A
n
n
u
a
l
R
e
p
o
r
t
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
0
J
u
n
e
2
0
1
8
-
H
e
l
l
o
w
o
r
l
d
T
r
a
v
e
l
L
i
m
i
t
e
d
© DISNEY
Helloworld Travel Limited and Controlled Entities
Annual Report for the year ended 30 June 2018
ANNUAL REPORT 2018
CONTENTS
Corporate Information
Glossary
Chairman’s Report
Chief Executive Officer’s Report
Financial Performance Summary
Directors’ Report
Auditor’s 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
45
46
54
55
56
57
58
129
130
137
1
1
CORPORATE INFORMATION
Directors
Auditor
Garry Hounsell (Chairman)
Andrew Burnes (Chief Executive Officer)
Cinzia Burnes
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
AGM
AOT
Earnings before interest expense, tax, depreciation and amortisation
Annual General Meeting
AOT Group Pty Ltd and its controlled entities
Asia Escape Holidays
Keygate Holidays Pty Ltd
ASIC
ASX
CEO
CFO
Australian Securities & Investments Commission
Australian Securities Exchange
Chief Executive Officer
Chief Financial Officer
Company
The parent entity, Helloworld Travel Limited
EPS
FAR
Earnings per share
Fixed Annual Remuneration
Flight Systems
Flight Systems Pty Ltd and its controlled entities
FY17
FY18
FY19
Group
Financial Year ended 30 June 2017
Financial Year ended 30 June 2018
Financial Year ended 30 June 2019
The Helloworld Travel Group, comprising Helloworld Travel Limited and its controlled entities
Helloworld Travel
Helloworld Travel Limited
KMP
LTIP
Magellan
MTA
Qantas
QBT
QH
STIP
TTV
Key Management Personnel
Long Term Incentive Plan
Magellan Travel Group
Mobile Travel Holdings Pty Limited and its controlled entities
Qantas Airways Limited
QBT Pty Limited
Qantas Holidays Limited
Short Term Incentive Plan
Total Transaction Value
3
CHAIRMAN’S REPORT
On behalf of the Board of Directors
I am very pleased to be presenting
this report as Chairman of
Helloworld Travel Limited.”
It has been a year of strong business performance for Helloworld
Travel Limited, building on the momentum achieved over the last
two years.
As Chairman of Helloworld Travel, I am very pleased to report that the
success and development we have been building in the business has
continued over the last financial year, including the increased focus
on brand recognition, the acquisition of new businesses, improved
remuneration model for our agents, changes to our brand and
marketing strategy and our ongoing strong focus on developing and
delivering enhanced technologies across our business divisions.
All these have either met or exceeded the boards’ expectations.
In May 2018, I attended the Helloworld Travel Owner Managers
Conference in Adelaide, South Australia. I spoke directly to our agents
and confirmed that the changes we are making as a business are
delivering positive results which flow directly to the bottom line of our
agency members and these changes are playing a significant role in the
strength, sustainability and success we see across all our networks in
Australia and New Zealand.
We have also completed a number of significant acquisitions across
the year. These have contributed to our successful year including
the Magellan Travel Group, Flight Systems Pty Ltd and Asia Escape
Holidays.
helloworldlimited.com.au Consolidating and building on
strength in 2017/18
For the year ended 30 June 2018, Helloworld Travel
Limited has delivered a second successive year of strong
profitability growth reporting profit before income tax
of $46.2 million an increase on the year prior of $15.2
million, or 48.9%.
Our EBITDA of $65.2 million represents an increase of
18.2% or $10.0 million over the prior year while our TTV
also increased again year on year by 3.5% rising to $6.1
billion for the year ended 30 June 2018.
Net profit after tax for the year was $32.0 million,
a 48.1% or $10.4 million increase on the prior year.
Revenue levels were maintained across our business
units through increased volume and improved contracting
outcomes, despite challenging conditions related to the
impact of lower airfares.
Basic earnings of 27.1 cents per share were achieved this
financial year, representing an increase of 8.3 cents per
share or 44.1% compared with the prior year and our final
dividend declared of 11.0 cents per share fully franked,
brought the total dividends for the year ending 30 June
2018 to 18.0 cents per share, an increase of 28.6%
compared with the prior year. This is the third consecutive
year we have returned a dividend to shareholders.
Throughout the year management continued to focus on
our costs. Total operating costs for the year were $263.2
million a decline of $9.4 million or 3.4%.
Looking ahead
We are in a very strong position to continue our
successful business performance and also to carry on
the momentum in growing and developing our business in
Australia, New Zealand and around the world.
On behalf of the Board I would like to acknowledge
Andrew Burnes as Chief Executive Officer and Managing
Director of Helloworld Travel Limited, together with the
Executive Leadership Team and Senior Management
Team on their development and delivery of the strategies
that are now resulting in consistent and sustainable
results across the business.
I would also like to acknowledge and thank my fellow
board members for their contribution and commitment
to the company, both over the past year and also going
forward.
I am delighted to be part of this vibrant travel industry
and, as the Chairman of this company, which is going from
strength to strength, I am looking forward to continuing
to work towards the future successes that Helloworld
Travel Limited has ahead.
Garry Hounsell
Further details of the financial performance of the Group
are included in the Operating and Financial Review on
pages 16 to 31.
Chairman
Helloworld Travel Limited
Melbourne, 21 August 2018
5
CHIEF EXECUTIVE OFFICER’S REPORT
I am delighted to present
this report and our results
for the year ended 30 June
2018 as CEO and Managing
Director of Helloworld
Travel Limited.”
A year of continued development and success
Results
Helloworld Travel Limited performed very strongly in FY18 delivering
on key business and financial initiatives with significant improvement
in our key indicators including net profit after tax, EBITDA and costs
compared with the prior year.
Total Transactional Value (TTV) increased to $6.1 billion, up 3.5%
or $204.7 million on the prior year. The increase was despite lower
international airfares (6.6% down on prior year in Australia) offset
by strong growth in international and domestic ticketing volumes
(up 4.6% on prior year in Australia) and improved contracting
outcomes across the Group.
Our full year EBITDA is $65.2 million, an increase of $10.0 million
compared with the prior year, up 18.2%. Net profit after tax also increased
to $32.0 million, up 48.1% and $10.4 million year on year from FY17.
Earnings per share for FY18 was 27.1 cents, up from 18.8 cents in
FY17 (up 44.1 %), enabling us to declare a final dividend of 11.0 cents
per share to our shareholders. This brings our total dividends in FY18
to 18.0 cents per share, fully franked. This is the third consecutive
year we have declared a dividend payment since FY16, which was the
first dividend payment since 2013.
All segments across Australia, New Zealand and Rest of World (ROW)
have reported strong growth in EBITDA compared with the prior
year and our EBITDA margin as a percentage of revenue continues to
improve across all segments as the Group benefits from its focus on
profitable revenue streams and improved productivity.
Operating costs were significantly lower than the prior year
reflecting the Group’s continued focus on efficiencies and delivering
on our cost reduction initiatives.
helloworldlimited.com.au Investments
Brand
We have made a number of strategic acquisitions in this
financial year, including; the Magellan Travel Group, an
Australian independent agency network with over 120
members; Flight Systems, a provider of web-based flight
booking technologies; and Asia Escape Holidays, an
outbound travel wholesaler specialising in destinations
throughout Asia.
Our acquisitions complement the Group’s existing
businesses, expanding future product offerings and
technology solutions to an increased network of agents,
suppliers and customers.
Technology developments
Helloworld Travel is continuing to focus on our
technology offerings and are increasing our investment
in technology developments across the business
including key upgrades to our hotel platforms, our
retail agency platforms, our inbound systems and our
corporate and ticketing solutions.
In the retail leisure and retail corporate division, this
includes the introduction of tailored microsites and
apps for all our agents across our branded, associate,
business travel and Magellan networks. The recent
purchase of the Flight Systems website technology has
enhanced our technology offering as we strive to drive
increased productivity for our agents and our internal
business units.
Specifically in our Travel Management Corporate
businesses, we are investing in delivering new cutting
edge tools for our corporate customers including the
deployment of Cytric in partnership with Amadeus.
And finally in our Air Tickets business we are finalising the
upgrade of our Cats+ mid-office system and expanding
the deployment of our ticketing technologies.
Our level of investment in new and complimentary
technologies is running at approximately $16 million
per annum and we regard this on-going investment as
critical as we seek to improve our service offerings and
drive our productivity.
We successfully completed the brand refresh from
Helloworld to Helloworld Travel in Australia resulting in
a new logo and associated marketing initiatives being
effectively rolled out across the Australian network
during FY18. During FY19, we will also roll out the brand
refresh across our New Zealand branded network.
We have made significant investment in more focused
consumer marketing and advertising to strategically
improve Helloworld Travel’s brand presence. The strategy
has proved successful with prompted and unprompted
consumer brand awareness for the Helloworld Travel
brand growing significantly and our partnerships with
News Corporation and Channel 9 over the next 3 years will
help grow our brand recognition further.
Our retail networks have grown to 2,223 members across
Australia and New Zealand as at 30 June 2018, this
represents an increase of 208 members since 30 June
2017. The increase in members was led by growth in our
Helloworld Travel branded members, growth in home
based agent network MTA, the expansion of the My Travel
Group and the acquisition of the Magellan Travel Group.
Awards
The Helloworld Travel Limited Group was again
recognised at the 2018 Australian Federation of Travel
Agents (AFTA) National Travel Industry Awards (NTIA) in
Sydney. Our agents, businesses and brands took home 11
awards including Best Non-Branded Travel Agency Group
for Helloworld Business Travel, Best Domestic Wholesaler
for Qantas Holidays & Viva Holidays, Air Tickets for Best
Agency Support Services and MTA for Best Travel Broker
Network. We were also recognised with 7 awards within
our member networks. Overall Helloworld Travel Limited
group members were recognised with 46 finalists across
22 categories, a terrific achievement.
In New Zealand the Group was awarded Best Brand Retail
Multi Location at the 2017 Travel Agents Association of
New Zealand (TAANZ) Awards presented in September
2017 and our NZ wholesale brand GO Holidays was
awarded ‘Best Wholesaler’ award for the fourth
consecutive year.
7
While a high percentage of these transactions are
undertaken using our online digital tools and platforms,
all bookings are supported by our 24/7 personal service.
Across all our divisions we provide a personal service
that makes us the trusted advisor for our clients and our
members’ customers. This is our commitment and our
offering that we know we deliver on.
I would like to acknowledge and thank the many people
involved in our company across our global offices, our
agent networks, our shareholders, all of our 2000 plus
staff, our many suppliers, partners and supporters who
are integral to our success. Without the dedication and
commitment of all of our stakeholders we would not be
able to achieve this success.
The future is very promising for Helloworld Travel
Limited and I am looking forward to continuing the
journey of success for the business in the years ahead.
Andrew Burnes
Chief Executive Officer and Managing Director
Helloworld Travel Limited
Melbourne, 21 August 2018
Dividend
The Board has resolved that the company will pay a
final dividend of 11.0 cents per share. The dividend is to
be paid on 18th September 2018 and brings the total
dividends declared, fully franked, for the current financial
year to 18.0 cents per share compared with 14.0 cents
per share in the prior year.
Outlook
The outlook for Helloworld Travel Limited is very positive.
As a Group we remain focused on growing our TTV at
profitable margins while carefully controlling our costs.
In FY19 and beyond we will continue to expand our
travel product and service offerings through strategic
acquisitions and increased investment in enhanced
technology solutions.
We remain focused on delivering for our shareholders,
our travel agents, our supplier partners and most
importantly all of our customers with investment in our
brands, technologies and people, to provide enhanced
outcomes across our distribution platforms.
Our solid foundation for sustainable long term growth
has now been established and we expect to improve
on our current financial year performance in the
years ahead.
We are committed to the long-term future of travel
agents and our experience is that travellers continue
to value our agents as their trusted travel professional.
This relationship is vital for our continuing success. The
ongoing focus of our business is to empower our agents
and members with marketing support, commercial
partner deals, training and technology to provide
professional travel services and advice to their clients,
resulting in profitable businesses.
Our wholesale and corporate businesses also focus on
providing professional, valued and personal service.
helloworldlimited.com.au FINANCIAL PERFORMANCE SUMMARY
FOR THE YEAR ENDED 30 JUNE 2018
Summary Group Results
Total transaction value (TTV) 1
6,077,040
5,872,329
204,711
For the
year ended
30 June 2018
$’000
For the
year ended
30 June 2017
$’000
Change
$’000
Revenue
EBITDA 2
Profit before income tax expense
Profit after 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
326,874
326,833
65,216
46,207
31,969
31,918
55,179
31,037
21,591
21,510
For the
year ended
30 June 2018
Cents
For the
year ended
30 June 2017
Cents
27.1
26.9
7.0
11.0
18.8
18.7
6.0
8.0
For the
year ended
30 June 2018
$’000
For the
year ended
30 June 2017
$’000
65,216
(17,320)
(1,689)
46,207
55,179
(21,076)
(3,066)
31,037
41
10,037
15,170
10,378
10,408
Change
Cents
8.3
8.2
1.0
3.0
Change
$’000
10,037
3,756
1,377
15,170
Change
%
3.5%
0.0%
18.2%
48.9%
48.1%
48.4%
Change
%
44.1%
43.9%
16.7%
37.5%
Change
%
18.2%
17.8%
44.9%
48.9%
1 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 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 11.0 cents per share for the 2018 financial year. This results in total dividends
declared of 18.0 cents per share for the 2018 financial year, compared with 14.0 cents per share for the 2017 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 2018 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 2018 and the Independent Auditor’s Report.
Directors
The Directors of the Company in office at any time during
or since the end of the financial year are as follows:
Garry Hounsell B Bus, FAICD, FCA
Non-Executive Director and Chairman
Appointment
Mr Hounsell was appointed to the Board and as Chairman
from 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 Chartered Accountants in
Australia and New Zealand.
Other current directorships of listed entities:
• Myer Holdings Limited (since September 2017),
Chairman (November 2017 to February 2018 and
from 4 June 2018), Executive Chairman (February
2018 to 4 June 2018).
• Treasury Wine Estates Limited (since 2012).
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).
• Spotless Group Holdings Limited (2014 to 2017)
and Chairman (2017).
• Dulux Group Limited (2010 to 2017).
Special Responsibilities:
• Chairman of the Board.
• Chairman of the Remuneration Committee and
Nominations & Governance Committee.
• Member of the Audit & Risk Committee.
Interests in Shares:
• A legal and beneficial interest in 78,500 fully paid
ordinary shares.
helloworldlimited.com.au Andrew Burnes LLB, B Com (Melb)
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). After the merger
of AOT and Helloworld in January 2016, he was appointed
Chief Executive Officer 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.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Chief Executive Officer and Managing Director
Interests in Shares:
• A legal and beneficial interest in 12,899,381 fully paid
ordinary shares.
• In conjunction with Mrs Burnes a further beneficial
interest in 18,490,105 fully paid ordinary shares.
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.
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
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Group General Manager – Wholesale & Inbound
Interests in Shares:
• A legal and beneficial interest in 12,638,014 fully paid
ordinary shares.
• In conjunction with Mr Burnes a further beneficial
interest in 18,490,105 fully paid ordinary shares.
11
Mike Ferraro LLB (Hons)
Non-Executive Director
Appointment
Andrew Finch B Com, LLB (UNSW), LLM (Hons 1 USyd),
MBA (Exec) AGSM)
Non-Executive Director
Mr Ferraro was appointed to the Board on 1 January 2017.
Appointment
Experience and Expertise
Mr Ferraro is currently Chief Executive Officer and
Managing Director of Alumina Limited, having been
appointed 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.
Current directorships of listed entities:
• Alumina Limited (5 February 2014 to 31 May 2017),
CEO and Managing Director (from 1 June 2017)
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Chairman of the Audit & Risk Committee.
• Member of the Remuneration Committee and
Nominations & Governance Committee.
Interests in Shares:
• A beneficial interest in 9,569 fully paid ordinary shares.
Mr Finch was appointed to the Board on 1 January 2017.
Experience and Expertise
Mr Finch is General Counsel and Group Executive, Office of
the CEO 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, Remuneration
Committee and Nominations & Governance Committee.
Interests in Shares:
• Nil
helloworldlimited.com.au Michael Burnett BCom (Melb), CA
Peter Spathis FCPA
Chief Financial Officer and Group Company Secretary
Former Non-Executive Director
Mr Spathis served as a Non-Executive Director from May
2015 and did not stand for re-election at the company’s
2017 Annual General Meeting held on 16 November
2017. He previously served as a director from June 2002
to November 2012.
Mr Burnett joined Helloworld Travel Limited as the Chief
Financial Officer and Group Company Secretary in April
2016. Prior to this he was with the Transurban Group
where he had been their Chief Financial Officer in North
America since August 2013 and the Group’s General
Manager of Finance from 2007.
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.
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 2 meetings of the Nominations & Governance Committee were held.
Attendance at Board and Board Committee Meetings during FY18 is set out in the table below:
Board
Audit &
Risk Committee
Remuneration
Committee
Nominations &
Governance Committee
DIRECTOR
Garry Hounsell
Andrew Burnes
Cinzia Burnes
Mike Ferraro
Andrew Finch
Peter Spathis
A
8
8
8
8
8
3
B
8
8
8
6
8
2
A
2
4
1
4
4
2
B
2
4
1
4
4
1
A
3
2
1
3
3
2
B
3
2
1
3
3
1
A
2
2
2
2
2
1
B
2
2
2
2
2
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:
Nominations & Governance
Committee
Garry Hounsell (Chairman)
Peter Spathis (until 16 November 2017)
Audit & Risk Committee
Mike Ferraro (Chairman)
Andrew Finch
Peter Spathis (until 16 November 2017)
Garry Hounsell (from 16 November 2017)
Remuneration Committee
Garry Hounsell (Chairman)
Andrew Finch
Mike Ferraro (from 16 November 2017)
Peter Spathis (until 16 November 2017)
Andrew Burnes
Cinzia Burnes
Mike Ferraro
Andrew Finch
Retirement in office of Directors
In accordance with the Company’s Constitution and the
ASX Listing Rules, Mr Garry Hounsell and Mrs Cinzia
Burnes, being the longest serving directors are retiring
by rotation and, being eligible, offer themselves for re-
election at the 2018 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 retail
distribution networks of travel agents.
Helloworld Travel is a leading Australian and New
Zealand travel distribution company comprising retail
distribution 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 distribution operations include
Helloworld Branded, Australia’s largest network
of branded franchised travel agents, in addition to
Helloworld Associate, Helloworld Business Travel,
the My Travel Group and Mobile Travel Agent (MTA)
networks. During the current year, Helloworld Travel
introduced a sixth retail distribution network through its
acquisition of the Magellan Travel Group.
Our operations are located in Australia, New Zealand,
Fiji, South East Asia, India, the United States of America,
the United Kingdom and Europe.
During the current financial year, the following fully
franked dividends were distributed on Helloworld Travel
Limited ordinary shares:
Type
Final 2017 dividend, distributed
on 20 September 2017
Interim 2018 dividend, distributed
on 9 March 2018
Total dividends distributed during
Cents
per share
Dividend
amount $m
8.0
7.0
9.7
8.5
the current year
15.0
18.2
On the 21 August 2018, Helloworld Travel declared a fully
franked final dividend of 11.0 cents per share, which is
expected to amount to $13.7 million based on the closing
number of shares issued as at 30 June 2018. This brings
the total dividends declared in relation to the year ended
30 June 2018 to 18.0 cents per share.
The final dividend for the year ended 30 June 2018 will be
paid during the 2019 financial year out of 30 June 2018
current year profits, but is not recognised as a liability at
year end.
Further details on dividends during the year ended 30
June 2018 is set out in note 7 to the financial statements.
Earnings per share
Basic earnings per share was 27.1c (2017: 18.8c)
Diluted earnings per share was 26.9c (2017: 18.7c)
The increase in basic earnings per share reflects the
strong net profit after tax performance in the current
year. This has been achieved by growing TTV and reducing
the business cost base, delivering on key performance
initiatives and growing the business through strategic
acquisitions.
During the 2018 financial year Helloworld Travel issued
shares under the franchise loyalty bonus program and
also issued shares under the LTIP 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.
The franchise loyalty shares are included in the
calculation of diluted earnings per share.
15
OPERATING AND FINANCIAL REVIEW
Summary of results
Total Transaction Value (TTV)
Revenue
Operating expenses
Equity accounted profits
EBITDA
Depreciation and amortisation expense
Finance expense
Profit before income tax expense
Profit after income tax expense
Profit after tax attributable to members
Revenue margin %
EBITDA margin %
Basic earnings per share
Diluted earnings per share
Interim dividend per share
Final dividend per share
Total dividends per share
FY18
$000’s
6,077,040
326,874
(263,167)
1,509
65,216
(17,320)
(1,689)
46,207
31,969
31,918
5.4%
20.0%
FY18
Cents
27.1
26.9
7.0
11.0
18.0
FY17
$000’s
5,872,329
326,833
(272,513)
859
55,179
(21,076)
(3,066)
31,037
21,591
21,510
5.6%
16.9%
FY17
Cents
18.8
18.7
6.0
8.0
14.0
Change
$000’s
204,711
41
9,346
650
10,037
3,756
1,377
15,170
10,378
10,408
(0.2%)
3.1%
Change
Cents
8.3
8.2
1.0
3.0
4.0
Change
%
3.5%
0.0%
3.4%
75.7%
18.2%
17.8%
44.9%
48.9%
48.1%
48.4%
(3.6%)
18.3%
Change
%
44.1%
43.9%
16.7%
37.5%
28.6%
The Board assesses the performance of the group and its segments based on several measures including TTV, revenue,
EBITDA, profit before tax and associated key ratios.
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
Helloworld Travel has delivered a second successive
year of strong profitability growth with EBITDA of $65.2
million, an increase of $10.0 million or 18.2% compared
with the prior year. EBITDA margin has continued to
improve to 20.0%, an increase of 3.1% compared with
the prior year. This has been led by the focus on profitable
revenue streams and realisation of cost reduction
benefits, supported by enhanced technology solutions
and business process efficiencies. Profit before tax was
$46.2 million, an increase of $15.2 million or 48.9%, and
a profit after tax of $32.0 million, an increase of $10.4
million or 48.1%.
Helloworld Travel grew TTV by 3.5% to $6,077.0
million driven primarily by strong air ticket transaction
volume growth and the addition of the Magellan Travel
Group acquired in March 2018. These increases were
partially offset by the continued decline of international
airfares in the industry. Revenue of $326.9 million was
consistent with the prior year despite the prior year
including revenue from the disposed air representation
business, disposed company owned stores and the
restructured Insider Journeys business. The Group’s
revenue benefited from the recent acquisitions of the
Magellan Travel Group, Flight Systems and Asia Escape
Holidays. Excluding acquisitions and disposals, revenue
increased by $1.6 million or 0.5% reflecting the improved
contracting outcomes across air, land, cruise and ancillary
products.
Revenue margin was 5.4%, a decrease of 0.2% reflecting
the continued change in product mix with TTV growth
coming from lower margin air, cruise and corporate sales.
Margins in each area of the business continue to benefit
from improved contracting outcomes.
Operating costs were well below the prior year across
all segments. The lower operating costs reflect the
Group’s continued focus on cost reduction to right
size the cost base and reduced costs from disposed
operations. The lower costs were partially offset by
the inclusion of the cost base from our recent business
acquisitions and associated one off acquisition costs
incurred of $1.0 million.
From a segment perspective, the Australian segment
EBITDA was up 15.2% to $58.0 million; the New Zealand
segment EBITDA was up 10.3% to $6.9 million; and the
Rest of World segment EBITDA improved by $1.7m to
$0.4 million. A detailed review of the segment operational
results is on pages 21 to 27.
Depreciation and amortisation expense decreased
by $3.8 million to $17.3 million, reflecting the focus
on capital spend and numerous assets being fully
depreciated or amortised in prior years.
Finance expense decreased by 44.9% to $1.7 million,
reflecting the full year benefit of entering into a 5 year
facility with the Westpac Banking Corporation in May
2017 on more attractive terms, delivering cost savings
to the business. The decrease in finance expense from
the improved debt facility arrangements was partially
offset by the increased level of debt to fund the business
acquisitions in the second half of FY18.
17
helloworldlimited.com.au
Shareholder returns
The Group’s strong business performance has delivered an
earnings per share of 27.1 cents compared with 18.8 cents
in the prior year. Diluted earnings per share was 26.9 cents
compared with 18.7 cents in the prior year. The diluted
earnings per share include those shares granted under 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 11.0 cents per share for the year ended 30
June 2018, payable in September 2018. This brings total
dividends declared or proposed to 18.0 cents per share,
an increase of 4.0 cents per share or 28.6% from the
prior year. The total dividends declared of 18.0 cents per
share represents an expected dividend cash distribution
of $22.2 million, equating to a dividend payout ratio of
69.5% for the year ended 30 June 2018.
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 considering potential future
business acquisition opportunities, balancing the
needs of shareholders, creditors and external
market confidence.
Acquisitions and disposals
Helloworld Travel has made a number of business
acquisitions during the current year. The acquisitions
undertaken have met the strategic and financial
objectives established by the Board of Directors.
These acquisitions complement the Group’s existing
businesses, expanding future product offerings leading
to an increased network of agents, suppliers and
customers. The full year benefit of these acquisitions will
be reflected in FY19 and will deliver increased financial
shareholder returns in future financial years.
the retail and corporate travel agency sector, whilst
leveraging ongoing technology developments and supplier
relationships.
