ANNUAL REPORT 2020
Helloworld Travel Limited and Controlled Entities Annual Report for the year ended 30 June 2020
ANNUAL REPORT 2020
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
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163
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CORPORATE INFORMATION
Directors
Auditor
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
Automic Pty Ltd
Level 5, 126 Phillip Street
Sydney NSW 2000
hello@automic.com.au
1300 288 664 (within Australia) or
+61 2 9698 5414 (outside Australia)
Website
www.helloworldlimited.com.au
Garry Hounsell (Chairman)
Andrew Burnes AO (Chief Executive Officer)
Cinzia Burnes
Mike Ferraro
Andrew Finch
Company Secretary
David Hall
Registered and principal office
179 Normanby Road
South Melbourne VIC 3205
Telephone: +61 3 9867 9600
Facsimile: +61 3 9867 4855
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helloworldlimited.com.au GLOSSARY
The following terms have been used through this Annual Report:
EBITDA
Earnings before interest expense, tax, depreciation and amortisation
AGM
AOT
ASIC
ASX
CEO
CFO
Annual General Meeting
AOT Group Pty Ltd and its controlled entities
Australian Securities & Investments Commission
Australian Securities Exchange
Chief Executive Officer
Chief Financial Officer
Company
The parent entity, Helloworld Travel Limited
EPS
FAR
FY19
FY20
FY21
Group
Earnings per share
Fixed Annual Remuneration
Financial Year ended 30 June 2019
Financial Year ended 30 June 2020
Financial Year ended 30 June 2021
The Helloworld Travel Group, comprising Helloworld Travel Limited and its controlled entities
Helloworld Travel
Helloworld Travel Limited
HLO
KMP
LTIP
MTA
PCP
Qantas
QBT
VH
STIP
TTV
Helloworld Travel Limited
Key Management Personnel
Long Term Incentive Plan
Mobile Travel Holdings Pty Limited and its controlled entities
Prior Comparative Period
Qantas Airways Limited
QBT Pty Limited
Viva Holidays
Short Term Incentive Plan
Total Transaction Value
3
CHAIRMAN’S REPORT
FY20 was an extraordinary tale of two
halves. After a successful first half, things
deteriorated from March onwards and we
have turned our focus to re-structuring the
business to get through the challenges of
COVID-19 and beyond.”
The 2020 Financial Year has been the most extraordinary and challenging Financial Year for not only our business
at Helloworld Travel Limited but also for so many businesses and so many industries in Australia, New Zealand and
around the world.
Our first half results through to the 31 December 2019, released on 24 February 2020, showed record TTV up 12.9%
to $3.6 billion, revenue up 9.8% to $200 million and an underlying EBITDA of $48 million, up 14.8% on the prior
corresponding period.
The Company was on track to achieve its forecast results for the year including TTV of circa $7 billion.
All of this began to change in March 2020 in ways which impacted on the travel industry more significantly than just
about any other industry globally and ultimately, as we now know, resulted in the closure of international borders, of
State and Territory borders, in lockdowns across a number of major cities and countries throughout the world and the
suspension of most international and domestic flights in Australia and New Zealand.
March TTV’s and revenues fell as the spread of COVID-19 increased, and as each week of March deteriorated with
border closures and airline route shutdowns.
The Company responded rapidly in order to reduce costs, taking advantage of JobKeeper in Australia and Wage
Subsidy in New Zealand to reduce personnel overheads and implementing freezes on all discretionary expenditures
while negotiating better terms with the Company’s landlords in Australia and New Zealand.
In addition, Helloworld sold its North American operations at the end of June, closed down operations in the
Philippines and wound back operations in Mumbai, where we previously had 140 personnel.
From April, the Company has been able to maintain a cash burn rate of approximately $2 million per month (excluding
one-offs) with a combination of $4 million per month in revenues (down approximately 80% on the pcp) and $6 million
per month in expenses (down approximately 75% on the pcp).
Post balance date the Company undertook a $50 million equity raising in July in order to extend the Company’s
liquidity runway and on the current cash burn rate has sufficient liquidity to continue at the same revenue and cost
profiles all the way into 2023 if required.
4
helloworldlimited.com.au Our results for the year ended 30 June, 2020 show an
underlying EBITDA of $44.0 million for the year and an
underlying profit before tax of $17.1 million.
The company undertook a detailed review of its
non-cash assets and impaired those assets by
$67.9 million which is appropriate given the current
circumstances.
Current Status
Helloworld has three main operating divisions, Retail,
Wholesale & Inbound and Corporate.
At present, the Company is currently experiencing
reasonable volumes (approximately 35% on the pcp) in its
corporate division while its wholesale and retail divisions
are reporting transaction volumes of around 10-15% on
last year.
The inbound division, which forms part of the wholesale
division, is also experiencing new booking volumes of
approximately 20% compared to this time last year even
though the Company is not taking any inbound bookings
for travel prior to July 2021.
Helloworld continues to take advantage of the JobKeeper
scheme in Australia. Currently, the company has
approximately 650 personnel working 390 FTE positions
in Australia with a further 100 personnel working in non-
travel related operations. A further 380 personnel are
on stand down in Australia and Fiji, with 80 FTE in New
Zealand and 45 in other parts of the world. This totals
1,210 people.
This is obviously a very significant reduction from the
approximately 1,950 personnel which the Company
employed at the end of December 2019.
Looking ahead
The Company has spent most of the last seven months
restructuring its operations in order to remain viable in
the face of a very significant decline in TTV and revenues.
I am pleased to say that this strategy has been largely
successful with our monthly cash burn rate reduced to
around $2 million and our surplus cash funds of around
$100 million give us a very significant runway at these levels.
However, we do not believe it will take until 2023 for
there to be a significant recovery in the travel industry
and anticipate this recovery being a four-step process
over the next two to three years.
Firstly, once Australian State borders have all opened
and domestic flight schedules have resumed, most likely
to 70-80% of their previous capacities, we will obviously
see a significant uplift in our domestic wholesale sales,
in sales through our retail networks and in our corporate
business, which is normally 80% domestic in any event.
Step two will be the opening up of the trans-Tasman
bubble and two-way traffic across the Tasman will
generate significant demand from both leisure and
corporate travellers while an extension of that bubble
into the South-Pacific will help boost leisure travel sales
in both Australia and New Zealand.
Step three will see the opening up of some specific
bilateral ‘bubbles’, possibly with countries such as
Singapore, Japan and possibly Taiwan. It’s not a
coincidence that those three countries are all islands and
have an ability to closely monitor traffic flows in and out
of their particular countries and keep the virus in check
more so than countries with much bigger populations
and / or porous borders.
From all accounts, a vaccine will most probably be available
sometime in 2021 and obviously once a proven vaccine
candidate is selected and goes into mass production and
distribution, the world will begin to open up.
I thank our Board for all their efforts over the last year
and particularly the last nine months. It's been a time of
constant change and I very much appreciate the efforts
that all Board members have made to our business and
its sustainability. Importantly, may I extend the thanks
and appreciation of the Board to our staff throughout
the business.
Garry Hounsell
Chairman
Helloworld Travel Limited
Melbourne, 15 October 2020
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CHIEF EXECUTIVE OFFICER’S REPORT
The 2020 Financial Year has been our
most challenging ever however we are
positioned to survive this crisis and
emerge again as a major distributor of
travel products and services in Australia
and New Zealand.”
The year of extraordinary challenges.
Results
Helloworld Travel Limited has recorded an extraordinary 12-month period, with eight months of very solid results
through to 29 February 2020 followed by a slide in transaction values and earnings throughout March and an entirely
new set of trading parameters and circumstances from April onwards.
These circumstances and the resultant uncertainties have thrown up the most unique set of challenges the Company
has ever faced and like many other businesses around the world we had to adapt quickly and reset our modus operandi
in a matter of weeks. As Darwin said, its not the strongest who survive, it's the most adaptable.
Our trading results through to the 31 December 2019 were on forecast and our results in the March quarter
highlighted the normalcy in trading through to the end of February followed by a rapid decline through March and an
80%-100% drop in various divisions from April onwards. So, our year in aggregate comprised eight very good months,
aligned to our forecasts and showing continued growth across our business divisions, a 50% drop off in March and
massive declines across all of business segments from April.
As 16,000 passenger jets were grounded around the world in April, we spent the last quarter in FY20 re-engineering
our business processes as we stopped selling travel and began to process and refund literally hundreds of millions
of dollars in cancellations back to customers as well as process an enormous amount of ‘future travel credits’ from
airlines, cruise companies and other providers.
Our emphasis across the business since April has been in four specific areas.
Focus on costs
Firstly, given the inevitable nature of the rapid declines in TTV and revenues with the onset of COVID-19 we focused
on our costs, with the early focus being on variable costs most particularly personnel and other discretionary variable
expenditures such as marketing and advertising and over time we have turned our attention to our fixed costs which we
have also been able to bring down through renegotiation of tenancy agreements, a review of all technology expenditures,
consolidation of systems and keeping a very tight rein on overheads.
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helloworldlimited.com.au This has resulted in our average monthly overheads
dropping from approximately $24 million per month up
to the end of February to approximately $6 million per
month since April and we are focused on continuing to
keep our overheads at these levels, which have been set on
the premise that we obviously need to maintain the skill
sets and the personnel to provide the ongoing services
our customers need and to be able to take advantage
of an expected uplift in demand from 2021. To be clear
though, we do not expect that to be by way of a massive
up-tick in leisure or corporate demand from next year. It
will be a slow and elongated process across 2021, 2022
and into 2023 and it will be full of the contradictions and
inconsistencies we have come to expect with this virus.
Focus on refunds & credits
Secondly, we have focused on ensuring our network
members get refunds back for their customers via our
ticketing and wholesale operations as quickly as possible
and continue to provide members with revenues earned on
previous sales as they flow through from supplier partners.
We have and continue to work with our network assisting
with tenancy negotiations, setting out business plans
and assisting with grant applications for various State
Government schemes. Helloworld has frozen all franchise
fees from April 2020 through to 31 March 2021. We’ve
frozen all marketing costs for franchisees over the same
period and are providing contractual flexibility in relation
to agency members who have been or may be able to exit
existing leases and are planning to operate from home for
a period before reopening again in 2021.
Our networks members have been able to take advantage
in both Australia and New Zealand of employment
assistance on both sides of the Tasman and significantly
reduce lease costs on their premises. Network numbers are
holding at approximately 700 brokers and 1,800 bricks and
mortar agents. 1,450 of those are in Australia and another
350 in New Zealand and while we anticipate there will be
further agents looking to exit their business sometime
in the next 6-12 months, our current expectation is that
these closures will be limited to not more than 15% of
our existing networks and that they will take place with all
employee and customer obligations being met. This means
our retail footprints across both Australia and New Zealand
will be even more significant than in the past given the
decline in agency numbers from our major competitors.
