three new Board
appointments were male this had the impact of reducing
the proportion of females on the Board. During the
2017 financial year, there were no changes of personnel
47
reporting to the CEO and therefore the level of gender
diversity has remained at 30 June 2016 levels.
Share trading
The Company recognises the importance and prominence
of diversity across Australian workplaces and accordingly
the Board has agreed to a Diversity Plan for the 2018
financial year that encompasses:
• The Helloworld Travel Reconciliation Action Plan
which is designed to:
- Attract and retain indigenous employees
- Develop indigenous support through training
• Building an Inclusive culture through:
- Identifying and removing unconscious bias
- Enhancing employee health and wellbeing programs
- Reviewing employment flexibility options and
offerings
• Increasing gender diversity through:
- Increasing the number of women on the Board, when
possible
- Developing internal career pathways for women to
progress into senior roles
Helloworld Travel’s specific goals and actions include:
• Focussing leadership attention on the gender pay
gap through the CEO and leadership team working
together to set targets and timeframes to address
the gender pay gap at the organisation level;
• Reviewing the gender pay gap on an annual basis
to track progress;
• Investigating the development of training sessions
for senior leaders to increase awareness of the types
of unconscious bias within the workplace;
• Reviewing current parental leave program and where
possible ensure policy is consistent across the group;
and
• Emphasis will be placed on seeking female candidates
to fill any vacant Senior Leadership Group positions.
Proportion of women in the organisation
At 30 June there were 1,312 female employees in the
Group representing 70.9 % of the workforce. In addition,
there were 4 female employees representing 30.8 % of
the workforce who report to the CEO and CEO’s direct
reports. There was one female on the Board which
represents 16.7% of the Board.
A Share Trading Policy is in place for directors, senior
executives and employees. The objectives of the policy
are 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 Travel 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 & Risk 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 & Risk Committee:
• Mike Ferraro (Chairman and member from 1 January
2017)
• Andrew Finch (from 1 January 2017)
• Peter Spathis (member for the full year and Acting
Chairman to 31 December 2016)
• Rob Marcolina (until 31 December 2016)
• Andrew Cummins (until 22 November 2016)
The Audit & Risk 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.
From 22 January 2016 until 31 December 2016, Peter
Spathis, a non-independent director served as the
Committee’s acting Chairman until the appointment
of Mike Ferraro as an independent Director and the
helloworldlimited.com.au
Committee’s Chairman on 1 January 2017. The Company
recognises that Mr Spathis’ chairmanship of this
Committee 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.
Details of these Directors’ qualifications and attendance
at Audit & Risk Committee meetings are set out in the
Directors’ Report on pages 10 to 14.
The Board and Audit & Risk 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 Group’s Shareholder Communications Policy
promotes effective communication with the Company’s
shareholders and encourages shareholder participation
at Annual General Meetings. A copy of this Policy, which
deals with communication through the ASX, the Share
Registry, shareholder meetings and the Annual Report,
may be found in the Corporate Governance section of the
Company’s website. All of the Company’s announcements
to the market may also be accessed through the
Company’s website and the Helloworld Travel Limited
Annual Reports since 2007 are posted here.
Copies of each of the Board and Committee 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 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 for the oversight
and management of its material business risks. The
Group takes a proactive approach to risk management.
The Board and Audit & Risk 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;
49
• 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
Information in relation to the economic, environmental
and social sustainability risks facing the Company and
the manner in which these are managed are included in
the Operating and Financial Review on pages 16 to 27
of the Annual Report.
management of the Company’s operations.
Internal Audit
Under the Risk Management Policy, the Audit & Risk
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 & Risk Committee
are set out above in the Integrity of financial reporting
section of this Corporate Governance Statement.
The Company’s Senior Leadership Group (SLG)
also plays a significant role in identifying, assessing,
monitoring and managing risks. The SLG, supported
by the Group’s Risk team, are responsible for assisting
the Audit & Risk Committee to ensure that robust risk
management exists across the organisation. The SLG
ensures that a sufficient level of risk analysis is applied
to critical decisions and provides assurance to the
Audit & Risk Committee that risk processes at all levels
are effective and compliant with the Company’s Risk
Management Policy.
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 be best
able to undertake a particular audit. Areas of focus
for internal audits are identified by reference to the
Company’s risk management framework. The findings and
recommendations generated by the internal audits are
evaluated and reviewed by the Audit & Risk 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, with the findings reported to
the Audit & Risk Committee. The objective of this
internal audit was to review the Company’s PCI
compliance project with a specific focus on the project
scope, approach, compliance, risks and technical
requirements. The outcome of the internal audit was
used to drive improvements in data security and meet
compliance requirements.
8 Remunerating fairly and responsibly
The Group’s remuneration philosophy, objectives and
arrangements are detailed in the Remuneration Report
which forms part of the Directors’ Report.
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.
Directors
The Board has also received from the CEO and CFO a
declaration that, in their opinion, the financial records
of the entity have been properly maintained and that
the financial statements comply with the appropriate
accounting standards and give a true and fair view of
the financial position and performance of the entity and
that the opinion has been formed on the basis of a sound
system of risk management and internal control which is
operating effectively.
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.
Details of the remuneration arrangements for the
Company’s Executive Directors are set out in the
Remuneration Report on pages 32 to 41.
helloworldlimited.com.au Remuneration
The Board has established a Remuneration 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 Committee during the
reporting period are set out in Remuneration Committee
section of this Corporate Governance Statement.
The Remuneration 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
Committee does not have a majority of independent
directors however the Chairman of the Committee is an
independent director. The 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 Committee meetings are set out in the
Directors’ Report on pages 10 to 14.
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.
In 2017, a loan based equity long term incentive plan
(LTIP) was 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.
51
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
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 expense, tax, depreciation and amortisation (EBITDA)
Finance expense
Depreciation and amortisation expense
PROFIT BEFORE INCOME TAX EXPENSE
Income tax expense
PROFIT 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 loss
Deferred tax benefit 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 INCOME/(LOSS) FOR THE YEAR, NET OF TAX
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
PROFIT FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Travel Limited
TOTAL COMPREHENSIVE INCOME FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Travel Limited
Basic earnings per share
Diluted earnings per share
CONSOLIDATED
2017
$’000
2016
$’000
326,433
300,549
(139,820)
(134,065)
Note
2
3
(32,552)
(38,921)
(21,749)
(14,351)
(25,149)
429
859
55,179
(3,066)
(38,086)
(33,905)
(20,754)
(14,065)
(34,763)
379
-
25,290
(3,381)
(21,076)
(18,459)
31,037
(9,446)
21,591
3,450
(1,774)
1,676
-
-
(2,405)
722
407
(108)
(1,012)
(713)
(826)
220
2,329
40
20,878
1,716
81
21,510
21,591
81
20,797
20,878
Cents
18.8
18.4
(23)
1,699
1,676
(23)
1,739
1,716
Cents
1.9
1.9
30
11
4
3
6
32
6
20
20
20
8
8
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Investments accounted for using the equity method
Investment properties
Property, plant and equipment
Intangible assets
Deferred tax assets
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 liabilities1
Provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses1
Equity attributable to the owners of Helloworld Travel Limited
Non-controlling interest
TOTAL EQUITY
1 Comparatives as at 30 June 2016 have been restated, refer to note 1 for further details.
The above statement of financial position should be read in conjunction with the accompanying notes
CONSOLIDATED
2017
$’000
2016
$’000
Note
9
10
11
12
13
14
15
16
17
24
16
18
17
19
20
21
198,070
125,592
164
202,621
134,233
191
323,826
337,045
16,657
175
13,827
283,302
888
268
315,117
638,943
1,563
175
19,560
285,856
1,203
196
308,553
645,598
202,306
220,783
104
14,903
73,367
799
5,879
287
13,830
82,967
1,526
1,419
297,358
320,812
20,253
35,191
3,249
2,988
61,681
359,039
46,352
32,796
3,233
4,007
86,388
407,200
279,904
238,398
395,081
7,150
366,235
163,051
(123,717)
(292,218)
278,514
1,390
237,068
1,330
279,904
238,398
53
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED
BALANCE AT 1 JULY 2015
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
278,755
161,636
(263,014)
Adjustment for change in accounting policy (refer note 1)
-
-
(29,220)
BALANCE AT 1 JULY 2015 - RESTATED
278,755
161,636
(292,234)
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:
Issue of new shares, net of transaction costs
Transactions with non-controlling interest:
Acquisitions
BALANCE AT 30 JUNE 2016
-
-
-
-
87,480
-
-
1,723
1,723
(308)
-
-
1,699
(1,683)
16
-
-
-
366,235
163,051
(292,218)
Non-
controlling
interests
$’000
99
-
99
(23)
-
(23)
Total
equity
$’000
177,476
(29,220)
148,256
1,676
40
1,716
-
-
(308)
87,480
1,254
1,330
1,254
238,398
CONSOLIDATED
BALANCE AT 1 JULY 2016
Profit after income tax expense
Other comprehensive income/(loss)
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
Transfer of predecessor accounting reserve to accumulated losses
Transactions with owners in their capacity as owners net of tax:
Long term incentive plan expensed
Franchise loyalty plan expensed
Issue of new shares, net of transaction costs
28,846
Dividends paid
Transactions with non-controlling interest:
Dividends paid
BALANCE AT 30 JUNE 2017
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Non-
controlling
interests
$’000
Total
equity
$’000
366,235
163,051
(292,218)
1,330
238,398
-
-
-
-
-
-
-
-
-
21,510
(713)
(713)
-
21,510
(156,400)
156,400
531
681
-
-
-
-
-
-
(9,409)
-
395,081
7,150
(123,717)
81
-
81
-
-
-
-
-
21,591
(713)
20,878
-
531
681
28,846
(9,409)
(21)
1,390
(21)
279,904
The above statement of changes in equity should be read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Finance costs paid
Income taxes paid
NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangibles
Payments for property, plant and equipment
Payments for investments in associates
Payments for acquisition of businesses
Net cash acquired from acquisition of controlled entities
Payments for deferred settlement on acquisition of controlled entities
Payments for acquisitions of stores
Proceeds from disposals of investments
Proceeds from disposal of property, plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayment of borrowings
Proceeds of share issue, net of transaction costs
Dividends paid to company shareholders
Dividends paid to minority shareholder
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
Note
CONSOLIDATED
2017
$’000
2016
$’000
3,102,699
2,846,533
(3,069,618)
(2,844,631)
23
11
30
30
30
30
7
2,624
(2,450)
(4,187)
29,068
(7,751)
(2,720)
(14,217)
(664)
-
(731)
-
498
178
3,638
(2,953)
(271)
2,316
(10,444)
(6,014)
-
-
15,040
-
(736)
739
188
(25,407)
(1,227)
-
(26,883)
28,440
(9,409)
(21)
(7,873)
(4,212)
202,621
(339)
32,000
(10,000)
-
-
-
22,000
23,089
176,141
3,391
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
9
198,070
202,621
The above statement of cash flows should be read in conjunction with the accompanying notes
55
NOTES TO THE
FINANCIAL STATEMENTS
1. Basis of preparation
(a) Reporting entity
Helloworld Travel Limited (The Company) is a company limited by shares incorporated and domiciled in Australia whose
shares are publicly traded on the Australian Stock Exchange (ASX).
Helloworld Limited changed its name to Helloworld Travel Limited following approval by the company’s shareholders
at a General Meeting held on 10 April 2017.
The financial statements of Helloworld Travel Limited and its controlled entities (the Group), for the year ended 30 June
2017 were authorised for issue in accordance with a resolution of the directors on 23 August 2017. 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 Travel is a for profit entity for the purpose of preparing the
financial statements.
(b) Presentation and measurement
(i) Statement of compliance
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
(including Australian Accounting Interpretations) adopted by the Australian Accounting Standards Board 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.
(ii) Basis of measurement
These financial statements have been prepared on a historical cost basis except for, financial assets and financial
liabilities (including derivative instruments) and investment property measured at fair value.
(iii) Rounding of amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191 relating to the “rounding off” of amounts
in the financial statements. Amounts in the financial statements have been rounded off in accordance with the
instrument to the nearest thousand dollars, except where otherwise indicated.
(iv) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the Group’s 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”).
(v) Comparative periods
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period.
(vi) Consistent application of accounting policies
The accounting policies have been consistently applied by all entities included in the Group consolidated financial
statements. Refer note 34 for the principal accounting policies applied in the preparation of the financial statements.
The accounting policies have been consistently applied compared with prior year presented except for the accounting
policy change on the recognition of deferred tax liabilities for indefinite life intangible assets.
(vii) Changes in accounting policies
Recognition of deferred tax liability for indefinite life intangible assets
In November 2016, the IFRS Interpretation Committee (“IFRIC”) published a summary of its meeting discussions
regarding the expected manner of recovery of an intangible asset with an indefinite useful life for the purposes of
measuring deferred tax in accordance with AASB 112 Income Taxes.
The IFRIC decided not to take this issue to its agenda, however it provided guidance on the application of existing IFRS.
It noted that an intangible asset with an indefinite useful life is not a non-depreciable asset. This is because an asset
with an indefinite useful life is one where there is no foreseeable limit to the period over which the asset is expected to
generate net cash inflows, but this is not an infinite period. Consequently, the fact that an entity does not amortise an
intangible asset with an indefinite useful life does not necessarily mean that the entity will recover the carrying amount
of that asset only through sale and not through use.
As a result, the Group has changed its accounting policy retrospectively for the accounting of deferred income tax on
intangible assets with indefinite useful lives in relation to the indefinite life intangible asset of the Franchise System,
reported at $97.4 million as at 30 June 2015. This has resulted in the recognition of a deferred tax liability based
on the difference between the carrying amount and the tax base of the Franchise System at the 30% Australian
company tax rate. This treatment will continue whilst the value of this indefinite life intangible asset is expected to
be recovered through use, rather than through a specific plan to sell these assets.