Go Conference and Incentives (C&I) is a New Zealand
business operation that arranges and escorts travel for
large groups, conferences, incentive travel and events.
On 1 April 2018, Helloworld Travel purchased the 50%
beneficial share held by a former partner over the C&I
business, thereby owning 100% of the business, title and
future profits. The purchase price of $1.2 million consists
of $0.7 million cash and a deferred payment of $0.5
million payable in FY19.
On 16 April 2018, Helloworld Travel completed its
acquisition of Flight Systems Pty Ltd and its controlled
entities (Flight Systems) for a total consideration of
$1.4 million, funded by cash. Flight Systems is a provider
of web-based flight booking technologies and operator
of the Skiddoo website. The acquisition is expected to
strengthen Helloworld Travel’s business technology suite
in the corporate and leisure operations.
On 31 May 2018, Helloworld Travel completed its
acquisition of a 60% controlling stake in Asia Escape
Holidays, an outbound travel wholesaler based in
Perth specialising in destinations throughout Asia, the
Indian Ocean and the Pacific. The total consideration
amounted to $5.4 million, comprising $2.9 million initial
consideration funded by a mixture of cash and shares
and $2.5 million contingent deferred consideration
based on the achievement of FY19 objectives. The
acquisition is expected to complement the existing
Helloworld Travel wholesale range and provides the
Group with the ability to offer a greater range of mid-
haul all-inclusive packages.
These acquisitions have been reflected in the Group’s
current year consolidated income statement from their
acquisition date, until 30 June 2018.
Acquisition of controlled entities
Acquisition of minority interest shareholdings
The acquisitions and disposals have been outlined below:
On 1 March 2018, Helloworld Travel acquired
the Magellan Travel Group (Magellan) for a total
consideration of $32.5 million which was funded
by a mixture of cash and shares. Magellan is one of
Australia’s leading independent travel agent groups with
over 120 members. The Group expects the additional
scale and operating leverage to bring increased
economies of scale. The Magellan network is now
the sixth retail network of Helloworld Travel and will
enable Helloworld Travel to consolidate its position in
During the current year, Helloworld Travel has
established a minority interest shareholding in the
following businesses:
On 31 August 2017, the Group acquired a minority
shareholding in the Newcastle based Hunter Travel
Group (HTG) and at the same time Helloworld Travel
agreed to sell a 75% stake in Helloworld Travel’s
remaining seven wholly owned company stores in
Australia. The transaction strengthens the partnership
between Helloworld Travel and HTG, the Group’s largest
multi-franchise operator.
19
On 31 August 2017, the Group purchased a minority
shareholding in Queensland based company, Cooney
Investments Pty Ltd, which operates branded network
members Helloworld Travel Mackay and Helloworld Travel
Mt Pleasant and the very successful Hosted Journeys
Group Travel and Events products.
On 19 January 2018, a joint venture company between
Helloworld Travel (via QBT) and In Travel, an indigenous
In addition, Helloworld Travel continues to dispose of
its fully owned company stores and at year end only has
two remaining. The last seven company owned stores in
Australia were disposed in August 2017 as part of the
minority shareholding transaction in HTG. In New Zealand,
we commenced the current financial year with six
company owned stores and have two remaining company
owned stores as at 30 June 2018.
Travel Management Company was established. The joint
Network growth
venture company is called Inspire Travel Management
Pty Ltd, an incorporated company with ownership
interest of 60% In Travel and 40% Helloworld Travel.
This venture provides a platform that enables Helloworld
Travel to showcase industry best practice in the areas of
indigenous employment and procurement outcomes.
These investments are recorded under the equity
accounting method and the share of profit is recorded as
equity accounted profits in the consolidated statement
of profit or loss.
Disposals of businesses
Helloworld Travel’s retail network has grown to 2,223
members across Australia and New Zealand, an increase
of 208 since 30 June 2017, led by the:
• expansion of the My Travel Group network through
continued improvement in value proposition and
support network;
• growth in the Helloworld branded footprint in New
Zealand, reflecting increased brand support and
brand awareness;
• growth in home based agents in Australia via the
MTA network; and
• introduction of new sixth retail network in Australia
On 19 April 2018, Helloworld Travel sold its 33%
via the acquisition of Magellan Travel.
investment in Down Under Answers LLC, a USA based
entity. The consideration amounted to $1.6 million and
the net carrying value was $1.5 million, resulting in a
profit on sale of investment of $0.1 million. The sale is a
strategic step in the ongoing process of streamlining the
group and disposing of non-core investments. As part of
this transaction, Down Under Answers LLC has signed
a three year exclusive trading arrangement with the
Group’s inbound business, resulting in Helloworld Travel
continuing to provide Down Under Answers with product
and services in both Australia and New Zealand.
In May 2018, Helloworld Travel renewed the Collective
Purchasing Agreement with the Travellers Choice
agency group for a five year term to 30 June 2023,
further consolidating the Group’s buying power. Under
the new agreement, Travellers Choice, with 145 outlets
across Australia, has access to the commercial supply
arrangements of Helloworld Travel and will purchase the
bulk of its travel products through these agreements.
In addition, Helloworld Travel and Travellers Choice also
renewed their 5 year agreement to use the Group’s ticket
consolidation business, Air Tickets.
helloworldlimited.com.au In April 2017, the Group rebranded from Helloworld to
Helloworld Travel resulting in a new logo and associated
marketing initiatives being successfully rolled out across
the network during FY18. Helloworld Travel continues
to make significant investment in consumer marketing,
advertising and sponsorship to strategically accelerate
Helloworld Travel’s brand presence. The strategy has
proved successful with prompted and unprompted
consumer brand awareness for the Helloworld Travel
brand growing significantly.
Investment in technology
Helloworld Travel continues to invest in developing
technological initiatives to expand the system
capabilities across the business. In FY18, these
developments included the upgrade of wholesale agent
platform ReadyRooms, development of corporate
customer portal ReadyRooms for Business, the ongoing
rapid enhancement of retail consultant interface
Resworld agency portal, development of Air Tickets
Shop & Book technology and the acquisition of web-
based flight booking technologies provider Flight
Systems. 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.
Liquidity and funding
As at 30 June 2018, the Group held a cash balance of
$203.5 million (30 June 2017: $198.1 million) comprised
of general cash of $42.0 million (30 June 2017: $34.7
million) and client cash of $161.5 million (30 June 2017:
$163.3 million). As at 30 June 2018, the Group has
external borrowings of $41.5 million (30 June 2017:
$20.4 million) with available headroom on its debt
facilities of $7.8 million (30 June 2017: $28.4 million).
The level of external borrowings has increased in the
current year by $21.1million to $41.5 million as at 30
June 2018 as a result of the acquisitions undertaken
during the year. The overall level of debt held by
Helloworld Travel remains low compared with the cash
balance, total assets and market capitalisation of the
Group, resulting in a strong balance sheet.
Helloworld Travel has generated strong operating cash
flows from trading activity of $41.3 million, an increase
of $12.3 million compared with the prior year led by
growth in trading performance. The capital expenditure
(excluding investments) amounted to $17.7 million, an
increase of $7.2 million compared with the prior year, led
by the rebranding to Helloworld Travel across the network
and focussed internal development on technology
solutions. Capital expenditure continues to be tightly
controlled and is subject to significant due diligence
before the expenditure is undertaken. Free cash flow,
representing reported operating cash flow less capital
expenditure, of $23.6 million (30 June 2017: $18.5
million) generated in FY18, enabled the Group to invest in
the future and pay dividends to shareholders.
Helloworld Travel continues to manage a strong
balance sheet and increasing operating cash flows,
supported by secured long term debt facilities. As a
result, Helloworld Travel is well placed for future long
term sustainable growth.
Segment review
Helloworld Travel operates segments based on the
geographical location of where the businesses are
managed.
The Group has three main operating segments within
its structure of:
• Australia Segment
• New Zealand Segment
• Rest of World Segment
The Board assesses the performance of the segments
based on several measures including TTV, revenue,
EBITDA, 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.
21
Australia Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
Equity accounted profits
EBITDA
Revenue margin
EBITDA margin
The Australia segment has retail distribution 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 service functions.
Retail
In Australia, the Group has a range of retail operations.
The operations acts as a franchisor for multiple
award winning retail travel agency networks, including
Helloworld Travel Branded, Helloworld Travel Associate
and Helloworld Business Travel. The retail distribution
operations also include the membership groups of My
Travel Group, an independent network model of stores,
a 50% holding in MTA representing the specialist travel
brokers and the addition during the current year of the
sixth retail network from the acquisition of Magellan
corporate and leisure agents.
The retail division also contains an online channel of
helloworld.com.au and the current year acquisition
FY18
$000’s
5,078,479
250,774
(194,311)
1,509
57,972
4.9%
23.1%
FY17
$000’s
4,908,825
244,003
(194,550)
859
50,312
5.0%
20.6%
Change
$000’s
169,654
6,771
239
650
7,660
(0.1%)
2.5%
Change
%
3.5%
2.8%
0.1%
75.7%
15.2%
(2.0%)
12.1%
of Flight Systems, enabling the distribution of travel
products through Helloworld Travel’s multiple distribution
channels. The retail operations are underpinned by its
ticketing division Air Tickets, being the distributor and
ticketing services consolidator to the internal retail
network and to external independent agents.
The retail distribution division achieved strong results
in FY18. Despite the continued decline in international
airfares, TTV was in line with prior year as the retail
network has continued to grow sales volume. Airline
ticketing transaction volumes continue to perform
strongly with growth in FY18 of 7.4% in the international
market and 1.1% in the domestic market. There was a
6.6% decline in average international airfares mainly
due to lower airfares in key Asia and Europe markets in
the first half of FY18, however the second half of FY18
has shown an encouraging stabilisation of airfares in the
international sector as we lead into FY19.
Cumulative YoY growth variance - Domestic Fares AU
Cumulative YoY growth variance - International Fares AU
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
3.4%
1.1%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
7.4%
-6.6%
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan
18
Feb
18
Mar
18
Apr
18
May
18
June
18
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan
18
Feb
18
Mar
18
Apr
18
May
18
June
18
Transactions Average Price
Transactions Average Price
helloworldlimited.com.au Helloworld Travel’s air ticketing operation, Air Tickets,
services both the Helloworld Travel network of agents
and over 600 independent travel agents. The business
has seen significant growth over the past two years. 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 is well positioned for
further growth.
Helloworld Travel continued to expand its retail network,
led by the strategic acquisition of Magellan in March
2018, which added over 120 high quality leisure and
corporate travel agencies to the Helloworld family. The
acquisition provides a boost to TTV and improves the
scale of the business operations, which will in turn provide
great outcomes for all stakeholders. Member numbers
in Australia continue to grow organically with total of
1,854 as at 30 June 2018.
Helloworld Travel retail operations has completed
the rebranding of all fully branded outlets from the
old Helloworld to ‘Helloworld Travel – The Travel
Professionals’ with a new store look. The rebrand has
been a strong success with the response from members
and consumers being extremely positive supported by
a significant increase in consumer market awareness
of the Helloworld Travel brand. The Group’s recent
independent research shows the new branding and
refocused advertising and marketing has delivered
greater brand awareness, with unprompted awareness
increasing by 26% and prompted branded awareness
increasing by 7% in just six months after the launch.
Advertising and marketing spend continues to be focused
on unique product offerings and value propositions that
generate greater financial outcomes. A key initiative for
FY19 is the planned launch of a Helloworld Travel television
programme in partnership with free to air Channel 9,
which will showcase product offerings including a range of
destinations and the Group’s wholesale brands.
Wholesale & Inbound
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 over
70 countries worldwide. These businesses include AOT
Inbound, ATS Pacific and Experience Tours Australia (ETA).
The Australian wholesale & inbound operations increased
TTV and revenue benefiting from the expansion of
product range and growth in the cruise sector driven by
the successful integration of Seven Ocean Cruising and
the Cruise Team businesses. Revenue margins declined
slightly which was largely driven by product mix, with
strong growth in the lower margin cruise sales. Operating
costs were lowered significantly from improved
productivity efficiencies and business synergies between
the existing brands.
A key initiative of the wholesale operations was the
upgrade to the Qantas Holidays accommodation portal,
ReadyRooms in June 2018. The upgraded wholesale
agent portal expands the product range available to
agents and has a new look and enhanced functionality
for consultants, which includes improved interface,
improved search functionality and more flexible
booking capabilities.
The wholesale business continues to expand its in-
house product range. In the current year, new product
lines covering the Maldives, Disney Magic, Weddings &
Honeymoons and Unique Rail Journeys were introduced.
In addition, the acquisition of Asia Escape Holidays in
May 2018, complements Helloworld Travel’s existing
wholesale businesses and provides the Group with a trade
focused brand that has expertise and speed to market in
the key Asia Pacific region.
Inbound operations continues to perform well, growing
revenue by 1.3% driven by strong demand from
traditional markets including the United Kingdom,
Europe and USA and increasing demand from newer
markets in Asia. The growth in Inbound revenue was
23
partially offset by lower groups revenue reflecting
less major events in Australia compared with the prior
year. Inbound China Free Independent Traveller (FIT)
platforms performed strongly in FY18 and is expected
to continue to grow in FY19.
The overall Australian inbound market continues to
grow. In the last 12 months total international tourists
entering Australia grew by 6.0% with all key major
source countries providing strong growth. As Australia’s
largest inbound tour operator with prominent brands
including AOT Inbound, ETA and ATS Pacific, Helloworld
Travel is well positioned to capitalise on this continuing
key growth sector.
Corporate
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 corporate division delivered TTV growth, supported
by strong transaction growth led by increased trading with
corporate and government clients as well as the addition
of new clients. Costs were well controlled by achieving
productivity efficiencies through investment in technology
and automation. The consolidation of the corporate
business in Australia (QBT) and New Zealand (APX) is well
advanced, ultimately resulting in a streamlined trans-
Tasman corporate travel solution for customers.
In August 2017, AOT Hotels successfully re-tendered
for the Whole of Australia Government contract for
accommodation program management, securing the
contract for a period of 3 years with further extension
options. In January 2018, QBT established a joint venture,
Inspire Travel Management, with the In Travel Group,
which will provide a point of difference to the corporate
market and highlight the best practice in the industry
in the areas of Indigenous employment and procurement
outcomes.
Summary
The Australia segment generated continued TTV growth
for the year ended 30 June 2018 across its divisions.
Revenue on a like for like basis (excluding the impact
of acquisitions and disposals), increased by 2.0% and
was driven by TTV growth and improved contracting
outcomes. Lower average international airfares
contributed to offset the benefits of strong ticket
growth. Operating costs on a like for like basis (excluding
the impact of acquisitions and disposals), continued
to decrease with the continued business focus on cost
control with significant reductions in employee and
operating expenses.
The revenue margin for the year decreased by 0.1% to
4.9%. This was a result of product mix from sales growth
in lower margin air, cruise and corporate sectors. This
change in mix was mostly offset by improved contracting
outcomes across the businesses.
Overall the segment reported an EBITDA of $58.0 million,
a strong result representing growth of $7.7 million or
15.2% from the prior year. The EBITDA margin increased
from 20.6% to 23.1% in FY18 across the Australian
operations, evidencing the commitment to drive
profitable revenue growth and right size the cost base.
Technology
The group continues to invest in technologies to build the
travel tools of the future. Helloworld Travel’s objective
is to increase product and service offerings to enhance
the travel solutions for agents, members, suppliers and
customers. The acquisition of Flight Systems in April
2018 was an important strategic step in strengthening
Helloworld Travel’s system and distribution development
capabilities. It will significantly enhance the distribution
of travel products through Helloworld Travel’s multiple
retail and corporate channels and strengthen the
business technologies to incorporate into the continued
development of the ResWorld platform.
Awards
The Australia segment was well recognised at the July
2018 National Travel Industry Awards, with Helloworld
Business Travel awarded the Best Non-Branded Travel
Agency Group, MTA awarded Best Travel Broker
Network, Qantas Holidays / Viva Holidays awarded Best
Wholesaler – Australian Product and Air Tickets awarded
Best Agency Support Service.
helloworldlimited.com.au New Zealand Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA
Revenue margin
EBITDA margin
The New Zealand segment has retail distribution
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 service functions.
Retail
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. The retail distribution operations also
include the membership groups of My Travel Group an
independent network model of stores and The Travel
Brokers network representing the specialist travel
brokers. In addition, the business is supported by its
ticketing division, Air Tickets, and the online channel,
helloworld.co.nz.
The expansion of the Helloworld Travel retail brand in
New Zealand continues with 369 members as at 30 June
2018, an increase of 69 members since 30 June 2017.
The growth was led by an increase in branded stores and
FY18
$000’s
901,805
57,120
(50,264)
6,856
6.3%
12.0%
FY17
$000’s
848,997
60,525
(54,307)
6,218
7.1%
10.3%
Change
$000’s
52,808
(3,405)
4,043
638
(0.8%)
1.7%
Change
%
6.2%
(5.6%)
7.4%
10.3%
(11.3%)
16.5%
expansion of the My Travel Group network. This is the
second consecutive year of strong growth to the retail
agent network.
In FY19, Helloworld Travel will launch a new ‘business
travel’ agent network and a new ‘boutique luxury’ branded
agent network, further enhancing the value proposition in
New Zealand to new and existing members. The continual
enlarging of the retail network in New Zealand is
testament to the improved brand recognition and service
in New Zealand and is expected to add significant TTV
volumes across air, wholesale and third party suppliers in
future financial years.
The New Zealand market also continued to experience
a decline in both domestic and international airfares of
1.4% and 2.1% respectively, which partially offset the
continued growth in our air ticketing transactions in FY18
of 10.2% in the international market and 4.9% in the
domestic market.
Cumulative YoY growth variance - Domestic Fares NZ
Cumulative YoY growth variance - International Fares NZ
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
4.9%
-1.4%
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan
18
Feb
18
Mar
18
Apr
18
May
18
June
18
Transactions Average Price
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
10.2%
-2.1%
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan
18
Feb
18
Mar
18
Apr
18
May
18
June
18
Transactions Average Price
25
Wholesale & Inbound
Summary
The New Zealand segment generated TTV of $901.8
million for the year ended 30 June 2018, representing
an increase of 6.2% compared with the prior year.
Revenue decreased as a result of the disposal of four
company stores in the retail division and reduced
transaction volume in the APX business. The decrease
was partially offset by growth from the wholesale and
inbound operations. Operating costs decreased by 7.4%
to $50.3 million due to less company owned stores and
productivity efficiencies from centralisation of key
functions to reduce the cost base. As a result, EBITDA
grew to $6.9 million, an increase of 10.3% compared with
the prior year result of $6.2 million. EBITDA margin grew
to 12.0% evidencing the commitment to drive profitable
revenue growth and right size the cost base.
The revenue margin for the year decreased to 6.3% from
7.1% reflecting a change in product mix with TTV growth
in lower margin air and cruise business, in addition to the
sale of company owned stores that had higher revenue
margin, but low profitability. Ticketing volumes continue
to show very strong growth, however average airfares at
both domestic and international levels continued to fall in
FY18.
Awards
In September 2017, at the TAANZ NTIA Awards, the New
Zealand wholesale business, GO Holidays, won the award
for Best Wholesale Brand for the fourth consecutive year.
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 over 70 countries worldwide.
The New Zealand wholesale and inbound operations
generated strong revenue growth during the year. Go
Holidays was well supported by Helloworld branded
members and growth from the cruise sector and Inbound
operations continues to generate strong demand for New
Zealand product globally. This growth has been reflected
in improved revenue margins and EBITDA performance of
the wholesale and inbound businesses.
Corporate
The Group’s APX business provides corporate travel
management services to corporate and government
customers throughout New Zealand including booking
flights and accommodation.
The APX business continues to refocus its corporate
product offering in difficult trading conditions in the
market led by strong competition and lower average
airfares. During FY18, APX won the tender for the
corporate travel business of Fonterra, however this
growth was adversely impacted by the loss of key clients
in the second half of FY17 including Auckland University.
APX continues to invest in technologies, which are
delivering enhanced travel solutions to the corporate
clients and lowering the cost base with productivity
and structural efficiencies. APX and QBT continue
to integrate to become more efficient and provide a
streamlined trans-Tasman corporate travel solution for
customers.
helloworldlimited.com.au Rest of World (ROW) Segment
Total Transaction Value (TTV)
Revenue
Operating expenses
EBITDA
Revenue margin
EBITDA margin
FY18
$000’s
96,756
18,980
(18,592)
388
19.6%
2.0%
FY17
$000’s
114,507
22,305
(23,656)
(1,351)
19.5%
(6.1%)
Change
$000’s
(17,751)
(3,325)
5,064
1,739
0.1%
8.1%
Change
%
(15.5%)
(14.9%)
21.4%
129%
0.5%
133%
This segment consists of Insider Journeys (operating in
South East Asia), Tourist Transport Fiji (TTF) and Qantas
Vacations (operating in North America), in addition to the
ATS Pacific inbound business in Fiji.
The decline in TTV and revenue primarily reflects the full
year impact of Insider Journeys refocused distribution
method to the wholesale market. In addition, TTV and
revenue decreased in the Fiji businesses due to cyclone
activity adversely impacting Fiji visitor arrival numbers
both by air and cruise ship.
The ROW segment generated EBITDA of $0.4 million,
whilst small, represents a significant improvement from
the prior year position of negative EBITDA of $1.4 million.
This segment has focused on profitable revenue streams
and right sizing of the cost base through cost reduction
initiatives to ensure this small segment is profitable in
future financial years.
Indochina
Insider Journeys TTV and revenue was adversely
impacted by the softening of the Australian outbound
market to key destinations such as Vietnam as well
as increased competition with aggressive pricing and
heavy discounting, placing pressure on sales and margin.
However, the business recorded an improved EBITDA
in the current year as it refocuses on the traditional
wholesale market and lowering of cost base. In the
current year, the alignment of systems for Insider
Journeys with the wholesale brands was implemented,
which provided increased efficiencies and the ability to
more easily purchase Insider Journeys products across
the network.
USA
The USA based business, Qantas Vacations continues
to also realign its cost base through productivity
efficiencies. It has refocused advertising and promotions
teams and this continues to gain positive traction in
the market.
Fiji
The Group’s Fiji based business, ATS Pacific (Inbound)
and TTF Fiji (Transport) performed solidly during the
current year despite cyclone activity adversely impacting
Fiji visitor arrival numbers both by air and cruise ship.
The businesses were able to realign their cost base
through productivity efficiencies to record positive
EBITDA growth compared with the prior year. During the
year, the Group invested in fleet upgrades, ensuring TTF
Fiji maintain their position as Fiji’s premier transport
operator and ground handler. Both ATS Pacific and TTF
Fiji are well placed to cater for future tourism growth
opportunities in Fiji.
27
Outlook & economic sustainability
The Travel Industry continues to grow strongly in all
segments in which the Group operates. Economic growth
both domestically and globally, is expected to continue
and this will have a positive effect on the travel markets
in which we operate. International tourist arrivals to our
markets have consistently outpaced global economic
growth and all indications are that this trend will continue.
The number of outbound trips is also expected to
continue to grow. From a corporate travel perspective,
improved economic performance and stronger business
confidence will continue to drive corporate travel activity.
The Group’s focus in the 2019 financial year will be on
growing revenue and margins and extracting further
efficiencies in its operations and cost base to improve
key profitability margin metrics.
During the current year, Helloworld Travel has made a
number of strategic acquisitions. The full year benefit
of these acquisitions will be reflected in FY19 and are
expected to increase shareholder returns in future
financial years.
Helloworld Travel is focused on delivering for
shareholders, agents, partners and consumers.
Helloworld Travel’s priority is to future proof our agents
and the business through technology, training, product
and profile supported by our omni-channel strategy.
The Company has a strong balance sheet, a stable
network of high performing agents and a suite of
enhanced digital solutions for our customers. As a result,
Helloworld Travel is well positioned for sustainable long
term growth.
Total Inbound Tourists to Australia
Total Outbound Australian Travellers
780,000
760,000
740,000
720,000
700,000
680,000
660,000
640,000
620,000
600,000
970,000
940,000
910,000
880,000
850,000
820,000
790,000
760,000
730,000
700,000
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb Mar April May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb Mar April May
Total number of tourists 2017 Total number of tourists 2018
5 year average
Total number of tourists 2017 Total number of tourists 2018
5 year average
Source: AFTA - May 2018 Short-term Movement, Visitor Arrivals - Selected Countries
of Residence: Seasonally adjusted.
Source: AFTA - May 2018 Short-term Movement, Residents Returning - Selected
Destinations: Seasonally adjusted.
helloworldlimited.com.au Business Risks
Foreign exchange exposure
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 we manage these risks, 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 price shocks, consumer confidence
and the buoyancy of the stock market.
Travel demand can also be affected by certain events that
can affect travellers’ preparedness to travel, including
pandemics, terrorism incidents, natural disasters, civil
unrest and wars.
To the extent possible, 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.
Within the wholesale business, a significant amount of
international travel product is sold in local currency and
suppliers are paid in foreign currencies. In order to mitigate
the resulting exchange fluctuation risk, Helloworld 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 and transforming 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 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.
29
Information technology security
A failure of or a breach of the Group’s information
technology systems security could result in a service
interruption or a data compromise event impacting
the efficient conduct and reputation of the Helloworld
Travel business. The company is vigilant in its approach
to mitigating this risk through investment and continual
management, in addition to the monitoring of systems to
ensure the highest standards are met.