Revenue opportunities
Thirdly, we have been focusing on revenue opportunities
from those areas which are still experiencing some demand
and also seeking revenue from other sources. Our corporate
TTV, after declining nearly 85% in the June quarter is now
running at around 35% of the volumes from the prior
corresponding period in Australia and at around 25% in
New Zealand. Show travel, which was acquired in December
2018 has recovered well as a result of the resumption of
major film and television productions although major live
events are on hold for some time to come. Our wholesale
division continues to record reasonable sales volumes in
domestic intrastate travel and, when it’s been possible,
domestic interstate travel in Australia.
With domestic borders potentially opening up further
before the end of the calendar year we expect this to be a
reasonable source of sales and revenue in the second half of
FY21 for our retail and wholesale operations.
The company has also focused on obtaining alternative work
from a number of agencies for various call-centre services
and this has generated reasonable revenue in the period
April to June and similar amounts in subsequent months.
This has helped keep many of our employees working on
a full-time basis, maintaining their connectivity with the
business, maintaining their income and generating some
profits for the provision of these services.
Re-shaping the business
Finally, we have been focusing on the reshaping and
resizing of the business so that it sits at appropriate
levels for the foreseeable future. We have closed
offices in Wellington, Mumbai and Manila, and sold our
US operations in Los Angeles as part of our efforts to
streamline our operations and right size them for the
next couple of years.
We have mapped out various recovery scenarios in terms
of border openings, bubbles and vaccine availability to
ensure we have both the personnel and the right product
available to sell in market once both domestic and then
international travel becomes available and much work
has gone into these future facing efforts.
When we consider what we have in the business that’s good
(to paraphrase that famous NASA expression) there is a
lot to be thankful for. We have great people and over half
our personnel are still with us. We have excellent systems
across all of our divisions and we are continuing to invest in
these to ensure we can meet our customers demands in the
years ahead. We have a dedicated management team who
have worked tirelessly to guide and lead our personnel
over the last eight months. And we have an extraordinary
group of travel agency members, both in their own outlets
and across the broker networks we have in Australia and
New Zealand. Their courage and determination has been
extraordinary as they fought to get people home as this
pandemic unfolded and they have fought to get back the
millions owed to their customers in refunds and credits and
re-shaped their businesses so they can survive and get back
to being the trusted travel advisors for millions and millions
of Australians.
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Personnel
Having started the year with 1,950 personnel in Australia,
New Zealand, Fiji and other parts of the world we have
seen our personnel numbers reduce to approximately
1,200. This includes 380 personnel who are currently
stood down. Unfortunately, quite a few of those
employees stood down have been in that position for
a considerable period and receiving JobKeeper only as
there just hasn’t been any work for them. We are looking to
stand them up when we have sufficient work.
Future plans
Helloworld has been through a comprehensive
recalibration of the business over the last 8 months as
a result of COVID-19, significantly shrinking our cost
base to maximise the length of our liquidity runway and
with the $50 million capital raising we underwent in July
2020, anticipate that our current cash holdings will see us
through to 2023 under existing conditions.
Obviously, we expect conditions to show signs of
improvement as we roll into 2021 and beyond and for
Helloworld Travel the opening up of Australia’s domestic
borders will provide a significant boost to our network
retail and corporate businesses, our wholesale business
and our own corporate division.
We know that markets do recover quickly and as evidence
of that, China's domestic capacity in August 2020 grew
by 1% compared to last year. Obviously different markets
will perform at their own pace but we expect domestic
capacity in Australia to be back at 100% of previous
levels by end March, 2021 on the basis that all State and
Territory borders are open.
In 2021 we expect the limited return for international
travel,mainly in short-haul routes to the Pacific and
parts of Asia. Initially this will come in some form of
Trans-Tasman / Trans-Pacific bubble between nations
with minimal transmission numbers with subsequent
bilateral bubbles opening up to selected short to mid-haul
destinations. Given recent experiences with domestic
border openings we expect demand for any destination
that’s open for quarantine free travel will be extremely
popular.
In relation to the resumption of widespread long-haul
international travel, particularly travel to the northern
hemisphere and most specifically North America and UK
/ Europe, we are not expecting this to available until the
widespread distribution of COVID-19 vaccines and the
establishment and acceptance of appropriate protocols
for both air and cruise travel to minimise the residual risk
of infection in a majority COVID-19 vaccinated world.
8
With prudent cost management, mutual support from our
supplier partners, maximizing opportunities for our retail
agents to get to the other side of this crisis, a great team
of dedicated professionals and in the knowledge that
Australians and New Zealanders are amongst the world’s
greatest travellers, we are hopeful.
On both sides of the Tasman travellers will not have spent
close to $100 billion on domestic and international travel by
early next year and many are sitting on large future travel
credits from supplier partners.
So we are confident that when the opportunities return to
venture from our shores, people will do so in droves and we
will be there to help them with their travel arrangements,
ensuring they travel safely and are there to help navigate
through the myriad of rules that will no doubt exist through
the insurance options that people are able to take and to get
the best possible terms and conditions when they book with
suppliers for future travel. Early signs from recent cruise
sales for 2022 departures show a very clear indication of the
levels of this demand and give us cause for optimism.
Technology developments
Helloworld’s technologies are an extremely important part of
its business and we continue to invest in these technologies
to deliver world class outcomes for our agents, our corporate
customers, our inbound customers and for travellers.
Helloworld has a suite of in-house technologies including
our new agency mid-office system, ResWorld which we
continue to develop and roll out across our networks and
which continue to deliver greater degrees of efficiency and
customer interaction than ever before. These technologies
form a very important part of our future offerings and will
stand the company in great stead to capture opportunities in
2021, 2022 and beyond.
Conclusion
On behalf of myself and the executive management team
at Helloworld Travel, I want to thank every member of staff
at Helloworld wherever they may be for the extraordinary
efforts that you’ve made over the last eight months and
your determination and professionalism to ride this crisis
out and get to the other side. I also want to thank all of our
shareholders, both our long-term holders and those who have
recently invested in the company through our capital raising.
Andrew Burnes, AO
Chief Executive Officer and Managing Director
Helloworld Travel Limited
Melbourne, 15 October 2020
helloworldlimited.com.au FINANCIAL PERFORMANCE SUMMARY
FOR THE YEAR ENDED 30 JUNE 2020
Summary Group Results
Total Transaction Value (TTV)1
Revenue
Profit/(loss) before income tax expense
Profit/(loss) after income tax expense
Underlying EBITDA2
Underlying PBT3
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share4
Underlying diluted earnings per share
Interim dividend per share
Final dividend per share
Total dividends per share
RECONCILIATION OF UNDERLYING EBITDA
TO PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
Underlying EBITDA2
Significant non-recurring items
Depreciation and amortisation expense2
Finance expense on borrowings2
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
For the year ended
30 June 2020
$000’s
For the year ended
30 June 2019
(Restated)1
$000’s
Change
Change
$000’s
%
5,005,961
6,511,299 (1,505,338)
282,187
(68,879)
(69,985)
44,042
17,094
357,562
(75,375)
54,352
(123,231)
38,043
(108,028)
73,526
50,773
(29,484)
(33,679)
(23.1%)
(21.1%)
n/a
n/a
(40.1%)
(66.3%)
For the year ended
30 June 2020
Cents
(56.5)
(56.5)
9.7
9.7
9.0
-
9.0
For the year ended
30 June 2019
(Restated)1
Cents
31.4
30.8
29.4
28.8
8.0
12.5
20.5
Change
Change
Cents
(79.9)
(87.3)
(19.7)
(19.1)
1.0
(12.5)
(11.5)
%
n/a
n/a
(67.0%)
(66.3%)
12.5%
-
(56.1%)
For the year ended
30 June 2020
$’000
For the year ended
30 June 2019
$’000
Change
Change
$’000
%
44,042
(85,973)
(23,919)
(3,029)
(68,879)
73,526
(29,484)
(40.1%)
3,579
(89,552)
(20,332)
(2,421)
(3,587)
(608)
54,352 (123,231)
n/a
17.6%
25.1%
n/a
1 Total Transaction Value (TTV) does not represent revenue in accordance with Australian Accounting Standards. TTV represents the price at which
travel products and services have been sold across the Group, as agents for various airlines and other service providers, plus revenue from other
sources. The Group’s revenue is, therefore, derived from TTV. TTV does not represent Group cash inflows as some transactions are settled directly
between the customer and the supplier.
2
3
4
Underlying EBITDA represents earnings before interest expense, tax, depreciation and amortisation, adjusted to include depreciation on right of
use assets and interest expense on lease liabilities and make good provisions arising from the application of AASB 16; and exclude large non-
recurring items (refer note 6(c) in the Annual Report for further information). Underlying 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.
Underlying Profit before Taxation (Underlying PBT): 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. Underlying PBT represents: Underlying EBITDA; less depreciation and
amortisation, excluding depreciation on Right of Use assets; and Finance expense, excluding interest on lease liabilities.
Underlying earnings per share (Underlying EPS): 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. Underlying EPS represents: Underlying PBT for the respective period, net of
corporate taxation at 30%; divided by either the basic or the diluted weighted average number of shares.
Shareholder returns
The Board has determined no final dividend will be paid for the 2020 financial year. As a result, the total dividends
declared for the 2020 financial year is 9.0 cents per share (paid on 19 March 2020), compared to 20.5 cents per share
for the 2019 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 2020 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 2020 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
Garry 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.
Garry 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 (since November 2017),
Executive Chairman (February 2018 to 4 June 2018).
• Treasury Wine Estates Limited (since 2012).
Former directorships of listed entities in the last 3 years:
• 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 153,890 fully paid
ordinary shares. This includes 15,390 shares acquired
as part of the capital raising in July/August 2020.
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helloworldlimited.com.au Andrew Burnes AO
LLB, B Comm. (Melb)
Chief Executive Officer
and Managing Director
Cinzia Burnes
Group General Manager –
Wholesale & Inbound,
Executive Director
Appointment
Appointment
Andrew Burnes was appointed Chief Executive Officer and
Managing Director of Helloworld Travel Limited and to the
Board on 1 February 2016.
Cinzia Burnes was appointed Group General Manager –
Wholesale and Inbound, Helloworld Travel Limited and to
the Board on 1 February 2016.
Experience and Expertise
Experience and Expertise
Upon completing his studies in Law and Commerce at
Melbourne University, Andrew was employed by Blake
Dawson Waldron where he completed his articles and worked
as a solicitor.
On 1 November 1987, Andrew founded The Australian
Outback Travel Company, which became The AOT Group. After
the merger of The AOT Group and Helloworld in January 2016,
he was appointed Chief Executive Officer of Helloworld Travel
Limited on 1 February 2016.
Andrew was Honorary Federal Treasurer of the Liberal
Party of Australia from July 2015 to June 2019. Prior to that
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. Andrew 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.
Andrew was made an Officer of the Order of Australia (AO) in
the June 2020 Queens Birthday honours for his distinguished
services to business, particularly through a range of travel
industries, to professional tourism organisations, and to the
community.
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 10,495,531 fully paid
ordinary shares.