The impact of this change in accounting policy on the previously reported comparative statement of financial position
is noted below. The adjustment is initially recorded against goodwill, however as the corresponding goodwill was
previously impaired, this adjustment is recognised directly to accumulated losses within these financial statements.
FINANCIAL STATEMENT LINE ITEM AFFECTED
Accumulated losses at the beginning of the financial year
Deferred tax liability
FINANCIAL STATEMENT LINE ITEM AFFECTED
Accumulated losses at the beginning of the financial year
Deferred tax liability
1 July 2015
(as stated)
’000s
Adjustment
’000s
1 July 2015
(restated)
’000s
263,014
(296)
29,220
(29,220)
292,234
(29,516)
30 June 2016
(as stated)
’000s
Adjustment
’000s
30 June 2016
(restated)
’000s
262,998
(3,576)
29,220
(29,220)
292,218
(32,796)
The change of accounting policy did not have an impact on the comparative reported consolidated statement
of profit or loss and other comprehensive income or consolidated statement of cash flows.
57
(c) New and amended accounting standards impacting the Group
(i) New and amended accounting standards for the year ended 30 June 2017
The Group has applied the following standards and amendments for the first time for its annual reporting period
commencing 1 July 2016:
• AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of
Depreciation and Amortisation
• AASB 2014-9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements
• AASB 2015-1 Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting
Standards 2012-2014 Cycle
• AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
The adoption of these standards did not have any impact on the current period or any prior period and is not likely to
affect future periods.
(ii) New and amended accounting standards impacting the group for future financial years
The following new accounting standards are not yet effective, but may have an impact on the Group in financial years
commencing from 1 July 2018:
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 is currently in the process of determining the potential impact of adopting the standard including both, a
review of its hedging and credit risk policies and related processes and systems across the Group. The financial impacts
of adopting the standard are not expected to be significant to the Group.
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 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. 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 is currently in the process of determining the potential impact of adopting the standard, including a review of
its revenue streams, policies and key contracts across the Group.
helloworldlimited.com.au 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.
This standard is available for early adoption, for entities that apply AASB 15 Revenue from Contracts with Customers
at or before the date of initial application of AASB 16, however will not become mandatory for the Group’s financial
statements until the year ended 30 June 2020.
The Group has not yet decided when to adopt AASB 16 as it has not yet determined the potential impact of the standard.
(d) 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.
(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 13.
(ii) Override commission revenue
The Group estimates override commission revenue generated by airlines and leisure partners. The override commission
revenue accrual process is inherently judgemental and is impacted significantly by factors which are not completely
under the control of Helloworld Travel. These factors include:
• A significant portion of override 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 associated override commission rates applicable to these forecast levels. Flown
revenue is earned when the passenger has flown/departed (for air and cruise) or the passenger has commenced
their hotel stay;
• The differing commencement dates of the override commission contracts mean that commissions may have to be
estimated for contracts for which the applicable override 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 override commission revenue is set out in note 34.
59
2. Revenue
Rendering of services
Rents and sub-lease rentals
Finance income
Other revenue
REVENUE
3. Expenses
PROFIT/(LOSS) BEFORE INCOME TAX INCLUDES THE FOLLOWING SPECIFIC EXPENSES:
Depreciation (note 12)
Amortisation (note 13)
Defined contribution superannuation expense
Defined benefit superannuation expense (note 32)
Employee benefits expense excluding superannuation
Rental expense under operating leases (note 25)
AOT merger costs (note 30)
Business transformation costs
Redundancy costs
Recovery relating to GST legal dispute
Franchise loyalty plan expense (note 31)
4. Finance income and expense
RECOGNISED IN PROFIT OR LOSS
Finance income recognised in revenue
Finance expenses
NET FINANCE INCOME/(EXPENSE) RECOGNISED IN PROFIT OR LOSS
CONSOLIDATED
2017
$’000
2016
$’000
321,926
295,004
923
2,624
960
643
3,638
1,264
326,433
300,549
CONSOLIDATED
2017
$’000
2016
$’000
(7,771)
(13,305)
(8,784)
-
(131,036)
(11,553)
-
(621)
(857)
-
(681)
(8,102)
(10,357)
(7,482)
(640)
(125,943)
(11,446)
(3,822)
(2,904)
(1,801)
1,775
-
CONSOLIDATED
2017
$’000
2016
$’000
2,624
(3,066)
(442)
3,638
(3,381)
257
helloworldlimited.com.au 5. Operating segments
(a) Description of segments
During the year, the Group revised its internal management reporting structure for the Chief Executive Officer and the
Board (the Chief Operating Decision Makers or CODMs) to better review and assess the performance of the business.
The new structure is on a geographical basis and all internal reports reviewed and used by the CODMs in assessing
performance and making strategic decisions are now prepared on this basis. As a result, the Group has changed its
operating segments from the previous product basis of retail franchise operations, wholesale & inbound and travel
management to the following three segments:
• Australia;
• New Zealand; and
• Rest of World.
The segments are based on the geographical location of where the businesses are managed. The Australia and New
Zealand segments each have retail franchise operations, air ticketing, wholesale & inbound, and travel management
businesses. Australia and New Zealand also contain corporate support units performing shared service functions,
which are fully allocated to all segments within segment expenses. The Rest of World segment consists of the wholesale
businesses of Insider Journeys, Tourist Transport Fiji (TTF) and Qantas Vacations in North America, in addition to the
inbound business in Fiji.
Comparative information has been restated to reflect prior year information on the new segment basis.
(b) Segment information provided to the CODMs
The CODMs assess the performance of the operating segments based on a measure of EBITDA (earnings before interest
expense, tax, depreciation and amortisation). Interest income on client funds is included within segment revenue and
EBITDA.
Segment results for the Group are shown below:
CONSOLIDATED
YEAR ENDED 30 JUNE 2017
Segment revenue
Segment expenses
Equity accounted profits
EBITDA
CONSOLIDATED
YEAR ENDED 30 JUNE 2016
Segment revenue
Segment expenses
Equity accounted profits
EBITDA
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
243,603
(194,150)
859
50,312
60,525
(54,307)
-
6,218
22,305
(23,656)
-
(1,351)
326,433
(272,113)
859
55,179
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
224,204
(198,194)
-
26,010
52,610
(50,720)
-
1,890
23,735
(26,345)
-
300,549
(275,259)
-
(2,610)
25,290
61
(c) Other segment information
(i) EBITDA
A reconciliation of EBITDA to profit before income tax expense is provided as follows:
EBITDA
Depreciation
Amortisation
Finance costs
PROFIT BEFORE TAX
(ii) Segment assets
CONSOLIDATED
2017
$’000
2016
$’000
55,179
(7,771)
25,290
(8,102)
(13,305)
(10,357)
(3,066)
31,037
(3,381)
3,450
The internal management reports provided to the CODMs report total assets on a basis 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.
Total non-current assets, other than deferred tax assets, located in Australia total $269.8 million (2016: $261.6
million). Total non-current assets located in other countries total $44.5 million (2016: $45.8 million). Under the current
management reporting framework, total assets are not reviewed to a specific reporting segment or geographic location.
(iii) Segment liabilities
The internal management reports provided to the CODMs report total liabilities on a basis consistent with that
of the consolidated financial statements. Under the current management reporting framework, total liabilities
are not reviewed to a specific reporting segment or geographic location.
helloworldlimited.com.au 6. 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 in deferred tax assets (note 14)
Increase in deferred tax liabilities (note 18)
DEFERRED INCOME TAX - RELATING TO THE ORIGINATION AND REVERSAL OF
TEMPORARY DIFFERENCES
(b) Reconciliation of income tax expense and tax at the statutory rate
PROFIT BEFORE INCOME TAX EXPENSE
Tax at the statutory tax rate of 30%
Add/(deduct):
Current year tax losses not recognised
Amortisation not deductible
Gain on disposal of non-current assets
Merger costs not deductible
Withholding tax not claimable
Share based payments
Differences in overseas tax rates
Over provision in prior year
Other
CONSOLIDATED
2017
$’000
2016
$’000
9,149
459
(162)
1,546
504
(276)
9,446
1,774
(719)
1,178
(795)
1,299
459
504
CONSOLIDATED
2017
$’000
2016
$’000
31,037
9,311
29
13
(189)
-
186
364
(231)
(162)
125
3,450
1,035
113
64
(108)
1,142
-
(109)
(163)
(186)
(14)
INCOME TAX EXPENSE REPORTED IN THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
9,446
1,774
(c) Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges
Defined benefit plan - actuarial losses
TOTAL TAX EXPENSE/(INCOME) RELATING TO ITEMS OF OTHER COMPREHENSIVE INCOME
CONSOLIDATED
2017
$’000
2016
$’000
108
-
108
(220)
(722)
(942)
63
(d) Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at statutory tax rates
CONSOLIDATED
2017
$’000
2016
$’000
2,249
675
1,733
520
All unused tax losses were incurred by non-Australian entities that are not part of the tax consolidated group.
(e) Unrecognised temporary differences
The Group had undistributed earnings for controlled entities 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.
7. Dividends paid and proposed
(a) Dividends
The amount of dividends paid during the year are:
Final dividend for year ended 30 June 2016 of 2.0 cents per share, paid 16 September 2016
Interim dividend for year ended 30 June 2017 of 6.0 cents, paid on 20 March 2017
DIVIDENDS PAID
All dividends paid or declared during the current year are fully franked.
CONSOLIDATED
2017
$’000
2016
$’000
2,197
7,212
9,409
-
-
-
On 23 August 2017, the Group declared an 8.0 cents per share fully franked final dividend. The dividend is to be paid on
20 September 2017, with a record date of 4 September 2017. The dividend will be paid out of the 2017 financial year
profits, but is not recognised as a liability as at 30 June 2017.
(b) Franking credits
The franked portions of any future dividends paid after 30 June 2017 will be paid out of existing franking credits or
out of franking credits arising from the payment of income tax in the year ending 30 June 2018. Franking credits are
all based on a tax rate of 30%. The amount of franking credits available for the subsequent financial years are:
Franking credits available at the reporting date
Franking credits that will arise from income tax payable as at year end
Franking debits that will arise from the payment of the final dividend
TOTAL AMOUNT OF FRANKING CREDITS AVAILABLE FOR THE SUBSEQUENT FINANCIAL YEARS
CONSOLIDATED
2017
$’000
2016
$’000
27,492
6,163
(4,121)
29,534
27,614
747
(941)
27,420
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 8. Earnings per share
Basic earnings per share (EPS) was calculated for the year ended 30 June 2017 based on the profit attributable to
ordinary shareholders of $21.5 million (2016: $1.7 million) and a denominator of weighted average number of ordinary
shares outstanding of 114,647,185 (2016: 88,867,177).
(a) Basic earnings per share
Total basic earnings per share from continuing operations attributable
to ordinary equity holders of the Company
(b) Diluted earnings per share
CONSOLIDATED
2017
cents
2016
cents
18.8
1.9
Total diluted earnings per share from continuing operations attributable
to ordinary equity holders of the Company
18.4
1.9
(c) Reconciliation of earnings used in calculating earnings per share
Net profit for the year attributable to owners of Helloworld Travel
Profit/(loss) attributable to non-controlling interest
PROFIT AFTER INCOME TAX
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
- Adjustment for shares issued under the long term incentive plan
- Adjustment for shares issued under franchise loyalty plan
Weighted average number of ordinary shares used as the denominator
in calculating diluted earnings per share
CONSOLIDATED
2017
$’000
2016
$’000
21,510
81
21,591
1,699
(23)
1,676
2017
Number of
shares
2016
Number of
shares
114,647,185
88,867,177
1,985,891
350,334
-
-
116,983,410
88,867,177
For the year ended 30 June 2017, the Company had no legacy performance rights remaining under the previous
performance rights plan (PRP) that could potentially dilute basic EPS in the future. For the year ended 30 June 2016,
the Company had a weighted average number of 413,118 performance rights which could have potentially diluted basic
EPS in the future. Legacy performance rights were not included in the calculation of EPS because they were considered
antidilutive, refer note 31 for details on the legacy PRP.
Shares issued under the new long term incentive plan and franchise loyalty plan are excluded from basic EPS due to
the terms and conditions attached to these shares. These shares are included in dilutive EPS. Refer note 31 for further
details on the nature of the shares issued under these plans.
65
(e) Information concerning the classification of securities
As at 30 June 2017, the Company had 120,204,418 (2016: 109,838,418) ordinary shares on issue. Refer note 19 for
further details on the movement of ordinary shares during the current year.
9. Cash and cash equivalents
Cash at bank and on hand
Client cash
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS
CONSOLIDATED
2017
$’000
2016
$’000
34,732
163,338
198,070
26,201
176,420
202,621
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.
10. Trade and other receivables
Trade receivables
Provision for impairment of receivables
TRADE RECEIVABLES NET OF IMPAIRMENT
Accrued income
Prepayments
Other receivables
CONSOLIDATED
2017
$’000
2016
$’000
66,512
(510)
66,002
32,700
11,306
15,584
59,590
67,308
(701)
66,607
36,077
14,967
16,582
67,626
TRADE AND OTHER RECEIVABLES
125,592
134,233
Trade receivables are non-interest bearing and are generally on 30 day terms from invoice.
Fair value and credit risk
Due to the short-term nature of these receivables, their carrying value generally approximates their fair value.
The maximum exposure to credit risk is the fair value of the receivables. Collateral is not held as security, nor is
it the Group’s policy to transfer receivables to special purpose entities.