Environmental and social sustainability
Helloworld Travel recognises the potential environmental
and social impact that tourists have on destinations in
Australia and overseas. The Group recognises that the travel
industry can have both positive and negative impact and
continues to monitor this impact on tourism destinations
and community and traveller expectations in relation to their
travel experience.
People
At 30 June 2018, Helloworld Travel has 1,807 Full Time
Equivalent (FTE) employees. This is an increase of 21
from the 1,786 FTE at 30 June 2017. The increase
reflects the new businesses acquired (Asia Escape
Holidays, Flight Systems and Magellan), partially offset
by disposal of company owned stores and a continual
focus on process efficiencies with the use of technology
to reduce the cost base of the business and align it with
business revenue and product offering. The total number
of people employed across the Group at year end was
1,898, of which 70% are female.
Employee expenditure for the year ended 30 June 2018
decreased by $9.4m or 6.8% to $130.4m, reflecting
efficiency gains partially offset by employee costs
associated with the businesses acquisitions which
occurred towards the end of FY18.
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, Philippines, United Kingdom,
China, Singapore, Thailand, Cook Islands, Italy,
Germany, Hong Kong and Indonesia.
The FTE breakdown by country is as below:
Australia
New Zealand
Fiji
India
Vietnam
USA
Philippines
Other
(57%)
(20%)
(9%)
(5%)
(3%)
(2%)
(2%)
(1%)
1,041
358
159
93
59
42
36
20
1,807
Capital structure
At 30 June 2018, Helloworld Travel had 124,508,076
shares on issue of which the Executive Directors,
Andrew Burnes and Cinzia Burnes, along with their
Director related entities, own 35.4%. Sintack Pty
Limited and its associates hold 17.7%, QH Tours
Limited (a subsidiary of Qantas Airways Limited) holds
17.1%, with the remaining 29.8% being held by other
shareholders including management.
During the current year, the number of shares increased by
4,303,658 shares to 124,508,076 reflecting the following:
• Issue of 1,550,000 shares under long term incentive
plans to certain senior managers;
• Issue of 62,750 shares under the franchise loyalty
plan; and
• Issue of 2,690,908 shares as part consideration for
the purchase of Magellan, Asia Escape Holidays and
a 25% interest in Cooney Investments Pty Ltd.
helloworldlimited.com.au (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 $138,097
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.
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 2018 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 21 August 2018, the Directors resolved to pay a 100%
franked final dividend of 11.0 cents per ordinary share.
Likely developments
In the opinion of the Directors, it would prejudice
the interests of the Group to provide additional
information, except as reported in this report, relating
to likely developments in the operations of the Group in
subsequent financial years.
Environmental regulation
The Group’s operations are not subject to any significant
environmental regulations under either Commonwealth or
State legislation.
Indemnification and insurance of
Directors and officers
Indemnification
The Company has agreed to indemnify the Directors
and executive officers (or former Directors or executive
officers) of the Company against:
(a)
any liability (other than for legal costs) incurred by
the Director or executive officer;
(b)
any legal costs reasonably incurred by the Director
or executive officer in connection with;
(i)
any claim brought against or by the Director
or executive officer of the Company; or
(ii)
any investigative proceeding, including (without
limitation) in obtaining legal advice for the
purposes of responding to, preparing for or
defending any of the above; and
31
HELLOWORLD TRAVEL LIMITED - BRAND PORTFOLIO
Retail - Australia/NZ
DMC - Australia, NZ, SOPAC & Asia
S
U
-
e
l
a
s
e
o
h
W
l
n
o
i
t
a
d
i
l
o
s
n
o
C
®
y
July 2018
Wholesale - Australia & NZ
ReadyRooms
For Business
C
o
r
p
o
r
a
t
e
-
A
u
s
t
r
a
l
i
a
/
N
Z
T
o
u
r
O
p
e
r
a
t
i
n
g
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 2018.
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 2018
There were no Short Term Incentive payments awarded for any Key Management Personnel (KMP) for the years ended
30 June 2018 and 30 June 2017. KMPs have established remuneration packages which allows them to participate in the
Long Term Incentive Plan (LTIP). KMPs had no further grants under the LTIP during the current year with the exception
of the new KMP, John Constable, Group General Manager, Retail and Commercial who was granted 500,000 shares on 1
April 2018 under the LTIP.
Changes to executive remuneration in 2018
During the 2018 year, a number of senior roles were consolidated under the new KMP role of Group General Manager,
Retail and Commercial.
The Board believes the current remuneration strategy ensures the appropriate framework to drive long term
performance and align executive reward with shareholders’ interests.
The Board has continued its commitment to its LTIP program, consisting of a loan-based share plan, directly linked
to Total Shareholder Return (TSR) for executive KMP, excluding Executive Directors. 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 2018 Annual General Meeting.
Yours faithfully
Garry Hounsell
Chairman of the Remuneration Committee
Chairman of Helloworld Travel Limited
33
REMUNERATION REPORT
(AUDITED)
This 2018 Remuneration Report outlines the remuneration arrangements for the 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 2018
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2018
2.2 Executive remuneration
2.3 Loan funded LTIP
2.4 Executive shareholdings
2.5 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 KMP of the Group. KMP are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or
indirectly, including any Director (whether executive or otherwise). For the purposes of this report, the term ‘executive’
encompasses the Executive Directors and the Executive KMP.
Directors and other KMP disclosed in this report are:
Name
Non-Executive Directors
Garry Hounsell
Mike Ferraro
Andrew Finch
Peter Spathis (retired 16 November 2017)
Position
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Executive Directors
Andrew Burnes
Cinzia Burnes
Executive KMP
Michael Burnett
Russell Carstensen (resigned 23 May 2018)
Simon McKearney
Chief Executive Officer and Managing Director
Group General Manager, Wholesale & Inbound and
Executive Director
Chief Financial Officer
Group General Manager – Corporate
Group General Manager – New Zealand
John Constable (commenced 12 February 2018)
Group General Manager – Retail & Commercial
1.2 Remuneration governance
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 the market level of remuneration for comparable directors and KMP
executive roles.
35
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 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 KMP 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 FY18 remuneration components is as below:
Executive Remuneration Mix
CEO and
Managing Director
Group General Manager, Wholesale &
Inbound and Executive Director
100%
100%
CFO
79%
21%
Group General Manager –
New Zealand
Group General Manager –
Retail & Commercial
89%
91%
11%
9%
0%
20%
40%
60%
80% 100%
Fixed Remuneration LTIP
helloworldlimited.com.au
1.5 Remuneration changes for 2018
Short Term Incentive Plan (STIP)
There was no STIP for any KMP for the years ended 30 June 2018 and 30 June 2017.
Long Term Incentive Plan (LTIP)
An LTIP was implemented in the 2017 financial year to a targeted group of senior leaders including executive KMP.
During the 2018 financial year, a number of additional senior leaders, including a new executive KMP, were granted
LTIP allocations.
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;
• 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 in the 2017 financial year and the allocation to new personnel in the 2018 financial year were for
a three year period.
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.
During the year ended 30 June 2017, M Burnett and S McKearney were allocated shares pursuant to the LTIP which
included the following attributes:
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
$5.50 share price
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 HLO share value at
the scheme commencement and the number of shares issued. The
loan is repaid to the company upon the vesting of shares.
During the year ended 30 June 2018, J Constable was allocated shares pursuant to the LTIP which included the
following attributes:
Type of Scheme
Grant allocation date
Scheme measurement and vesting date
Share VWAP at Commencement
Performance Criteria
50% Vesting
100% Vesting
KPIs
Loan
Loan Funded Scheme
1 April 2018
31 December 2020
$4.67 per share
Must meet both;
- TSR (based on share price), and
- Individual KPIs
$5.50 share price
$6.50 share price
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 HLO share value at
the scheme commencement and the number of shares issued. The
loan is repaid to the company on the sale of vested shares.
37
Refer to note 33: 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.
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2018
The table below provides relevant Group performance information for the key financial measures over the last five years;
Net profit / (loss) after tax (NPAT)
EBITDA
2018
$’000
2017
$’000
2016
$’000
2015
$’000
2014
$’000
31,969
21,591
1,676 (201,111)
(63,243)
65,216
55,179
25,290
24,051
40,561
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Basic earnings / (loss) per share (EPS cents)
Total dividends declared (cents per share)
Opening share price at 1 July ($)
Closing share price at 30 June ($)
Total shareholder return (%)
2018
2017
2016
2015
2014
27.1
18.0
4.04
4.80
18.8
14.0
3.08
4.04
1.9
2.00
2.16
3.08
(274.0)
(86.3)
-
1.68
2.16
-
1.98
1.68
22.5%
33.8%
42.6%
28.6% (15.2%)
For the third consecutive year, key metrics including EBITDA, NPAT and EPS have increased significantly. In FY18,
Helloworld Travel has increased revenue and successfully reduced costs to re-size the cost base, supported by enhanced
technology solutions and business process efficiencies.
helloworldlimited.com.au 2.2 Executive remuneration
Short term benefits
Salary
($)
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)
2018
2017
480,000
455,384
-
-
-
-
8,571
7,392
20,049
19,616
C Burnes (Group General Manager – Wholesale & Inbound and Executive Director)
2018
2017
M Burnett (CFO)
2018
2017
480,000
455,384
450,000
425,000
-
-
-
-
R Carstensen (Group General Manager – Corporate)
Resigned 23 May 2018
2018
2017
406,038
468,765
-
-
-
-
-
-
-
-
8,571
7,392
20,049
19,616
708
-
20,049
19,616
23,118
8,625
20,049
19,616
S McKearney (Group General Manager – New Zealand)
2018
2017
313,895
319,908
-
-
-
-
J Constable (Group General Manager – Retail & Commercial)
Commenced 12 February 2018
2018
219,284
2018 TOTAL
2017 TOTAL
2,349,217
2,124,441
-
-
-
231,960
-
-
-
9,417
9,597
-
231,960
-
40,968
23,409
89,613
88,061
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128,333
128,333
(64,167)
43,613
38,500
38,500
-
-
-
-
-
-
-
-
-
-
508,620
482,392
508,620
482,392
0%
0%
0%
0%
599,090
572,949
21.4%
22.4%
385,038
540,619
(16.7%)
8.1%
361,812
368,005
10.6%
10.5%
45,000
-
496,244
9.1%
147,666
210,446
- 2,859,424
- 2,446,357
The proportion of remuneration that is performance based was calculated as the LTIP share-based payment as a
proportion of total remuneration.
Mr Constable was appointed to Helloworld Travel on 12 February 2018 and his remuneration reflects the period from
12 February 2018 to 30 June 2018. Short term benefits comprising car and housing allowances and one off relocation
benefits were provided to Mr Constable. The cost of these benefits and the associated FBT payable are shown in the
table above as short term benefits – other, amounting to $231,960.
Mr Carstensen resigned from Helloworld Travel on 23 May 2018 and is no longer a KMP. Mr Carstensen’s salary reflects
the period from 1 July 2017 to 23 May 2018.
No STIP was awarded in FY18 and FY17.
39
2.3 Loan funded LTIP
As described at section 1.5, a LTIP was established during 2017. 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 our shareholders.
During the current year, 500,000 (2017: 900,000) shares were issued and allocated to KMP under the loan funded LTIP.
The details of the loan funded LTIP are included in note 33 to the Financial Statements: share based payments.
In the current year, 500,000 shares were allocated to John Constable under the 1 April 2018 grant, with vesting date of
31 December 2020. The shares were valued at the market value at the grant date of $4.67 per share.
In the prior year, 900,000 shares were allocated to three KMP members on the 1 July 2016 grant, with vesting date of 30
June 2019. The shares were valued at the market value at the grant date of $3.00 per share. Russell Carstensen resigned
from Helloworld Travel during FY18 and his allocated 250,000 shares have been subsequently removed to be sold on
market in FY19, as the shares did not meet the three year vesting conditions of the grant.
A loan is provided to each participant equal to the market value of the shares at the time of issue. As at 30 June 2018,
the loans to the KMP amount to $4.2 million (30 June 2017: $2.7 million).
The loan is interest free and non-recourse. The loan is to be repaid to Helloworld Travel after vesting conditions are
met and must be repaid on the earlier of, the sale of the shares or 10 years after grant date. If the shares fail to vest,
the shares will be forfeited and the loan extinguished. During the vesting period, the shares receive dividends as per
ordinary paid up shares. The dividends earned on the shares during the vesting period are offset against the loan under
the scheme until the loan is repaid.
Set out below is the summary of the shares and loan value with the KMP:
Year ended 30 June 2017
Number of Shares
Loan Value $
Name
M Burnett
R Carstensen
S McKearney
TOTAL
Opening
Balance
-
-
-
-
Granted
500,000
250,000
150,000
900,000
Removal as
KMP
-
-
-
-
Closing
Balance
500,000
250,000
150,000
900,000
Opening
Balance Movement
Closing
Balance
-
-
-
-
1,478,182
1,478,182
739,071
443,443
739,071
443,443
2,660,696
2,660,696
Year ended 30 June 2018
Number of Shares
Loan Value $
Name
M Burnett
R Carstensen
S McKearney
J Constable
TOTAL
Opening
Balance
500,000
250,000
150,000
-
900,000
Granted
Removal as
KMP
Closing
Balance
Opening
Balance Movement
Closing
Balance
-
-
-
500,000
500,000
-
500,000
1,478,182
(56,826)
1,421,356
(250,000)
-
739,071
(739,071)
-
-
-
150,000
500,000
443,443
(17,036)
426,407
-
2,337,350
2,337,350
(250,000)
1,150,000
2,660,696
1,524,417
4,185,113
helloworldlimited.com.au 2.4 Executive shareholdings
The number of shares in the company held during the financial year by each director and other members of KMP of the
Group, including their personally related parties, is set out below:
EXECUTIVE
A Burnes
C Burnes
Number of
shares at
1 July 2017
12,858,058
12,638,014
The Burnes Group Pty Limited as trustee for
The Burnes Group Service Trust
18,480,105
Longbush Nominees Pty Ltd as trustee for
the Burnes Superannuation Fund
M Burnett
R Carstensen (resigned 23 May 2018)
J Constable (commenced 18 February 2018)
S McKearney
TOTAL
10,000
500,000
334,246
-
150,000
44,970,423
Removal as
no longer
KMP
Granted
under LTIP
Number of
shares at
30 June 2018
-
-
-
-
-
(334,246)
-
-
-
-
-
-
-
-
500,000
-
12,899,381
12,638,014
18,480,105
10,000
500,000
-
500,000
150,000
Additions
41,323
-
-
-
-
-
-
-
41,323
(334,246)
500,000
45,177,500
A Burnes and C Burnes each have a beneficial interest in The Burnes Group Pty Limited which acts as the Trustee of The
Burnes Group Service Trust. A Burnes and C 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.
M Burnett, J Constable and S McKearney shares were granted under the LTIP, refer section 2.3 for further details.
2.5 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 and Group Company Secretary
6 months
6 months
6 months
In accordance with normal statutory entitlements
In accordance with normal statutory entitlements
Group General Manager -
J Constable
Retail & Commercial
6 months
6 months
In accordance with normal statutory entitlements
S McKearney
Group General Manager -
New Zealand
3 months
3 months
In accordance with normal statutory entitlements
41
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 on one or
& Risk Committee receives
more Committees. Committee fee is not paid to the Board Chairman.
$25,000)
The Directors’ fees have not increased since 1 July 2011. Non-Executive Directors do not receive any performance
related remuneration or retirement allowances. The remuneration of Non-Executive Directors for the years ended
30 June 2018 and 30 June 2017 is detailed in the following statutory table. The process for review of Non-Executive
Directors’ performance is explained in the Corporate Governance Statement.
helloworldlimited.com.au 3.3 Non-Executive Director remuneration
NON-EXECUTIVE DIRECTOR
G Hounsell (Chairman) - appointed 4 October 2016
2018
2017
M Ferraro - appointed 1 January 2017
2018
2017
A Finch - appointed 1 January 2017
2018
2017
P Spathis (Former Non-Executive Director)
– retired 16 November 2017
2018
2017
R Marcolina (Former Acting Chairman)
2018
2017
A Cummins (Former Non-Executive Director)
2018
2017
2018 TOTAL
2017 TOTAL
Short-term benefits
Cash salary
($)
Post-employment
benefits
Superannuation
($)
Other
($)
175,000
130,577
125,000
62,500
-
-
41,342
100,457
-
55,000
-
39,925
341,342
388,459
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,625
12,405
11,875
5,938
-
-
3,927
9,543
-
-
-
3,793
32,427
31,679
Total
($)
191,625
142,982
136,875
68,438
-
-
45,269
110,000
-
55,000
-
43,718
373,769
420,138
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. The amount in the above table in relation to Mr Marcolina was paid to
Qantas Airways Limited.
3.4
Non-Executive Director shareholdings
NON-EXECUTIVE DIRECTOR
G Hounsell (Chairman)
M Ferraro
A Finch
P Spathis
TOTAL
Number of shares
at 1 July 2017
59,000
-
-
83,333
142,333
Additions
19,500
9,569
-
-
29,069
Removal as no
longer KMP
Number of
shares at
30 June 2018
-
-
-
(83,333)
(83,333)
78,500
9,569
-
-
88,069
This concludes the remuneration report, which has been audited.
43
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, 21 August, 2018
The Directors received the declaration of independence
on page 45 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 & Risk 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 & Risk 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 45 and forms part of the Directors’ Report for
the financial year ended 30 June 2018. Details of the
amounts paid to PricewaterhouseCoopers, for audit and
non-audit services are set out in note 24 of the Financial
Statements on page 86 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 2018, 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
21 August 2018
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.
45
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 21 August 2018.
1 Laying solid foundations
for management and oversight
The relationship between the Board and senior
management is critical to the Company’s long term
success. The Board is responsible for the performance
of the Company in both the short and longer term and
seeks to balance sometimes competing objectives in the
best interests of the Group as a whole. The key aims of
the Board are to ensure that the Company is properly
managed and has an appropriate corporate governance
structure to ensure the creation and protection of
shareholder value.
The role and responsibilities of the Board, the Chairman
and individual Directors are set out in the Company’s
Board Charter. A copy of the Board Charter is available
from the Corporate Governance section of the Company’s
website at www.helloworldlimited.com.au.
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
CEO, the 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 a director appointment, the Board ensures that
appropriate checks including background and reference
checks are conducted on candidates for the role of director,
which may be conducted by external consultants and by
other Directors. Candidates also meet with each existing
director prior to the Board’s decision to appoint them.
helloworldlimited.com.au
To ensure that Directors clearly understand the
requirements of the role, service contracts and formal job
descriptions are provided to them.
Senior executive performance
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 his 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 five 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
Relationships/Stakeholder Management
Remuneration, Human Resources
Legal
Wide Industry Experience
Financial Experience
Strategic Planning & Risk
Health & Safety
Number out
of 5 directors
4
4
2
3
3
4
4
5
5
3
3
3
5
5
Further detail 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.
Director Independence
As at 30 June 2018, 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, 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;
• Andrew Burnes is the Company’s Chief Executive
Officer and Managing Director, and a substantial
shareholder of the Company;
• Cinzia Burnes is the Company’s Group General Manager,
Wholesale and Inbound, Executive Director and a
substantial shareholder of the Company; and
• Peter Spathis until his retirement from the HLO Board
on 16 November 2017, was employed as Chief Financial
Officer of Consolidated Travel Pty Ltd, which operated
in the travel industry, and within the Alysandratos
Group of Companies, which includes Sintack Pty Ltd
(‘Sintack’), a substantial shareholder of Helloworld
Travel Limited.
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 Garry Hounsell. Mr Hounsell is an independent director
of the Company.
For the whole of the year for QH Tours Ltd and up until 16
November 2017 for Sintack Pty Ltd, each had nominated
members to the Board. Those nominees brought to the
Board the requisite skills which are complementary
to those of the other Directors and enabled them to
adequately discharge their responsibilities as Non-
Executive Directors.
47
The following Directors were members of the
Nominations and Governance Committee:
• G Hounsell (Chairman)
• A Burnes
• C Burnes
• P Spathis (until 16 November 2017)
• M Ferraro
• A Finch
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 53 in this Corporate Governance Statement under
the heading ‘Remunerating fairly and responsibly’.
Remuneration Committee
During the year, the following Non-Executive Directors
were members of the Remuneration Committee:
• G Hounsell (Chairman)
• M Ferraro (from 16 November 2017)
• A Finch
• P Spathis (until 16 November 2017)
Details of these Directors’ qualifications, their
attendance at Remuneration Committee meetings, and
the number of meetings held during FY18 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.
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.
All Directors bring independent judgement to bear on
their decisions.
The materiality thresholds used to assess director
independence are set out in the Board Charter. The Board
believes that the interests of the shareholders are best
served by:
• the current 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
The company has a Nominations & Governance
Committee. It’s key responsibilities are the nomination,
appointment and re-election of directors 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.
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 Standard of Conduct Policy is in place to promote
ethical and responsible practices and expectations for
Directors, employees and consultants of the Company in
the discharge of their responsibilities. This Policy reflects
the Directors’ and senior executive’s intention to ensure
that their duties and responsibilities to the Company
are performed with the utmost integrity. A copy of the
Standard 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:
• That the Board was functioning well with very open
communication between management and the Board;
• The mix of skills and experience of the Board is
appropriate for the size and complexity of the company
with all directors making a strong contribution;
Diversity
The Board has established a Diversity Policy which
supports the commitment of the Company to an inclusive
workplace that embraces and promotes diversity and
provides a framework for new and existing diversity
related initiatives, strategies and programs within the
business. A copy of the policy is available in the Corporate
Governance section of the Company’s website and the
terms are consistent with ASX CGP3.
In accordance with this policy and ASX CGP3, the Board
has established the following measurable objectives in
relation to gender diversity:
• Commitment to the ongoing focus on emerging and
• The Board will actively seek suitable women applicants
current non-financial risks; and
• Continuing and enhancing director involvement in
company events.
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.
for Board vacancies;
• The proportion of females on the Board should not fall
below current levels unless a transparent process fails
to succeed in attracting a suitable woman candidate; 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.
During the current year, no new Directors were appointed
and one Director retired at the 2017 AGM. The retirement
of one male Director had the impact of increasing the
proportion of females on the Board. The percentage of
female personnel reporting directly to the CEO at 30 June
2018 was 29%.
49
During the year the company delivered the following
diversity outcomes:
• As part of the Helloworld Travel Reconciliation
Action Plan, a joint venture between QBT and inTravel
was finalised which will focus on providing career
opportunities to indigenous Australians;
• Provided enhanced health and well being programs
nationally including the development of strategic
initiatives that focus on the wellness pillars of physical,
mental and financial. The programs offer consistent
benefits to all team members and support an inclusive
culture; and
• Development of ‘Career Pathways’ to highlight the
vast number of positions and career opportunities that
the group can offer new candidates and existing team
members. The career Pathways encompass a talent
management program which enables identification,
development and formal career guidance for key talent
including a focus on the identification of key female
contributors within the company.
The Company recognises the importance and prominence
of diversity that is currently encouraged across Australia
and globally. The Company will continue to focus on a
holistic view of diversity as opposed to solely focusing
on gender. The Board has agreed to a Diversity Plan for
the 2019 financial year that will focus on:
• Implementation of development sessions for all
senior leaders to provide an awareness of the types
of unconscious biases relating to gender, sexual
preference, and race that exist within the workplace,
such as prejudices to flexible working, remuneration
outcomes, recruitment and selection;
• Ongoing review of the operation of the current
parental leave policy across the group to ensure
appropriate education is provided to managers on their
responsibilities during parental leave. This includes a
parental leave handbook to support employees at this
important time and ongoing commitment to the ‘keep
in touch’ program for employees on parental leave
which contains a support program for transition back
to the workplace. This includes 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;
• Implementation of Career Pathways and Talent
Management programs; and
• In the event that a vacancy arises within the Senior
Leadership Team, an emphasis will be placed on seeking
female candidates to attempt to close the gender gap
and implement a more diverse team. The company will
however continue to operate a meritocracy and the
best candidate for the role will be selected.
• The Helloworld Travel Reconciliation Action Plan
Proportion of women in the organisation
which is designed to:
- Attract and retain indigenous employees
- Develop indigenous awareness through
communication and training
• Build an inclusive culture through:
- Identifying and removing unconscious bias
- Implementing and enhancing employee health
and well being programs
- Reviewing employment flexibility options
and offerings
- Celebrating key events, including culturally
diverse events
• Increasing gender diversity through:
- Developing internal career pathways for women
to progress into senior roles
Helloworld Travel’s specific goals and actions include:
• Working with the leadership team to set targets and
timeframes to address the gender pay gap at the
organisation level, therefore focusing leadership
attention to the topic;
• Reviewing the gender pay gap on an annual basis to
track progress;
There are 1322 female employees in the Group
representing 70% of the workforce. There are five female
employees representing 45% of employees who report
directly to the CEO. There is one female on the Board
which represents 20% of the Board.
Share trading
A Share Trading Policy is in place for Directors, senior
executives and employees. The objective of the policy
is to minimise the risk of Directors and employees who
may hold material non-public information contravening
the laws against insider trading, ensure the Company
is able to meet its reporting obligations under the ASX
Listing Rules and increase transparency with respect to
trading in securities of the Company. A copy of the policy
is available in the Corporate Governance section of the
Company’s website.
Protected disclosures
The Group’s Whistleblower Policy encourages employees
to report concerns in relation to illegal, unethical or
helloworldlimited.com.au
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.
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.