• In conjunction with Cinzia Burnes a further beneficial
interest in 21,570,408 fully paid ordinary shares. This
includes 3,030,303 shares acquired as part of the capital
raising in July/August 2020.
Cinzia brings extensive sector and management
experience to the Board.
In 1982, she commenced her career in travel and after
working as a travel 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. The AOT Group
was privately owned by Andrew and Cinzia Burnes until its
merger with Helloworld Travel Limited in February 2016.
Cinzia 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. During 2018
Cinzia was a member of the Beyond Tourism 2020
Committee, initiated by the Minister for Trade, Tourism
and Investment, Mr Ciobo, to design Australia’s next long-
term tourism strategy.
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 10,138,014 fully paid
ordinary shares.
• In conjunction with Andrew Burnes a further beneficial
interest in 21,570,408 fully paid ordinary shares. This
includes 3,030,303 shares acquired as part of the
capital raising in July/August 2020.
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Mike Ferraro
LLB (Hons)
Non-Executive Director
Andrew Finch
B Comm, LLB (UNSW), LLM (Hons 1 USYD),
MBA (Exec) AGSM)
Non-Executive Director
Appointment
Appointment
Mike Ferraro was appointed to the Board on 1 January 2017.
Andrew Finch was appointed to the Board on 1 January 2017.
Experience and Expertise
Experience and Expertise
Andrew is General Counsel and Group Executive, Office
of the CEO and Group Company Secretary at Qantas
Airways Limited and is a member of the Qantas Group
Management Committee. He was previously a partner
with Allens Linklaters (including 2 years in London) where
he specialized in mergers and acquisitions, equity capital
markets and general corporate advice.
Other current directorships of listed entities:
• Nil
Former directorships of listed entities in the last 3 years:
• Nil
Special Responsibilities:
• Member of the Audit & Risk Committee, Remuneration
Committee and Nominations & Governance Committee.
Interests in Shares:
• Nil
Mike 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. On 25 May 2017 Mike was
appointed as a non-executive of director of Alcoa of
Australia Limited. Mike 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 19,522 fully paid ordinary shares.
This includes 1,953 shares acquired as part of the capital
raising in July/August 2020.
12
helloworldlimited.com.au David Hall
B Bus, FCA
Chief Financial Officer and
Group Company Secretary
David joined Helloworld Travel Limited in December
2019 and has more than 30 years finance, commercial,
operational and management experience across a number
of industries, predominately in the Aviation sector. Prior
to joining Helloworld, David was most recently CFO at
Australia Pacific Airports Corporation (the owner of
Melbourne and Launceston Airports).
During his decade with Qantas Group, David’s roles
included Qantas’ Group Executive Corporate Services,
Jetstar Airways’ CFO and ultimately CEO of Jetstar
Australia and New Zealand, responsible for leading one of
Australia’s best known brands and fastest growing airlines
in the Asia Pacific. David is a Fellow of the Institute of
Chartered Accountants in Australia and New Zealand.
13
Directors’ meetings
During the year, twelve meetings of the Board, four meetings of the Audit & Risk Committee, three meetings of the
Remuneration Committee and two meetings of the Nominations & Governance Committee were held.
Attendance at Board and Board Committee Meetings during FY20 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
A
12
12
12
12
12
B
11
12
12
12
11
A
4
4
2
4
4
B
4
4
2
4
3
A
3
3
3
3
3
B
3
3
3
3
2
A
2
2
2
2
2
B
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.
Nominations & Governance
Committee
Garry Hounsell (Chairman)
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, Garry Hounsell and Cinzia Burnes,
being the longest serving directors are retiring
by rotation and, being eligible, offer themselves for
re-election at the 2020 Annual General Meeting.
Committee membership
At the date of this report, the Company has an Audit
& Risk Committee, a Remuneration Committee and a
Nominations & Governance Committee of the Board.
During the year, the members of the Committees were:
Audit & Risk Committee
Mike Ferraro (Chairman)
Andrew Finch
Garry Hounsell
Remuneration Committee
Garry Hounsell (Chairman)
Andrew Finch
Mike Ferraro
14
helloworldlimited.com.au Dividends
Principal activities
During the current financial year, the following fully
franked dividends were distributed on Helloworld Travel
Limited Ordinary Shares.
Type
Cents
per share
Dividend
amount $m
Final 2019 dividend, distributed on
17 September 2019
12.5
15.6
Interim 2020 dividend, distributed on
19 March 2020
9.0
11.2
Total dividends distributed during
the current year
21.5
26.8
The company paid out its 9.0c per share dividend on
19 March, 2020, totalling $11.2m.
No final dividend for FY20 has been declared.
Further details on dividends during the year ended 30 June
2020 is set out in note 8 to the financial statements.
Earnings per share
Basic earnings per share was (56.5c) (2019: 31.4c)
Diluted earnings per share was (56.5c) (2019: 30.8c)
The decline in basic earnings per share reflects the impact
on net profit after tax of COVID-19 in the current year.
Underlying EPS for FY20 was 9.7c compared to 29.4c
in FY19.
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
businesses (domestic and international) corporate TMC
(Travel Management Company) and Accommodation
management operations and online operations.
Helloworld's retail distribution operations include
Helloworld Travel, Australia’ and New Zealand's largest
network of branded and co-branded franchised travel
agents, Magellan Travel, Helloworld Business Travel,
the My Travel Group, NZ Travel Brokers and our 50%
investment in MTA (Mobile Travel Agents).
Helloworld Travels corporate operations includes QBT, AOT
Hotels, TravelEdge, Show Travel and APX in New Zealand.
Helloworld's wholesale travel businesses include Viva
Holidays, Sunlover Holidays, Ready Rooms, Seven
Oceans Cruises and Go Holidays and Williments Travel in
New Zealand.
Helloworld's inbound operations include AOT, ATS Pacific
and ETA while our transport businesses include TTF Fiji
and Show Freight, a division of Show Travel.
Helloworld Travel’s main business operations are located
in Australia, New Zealand and Fiji.
15
OPERATING AND FINANCIAL REVIEW
Summary of results
For the year ended
30 June 2020
$000’s
For the year ended
30 June 2019
(Restated)1
$000’s
Change
$000’s
6,511,299
(1,505,338)
Total Transaction Value (TTV)
Revenue
Underlying operating expenses
Equity accounted profits
Add back trading losses relating to U.S Wholesale Division
Underlying EBITDA
Significant non-recurring items
Depreciation and amortisation expense
Finance expense on borrowings
Profit/(loss) before income tax expense
Profit/(loss) after income tax expense
Profit/(loss) after tax attributable to members
Revenue margin %
Underlying EBITDA margin %
5,005,961
282,187
(241,675)
1,246
2,284
44,042
(85,973)
(23,919)
(3,029)
(68,879)
(69,985)
(69,874)
5.6%
15.6%
357,562
(286,066)
1,437
593
73,526
3,579
(20,332)
(2,421)
54,352
38,043
38,008
5.5%
20.6%
Basic earnings per share
Diluted earnings per share
Underlying basic earnings per share
Underlying diluted earnings per share
Interim dividend per share
Final dividend per share
Total dividends per share
For the year ended
30 June 2020
Cents
For the year ended
30 June 2019
(Restated)1
Cents
(56.5)
(56.5)
9.7
9.7
9.0
-
9.0
31.4
30.8
29.4
28.8
8.0
12.5
20.5
(75,375)
44,391
(191)
1,691
(29,484)
(89,552)
(3,587)
(608)
(123,231)
(108,028)
(107,882)
0.1%
(5.0%)
Change
Cents
(79.9)
(87.3)
(19.7)
(19.1)
1.0
(12.5)
(11.5)
Change
%
(23.1%)
(21.1%)
(15.5%)
(13.3%)
285.2%
(40.1%)
n/a
17.6%
25.1%
n/a
(284.0%)
(283.8%)
1.8%
(24.3%)
Change
%
n/a
n/a
(67.0%)
(66.3%)
12.5%
-
(56.1%)
Note 1: Comparatives have been restated for changes in accounting standards.
The Board assesses the performance of the group and its segments based on several measures including TTV, revenue,
Underlying 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. 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. Underlying EBITDA margin has been calculated
as Underlying EBITDA as a percentage of revenue.
16
helloworldlimited.com.au YEAR IN REVIEW
Overview of results
The financial performance of the Group is significantly
related to demand for domestic and international travel.
On 11 March 2020 the World Health Organisation (WHO)
declared a global pandemic as a result of the outbreak
and spread of COVID-19. As a result, governments
across the world took action to close country borders
and limited people to essential travel. Both the
Australian and New Zealand governments imposed
these restrictions which resulted in a significant adverse
impact on Helloworld Travel’s ability to derive revenue
from the sale of travel products and services.
As a consequence, Helloworld Travel’s FY20 full year
results are down on those achieved in FY19. This is
despite record performance achieved in the six month
period to 31 December 2019 (1H20). Helloworld Travel’s
key financial results for the year ended 30 June 2020
compared with the prior year ended 30 June 2019 are:
• Full year TTV of $5,006.0 million was down 23.1% on
FY19 (1H20 +12.9%) and revenue of $282.2 million
fell 21.1% on FY19 (1H20 +9.8%) compared to FY19
primarily impacted by adverse conditions in the four
month period from March to June 2020 (2H20) due to
COVID-19.
• During 2H20 Helloworld Travel undertook several critical
steps to reduce costs and minimise ongoing cash burn in
the COVID-19 environment. These included:
• Accessing government COVID-19 wage subsidy
schemes in Australia and New Zealand.
• Implementation of hiring and salary freezes and
restructuring of non-essential contractors and staff.
• Eliminating all non-essential expenditure including
short term capital expenditure and discretionary
overheads.
• Negotiating reduced occupancy costs across
Helloworld Travel’s property portfolio.
• Implementing staff stand downs and reduced
working hours across the business.
• Directors and direct reports to the CEO agreed to
reduced fees and salaries which continue into the
2021 financial year.
Post year end, the Group commenced a restructure of
our New Zealand operations, further reducing headcount
by 160 personnel at a cost of $2.4 million including all
entitlements. The charge will be reflected in our FY21
statutory results. This is in addition to restructuring costs
of $6.9 million which have been reflected in the 2020
financial year.
• Equity accounted profits of $1.2 million were 13.3%
below the prior year due to adverse performance in 2H20.
• Underlying EBITDA was $44.0 million, down 40.1% or
$29.5 million on the prior year.
• Depreciation and amortisation increased by $4.4 million
to $32.7 million due to the full year amortisation impact of
commercial agreements and intangible assets acquired in
the prior year and the continued investment in technology
developments prior to COVID-19.
• Finance expense increased by $0.7 million to $4.1 million
due to the higher level of borrowings held to fund business
acquisitions.
• The Group incurred a loss before tax of $68.9 million in
the 2020 financial year which compares to a profit before
tax of $54.4 million in the 2019 financial year. The loss
reflects adverse conditions in 2H20 due to COVID-19
which have also resulted in the Group recognising
non-cash impairment charges of $67.9 million, an increase
in loss allowances of $7.1 million, restructuring expense
of $6.9 million and other non-recurring items totalling
$5.5 million.