Credit, foreign exchange and interest rate risk
Details regarding credit, foreign exchange and interest rate risk exposure are disclosed in note 24.
helloworldlimited.com.au 11. Investments accounted for using the equity method
Investment in associates and joint ventures
Provision for diminution in value
CARRYING AMOUNT AT END OF FINANCIAL YEAR
(a) Interests in associates and joint ventures
Information relating to associates and joint ventures is set out below:
NAME
COUNTRY OF INCORPORATION
Mobile Travel Holdings Pty Limited and its subsidiaries (MTA)
Australia
Tour Managers (Fiji) Limited
Harvey World Travel Strategy Group Ltd
V & A Travel P/L
Down Under Answers, LLC
Fiji
New Zealand
Australia
United States of America
CONSOLIDATED
2017
$’000
2016
$’000
16,711
(54)
16,657
1,617
(54)
1,563
OWNERSHIP INTEREST
2016
%
2017
%
50.00%
33.00%
-
50.00%
33.00%
-
33.00%
50.00%
50.00%
33.00%
All associates and joint ventures have a 30 June balance date except Down Under Answers LLC, which has a reporting
date of 31 December.
(b) Movement in carrying amounts
Carrying amount at the beginning of the financial year
Additions due to acquisition of MTA
Increase due to associates acquired from business combinations
Share of profits after income tax
Decrease due to change in ownership interest
Other movements
CARRYING AMOUNT AT END OF THE FINANCIAL YEAR
(c) Joint venture with MTA
CONSOLIDATED
2017
$’000
2016
$’000
1,563
14,217
-
859
-
18
16,657
460
-
1,727
-
(640)
16
1,563
On 1 December 2016, the Group acquired 50% of MTA for cash consideration of $13.9 million. Acquisition related
costs of $0.3 million were incurred and are included in the carrying value of the investment.
MTA provides home based travel consulting services by franchise mobile travel consultants throughout Australia.
The investment provides Helloworld Travel with a significant footprint in a sector that is experiencing accelerated
growth both in Australia and globally. The Group expects the additional scale and operating leverage to bring increased
economies of scale.
(d) Harvey World Travel Strategy Group Ltd
Harvey World Travel Strategy Group Ltd, based in New Zealand, was deregistered on 14 October 2016.
67
(e) Summarised financial information
The tables below provide summarised financial information of the equity accounted investment in MTA. The
information disclosed reflects the amounts presented in the financial statements of MTA and not Helloworld Travel’s
share of those amounts.
(i) Summarised statement of financial position
Current assets
Non-current assets
TOTAL ASSETS
Current liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
(ii) Summarised statement of profit or loss and other comprehensive income, since
acquisition on 1 December 2016
Revenue
Operating expenses
EBITDA
Depreciation and amortisation
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
(f) Reconciliation of the Group’s investment in MTA
Opening carrying amount
Acquisition in MTA
Share of profit after income tax
CLOSING CARRYING AMOUNT
(g) Contingent liabilities
2017
$’000
13,370
820
14,190
11,798
33
11,831
2,359
2017
$’000
5,923
(3,290)
2,633
(179)
2,454
(736)
1,718
-
1,718
2017
$’000
-
14,217
859
15,076
There are no contingent liabilities in associates or joint ventures for which the Group has a legal obligation to settle.
helloworldlimited.com.au 12. Property, plant and equipment
CONSOLIDATED
BALANCE AT 1 JULY 2015
Additions
Additions through business combinations
Disposals
Foreign currency differences
Depreciation charge (note 3)
BALANCE AT 30 JUNE 2016
AT 30 JUNE 2016
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2016
Additions
Additions through business combinations
Disposals
Foreign currency differences
Transfer in/(out)
Depreciation charge (note 3)
BALANCE AT 30 JUNE 2017
AT 30 JUNE 2017
Cost
Accumulated depreciation
NET BOOK AMOUNT
Land and
buildings
$’000
Office
Equipment
$’000
Leasehold
Improvements
$’000
-
-
607
-
-
(4)
603
607
(4)
603
603
-
-
-
-
-
(10)
593
607
(14)
593
11,412
3,067
4,120
(135)
184
(5,550)
13,098
21,486
(8,388)
13,098
13,098
1,601
9
(198)
(12)
(57)
(6,620)
7,821
16,488
(8,667)
7,821
5,504
2,531
464
(198)
106
(2,548)
5,859
8,355
(2,496)
5,859
5,859
1,502
-
(847)
(17)
57
(1,141)
5,413
7,899
(2,486)
5,413
Total
$’000
16,916
5,598
5,191
(333)
290
(8,102)
19,560
30,448
(10,888)
19,560
19,560
3,103
9
(1,045)
(29)
-
(7,771)
13,827
24,995
(11,168)
13,827
69
13. Intangible assets
CONSOLIDATED
Goodwill
$’000
Franchise
systems
$’000
Agent
network
$’000
Supplier
agreements
$’000
Brand
Names and
Trademarks
$’000
Software
website and
other 1
$’000
Total
$’000
BALANCE AT 1 JULY 2015
32,531
97,400
Additions
-
Additions through business combinations
106,607
Foreign currency differences
Amortisation charge (note 3)
2,110
-
-
-
-
-
BALANCE AT 30 JUNE 2016
141,248
97,400
8,310
-
-
-
-
8,310
2,634
-
-
-
(160)
2,474
3,492
27,981
161,404
14
10,675
10,689
-
-
4,273
121,824
186
2,296
(623)
2,883
(9,574)
(10,357)
33,541
285,856
AT 30 JUNE 2016
Cost
464,756
97,400
8,310
Accumulated amortisation and impairment
(323,508)
-
-
NET BOOK AMOUNT
141,248
97,400
8,310
2,634
(160)
2,474
9,103
55,729
637,932
(6,220)
(22,188)
(352,076)
2,883
33,541
285,856
BALANCE AT 1 JULY 2016
141,248
97,400
8,310
2,474
2,883
33,541
285,856
Additions
Additions through business combinations
Disposals
Foreign currency differences
Transfer in/(out)
Amortisation charge (note 3)
-
3,609
-
(217)
224
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE AT 30 JUNE 2017
144,864
97,400
8,310
-
-
-
-
-
-
-
-
-
-
7,760
-
(384)
(17)
(224)
7,760
3,609
(384)
(234)
-
(385)
2,089
(1,027)
(11,893)
(13,305)
1,856
28,783
283,302
BALANCE AT 30 JUNE 2017
Cost
468,267
97,400
8,310
Accumulated amortisation and impairment
(323,403)
-
-
NET BOOK AMOUNT
144,864
97,400
8,310
2,634
(545)
2,089
9,103
58,332
644,046
(7,247)
(29,549)
(360,744)
1,856
28,783
283,302
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.
helloworldlimited.com.au Impairment tests for goodwill and other indefinite life intangibles
(a) Goodwill
Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets
acquired. Goodwill is allocated to the group’s cash generating units (CGUs) which are assessed as benefitting from the
business combination benefits and synergies.
During the year, the Group changed its reporting structure to reflect management of the Group on a geographical basis.
As a result, the previous CGUs of retail franchise operations, wholesale & inbound and travel management have been
replaced by Australia retail franchise operations, Australia wholesale & inbound, Australia travel management, New
Zealand and Rest of the World.
A goodwill impairment assessment was performed on the previous CGUs, with no impairment identified. In addition, the
sensitivity analysis determined there were no reasonable changes in assumptions which could have caused the previous
CGU carrying values to exceed their recoverable amount.
The goodwill has been reallocated to the new CGU’s based on the relative fair value contribution of each CGU.
Comparatives have been restated and the goodwill allocation to the new CGUs is presented below:
Australia retail franchise operations
Australia wholesale & inbound
New Zealand
GOODWILL NET OF IMPARMENT
CONSOLIDATED
2017
$’000
2016
$’000
21,916
111,702
11,246
144,864
22,792
107,309
11,147
141,248
There is no goodwill allocated to the Australia travel management and the Rest of the World CGUs.
Impairment review
The recoverable amount of the Group’s CGUs are determined based on the value in use calculations.
The impairment testing undertaken for the year ended 30 June 2017 supports the carrying value of goodwill for all
of the CGU’s under review.
Key assumptions used for value in use calculations
(i) Cash flows
Cash flows have been based on the financial year 2018 (FY18) board approved budget. Cash flow forecasts for years
2 to 5 (the forecast period) are based on the FY18 budget adjusted for internal projections of revenue and costs. Cash
flows comprise earnings before interest expense, depreciation, amortisation and tax (EBITDA) from each CGU, net of
expected working capital movements and sustainable levels of maintenance capital expenditure.
(ii) EBITDA growth
Operating cash flows are expected to grow at 5.0% (2016: 5.0%) for all CGU’s over the forecast period.
71
(iii) Long term growth
The terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5% (2016:
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.
(iv) Discount rates
Discount rates applied in the testing of recoverable amounts reflect the pre-tax weighted average cost of capital
derived using the Capital Asset Pricing Model (CAPM). Discount rates applied to the respective CGUs with goodwill
allocated are as follows:
Australia retail franchise operations
Australia wholesale & inbound
New Zealand
13.8%
14.0%
13.7%
The 2016 pre-tax discount rates reported in the prior year were 13.6% for retail franchise operations and 13.7%
for wholesale & inbound.
Impact of possible change in key assumptions
The sensitivity analysis determined there are no reasonable changes in assumptions that would cause any of the
CGU carrying values to exceed their recoverable amount as at 30 June 2017.
(b) Franchise System
The Franchise System asset was acquired as part of the Stella Travel Services Holdings Pty Limited and Jetset
Travelworld business combination in the year ending 30 June 2011. The Franchise System is the integrated system
of methods, procedures, techniques and other systems which facilitate the day-to-day running of the retail
franchise business.
The Franchise System includes access to products/inventory, brands, marketing, advertising, promotional techniques,
training and operational manuals of the network. Due to the inter-dependencies between these components, the Group
considered these assets to be complementary and were recognised as a single identifiable asset. The Group considers
that the Franchise System has an indefinite useful life due to the ongoing effectiveness of the system which support
the franchise network.
The Franchise System is an indefinite life intangible asset entirely allocated to the Australian retail franchise
operations CGU. There is no change in the cash flows methodology utilised to support the carrying value of this asset
from prior year.
The recoverable amount has been assessed at 30 June 2017 using an excess earnings calculation. The key assumptions
used in the calculation are outlined below:
• Cash flows are based on the FY18 board approved budget, with EBITDA growth rates for years 2 to 5 of 5.0%
(2016: 5.0%);
• Terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5%
(2016: 2.0%), in line with inflation expectations;
• Pre-tax discount rate was 14.2% (2016: 14.2%); and
• Capital charges that range from -0.2% to 1.0% (2016: -0.4% to 1.1%).
The impairment testing undertaken for the year ended 30 June 2017 supports the carrying value of the Franchise
System.
The sensitivity analysis determined there are no reasonable changes in assumptions that would cause the carrying value
of the Franchise System to exceed its recoverable amount as at 30 June 2017.
helloworldlimited.com.au (c) Agent Network
The Agent Network asset was acquired as part of the merger with AOT Group Limited in February 2016. The Agent
Network represents the agreements with travel agents for the provision of domestic travel product such as packaged
tours. The Group considers that the Agent Network has an indefinite useful life as there are no indications that these
relationships will not continue to remain strong in the long term and is entirely allocated to the Australia wholesale &
inbound CGU.
The recoverable amount has been assessed at 30 June 2017 using an excess earnings calculation. The key assumptions
used in the calculation are outlined below:
• Cash flows are based on the FY18 board approved budget, with growth rates for years 2 to 5 of 5.0%;
• Terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5%, in line with
inflation expectations;
• Pre-tax discount rate was 14.2%; and
• Capital charges that range from -0.2% to 1.0%.
The impairment testing undertaken for the year ended 30 June 2017 supports the carrying value of the Agent Network.
The sensitivity analysis determined there are no reasonable changes in assumptions that would cause the carrying value
of the Agent Network to exceed its recoverable amount as at 30 June 2017.
73
14. Deferred tax assets
(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
2017
$’000
2016
$’000
2,244
1,430
4,364
11,603
1,506
21,147
2,424
616
4,228
12,359
1,200
20,827
(20,259)
(19,624)
888
1,203
15,578
5,569
21,147
14,333
6,494
20,827
CONSOLIDATED
AT 1 JULY 2015
(Charged)/credited
- to profit or loss
- to other comprehensive income
Acquisition by business combination
AT 30 JUNE 2016
AT 1 JULY 2016
(Charged)/credited
- to profit or loss
Employee
benefits
$’000
Payables and
accruals
$’000
Property
plant and
equipment
$’000
Tax losses
$’000
Other
$’000
Total
$’000
3,409
11,541
159
2,174
1,130
18,413
(89)
-
908
4,228
759
-
59
456
250
-
1
-
-
(581)
169
482
795
169
1,450
12,359
616
2,424
1,200
20,827
4,228
12,359
616
2,424
1,200
20,827
- to other comprehensive income
Acquisitions via business combination
AT 30 JUNE 2017
-
-
-
-
4,364
11,603
-
(291)
1,430
136
(756)
1,105
(180)
414
(108)
-
719
(108)
(291)
-
-
2,244
1,506
21,147
helloworldlimited.com.au 15. Trade and other payables
Trade payables
Accruals
Other payables
TRADE AND OTHER PAYABLES
CONSOLIDATED
2017
$’000
2016
$’000
154,100
165,587
30,226
17,980
34,163
21,033
202,306
220,783
Trade creditors are non-interest bearing and are normally settled within 30 day terms from invoice. Non-trade payables
and accruals are non-interest bearing.