During the reporting period, the following Non-Executive
Directors were members of the Audit & Risk Committee:
6 Rights of shareholders
• Mike Ferraro (Chairman)
• Andrew Finch
• Garry Hounsell (from 16 November 2017)
• Peter Spathis (until 16 November 2017)
The Audit & Risk Committee charter is available in the
Corporate Governance section of the Company’s website
and the composition, operation and responsibilities of
the Committee are consistent with ASX CGP 4.1, except
that, due to the small number of Independent Directors,
the Audit & Risk Committee did not have a majority of
Independent Directors until 16 November 2017. During
that time, the members of the Audit Committee were
considered to be the best qualified to serve on the
Committee given their background and experience.
Mike Ferraro, an independent Director, has been the
Committee Chairman for the full year. The Company
recognised that Mr Spathis’ membership of this
committee until 16 November 2017 was a departure from
Recommendation 4.1 of the ASX CGP. The composition
and operation of this committee is now consistent with
ASX CGP 4.1.
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.
The Helloworld Travel Limited 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 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
51
the Company, provided the information requested is not
price sensitive.
Shareholders have the option to receive communications
from and send communications to the Company and its
share registrar electronically if they wish to do so. They
also have the option of voting online on resolutions to be
put at the Company’s Annual General Meetings.
7 Recognising and managing risk
The Company has a written policy in place for the
oversight and management of its material business
risks. The Group takes a proactive approach to risk
management. The Board and Audit & 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;
• 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
The Company’s Executive Management Team (EMT)
also plays a significant role in identifying, assessing,
monitoring and managing risks. The EMT, supported
by the Helloworld Group Risk team, are responsible for
assisting the Audit & Risk Committee to ensure that
robust risk management exists across the organisation.
The EMT 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.
The Board has received a report from Management as to
the effectiveness of the Company’s management of its
material business risks during the year. The Board has
also received from the CEO and CFO a declaration that,
in their opinion, the financial records of the Company
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 Company and that
the opinion has been formed on the basis of a sound
system of risk management and internal control which is
operating effectively.
Information in relation to the economic, environmental
and social sustainability risks facing the Company and the
manner in which these are managed are included in the
Operating and Financial Review on pages 16 to 31 of the
Annual Report.
• Approving the delegations of authority for day-to-day
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 in the Integrity of financial reporting section
of this Corporate Governance Statement.
An internal audit program is an important element
of the Company’s risk management processes. While
the Company does not have an in-house internal audit
function, it engages independent, expert consultants
to conduct internal audit work on its behalf on a case
by case basis. The consultants engaged are those
considered on the basis of their skill set to best be
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.
helloworldlimited.com.au 8 Remunerating fairly and responsibly
Executive management
Remuneration for executive management is generally set
to be competitive, so as to both retain executives and
attract appropriately skilled 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 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. During the current
year, a number of additional senior leaders were offered
the opportunity to participate in the LTIP.
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.
Helloworld Travel’s remuneration philosophy, objectives
and arrangements are detailed in the Remuneration
Report, which forms part of the Directors’ Report.
Directors
The annual total of fees paid to Non-Executive Directors
is set by the Company’s shareholders and allocated
as Directors’ Fees and Committee Fees by the Board
on the basis of the roles undertaken by the Directors.
Full details of Directors’ remuneration appear in the
Remuneration Report. These fees are inclusive of
statutory superannuation contributions. No retirement
benefits and no equity-based remuneration scheme exist
for Non-Executive Directors.
Details of the remuneration arrangements for the
Company’s Executive Directors are set out in the
Remuneration Report on pages 34 to 43.
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 the 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 Committee Chairman and
members of the Committee are 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.
53
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
REVENUE
Employee benefits expenses
Advertising and marketing expenses
Selling expenses
Communication 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 may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges
Income tax 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
2018
$’000
2017
$’000
326,874
326,833
(130,381)
(139,820)
Note
2
3
(30,575)
(46,864)
(20,952)
(12,293)
(22,241)
139
1,509
65,216
(1,689)
(32,022)
(39,851)
(21,749)
(14,351)
(25,149)
429
859
55,179
(3,066)
(17,320)
(21,076)
46,207
(14,238)
31,969
31,037
(9,446)
21,591
1,259
(370)
(1,175)
407
(108)
(1,012)
(286)
(713)
31,683
20,878
51
31,918
31,969
51
31,632
31,683
Cents
27.1
26.9
81
21,510
21,591
81
20,797
20,878
Cents
18.8
18.7
3
11
4
3
6
22
22
22
8
8
The above consolidated 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 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments accounted for using the equity method
Investment properties
Property, plant and equipment
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
Deferred revenue
Derivative financial instruments
Income tax payable
Other current liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Deferred tax liabilities
Provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
EQUITY ATTRIBUTABLE TO THE OWNERS OF HELLOWORLD TRAVEL LIMITED
Non-controlling interest
TOTAL EQUITY
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
CONSOLIDATED
2018
$’000
2017
$’000
Note
9
10
26
10
11
12
13
14
15
16
17
18
26
20
16
19
17
20
21
22
23
203,528
130,615
524
1,471
198,070
125,227
529
-
336,138
323,826
2,489
17,546
175
14,143
327,225
552
362,130
698,268
268
16,657
175
13,827
283,302
888
315,117
638,943
199,842
199,911
-
14,251
79,612
-
8,124
807
104
14,067
75,736
799
5,905
809
302,636
297,331
41,465
40,289
3,154
8,514
93,422
396,058
20,253
35,191
4,085
2,179
61,708
359,039
302,210
279,904
408,495
395,081
1,726
7,150
(109,469)
(123,717)
300,752
278,514
1,458
1,390
302,210
279,904
55
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Issue of new shares, net of transaction costs
28,846
FOR THE YEAR ENDED 30 JUNE 2018
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:
LTIP expensed
Franchise loyalty plan expensed
Dividends
Transactions with non-controlling interest:
Dividends
BALANCE AT 30 JUNE 2017
CONSOLIDATED
BALANCE AT 1 JULY 2017
Profit 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:
LTIP expensed
Franchise loyalty plan expensed
Issue of new shares, net of transaction costs
13,414
Dividends
Dividends associated with LTIP
Option for additional interest in subsidiary
Transactions with non-controlling interest:
Acquisition through business combinations
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
(9,409)
531
681
-
-
-
81
-
81
-
-
-
-
-
21,591
(713)
20,878
-
531
681
28,846
(9,409)
-
(21)
(21)
395,081
7,150
(123,717)
1,390
279,904
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Non-
controlling
interests
$’000
Total
equity
$’000
395,081
7,150
(123,717)
1,390
279,904
-
31,918
(286)
(286)
-
31,918
51
-
51
31,969
(286)
31,683
616
1,446
-
-
-
(7,200)
-
-
-
-
(18,168)
498
-
-
-
-
-
-
-
-
616
1,446
13,414
(18,168)
498
(7,200)
17
17
BALANCE AT 30 JUNE 2018
408,495
1,726
(109,469)
1,458
302,210
The above consolidated 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 2018
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
Payments for acquisition of controlled entities, net of cash acquired
Proceeds from disposal of investments
Proceeds from disposal of controlled entities
Proceeds from disposal of property, plant and equipment
Dividends from associates
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds/(repayments) of borrowings
Proceeds from share issues, net of costs
Proceeds from sale of forfeited plan shares, net of costs
Dividends paid to company shareholders
Dividends paid to minority shareholder
Loans provided to related parties for equity accounted investments
Loans repaid from related parties for equity accounted investments
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
2018
$’000
2017
$’000
3,147,250
3,102,699
(3,099,606)
(3,069,732)
3,109
(1,716)
(7,763)
41,274
(12,430)
(5,278)
(1,303)
(697)
(18,579)
1,219
-
83
1,289
2,624
(2,450)
(4,187)
28,954
(7,751)
(2,720)
(14,217)
(664)
(731)
-
498
178
-
25
13
12
11
32
32
11
32
11
(35,696)
(25,407)
25
21,563
7
28
28
-
706
(17,784)
-
(2,900)
586
2,171
7,749
198,070
(2,291)
(26,883)
28,440
-
(9,295)
(21)
-
-
(7,759)
(4,212)
202,621
(339)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
9
203,528
198,070
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
57
NOTES TO THE
FINANCIAL STATEMENTS
1. Basis of preparation
(a) Reporting entity
Helloworld Travel Limited (The Company) is incorporated and domiciled in Australia. The Company’s shares are publicly
traded on the Australian Stock Exchange (ASX).
The financial statements of Helloworld Travel Limited and its controlled entities (the Group), for the year ended 30 June
2018 were authorised for issue in accordance with a resolution of the directors on 21 August 2018.
Helloworld Travel Limited is a for profit entity and its principal activities are the selling of international and domestic
travel products and services and the operation of travel agent networks.
(b) Presentation and measurement
(i) Statement of compliance
This general purpose financial report has 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 accounting
The 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) Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the Group’s functional currency.
(iv) Rounding of amounts
The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
and in accordance with that instrument, amounts in the consolidated financial statements and directors’ report have
been rounded off to the nearest thousand dollars, unless otherwise indicated.
(v) Consistent application of accounting policies
Details of the Group’s principle accounting policies which have been applied in the preparation of the financial
statements are included in note 35: significant accounting policies. These accounting policies have been consistently
applied by all entities included in the Group consolidated financial statements. There have been no significant changes
in accounting policies from the prior year.
(vi) Comparative periods
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period.
(c) 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 the Group’s 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 prospectively.
(i)
Impairment review 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: intangible assets.
(ii) Business acquisitions
The Group undertakes business acquisitions, which requires key judgements in the identification, recognition and
measurement of intangible assets created on acquisition, included in the allocation of the purchase price consideration.
For certain acquisitions, the Group is required to assess and value the deferred consideration payable including
valuation of potential future purchases of non-controlling interests.
In accordance with applicable accounting standards, Helloworld Travel has twelve months from the date of acquisition
to finalise its current year acquisitions including the purchase price allocation. The key judgements used for the current
year business acquisitions undertaken are outlined in note 32: business acquisitions and disposals. In addition, the
accounting policies for acquisitions undertaken are outlined in note 35: significant accounting policies.
(iii) 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 outlined in note 35: significant accounting policies.
59
(d) New and amended accounting standards impacting the Group
(i) New and amended accounting standards for the year ended 30 June 2018
The Group has applied the following standards and amendments for the first time for its annual reporting period
commencing 1 July 2017:
• Amendment to AASB 7: Statement of Cash Flow requiring entities to provide disclosures regarding the changes in
liabilities arising from financing activities; and
• Amendment to AASB 12: Income Taxes provides guidance on consideration of tax law restrictions for the sources of
taxable profits against which it may make deductions on the reversal of that deductible temporary difference and the
determination of future taxable profits.
The adoption of these amendments did not have any impact on the amounts recognised in 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 will have an impact on the Group in future financial
years. The Group has not early adopted the new or amended standards in preparing these consolidated financial
statements. The Group’s assessment of the impact of these new standards and interpretations is set out below:
AASB 15: Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised.
It replaces existing revenue recognition guidance, including AASB 118: Revenue and AASB 111: Construction Contracts.
The new standard is based on the principle that revenue is recognised when control of the good or service transfers to a
customer, replacing the existing principle under AASB 118 of revenue recognised upon the transfer of risk and rewards.
The Group has assessed the impacts of applying the new standard on the Group’s financial statements and identified
that the timing of commission revenue recognition derived in our wholesale businesses will change.
Currently, commissions earned from the arrangement of airline tickets, tours and travel for the Wholesale businesses
are recognised when tickets, itineraries or travel documents are issued (ticketing date). Under AASB 15, revenue will
be recognised when the Group satisfies its performance obligation under its contracts by transferring the promised
good or service to the customers. Under AASB15, the Group has defined the performance obligation of its wholesale
businesses as the arrangement of all aspects of holiday packaged travel, including booking, ticketing and management
amendments up to the point of departure (departure date). As a result, the revenue from these contracts will no longer
be recognised at the ticketing date when previously the risk and reward was deemed to have transferred per the current
revenue standard, but will be deferred to be recognised at the later departure date under AASB 15: Revenue from
Contracts with Customers, in line with the service obligation performance of the contracts being met to the customer.
The estimated financial impact of this change on net assets and accumulated losses, excluding the impact of tax, at
the date of transition on 1 July 2017 is to decrease both by $11.3 million. The impact of this change on net assets and
accumulated losses, excluding the impact of tax, as at 30 June 2018 is to decrease both by $12.2 million. The impact on
profit before income tax expense for the year ended 30 June 2018 is estimated to be a reduction of $0.9 million relating
to the revenue timing adjustment. The income tax impact of this change has not yet been finalised.
Under the new revenue standard, the quantitative and qualitative disclosures will increase compared with the existing
revenue standard. Helloworld Travel are currently working through the enhanced disclosures required in preparation
for adoption.
The Group will adopt AASB 15: Revenue from Contracts with Customers on 1 July 2018 under the retrospective
approach, where comparatives will be restated to align with the new accounting standard. This will result in the impact of
initially applying this standard at the beginning of the comparative period on 1 July 2017.
helloworldlimited.com.au AASB 9: Financial Instruments
AASB 9: Financial Instruments addresses the classification, measurement and de-recognition of financial assets and
financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.
The Group has assessed the impacts of applying the new standard on the consolidated financial statements and
identified that the impairment for trade receivables will increase under the new standard and the hedge documentation
of our existing cash flow hedges for forecast foreign currency liabilities will change, but not result in any financial impact
to the Group.
Under the new accounting standard, the impairment model requires the recognition of impairment provisions based
on expected credit losses for trade receivables, rather than only incurred credit losses under the existing accounting
standard. The estimated financial impact of this change on accumulated losses at the date of transition on 1 July
2017 is not expected to be significant. In addition, the year on year balance sheet impact on the consolidated
statement of financial position and subsequent movement in the annual consolidated statement of profit or loss is
not expected to be significant.
AASB 9 requires the Group to ensure that hedge accounting relationships are aligned with the Group’s risk management
objectives and strategy and to apply a more qualitative and forward looking approach to assessing hedge effectiveness.
Helloworld Travel has assessed the impact of hedge accounting and determined that the hedge accounting
documentation be updated to align with the requirements of the new accounting standard and be applied prospectively.
There will be no significant financial impacts to the consolidated statement of financial position or the consolidated
statement of profit or loss from the adoption of the new accounting standard.
The Group will adopt AASB 9: Financial Instruments on 1 July 2018 under the retrospective approach, where
comparatives will be restated to align with the new accounting standard. This will result in the impact of initially applying
this standard at the beginning of the comparative period on 1 July 2017.
AASB 16: Leases
AASB 16 replaces existing leases guidance, including AASB 117: Leases, IFRIC 4: Determining whether an Arrangement
contains a Lease, SIC 15: Operating Leases – Incentives and SIC 27: Evaluating the Substance of Transactions Involving
the Legal Form of a Lease. The standard is effective for the Group for the period commencing 1 July 2019.
AASB 16 introduces a single, on balance sheet lease accounting model for lessees. A lessee recognises a right of
use asset representing its right to use the underlying asset and a lease liability representing its obligation to make
lease payments. In addition, the nature of expenses related to those leases will now change as the future accounting
standard replaces the current straight line operating lease expense with a depreciation charge for right of use assets
and interest expense on lease liabilities. There are recognition exemptions for short term leases and leases of low
value items. Lessor accounting remains like the current standard with lessors continuing to classify leases as finance
or operating leases.
The future accounting standard will primarily impact the accounting for the Group’s operating leases. As at 30 June
2018, the Group has $25.3 million of non cancellable operating leases relating mainly to commercial office premises,
refer note 27: commitments and contingencies for further details. The actual impact of applying AASB 16 on the
consolidated financial statements in the period of initial application will depend on economic conditions including the
Group’s borrowing rate, the composition of the lease portfolio, the assessment of whether it will exercise any lease
renewal options and the extent to which the Group chooses to use practical expedients and recognition exemptions.
The Group has commenced an initial review of the potential impact on the consolidated financial statements, but has
not yet completed its detailed assessment to quantify the financial impact. The new standard will become mandatory
for the Group’s financial statements in the financial year ended 30 June 2020 with comparative restatements under
the retrospective method applied for the year ended 30 June 2019.
61
2. Revenue
Rendering of services
Rents and sublease rentals
Finance income
Other revenue
REVENUE
3. Expenses
PROFIT BEFORE INCOME TAX EXPENSE INCLUDES THE FOLLOWING SPECIFIC EXPENSES:
Depreciation (note 12)
Amortisation (note 13)
Defined contribution superannuation expense
LTIP expense (note 33)
Employee benefits expense excluding superannuation and LTIP
Rental expense under operating leases (note 27)
Impairment of trade receivables (note 26)
Profit on disposal of investments (i)
Franchise loyalty plan expense (note 33)
Business acquisition related expenses
CONSOLIDATED
2018
$’000
2017
$’000
321,951
322,326
582
3,109
1,232
923
2,624
960
326,874
326,833
CONSOLIDATED
2018
$’000
2017
$’000
(4,744)
(12,576)
(8,511)
(616)
(7,771)
(13,305)
(8,784)
(531)
(121,254)
(130,505)
(9,564)
(11,553)
(339)
139
(1,446)
(1,009)
(275)
429
(681)
-
(i) In the current year, Helloworld Travel disposed of its 33.0% share in Down Under Answers LLC for a profit of
$0.1 million, refer note 11: investments accounted for using the equity method for further details. In the prior year,
Helloworld Travel sold its legal entities forming part of its former air representation business for a profit of $0.4 million,
refer to note 32: business acquisitions and disposals for further details.
4. Finance income and expense
RECOGNISED IN PROFIT OR LOSS
Finance income recognised in revenue
Finance expense
NET FINANCE INCOME/(EXPENSE) RECOGNISED IN PROFIT OR LOSS
CONSOLIDATED
2018
$’000
2017
$’000
3,109
(1,689)
1,420
2,624
(3,066)
(442)
helloworldlimited.com.au 5. Operating segments
(a) Description of segments
The reporting structure is based on a geographical basis of where the businesses are managed. Internal reports
reviewed and used by the Chief Executive Officer and Board (the Chief Operating Decision Makers or CODMs) in
assessing performance and making strategic decisions are prepared on this basis.
The Group has the following three segments:
• Australia;
• New Zealand; and
• Rest of World.
Australia and New Zealand segments each have retail distribution 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.
(b) Segment information provided to the CODMs
The CODMs assess the performance of the operating segments based on a measure of EBITDA. 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 2018
Segment revenue
Segment expenses
Equity accounted profits
EBITDA
CONSOLIDATED
YEAR ENDED 30 JUNE 2017
Segment revenue
Segment expenses
Equity accounted profits
EBITDA
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
250,774
(194,311)
1,509
57,972
57,120
(50,264)
-
6,856
18,980
(18,592)
-
388
326,874
(263,167)
1,509
65,216
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
244,003
(194,550)
859
50,312
60,525
(54,307)
-
6,218
22,305
(23,656)
-
(1,351)
326,833
(272,513)
859
55,179
63
(c) Other segment information
(i) EBITDA
A reconciliation of EBITDA to profit before income tax expense is provided as follows:
EBITDA
Depreciation
Amortisation
Finance expense
PROFIT BEFORE INCOME TAX EXPENSE
(ii) Segment assets
CONSOLIDATED
2018
$’000
2017
$’000
65,216
(4,744)
55,179
(7,771)
(12,576)
(13,305)
(1,689)
46,207
(3,066)
31,037
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 $337.9 million (2017: $289.8
million). Total non-current assets located in other countries total $23.7 million (2017: $24.4 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.
6. Income tax expense
The major components of income tax expense recognised in the consolidated statement of profit or loss and other
comprehensive income are:
(a) Income tax expense
Current income tax expense
Deferred income tax expense
Adjustment in respect of current tax expense of previous year
INCOME TAX EXPENSE
Deferred income tax expense relates to the origination and reversal of temporary
differences and comprises:
(Increase)/decrease in deferred tax assets (note 14)
Increase/(decrease) in deferred tax liabilities (note 19)
DEFERRED INCOME TAX EXPENSE
CONSOLIDATED
2018
$’000
2017
$’000
11,057
3,074
107
14,238
481
2,593
3,074
9,149
459
(162)
9,446
(719)
1,178
459
helloworldlimited.com.au (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):
Gain on disposal of non-current assets
Withholding tax not claimable
Share based payment expense
Differences in overseas tax rates
Business acquisition related costs not deductible
Tax offset for franked dividends from equity accounted investments
Under/(over) provision in prior year
Other
INCOME TAX EXPENSE
(c) Tax expense relating to items of other comprehensive income
Cash flow hedges
TOTAL TAX EXPENSE RELATING TO ITEMS OF OTHER COMPREHENSIVE INCOME
(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
2018
$’000
2017
$’000
46,207
13,862
31,037
9,311
(42)
-
618
(134)
196
(434)
107
65
14,238
(189)
186
364
(231)
-
-
(162)
167
9,446
CONSOLIDATED
2018
$’000
2017
$’000
370
370
108
108
CONSOLIDATED
2018
$’000
2017
$’000
2,734
820
2,249
675
All unused tax losses were incurred by non-Australian entities that are not part of the Australian 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.
65
7. Dividends paid and proposed
(a) Dividends
The amount of dividends paid during the year are:
Final dividend for year ended 30 June 2017 of 8.0 cents per share (2017: 2.0 cents per share),
distributed on 20 September 2017 (2017: 16 September 2016)
Final dividends associated with LTIP
Interim dividend for year ended 30 June 2018 of 7.0 cents per share (2017: 6.0 cents per share),
distributed on 9 March 2018 (2017: 20 March 2017)
Interim dividends associated with LTIP
DIVIDENDS PAID PER STATEMENT OF CASH FLOWS
CONSOLIDATED
2018
$’000
2017
$’000
9,684
(209)
8,484
(175)
17,784
2,197
-
7,212
(114)
9,295
All dividends paid or declared during the current year are fully franked.
On 21 August 2018, the Group declared a 11.0 cents per share fully franked final dividend. The dividend is to be paid on
18 September 2018, with a record date of 3 September 2018. The final dividend distributed is expected to amount to
$13.7 million based on the closing number of issued shares as at 30 June 2018 of 124,508,076. The dividend will be paid
out of the 2018 financial year profits, but is not recognised as a liability as at 30 June 2018.
(b) Franking credits
The franked portions of any future dividends paid after 30 June 2018 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 2019. 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
2018
$’000
2017
$’000
26,797
7,654
(5,870)
28,581
27,492
6,163
(4,121)
29,534
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
(a) Basic and diluted earnings per share
Total basic earnings per share from continuing operations attributable to the ordinary equity
holders of the Company
Total diluted earnings per share from continuing operations attributable to the ordinary equity
holders of the Company
(b) Reconciliation of earnings used in calculating earnings per share
Profit after income tax expense
Adjusted for profit attributable to the non-controlling interest
NET PROFIT FOR THE YEAR ATTRIBUTABLE TO THE OWNERS OF HELLOWORLD TRAVEL LIMITED
USED IN CALCULATING EARNINGS PER SHARE
(c) 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 franchise loyalty plan
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED AS THE DENOMINATOR IN
CALCULATING DILUTED EARNINGS PER SHARE
CONSOLIDATED
2018
cents
2017
cents
27.1
26.9
18.8
18.7
CONSOLIDATED
2018
$’000
2017
$’000
31,969
(51)
21,591
(81)
31,918
21,510
CONSOLIDATED
2018
Number
of Shares
2017
Number
of Shares
117,927,415
114,647,185
683,865
350,334
118,611,280
114,997,519
Shares issued under the franchise loyalty plan and the loan funded LTIP are excluded from basic EPS due to the terms
and conditions attached to these shares.
The franchise loyalty shares are included in diluted EPS reflecting the forward non-market vesting conditions and the nil
consideration paid on the issue of the shares.
The LTIP shares are excluded from diluted EPS reflecting the forward market vesting conditions attached to the shares.
For the year ended 30 June 2018, Helloworld Travel has a weighted average number of potential ordinary shares relating
to the LTIP of 3,415,068 (2017: 1,985,891).
Refer note 33: share based payments for further details on the nature of shares issued under the franchise loyalty plan
and the loan funded LTIP.
(d) Information concerning the classification of securities
As at 30 June 2018, the Company had 124,508,076 (2017: 120,204,418) ordinary shares on issue. Refer note 21: issued
capital for further details on the movement of ordinary shares during the current year.
67
9. Cash and cash equivalents
Cash at bank and on hand
Client cash
CASH AND CASH EQUIVALENTS
CONSOLIDATED
2018
$’000
2017
$’000
41,987
161,541
203,528
34,732
163,338
198,070
Client cash includes monies paid to the Group by customers prior to being paid to product and service suppliers.
10. Trade and other receivables
Trade receivables
Provision for impairment of receivables
TRADE RECEIVABLES NET OF IMPAIRMENT
Accrued revenue
Prepayments
Other receivables
CONSOLIDATED
2018
$’000
2017
$’000
65,610
(589)
65,021
48,361
12,351
4,882
65,594
66,512
(510)
66,002
41,946
10,941
6,338
59,225
CURRENT TRADE AND OTHER RECEIVABLES
130,615
125,227
Loans to related parties (note 28)
Other receivables
NON-CURRENT TRADE AND OTHER RECEIVABLES
2,314
175
2,489
-
268
268
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 the current trade and other 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 26: financial risk
management.
helloworldlimited.com.au 11. Investments accounted for using the equity method
Investment in associates and joint ventures
Provision for diminution in value
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
(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 (g)
Australia
Down Under Answers, LLC (f)
Hunter Travel Group Pty Ltd (c)
HTG Australia Pty Ltd (c)
Cooney Investments Pty Ltd (d)
Inspire Travel Management Pty Ltd (e)
United States of America
Australia
Australia
Australia
Australia
CONSOLIDATED
2018
$’000
2017
$’000
17,600
(54)
17,546
16,711
(54)
16,657
OWNERSHIP INTEREST
2017
%
2018
%
50.0%
-
12.0%
25.0%
20.0%
40.0%
50.0%
33.0%
-
100.0%
-
-
All associates and joint ventures have a 30 June reporting date except Down Under Answers LLC, which has a reporting
date of 31 December.