• The Group incurred a loss after tax of $70.0 million in the
2020 financial year which compares to a profit after tax
of $38.0 million in the 2019 financial year. The change
from the prior year reflects the factors outlined above,
particularly the non-cash impairment partially offset by a
reduction in income tax expense due to lower profitability
in the 2020 financial year.
• The Company's underlying net profit before tax was
$17.1 million.
17
helloworldlimited.com.au Shareholder returns
The Board determined that the Company will not pay
a final dividend for the year ended 30 June 2020. As a
result, the total dividend for the FY20 year was 9.0 cents
per share fully franked, which is a decrease from the 20.5
cents per share paid in the prior year.
boutique travel management company providing tailored
solutions for corporate, groups, conference and leisure
travel. The Atlas acquisition contributed $0.2 million
profit before income tax expense to the current year
Group result from the date of acquisition. The profit
before income tax expense for the whole of the previous
year of Atlas was $0.2 million.
Helloworld Travel’s underlying basic earnings per share
of 9.7 cents compared to the prior year of 29.4 cents
per share, reflecting the business’ lower performance
in 2H20 due to COVID-19. 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 made two business acquisitions during
the current year and completed the disposal of its U.S
Wholesale business. These transactions have met the
strategic and financial objectives established by the Board
of Directors.
Acquisitions
In FY20 Helloworld Travel continued to grow through
business acquisitions that complement the Group’s
existing businesses, expanding future product offerings
and expanding our network of agents, suppliers and
customers. The full year benefit of these acquisitions will
be reflected in future years and will deliver increased
financial shareholder returns in the years ahead.
The acquisitions are outlined below:
On 1 October 2019, Helloworld Travel acquired 100%
of the TravelEdge Group for a total consideration of
$22.6 million, net of cash acquired. TravelEdge is one
of Australia’s largest privately owned corporate travel
management companies. TravelEdge operates through
six divisions, providing corporate travel management
solutions, event and group planning and delivery, holiday
and leisure services and travel prizing and incentives.
The TravelEdge acquisition contributed $0.1 million
profit before income tax expense to the current year
Group result from the date of acquisition to 30 June. The
profit before income tax expense for the whole of the
previous year of the TravelEdge Group was $4.4 million.
Refer note 16 of the Annual Report for discussion
regarding the non-cash impairment recognised in the
2020 statutory results.
On 1 March 2020, Helloworld Travel completed the
acquisition of 100% of the issued capital of Atlas Limited
for a total consideration of $2.1 million. Atlas is a
Disposals
On 30 June 2020, Helloworld Travel disposed (and control
lost) of its U.S Wholesale business. A gain on sale of $1.1
million was recorded. This included the disposal of the
two legal entities registered in the USA of Concorde
International Travel Inc. and Helloworld Travel Services USA
Inc. The U.S Wholesale business contributed $(2.8) million
loss before income tax expense to the current year Group
result prior to the date of the disposal. The business was not
considered core to Helloworld Travel’s future strategy and
does not have a material impact on the Group’s consolidated
results. A preferred partner arrangement was entered
into with the purchaser to ensure the TTV continues to be
serviced by Helloworld Travel.
Liquidity and funding
At 30 June 2020, the Group had a cash balance of $131.9
million. In July/August 2020, Helloworld Travel completed
a $50.0 million fully underwritten equity raising to further
enhance the Group’s liquidity position ($48.5 million net of
offer costs).
At 30 June 2020, short dated facilities totalling $17.9
million and $29.0 million were extended by a further
12 months, expiring April 2022 and September 2022
respectively.
Subsequent to year-end, facility amendments were
negotiated with Westpac. Net leverage and interest
coverage covenants are suspended for the calculation dates
between September 2020 and September 2021.
At the end of September 2020, the Group had circa $100.0
million of unrestricted cash, with an additional $8.9 million
of headroom on existing facilities. This is believed to
be sufficient to manage through a prolonged period of
disruption to the global travel industry.
The Group has decided to prepay $20.0 million of borrowings
in October 2020 which can be redrawn if required with
Westpac’s consent. This will reduce our annual interest costs
by approximately $420,000 per annum at current rates.
A monthly Liquidity requirement has been agreed to be
$70.0 million at 30 September 2020 (this was met), $50.0
million during quarter 2 FY21 and from 1 January 2021
$40.0 million through to the end of September 2021. The
amount of $40.0 million is subject to negotiation in good
faith after 1 October 2021.
19
No dividends can be paid prior to 31 December 2021
without Bank consent.
Previously agreed quarterly normalised EBITDA thresholds
for the period 1 July 2020 to 30 September 2021 have
been removed.
The pricing of the Group’s facilities remains unchanged.
The Group has complied with the financial covenants of
its borrowing facilities during the relevant 2020 and 2019
periods.
Network growth
Helloworld Travel’s retail network increased to 2,496
members across Australia and New Zealand as at 30 June,
2020. This is an increase of 49 since 30 June 2019. The
Australian retail network grew to 1,900 members as at 30
June 2020, up 1,871 from 30 June 2019. The New Zealand
network increased to 596 agency members, up from 576
members as at 30 June 2019. The increases were primarily
driven by strong yearly growth in the home-based segment
(MTA in Australia and Travel Brokers in NZ) pre-COVID-19.
In Australia, 21 agencies have closed and a further 23 have
indicated they will put their business into hibernation until
travel demand returns.
Helloworld expects some further franchisee and buying
group members may opt to close their businesses in the
coming six months and will work to ensure all customer
obligations are met.
Helloworld expects demand for agency services in the
coming two to three years will be very high, given the
expertise agents have in being the trusted advisers of
their clients, the complexities of international travel in
the next few years and the ability of agents to apply an
appropriate duty of care for their customers in terms of
traveller health, safety and risk management. Only travel
agents, both corporate and leisure, can provide this
professional duty of care to their customers with access
to a range of risk assessment and risk management tools,
the most up to date information on destinations and
suppliers and awareness of issues around contactless
check-ins, deep cleaning, digital key access, embarkation
and disembarkation procedures, contactless rental car
pick up and a range of other travel protocols that will be
implemented as the world opens up again.
20
helloworldlimited.com.au Continued brand investment
Helloworld Travel Community Fund
Helloworld Travel continued to make significant investment
in consumer marketing, advertising and sponsorship
up until the end of February 2020 to strategically
accelerate Helloworld Travel’s brand presence. Key
initiatives implemented during the FY20 year included:
• Continued our platinum media partnership with
Newscorp delivering high level results from both a
branding and tactical perspective.
• Continued with the Helloworld Travel TV program on
the Seven network. The program aired in Australia
nationally, with 14 episodes from October 2019
through to March 2020 and 4 episodes still to be
released. The program was watched on average by a
weekly audience of over 405,000 and was very well
received by viewers.
• From March 2020 most promotional activity ceased
with the exception of some intrastate and interstate
campaigns as lockdowns and border openings allowed.
These initiatives we well received and fully funded by
partners.
Investment in technology
Helloworld Travel continues to invest in our own
technology platforms across the business to improve
service delivery and product offerings to customers.
Key developments in the current year include further
upgrades and roll-outs of our retail ResWorld mid-
office system, upgrading our Air Tickets booking system,
rebuilding our wholesale agency platform ReadyRooms
and further enhancements to our cruise platform.
In our Corporate division, we have enhanced our
corporate customer interface solutions, improved
mobile booking options and completed the deployment
of the Amadeus 'Cytric’ product across major QBT
customers.
We have also invested in technologies to allow us
to offer more Work From Home opportunities for
personnel throughout the business as a result of
lockdowns and safe work practices. This has resulted in
most personnel in Australia and New Zealand being able
to, if required, work from home.
Investment in people
Helloworld Travel continues to invest in our people
and has focussed on providing training and career
enhancement strategies for personnel throughout the
business. Since March most of the training activities
have been put on hold however we will be ramping this up
again once our personnel are fully engaged again.
The Helloworld Travel Community fund actively
encourages staff to recommend activities in their local
communities for the Group to support. During the current
year, Helloworld Travel staff and the Helloworld Travel
Community Fund have provided support and donations to
a wide variety of very worthy causes including:
• the School of St Jude in Tanzania. This amazing school
in Tanzania provides life-changing education to over
2,000 students. Helloworld and AOT have donated over
$500,000 to this worthy cause since 2011;
• Anangnu Community Foundation;
• Humpty Dumpty Foundation;
• Make a Wish Foundation;
• The Dannii Foundation;
• St Vincent's Hospital Sydney Foundation;
• World's Greatest Shave supporting Leukaemia
research;
• the Auckland Women s Refuge;
• Share the Dignity campaign;
• Family Life Christmas Appeal;
• Buy a Bale campaign.
Segment review
Helloworld Travel operates segments based on the
geographical location from 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,
Underlying EBITDA, profit before tax and associated key
ratios. The segment results for Australia, New Zealand
and Rest of World segments have been extracted from
note 6 to the financial statements.
21
Australia Segment
Total Transaction Value (TTV)
Revenue
Underlying operating expenses
Equity accounted profits
Underlying EBITDA
Revenue margin
Underlying EBITDA margin
The Australia segment has retail distribution operations,
air ticketing, wholesale & inbound operations and travel
management operations (corporate travel). These
operations supply travel products and services to
customers and are supported by shared service functions
encompassing Administration, Finance, IT, Systems and HR.
Retail
In Australia, the Group has a range of retail operations
acting as a franchisor for retail travel agency networks,
including Helloworld Travel Branded, Helloworld Travel
Associate and Helloworld Business Travel and Magellan
Travel. In addition HLO operates the My Travel Group, an
independent network of agencies and has a 50% holding
in MTA, which operates a travel broker network with over
450 members.
Retail operations are underpinned by HLO's ticketing
division Air Tickets, being the distributor and ticketing
services consolidator to the internal retail network and
to over 400 external independent agents. Air Tickets
operates in all Australian states with world class
technology allowing agents to issue tickets 24 hours a
day, seven days a week.
FY20
$000’s
FY19
$000’s
Change
$000’s
4,275,488
5,574,146
(1,298,658)
229,338
282,777
(53,439)
(191,104)
(221,552)
1,246
39,480
5.4%
17.2%
1,437
62,662
5.1%
22.2%
30,448
(191)
(23,182)
0.3%
(5.0%)
Change
%
(23.3%)
(18.9%)
(13.7%)
(13.3%)
(37.0%)
5.9%
(22.5%)
Air Tickets continues to invest in innovative ticketing
technology and is considered one leading airfare
distribution and ticketing services consolidator.
The retail distribution division performed strongly in
FY20 up to the end of February, underpinned by margin
improvement. Airline ticketing transaction volumes
continued to perform strongly over this period in the
leisure, wholesale and corporate sectors.