Details regarding foreign exchange risk exposure are disclosed in note 24.
16. Borrowings
Unsecured financing
CURRENT BORROWINGS
Secured bank loan
Deferred borrowings costs
NON-CURRENT BORROWINGS
(a) Financing arrangements
The following lines of credit were available at the balance date:
Secured bank loan - multi currency
Secured multi-option revolving credit facilities
TOTAL FACILITIES
Secured bank loan - multi currency
Secured multi-option revolving credit facilities
USED AT THE REPORTING DATE
Secured bank loan - multi currency
Secured multi-option revolving credit facilities
UNUSED AT THE REPORTING DATE
CONSOLIDATED
2017
$’000
2016
$’000
104
104
20,827
(574)
20,253
287
287
47,542
(1,190)
46,352
CONSOLIDATED
2017
$’000
2016
$’000
40,000
20,000
60,000
20,827
10,798
31,625
19,173
9,202
28,375
55,642
40,000
95,642
47,542
11,979
59,521
8,100
28,021
36,121
In May 2017, the Group renegotiated its financing arrangement with the Westpac Banking Corporation, replacing its old
facility with a new $60.0 million debt facility. The new facility expires in May 2022.
75
(b) Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
Secured bank loan
(c) Set-off of assets and liabilities
CONSOLIDATED
2017
$’000
2016
$’000
20,827
47,542
There are currently no contractual arrangements establishing a legal right to set-off assets and liabilities with any
financial institutions.
(d) Fair values and risk exposures
Information about the carrying amounts and fair values of interest bearing liabilities, including its exposure to interest
rate and foreign currency changes, is provided in note 24.
helloworldlimited.com.au 17. Provisions
Employee benefits - annual leave
Employee benefits - long service leave
Lease make good
Straight line rent
Onerous lease contracts
Restructuring
Other
CURRENT PROVISIONS
Employee benefits - long service leave
Onerous lease contracts
NON-CURRENT PROVISIONS
(a) Movement in provisions
CONSOLIDATED
2017
$’000
2016
$’000
5,853
4,942
996
1,131
903
790
288
6,132
4,435
944
942
492
662
223
14,903
13,830
2,871
378
3,249
2,893
340
3,233
Movements in each class of provision (current and non-current) during the financial year, other than employee benefits,
are set out below:
CONSOLIDATED
BALANCE AT 1 JULY 2015
Provision charged/(released) to income
statement
Payments made/transfers from provision
Additions through business combinations
Other
BALANCE AT 30 JUNE 2016
Current
Non-current
BALANCE AT 30 JUNE 2016
BALANCE AT 1 JULY 2016
Provisions charged to fixed assets
Provision charged/(released) to income statement
Payments made/transfers from provision
BALANCE AT 30 JUNE 2017
Current
Non-current
BALANCE AT 30 JUNE 2017
Lease
make good
$’000
Restructuring
$’000
Onerous
lease
contracts
$’000
Straight
line rent
$’000
Other
$’000
Total
$’000
1,353
(91)
(391)
76
(3)
944
944
-
944
944
592
(100)
(440)
996
996
-
996
925
276
(539)
-
-
662
662
-
662
662
-
444
(316)
790
790
-
790
446
481
(95)
-
-
832
492
340
832
832
-
449
-
1,281
903
378
1,281
912
184
3,820
209
(239)
58
2
942
942
-
942
942
-
312
(123)
1,131
1,131
-
1,131
28
-
-
11
223
223
-
223
223
-
128
(63)
288
288
-
288
903
(1,264)
134
10
3,603
3,263
340
3,603
3,603
592
1,233
(942)
4,486
4,108
378
4,486
77
(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 future lease make good costs capitalised and recognised as a provision are amortised. The unwinding of the effect
of discounting of the provision is recognised as a finance expense.
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.
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 lower of, 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.
Straight line rent
A provision for straight lining rent is recognised when the operating rental expense exceeds the amount paid. The rental
payments 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.
(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.
helloworldlimited.com.au 18. Deferred tax liabilities
(a) Deferred tax liabilities
Accrued income
Indefinite life intangibles
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
(b) Movement in temporary differences during the year
CONSOLIDATED
2017
$’000
2016
$’000
18,352
31,713
5,385
55,450
(20,259)
35,191
10,189
45,261
55,450
18,171
29,220
5,028
52,419
(19,623)
32,796
11,365
41,054
52,419
Accrued
income
$’000
10,123
218
-
7,830
18,171
691
-
612
1,303
18,171
1,303
821
(640)
246
-
18,352
1,549
Property
plant and
equipment
$’000
Defined
benefit
asset
$’000
Indefinite
life
intangibles
$’000
Other
$’000
Total
$’000
-
918
29,220
2,425
42,686
(196)
(722)
-
-
-
-
-
-
-
-
-
586
(76)
790
1,299
(798)
9,232
29,220
3,725
52,419
29,220
3,725
52,419
-
2,493
31,713
111
-
1,178
1,853
3,836
55,450
CONSOLIDATED
AT 1 JULY 2015
(Charged)/credited
- to profit or loss
- to other comprehensive income
Acquisition by business combination
AT 30 JUNE 2016
AT 1 JULY 2016
(Charged)/credited
- to profit or loss
Acquisition by business combination
AT 30 JUNE 2017
19. Issued capital
(a) Shares on issue
CONSOLIDATED
30 Jun 2017
Shares
30 Jun 2016
Shares
30 Jun 2017
$’000
30 Jun 2016
$’000
ISSUED CAPITAL
120,204,418
109,838,418
395,081
366,235
Holders of ordinary shares in Helloworld Travel are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at Helloworld Travel shareholders’ meetings. In the event of the winding up of Helloworld Travel, ordinary
shareholders rank after creditors and are fully entitled to any proceeds on liquidation. Ordinary shares have no par value and
Helloworld Travel does not have a limited amount of authorised capital.
79
(b) Movements in shares on issue
CONSOLIDATED
BALANCE
One for six shares consolidation (i)
Shares offered as consideration for AOT Group
BALANCE
Long term incentive plan
Long term incentive plan
Share issue (ii)
Franchise loyalty plan
Shares offered as consideration for Cruise businesses
Capital raising costs (iii)
Note
Date
Number
of Shares
$’000
1 July 2015
440,330,198
278,755
29 January 2016
(366,941,781)
30
31
31
31
30
1 February 2016
30 June 2016
23 September 2016
14 October 2016
26 October 2016
20 December 2016
28 February 2017
36,450,001
109,838,418
2,450,000
150,000
7,000,000
666,000
100,000
-
-
87,480
366,235
-
-
29,750
-
406
(1,310)
395,081
BALANCE
30 June 2017
120,204,418
CLOSING BALANCE AT 30 JUNE 2017 IS REPRESENTED BY:
Issued capital – fully paid
Issued capital – issued, but not vested (iv)
ISSUED CAPITAL – TOTAL
(i) Share consolidation
116,938,418
395,264
3,266,000
(183)
120,204,418
395,081
Helloworld Travel underwent a 1 for 6 share consolidation on 29 January 2016 whereby the pre-existing 440,330,198
shares were reduced by 366,941,781 to 73,388,417 shares, prior to the merger with the AOT Group on 1 February 2016.
(ii) Share issue
On 26 October 2016, Helloworld Travel issued 7,000,000 fully paid ordinary shares at a price of $4.25 per share to
institutional investors, which amounted to gross proceeds of $29.8 million. The purpose of the capital raising was to
fund the 50% purchase of MTA and repay long term debt.
(iii) Capital raising costs
Helloworld Travel incurred $1.1 millon of capital raising costs for the 7,000,000 share issue undertaken to institutional
investors on 26 October. In addition, Helloworld Travel incurred capital raising costs in relation to the issued, but not yet
vested shares under the long term incentive plan and franchise loyalty plan amounting to $0.2 million.
(iv) Issued capital – issued, but not vested
Issued, but not vested capital relates to shares issued under the long term incentive plan and franchise loyalty plan
issued in the current year.
helloworldlimited.com.au 20. Reserves
Predecessor accounting reserve
Foreign currency translation reserve
Hedging reserve
Share based payments reserve
RESERVES
(a) Movements in reserves
CONSOLIDATED
2017
$’000
2016
$’000
-
156,400
3,802
750
2,598
7,150
4,814
451
1,386
163,051
Movements in each class of reserve during the current and previous financial year are set out below:
CONSOLIDATED
BALANCE AT 1 JULY 2015
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Share based payment credit
BALANCE AT 30 JUNE 2016
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Share based payment expense
Transfer of predecessor accounting reserve to accumulated losses
Foreign
currency
translation
reserve
$’000
2,485
-
-
2,329
-
4,814
-
-
(1,012)
-
-
Hedging
reserve
$’000
Predecessor
accounting
reserve
$’000
Share based
payments
reserve
$’000
Total
$’000
1,057
(826)
220
-
-
451
407
(108)
-
-
-
156,400
1,694
161,636
-
-
-
-
156,400
-
-
-
-
-
-
-
(308)
1,386
-
-
-
1,212
(826)
220
2,329
(308)
163,051
407
(108)
(1,012)
1,212
(156,400)
-
(156,400)
BALANCE AT 30 JUNE 2017
3,802
750
-
2,598
7,150
(b) Nature of reserves
Foreign currency translation reserve
Exchange differences arising on translation of the foreign operations are taken to the foreign currency translation
reserve, as described in note 34. The cumulative amount is reclassified to profit or loss when the net investment
is disposed of.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedging transactions that have not yet occurred, as described in note 34. Amounts
are reclassified to the income statement when the associated hedge transaction affects profit and loss.
81
Predecessor accounting reserve
Historically, differences between the net assets acquired and the consideration provided in relation to common control
transactions are recorded in the predecessor accounting reserve.
During the current year, the Group has reviewed the nature of the historic predecessor accounting reserve and
transferred the balance against the accumulated losses reserve.
Share based payments reserve
The share based payments reserve is used to recognise the grant date fair value of incentive shares, or performance
rights issued to eligible employees with performance related conditions. In addition, the reserve records the fair value
of franchise loyalty shares issued to eligible franchise network members with related conditions.
21. Accumulated losses
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
Adjustment for change in accounting policy (note 1)
Profit after income tax expense
Dividends paid
Actuarial loss on defined benefit plans, net of tax
Transfer of predecessor accounting reserve to accumulated losses reserve
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
CONSOLIDATED
2017
$’000
2016
$’000
(292,218)
(263,014)
-
21,510
(9,409)
(29,220)
1,699
-
-
(1,683)
156,400
-
(123,717)
(292,218)
helloworldlimited.com.au 22. Auditor’s remuneration
During the financial year the following fees were paid or payable for services provided by PricewaterhouseCoopers
(PwC) Australia, the auditor of the company, its related practices and unrelated firms:
AUDIT SERVICES – PwC AUSTRALIA
Audit or review of the financial statements
OTHER SERVICES - PwC AUSTRALIA
Taxation services
Other services
TOTAL OTHER SERVICES – PwC AUSTRALIA
TOTAL SERVICES - PwC AUSTRALIA
NETWORK FIRMS OF PwC AUSTRALIA
Audit services
Taxation services
Other services
TOTAL SERVICES - NETWORK FIRMS OF PwC AUSTRALIA
NON-PwC AUDIT FIRMS
Audit services - unrelated firms
Taxation services
Other services
TOTAL SERVICES - NON-PwC AUDIT FIRMS
CONSOLIDATED
2017
$
2016
$
954,580
1,153,000
135,252
302,970
438,222
93,110
118,000
211,110
1,392,802
1,364,110
195,223
61,520
19,568
276,311
53,978
68,813
9,797
132,588
202,492
113,544
5,301
321,337
70,965
22,879
1,517
95,361
23. Reconciliation of profit after income tax to net cash from
operating activities
PROFIT AFTER INCOME TAX EXPENSE FOR THE YEAR
Adjustments for:
Depreciation and amortisation
Share based payments
(Gain)/loss on sale of non-current assets
Impairment losses on trade receivables
Gain on disposal of investments
Share of profits of associates accounted for using the equity method
Amortisation of borrowing costs
Change in operating assets and liabilities:
(Increase)/decrease in inventories
(Increase)/decrease in trade and other financial assets
Increase/(decrease) in other provisions
Increase/(decrease) in other non-current liabilities
Movements in tax balances
(Increase) in trade and other payables
Increase in trade and other receivables
NET CASH FROM OPERATING ACTIVITIES
CONSOLIDATED
2017
$’000
2016
$’000
21,591
1,676
21,076
1,212
(55)
275
(429)
(859)
1,200
27
(9,828)
1,375
(1,272)
4,513
18,459
(360)
145
169
(379)
-
426
(98)
2,289
(374)
1,858
(390)
(17,222)
(33,855)
7,464
29,068
12,750
2,316
83
24. Financial risk management
The Group’s principal financial instruments comprise receivables, payables, cash, short-term deposits, borrowings and
derivatives. The Group manages its exposure to key financial risks, including currency risk in accordance with a set of
policies approved by the Board. The Group’s policy is to not enter into, issue or hold derivative financial instruments for
speculative trading purposes.
Financial risk management is carried out by Group Treasury under policies approved by the Board of Directors. Group
Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units.
Details of the significant accounting policies and methods adopted, including criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 34.
(a) 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 16) and cash and cash equivalents (outlined in note 9) on the basis of expected cash flows. Financing arrangements
are outlined in note 16.