(b) Movement in carrying amounts
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD AT
THE BEGINNING OF THE FINANCIAL YEAR
Additions (i)
Disposals
Share of profit after income tax expense
Dividends received
Other movements
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD AT
THE END OF THE FINANCIAL YEAR
CONSOLIDATED
2018
$’000
2017
$’000
16,657
2,205
(1,527)
1,509
(1,289)
(9)
1,563
14,217
-
859
-
18
17,546
16,657
(i) During the current year, Helloworld Travel acquired several equity accounted investments for a total of $2.2 million,
which included cash consideration of $1.3 million.
69
(c) Acquisition in Hunter Travel Group Pty Ltd (HTG)
On 31 August 2017, the Group acquired 12.0% of HTG. In addition, Helloworld Travel sold 75.0% of the wholly owned
subsidiary, HTG Australia Pty Ltd, to HTG. The subsidiary held seven company owned stores that were the only company
owned stores in the Australian network. Helloworld Travel has retained a 25.0% ownership interest in HTG Australia
Pty Ltd. The consideration for the investment in HTG amounted to $1.0 million, consisting of cash consideration of $0.4
million and the net assets in HTG Australia Pty Ltd of $0.6 million.
The investment in HTG was undertaken to support the franchises’ network development and future growth plans.
HTG has seven branded stores and two cruise travel centres in Newcastle and the surrounding areas. In addition,
HTG also operates eight Royal Automobile Club of Tasmania (RACT) travel outlets across Tasmania and one cruise
travel centre in Hobart.
Due to the ownership interest held of 12.0% in HTG and its subsidiary, HTG Australia Pty Ltd (which Helloworld Travel
also has retained a 25.0% direct ownership interest), and Board representation on HTG, Helloworld Travel has significant
influence over HTG and HTG Australia Pty Ltd. As a result, the investments are accounted for using the equity method of
accounting, after initially being recognised at cost.
(d) Acquisition in Cooney Investments Pty Ltd
On 31 August 2017, the Group acquired 20.0% of Cooney Investments Pty Ltd. The consideration for the investment
in Cooney Investments Pty Ltd amounted to $0.8 million, consisting of cash consideration of $0.5 million and 73,395
shares issued at a share price of $4.36 per share, valued at $0.3 million. The share price was based on the weighted
average price of Helloworld Travel’s share price over the 30 days prior to acquisition and approximates fair value at the
date of acquisition.
The investment in Cooney Investments Pty Ltd was undertaken to support the franchises’ network development and
future growth plans. Cooney Investments Pty Ltd operate two branded network agencies, Helloworld Travel Mackay and
Helloworld Travel Mount Pleasant. In addition, Cooney Investments Pty Ltd also operate Hosted Journeys Group Travel
and Events, which offers hosted tour products.
Helloworld Travel has significant influence over Cooney Investments Pty Ltd. As a result, the investment is accounted for
using the equity method of accounting, after initially being recognised at cost.
(e) Joint venture with Inspire Travel Management Pty Ltd
On 19 January 2018, the Group entered into a joint venture with In Travel Group an indigenous travel management
company. Helloworld Travel has a 40.0% non-controlling interest in the joint venture company, named Inspire Travel
Management Pty Ltd. Acquisition related costs of $0.4 million were incurred to establish the joint venture and are
included in the carrying value of the investment.
Inspire Travel Management Pty Ltd provides travel management services throughout Australia. This venture enables
Helloworld Travel to lead best practice in the areas of indigenous employment and procurement outcomes.
Helloworld Travel has significant influence over Inspire Travel Management Pty Ltd. As a result, the investment is
accounted for using the equity method of accounting, after initially being recognised at cost.
(f) Disposal of Down Under Answers LLC
On 19 April 2018, the Group sold its 33.0% share in Down Under Answers LLC. The total consideration amounted to $1.6
million including cash consideration in the current year of $1.2 million and the carrying value of the investment at the
date of disposal was $1.5 million. As a result, profit of $0.1 million was recognised on disposal of the investment.
helloworldlimited.com.au (g) Joint venture with Mobile Travel Holdings Pty Limited and its subsidiaries (MTA)
In the prior year, the Group acquired 50.0% 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.
(i) Reconciliation of the Group’s investment in MTA
Reconciliation of movement of investment in MTA:
OPENING CARRYING AMOUNT
Additions
Share of profit after income tax expense
Dividends received
CLOSING CARRYING AMOUNT
The closing carrying amount of investment in MTA is reconciled as follows:
50% share in net assets of MTA
Indefinite life intangible assets acquired on acquisition
CLOSING CARRYING AMOUNT
(ii) Summarised MTA financial information
CONSOLIDATED
2018
$’000
2017
$’000
15,076
-
-
14,217
1,434
(1,200)
15,310
859
-
15,076
CONSOLIDATED
2018
$’000
2017
$’000
1,414
13,896
15,310
1,180
13,896
15,076
The below tables provide summarised financial information for the equity accounted investment in MTA, which is
considered a significant equity accounted investment for the Group. The information disclosed reflects the amounts
presented in the financial statements of MTA and not Helloworld Travel’s share of those amounts.
Summarised statement of financial position
Total current assets
Total non-current assets
TOTAL ASSETS
Total current liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
MTA
2018
$’000
14,627
825
15,452
12,609
15
12,624
2,828
2017
$’000
13,370
820
14,190
11,797
33
11,830
2,360
71
Summarised statement of profit or loss and other comprehensive income
Revenue
Operating expenses
EBITDA
Depreciation and amortisation
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
MTA
2018
$’000
10,596
(6,187)
4,409
(312)
4,097
(1,229)
2,868
-
2,868
2017
$’000
5,923
(3,290)
2,633
(179)
2,454
(736)
1,718
-
1,718
The FY18 statement of profit or loss and other comprehensive income represents the full year trading of MTA. The
FY17 statement of profit or loss and other comprehensive income represents the 7 months trading of MTA, from the
date of acquisition being 1 December 2016.
(h) Contingent liabilities
There are no contingent liabilities in associates or joint ventures for which the Group has a legal obligation to settle.
12. Property, plant and equipment
CONSOLIDATED
BALANCE AT 1 JULY 2016
Additions
Additions through business combinations (note 32)
Disposals
Foreign currency differences
Transfers in/(out)
Depreciation charge (note 3)
BALANCE AT 30 JUNE 2017
AT 30 JUNE 2017
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2017
Additions
Additions through business combinations (note 32)
Disposals
Disposals through business sales (note 32)
Foreign currency differences
Transfers in/(out)
Depreciation charge (note 3)
BALANCE AT 30 JUNE 2018
AT 30 JUNE 2018
Cost
Accumulated depreciation
NET BOOK AMOUNT
Land and
buildings
$’000
603
-
-
-
-
-
(10)
593
607
(14)
593
593
-
-
(33)
-
92
-
(10)
642
681
(39)
642
Equipment
including motor
vehicles
$’000
Leasehold
improvements
$’000
13,098
1,601
9
(198)
(12)
(57)
(6,620)
7,821
16,488
(8,667)
7,821
7,821
4,331
129
(31)
(351)
46
190
(2,852)
9,283
20,629
(11,346)
9,283
5,859
1,502
-
(847)
(17)
57
(1,141)
5,413
7,899
(2,486)
5,413
5,413
947
89
(21)
(100)
(33)
(195)
(1,882)
4,218
8,023
(3,805)
4,218
Total
$’000
19,560
3,103
9
(1,045)
(29)
-
(7,771)
13,827
24,994
(11,167)
13,827
13,827
5,278
218
(85)
(451)
105
(5)
(4,744)
14,143
29,333
(15,190)
14,143
helloworldlimited.com.au 13. Intangible assets
CONSOLIDATED
Retail
distribution
systems
$’000
Goodwill
$’000
Agent
network
$’000
Supplier
agreements
$’000
Brand
names and
trademarks
$’000
Software,
website
and other
$’000
Total
$’000
BALANCE AT 1 JULY 2016
141,248
97,400
8,310
2,474
2,883
33,541 285,856
Additions
Additions through internally generated projects
-
-
Additions through business combinations (note 32)
3,609
Disposals
Foreign currency differences
Transfers in/(out)
Amortisation charge (note 3)
-
(217)
224
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE AT 30 JUNE 2017
144,864
97,400
8,310
-
-
-
-
-
-
-
-
-
-
-
-
4,627
3,133
-
(384)
(17)
(224)
4,627
3,133
3,609
(384)
(234)
-
(385)
2,089
(1,027)
(11,893)
(13,305)
1,856
28,783 283,302
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
BALANCE AT 1 JULY 2017
144,864
97,400
8,310
2,089
1,856
28,783 283,302
Additions
Additions through internally generated projects
-
-
-
-
Additions through business combinations (note 32)
34,052
7,000
Foreign currency differences
Transfer in
Amortisation charge (note 3)
(861)
-
-
-
-
-
-
-
-
-
-
-
BALANCE AT 30 JUNE 2018
178,055
104,400
8,310
-
-
-
-
-
40
-
-
-
-
6,107
6,283
3,873
-
5
6,147
6,283
44,925
(861)
5
(385)
1,704
(488)
(11,703)
(12,576)
1,408
33,348 327,225
AT 30 JUNE 2018
Cost
501,475
104,400
8,310
Accumulated amortisation and impairment
(323,420)
-
-
NET BOOK AMOUNT
178,055
104,400
8,310
2,634
(930)
1,704
9,143
72,504 698,466
(7,735)
(39,156) (371,241)
1,408
33,348 327,225
Indefinite life intangible assets including goodwill, retail distribution systems and agent network have been assessed
for impairment and no impairment was required in the current year and prior year.
The software, website and other asset class includes additions of capitalised internal labour development costs of
$6.3 million (2017: $3.1 million) and intangible technology assets provisionally acquired as part of the current year
Flight Systems business acquisition. The intangible asset provisionally acquired of $3.8 million relates to the technology
developed for the Skiddoo travel booking system and related flight distribution systems that enable customers to
access travel related products via the Skiddoo website and software systems.
73
Impairment tests for goodwill and other indefinite life intangibles
(a) Goodwill by cash generating unit (CGU)
Australia retail distribution operations
Australia wholesale & inbound
Australia travel management
New Zealand
GOODWILL, NET OF IMPAIRMENT
CONSOLIDATED
2018
$’000
2017
$’000
49,890
97,855
19,429
10,881
178,055
21,916
111,702
-
11,246
144,864
Australia retail distribution operations CGU, Australia wholesale and inbound CGU and Australia travel management
CGU make up the Australia reportable segment for management reporting purposes. The New Zealand CGU equates to
the New Zealand reportable segment for management reporting purposes. There is no goodwill allocated to the Rest of
World CGU, which equates to the Rest of World reportable segment for management reporting purposes.
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 CGUs, which are assessed as benefiting from the business combination
benefits and synergies.
During the current year, total goodwill increased by $33.2 million to $178.1 million as at 30 June 2018, reflecting several
strategic acquisitions undertaken. The goodwill determined from each of these acquisitions has been assessed and
recorded within an existing CGU based on how Helloworld Travel manages its operations and how the future benefits and
synergies arising from the acquisition complement our pre existing businesses. The details of the acquisitions and the
goodwill allocation to the respective CGU is outlined in note 32: business acquisitions and disposals.
During the current year, the AOT Hotels business was re-assigned from Australia wholesale & inbound CGU to the
Australia travel management CGU reflecting internal reporting and executive management responsibility changes.
The AOT Hotels business operates closely with the pre-existing Australia travel management CGU in the supply of
critical land products to key corporate customers. As a result, goodwill was reallocated from the Australia wholesale &
inbound CGU to the Australia travel management CGU, based on the relative cash flow contribution being re-assigned.
In accordance with applicable accounting standards, a goodwill impairment assessment was performed on the impacted
CGUs prior to the change with no impairment identified. In addition, a sensitivity analysis determined there were no
reasonable changes in assumptions that resulted in the CGU carrying values prior to this re-assignment to exceed the
recoverable amount.
The Group tests whether goodwill has incurred any impairment on an annual basis. The recoverable amount of the
Group’s CGU’s is determined based on the value in use calculations. These calculations use cash flow projections based
on the Board approved budget for the next financial year, internal CGU level projections covering the subsequent 4 years
(the forecast period) and a steady state terminal value calculation at the end of year 5.
The impairment testing undertaken for the year ended 30 June 2018 supports the carrying value of goodwill for all
of the CGU’s under review and no impairment of goodwill was required. The key assumptions used for the value in use
calculations are outlined below:
(i) Cash flows
Operating cash flows were based on the 2019 financial year (FY19) Board approved budget. Cash flows for the forecast
period are expected to grow at 5.0% (2017: 5.0%) for all CGU’s. The operating cash flows comprise EBITDA from each
CGU, net of expected working capital movements and sustainable levels of maintenance capital expenditure.
helloworldlimited.com.au (ii) Long term growth
The terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5% (2017:
2.5%). Revenue and operating expense growth projections have been benchmarked against inflation forecasts, travel
industry forecasts and other general economic projections where available.
(iii) Discount rates
Discount rates applied in the testing of recoverable amounts reflect the pre-tax weighted average cost of capital.
Discount rates applied to the respective CGU’s with goodwill allocated are as follows:
Australia retail distribution operations
Australia wholesale & inbound
Australia travel management
New Zealand
CONSOLIDATED
2018
%
2017
%
14.2
14.3
14.3
14.3
13.8
14.0
-
13.7
The sensitivity analysis determined there are no reasonable changes in assumptions that would cause any of the CGU’s
carrying value to exceed their recoverable amount as at 30 June 2018. In addition, Helloworld Travel has undertaken a
sensitivity analysis, excluding the impact of the FY18 business acquisitions, resulting in no impairment identified and no
reasonable change in assumptions that will result in goodwill becoming impaired.
(b) Retail distribution systems
Retail distribution systems
CONSOLIDATED
2018
$’000
2017
$’000
104,400
97,400
Retail distribution system assets are acquired as part of business acquisitions undertaken and result in separate
identification and valuation of an indefinite life intangible asset.
The retail distribution systems are the integrated system of methods, procedures, techniques and other systems which
facilitate the day-to-day running of the retail business. This 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 considers these assets to be complementary and are recognised as single
identifiable assets. The Group has determined that these retail distribution systems have an indefinite useful life due to
the ongoing effectiveness of the systems which support the Australia retail network and are allocated to the Australian
retail distribution operations CGU.
During the current year, an additional $7.0 million was separately identified, through the business acquisition of the
Magellan Travel Group, as a retail distribution system intangible asset. The Magellan Travel Group is the 6th retail
member network of the Australian retail distribution operations CGU and complements the existing retail member
networks, underpinned by the Air Tickets consolidation business that provides airfare distribution and ticketing services.
The recoverable amount has been assessed at 30 June 2018 using an excess earnings calculation methodology. The key
assumptions used in the calculation are outlined below:
• Cash flows are based on the FY19 board approved budget, with EBITDA growth rates for years 2 to 5 of 5.0%
(2017: 5.0%);
• Terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5%
(2017: 2.5%); and
• Pre-tax discount rate was 14.5% (2017: 14.2%).
75
The impairment testing undertaken for the year ended 30 June 2018 supports the carrying value of the retail
distribution systems and no impairment was recognised.
The sensitivity analysis determined there are no reasonable changes in assumptions that would cause the carrying value
of the retail distribution systems to exceed its recoverable amount as at 30 June 2018. In addition, Helloworld Travel
has undertaken a sensitivity analysis excluding the impact of the Magellan Travel group, resulting in no impairment
identified and no reasonable change in assumptions that will result in the indefinite life asset becoming impaired.
(c) Agent network
Agent network
CONSOLIDATED
2018
$’000
2017
$’000
8,310
8,310
The agent network asset was separately identified and valued as part of the merger with AOT Group Limited.
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 2018 using an excess earnings calculation methodology. The key
assumptions used in the calculation are outlined below:
• Cash flows are based on the FY19 board approved budget, with EBITDA growth rates for years 2 to 5 of 5.0%
(2017: 5.0%);
• Terminal value calculations have an equivalent revenue and operating expense growth assumption of 2.5%
(2017: 2.5%); and
• Pre-tax discount rate was 14.5% (2017:14.2%).
The impairment testing undertaken for the year ended 30 June 2018 supports the carrying value of the agent network
and no impairment was recognised.
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 2018.
helloworldlimited.com.au 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
GROSS DEFERRED TAX ASSETS
(b) Movement in temporary differences during the year
CONSOLIDATED
2018
$’000
2017
$’000
1,837
1,399
4,515
12,186
593
20,530
(19,978)
552
15,863
4,667
20,530
2,244
1,430
4,364
11,603
1,506
21,147
(20,259)
888
15,578
5,569
21,147
Employee
benefits
$’000
Payables and
accruals
$’000
Property
plant and
equipment
$’000
Tax losses
$’000
Other
$’000
Total
$’000
4,228
12,359
616
2,424
1,200
20,827
CONSOLIDATED
BALANCE AT 1 JULY 2016
(Charged)/credited
- to profit or loss
- to other comprehensive income
Additions through business combinations
BALANCE 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
BALANCE AT 1 JULY 2017
(Charged)/credited
- to profit or loss
- to other comprehensive income
Additions through business combinations
67
-
84
540
-
43
(31)
(407)
-
-
-
-
BALANCE AT 30 JUNE 2018
4,515
12,186
1,399
1,837
4,364
11,603
1,430
2,244
1,506
21,147
(650)
(284)
21
593
(481)
(284)
148
20,530
77
15. Trade and other payables
Trade payables
Accruals
Other payables
TRADE AND OTHER PAYABLES
CONSOLIDATED
2018
$’000
2017
$’000
152,846
154,100
28,494
18,502
30,226
15,585
199,842
199,911
Trade creditors are non-interest bearing and are normally settled within 30 to 60 day terms from invoice. Non trade
payables and accruals are non-interest bearing.
Details regarding foreign exchange risk exposure are disclosed in note 26: financial risk management.
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
2018
$’000
2017
$’000
-
-
42,066
(601)
41,465
104
104
20,827
(574)
20,253
CONSOLIDATED
2018
$’000
2017
$’000
40,000
20,000
60,000
37,066
15,152
52,218
2,934
4,848
7,782
40,000
20,000
60,000
20,827
10,798
31,625
19,173
9,202
28,375
The Group has secured financing arrangements with the Westpac Banking Corporation of $60.0 million. The facility
expires in May 2022.
helloworldlimited.com.au (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
2018
$’000
2017
$’000
42,066
20,827
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 exposure to interest rate
and foreign currency changes, is provided in note 26: financial risk management.
79
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
Lease make good
Straight line rent
Onerous lease contracts
NON-CURRENT PROVISIONS
(a) Movement in provisions
CONSOLIDATED
2018
$’000
2017
$’000
5,961
6,814
222
306
597
132
219
5,853
6,044
47
142
903
790
288
14,251
14,067
1,647
1,769
846
661
-
949
989
378
3,154
4,085
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 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
BALANCE AT 1 JULY 2017
Additions through business combinations
Provisions charged to fixed assets
Provision charged/(released) to income statement
Payments made/transfers from provision
BALANCE AT 30 JUNE 2018
Current
Non-current
BALANCE AT 30 JUNE 2018
Lease
make good
$’000
Restructuring
$’000
Onerous
lease
contracts
$’000
Straight
line rent
$’000
Other
$’000
944
592
(100)
(440)
996
47
949
996
996
53
58
(47)
8
1,068
222
846
1,068
662
-
444
(316)
790
790
-
790
832
-
449
-
1,281
903
378
942
-
312
(123)
1,131
142
989
1,281
1,131
790
1,281
1,131
-
-
(486)
(172)
132
132
-
132
71
-
253
(1,008)
597
597
-
597
-
-
(2)
(162)
967
306
661
967
223
-
128
(63)
288
288
-
288
288
99
-
(86)
(82)
219
219
-
219
Total
$’000
3,603
592
1,233
(942)
4,486
2,170
2,316
4,486
4,486
223
58
(368)
(1,416)
2,983
1,476
1,507
2,983
helloworldlimited.com.au (b) Nature and timing of provisions
(i) 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 effect of the unwinding
of discounting the provision is recognised as a finance expense.
(ii) 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.
(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 higher 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.
(iv) 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.
18. Deferred revenue
Deferred revenue
CONSOLIDATED
2018
$’000
2017
$’000
79,612
75,736
The Group receives monies from customers prior to the travel booking finalisation, which is recorded in the statement
of financial position as deferred revenue as at 30 June. The monies will be transferred out of deferred revenue and into
trade creditors upon booking finalisation, to pay the suppliers for the travel products and services, with the commission
element earned on these bookings reflected as revenue in the consolidated statement of profit or loss and other
comprehensive income in the next financial year. Refer note 35: significant accounting policies for further details on
deferred revenue.
81
19. 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
GROSS DEFERRED TAX LIABILITIES
(b) Movement in temporary differences during the year
CONSOLIDATED
2018
$’000
2017
$’000
21,363
33,813
5,091
60,267
(19,978)
40,289
11,893
48,374
60,267
18,352
31,713
5,385
55,450
(20,259)
35,191
10,189
45,261
55,450
CONSOLIDATED
BALANCE AT 1 JULY 2016
(Charged)/credited
- to profit or loss
Additions through business combinations
BALANCE AT 30 JUNE 2017
BALANCE AT 1 JULY 2017
(Charged)/credited
- to profit or loss
- to other comprehensive income
Additions through business combinations
BALANCE AT 30 JUNE 2018
20. Other liabilities
Lease incentives
OTHER CURRENT LIABILITIES
Lease incentives
Redemption liability (i)
Other non-current liabilities
OTHER NON-CURRENT LIABILITIES
Accrued
income
$’000
Property
plant and
equipment
$’000
Indefinite
life
intangibles
$’000
Other
$’000
Total
$’000
18,171
1,303
29,220
3,725
52,419
821
(640)
246
-
-
2,493
111
-
1,178
1,853
18,352
1,549
31,713
3,836
55,450
18,352
1,549
31,713
3,836
55,450
2,989
112
-
22
-
-
21,363
1,661
-
-
2,100
33,813
(508)
86
16
3,430
2,593
86
2,138
60,267
CONSOLIDATED
2018
$’000
2017
$’000
807
807
994
7,200
320
8,514
809
809
1,689
-
490
2,179
(i) The redemption liability relates to the estimated consideration payable by Helloworld Travel for the remaining non-
controlling interest in Asia Escape Holidays. Refer note: 32 business acquisitions and disposals for more information.
helloworldlimited.com.au 21. Issued capital
(a) Shares on issue
CONSOLIDATED
30 Jun 2018
Shares
30 Jun 2017
Shares
30 Jun 2018
$’000
30 Jun 2017
$’000
Issued capital – fully paid
119,797,576
116,938,418
408,708
395,264
Issued capital – issued, but not vested (i)
4,710,500
3,266,000
(213)
(183)
ISSUED CAPITAL
124,508,076
120,204,418
408,495
395,081
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.
(i)
Issued capital – issued, but not vested
Issued, but not vested capital relates to shares that have been issued under the LTIP and the franchise loyalty plan which have
not yet met their future vesting conditions.
(b) Movements in shares on issue
CONSOLIDATED
BALANCE
LTIP shares
LTIP shares
Share issue (i)
Franchise loyalty plan shares
Shares offered as consideration for the Cruise
business acquisition
Capital raising costs (i)
BALANCE
BALANCE
LTIP shares
LTIP shares
Forfeited franchise loyalty plan shares converted to
fully paid capital (ii)
Shares offered as consideration for the ownership interest
in Cooney Investments
Forfeited LTIP shares converted to fully paid capital (iii)
Franchise loyalty plan shares
Franchise loyalty plan shares
Forfeited franchise loyalty plan shares converted to
fully paid capital (ii)
Shares offered as consideration for the Magellan
Travel Group acquisition
LTIP shares
Shares offered as consideration for the ownership
interest in Asia Escape Holidays
Capital raising costs
BALANCE
Note
Date
Number
of Shares
$’000
33
33
33
32
33
33
11
33
33
32
33
32
1 July 2016
109,838,418
366,235
23 September 2016
14 October 2016
26 October 2016
20 December 2016
2,450,000
150,000
7,000,000
666,000
28 February 2017
100,000
-
30 June 2017
120,204,418
-
-
29,750
-
406
(1,310)
395,081
1 July 2017
26 July 2017
30 August 2017
31 August 2017
21 September 2017
1 November 2017
24 November 2017
1 February 2018
6 February 2018
1 March 2018
1 April 2018
31 May 2018
120,204,418
395,081
350,000
500,000
-
73,395
-
30,000
32,750
-
2,427,649
700,000
189,864
-
-
-
58
320
690
-
-
24
11,500
-
888
(66)
30 June 2018
124,508,076
408,495
83
(i) 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. Helloworld Travel incurred $1.1 million of
capital raising costs for the issue of these shares, resulting in net cash proceeds of $28.7 million. The purpose of the
capital raising was to fund the prior year 50% purchase of MTA and repay long term debt.