Since March, numbers fell away as border restrictions
were imposed and air schedules cut back. It is expected
that domestic air schedules will recover in Q2 '21 and
Q3 '21 as domestic borders re-open and we anticipate
the demand for professional travel agency services will
be high with the implementation of a whole new range of
travel protocols and requirements.
In addition many Agents will benefit from the recent tax
breaks provided in the 2020 Federal Budget and any
further direct assistance to the sector from State of
Federal Governments.
22
helloworldlimited.com.au
The Australian retail network continues to expand
organically even in these very challenging times, with a
total of 2,496 members, a net increase of 49 members
since 30 June 2019.
Member engagement remains strong and we have
undertaken a wide range of engagement activities since
March.
Helloworld Travel is focused on ensuring that our retail
networks in Australia and New Zealand are there for
when domestic, trans Tasman and eventually international
borders re-open and are confident that demand for travel
agency advice and service will be in high demand (refer
page 20).
Since the pandemic broke out, travel agents managed the
return of tens of thousands of travellers from overseas
back to Australia and New Zealand. Agents then turned
to managing the cancellation of hundreds of thousands
of bookings and the processing of billions of dollars of
customers money with either cash refunds or future
travel credits, many of which were for amounts greater
than the original value of the booking. Agents have earned
nothing for this service and have refunded customers in
full including the commissions earned on providing the
original service.
Wholesale & Inbound
The wholesale businesses in Australia operate a range of
brands including Viva! Holidays, Sunlover Holidays, Ready
Rooms, Seven Oceans Cruises. These businesses package
air, cruise and land products 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 and New Zealand, 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 TTV
fell over 90% in the June quarter. With all international
arrivals and departures to and from Australia, New
Zealand and Fiji ceasing.
Wholesale sales are slowly recovering, with bookings
being made for both intrastate and interstate travel and a
limited number for international travel from late 2021 and
into 2022.
Encouragingly, we have seem some significant sales of
cruise departures for 2022, demonstrating that there
is still very significant demand for cruise product in the
Australian and New Zealand markets.
Our wholesale operation is poised to benefit from the
volume of domestic product offered by our Viva Holidays
and Sunlover Holidays brands as interstate borders re-
open and the trans-Tasman market comes back on line.
With the commitment of State Governments and the
Federal Government to promotion of domestic travel,
including $230 million for Tourism Australia to promote
domestic travel, we expect demand for all domestic
destinations will increase significantly from December
onwards and our retail networks and wholesale businesses
are well placed to capture much of this demand.
23
Corporate
Investments
The Group’s corporate travel management services
division offers travel management services to corporate
and government customers including booking flights,
accommodation and other services through the QBT, AOT
Hotels, Show Group and TravelEdge businesses.
During 2H20, Helloworld Travel purchased the Excite
Holidays software platform which is continuing to
be enhanced ahead of launch. The new technology
will complement our Ready Rooms brand within our
wholesale division.
In FY20, Helloworld Travel launched the ResWorld
mid-office solution to retail agents. There are now over
50 active agencies and new agencies continue to be
on-boarded remotely.
Awards
The Australia segment was well recognised at the July
2019 National Travel Industry Awards, with Magellan
Travel awarded Best Non-Branded Travel Agency group,
Viva Holidays awarded Best Wholesaler – Australia
Product, Air Tickets awarded Best Agency Support
Services, Veronika Panzic from Show Group awarded
Best Travel Consultant Corporate and over 50 finalists
across the Helloworld Travel group.
The corporate division expanded through the acquisition
of Show Group in December 2018. Show Group is proving
to be a valuable addition to the Helloworld Travel
corporate division recording improved performance over
recent months as television and movie production came
back on line. Up to February, the business had been a
strong performer with a range of high profile events and
concerts generating demand for our travel and freight
services.
Although we do not expect large scale concerts and
events to return until 2021, there are plans in place for
this business to start up again and many artists and other
events will be eager to get back on the road again.
Our QBT, TravelEdge and APX businesses performed
well in the first half of FY20 and into the new year but
diminished over the June quarter.
Volumes are now back to 30-35% of previous levels
however corporate and government travel is being
undertaken on a strictly essential travel only basis.
Throughout the year we completed the roll out of the
Cytric platform to major clients in Australia and are
finalising the roll out in New Zealand. This should be
completed by the end of Q2 21.
Summary
The Australian segment generated TTV of $4.275 billion
(-23.3%) and revenue of $229.3 million (-18.9%) were
impacted by adverse conditions in 2H20 which offset the
strong growth experienced from the retail and corporate
divisions in 1H20.
Revenue margin increased from 5.1% in FY19 to 5.4% in
FY20. The increase reflects better margin outcomes from
our sales mix with some impact from revenues derived
from COVID-19 related call centre work. No TTV is
associated with this revenue. Total underlying operating
expenditure was reduced by $30.4 million through cost
saving initiatives from March 2020 and from wage
subsidies in Q420. Underlying EBITDA for the Australian
segment was $39.5 million, a decrease of $23.2 million or
37.0% compared with the prior year.
Overall the segment reported an underlying EBITDA of
$39.5 million, down from $62.7 million in the prior year.
24
helloworldlimited.com.au New Zealand Segment
Total Transaction Value (TTV)
Revenue
Underlying operating expenses
Underlying EBITDA
Revenue margin
Underlying EBITDA margin
FY20
$000’s
FY19
$000’s
Change
$000’s
688,911
851,904
(162,993)
45,075
59,181
(14,106)
(40,534)
(47,545)
4,541
6.5%
10.1%
11,636
6.9%
19.7%
7,011
(7,095)
(0.4%)
(9.6%)
Change
%
(19.1%)
(23.8%)
(14.7%)
(61.0%)
(5.8%)
(48.7%)
The New Zealand segment has retail distribution
operations, an air ticketing & consolidation business,
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.
The NZ Travel Brokers group joined the network in June
2019 taking the total number of brokers in the New
Zealand network to more than 280 members. Helloworld’s
retail networks have a very strong value proposition
which is providing a significant attraction for new agents
to join.
The expansion brings the total retail network membership
in New Zealand to over 550 members as at 30 June 2020.
Agents in NZ will be taking advantage of the Consumer
Travel Reimbursement Scheme under which the NZ
Government is paying 7.5% to agents for refunds and
5% of future travel credits for refunds and credits for
bookings made prior to 14 August 2020 and refunded or
credited after 14 August 2020.
Retail
In New Zealand, the Group has a range of retail operations
acting as a franchisor of retail travel agency networks
including the Helloworld Travel Branded and Helloworld
Travel Associate networks . The retail distribution
operations also include the membership groups of My
Travel Group (an independent network of agencies)
and The Travel Brokers and NZ Travel Brokers groups
representing the specialist travel brokers network.
In addition, the business is supported by its ticketing
division, Air Tickets, and the online channel, helloworld.co.nz.
The New Zealand retail network has significantly
increased member numbers during the year including the
additions of associate members Gilpin Travel, Barlow Travel
and Atlas Corporate Travel which joined during 2019.
25
Wholesale & Inbound
Summary
The Group’s wholesale business, 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 offer travel services to
clients in over 70 countries worldwide.
As with the Australia segment, New Zealand’s full year
segment results reflect the change in travel conditions
in 2H20 caused by COVID-19. This offset the strong TTV
growth in 1H20 (+33%) driven by an expanded retail
network. FY20 TTV of $688.9 million decreased by 19.1%
and revenue decreased by 23.8% to $45.1 million.
Total underlying operating expenditure was reduced by
$7.0 million through cost saving initiatives and wage
subsidies in Q420 to mitigate the impacts of COVID-19.
Underlying EBITDA was $4.5 million, a decrease of 61.0%
compared with the prior year.
The New Zealand underlying EBITDA margin has
declined to 10.1% in FY20 (relative to 19.7% in FY19)
which reflected a change in business mix with a higher
proportion of NZ TTV coming from lower margin retail
business and the rapid onset of revenue reductions while
business costs were being reduced.
Post year end, the Group commenced a restructure of
our New Zealand operations, reducing headcount by a
further 160 personnel at a cost of $2.4 million including
all entitlements. The charge will be reflected in our FY21
statutory results.
The New Zealand wholesale and inbound operations
had a strong year through to February. Go Holidays
continued to be well supported by the Helloworld Travel
retail network and other NZ agents and benefited from
an expanded product range and growing support from
the networks. Inbound operations saw an increase in
sales to end February before the NZ borders closed to all
international arrivals.
Corporate
The Group’s corporate travel management services
division offers travel management services to corporate
and government customers including booking flights
and accommodation, through APX, and events services
through GO Conference & Incentives (C&I) and Williment
Travel Group.
A decision was made to consolidate the GO C&I business
into APX in March .
APX was reappointed to the New Zealand All of Government
(AoG) Travel Management Services five member panel in
March 2019 and the new agreement came into effect from
1 July 2019 for an initial five-year term with two further
two-year renewal options.
Sports travel specialist, Williment Travel Group, which was
acquired in 2019 opened up new product offerings to the
existing Helloworld Travel network and expanded its reach
in the travel market, with the benefits showing in FY20 until
the end of February, when sporting and other events ceased.
26
helloworldlimited.com.au Rest of World (ROW) Segment
Total Transaction Value (TTV)
Revenue
Underlying operating expenses
Add back trading losses relating to U.S.A. Wholesale Division
Underlying EBITDA
Revenue margin
Underlying EBITDA margin
FY20
$000’s
41,563
7,774
FY19
$000’s
85,249
15,604
(10,037)
(16,969)
2,284
21
18.7%
0.3%
593
(772)
18.3%
(4.9%)
Change
$000’s
(43,686)
(7,830)
6,932
1,691
793
0.4%
5.2%
Change
%
(51.2%)
(50.2%)
(40.9%)
285.2%
102.7%
2.2%
106.1%
This segment is now effectively our Fiji operation (ATS
Pacific and Tourism Transport Fiji) post the disposal of
our Insider Journeys (divested on 30 June 2019) and our
US wholesale business (divested on 30 June 2020).
The segment generated a very small underlying EBITDA of
$21,000. Operating costs were lower than the prior year
as the segment focused on disposing of the US business
and reducing costs in Fiji from March 2020 onwards.
The segment generated TTV and revenue below the prior
year primarily reflecting the changing travel conditions
in the second half of FY20. Current year and prior year
trading losses of the U.S Wholesale business are excluded
from underlying EBITDA.
Fiji
The Group’s Fiji based businesses, ATS Pacific (Inbound)
and TTF Fiji (Transport) performed well to the end of
February 2020 but with the onset of COVID-19 travel to
and from Fiji has been suspended, while there is hope for
Fiji to be included in a trans-Pacific bubble in 2021.
27
Outlook & economic sustainability
The Travel Industry continued to grow strongly the first
8 months of FY20 however this ended in March with the
onset of COVID-19. Economic growth both domestically
and globally, is expected to decline in the year ahead.
Against this background, there is evidence that Australian
and New Zealand leisure travellers have not spent or will
not spend up to $100 billion in domestic and international
travel and events between March 2020 and March 2021.