CONSOLIDATED - 2017
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Contractual Cash flows
Carrying
value
$’000
Less than
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
Trade and other payables
Interest bearing liabilities - secured (1)
Interest bearing liabilities - unsecured
172,080 172,080
-
-
-
-
-
20,827
104
780
104
768
1,560
1,571
1,593 21,646
-
-
-
-
-
- 172,080
-
-
27,918
104
Bank guarantees and letters of credit
-
3,401
3,203
1,133
1,234
156
953
718
10,798
DERIVATIVE FINANCIAL INSTRUMENTS
Cash flow hedges
799
718
81
-
-
-
-
-
799
TOTAL
193,810 177,083
4,052
2,693
2,805
1,749 22,599
718 211,699
CONSOLIDATED - 2016
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Contractual Cash flows
Carrying
value
$’000
Less than
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
Trade and other payables
Interest bearing liabilities - secured (1)
186,620 186,620
-
-
-
47,542
1,510
1,474
2,914 49,828
Interest bearing liabilities - unsecured
287
143
144
-
-
-
-
-
-
-
-
- 186,620
-
-
55,726
287
Bank guarantees and letters of credit
-
4,052
3,495
289
1,136
156
1,210
1,641
11,979
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
1,641 256,138
1 Excludes deferred borrowing costs
Details on the interest bearing liabilities and facilities, including maturity dates are contained in note 16.
helloworldlimited.com.au (b) 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 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 income.
As at 30 June 2017, the Group’s net exposure to foreign currency risk is set out in the table below and 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
CONSOLIDATED
2017
$’000
AUD
equivalent
2016
$’000
AUD
equivalent
(2,175)
(1,397)
(436)
(2,872)
10,124
(4,668)
(1,424)
(4,472)
(1,436)
(2,002)
(2,820)
11,189
(2,395)
(1,936)
The following table summarises the impact of a reasonably possible change in foreign exchange rates on net profit.
For the purpose of this disclosure, the sensitivity analysis assumes a 10% increase and decrease in foreign exchange
rates. Sensitivity analysis assumes hedge effectiveness as at 30 June 2017. This analysis also assumes that all other
variables, including interest rates, remain constant.
10% increase
10% decrease
CONSOLIDATED
Impact on net profit
before tax
2017
$’000
686
(838)
2016
$’000
718
(878)
85
(ii)
Interest rate risk
Interest rate risk refers to the risk that the fair value of 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 $28.0 million (2016: $54.0 million)
paying a weighted average fixed rate of 2.3% per annum (2016: 2.5%). Other funds are held in operational and foreign
currency bank accounts earning interest at market rates under normal commercial terms. The Group also has exposure
to interest rate risk on the drawn down borrowings of $20.8 million (2016: $47.5 million).
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 $280,000
(2016: $540,000).
All borrowings are variable rate instruments and accordingly, a change in interest rates of 100 basis points per annum
at the reporting date would have an impact on the profit and net equity of the Group of $208,000 (2016: $475,000)
(c) 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 its trade debtor counterparties. The credit risk is the recognised amount, net
of any impairment loss. As at 30 June 2017, this amounted to $66.0 million (2016: $66.6 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.
Helloworld Travel’s most significant supplier is Qantas Airways Limited and its subsidiaries, details of these transactions
are outlined in note 26.
Where specific credit risk is identified with a counterparty, the Group requires pre-payment for services provided.
A reservation for such a counterparty is not confirmed or ticketed prior to receiving payment in full. Due to the short
term nature of these receivables, their carrying amount is assumed to be their fair value.
The maximum exposure to credit risk is the fair value of the receivables. Collateral is not held as security, nor is
it the Group’s policy to transfer receivables to special purpose entities.
The ageing of trade receivables net of impairment 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
CONSOLIDATED
2017
$’000
2016
$’000
48,485
10,703
3,455
2,148
1,169
42
47,637
10,217
5,579
2,216
911
47
TOTAL TRADE RECEIVABLES NET OF IMPAIRMENT
66,002
66,607
As at 30 June 2017, trade receivables of $17.5 million (2016: $19.0 million) were past due but not impaired. These
relate to a number of independent counterparties for whom there is no recent history of default.
There are no significant other receivables, or other classes of receivables, that have been recognised that would
otherwise, without negotiation, have been past due or impaired. It is expected that these amounts will be received
when due. The Group does not hold any collateral in relation to these receivables.
helloworldlimited.com.au 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 PROVISION FOR IMPAIRMENT OF RECEIVABLES
CONSOLIDATED
2017
$’000
2016
$’000
-
6
8
372
49
75
510
-
3
6
92
143
457
701
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.
Movements in the allowance for impairment losses in respect of trade receivables are as follows:
BALANCE AT 1 JULY
Acquisitions through business combinations
Additional provision recognised
Writeback of provision
Receivables written off during the year as uncollectable
Other
BALANCE AT 30 JUNE
CONSOLIDATED
2017
$’000
2016
$’000
701
-
275
(253)
(113)
(100)
510
635
57
169
(136)
(111)
87
701
An allowance for impairment losses is made when there is objective evidence that a trade receivable is impaired. In the
current year an additional $0.3 million (2016: $0.2 million) provision has been recognised by the Group. The amount of
the allowance is measured as the difference between the carrying amount of the trade receivables and the estimated
future cash flows expected to be received from the relevant debtors.
The table below sets out the maximum exposure to credit risk as at 30 June:
Cash and cash equivalents
Trade and other receivables
TOTAL CREDIT RISK EXPOSURE
CONSOLIDATED
2017
$’000
2016
$’000
198,070
125,592
323,662
202,621
134,233
336,854
87
(d) 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:
Cash and cash equivalents
Trade and other receivables
TOTAL ASSETS
Trade payables
Other payables
Interest bearing liabilities – current
Interest bearing liabilties – non-current
TOTAL LIABILITIES
(e) Fair value hierarchy
2017
2016
Carrying
amount
$’000
198,070
125,592
323,662
154,100
17,980
104
20,253
192,437
Net fair
value
$’000
198,070
125,592
323,662
154,100
17,980
104
20,827
193,011
Carrying
amount
$’000
202,621
134,233
336,854
165,587
21,033
287
46,352
233,259
Net fair
value
$’000
202,621
134,233
336,854
165,587
21,033
287
47,542
234,449
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 - 2017
Net derivative financial liabilities
TOTAL LIABILITIES
CONSOLIDATED - 2016
Net derivative financial liabilities
TOTAL LIABILITIES
Level 1
$’000
-
-
Level 1
$’000
-
-
Level 2
$’000
799
799
Level 2
$’000
1,526
1,526
Level 3
$’000
-
-
Level 3
$’000
-
-
Total
$’000
799
799
Total
$’000
1,526
1,526
helloworldlimited.com.au (f) 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.
The Board continually assess the Group’s future cash flow generation with our debt and equity capital structure mix.
The Board’s considerations include:
• potential repayment of debt obligations;
• future fixed asset investment;
• funding of any future proposed acquisitions via either debt or equity instruments; and
• the appropriate level of future dividends to ordinary shareholders to support investor returns.
There were no changes in the Group’s approach to capital management during the current year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
25. Commitments and contingencies
LEASE COMMITMENTS - AS LESSEE
Non-cancellable operating lease rentals are payable as follows:
Within one year
One to five years
More than five years
AGGREGATE LEASE EXPENDITURE CONTRACTED FOR AT YEAR END
LEASE COMMITMENTS - AS LESSOR
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
(a) Lease commitments - as lessee
CONSOLIDATED
2017
$’000
2016
$’000
11,961
21,462
2,066
35,489
452
1,211
1,663
12,038
27,382
2,753
42,173
740
1,370
2,110
The Group has entered into commercial property leases. 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 $11.6 million in the period (2016: $11.4 million).
(b) Lease commitments - as lessor
The Group recognised lease rental income of $0.9 million (2016: $0.6 million). Rental income is derived from the
sub-lease of surplus office space and lease of one investment property.
(c) Guarantees
Other than the Deed of Cross Guarantee entered into with its subsidiaries as outlined in note 29, the Group has on
issue at 30 June 2017 bank guarantees and letters of credit (secured multi-option revolving credit facilities) totalling
$10.8 million (2016: $12.0 million).
(d) Contingencies
There are no significant contingent assets or contingent liabilities.
89
26. Related party transactions
(a) Subsidiaries
Details relating to subsidiaries are included in note 27.
(b) Ultimate and direct parent
Helloworld Travel Limited is the legal owner of the Group. Refer to note 28 for parent entity information.
(c) Entities with significant influence
The following entities are considered to have significant influence over the Group:
• Andrew and Cinzia Burnes director related entities hold 36.6% (2016: 40.0%) of the ordinary shares of Helloworld
Travel Limited following the merger with the AOT Group and its controlled entities. Andrew Burnes is the CEO and
Managing Director of Helloworld Travel Limited and both are executive board members of the Group.
• Sintack Pty Ltd hold 18.4% (2016: 19.6%) of the ordinary shares of Helloworld Travel Limited and has one executive
member, Peter Spathis on the Board.
• QH Tours Limited, a wholly owned subsidiary of Qantas Airways Limited, hold 17.7% (2016: 19.3%) of the ordinary
shares of Helloworld Travel Limited and has one executive member, Andrew Finch on the Board.
(d) Key management personnel (KMP) compensation
Short term employee benefits
Long term employee benefits
Share based payment benefits
Post-employment benefits
Termination benefits
TOTAL KMP COMPENSATION
CONSOLIDATED
2017
$
2016
$
2,512,900
3,399,939
23,409
210,446
119,740
-
18,834
(219,178)
121,611
419,529
2,866,495
3,740,735
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 1
(ii) Expenses incurred as a result of transactions with:
Associates of the Group
Entities with significant influence over the Group 1
Other related parties
YEAR END BALANCES
(i) Receivables:
Associates of the Group
Entities with significant influence over the Group
(ii) Payables:
Associates of the Group
Entities with significant influence over the Group
CONSOLIDATED
2017
$’000
2016
$’000
794
47,939
-
50,835
1,340
7,301
1,176
197
8,018
401
2,636
-
9,829
471
-
8,645
181
3,949
1 Helloworld Travel has previously entered into an umbrella agreement with Qantas Airways Limited (and its controlled entities). The agreement
was intended to facilitate a transition to arrangements directly between Helloworld Travel 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 transactions
Sales to and purchases from related parties are made at arm’s length at normal market prices and on normal
commercial terms.
Related party trade receivables are non-interest bearing and are generally on 30 day terms from invoice. The Group
settles related party trade payables according to the payment conditions confirmed by the supplier of services and
are non-interest bearing and generally on 30 day terms from invoice.
(f) Transactions with Director related entities
Andrew Burnes and Cinzia Burnes, directors of Helloworld Travel Limited, jointly hold 36.6% (2016: 40%) of the ordinary
shares of Helloworld Travel Limited, following the merger of AOT Group and Helloworld Travel on 1 February 2016.
Andrew and Cinzia Burnes are both trustees of Normanby Road Holdings Pty Ltd (ATF 179 Normanby Road Trust), which
owns and leases to Helloworld Travel, the head office premises for the AOT Group operations. Details of transactions
with Normanby Road Holdings Pty Ltd (ATF 179 Normanby Road Trust) for the year ended June 2017 and for the five
months ended June 2016 are included in part (e) above.
Peter Spathis was reappointed as a Director of Helloworld Travel Limited on 18 May 2015. He was previously
a director during the period 30 June 2002 to 28 November 2012. Peter Spathis represents Sintack Pty Ltd, which
holds 18.4% (2016: 19.6%) of the ordinary shares of Helloworld Travel Limited. Peter 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 Travel held a sub-lease agreement with Consolidated Travel Pty Limited
during 2017 for which $0.02 million of income was received (2016: $0.02 million).
91
(g) Transactions with key management personnel (KMP)
During the current year, a new loan funded long term incentive plan (LTIP) was introduced. The details of this scheme are
included in note 31. Shares were allocated to key executives and senior leaders reporting to the CEO or senior leaders
who are considered critical to the ongoing success of the Group.
Under the new LTIP, a total of 2,600,000 shares were issued and allocated under the plan at the start of the current
financial year, at the market value at that time of $3.00 per share. Of the 2,600,000 shares issued, 900,000 were
allocated to KMP. A loan is provided to each participant equal to the number of shares issued at $3.00, amounting
to $2.7 million for the KMP. The loan is interest free and non-recourse.
The loan is to be repaid to Helloworld Travel after vesting conditions are met on 1 July 2019 and can be repaid up until
1 July 2026. If the shares fail to vest, the shares will be cancelled and the loan extinguished. During the vesting period,
the shares receive dividends as per ordinary paid up shares. The dividends earned are offset against any future loan
payable under the scheme until the loan is repaid.
Set out below is the summary of the shares granted and loan value with the KMP:
Name
Role
M Burnett
R Carstensen
S McKearney
TOTAL
Chief Financial Officer
Group General Manager - Corporate
Group General Manager – New Zealand
Shares granted
Number
Loan value
at grant date
$
Loan value as
at 30 June 2017
$
500,000
250,000
150,000
900,000
1,500,000
750,000
450,000
2,700,000
1,478,182
739,071
443,443
2,660,696
The detailed KMP remuneration disclosures are provided in the in the Remuneration Report, contained within the
Directors Report.
helloworldlimited.com.au 27. Particulars in relation to controlled entities as at 30 June 2017
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 34. The proportion of ownership interest
is equal to the proportion of voting power held.