(ii) Forfeited franchise loyalty plan shares converted to fully paid capital
During the current year, 13,000 and 5,250 shares relating to the franchise loyalty plan did not meet vesting conditions
and were relinquished by the participants. These shares were subsequently sold on market at a share price of $4.45 and
$4.50 respectively, amounting to $0.1 million.
(iii) Forfeited LTIP shares converted to fully paid capital
During the current year, 150,000 shares relating to the LTIP did not meet vesting conditions and were relinquished by
the participants. These shares were subsequently sold on market at a share price of $4.60, amounting to $0.7 million.
22. Reserves
Foreign currency translation reserve
Hedging reserve
Share based payments reserve
Redemption reserve
RESERVES
(a) Movements in reserves
CONSOLIDATED
2018
$’000
2017
$’000
2,627
1,639
4,660
(7,200)
1,726
3,802
750
2,598
-
7,150
Movements in each class of reserve during the current and previous financial year are set out below:
CONSOLIDATED
BALANCE AT 1 JULY 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
4,814
-
-
(1,012)
-
-
BALANCE AT 30 JUNE 2017
3,802
750
BALANCE AT 1 JULY 2017
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Share based payment expense
Option for additional interest in subsidiary
3,802
-
-
(1,175)
-
-
750
1,259
(370)
-
-
-
BALANCE AT 30 JUNE 2018
2,627
1,639
Hedging
reserve
$’000
Predecessor
accounting
reserve
$’000
Share based
payments
reserve
$’000
Redemption
reserve
$’000
451
407
(108)
-
-
-
156,400
1,386
-
-
-
-
(156,400)
-
-
-
-
-
-
-
-
-
-
-
1,212
-
2,598
2,598
-
-
-
2,062
-
4,660
-
-
-
-
-
-
-
-
-
-
-
-
(7,200)
(7,200)
Total
$’000
163,051
407
(108)
(1,012)
1,212
(156,400)
7,150
7,150
1,259
(370)
(1,175)
2,062
(7,200)
1,726
helloworldlimited.com.au (b) Nature of reserves
(i) 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 35: significant accounting policies. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of.
(ii) 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 35:
significant accounting policies. Amounts are reclassified to the consolidated statement of profit or loss and other
comprehensive income when the associated hedge transaction affects profit and loss.
(iii) 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.
In the prior year, Group reviewed the nature of the historic predecessor accounting reserve and transferred the balance
to accumulated losses.
(iv) 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.
(v) Redemption reserve
The redemption reserve relates to Helloworld Travel’s option to purchase the remaining non-controlling interest in
Asia Escape Holidays. The Group has recognised a financial liability for the estimated amount payable. Refer note: 32
business acquisitions and disposals for more information.
23. Accumulated losses
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
(123,717)
(292,218)
Profit after income tax expense attributable to the owners of Helloworld Travel Limited
Dividends
Dividends associated with LTIP
Transfer of predecessor accounting reserve to accumulated losses
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
31,918
(18,168)
498
-
21,510
(9,409)
-
156,400
(109,469)
(123,717)
CONSOLIDATED
2018
$’000
2017
$’000
85
24. 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
25. Cash flow reconciliation
CONSOLIDATED
2018
$
2017
$
852,500
954,580
185,263
283,232
468,495
135,252
302,970
438,222
1,320,995
1,392,802
193,832
195,223
81,086
66,838
61,520
19,568
341,756
276,311
61,015
16,488
5,429
82,932
53,978
7,313
9,797
71,088
(a) 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 expense
Share based payment expense
Profit on disposal of property, plant and equipment
Profit on disposal of investments
Impairment losses on trade receivables
Share of profit of associates accounted for using the equity method
Amortisation of borrowing costs
Change in operating assets and liabilities, net of effects from purchases of controlled entities:
(Increase)/decrease in trade and other receivables
Increase in derivative financial instruments
Decrease in inventories
Decrease in trade and other payables
(Decrease)/increase in deferred revenue
(Decrease)/increase in provisions
Decrease in other liabilities
Movements in tax balances
NET CASH FROM OPERATING ACTIVITIES
CONSOLIDATED
2018
$’000
2017
$’000
31,969
21,591
17,320
21,076
2,062
(83)
(139)
339
(1,509)
151
(2,935)
(2,270)
5
1,212
(55)
(429)
275
(859)
1,200
8,249
(727)
27
(12,209)
(17,336)
3,876
(747)
(820)
6,264
41,274
(9,600)
1,089
(1,272)
4,513
28,954
helloworldlimited.com.au (b) Reconciliation of assets and liabilities arising from financing activities
The movements in assets and liabilities impacting financing activities are outlined below:
CONSOLIDATED
Cash flows
Non-cash
Balance
at 30 June
2017
$’000
Proceeds/
(repayments)
of borrowings
$’000
Movement
in related
party loans
$’000
Foreign
exchange
movement
$’000
Balance
at 30 June
2018
$’000
Current borrowings - unsecured financing
Non-current borrowings - secured bank loan
Non-current receivables - loans to related parties
104
20,827
-
(104)
21,667
-
NET DEBT FROM FINANCING ACTIVITIES
20,931
21,563
-
-
(2,314)
(2,314)
-
(428)
-
(428)
-
42,066
(2,314)
39,752
26. Financial risk management
The Group’s principal financial instruments comprise of receivables, payables, cash, short-term deposits, borrowings
and derivatives. 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 35: significant accounting policies.
Financial risk management is carried out under policies approved by the Board of Directors. The Group identifies,
evaluates and hedges financial risks in close co-operation with the Group’s operating businesses. The Board of Directors
set policies covering specific areas, such as liquidity risk, foreign exchange risk, interest rate risk, credit risk and the use
of derivative financial instruments and non derivative financial instruments.
(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.
Helloworld Travel manages short term liquidity risk by matching surplus and deficit cash flows throughout the Group.
In addition, the Group ensures that there is further excess liquidity based on an ongoing assessment of the current
operating environment, in the event that unexpected circumstances should arise.
Management monitors rolling forecasts of the Group’s liquidity reserves (comprising the undrawn facilities outlined
in note 16: borrowings) and cash and cash equivalents (outlined in note 9: cash and cash equivalents) on the basis of
expected cash flows. Financing arrangements, including details on the interest bearing liabilities and facilities and
maturity dates, are contained in note 16: borrowings.
87
(i) Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities for:
• all non-derivative financial liabilities; and
• net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances as the impact on discounting is not significant.
CONSOLIDATED - 2018
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
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Trade and other payables
199,842 197,322
2,520
Redemption liability (note 32)
Interest bearing liabilities – secured (i)
7,200
42,066
Bank guarantees and letter of credit
-
2,743
TOTAL
249,108 201,010
4,392
7,844
-
-
-
-
-
-
-
-
-
7,200
945
932
1,902
1,923 43,796
1,445
156
1,069
-
-
- 199,842
-
-
7,200
49,498
346
10,151
3,347
2,079 44,865
7,200
346 266,691
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
199,911 199,911
-
-
-
-
-
Interest bearing liabilities – secured (i)
20,827
Interest bearing liabilities - unsecured
104
780
104
768
1,560
1,571
1,593 21,646
-
-
-
-
-
- 199,911
-
-
27,918
104
Bank guarantees and letter of credit
-
3,401
3,203
1,133
1,234
156
953
718
10,798
TOTAL
220,842 204,196
3,971
2,693
2,805
1,749 22,599
718 238,731
(i) Excludes deferred borrowing costs
helloworldlimited.com.au (b) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed in its wholesale operations to foreign exchange risk arising from
future cash flows relating to financial instruments denominated in a currency that is different to its local currency.
Due to the nature of Helloworld Travel’s wholesale operations, revenue is earned in the wholesale businesses’ local
currency, however the associated cost of sales is settled by Helloworld Travel based on quoted prices in the local
currency of the supplier.
The risk is measured through a forecast of highly probably future purchases, with hedge contracts to purchase foreign
currencies timed to mature when payments to suppliers are scheduled, in order to minimise the volatility of the
Australian dollar cash flows.
The Board’s risk management policy is to hedge forecasted foreign currency cash flows in the wholesale businesses,
within specific parameters using forward foreign exchange contracts and to not enter into, issue or hold derivative
financial instruments for speculative trading purposes. As at 30 June 2018, all forecasted transactions were highly
probable to occur and considered effective hedges in accordance with applicable accounting standards.
The New Zealand dollar denominated credit facility is expected to be repaid with receipts from New Zealand dollar
denominated sales. The foreign currency exposure of this financial instrument has therefore not been hedged.
Derivatives
Helloworld Travel has entered into forward foreign exchange contracts to hedge forecasted foreign currency payables. As
at 30 June 2018, the Group has the following derivative financial instruments:
CURRENT ASSETS
Forward foreign exchange contracts – cash flow hedges
TOTAL CURRENT DERIVATIVE FINANCIAL INSTRUMENT ASSETS
CURRENT LIABILITIES
Forward foreign exchange contracts – cash flow hedges
TOTAL CURRENT DERIVATIVE FINANCIAL INSTRUMENT LIABILITIES
CONSOLIDATED
2018
$’000
2017
$’000
1,471
1,471
-
-
-
-
799
799
Derivatives are presented as current assets or liabilities as they are expected to be settled within 12 months after
the end of the reporting date. The Group’s accounting policy for its cash flow hedges is set out in note 35: significant
accounting policies.
89
Exposure
As at 30 June 2018, the Group’s net exposure to foreign currency risk is set out in the table below. The table includes
the following:
• foreign cash holdings as at year end;
• receivables denominated in foreign currencies as at year end;
• current trade payables and forward payment obligations in foreign currencies as at year end; and
• foreign currency exchange contracts outstanding as at year end.
CURRENCY
USD
EUR
GBP
FJD
NZD
Other currencies
NET TOTAL FOREIGN CURRENCY EXPOSURE ASSET/(LIABILITY)
Sensitivity
CONSOLIDATED
2018
$’000
AUD
equivalent
2017
$’000
AUD
equivalent
(2,028)
(1,140)
(395)
(1,935)
11,806
(4,155)
2,153
(2,175)
(1,397)
(436)
(2,872)
10,124
(4,668)
(1,424)
The following table summarises the impact of a 10% increase (strengthening of AUD) and decrease (weakening of
AUD) in foreign exchange rates on the net profit in the statement of profit or loss and other comprehensive income.
The sensitivity rate represents management’s assessment of the reasonable possible change in foreign exchange rates
and is used when reporting foreign currency risk to key management personnel. The sensitivity analysis assumes hedge
effectiveness as at 30 June 2018 and that all other variables including interest rates, remain constant.
10% increase (2017: 10%)
10% decrease (2017: 10%)
(ii)
Interest rate risk
CONSOLIDATED
Impact on net profit
before tax
2018
$’000
667
(816)
2017
$’000
686
(838)
The Group’s interest rate risk arises from future cash flows relating to cash assets and cash borrowings with variable
interest rates. Helloworld Travel does not hedge its exposure to fluctuations in future cash flows due to changes in
market interest rates.
Helloworld Travel manages interest rate risk by ensuring that debt servicing costs are minimised and interest earned is
maximised. This includes reviews undertaken, where required, to consider the restructuring of interest bearing debt, the
possibility of repaying interest bearing debt and the level of investment of surplus cash in interest bearing accounts.
helloworldlimited.com.au Exposure
As at 30 June 2018, the Group had term deposits amounting to $50.1 million (2017: $28.0 million) with an average
interest rate of 3.1% per annum (2017: 2.3%). In addition, the Group had drawn down borrowings of $42.1 million (2017:
$20.8 million) and other cash funds held in operational and foreign currency bank accounts with interest at market rates
under normal commercial terms.
Sensitivity
The information below summarises the impact of a 100 basis points per annum increase and decrease in interest rates
on the net profit in the statement of profit or loss and other comprehensive income.
SHORT TERM DEPOSITS
Increase by 100 basis points (2017: 100 basis points)
Decrease by 100 basis points (2017: 100 basis points)
BORROWINGS
Increase by 100 basis points (2017: 100 basis points)
Decrease by 100 basis points (2017: 100 basis points)
(c) Credit risk
CONSOLIDATED
Impact on net profit
before tax
2018
$’000
500
(500)
(421)
421
2017
$’000
280
(280)
(208)
208
The Group undertakes transactions with a large number of customers and other counterparties in various countries in
accordance with Board approved policy. Credit risk arises from the possibility that a counterparty will default on its
contractual obligation relating to cash and cash equivalents, trade and other receivables and favourable derivatives,
resulting in financial loss to the Group. Credit risk is measured at fair value.
Risk management
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, regular monitoring and
accreditation of travel agents through industry programs.
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.
Helloworld Travel’s most significant supplier is Qantas Airways Limited and its subsidiaries, details of these transactions
are outlined in note 28: related party transactions.
Collateral is not held as security, nor is it the Group’s policy to transfer receivables to special purpose entities.
Exposure
The Group’s maximum exposure to credit risk is the fair value of the financial assets which is the carrying amount of the
financial asset, net of any impairment losses and provisions.
91
The table below sets out the maximum exposure to credit risk as at 30 June:
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
TOTAL CREDIT RISK EXPOSURE
Impaired trade receivables
CONSOLIDATED
2018
$’000
2017
$’000
203,528
133,104
1,471
338,103
198,070
125,495
-
323,565
An allowance for impairment losses is made when there is objective evidence that a trade receivable is impaired. 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.
Refer to note 35: significant accounting policies for more information regarding the calculation of impairment losses.
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
More than 90 days
TOTAL PROVISION FOR IMPAIRMENT OF RECEIVABLES
Movements in the provision for impairment of 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
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
More than 90 days
CONSOLIDATED
2018
$’000
2017
$’000
-
2
175
228
184
589
-
6
8
372
124
510
CONSOLIDATED
2018
$’000
2017
$’000
510
24
339
(209)
(64)
(11)
589
701
-
275
(253)
(113)
(100)
510
CONSOLIDATED
2018
$’000
2017
$’000
48,464
9,141
3,996
1,677
1,743
48,485
10,703
3,455
2,148
1,211
TOTAL TRADE RECEIVABLES NET OF IMPAIRMENT
65,021
66,002
helloworldlimited.com.au As at 30 June 2018, trade receivables of $16.6 million (2017: $17.5 million) were past due but not impaired. These relate
to a number of independent counterparties for whom there is no recent history of default.
There are no significant other receivables, or other classes of receivables, that have been recognised that would
otherwise, without negotiation, have been past due or impaired. It is expected that these amounts will be received when
due. The Group does not hold any collateral in relation to these receivables.
(d) Net fair values
The net fair values of current cash and cash equivalents and non-interest bearing current financial assets and current
financial liabilities approximate their carrying values due to their short maturity.
The fair values of interest bearing financial assets and liabilities, together with their carrying amounts in the statement
of financial position, are as follows:
CONSOLIDATED
Interest bearing assets – non-current
TOTAL ASSETS
Interest bearing liabilities - current
Interest bearing liabilities – non-current
TOTAL LIABILITIES
(e) Fair value hierarchy
2018
2017
Carrying
amount
$’000
2,314
2,314
-
41,465
41,465
Net fair
value
$’000
2,314
2,314
-
42,066
42,066
Carrying
amount
$’000
Net fair
value
$’000
-
-
104
20,253
20,357
-
-
104
20,827
20,931
Certain judgements and estimates are made in determining the fair values of the financial instruments that are
recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the
inputs used in determining fair value, the Group has classified its financial instruments into the three levels prescribed
under the accounting standards.
The table below analyses financial instruments carried at fair value, by valuation method.
CONSOLIDATED - 2018
Net derivative financial assets
TOTAL ASSETS
Contingent consideration (i)
Redemption liability (i)
TOTAL LIABILITIES
CONSOLIDATED - 2017
Net derivative financial liabilities
TOTAL LIABILITIES
Level 1
$’000
-
-
-
-
-
Level 1
$’000
-
-
Level 2
$’000
1,471
1,471
-
-
-
Level 2
$’000
799
799
Level 3
$’000
-
-
2,520
7,200
9,720
Level 3
$’000
-
-
Total
$’000
1,471
1,471
2,520
7,200
9,720
Total
$’000
799
799
(i) For the valuation inputs of the contingent consideration and redemption liability in relation to the acquisition of Asia
Escape Holidays, refer note 32: business acquisitions and disposals for details.
There were no transfers between level 1, 2 and 3 for recurring fair value measurements during the year.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the
reporting period.
93
The different levels have been defined as follows:
• Level 1: fair value of instruments traded in active markets is based on quoted markets prices at the end of the
reporting period. The quoted market price used for financial assets is the current bid price.
• Level 2: fair value of instruments that are not traded in an active market is determined using valuation techniques
which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
• Level 3: if one or more of the significant inputs is not based on observable market data, the instrument is included
in level 3.
(f) Capital Management
(i) Capital Structure
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 continually monitors the return on capital, the level of dividends to ordinary shareholders, cash flow
generation and the debt to equity mix in determining its appropriate capital structure.
In order to maintain or adjust the capital structure, the Board’s considers the following:
• 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.
(ii) Loan covenants
Under the terms of the borrowing facility, the Group is required to comply with certain loan covenants. The Group has
complied with these covenants throughout the current and prior year, with no breaches of loan covenants noted.
helloworldlimited.com.au 27. Commitments and contingencies
LEASE COMMITMENTS - AS LESSEE
Future minimum lease payments for non-cancellable operating leases are payable as follows:
Within one year
One to five years
More than five years
TOTAL LEASE EXPENDITURE CONTRACTED FOR AT YEAR END
LEASE COMMITMENTS - AS LESSOR
Future minimum lease receipts are as follows:
Within one year
One to five years
TOTAL LEASE INCOME CONTRACTED FOR AT YEAR END
(a) Lease commitments - as lessee
CONSOLIDATED
2018
$’000
2017
$’000
10,316
13,473
1,509
25,298
11,961
21,462
2,066
35,489
463
753
1,216
452
1,211
1,663
The Group predominantly leases commercial properties under non-cancellable operating 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 expense of $9.6 million in the period (2017: $11.6 million).
(b) Lease commitments - as lessor
The Group recognised lease rental income of $0.6 million (2017: $0.9 million). Rental income is derived from the
sublease of surplus office space and lease of one investment property.
(c) Guarantees
The Group has on issue bank guarantees and letters of credit as at 30 June 2018 totalling $10.2 million (2017: $10.8
million). In addition, Helloworld Travel Limited has entered into a Deed of Cross Guarantee with certain Australian wholly
owned controlled entities as outlined in note 30: parent entity information.
(d) Contingencies
As at 30 June 2018, there are no significant contingent assets or contingent liabilities.
95
28. Related party transactions
(a) Subsidiaries
Details relating to subsidiaries are included in note 29: particulars in relation to controlled entities.
(b) Ultimate and direct parent
Helloworld Travel Limited is the legal owner of the Group. Refer to note 30: parent entity information for further
information.
(c) Associates and joint ventures
Helloworld Travel undertake transactions with its associates and joint ventures. The list of associates and joint
ventures held by Helloworld Travel are outlined in note 11: investments accounted for using the equity method.
(d) Entities with significant influence
The following entities were considered to have significant influence over the Group during the year:
• Andrew and Cinzia Burnes director related entities hold 35.4% (2017: 36.6%) of the ordinary shares of Helloworld
Travel Limited following the FY16 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. Andrew and
Cinzia Burnes are both Directors 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. The rent charged in the current
year for the commercial office premises, amounted to $1.2 million (2017: $1.2 million) and is included in part (f) as
entities with significant influence over the Group.
• Sintack Pty Ltd holds 17.7% (2017: 18.4%) of the ordinary shares of Helloworld Travel Limited and had one executive
member, Peter Spathis on the Board until 16 November 2017. As a result, significant influence over Helloworld Travel
ceased on 16 November 2017, in accordance with applicable accounting standards.
• QH Tours Limited, a wholly owned subsidiary of Qantas Airways Limited, holds 17.1% (2017: 17.7%) of the ordinary
shares of Helloworld Travel Limited and has an executive member, Andrew Finch on the Board.
(e) Key management personnel (KMP) compensation
Short term employee benefits
Long term employee benefits
Share based payment benefits
Post employment benefits
TOTAL KMP COMPENSATION
CONSOLIDATED
2018
$
2017
$
2,922,519
2,512,900
40,968
147,666
122,040
23,409
210,446
119,740
3,233,193
2,866,495
Detailed remuneration disclosures are provided in the remuneration report, contained within the Directors Report.
helloworldlimited.com.au (f) Transactions with related parties
The following trading transactions occurred with related parties:
(i) Revenue derived from:
Associates and joint ventures
Entities with significant influence over the Group
(ii) Expenses incurred as a result of transactions with:
Associates and joint ventures
Entities with significant influence over the Group
(iii) Receivables as at 30 June:
Associates and joint ventures
Entities with significant influence over the Group
(iv) Payables as at 30 June:
Associates and joint ventures
Entities with significant influence over the Group
CONSOLIDATED
2018
$’000
2017
$’000
873
48,248
794
47,939
5,297
7,859
477
9,837
1,463
2,958
1,340
8,477
197
8,018
401
2,636
Terms and conditions of related party trading 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.
The following loan transactions occurred with related parties:
(i)
Interest revenue from:
Associates of the Group
(ii) Non-current loans as at 30 June:
Associates of the Group
Terms and conditions of related party transactions
CONSOLIDATED
2018
$’000
2017
$’000
102
2,314
-
-
During the current year, Helloworld Travel provided a five year loan to the owners of HTG and Cooney Investments Pty
Ltd, amounting to $2.9 million. The loans were partially repaid by the owners of $0.6 million in the current year. The
closing balance as at 30 June 2018 amounted to $2.3 million, which is reported as non current loans to related parties in
the consolidated statement of financial position.
The loans were provided to the owners of these related parties as part of Helloworld Travel’s acquisition of a minority
interest shareholding, with the objective of assisting these businesses with their future strategic growth objectives.
The loans are made on an arm’s length basis under normal commercial terms and conditions. The loans are secured by
the assets of the respective businesses. Interest accrues daily and is invoiced on a quarterly basis on 30 day terms. The
interest rate is based on the Australian Bank Bill swap reference plus a commercial mark up margin.
97
(g) Transactions with key management personnel (KMP)
During the current year, 500,000 (2017: 900,000) shares were issued and allocated to KMP under the loan funded LTIP.
The details of the loan funded LTIP are included in note 33: share based payments.
In the current year, 500,000 shares were allocated to John Constable under the 1 April 2018 grant, with vesting date of
31 December 2020. The shares were valued at the market value at the grant date of $4.67 per share.
In the prior year, 900,000 shares were allocated to three KMP members on the 1 July 2016 grant, with vesting date of
30 June 2019. The shares were valued at the market value at the grant date of $3.00 per share. Russell Carstensen
resigned from Helloworld Travel during FY18 and his allocated 250,000 shares have been subsequently removed to be
sold on market in FY19, as the shares did not meet the three year vesting conditions of the grant.
A loan is provided to each participant equal to the number of shares issued at market value, amounting to $2.3 million
(2017: $2.7 million) for the KMP. As at 30 June 2018, the loan to the KMP amounts to $4.2 million (30 June 2017:
$2.7 million).
The loan is interest free and non-recourse. The loan is to be repaid to Helloworld Travel after vesting conditions are
met and must be repaid on the earlier of, the sale of the shares or 10 years after grant date. If the shares fail to vest,
the shares will be forfeited and the loan extinguished. During the vesting period, the shares receive dividends as per
ordinary paid up shares. The dividends earned on the shares during the vesting period are offset against any future loan
payable under the scheme until the loan is repaid.
Set out below is the summary of the shares and loan value with the KMP:
Year ended 30 June 2017
Number of Shares
Loan Value
Name
Role
M Burnett
Chief Financial Officer
R Carstensen Group GM - Corporate
S McKearney Group GM - New Zealand
Opening
Balance
-
-
-
-
Granted
500,000
250,000
150,000
900,000
Removal
as KMP
Closing
Balance
Opening
Balance Movement
Closing
Balance
-
-
-
-
500,000
250,000
150,000
900,000
- 1,478,182 1,478,182
-
-
739,071
739,071
443,443
443,443
- 2,660,696 2,660,696
Year ended 30 June 2018
Number of Shares
Loan Value
Name
Role
M Burnett
Chief Financial Officer
R Carstensen Group GM - Corporate
Opening
Balance
500,000
250,000
S McKearney Group GM - New Zealand
150,000
J Constable
Group GM - Retail &
Commercial
-
500,000
Granted
Removal
as KMP
Closing
Balance
Opening
Balance Movement
Closing
Balance
-
-
-
-
500,000
1,478,182
(56,826) 1,421,356
(250,000)
-
739,071
(739,071)
-
-
-
150,000
443,443
(17,036)
426,407
500,000
- 2,337,350 2,337,350
900,000
500,000
(250,000) 1,150,000
2,660,696 1,524,417 4,185,113
The detailed KMP remuneration disclosures are provided in the Remuneration Report, contained within the
Directors Report.
helloworldlimited.com.au 29. Particulars in relation to controlled entities as at 30 June 2018
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 35: significant accounting policies.
The proportion of ownership interest shown in this table is equal to the proportion of voting power held.