With interest rates at all time lows, tax concessions and
reductions in the rates of personal income tax and an
inability to travel internationally at all, this should bode
well for the travel and tourism industry in the coming two
years.
From a corporate travel perspective, this has been
reduced to essential travel only for Government and
business travellers but reports indicate this should start
to recover in FY21 once new COVID safe protocols for
travel have been implemented and accepted,
The Group’s focus in the 2021 financial year will be on
managing our costs and revenues to ensure we minimise
our losses over the first 6-9 months before returning to
profitability by the end of the year.
Helloworld Travel is focused on delivering value for our
shareholders, our travel agents, our supplier partners and
our travellers.
The Company has a strong balance sheet at the end of
FY20, a stable network of high performing agents who
are determined to see through this crisis, a wide range
of preferred partners and a suite of enhanced digital
solutions for our agency and corporate customers.
28
helloworldlimited.com.au Business Risks
There are a number of factors, both specific to Helloworld
Travel and of a general nature, which may impact the
future operating and financial performance of the Group
and its ability to operate as a going concern. Helloworld
Travel has a number of risks, some of which are specific
to Helloworld Travel and many of which are beyond the
control of the company. The specific material risks faced
by Helloworld Travel and how these risks are managed, are
set out below:
Travel industry disruption and the impact of COVID-19
Helloworld Travel’s operating and financial performance
is dependent on people's ability to travel. A decline in the
domestic and/or international travel industry, whether
as a result of a particular event or economic conditions
(such as a decrease in consumer and business demand),
will have a material adverse effect on Helloworld Travel’s
operating and financial performance.
The events relating to COVID-19 have resulted in
unprecedented restrictions on domestic and international
travel, major reductions in airline capacity and general
disruption to the tourism and travel industry. These
restrictions have been imposed by both State, Federal
and international governments and regulatory authorities,
and/or implemented as a matter of best practice during
a health crisis. These developments have resulted in
a halt in international travel and a sharp decline in
domestic travel. Flowing from this has been a massive
increase in travel cancellation rates and the requirement
to process a vast amount of refund and future travel
credits for travellers. This is expected to have a very
significant medium term impact on Helloworld Travel’s
business and operations and in particular, the demand
for its services. There is continued uncertainty as to the
duration of and further impact of COVID-19 including
(but not limited to) in relation to government, regulatory
or health authority actions, work stoppages, lockdowns,
quarantines, vaccines, travel restrictions and the impact
on the Australian and global economy. There is a risk that
if the spread of COVID-19 continues, and/or the actions
taken to combat COVID-19 persist, Helloworld Travel’s
operational and financial performance could deteriorate
further. There is no certainty that demand for Helloworld
Travel’s services will normalise to a level existing prior to
the impact of COVID-19 (or how long such normalisation
could take), even once the domestic and international
travel restrictions are lifted.
Helloworld Travel has taken several critical steps to
manage the financial impact of the travel industry
disruption and COVID-19 as outlined in note 1 (c) in the
Annual Report.
General economic conditions
Helloworld Travel’s operating and financial performance is
influenced by a variety of general economic and business
conditions in Australia and overseas. A prolonged
deterioration in general economic conditions, including
a decrease in consumer and business demand, would
likely have a material adverse effect on Helloworld
Travel’s business or financial condition (or both). This
risk is heightened in the current uncertain economic
environment.
In light of recent Australian and Global macroeconomic
events, including but not limited to the global impact of
COVID-19, it is likely that Australia will experience an
economic downturn of uncertain severity and duration
which would affect discretionary spending on travel and
leisure and the operating and financial performance of
the Group.
Furthermore, the containment measures implemented
in response to COVID-19 are expected to result in
significant and prolonged disruption to economies
globally. It is anticipated that many of the markets in
which Helloworld Travel operates will have economic
downturns of uncertain severity and duration, which could
29
affect the desire of people to travel in, to and from those
markets which would in turn impact on the operating and
financial performance of the Group.
There are also other changes in the macroeconomic
environment which are also beyond the control of Helloworld
Travel and may be exacerbated in an economic recession or
downturn. These include, but are not limited to:
• changes in inflation, interest rates and foreign currency
exchange rates;
• changes in employment levels and labour costs, which will
affect the cost structure of the Group;
• changes in aggregate investment and economic output;
and
• other changes in economic conditions which may affect
the revenue or costs of the Group.
Due to the impact of COVID-19, many of these factors
are in a state of flux and may have an adverse impact
on the financial position and prospects of the Group in
the future. If market conditions continue to deteriorate,
Helloworld Travel may need to take additional measures
to respond and there is a risk of future impairment of the
carrying value of the company’s assets.
Supplier risk
Helloworld Travel’s business activities and financial
performance are reliant on suitable contractual
arrangements being negotiated with major airlines, global
distribution system providers, and other suppliers of
goods and services. Helloworld’s supply chain consists of a
complex series of travel providers and intermediaries. There
are a variety of credit risks inherent in this supply chain
which are particularly heightened in the current economic
environment. A dispute, or a breakdown in the relationship,
between Helloworld Travel and its suppliers, a failure to
reach a suitable arrangement with a particular supplier,
or the failure of a supplier to pay or otherwise satisfy its
contractual obligations (including as a result of insolvency,
financial stress or the impacts of COVID-19), could have
an adverse effect on the reputation and/or the financial
performance of Helloworld Travel. The adverse impacts of
COVID-19 may also have an adverse impact on the financial
position of the Group’s suppliers, which may impact their
ability to carry on business with Helloworld Travel.
To the extent suppliers, partners or counter-parties
(such as international airlines, whose operations have
been completely or substantially suspended) are facing
financial stress, they may seek to change the terms upon
which they engage with, cease or significantly reduce
engagement with Helloworld Travel (including through
the reduced supply of inventory), or in extreme cases,
may not pay their debts as and when they fall due. Such
30
circumstances may impact upon the operations and
financial performance of Helloworld Travel.
Customer risk
Restrictions in international and domestic travel as
a result of COVID-19 have resulted in a significant
disruption to customer bookings and travel plans. As a
result of these travel restrictions, Helloworld Travel has
experienced a very significant increase in the number
of customer requests for travel cancellations and
consequent refunds. The high volume of cancellation
and refund requests during the COVID-19 crisis has
placed significant burden on the Group’s personnel in
responding to and processing customer requests for
travel credits and refunds. Delays in refunds by suppliers
may have an adverse impact on Helloworld Travel’s
operational and financial performance. Customers may
also seek a charge-back (or reversal) for certain types
of card purchases. Any such actions may place a burden
on the Group’s resources which may have an adverse
impact on Helloworld Travel’s operational and financial
performance. Further information is provided under the
heading ‘Working capital requirements’ regarding the
risks associated with Helloworld Travel’s working capital
requirements.
Uncertainty in relation to the future of the travel industry
may also have detrimental effect on the confidence of
customers in the ability of the Group to recover from
this disruption to the industry and continue to operate
in future. Further information regarding regulatory risk
and diminution of customer satisfaction and loyalty is
provided under the headings, ‘Risk of litigation, claims and
disputes’ and ‘Diminution of customer satisfaction and
loyalty’.
Working capital requirements
Helloworld Travel’s business model includes payment
terms relating to the pre-payment by customers for
travel and tourism related services and the maintenance
of corporate credit balances, and related payment terms
between Helloworld Travel and its suppliers. To the extent
these terms of payment and supply change, customers
seek refunds (particularly in the current environment),
receivables are uncollectable fully or partly, contract
assets on balance sheet are unrecoverable or counter-
parties do not act consistently with supply terms,
Helloworld Travel may need to obtain additional working
capital financing. In addition, transactional banking
facilities, including credit card processing facilities,
operated by Helloworld Travel may be withdrawn by the
banks or other providers, or the terms and conditions of
those facilities may be materially amended, which may
helloworldlimited.com.au have an adverse impact on Helloworld Travel’s operational
and financial performance. The company’s working capital
position may be impacted to the extent the current
economic environment increases the risk of counter-parties
not complying with their obligations. To the extent that there
is a continued decline in sales as a result of COVID-19 and
ongoing expenses associated with operating the business
would place pressure on Helloworld Travel’s liquidity. In the
event that Helloworld Travel did not have sufficient liquidity
to manage its working capital cycle, Helloworld Travel would
not be able to continue operating its business in the ordinary
course. Further information is provided under the heading
Travel industry disruption and the impact of COVID-19.
Subsequent to year end, Helloworld Travel completed a
$50.0 million fully underwritten equity raise to strengthen
the balance sheet and provide additional liquidity to manage
the prolonged period of disruption to the global travel
industry.
Cost reduction initiatives
The company has undertaken and will continue to undertake
cost reduction initiatives. These initiatives are based on a
number of assumptions made with respect to the company’s
ability to achieve and sustain these cost-saving targets.
Additional considerations are the extent of one-off costs
associated with realisation of those cost savings and legal
advice in respect to the company’s rights with respect to
its employees, landlords, customers and suppliers. Inability
to meet these cost-saving targets may impact upon the
company’s operations and financial performance. There
is a risk that these assumptions are not correct, such that
the cost-saving initiatives are not as effective as currently
anticipated by management, or the one-off costs required
to implement these cost reduction initiatives are larger than
anticipated. These actions include changes to the employee
cost base, operating and capital expenditure plans.
Further initiatives may be required in the case of an
extended downturn. Wage relief is currently available
in Australia and will form part of the company’s ongoing
workforce strategy. Any such relief may mitigate one-off
costs associated with these cost reduction initiatives. Given
the dynamic nature of the current environment, there can
be no assurance that these initiatives and other cost-out
efforts can or will be achieved as or to the extent envisaged.
Financing risk
The Group’s loans incorporate certain market standard
covenants such as interest cover ratio, net leverage ratio
and a minimum level of liquidity. Westpac has agreed
to certain covenant waivers and suspensions. In event
that covenants are breached, financiers may require
that their loans be repaid immediately, which may have a
material adverse effect on the Group’s future financial
performance and position.
Human resources risk
The Group is dependent upon the experience of its
Directors, key senior management and staff generally. The
loss of any key personnel, as well as high staff turnover could
cause disruption to the conduct of the Group’s business
in the short term and negatively affect the company’s
operating and financial performance.
The current and ongoing cost reduction initiatives could also
cause disruption to operations and impact on the Group’s
ability to retain high quality staff, operate its business in the
ordinary course, effectively manage operational risks and/
or take advantage of a recovery in the sector when the travel
restrictions cease. In addition, while the actions taken by
the Group to preserve cash and Helloworld Travel’s survival
are believed by the Directors to have been appropriate and
consistent with those taken across the industry, the area of
labour relations can be subject to dispute.
In addition, any outbreak of COVID-19 within the Group’s
workforce could have an adverse effect on the operating and
financial performance of the Group.
Complexities in the application of award and minimum
conditions payments (including wages and overtime) during
COVID-19 disruption also raises risks for the Group as with
a large number of employers in Australia and overseas. While
the Group has processes in place to ensure compliance
with applicable labour laws, the overlap of workplace
agreements, awards and industrial relations rules can give
rise to risks of breaches having occurred in the countries in
which the Group operates.