NAME
COUNTRY OF INCORPORATION
OWNERSHIP INTEREST
2016
%
2017
%
Helloworld Travel Limited 1, 2, 4
AOT Group Limited 2
Jetset Travelworld Network Pty Limited 2
Jetset Pty Limited 2
JTG Corporate Pty Limited 2
Helloworld Services Pty Limited 2
Helloworld Group Pty Limited 2
QBT Pty Limited 2
Qantas Holidays Limited
Travelworld Pty Limited 2
Retail Travel Investments Pty Limited 2
Harvey World Travel Group Pty Limited 2
Harvey World Travel Franchises Pty Limited
Travelscene Pty Limited 2
Harvey World Travel International Pty Limited 2
Travelscene Tickets Pty Limited 3
Transonic Travel Pty Limited 2
World No. 1 Limited 3
Helloworld Travel Services (Australia) Pty Limited 4
Travel Indochina Limited
Best Flights Pty Limited 2
World Aviation Systems (Australia) Pty Limited 3
Global Aviation Services Pty Limited 3
Helloworld Travel Services (NZ) Limited 4
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
Helloworld NZ Limited
Global Aviation Services (Australasia) Pty Limited 3
Biztrav Limited
Aus STS Holdco II Pty Limited 2
Helloworld Travel Services Group Pty Limited 2, 4
ACN 003 683 967 Pty Limited
Concorde International Travel Inc.
Helloworld Travel Services USA Inc.4
Harvey Holidays Pty Limited
Travel Indochina Vietnam Co. Ltd
Travel Indochina Lao Co Limited
Advanced Applications (UK) Limited 3
Helloworld Franchising Pty Limited 2
Helloworld Digital Pty Limited 2
Helloworld IP Pty Limited 2
Insider Journeys Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
United Kingdom
Australia
Australia
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
United States of America
United States of America
Australia
Vietnam
Laos
United Kingdom
Australia
Australia
Australia
United Kingdom
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%
-
76.6%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
95.0%
70.0%
-
100.0%
100.0%
100.0%
100.0%
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%
76.6%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
95.0%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
93
NAME
COUNTRY OF INCORPORATION
Helloworld Travel Services Holding Pty Limited 2, 4
Sunlover Holidays Pty Limited
AOT Business Consulting (Shanghai) Limited
ATS Pacific Pty Limited 2
AOT Inbound Pty Limited 2
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
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
HTG Australia Pty Limited 4
1. Helloworld Travel Limited
Australia
Australia
China
Australia
Australia
New Zealand
New Zealand
Fiji
Fiji
Fiji
Fiji
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
OWNERSHIP INTEREST
2016
%
2017
%
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%
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%
-
Helloworld Travel Limited is the legal owner of the Group. Refer note 28 for parent entity information.
2. Deed of cross guarantee
These entities are included in the Deed of Cross Guarantee (refer note 29). Pursuant to ASIC Corporations (Wholly-
owned Companies) Instrument 2016/785, these controlled entities are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial statements.
3. Controlled entities disposed or deregistered during the current year
On 23 January 2017, Helloworld Travel disposed of its wholly owned controlled entities, World Aviation Systems
(Australia) Pty Limited, Global Aviation Services Pty Limited and Global Aviation Services (Australasia) Pty Limited.
Refer note 30 for further details.
During the current year, Helloworld Travel deregistered the following dormant entities:
• Travelscene Tickets Pty Limited on 13 July 2016;
• World No. 1 Limited on 22 February 2017; and
• Advanced Applications (UK) Limited on 2 March 2017.
4. Other changes to controlled entities
During the current year, the following entities changed their legal name:
• Helloworld Limited to Helloworld Travel Limited on 10 April 2017;
• Stella Travel Services (NZ) Limited to Helloworld Travel Services (NZ) Limited on 18 August 2016;
• Stella Travel Services USA Inc. to Helloworld Travel Services USA Inc. on 15 August 2016;
• Stella Travel Services Group Pty Ltd to Helloworld Travel Services Group Pty Limited on 11 August 2016;
• Stella Travel Services (Australia) Pty Ltd to Helloworld Travel Services (Australia) Pty Limited on 11 August 2016; and
• Stella Travel Services Holding Pty Ltd to Helloworld Travel Services Holding Pty Limited on 11 August 2016.
On 2 June 2017, Helloworld Travel registered a new company named HTG Australia Pty Ltd. This legal entity is
currently dormant.
helloworldlimited.com.au 28. Parent entity information
As at year ended 30 June 2017, the legal parent company of the Group was Helloworld Travel Limited. Set out below
is the supplementary information about the parent entity.
(a) Results of parent entity
Profit/(loss) after income tax
TOTAL COMPREHENSIVE INCOME/(LOSS)
STATEMENT OF FINANCIAL POSITION
Total current assets
Total non-current assets
TOTAL ASSETS
Total current liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share based payments reserve
Accumulated losses
TOTAL EQUITY
PARENT
2017
$’000
19,539
19,539
118,834
150,809
269,643
54,073
146
54,219
2016
$’000
(27)
(27)
40,348
150,352
190,700
15,464
-
15,464
215,424
175,236
464,534
435,688
2,498
1,286
(251,608)
(261,738)
215,424
175,236
(b) Parent entity guarantees in respect of debts of its subsidiaries
The legal parent Helloworld Travel 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 29.
(c) 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 2017 the tax consolidated group had a tax payable of
$6.2 million (2016: $0.7 million).
(d) 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 2017 (2016: none).
95
29. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the entities identified in note 27 are
relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial statements
and Directors’ reports.
Helloworld Travel has a Deed of Cross Guarantee in place since 25 May 2007. The effect of the Deed is that Helloworld
Travel 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 Travel 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 removed from the deed:
• World Aviation Systems (Australia) Pty Limited (23 January 2017)
• Global Aviation Services Pty Limited (23 January 2017)
The consolidated income statement and statement of financial position have been prepared in accordance with the
accounting policy note 34 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.
(a) Statement of profit or loss and other comprehensive income
REVENUE 1
Employee benefits expenses
Advertising, selling and marketing expenses
Communication and technology expenses
Occupancy and rental expenses
Operating expenses 2
Profit on disposal of investments
Earnings before interest expense, tax, depreciation and amortisation (EBITDA)
Finance expense
Depreciation and amortisation expense
LOSS BEFORE INCOME TAX BENEFIT
Income tax benefit
LOSS AFTER INCOME TAX BENEFIT
OTHER COMPREHENSIVE INCOME
Cash flow hedges transferred to profit or loss, net of tax
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
2017
$’000
116,372
(52,833)
(18,405)
(6,926)
(5,323)
2016
$’000
72,845
(46,195)
(17,913)
(6,325)
(5,363)
(34,855)
(20,369)
429
332
(1,541)
(2,597)
(3,171)
(7,309)
5,058
(2,251)
(22,988)
(2,626)
(2,250)
(27,864)
8,249
(19,615)
3
23
(2,248)
(19,592)
1 Revenue includes $24.0 million (2016: nil) in dividends received from Australian entities outside the Closed Group.
2 Operating expenses include $17.6 million (2016: $1.3 million) relating to debt forgiveness of intercompany loans with entities outside
of the Closed Group.
helloworldlimited.com.au (b) Summary of movement in accumulated losses
Accumulated losses at the beginning of the financial year
Dividends paid
Loss after income tax benefit
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(c) Statement of financial position as at 30 June
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Deferred tax assets
Investments
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Derivative financial instruments
Provisions
Deferred revenue
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
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
2017
$’000
2016
$’000
(165,453)
(145,838)
(9,409)
(2,251)
-
(19,615)
(177,113)
(165,453)
2017
$’000
2016
$’000
23,397
33,959
57,356
1,670
107,141
6,928
206,088
127
321,954
379,310
10,865
22,404
33,269
1,719
105,113
6,604
206,086
301
319,823
353,092
196,997
168,651
104
-
9,047
2,384
6,163
287
3
7,255
3,011
1,813
214,695
181,020
11,134
10,715
2,284
2,126
26,259
240,954
138,356
37,044
7,962
2,444
4,057
51,507
232,527
120,565
313,041
2,428
284,186
1,832
(177,113)
(165,453)
138,356
120,565
97
30. Business acquisitions and disposals
(a) Acquisition of Cruise Factory, Seven Oceans Cruising, Cruise Abroad and
Worldwide Cruise Centres
On 28 February 2017, Helloworld Travel completed its acquisition of Cruise Factory, Seven Oceans Cruising, Cruise
Abroad and Worldwide Cruise Centres businesses (collectively referred to as the Cruise Businesses).
Cruise Factory is a cruise data provider specialising in providing access to a database of all major ocean and river cruise
products worldwide including more than 20,000 itineraries, over 120 cruise lines, 450 ocean and river cruise vessels and
information on over 3,000 ports worldwide.
Seven Oceans and Cruise Abroad are wholesale cruise specialists providing cruise packaging and services to a wide
range of agency groups including the affiliated network of Worldwide Cruise Centres.
Details of the purchase consideration, net assets acquired and goodwill of the Cruise Businesses are as follows:
Cash paid
Ordinary shares issued
PURCHASE CONSIDERATION
$’000
664
406
1,070
The fair value of the 100,000 shares issued as part of the consideration paid for the Cruise Businesses was based on the
published share price on 28 February 2017 of $4.06 per share.
The provisional assets and liabilities recognised as a result of the acquisition of the Cruise Businesses are as follows:
Property, plant and equipment
Other assets
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
Fair Value
$’000
9
17
26
1,044
1,070
The goodwill is attributable to future revenue, profitability and cost synergies expected to arise from the acquisition. It
will not be deductible for tax purposes.
(b) Acquisition of AOT Group Limited
On 1 February 2016, the Group acquired 100% of the share capital of the AOT Group and its controlled entities (AOT)
following approval by the Group’s shareholders on 22 January 2016 at an extraordinary general meeting. The merger of
these two complementary businesses is treated as an acquisition by Helloworld Travel for Group accounting purposes
under applicable accounting standards. The merger creates a larger and more competitive integrated travel group which
offers a broader range of travel products and services.
Details of the purchase consideration, net assets acquired and goodwill of AOT are as follows:
Cash paid
Ordinary shares issued
PURCHASE CONSIDERATION
$’000
16,730
87,480
104,210
helloworldlimited.com.au The fair value of the 36,450,001 shares issued as part of the consideration paid for AOT was based on the published
share price on 1 February 2016 of $2.40 per share. The cash consideration was settled in full by April 2016 and was
adjusted to reflect the debt free, cash free basis of the transaction.
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
$’000
(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.
The assets and liabilities recognised as a result of the AOT merger are as follows:
Cash and cash equivalents
Trade receivables
Other current assets
Equity accounting investments
Property, plant and equipment
Identifiable intangible assets acquired
Deferred tax assets
Trade and other payables
Tax related payables
Provisions
Deferred tax liabilities
Non-controlling interests
Net assets acquired (excluding goodwill)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
Provision at
30 June 2016
$’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
Adjustments
-
(122)
-
-
-
-
-
-
(299)
-
(2,144)
-
(2,565)
2,565
-
Final at
30 June 2017
$’000
31,770
37,033
4,851
1,727
4,907
15,217
2
(82,264)
(3,206)
(2,855)
(9,928)
(1,254)
(4,000)
108,210
104,210
During the current year, Helloworld Travel finalised the values of assets and liabilities acquired as a result of the AOT
merger in accordance with acceptable accounting standards. The adjustments relate to the finalisation of income tax
and the recognition of a deferred tax liability on the AOT Agent Network, acquired as part of the merger that has an
indefinite useful life.
The goodwill is attributable to the additional products and services, the experience of the AOT management and cost
synergies which are expected to increase the market share and earnings of the enlarged Group. It will not be deductible
for tax purposes.
From the date of the merger, 1 February 2016 to 30 June 2016 (5 month period), AOT contributed revenue of
$19.6 million and net profit before tax of $3.0 million to the 30 June 2016 Group results. If the date of the AOT
merger was 1 July 2015, the enlarged Helloworld Travel group revenue would have been $334.5 million and group
net profit before tax of $16.6 million for the year ended 30 June 2016. These results are based on the aggregation
of the Helloworld Travel and AOT results, excluding certain significant items not in the ordinary course of business.
Acquisition related costs of $3.8 million that were incurred in FY16 by the Group, net of the AOT acquisition and not
directly related to the issue of shares, are included in other expenses in the consolidated statement of profit or loss
and other comprehensive income and in operating cash flows in the consolidated statement of cash flows.
99
(c) Disposal of World Aviation Services Pty Ltd and Global Aviation Services Pty Ltd
On 23 January 2017, the Group disposed of its investment in World Aviation Systems (Australia) Pty Limited, Global
Aviation Services Pty Limited and Global Aviation Services (Australasia) Pty Limited for a consideration of $0.5 million,
after adjustments for employee leave liabilities and transaction costs. The disposal resulted in a profit before tax
of $0.4 million in the current year.
(d) 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 2016 financial year.
(e) Settlement of Advanced Applications (UK) Limited acquisition
During the financial year ended 30 June 2014, the Group acquired 100% ownership interest in the business of Advanced
Applications (UK) Limited. The acquisition had a deferred consideration component, which was settled in the current
year of $0.7 million and reported in the consolidated statement of cash flows.
31. Share based payments
(a) Long term incentive plan (LTIP)
Background
The Board adopted the Helloworld Travel 2016 long term incentive plan (LTIP) following a review of the previous short
and long term incentive plans for key executives and senior leaders. This scheme replaces the previous LTIP which was
in place for a certain number of Helloworld Travel Senior Leaders. The overall objectives of the LTIP is to lock in key
leaders for an extended period of time whilst at the same time incentivising them to generate superior returns for
the Group.