NAME
COUNTRY OF INCORPORATION
OWNERSHIP INTEREST
2017
%
2018
%
Helloworld Travel Limited 1, 2
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 2
Travelscene Pty Limited 2
Harvey World Travel International Pty Limited 2
Transonic Travel Pty Limited 2
Helloworld Travel Services (Australia) Pty Limited
Travel Indochina Limited
Best Flights Pty Limited 2
Helloworld Travel Services (NZ) Limited
Atlantic and Pacific Business Travel Limited
GP Holiday Shoppe Limited
Gullivers Pacific Limited
Harvey World Travel (2008) Ltd
Just Tickets Limited
United Travel Limited
Atlantic & Pacific Business Travel Pty Limited 2
Helloworld NZ Limited
Biztrav Limited
Aus STS Holdco II Pty Limited 2
Helloworld Travel Services Group Pty Limited 2
ACN 003 683 967 Pty Limited 2
Concorde International Travel Inc.
Helloworld Travel Services USA Inc.
Harvey Holidays Pty Limited
Travel Indochina Vietnam Co. Ltd
Travel Indochina Laos Co Limited
Helloworld Franchising Pty Limited 2
Helloworld Digital Pty Limited 2
Helloworld IP Pty Limited 2
Insider Journeys Limited
Helloworld Travel Services Holdings Pty Limited 2
Sunlover Holidays Pty Limited 2
AOT Business Consulting (Shanghai) Limited
ATS Pacific Pty Limited 2
AOT Inbound Pty Limited 2
AOT New Zealand Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United Kingdom
Australia
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Australia
New Zealand
New Zealand
Australia
Australia
Australia
United States of America
United States of America
Australia
Vietnam
Laos
Australia
Australia
Australia
United Kingdom
Australia
Australia
China
Australia
Australia
New Zealand
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%
100.0%
100.0%
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%
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%
100.0%
100.0%
100.0%
100.0%
100.0%
99
NAME
COUNTRY OF INCORPORATION
Australian Travel Service (Pacific) Limited
New Zealand
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
Travel Brokers Limited
Pacific Spirit Travel Pty Limited 2
Pillowpoints Pty Limited 2
Travelpoint Pty Limited 2
AOT Retail Pty Limited 2
Australian Online Travel Pty Limited 2
HTG Australia Pty Limited 3
AOT India PVT LTD
Magellan Travel Pty Limited 2, 3
Luxury Getaways Pty Limited 2, 3
Flight Systems Pty Limited 2, 3
Skiddoo Pty Limited 2, 3
Skiddoo IT Pty Ltd 2, 3
Skiddoo Pte. Ltd 3
Skiddoo Philippines Inc. 3
Skiddoo Management Inc. 3
Keygate Holdings Pty Limited 3
Helloworld Travel Singapore Pte. Ltd 3
1. Helloworld Travel Limited
Fiji
Fiji
Fiji
Fiji
New Zealand
New Zealand
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
India
Australia
Australia
Australia
Australia
Australia
Singapore
Philippines
Philippines
Australia
Singapore
OWNERSHIP INTEREST
2017
%
2018
%
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%
25.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
60.0%
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%
-
-
-
-
-
-
-
-
-
-
Helloworld Travel Limited is the legal owner of the Group. Refer note 30: parent entity information for further details.
2. Deed of cross guarantee
These entities are included in the Deed of Cross Guarantee. 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. Changes to controlled entities during the current year
During the current year, the following entities were acquired via a business acquisition:
• On 1 March 2018, Helloworld Travel acquired the control of two trusts, named Magellan Travel Group Corporate Unit
Trust and Magellan Travel Group Unit Trust, trading as the Magellan Travel Group. These trusts are winding down their
operations and are expected to be deregistered in FY19. In addition, a new company was incorporated by Helloworld
Travel in A.C.N.623 441 814 Pty Ltd on 15 December 2017, which subsequently changed its name to Magellan Travel
Pty Limited on 10 April 2018. During the current year, the agents working within the Helloworld Travel Magellan retail
network established trading arrangements with Magellan Travel Pty Limited.
helloworldlimited.com.au • On 16 April 2018, Helloworld Travel purchased 100% of Flight Systems Pty Limited (formerly known as Skiddoo
Group Pty Limited) and its controlled entities consisting of:
- Skiddoo Pty Ltd
- Skiddoo IT Pty Ltd
- Skiddoo Pte Ltd (Singapore)
- Skiddoo Philippines Inc. (Philippines)
- Skiddoo Management Inc. (Philippines)
• On 31 May 2018, Helloworld Travel Limited purchased 60.0% of Keygate Holdings Pty Limited, trading as Asia
Escape Holidays.
For further details on the acquisition of these controlled entities, refer note 32: business acquisition and disposals.
During the current year, the following legal entities were established:
• On 3 April 2018, Helloworld Travel registered a new wholly owned entity based in Australia, named Luxury Getaways
Pty Limited. This entity is currently dormant.
• On 2 May 2018, Helloworld Travel registered a new wholly owned entity based in Singapore, named Helloworld Travel
Singapore Pte. Ltd. This entity is currently dormant.
On 31 August 2017, Helloworld Travel sold 75.0% of HTG Australia Pty Limited to Hunter Travel Group Pty Limited,
retaining a 25.0% interest in the business. HTG Australia Pty Limited was the legal owner of the last 7 Australian
company owned stores. As a result, our 25.0% share in HTG Australia Pty Limited is recognised as an equity accounted
investment, refer note 11: investments accounted for using the equity method for further details.
101
30. Parent entity information
The legal parent company of the Group is Helloworld Travel Limited. Set out below is the supplementary information
about the parent entity.
(a) Results of parent entity
Summarised statement of profit or loss and other comprehensive income
Profit after income tax
TOTAL COMPREHENSIVE INCOME
Summarised 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
2018
$’000
22,478
22,478
2017
$’000
19,539
19,539
PARENT
2018
$’000
75,730
255,018
330,748
7,560
-
7,560
2017
$’000
54,122
255,018
309,140
6,090
146
6,236
323,188
302,904
565,428
4,560
552,014
2,498
(246,800)
(251,608)
323,188
302,904
(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 31: deed of cross guarantee.
(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 2018 the tax consolidated group had a tax payable of $7.6
million (2017: $6.2 million).
(d) Parent entity contingencies
As at 30 June 2018, there are no significant contingent assets or contingent liabilities.
(e) Parent entity issued capital
The issued capital of the parent entity does not equal the issued capital of the consolidated Group due to reverse
acquisition business combinations previously undertaken by the Group.
helloworldlimited.com.au 31. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the entities identified in note 29:
particulars in relation to controlled entities are relieved from the Corporations Act 2001 requirements for preparation,
audit and lodgement of financial statements and Directors’ reports.
Helloworld Travel has had a Deed of Cross Guarantee in place since 25 May 2007, which has been amended from time
to time to add or remove entities. On 20 June 2018 a replacement Deed of Cross Guarantee was entered into which
included the addition of certain wholly owned Australia controlled entities. 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 added into the Deed of Cross Guarantee:
• ACN 003 683 967 Pty Ltd
• AOT Retail Pty Ltd
• Atlantic & Pacific Business Travel Pty Ltd
• Flight Systems Pty Ltd
• Harvey World Travel Franchises Pty Ltd
• Luxury Getaways Pty Ltd
• Magellan Travel Pty Ltd
• Pacific Spirit Travel Pty Ltd
• Pillowpoints Pty Ltd
• Skiddoo Pty Ltd
• Skiddoo IT Pty Ltd
• Sunlover Holidays Pty Ltd
• Travelpoint Pty Ltd
During the current year there were no entities removed from the Deed of Cross Guarantee.
The consolidated income statement and statement of financial position have been prepared in accordance with the
accounting policy note 35: significant accounting policies 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.
103
(a) Closed Group statement of profit or loss and other comprehensive income
REVENUE (i)
Employee benefits expenses
Advertising, selling and marketing expenses
Communication and technology expenses
Occupancy and rental expenses
Operating expenses (ii)
Profit on disposal of investments
Share of profit in associates accounted for using the equity method
EBITDA
Finance expense
Depreciation and amortisation expense
PROFIT/(LOSS) BEFORE INCOME TAX BENEFIT
Income tax benefit
PROFIT/(LOSS) AFTER INCOME TAX BENEFIT
OTHER COMPREHENSIVE INCOME
Change in fair value of cash flow hedge, net of tax
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR
CLOSED GROUP
2018
$’000
2017
$’000
125,135
116,372
(64,981)
(21,589)
(8,004)
(4,891)
(52,833)
(18,405)
(6,926)
(5,323)
(15,106)
(34,855)
139
74
10,777
(1,413)
(3,798)
5,566
5,025
429
-
(1,541)
(2,597)
(3,171)
(7,309)
5,058
10,591
(2,251)
-
3
10,591
(2,248)
(i) Revenue includes $20.7 million (2017: $24.0 million) in dividends received from Australian entities outside the
Closed Group.
(ii) Operating expenses include $0.3 million (2017: $17.6 million) relating to debt forgiveness of intercompany loans
with entities outside the Closed Group.
(b) Closed Group summary of movement in accumulated losses
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
Dividends
Dividends associated with LTIP
Profit/(loss) after income tax benefit
Retained earnings transferred in due to change in closed group
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
CLOSED GROUP
2018
$’000
2017
$’000
(201,427)
(189,767)
(18,168)
(9,409)
498
10,591
32,896
-
(2,251)
-
(175,610)
(201,427)
helloworldlimited.com.au (c) Closed Group statement of financial position as at 30 June
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Intangible assets
Deferred tax assets
Investments
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
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
CLOSED GROUP
2018
$’000
2017
$’000
31,731
38,920
115
70,766
2,439
1,269
156,047
7,117
166,363
333,235
404,001
23,397
33,783
-
57,180
127
1,670
106,758
6,928
182,333
297,816
354,996
164,197
196,997
-
9,873
11,196
7,652
104
9,047
2,384
6,163
192,918
214,695
38,899
14,357
1,140
9,000
63,396
256,314
147,687
11,134
10,715
2,284
2,126
26,259
240,954
114,042
326,455
(3,158)
313,041
2,428
(175,610)
(201,427)
147,687
114,042
105
32. Business acquisitions and disposals
(a) Summary of business acquisitions
During the current year, Helloworld Travel have undertaken several acquisitions with the net cash flow and total purchase
consideration summarised below:
CONSOLIDATED - 2018
ACQUISITION OF CONTROLLED ENTITIES
Magellan
Flight Systems
Asia Escape Holidays
TOTAL ACQUISITION OF CONTROLLED ENTITIES
Acquisition of GO C&I business
TOTAL BUSINESS ACQUISITIONS
Net outflow/(inflow)
of cash – investing
activities
$’000
Total
purchase
consideration
$’000
19,439
402
(1,262)
18,579
697
19,276
32,470
1,400
5,408
39,278
697
39,975
The details of the acquisitions undertaken during the current year are outlined below:
(b) Acquisition of Magellan Travel Group (Magellan)
(i) Summary of acquisition
On 1 March 2018, Helloworld Travel acquired the Magellan Travel Group. The acquisition included control over Magellan
Travel Group Corporate Unit Trust and Magellan Travel Group Unit Trust. These two trusts will be wound up in the next
financial year, with the operations being transferred to Magellan Travel Pty Limited, a wholly owned subsidiary of
Helloworld Travel.
The acquisition of Magellan has increased Helloworld Travel’s Australia retail distribution businesses scale of
operations, creating a separate sixth Australian retail network in the Group. The acquisition will enable the Magellan
members to benefit from Helloworld Travel’s investment in technology and distribution strategies.
Details of the purchase consideration, net assets acquired and goodwill of Magellan are as follows:
Cash paid
Ordinary shares issued
PURCHASE CONSIDERATION
$’000
20,970
11,500
32,470
The $11.5 million of ordinary shares consists of 2,427,649 shares issued at a share price of $4.74 per share. The share
price was based on the weighted average price of Helloworld Travel’s share price over the 30 days prior to acquisition
and approximates fair value at the date of acquisition.
helloworldlimited.com.au The provisional assets and liabilities recognised from the Magellan acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets - software
Intangible assets - retail distribution system
Trade and other payables
Provisions
Deferred tax liabilities
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
1,531
798
38
45
7,000
(1,768)
(153)
(2,100)
5,391
27,079
32,470
The assets and liabilities of Magellan acquired by Helloworld Travel are recorded at fair value, resulting in goodwill of
$27.1 million. The acquisition accounting was provisionally determined at 30 June 2018 and subsequent adjustments
may arise within 12 months of the acquisition date to finalise the acquisition accounting including the final allocation to
the separate identifiable intangible assets and the associated tax impact.
The goodwill is attributable to the experience of Magellan management and future revenue synergies expected to arise
from the acquisition. It will not be deductible for tax purposes. The goodwill has been allocated to the Australia retail
distribution operations cash generating unit.
(ii) Purchase consideration – cash outflow
Cash paid
Cash and cash equivalents acquired from controlled entities
NET OUTFLOW OF CASH – INVESTING ACTIVITIES
$’000
(20,970)
1,531
(19,439)
(iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 1 March 2018 to 30 June 2018 (4 month period), Magellan contributed revenue of $5.2
million and net profit before income tax expense of $0.3 million to Helloworld Travel’s results.
If the date of the Magellan acquisition was 1 July 2017, the enlarged Group revenue and net profit before income tax
expense for the year ended 30 June 2018 would have been $333.1 million and $47.1 million respectively. These results
are based on the aggregation of Helloworld Travel’s and Magellan’s results.
(iv) Acquisition related costs
Acquisition related costs of $0.6 million were incurred in the acquisition and 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.
107
(c) Acquisition of Flight Systems Pty Ltd and its controlled entities (Flight Systems)
(i) Summary of acquisition
On 16 April 2018, Helloworld Travel acquired 100% of the share capital of Flights Systems Pty Ltd, a provider of web-
based flight booking technologies and operator of the skiddoo.com.au website.
The acquisition of Flight Systems provides Helloworld Travel with sophisticated website and flight distribution
technologies, which will be incorporated into the Group’s existing IT platforms, strengthening Helloworld Travel’s
business technology suite.
Details of the purchase consideration, net assets acquired and goodwill of Flight Systems are as follows:
Cash paid
PURCHASE CONSIDERATION
The provisional assets and liabilities recognised from the Flight Systems acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Intangible assets - software
Intangible assets - technology assets
Deferred tax assets
Trade and other payables
Provisions
Deferred tax liabilities
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
1,400
1,400
$’000
998
980
5
59
3,769
148
(5,046)
(370)
(38)
505
895
1,400
The assets and liabilities of Flight Systems acquired by Helloworld Travel are recorded at fair value for accounting
purposes, resulting in goodwill of $0.9 million. The acquisition accounting was provisionally determined at 30 June 2018
and subsequent adjustments may arise within 12 months of the acquisition date to finalise the acquisition accounting
including the final allocation of the purchase price to the separate identifiable intangible assets and the impact of the
Australian tax consolidation finalisation.
The goodwill is attributable to the experience of Flight Systems management and future profitability expected to arise
from the acquisition. It will not be deductible for tax purposes. The goodwill has been allocated to the Australia retail
distribution operations cash generating unit.
(ii) Purchase consideration – cash outflow
Cash paid
Cash and cash equivalents acquired from controlled entities
NET OUTFLOW OF CASH – INVESTING ACTIVITIES
$’000
(1,400)
998
(402)
helloworldlimited.com.au (iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 16 April 2018 to 30 June 2018 (2.5 month period), Flight Systems contributed
revenue of $0.6 million and net loss before income tax expense of $(0.1) million to Helloworld Travel’s results.
If the date of the Flight Systems acquisition was 1 July 2017, the enlarged Group revenue and net profit before income
tax expense for the year ended 30 June 2018 would have been $330.4 million and $45.1 million respectively. These
results are based on the aggregation of Helloworld Travel’s and Flight Systems’ results.
(iv) Acquisition related costs
Acquisition related costs of $0.2 million were incurred in the acquisition and 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.
(d) Acquisition of Keygate Holdings Pty Ltd (trading as Asia Escape Holidays)
(i) Summary of acquisition
On 31 May 2018, Helloworld Travel acquired 60.0% of the share capital in Keygate Holdings Pty Ltd, trading as Asia
Escape Holidays, a fast growing outbound travel wholesaler based in Perth specialising in 16 destinations through
Asia, the Indian Ocean and the Pacific.
The acquisition of Asia Escape Holidays provides Helloworld Travel with additional products and services that
complement the existing Helloworld Travel wholesale businesses in the Asia Pacific region. With demand for inclusive
packages in the retail leisure market increasing, this gives Helloworld Travel the ability to offer and deliver a greater
range of all-inclusive packages throughout the Asia Pacific region.
Details of the purchase consideration, net assets acquired and goodwill of Asia Escape Holidays are as follows:
Cash paid
Ordinary shares issued
Deferred contingent consideration
PURCHASE CONSIDERATION
$’000
2,000
888
2,520
5,408
The $0.9 million of ordinary shares consists of 189,864 shares issued at a share price of $4.68 per share. The share
price was based on the weighted average price of Helloworld Travel’s share price over the 30 days prior to acquisition
and approximates fair value at the date of acquisition.
The total purchase consideration of $5.4 million includes deferred contingent consideration calculated at $2.5 million.
The contingent consideration is payable on 1 July 2019 and determined in accordance with the conditions of the sale
and purchase contract. The deferred contingent consideration is based on Asia Escape Holidays’ FY19 expected
performance that is in excess of the FY18 base result as a valuation multiple.
Helloworld Travel has undertaken a detailed review of Asia Escape Holidays’ FY19 results which was included in the
Group board approved FY19 budget. Helloworld Travel expect the FY19 performance of Asia Escape Holidays to exceed
FY18, resulting in a fair value contingent consideration of $2.5 million as at 30 June 2018. The contingent consideration
is included in note 15: trade and other payables.
109
The provisional assets and liabilities recognised from the Asia Escape Holidays acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Property, plant and equipment
Trade and other payables
Provisions
Deferred revenue
Income tax payable
Non-controlling interest
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
3,262
633
80
175
(1,740)
(157)
(2,088)
(121)
(18)
26
5,382
5,408
The assets and liabilities of Asia Escape Holidays acquired by Helloworld Travel are recorded at fair value for accounting
purposes, resulting in goodwill of $5.4 million. The acquisition accounting was provisionally determined at 30 June 2018
and subsequent adjustments may arise within 12 months of the acquisition date, including the allocation of the purchase
price to separate identifiable intangible assets and the impact of tax finalisation.
The goodwill is attributable to the experience of Asia Escape Holidays management and the enlarged product and
service offering that Helloworld Travel can now provide to its customers. It will not be deductible for tax purposes. The
goodwill has been allocated to the Australian wholesale and inbound cash generating unit.
(ii) Purchase consideration – cash inflow
Cash paid
Cash and cash equivalents acquired from controlled entities
NET INFLOW OF CASH – INVESTING ACTIVITIES
$’000
(2,000)
3,262
1,262
(iii) Option to purchase 40% non-controlling interest
Helloworld Travel has a call option to buy the remaining 40.0% ownership interest in Asia Escape Holidays on 1 July
2022. In addition, the non-controlling minority interest holder has a put option to sell the 40.0% ownership interest
to Helloworld Travel at the same point in time. The mechanism for determining the purchase price of the remaining
40.0% ownership was established in the signed sale and purchase agreement on 31 May 2018, which outlines that the
consideration is set at the FY22 performance of Asia Escape Holidays as a valuation multiple.
Helloworld Travel has undertaken a review of Asia Escape Holidays forecast position and future expectations.
Helloworld Travel expect the FY22 performance EBITDA of Asia Escape Holidays to be significantly more than current
performance, resulting in a $7.2 million fair value assessment on this option. The financial liability in relation to the
put option of the remaining non-controlling interest in Asia Escape Holidays has been recorded as a redemption
liability in note 20: other liabilities and the potential future purchase of the remaining ownership interest recorded
as a redemption reserve within equity. Any change in the fair value measurement of the redemption liability in future
financial years will be recorded in the consolidated statement of profit or loss and other comprehensive income.
(iv) Revenue and profit before income tax expense contribution
From the date of the acquisition, 31 May 2018 to 30 June 2018 (1 month), Asia Escape Holidays contributed revenue of
$0.6 million and net profit before income tax expense of $0.1 million to Helloworld Travel’s results.
helloworldlimited.com.au If the date of the Asia Escape Holidays acquisition was 1 July 2017, the enlarged Group revenue and net profit before
income tax expense for the year ended 30 June 2018 would have been $332.1 million and $46.8 million respectively.
These results are based on the aggregation of Helloworld Travel’s and Asia Escape Holidays’ results.
(v) Acquisition related costs
Acquisition related costs of $0.1 million were incurred in the acquisition and 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.
(e) Acquisition of GO Conference & Incentive Management business (GO C&I)
On 1 April 2018, Helloworld Travel acquired Harris Group Ltd’s 50% beneficial interest in GO C&I, a New Zealand travel
management business that arranges travel for groups, conferences and events. As a result, Helloworld Travel owns
100% of the business, title and future profits.
The total consideration amounted to $1.2 million, comprising cash paid of $0.7 million and deferred cash consideration
of $0.5 million payable in September 2018. Goodwill arising from the acquisition amounted to $0.7 million, which is not
deductible for tax purposes and relates to future profitability expected to be derived. The goodwill has been allocated
to the New Zealand CGU. Consideration relating to remuneration services of the previous owner is expensed to the
consolidated statement of profit or loss and other comprehensive income.
(f) 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 final assets and liabilities recognised from the Cruise Businesses acquisition 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
$’000
9
17
26
1,044
1,070
111
The goodwill is attributable to future revenue, profitability and cost synergies expected to arise from the acquisition. It
was not deductible for tax purposes. The prior year acquisition was provisionally determined in FY17 and there were no
changes to the acquisition accounting upon finalisation in FY18.
(g) Disposal in HTG Australia Pty Ltd
On 31 August 2017, Helloworld Travel sold 75.0% of the wholly owned subsidiary, HTG Australia Pty Ltd, which held
seven company owned stores that were the only company owned stores in the Australian network, to Hunter Travel
Group Pty Ltd (HTG). Helloworld Travel retained a 25.0% ownership interest in HTG Australia Pty Ltd.
The disposed net assets formed part of the total consideration of $1.0 million for Helloworld Travel’s equity accounted
investment in HTG. Refer note 11: investments accounted for using the equity method for further details. The direct
management of the Australian company owned stores was not considered core to Helloworld Travel’s operations nor
material to the consolidated results.
(h) Disposal of air representation business
On 23 January 2017, the Group disposed of its investment in its former air representation business, consisting of
World Aviation Systems (Australia) Pty Limited, Global Aviation Services Pty Limited and Global Aviation Services
(Australasia) Pty Limited. The consideration amounted to $0.5 million resulting in a profit before tax of $0.4 million in
the prior year. The air representation business was not considered core to Helloworld Travel’s operations nor material to
the consolidated results.
helloworldlimited.com.au 33. Share based payments
(a) Long term incentive plan (LTIP)
Background
The Board has previously approved the adoption of the LTIP with grants provided to key executives and senior leaders
during the current and prior year. 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 key criteria for the LTIP are as follows:
• Shares granted under the LTIP 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;
• 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 the vesting period; and
• The executive or senior leader will also need to meet individual KPIs as determined by the CEO and Board over the
vesting period, with the achievement of these KPI’s at the sole discretion of the CEO and Board.
Key attributes and valuation
The key attributes of the plan and grants provided since inception are:
Grant date
Vesting date
Number of shares issued
Issue and exercise price
50% vesting
100% vesting
Performance criteria
FY18 grants
FY17 grant
1 July 2017
1 July 2020
850,000
$3.81 per share
$5.50 share price
$6.50 share price
TSR and KPIs
1 April 2018
1 January 2021
700,000
$4.67 per share
$5.50 share price
$6.50 share price
TSR and KPIs
1 July 2016
1 July 2019
2,600,000
$3.00 per share
$4.50 share price
$5.50 share price
TSR and KPIs
A loan is given to the participant at grant date equal to the share value at the scheme commencement and the number of
shares issued. The loan is repaid to the company after vesting conditions are met. The loan is non-recourse and interest
free. A holding lock will be placed on the shares until the vesting date has been reached and the performance criteria has
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 the loan extinguished.
The shares attract dividends as per ordinary paid up shares. The dividends earned will be offset against any future loan
payable by the eligible employees under the scheme.
The fair value of the shares granted includes the loan instruments attached to the shares. The fair value was calculated
in accordance with AASB 2: Share based payments. It has been determined using a version of the Black Scholes model
incorporating a Monte Carlo simulation analysis to value the market-based performance conditions.
113
The fair value of the respective grants with key assumptions used in determining its value is outlined as follows:
Grant date
Vesting date
Fair value of instrument
The fair value incorporates:
Expected price volatility (i)
Expected dividend yield
Risk free interest rate
FY18 grants
FY17 grant
1 July 2017
1 July 2020
$0.78
1 April 2018
1 January 2021
$0.99
1 July 2016
1 July 2019
$0.77
35% to 45%
30% to 40%
35% to 45%
3.75%
2.41%
3.40%
2.50%
2.00%
1.78%
(i) The expected price volatility is based on the historic volatility, adjusted for any expected changes to future
volatility due to publicly available information.