Growth strategy execution and business model disruption
The disruption to the Australian and global economy,
and specifically the travel and tourism sectors is likely
to impact upon Helloworld Travel’s ability to drive its
growth agenda in the short and medium term. The financial
performance of investments and the economic conditions
they operate within may result in investment impairment
should the recoverable amount of the investment fall
below its carrying value.
31
Regulatory risk
Climate change and social sustainability
Regulatory action against the Group under legislation and
government policy may adversely affect the Group. For
example, as a retailer of travel and travel-related products,
the Group engages in extensive promotional and other
advertising activities, conducts a foreign currency exchange
business and processes its employees’ and customers’
personal information/data. Further, the Group’s various
cancellations and refunds policies and procedures may
also expose it to regulatory scrutiny or action. Any media
attention, regulatory scrutiny or other action taken against
the Group members in any of the countries in which it
operates may have adverse effects on the reputation of
the Group or on its operating and financial performance.
Similarly, a variation in law or regulation requiring
Helloworld Travel or any of its other businesses to hold or
treat customer deposits differently to the way in which
these are currently managed may have financial implications
for the Group.
Transitioning to a lower-carbon economy may entail
extensive policy, legal, technology and market changes to
address mitigation and adaption requirements related to
climate change. Physical risks resulting from climate change
can be event driven or longer-term shifts in climate patterns
and may have financial implications for Helloworld Travel,
such as indirect impacts from supply chain disruption and
travel patterns and habits of customers.
There is uncertainty about how Helloworld Travel’s
customers will respond to the effects of climate change (and
therefore on possible changes in customer demand).
Helloworld Travel also 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.
A variation in legislation and government policy may also
Business systems risk
affect the Group and the business environment in which it
operates. Legislative changes could directly and indirectly
alter consumer demand for and consumer attitudes towards
international or domestic travel.
Helloworld Travel relies on the performance, reliability and
availability of its information technology, communication
and other business systems. Any damage to, or failure of,
Helloworld Travel’s key systems may result in disruptions to
its business (especially its online services). Any failures of, or
malicious attacks on, Helloworld Travel’s business systems
32
helloworldlimited.com.au or any compromise to the security of data (including any
personal information / data) held by the company may
similarly impact both Helloworld Travel’s business and
its reputation. Financial penalties for data breaches can
be significant, which if levied on Helloworld Travel could
have an adverse effect on the reputation and the financial
performance of the Group. The cost reduction initiatives
being undertaken, as well as the disruption caused to
operations as a result of COVID-19, may also affect its
information technology, communications and other business
systems.
Financial risk
Access to capital is a fundamental requirement to achieve
the Group’s business objectives and to meet its financial
obligations when they fall due.
The inability to maintain a strong balance sheet or to secure
new capital or credit facilities (from time to time) at market
rates could impact upon Helloworld Travel’s operational and
financial performance and the ability to meet its ongoing
liquidity needs.
There is no guarantee that equity or debt funding will be
available to the Group when an existing facility expires or
is otherwise terminated (e.g. due to an event of default), or
that the Group will be able to refinance that debt facility on
reasonable terms.
As a borrower of capital, the Group is exposed to fluctuations in
interest rates which may increase the cost of servicing its debt.
Developments in global financial markets, such as the impact
of COVID-19, may adversely affect the liquidity of global
credit markets and the Group’s access to those markets. This
may have a material adverse effect on Helloworld Travel’s
future financial performance and position.
Agent network closure
Helloworld Travel’s agent network has been an important part
of its growth as a business throughout its corporate history.
A significant reduction in the size of the agent network may
negatively influence Helloworld Travel’s brand and ability to
generate sales and sales growth in its retail division.
This risk is mitigated by the size of the networks, their
geographic spread and our close management, mentoring and
engagement of our members.
People
At 30 June 2020, Helloworld Travel has 1,578 employees
if all employees were working at their normal capacity
this would represent 1,508 FTE. Approximately 140
employees joined Helloworld Travel on 1 October 2019 as a
result of the acquisition of TravelEdge Group. The decrease
in FTE from FY19 reflects the need to reduce staff levels
to align with lower revenues as a result of the impact of
COVID-19. However taking in account the reduced work
hours being worked due to COVID-19, the FTE as at 30
June 2020 was 552.
Of the total number of people employed across the Group
at year end 69.6% (2019: 70%) are female.
Employee expenditure for the year ended 30 June 2020
decreased by $19.1 million or 13.7% to $120.3 million,
due to the lower level of employed staff, reducing working
hours and salary reductions for senior business leaders
following the impact of COVID-19. In addition, Helloworld
Travel received wage subsidies in Australia and New
Zealand from the respective national governments.
While the majority of the Group’s employees are now
based in either Australia, New Zealand or Fiji, the Group
has employees in several other countries.
The FTE breakdown by country as at 30 June 2020 is below:
Australia
New Zealand
Fiji
India
Other
TOTAL
1,060
269
138
22
19
1,508
(70%)
(18%)
(9%)
(2%)
(1%)
-
Capital structure
At 30 June 2020, Helloworld Travel had 124,720,842
shares on issue of which the Executive Directors,
Andrew Burnes and Cinzia Burnes, along with their
Director related entities, own 31.4%. Sintack Pty
Limited and its associates hold 16.6%, QH Tours
Limited (a subsidiary of Qantas Airways Limited) holds
15.4%, with the remaining 36.6% being held by other
shareholders including management.
During the current year to 30 June 2020, the number of
shares increased by 62,766 shares provided as part of
the purchase consideration for commercial agreements
entered into in New Zealand for the distribution of
travel products as part of the Group’s distribution
expansion.
During July/August 2020 the company undertook a
capital raising. The new shares issued as a result of the
capital raising increased the total number of shares
issued by 30,307,003 to 155,027,845.
33
(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 $305,104
(FY19: $140,313) 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 items described at note 39
of the accompany financial statements, the Directors
are not aware of any matter or circumstance that has
arisen in the interval between 30 June 2020 and the date
of signing of this report that has significantly, or may
significantly, affect the operations of the Group, the
results of the operations of the Group or the state of the
Group’s affairs in future financial years.
Likely developments
In the opinion of the Directors, it would prejudice the
interests of the Group to provide additional information,
except as described in this report, relating to likely
developments in the operations of the Group in
subsequent financial years.
Regulation
The Group’s operations are not subject to any significant
environmental regulations under either Commonwealth or
State legislation.
Helloworld Travel is an accredited member of the
International Air Transport Association (IATA).
Ongoing accreditation allows the company to sell
international and/or domestic airline tickets on behalf
of IATA member airlines. It also allows access to IATA’s
Billing and Settlement Plan (BSP), which is an efficient
interface for invoicing and payment between the travel
agent and airlines.
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
34
helloworldlimited.com.au 35
36
helloworldlimited.com.au LETTER FROM THE REMUNERATION COMMITTEE CHAIRMAN
Dear Shareholder,
On behalf of the Board, I am pleased to present the Remuneration Report for 2020 for Helloworld Travel Limited (the Group).
The Board is committed to an executive remuneration framework that is focused on driving organisational performance
and linking executive remuneration to the achievement of the Group’s strategy and business objectives and, ultimately,
generating superior returns to shareholders.
Group performance and remuneration outcomes in 2020.
The Group’s performance was significantly impacted by COVID-19 from March 2020. Prior to COVID-19, the Group had
generated positive and sustained results through the determined focus by the Group’s senior executive and their teams on
driving strategic business outcomes, incentivised through remuneration and incentive structures. That performance was
recognised by fixed salary increases for a number of Key Management Personnel (KMP) effective from November/December
2019. As a consequence of COVID-19, salary reductions for KMP were implemented. These reductions varied between 40%
and 100% and were applied between April 2020 and June 2020 and extend into the new financial year.
The Board believes the current remuneration strategy ensures the appropriate framework is in place to drive long term
performance and align executive reward with shareholders’ interests.
The Board has continued its commitment to its LTIP program which is directly linked to Total Shareholder Return (TSR) for
executive KMP, and other senior executives excluding Executive Directors. This consists of retaining the existing loan-
based share plan until the last of the vesting periods expire on 31 December 2020 and the making of awards under the
Omnibus Incentive Plan approved by shareholders at the 2019 Annual General meeting.
KMPs have established remuneration packages which allow them to participate in the Group’s Long Term Incentive Plan
(LTIP). There were no grants to KMP under either the existing LTIP loan based share plan or the Omnibus Incentive Plan
during the current year.
During the previous year the performance conditions attached to the LTIP shares granted in 2016 were met and accordingly
these shares vested on 1 July 2019. At the Helloworld Travel Annual General Meeting held on 14 November 2019, the Group’s
shareholders approved the adoption of the Helloworld Travel Limited Omnibus Incentive Plan (the Plan). Under the Plan, the
Group can reward and incentivise employees, directors (including both executive and non-executive directors), contractors
and consultants by offering shares, performance rights or options.
During the year ended 30 June 2020 no short term incentive payments were made to any KMP.
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 2020 Annual General Meeting.
Yours faithfully
Garry Hounsell
Chairman of the Remuneration Committee
Chairman of Helloworld Travel Limited
15 October 2020
37
REMUNERATION REPORT
(AUDITED)
This 2020 Remuneration Report outlines the remuneration arrangements for the KMP of the 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 2020
1.6 2021 update
2 EXECUTIVE REMUNERATION
2.1 Group performance and remuneration outcomes for 2020
2.2 Executive remuneration
2.3 Long Term Incentive Plan (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
38
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
Executive Directors
Andrew Burnes AO
Cinzia Burnes
Executive KMP
David Hall
Michael Burnett
John Constable
Simon McKearney
Nick Sutherland
Position
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer and Managing Director
Group General Manager, Wholesale & Inbound and Executive Director
Chief Financial Officer (appointed effective 2 December 2019)
Chief Financial Officer (ceased role effective 1 December 2019)
Group General Manager – Retail & Commercial
Group General Manager – New Zealand
Group General Manager - Corporate
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. Garry Hounsell (Chairman),
Mike Ferraro and Andrew Finch were the members of the Remuneration Committee during the year.
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.
39
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.
Annually the FAR for each executive is reviewed based on the executive’s past performance, changes in responsibility,
market forces and relativity to competitors and adjusted where appropriate. Due to the unprecedented impact of COVID-19
on domestic and international travel and on the Helloworld Travel business, a further re-assessment of each executive’s FAR
was conducted in March 2020 and adjustments made to reflect those conditions.
Short Term Incentive (‘at risk’ remuneration)
Short term ‘at risk’ components are linked to achievement of individual and the Group’s KPIs. Due to the impact of
COVID-19, no short term incentives were paid in the current year.
Long Term Incentive (‘at risk’ remuneration)
The long term ‘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. Due to the impact of COVID-19, no long term
incentives were granted during the year. More detail on the ‘at risk’ remuneration components and their link to the
Group’s 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.