The LTIP was approved by Shareholders at the 2016 Annual General Meeting. The key criteria for the new LTIP are as
follows:
• 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. The CEO and Group General Manager Wholesale and Inbound do not
participate in the LTIP;
• LTIP replaces the former performance rights plan (PRP) and the short term incentive plan (STIP) for KMP;
• The threshold performance criteria is directly linked to total shareholder return (TSR) and provides reward
on successful marked improvement of Helloworld Travel’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 the 2017 financial year will receive further grants prior to the 2017 grant vesting or expiring.
helloworldlimited.com.au The key attributes of the plan are as follows;
Type of scheme
Scheme commencement
Scheme measurement and vesting date
Number of shares issued
Share issue price at commencement
Performance Criteria
50% Vesting
100% Vesting
KPIs
Loan
Loan funded long term incentive plan
1 July 2016
1 July 2019
2,600,000
$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 after vesting conditions are met.
A holding lock will be placed on the shares until the vesting date has been reached and the performance criteria have
been assessed. Should the shares vest, they will be removed from the holding lock and issued to the eligible employee.
If the shares fail to vest, then the shares will be forfeited and cancelled.
These shares attract dividends as per ordinary paid up shares. The dividends earned will be offset against any future
loan payable by the eligible employee under the scheme.
During the year ended 30 June 2017, there were 2,600,000 shares granted under the new 2016 LTIP per the table below:
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price
Opening
balance
Granted
Lapsed
Closing
balance
Vested and
exercisable at
end of the year
Number of shares
1-Jul-16
1-Jul-16
30-Jun-19
$3.00
-
2,600,000
-
2,600,000
-
Fair value of shares granted under the LTIP
The assessed fair value of the shares granted during the year ended 30 June 2017 was $0.77 per share with a total value
of $2.0 million (2,600,000 shares) over the 3 year vesting period.
The fair value was determined using a version of the Black Scholes model incorporating Monte Carlo simulation analysis
to value the loan share instruments. This incorporates the market-based performance condition attached to the loan
share instruments.
101
(b) Legacy long term incentive plan (performance rights plan)
At the beginning of the current period, Helloworld Travel only had one tranche of 111,234 performance rights
outstanding under the former Helloworld Travel Limited PRP. These performance rights were not exercisable and lapsed
during the current year. No performance rights were granted during the current year.
Background
The Group previously remunerated key executives and senior leaders under the PRP. The PRP had been approved by
Shareholders at the 2011 Annual General Meeting. Under the PRP, conditional rights (‘performance rights’) to acquire
shares in Helloworld Travel were awarded to eligible senior executives as the long term incentive component of their
remuneration for each relevant financial year.
Each performance right generally provided the holder a conditional right to acquire one fully paid share in Helloworld
Travel if any applicable performance or other vesting conditions were satisfied (or waived).
Performance conditions
Features of the performance rights granted for each of the 2011-2015 financial years were as follows:
• The performance rights were subject to performance conditions linked to growth in the Helloworld Travel’s adjusted
earnings per share (‘adjusted EPS’). Adjusted EPS is EPS adjusted for significant, non-recurring and/or unusual items.
The actual adjusted EPS was compared to a target adjusted EPS. Adjusted EPS is not a financial measure prescribed
by Australian Accounting Standards but is a measure used by the remuneration committee (RC) solely to assess the
vesting of performance rights.
• To achieve vesting, the aggregate adjusted EPS for each performance period must meet or exceed the target adjusted
EPS. The target adjusted EPS was adjusted to reflect the 1 for 6 share consolidation that took place on 27 January
2016.
• Where the actual adjusted EPS achieves the minimum specified target adjusted EPS, fifty per cent of each
performance right tranche would vest. Where the actual adjusted EPS achieves the maximum specified target
adjusted EPS, one hundred per cent of each performance right tranche would vest. A straight line vesting is applied
where the actual adjusted EPS falls between the minimum and maximum specified target adjusted EPS.
Details of the performance rights movements during the year are set our below:
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price
Opening
balance
Granted
Lapsed
Closing
balance
Vested and
exercisable at
end of the year
Number of shares
27-Feb-15
1-Jul-14
30-Jun-17
$0.00
111,234
-
111,234
-
-
helloworldlimited.com.au (c) Franchise loyalty shares
On 20 December 2016, Helloworld Travel issued 666,000 shares to franchisees who had elected to participate in the
franchise loyalty plan.
The shares were issued for nil consideration. The shares have certain non-market conditions which must be satisfied
until their vesting date of 31 October 2018. If the franchisee leaves the Helloworld Travel network, or other non-market
conditions are not met prior to the vesting date, the shares allocated to the respective franchisee will be forfeited and
cancelled. At the vesting date, franchisees which have satisfied the required conditions of the scheme will be issued
with their allocated shares at no cost. All franchise loyalty shares rank equally in all respects with existing shares from
the date of their issue. Dividends on these shares are payable to the respective franchisee during the vesting period if
declared by the Group.
The fair value of the shares are amortised over the vesting period as a share based payment expense. The key attributes
of the plan are as follows;
Type of scheme
Scheme commencement date
Franchise loyalty plan
20 December 2016
Scheme measurement and vesting date
31 October 2018
Number of shares issued
Key performance criteria
666,000
Must remain a member of the Helloworld Travel franchisee network at vesting date
Details of the franchise loyalty shares movements during the year are set our below:
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price
Opening
balance
Granted
Lapsed
Closing
balance
Vested and
exercisable at
end of the year
Number of shares
20-Dec-16
20-Dec-16
31-Oct-18
$0.00
-
666,000
-
666,000
-
(d) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period were as follows:
Write-back of lapsed performance rights under legacy PRP
Shares granted under 2016 LTIP
Shares granted under franchise loyalty plan
TOTAL SHARE BASED PAYMENT EXPENSES
2017
$’000
(136)
667
681
1,212
2016
$’000
(359)
-
-
(359)
These expenses were taken to the share based payment reserve which forms part of the reserves in the consolidated
statement of financial position.
103
32. 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 Travel had previously assumed responsibility
for the plan assets and plan liabilities for these members in the defined benefit plan controlled and managed by
Helloworld Travel.
The plan was wound up on 29 February 2016 and thereafter defined benefits ceased to be provided to the previous
members of the Plan. The remaining members agreed to transfer to an Australian Super accumulation fund. The assets
and liabilities under this defined benefit plan were settled and derecognised from the Group’s consolidated statement
of financial position at that date.
As at 30 June 2017, Helloworld Travel has no defined benefit plan as the former plan ceased on 29 February 2016 and was
not replaced. As a result, no financial transactions or balances have been recorded in the current financial year and the
below summary highlights the respective comparative year financial information up to its closure on 29 February 2016.
AMOUNTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
Balance at the beginning of the year
Amount recognised in the statement of comprehensive income
Total expense
Employer contributions
BALANCE AT THE END OF THE YEAR
EXPENSE RECOGNISED IN THE 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
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 from changes in financial assumptions
Payments from the plan
Curtailments and settlements
CLOSING DEFINED BENEFIT OBLIGATION
CONSOLIDATED
2017
$’000
2016
$’000
-
-
-
-
-
3,062
(2,405)
(640)
(17)
-
CONSOLIDATED
2017
$’000
-
-
-
-
-
2016
$’000
512
324
192
(388)
640
CONSOLIDATED
2017
$’000
2016
$’000
-
-
-
-
-
-
-
-
-
-
10,058
512
324
192
112
1,208
941
(2,061)
(11,286)
-
helloworldlimited.com.au 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
ACTUAL RETURN GAIN/(LOSS) ON PLAN ASSETS
Actuarial (losses) recognised during the year
Cumulative actuarial gains recognised
Significant actuarial assumptions and sensitivity
The significant actuarial assumptions used (expressed as weighted averages) were as follows:
Discount rate
Future salary increases
CONSOLIDATED
2017
$’000
2016
$’000
-
-
-
-
-
-
-
13,120
132
(17)
112
(2,061)
(11,286)
-
CONSOLIDATED
2017
$’000
2016
$’000
-
-
(2,405)
2,001
CONSOLIDATED
2017
%
2016
%
-
-
3.8%
3.8%
In the prior period, the plan exposed Helloworld Travel to interest rate risk, investment risk and inflation risk. As the
plan was closed in the prior year, these risks no longer exist.
33. Events after the reporting period
No matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect
the Group’s operations, the results of those operations, or the Group’s state of affairs in future financial years except:
Dividends
On 23 August 2017, the Group declared an 8.0 cents per share fully franked final dividend. The dividend is to be paid
on 20 September 2017, with a record date of 4 September 2017. The dividend will be paid out of the 2017 financial
year profits, but is not recognised as a liability as at 30 June 2017.
105
34. 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 the legal owner Helloworld Travel Limited and its controlled entities.
(a) Principles of consolidation
(i) Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Helloworld Travel
Limited as at 30 June 2017 and the results of all subsidiaries for the year then ended. Helloworld Travel Limited and
its subsidiaries together are referred to in this financial report as the Group.
Subsidiaries are all 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 Travel Limited
and other individual entity financial statements within the Group.
(ii) 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.
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.
helloworldlimited.com.au (iii) 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 Travel 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.
(iv) Reverse acquisition accounting applied by the Group
On 30 September 2010, Helloworld Travel Limited (formerly known as Jetset Travelworld Limited) completed a merger
with Helloworld Travel Services Holdings Pty Limited (HTSH, formerly known as Stella Travel Services Holdings Pty
Limited). In accordance with applicable Australian Accounting Standards, this merger was accounted for as a reverse
acquisition business combination.
This reverse acquisition business combination follows the reverse acquisition business combination that was accounted
for at the time of the merger of Helloworld Travel Limited (formerly known as Jetset Travelworld Limited), Qantas
Holidays Limited and QBT Pty Limited in July 2008.
In applying the requirements of AASB 3 Business Combinations to the HTSH merger with the Group:
• Helloworld Travel Limited is the legal parent entity to the Group; and
• Helloworld Travel Services Holdings Pty Limited (HTSH), which is neither the legal parent nor legal acquirer, is deemed
to be the accounting acquirer.
The consolidated financial information incorporates:
• the assets and liabilities of all entities deemed to be acquired by HTSH, including Helloworld Travel 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 Travel 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 previous 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 (Helloworld Travel), but be a continuation of the financial
statements of the legal subsidiary (HTSH, which is the acquirer for accounting purposes).
(b) 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.
107
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition
date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree, either
at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. Where
equity instruments are issued in an acquisition, the instrument’s fair value is its published market price at the date of
the exchange unless, in rare circumstances, it can be demonstrated that the published price at the exchange date is an
unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair
value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree acquisition
date, and 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.
(c) 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
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.
(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;
helloworldlimited.com.au • 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.
(d) 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 airline ticket, 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.
In relation to our Inbound business in Australia, New Zealand and Fiji, revenue from the arrangement of airline ticket,
tours and travel are recognised on the traveller’s tour or travel departure date, consistent with the agency relationship
for Inbound travel arrangements. Revenue is recognised 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 when it is contractually entitled to receive this. This is generally when the
passenger has flown/departed (for air and cruise) or the passenger has commenced their hotel stay.
Each supplier has separate contractual agreements with the Group and the contractual periods vary accordingly.
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 current booking trends and historical information.
Override rates applied to calculate the override commission revenue are specified in each supplier contract and often
refer to 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 (based on actual sales, forecast bookings and historical trends) and compared to the
performance tiers.
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Other services
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 to revenue when the associated
operating expenses are recorded within advertising and marketing 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.
(iii) Finance income
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in revenue,
using the effective interest method.
(e) 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.
(f) 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 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.
(g) 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.
helloworldlimited.com.au (h) 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 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.
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.
(i) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the asset, even if that asset is not explicitly specified in an
arrangement.
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.
Leases in which substantially all the risks and benefits incidental to ownership of the leased items are transferred
to the Group are classified as finance leases. The Group currently has not entered into any finance leases.
(j) Investment property
Investment property is held for long term rental yields and is not occupied by the Group. Investment property is carried
at fair value. When measuring the fair value of investment property the Group ensures that the fair value reflects, among
other things, rental income from current leases and other assumptions that market participants would use when pricing
the investment property under current market conditions. Changes in fair values are recorded in profit or loss as part of
other income.
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(k) 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 (where applicable). 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 using the straight line method over the following periods:
• Supplier agreements
• Brand names
• Trademarks
• Software, website and other assets
8 years
7 to 20 years
7 to 20 years
2.5 to 5 years
Intangible assets with finite lives are tested for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method for intangible assets with finite useful lives
are reviewed at least at each financial year end.
Goodwill, Franchise System and Agent Network are considered to be indefinite life intangible assets. Intangible assets
with indefinite useful lives are tested for impairment annually either individually or at the Cash Generating Unit (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.
Amounts paid for the development of software and website intangible assets are capitalised only when it is probable
the future economic benefits of the project will flow to the Group. Costs capitalised include external direct costs of
materials and service, and direct payroll and payroll related costs of employees’ time spent on the project.
(l) 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 CGU, is the greater of its value in use and its fair value less costs of disposal.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the
purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (CGUs).
The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs that are
expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount.
Impairment losses are recognised in the 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.
helloworldlimited.com.au (m) 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. 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.
(n) 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.
(o) 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.
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(ii) 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. Further 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.
(iii) 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, 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.
(iv) 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.
(v) Rent straight line
A provision for straight line rent is recognised for fixed rental increases contracted to occur over the period of the lease.
The provision is released such that rent expense is recognised on a straight line basis over the lease term
(p) 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) or departure date of the traveller for the Inbound business, net of the
cost of sale in accordance with the revenue accounting policy outlined above.
(q) Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency exposures.
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.
helloworldlimited.com.au 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.
(r) 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.
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 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 of high quality corporate bonds at the end of the
reporting period, with terms and currencies that match, as closely as possible, to the estimated future cash outflows.
Re-measurements 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.
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(iii) Share based payments
Share based compensation benefits are provided to employees and franchisees via the long term incentive plan (LTIP)
and the franchise loyalty plan respectively. Information relating to these schemes is set out in note 31.