Financial summary
During the current year, there were 1,550,000 (2017: 2,600,000) shares granted under the LTIP, summarised as below:
Year ended 30 June 2017
Number of shares
Start of
performance
period
End of
performance
period
Exercise
price
1-Jul-16
30-Jun-19
$3.00
Grant
Date
1-Jul-16
TOTAL
Opening
balance
Granted
Lapsed (i)
Vested and
exercisable at
end of the year
(ii)
Closing
balance
-
-
2,600,000
2,600,000
-
-
2,600,000
2,600,000
-
-
Year ended 30 June 2018
Number of shares
Start of
performance
period
End of
performance
period
Exercise
price
Opening
balance
Granted
Lapsed (i)
Vested and
exercisable at
end of the year
(ii)
Closing
balance
1-Jul-16
30-Jun-19
$3.00
2,600,000
-
(150,000)
2,450,000
01-Jul-17
30-Jun-20
$3.8137
01-Apr-18
01-Apr-18
31-Dec-20
$4.6747
TOTAL
-
-
850,000
700,000
-
-
850,000
700,000
2,600,000
1,550,000
(150,000)
4,000,000
-
-
-
-
Grant
Date
01-Jul-16
01-Jul-17
(i) During the current year, 150,000 (2017: nil) shares lapsed and were subsequently sold on market, reflecting the
resignation of one executive.
(ii) No shares were vested or exercised during the current or prior year. The shares issued under the LTIP are all
currently in the three year vesting period as at 30 June 2018.
(b) Franchise loyalty shares
Background
Helloworld Travel has issued shares to franchisees, who had elected to participate in the franchise loyalty plan. The
shares are issued for nil consideration and have the non-market condition of remaining with the Helloworld Travel
network during the vesting period. If the franchisee leaves the Helloworld Travel network prior to the vesting date, the
shares allocated to the respective franchisee will be forfeited.
helloworldlimited.com.au At the vesting date, franchisees which have satisfied the required conditions of the scheme will be issued with their
allocated shares at nil consideration. 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 as
declared by the Group.
Key attributes and valuation
The key attributes of the plan and grants provided since inception are:
Grant date
Vesting date
Number of shares issued
Issue price
Vesting conditions
FY18 grants
24 November 2017
1 August 2019
30,000
1 February 2018
1 November 2018
32,750
$4.94 per share
$4.79 per share
FY17 grant
20 December 2016
1 November 2018
666,000
$3.75 per share
Non-market condition
Non-market condition
Non-market condition
The fair value of the shares issued under the franchise loyalty plan is based on the number of shares issued at grant
date and the issue price. The issue price is the closing market price on the ASX at the date of issue. The fair value of the
shares is amortised over the vesting period as a share based payment expense.
Financial summary
During the current year, there were 62,750 (2017: 666,000) shares granted under the franchise loyalty plan, summarised
as below:
Year ended 30 June 2017
Number of shares
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price
20-Dec-16
20-Dec-16
31-Oct-18
$0.00
TOTAL
Opening
balance
Granted
Lapsed (i)
-
-
666,000
666,000
-
-
Vested and
exercisable at
end of the year
(ii)
-
-
Closing
balance
666,000
666,000
Year ended 30 June 2018
Number of shares
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price
20-Dec-16
20-Dec-16
31-Oct-18
24-Nov-17
24-Nov-17
31-Jul-19
1-Feb-18
1-Feb-18
31-Oct-18
$0.00
$0.00
$0.00
TOTAL
Opening
balance
666,000
Granted
Lapsed (i)
Vested and
exercisable at
end of the year
(ii)
Closing
balance
-
(18,250)
647,750
-
-
30,000
32,750
-
-
30,000
32,750
666,000
62,750
(18,250)
710,500
-
-
-
-
(i) During the current year, 18,250 (2017: nil) shares lapsed and were subsequently sold on market, reflecting certain
franchisees leaving the Helloworld Travel network.
(ii) No shares were vested or exercised during the current or prior year. The shares issued under the franchise loyalty
plan are all currently in the vesting period as at 30 June 2018.
115
(c) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period are as follows:
Write back of lapsed performance rights under legacy incentive program
Share based payment expense under LTIP
Share based payment expense under franchise loyalty plan shares
TOTAL SHARE BASED PAYMENTS EXPENSE
CONSOLIDATED
2018
$’000
2017
$’000
-
616
1,446
2,062
(136)
667
681
1,212
The expense was taken to the share based payments reserve, which forms part of the reserves in the consolidated
statement of financial position.
34. Events after the reporting period
No matter or circumstance has arisen since 30 June 2018 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 for the
following items:
Dividends
On 21 August 2018, the Group declared a 11.0 cents per share fully franked final dividend. The dividend is to be paid on
18 September 2018, with a record date of 3 September 2018. The final dividend distributed is expected to amount to
$13.7 million based on the closing number of issued shares as at 30 June 2018 of 124,508,076. The dividend will be paid
out of the 2018 financial year profits, but is not recognised as a liability as at 30 June 2018.
helloworldlimited.com.au 35. 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.
(a) Principles of consolidation
The consolidated financial statements comprise the financial statements of Helloworld Travel Limited and its
subsidiaries (referred to in this financial report as the Group) as at 30 June 2018 and for the year then ended.
(i) Subsidiaries
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 deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries are consistent 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 consolidated
statement of financial position respectively.
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is
generally the case where the Group holds 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.
Under the equity method of accounting, the investments are initially recognised at cost including acquisition related
costs, that are adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the
investee (in Group profit or loss) and the Group’s share of movements in other comprehensive income (OCI) of the
investee (in Group OCI). Dividends received or receivable from associates are recognised as a reduction in the
carrying amount of the investment.
When the Group’s share of losses in an associate equal or exceed its interest in the entity, 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.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of associates are consistent with the policies adopted by
the Group.
The carrying amount of associates is tested for impairment in accordance with the policy described at note 35(l).
(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 amounts of
the controlling and non-controlling interests to reflect their relative interests in the 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.
117
When the Group ceases to consolidate or equity account for an investment because of a loss of 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. This fair value becomes 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 OCI 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 OCI are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of
the amounts previously recognised in OCI are reclassified to profit or loss where appropriate.
(b) Business combinations
The acquisition 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;
• liabilities incurred to the former owners of the acquired business;
• equity interest issued by the Group;
• fair value of any asset or liability resulting from a contingent consideration arrangement; and
• fair value of any pre-existing equity interest in the subsidiary.
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. The Group recognises any non-controlling
interest in the acquired entity on an acquisition by acquisition basis either at fair value or at the non-controlling
interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition related costs are expensed as incurred, except if related to the issue of debt or equity securities, in which
case are recognised directly in equity.
Goodwill is recognised when there is an excess of, consideration transferred, any amount of any non-controlling interest
in the acquired entity; and the acquisition date fair value of any previous equity interest in the acquired entity over the
fair value of the net identifiable assets acquired. If those amounts are less than the fair value of the net identifiable
assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present value as 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 as a financial liability and 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 acquired entity is remeasured to fair value on the acquisition date. Any gains or losses arising from
such re-measurement are recognised in profit or loss.
(c) Foreign currency translation
(i) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the date of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally
recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges or are attributable
to part of the net investment in a foreign operation.
helloworldlimited.com.au Foreign exchange gains or losses that relate to borrowings are presented in the statement or profit or loss, within
finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis
within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss in profit or loss and OCI.
(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 balance sheet presented are translated at the closing rate at the date of that
balance sheet;
• income and expenses for each statement of profit or loss and statement of comprehensive income are translated at
the average exchange rates or the exchange rate at the date of the transaction if considered more appropriate; and
• all resulting exchange differences are recognised in OCI.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of
borrowings are recognised in OCI. When a foreign operation is sold or any borrowings forming part of the net investment
are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
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 suppliers 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, agent commissions 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 primary activities as
outlined below:
(i) Commission revenue
The Group receives at source commission from suppliers for the arrangement of travel, tours and travel related
products.
Revenue is recognised by the Group’s retail business for travel commissions at source when tickets, itineraries or
travel documents are issued as the transaction is complete at this point.
The Group’s wholesale business work with hotels, transportation providers (air, rail and cruise) and attractions
to purchase individual travel components from them at agreed rates. Those components are packaged into
marketable holiday travel packages and tours for the travel leisure market to local and overseas destinations. The
commission revenue recognised is the margin received between the arranged purchase price of travel products and
the retail price of the holiday package, net of commissions paid to travel agents. Revenue is recognised at the point
of issuing tickets, itineraries or travel documents as it is considered reasonable that the risk and rewards have
sufficiently transferred.
Revenue is recognised by the Group’s Inbound business in Australia, New Zealand and Fiji for the arrangement of
airline tickets, tours and travel on the traveller’s tour or travel departure date due to this being the point at which
revenue can be reliably measured.
119
The Group also receives commissions from sales of travel related products such as insurance and foreign currency
purchasing services and incentives from suppliers. These commissions are recognised as revenue on an accrual basis
when they are earned and the amount can be reliably measured.
The Group acts in the capacity of an agent rather than principal with the facilitation of the tour, travel or
accommodation service. As a result, commission revenue is recognised as the net amount of commission received or
receivable by the Group.
(ii) Override commission revenue
The Group receives volume based override commissions from suppliers across the air, land and cruise travel products sold.
The override commissions are calculated on a tiered earning rate, generally based on eligible departed travel sales (for air
and cruise) or on commencement of hotel stay (for land), for the contracted period. Each supplier has separate contractual
agreements with the Group and the contractual rates, performance tiers and contract periods vary accordingly.
Override commission is calculated for the contract period, based on the value of eligible travel during the period at
the expected contracted applicable override rates. Eligible travel for the financial year is calculated based on detailed
booking information and is reviewed by management considering current and historical booking trends. To estimate the
appropriate override rate to use in the calculation of the estimated override commission, the expected eligible travel sales
for the contract period are estimated (based on actual sales, forecast bookings and historical trends) and compared to the
contractual performance tiers.
(iii) Travel management transaction and service fees
The Group’s travel management business charge customers a transaction fee when travel arrangements are booked
through either the Group’s online system or using a travel management consultant.
Transaction fees are levied in accordance with their contractually agreed rates for the type of product booked. Transaction
and service fees are recognised as revenue at the time of ticketing, as this is the point at which it is probable that revenue
will be received and can be measured reliably. Where amendments occur after the initial transaction, these are treated
separately and additional transaction fees may be incurred.
(iv) Other services
Contributions are received from suppliers to compensate the Group for costs incurred in relation to marketing campaigns
and activities. These contributions are recognised as revenue when the associated advertising and marketing costs are
incurred by the Group.
Franchise, agency, service level arrangements and licence fees are recognised on a straight-line basis over the term of
the agreement.
(e) Cash and cash equivalents
Cash and cash equivalents include 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. Interest income is earned on
cash and term deposits and is recognised on an accrual basis in the statement of profit or loss.
Client cash includes monies paid to the Group by customers prior to travelling.
(f) Trade 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. 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.
helloworldlimited.com.au 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) Accrued revenue
Accrued revenue relates to amounts owed to the Group at balance sheet date that has not yet been invoiced to the
customer or received as cash from the customer. The Group’s accrued income mainly relates to the estimate of override
commission revenue being earned during the respective customer contract period but not yet invoiced at balance date.
Refer note 35(d)(ii) for further details on revenue recognition for override commission revenue. In addition, accrued
revenue includes commission revenue earned, but not yet invoiced from the passage of time.
(h) Prepayments
Prepayments consist of travel products purchased prior to revenue recognition of the associated travel booking and
prepaid operating expenditure.
(i) Investment property
Investment property is held for long term rental yields and is not occupied by the Group. Investment property is initially
measured at cost and subsequently at fair value with any change therein recognised in profit or loss.
The measurement of fair value of investment property 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.
Rental income is derived from the leasing of investment property under long term operating leases and is recognised as
revenue on a straight-line basis over the term of the lease.
(j) Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment
losses. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
Depreciation is calculated to allocate the cost of items of property, plant and equipment (less their estimated
residual values) using the straight-line method over their estimated useful lives and is recognised in profit or
loss. Leasehold improvements are depreciated over the shorter of the lease term or their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term or extend the initial lease term.
Land is not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
• Freehold buildings
• Office equipment
• Leasehold improvements
40 years
2.5 to 10 years
5 to 10 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
121
(k) Intangible assets
(i) Goodwill
Goodwill on acquisition of subsidiaries is included in intangible assets and the goodwill measurement policy is outlined
in note 35(b). Goodwill is not amortised but tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and
losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (CGUs) for impairment testing purposes. The allocation is made to those
CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose.
(ii) Other 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). The useful lives of intangible assets are assessed to be either finite or indefinite.
The following intangible assets are considered finite life intangible assets. They are amortised using the straight-line
method over the following periods:
• Supplier agreements
• Brand names and trademarks
• Software, website and other assets
6 to 8 years
7 to 20 years
2.5 to 10 years
Included in the software, website and other assets class is the intangible technology asset acquired as part of the Flight
Systems acquisition. The asset relates to the technology developed for its travel booking system and related flight
distribution systems that enables customers to access travel related products via its website and software systems.
The asset is amortised over 10 years.
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.
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 a finite useful life are
reviewed at least at each financial year end.
Retail distribution systems and agent network assets are considered indefinite life intangible assets. Intangible
assets with indefinite useful lives are not amortised but are tested for impairment annually on an individual basis. The
indefinite life assumption of an intangible asset is reviewed each reporting period to determine whether the 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.
(l) Investment and other financial assets
Investments are categorised as financial assets at fair value through profit or loss. Other financial assets are
categorised as financial assets at fair value through profit or loss, or loans and receivables as appropriate.
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, in the case of assets not at fair value through profit or loss, they are
measure at fair value plus directly attributable transaction costs.
helloworldlimited.com.au 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. 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.
(m) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets including property, plant and equipment, are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or CGUs. Non-financial assets, other than goodwill,
that were impaired are reviewed for possible reversal of the impairment at the end of each reporting period.
(n) Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the
financial year which are unpaid. They include amounts owing to participating retail travel agents under the Group’s
incentive program, reported within selling expenses in the statement of profit or loss and OCI, which is assessed based
on the volume of completed sales made with designated preferred suppliers of the Group.
Trade and other payables are unsecured and are usually paid within 30 to 60 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.
They are recognised initially at their fair value and subsequently measured at their amortised cost.
(o) Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessees
are classified as operating leases. Payments made under operating lease payments (net of any incentives received from
the lessor) are recognised in profit or loss on a straight-line basis over the term of the lease. Operating lease incentives
are recognised as a liability when received and subsequently recognised as a reduction in the rental expense over the
lease term.
Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis 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 any finance leases.
(p) Employee benefits
(i) Short term employee benefits
Liabilities for wages and salaries, short term bonuses and annual leave (that are expected to be settled wholly within
12 months after the end of the period in which the employees render the related service) are recognised in respect of
employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled. The annual leave liability is presented as current employee benefit obligations in the balance
sheet. All other short-term employee benefit obligations are presented as payables.
123
(ii) Long term employee benefits
The liability for long service leave is not expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service. It is therefore measured as the present value of expected future
payments to be made in respect of services provided by employees up to the end of the reporting period. The fair
value of long term employee benefits is determined using the expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the
end of the reporting period of high quality corporate bonds that match, as closely as possible, the estimated future
cash outflows. Re-measurement from experience adjustments and changes in actuarial assumptions are recognised in
profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional
right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is
expected to occur.
(iii) Share based payments
Share based compensation benefits are provided in the form of loan funded share instruments (long term incentive
plan) to employees and a deferred share scheme (franchise loyalty plan) to franchisees. Information relating to these
schemes is set out in note 33: share based payments.
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 in the share based payment
reserve. The total amount to be expensed is determined by reference to the fair value of the instrument granted
as follows:
• including any market performance conditions such as share price;
• excluding the impact of any service and non-market performance vesting conditions such as employees achieving
certain KPIs; and
• including the impact of any non-vesting conditions.
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 and service 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.
The proceeds received (if any) net of any directly attributable transactions costs are credited directly to equity.
(iv) Defined contribution plans
The Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual
or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as
an asset to the extent that a cash refund or reduction in future payments is available.
(v) Termination benefits
Termination benefits are expensed at the earlier of when the Group 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 from 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.
helloworldlimited.com.au (q) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation arising from past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.
A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The
increase in the provision due to the passage of time is recognised as finance expense.
The nature and timing of provisions held by Helloworld Travel are outlined in note 17: provisions.
Dividends are only recognised in the financial year in which the dividend is paid as the decision to pay a dividend may be
revoked by the Board at any time before payment.
(r) Deferred revenue
The Group receives monies from customers prior to the travel booking finalisation, which are recorded in the statement
of financial position as deferred revenue.
At the end of each financial year, the amount recorded on the balance sheet consists of monies that Helloworld Travel
will pay its suppliers for the purchase of travel products in the next financial year and the revenue commission that will
be earned in future. The revenue commission from these transactions will be released to the consolidated statement of
profit or loss and OCI in the next financial year in accordance with the revenue recognition policy outlined in note 35(d).
(s) Financial liabilities (redemption liability)
As part of the acquisition of Asia Escape Holidays, the Group has entered a put and call option (redemption liability)
to purchase the remaining 40.0% ownership interest in the future. The Group has classified the liability as a financial
liability designated at fair value through profit and loss. The financial liability is initially recognised at fair value with a
corresponding debit made to the redemption reserve within equity.
All subsequent changes in the carrying value of the financial liability that result from the re-measurement of its fair
value are recognised in the consolidated statement of profit or loss and OCI. The Group will derecognise the financial
liability when the obligation is either exercised, cancelled or expired.
(t) 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 profit or loss over the period of the borrowings using the effective interest method.
Establishment fees of the loan facilities are recognised as borrowing costs of the loan as the facility has been drawn
down. The establishment fees are netted against the borrowings and amortised on a straight line basis over the term
of the facility. As a result, finance expense in the consolidated statement of profit or loss consists of interest expense
recorded on an accrual basis and the unwinding of the deferred borrowing costs.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a 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 the consolidated statement of profit or loss.
125
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 period.
(u) Derivatives and hedging activities
The Group holds derivative financial instruments to hedge its foreign currency exposures.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as a hedge of its foreign currency exposures.
The Group documents at the inception of the hedging transaction the relationship between the hedging instruments and
hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions have been and will continue to be highly effective in offsetting changes in cash flows of
hedged items.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in OCI and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised
immediately in the consolidated statement of profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or
loss. When the hedged item is a non-financial asset, the amount recognised in OCI is transferred to the carrying amount
of the asset when the asset is recognised. When a hedging instrument expires or is sold or terminated, or when a hedge
no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains
in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately
reclassified to profit or loss.
(v) Income tax
Income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
The current income tax charge is calculated on the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the amounts
expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the
reporting period and are expected to apply when the related deferred tax asset is realised or the deferred income tax
liability is settled.
The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the
property will be recovered entirely through sale.
helloworldlimited.com.au Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences
between the carrying amount and tax bases of investments in foreign operations where the company is able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in OCI
or directly in equity. In this case, the tax is also recognised in OCI or directly in equity, respectively.
(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 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.
(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 deferred tax asset relating to tax loss be 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 are recognised as a current amount
receivable or payable to Helloworld Travel. Any difference in the amounts assumed and the amount receivable or
payable to Helloworld Travel, are shown as a contribution to, (or distribution from) the head tax entity Helloworld
Travel 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.
127
(iii) 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.
(w) 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.
(x) 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 prior year, the balance of the predecessor accounting reserve was transferred to accumulated losses via the
statement of changes in equity.
The nature of our reserves reported in the statement of financial position are outlined in note 22: reserves.
(y) Earnings per share (EPS)
Basic EPS amounts are calculated by dividing net profit/loss for the year attributable to ordinary equity holders of the
parent entity by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS adjusts the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
(z) Parent entity financial information
The financial information for the legal parent entity, Helloworld Travel Limited is disclosed in note 30: parent entity
information and has been prepared on the same basis as described above, except as set out below.
• investment in subsidiaries and associates are accounted for at cost; and
• where Helloworld Travel Limited 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 54 to 128 and the Remuneration report
in the Directors’ Report set out on pages 34 to 43, 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 2018 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
2018 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 29 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 described in note 31 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, 21 August 2018
129
Independent auditor’s report
To the members 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 2018 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 2018
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 consolidated 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
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
Our audit focused on where the
Amongst other relevant
topics, we communicated the
following key audit matters to
the Audit and Risk
Committee:
Carrying value of
goodwill
Carrying value of retail
distribution 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 $2.3 million,
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.
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
We chose Group profit before
tax because, in our view, it is
the benchmark against which
the performance of the Group
is most commonly measured.
We selected 5% based on our
professional judgement,
noting it is within the range of
commonly acceptable
thresholds.
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.
131
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill
(Refer to note 13)
The Group has a goodwill balance of $178.1m which
represents 25% of the total assets of the Group. The
Group’s goodwill is recognised in four Cash Generating
Units (CGU) – Australia Retail Distribution Operations
($49.9m), Australia Wholesale & Inbound ($97.9m),
New Zealand ($10.9m) and Australian Travel
Management ($19.4m). There is one additional CGU,
Rest of World, which has no goodwill allocated as at 30
June 2018.
During the current year, the Group re-aligned the
business units based on the Group’s organisational
structure. This resulted in the AOT Hotels business
being considered as part of the Travel Management
Australia CGU, rather than Australia Wholesale &
Inbound CGU.
A goodwill impairment assessment was performed on
the previous CGUs, prior to reallocation, with no
impairment identified. The goodwill has been
reallocated to the new CGU’s based on the relative value
contribution of each CGU.
In addition there were a number of acquisitions during
the year that were allocated into the above CGU’s,
resulting in an increase in goodwill of $34.1m.
We compared the Group’s net assets at 30 June 2018 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 changes to the CGU’s, including
the re-allocation and acquisitions.
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 2019
used in the impairment assessment with the
FY2019 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.
For the year ended 30 June 2018, the Group performed
an impairment assessment over the goodwill balance by:
Compared the terminal growth rate to
historical growth rates and economic forecasts.
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
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.
For the acquisitions that occurred during the year,
further sensitivities were performed by excluding the
impact of the acquisitions to understand the movements
in the cash flows compared to the prior year position.
helloworldlimited.com.au
Key audit matter
How our audit addressed the key audit matter
Carrying value of Retail Distribution systems
and Agent network
(Refer to note 13)
The Retail Distribution systems ($104.4m) and Agent
network ($8.3m) are indefinite life intangible assets,
allocated to specific cashflows within Australia Retail
Distribution 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
and agents facilitate the day to day running of the
businesses.
In the current year, there was an additional Retail
Distribution system asset identified of $7.0m as part of
the Magellan acquisition.
For the year ended 30 June 2018 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
Retail Distribution systems and Agent network
to the carrying amount.
The assessment did not identify a need for impairment.
We considered the carrying value of the Retail
Distribution systems 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
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.
Compared the forecasted cash flows for 2019
used in the impairment assessments with the
FY2019 budget formally 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 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 impairment
assessment by reducing the cash flow growth rate and
terminal growth rate, and increasing the discount rate
within a reasonably foreseeable range.
133
Key audit matter
How our audit addressed the key audit matter
Estimation of override commission revenue
(Refer to note 1 (c)(iii) and note 35 (d)(ii))
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.
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.
We evaluated management’s estimates and judgements
in determining revenue recognised in relation to
override 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
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.
helloworldlimited.com.au
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2018, including the Chairman’s
Report, Chief Executive Officer’s Report, Financial Performance Summary, Directors’ Report, Corporate
Governance Statement and ASX additional information, 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 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 have no realistic alternative but to do so.
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.
135
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 34 to 43 of the directors’ report for the year
ended 30 June 2018.
In our opinion, the remuneration report of Helloworld Travel Limited for the year ended 30 June 2018
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
Melbourne
21 August 2018
helloworldlimited.com.au
ASX ADDITIONAL INFORMATION
Additional information required by ASX and not shown elsewhere in this report is as follows. The information is current
as at 4 September 2018.
(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
1,094
666
99
141
45
2,045
Number
of shares
564,496
1,573,119
745,067
4,203,210
117,422,184
124,508,076
%
0.45
1.26
0.60
3.38
94.31
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 4 September 2018 was 93 holders holding 2,177 shares.
(b) Twenty largest holders of quoted equity securities
The names of the 20 largest registered holders of quoted shares are:
ORDINARY SHAREHOLDERS
SINTACK PTY LTD
Q H TOURS LTD
THE BURNES GROUP PTY LTD
MR ANDREW JAMES BURNES
MRS CINZIA BURNES
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
MR JOHN ARMOUR & MS ROSALIE VAUGHAN
BNP PARIBAS NOMS PTY LTD
JAMEA INVESTMENTS PTY LTD
ANDREW SYDNEY JONES & KAREN LISA JONES
TREVOR EDWARD JONES & SONIA LEE JONES
NATIONAL NOMINEES LIMITED
MICHAEL BURNETT
MR JOHN CONSTABLE
BNP PARIBAS NOMINEES PTY LTD
THE HONOURABLE JOSEPH HOCKEY
MAPLESTONE PTY LTD
Number
of shares
22,068,997
21,223,454
18,490,105
12,899,381
12,638,014
7,328,375
6,094,206
3,981,305
2,475,060
1,000,000
983,591
781,773
781,773
781,773
626,000
500,000
500,000
307,655
227,904
226,597
%
17.72
17.05
14.85
10.36
10.15
5.89
4.89
3.20
1.99
0.80
0.79
0.63
0.63
0.63
0.50
0.40
0.40
0.25
0.18
0.18
113,915,963
91.49
137
(c) Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
SUBSTANTIAL SHAREHOLDER
SINTACK PTY LTD
QH 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
12,899,381
12,638,014
%
17.72
17.05
14.85
10.36
10.15
helloworldlimited.com.au ABN: 60 091 214 998 ASX CODE: HLO