The fair value of the share based payments for the LTIP and the franchise loyalty plan are recognised as an employee
benefits expense or operating cost respectively 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 Group 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 or franchisee
(respectively). 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 contribution and defined benefit plans
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.
The defined benefit plan controlled by Helloworld Travel was wound up effective from 29 February 2016 with all assets
and liabilities under this plan settled and derecognised from the consolidated statement of financial position.
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 high quality 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.
Re-measurement 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.
helloworldlimited.com.au (s) 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.
(t) 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.
(u) 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.
In the current financial year, the balance of the predecessor accounting reserve has been transferred to retained
profits/accumulated losses via the statement of changes in equity.
(v) 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.
(w) 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:
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• the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is
not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss; or
• the taxable temporary difference is associated with investments in subsidiaries, and the time of the reversal of
the temporary difference can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward or unused tax credits and
unused tax losses, to the extent that it is probable that the taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except when:
• the deferred tax assets relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
• the deductible temporary difference is associated with investments in subsidiaries, in which case a deferred tax asset
is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates that are expected to apply to the year when the asset is realised
or the liability settled, based on tax rates and tax laws that have been enacted or substantially enacted at the balance
sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the 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 Travel Limited and its wholly owned Australian controlled entities have implemented the tax consolidation
legislation. The head entity, Helloworld Travel 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 Travel 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.
helloworldlimited.com.au (ii) Nature of tax funding arrangements and tax sharing agreements
Helloworld Travel Limited, 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.
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.
Assets or liabilities arising from the tax funding agreement with Helloworld Travel Limited are recognised as a current
amount receivable or payable to Helloworld Travel Limited. Any difference in the amounts assumed and the amount
receivable or payable to Helloworld Travel Limited, are shown as a contribution to, (or distribution from) the head tax
entity Helloworld Travel Limited in the results of the individual legal entities.
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.
(x) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase
of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense item as applicable.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified
as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable, or payable to, the taxation authority.
119
(y) Parent entity financial information
The financial information for the legal parent entity, Helloworld Travel Limited is disclosed in note 28 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 Travel Limited.
(ii) Tax consolidation legislation
Helloworld Travel Limited and its wholly-owned Australia controlled entities have implemented the tax consolidation legislation.
(iii) Financial guarantees
Where Helloworld Travel 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.
helloworldlimited.com.au DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
The consolidated financial statements and notes that are set out on pages 52 to 120 and the Remuneration report
in the Directors’ Report set out on pages 32 to 41, 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 2017 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 2017 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 27 will be able to meet any obligations or liabilities to which they are or may become subject
to by virtue of the deed of cross guarantee between the Company and those Group entities pursuant to ASIC
Corporations (Wholly-owned Companies) Instrument 2016/785.
Note 1 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.
Garry Hounsell
Chairman
Helloworld Travel Limited
Melbourne, 23 August 2017
121
Independent auditor’s report
To the shareholders of Helloworld Travel Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Helloworld Travel Limited (the Company) and its controlled
entities (together, the Group) is in accordance with the Corporations Act 2001, including:
a)
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
financial performance for the year then ended; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2017;
the consolidated statement of profit or loss and other comprehensive income for the year then
ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended;
the notes to the financial statements, which include a summary of significant accounting
policies; and
the Directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Our audit approach
Overview
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
helloworldlimited.com.au We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
• Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
– Carrying value of goodwill
– Carrying value of franchisee
system and agent network
– Estimation of override
commission revenue
These are further described in the
Key audit matters section of our
report.
• For the purpose of our audit we
used overall group materiality of
$1.6m, which represents
approximately 5% of the
Group’s profit before tax.
• We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the
nature, timing and extent of our
audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
• We chose group profit before tax
because, in our view, it is the
metric against which the
performance of the Group is
most commonly measured and
is a generally accepted
benchmark.
• We selected 5% based on our
professional judgement noting
that it is also within the range of
commonly acceptable profit
related thresholds.
• Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future
events.
• The Group predominately
operates across Australia and
New Zealand, with operations in
Fiji, Vietnam, the United States
of America and other locations.
• The Group accounting function
is based in Melbourne.
• Our work is performed
•
predominately in Australia with
reporting from component
auditors in New Zealand.
In relation to the component
auditor, we decided on the level
of judgement required from us
to be able to conclude whether
sufficient appropriate audit
evidence has been obtained. Our
involvement included written
instructions to and reporting
from the component auditor,
discussions with the component
auditor to understand their
audit approach and clarifying
findings and further discussions
with component management,
where required.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
123
How our audit addressed the key audit matter
We compared the Group’s net assets as at 30 June
2017 to its market capitalisation and noted headroom.
To evaluate the impairment assessment, and the
process by which the forecast cash flows were
developed we:
•
•
•
•
•
Assessed the allocation of assets, liabilities
and cash flows to each CGU to test whether
they were directly attributable to the
individual CGUs.
Compared the forecasted cash flows for 2018
used in the impairment assessment with the
FY2018 budget approved by the directors.
Assessed the cash flow forecasts for each
CGU in the models by considering the key
factors and underlying drivers for growth in
the context of the Group’s future plans.
Considered the historical accuracy of the
Group’s cash flow forecasts by comparing the
forecasts used in the prior year to the actual
performance of each CGU in the current year.
Compared the terminal growth rate to
historical growth rates and economic
forecasts.
With the assistance of our internal valuation experts,
we assessed the discount rates used in the impairment
assessment by comparing it to our expected range
based on market data, comparable companies and
industry research.
We performed a sensitivity analysis for each CGU by
reducing the cash flow growth rates and terminal
growth rates, and increasing the discount rates within
a reasonably foreseeable range.
Key audit matter
Carrying value of goodwill
(Refer to note 13)
The Group has a goodwill balance of $144.9m which
represents 23% of the total assets of the Group. The
Group’s goodwill is recognised in three Cash
Generating Units (CGU) – Australia Retail Franchise
Operations ($21.9m), Australia Wholesale & Inbound
($111.7m) and New Zealand ($11.2m). There are an
additional 2 CGU’s, Australia Travel Management
and Rest of World, which have no goodwill allocated
to them as at 30 June 2017.
During the current year, the Group implemented a
new organisational structure to reflect management
of the Group on a geographical basis. As a result, the
previous CGUs of Retail Franchise Operations,
Wholesale & Inbound and Travel Management have
been replaced by those noted above.
A goodwill impairment assessment was performed on
the previous CGUs, with no impairment identified.
The goodwill has been reallocated to the new CGU’s
based on the relative value contribution of each CGU.
For the year ended 30 June 2017, the Group
performed an impairment assessment over the
goodwill balance by:
1.
Calculating the ‘Value in Use’ for each CGU
using a discounted cash flow model.
2. Comparing the ‘Value in Use’ of each CGU to
their respective book value to determine the
need for any impairment.
The impairment models included cash flows for each
CGU for a forecast 5 year period. A terminal growth
rate was applied in determining the terminal value.
The assessment did not identify a need for
impairment.
We considered the carrying value of goodwill to be a
key audit matter as the balance is material and there
is significant judgement involved in estimating future
cash flows, particularly with respect to determining
appropriate:
•
•
•
Discount rates
Annual growth rates (short-term)
Terminal growth rates
Carrying value of Franchise systems and
Agent network
(Refer to note 13)
The Franchise system ($97.4m) and Agent network
($8.3m) are indefinite life intangible assets, allocated
to specific cashflows within Australia Retail Franchise
Operations and Australia Wholesale & Inbound
segments respectively. These are the integrated
system of methods, procedures, techniques and other
systems which, together with a network of franchisees
To evaluate the cash flow forecasts and the process by
which they were developed we:
•
Assessed the allocation of cash flows to each
impairment assessment and found them to
be directly attributable to the individual
intangible assets.
helloworldlimited.com.au Key audit matter
and agents facilitate the day to day running of the
businesses. The franchise system asset was first
recognised and valued in 2011 as part of the Jetset /
Stella merger and the Agent network was recognised
as part of the purchase price accounting after the
merger with the AOT Group in 2016.
For the year ended 30 June 2017 the Group
performed impairment assessments at these
individual asset levels by:
1.
Calculating the recoverable amount based
on an excess earnings calculation.
2. Comparing the recoverable amount of the
Franchise system and Agent network to the
carrying amount.
The assessment did not identify a need for
impairment.
We considered the carrying value of the Franchise
system and Agent network to be a key audit matter as
the balances are material and there is significant
judgement involved in estimating future cash flows,
particularly with respect to determining appropriate:
•
•
•
Discount rates
Annual growth rates (short-term)
Terminal growth rates
Estimation of override commission revenue
(Refer to note 1 (d)(ii) and note 34 (d)(i))
The Group generates revenue through various
streams, including override 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 the
Group.
These factors include:
•
•
•
a significant portion of commission contract
periods do not correspond to the Group’s
financial year end. Judgement is required to
determine anticipated future travel revenues
over the remaining contract year and
associated commission rates;
The differing commencement dates of the
override commission contracts mean that
commissions may have to be estimated for
contracts for which the applicable override
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.
How our audit addressed the key audit matter
•
•
•
•
Compared the forecasted cash flows for 2018
used in the impairment assessments with the
FY2018 budget approved by the directors.
Assessed the cash flow forecasts for each
impairment assessment by considering the
key factors and underlying drivers for growth
in the context of the Group’s future plans.
Considered the historical accuracy of the
Group’s cash flow forecasts by comparing the
forecasts used in the prior year to the actual
performance of each respective business in
the current year.
Compared the terminal growth rate to
historical growth rates and economic
forecasts.
With the assistance of our internal valuation experts,
we assessed the discount rate used in the impairment
assessment by comparing it to our view of an
acceptable range based on market data, comparable
companies and industry research.
We performed a sensitivity analysis for each
impairment assessment by reducing the cash flow
growth rate and terminal growth rate, and increasing
the discount rate within a reasonably foreseeable
range.
We evaluated management’s estimates and
judgements in determining revenue recognised in
relation to override commission revenue from supplier
contracts during the year, with particular focus on
judgements made at year end with regard to accounts
receivable in relation to override commission revenue.
For override commission revenue that is cash settled
during the period our testing included the following,
performed on a sample basis:
•
•
Traced override commission revenue to cash
receipts.
Obtained a copy of the supplier contracts and
reconciled the eligible revenue and
commission rates to override commission
revenue calculations.
Override commission revenue outstanding at year end
within accounts receivable is the key area subject to
estimation. The testing procedures performed over
this balance included the following performed on a
sampling basis:
•
•
Obtained a copy of the supplier contracts
outlining the eligible revenue and
commission rates, and compared this to the
rates used in the calculations.
Obtained the most recent supplier statement
125
•
How our audit addressed the key audit matter
confirming eligible travel and reconciled this
to the calculations.
Agreed the underlying revenue data used in
the override commission revenue
calculations to independent third party
booking information.
Assessed the accuracy of future estimates
through evaluating the forecast Group sales
of the third party’s products compared to
historical actuals.
Compared the actual override commission
received in the current financial year relating
to the prior period accrual estimation to test
the accuracy of past estimates.
•
•
Key audit matter
Override commission revenue is calculated for the
contract period based on the value of ‘Eligible Travel’
during the period and the corresponding commission
rate in each of the supplier contracts. These ‘Override
Rates’ are often a tiered override earning rate based
on differing levels of Eligible Travel.
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.
We considered this to be a key audit matter due to the
significance of the override revenue to the Group’s
financial statements and the level of judgement
involved in the calculation.
Other information
The directors are responsible for the other information. The other information comprises the
Chairman’s Report, Chief Executive Officer’s Report, Financial Performance Summary, Directors’
Report, Corporate Governance Statement and ASX additional information included in the Group’s
annual report for the year ended 30 June 2017, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
helloworldlimited.com.au Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 32 to 41 of the Directors’ report for the
year ended 30 June 2017.
In our opinion, the remuneration report of Helloworld Travel Limited, for the year ended 30 June
2017 complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
PricewaterhouseCoopers
Andrew Cronin
Partner
23 August 2017
127
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 31 July 2017.
(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
769
548
88
112
51
1,568
Number
of shares
398,901
1,277,141
670,789
3,360,989
114,846,598
120,554,418
%
0.33
1.06
0.56
2.79
95.26
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 31 July 2017 was 96 holders holding 3,914 shares.
helloworldlimited.com.au (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
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMS PTY LTD
CITICORP NOMINEES PTY LIMITED – COLONIAL FIRST STATE INV A/C
BNP PARIBAS NOMINEES PTY LTD
MICHAEL BURNETT
HERITAGE CARE PTY LTD
MR RUSSELL CARSTENSEN
MR BRETT WILLIAM FISHER PATON + MRS VICKI ANNE PATON
CROWNACE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
MAPLESTONE PTY LTD
THE HONOURABLE JOSEPH BENEDICT HOCKEY
Number
of shares
21,740,016
21,223,454
18,480,105
12,828,654
12,638,014
9,580,308
3,108,379
2,964,408
1,958,809
1,286,525
1,044,906
673,186
500,000
370,700
334,246
252,464
250,000
234,309
226,597
215,784
%
18.03
17.60
15.33
10.64
10.48
7.95
2.58
2.46
1.62
1.07
0.87
0.56
0.41
0.31
0.28
0.21
0.21
0.19
0.19
0.18
109,910,864
91.17
(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
22,068,997
21,223,454
18,490,105
12,858,058
12,638,014
%
18.36
17.60
15.34
10.67
10.48
129
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2017
ABN: 60 091 214 998 ASX CODE: HLO
Helloworld Travel Limited and Controlled Entities
Annual Report for the year ended 30 June 2017
helloworldlimited.com.au