40
helloworldlimited.com.au 1.5 Remuneration changes for 2020
Short Term Incentive Plan (STIP)
During the 2020 financial year there were no STIP payments made to any KMP.
During the 2019 financial year, John Constable and Nick Sutherland received a STIP payment based on achievement of
their individual and business KPIs.
Long Term Incentive Plan (LTIP)
A LTIP program was implemented in the 2017 financial year to a targeted group of senior leaders including executive
KMP. Subsequent allocations were made in FY18. No allocations were made to KMP personnel during the current year
and it is intended that this loan based LTIP will cease once the last vesting date, 31 December 2020 has passed. At the
Helloworld Travel Annual General Meeting held on 14 November 2019, the Group’s shareholders approved the adoption
of the Helloworld Travel Limited Omnibus Incentive Plan (the Plan). Under the Plan, the Group can reward and incentivise
employees, directors (including both executive and non-executive directors), contractors and consultants by offering
shares, performance rights or options. It is intended that grants will be made under the Plan to KMP as a component of the
incentives to drive sustained and long term performance
The key criteria for the KMP LTIP plan are as follows:
• LTIP allocations will be 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 an extended period; and
• The executive or senior leader will need to meet individual KPIs as determined by the Board and CEO over the
measurement 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.
Pursuant to the loan LTIP, Michael Burnett and Simon McKearney were allocated shares during the year ended 30 June
2017 and Nick Sutherland and John Constable were allocated shares during the year ended 30 June 2018 which included
the following attributes:
KMP
Type of Scheme
Michael Burnett &
Simon McKearney
Scheme Commencement
1 July 2016
Nick Sutherland
John Constable
Loan Funded Scheme
Grant allocation date
1 July 2016
1 July 2017
1 April 2018
Scheme measurement
and vesting date
1 July 2019
Share VWAP for allocation
$3.00 per share
50% Vesting
100% Vesting
$4.50 share price
$5.50 share price
1 July 2020
$3.81 per share
$5.50 share price
$6.50 share price
31 December 2020
$4.67 per share
$5.50 share price
$6.50 share price
Performance Criteria
Must meet both TSR and individual KPIs
KPIs
Loan
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 grant date and the number of shares
issued. The loan is to be repaid to the Group after vesting of the shares.
Refer to note 38: share-based payments in the financial statements for further details on the nature of the LTIP
41
In relation to FY19, the Board determined that the KPIs in relation to the shares granted to KMP in 2016 had been
achieved. As a result, shares allocated to Michael Burnett (500,000 shares) and Simon McKearney (150,000 shares)
vested on 1 July 2019. The vesting target was achieved as the TSR over the three year period was in excess of the TSR
performance hurdle set at the commencement of the scheme as well as their individual KPIs.
In relation to the shares granted to Nick Sutherland in FY18, the Board has determined that the TSR share price based
performance criteria KPI has not been achieved and accordingly those shares did not vest on 1 July 2020.
For the LTIP scheme, the Board has sole discretion about what happens to the shares on any change of control event.
1.6 2021 update
During July 2020, John Constable, Group General Manager - Retail & Commercial relocated to the United Kingdom and
has since ceased his role with the Company. Simon McKearney, Executive General Manager - New Zealand, tendered
his resignation in July, 2020 and left the Group in September 2020.
For the quarter commencing 1 July 2020, both the CEO and Managing Director, and Group General Manager –
Wholesale & Inbound and Executive Director received salaries equivalent to 50% of their previous annual salaries prior
to COVID-19. For the year commencing 1 July 2020 the salaries for the other executive KMPs will remain at the same
40% reduction level as they were at 1 April 2020.
2 EXECUTIVE REMUNERATION
2.1 Company performance and remuneration outcomes for 2020
The table below provides relevant Group performance information for the key financial measures over the last five years;
Net profit / (loss) after tax (NPAT)
(69,985)
38,043
30,830
21,591
1,676
EBITDA (i)
Underlying EBITDA
N/A
77,105
64,030
55,179
25,290
44,042
73,526
N/A
N/A
N/A
2020
$’000
2019
$’000
2018
$’000
2017
$’000
2016
$’000
(i) EBITDA has been calculated for the 2019 financial year by including depreciation on right of use assets and finance
expense on lease liabilities to ensure consistency with previous periods.
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Basic earnings / (loss) per share (EPS cents)
Total dividends declared (cents per share)
Opening share price at 1 July ($)
Closing share price at 30 June ($)
Total shareholder return (%)
2020
2019
2018
2017
2016
(56.5)
9.0
5.07
2.29
31.4
20.5
4.80
5.07
26.1
18.0
4.04
4.80
18.8
14.0
3.08
4.04
1.90
2.00
2.16
3.08
(53.1)%
9.9%
23.3%
35.7%
43.5%
Note: 2019 figures above have been restated. Refer to note 2 of the financial statements for details.
TSR for 2020 reflects the impacts of COVID-19. Returns in 2020 contrast dramatically with increases in key metrics
including EBITDA, NPAT and EPS between 2016 and 2019.
42
helloworldlimited.com.au 2.2 Executive remuneration
Short term benefits
Salary
($)
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)
2020
2019
543,154
570,000
-
-
-
-
29,849
12,792
15,752
20,532
C Burnes (Group General Manager – Wholesale & Inbound and Executive Director)
2020
2019
514,212
570,000
-
-
D Hall (CFO and Group Company Secretary)
Commenced effective 2 December 2019
2020
268,039
-
M Burnett (CFO and Group Company Secretary)
(Resigned effective 20 December 2019)
2020
2019
260,192
550,000
-
-
-
-
-
-
-
22,638
12,792
15,752
20,532
-
15,763
(5,563)
4,855
10,501
20,531
J Constable (Group General Manager – Retail & Commercial)
2020
2019
520,141
-
340,782
1,124
570,138
171,041
339,307
S McKearney (Group General Manager – New Zealand)
2020
2019
362,892
327,367
-
-
N Sutherland (Group General Manager – Corporate)
2020
2019
449,905
-
376,351
41,250
-
-
-
-
-
-
10,887
9,821
-
-
-
5,193
741
21,003
20,531
2020 TOTAL
2019 TOTAL
2,918,535
-
340,782
2,963,856
212,291
339,307
53,241
31,180
89,658
91,947
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
208,958
180,000
180,000
-
62,688
52,000
52,000
-
-
-
-
588,755
603,324
552,602
603,324
0%
0%
0%
0%
-
283,802
0%
-
-
265,130
784,344
- 1,042,047
- 1,260,486
-
-
-
-
373,779
399,876
528,101
490,873
0%
26.6%
17.3%
27.8%
0%
15.7%
9.8%
19.0%
232,000
503,646
- 3,634,216
- 4,142,227
6.4%
17.3%
During the year, material changes were made in respect of KMP remuneration. The key changes in relation to executive
salary payments were as follows:
Andrew Burnes (CEO and Managing Director)
On 1 December 2019 annual salary increased from $650,000 to $850,000.
For the period 11 March 2020 to 25 March 2020 fortnightly salary was reduced by 30%.
For the period 26 March 2020 to 30 June 2020 fortnightly salary was reduced to zero and a JobKeeper payment of
$1,500 per fortnight was received.
Cinzia Burnes (Group General Manager – Wholesale & Inbound and Executive Director)
On 1 December 2019 annual salary increased from $650,000 to $750,000.
For the period 11 March 2020 to 25 March 2020 fortnightly salary was reduced by 25%.
For the period 26 March 2020 to 30 June 2020 fortnightly salary was reduced to zero and a JobKeeper payment of
$1,500 per fortnight was received.
David Hall (CFO and Group Company Secretary)
On 2 December 2019 commenced role with an annual salary of $600,000.
For the period 11 March 2020 to 25 March 2020 fortnightly salary was reduced by 25%.
For the period 26 March 2020 to 30 June 2020 fortnightly salary was reduced by a further 15% resulting in a 40%
salary reduction.
43
John Constable (Group General Manager – Retail & Commercial)
For the period 1 April 2020 to 30 June 2020 fortnightly salary was reduced by 40%.
Simon McKearney (Group General Manager – New Zealand)
On 20 November 2019 annual salary increased from $400,000 to $450,000.
For the period 1 April 2020 to 30 June 2020 fortnightly salary was reduced by 40%.
Nick Sutherland (Group General Manager – Corporate)
On 20 November 2019 annual salary increased from $424,268 to $550,000.
For the period 1 April 2020 to 30 June 2020 fortnightly salary was reduced by 40%.
The proportion of remuneration that is performance based is calculated as the combined STIP and LTIP share-based
payments as a proportion of total remuneration.
David Hall was appointed as CFO for Helloworld Travel on 2 December 2019 and his remuneration for FY20 reflects
the period from 2 December 2019 to 30 June 2020. Michael Burnett, the former CFO, ceased his role as CFO on 1
December 2019 and left the business on 20 December 2019. His remuneration reflects the period from 1 July 2019
to 20 December 2019. Mr Constable’s short term benefits for the 2019 and 2020 years comprise housing, motor
vehicle and travel allowances relating to his relocation from the UK. The cost of these benefits and the associated FBT
payable are shown in the table above as short term benefits – other.
John Constable and Nick Sutherland were awarded Short Term Incentive Plan (STIP) payments in FY19 in relation to
achievement of personal and business KPIs. The STIP for Mr Constable represented 30% of his fixed salary and was
the maximum payable. Mr Sutherland’s FY19 STIP was based on the achievement of certain revenue growth targets
and represented the maximum payable.
No STIP payments were made in FY20 due to the adverse impact of COVID-19 on the Helloworld Travel business.
44
helloworldlimited.com.au 2.3 Long Term Incentive Plan (LTIP)
As described at section 1.5, a loan based LTIP was established during 2017. The overall objectives of the LTIP were 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, no shares (2019: nil) were issued and allocated to KMP under this loan funded LTIP. The 200,000 LTIP
shares previously allocated to Mr Sutherland have been included in the table of KMP shares as a result of Mr Sutherland
joining the KMP on 1 July 2018. These shares were valued at the market value at the grant date of 1 July 2017 at $3.81 per
share. The details of the loan funded LTIP are included in note 38 to the Financial Statements: share based payments.
During the 2019 year the individual and the Group’s performance conditions attached to the loan funded LTIP shares granted
in 2016 were met and accordingly these shares vested on 1 July 2019. In accordance with the fund rules, the vesting target
was achieved as the Total Shareholder Return (TSR) over the three year period was in excess of the TSR performance hurdle
set at the commencement of the scheme for vesting.
In relation to the shares granted to Nick Sutherland in FY18, the Board has determined that the TSR share price based
performance criteria KPI was not been achieved and accordingly those shares did not vest on 1 July 2020.
A loan is provided to each participant equal to the market value of the shares at the time of issue. As at 30 June 2020, the
loans to the KMP amount to $2.9 million (30 June 2019: $4.7 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 2020
Number of LTIP shares
Loan Value $
Name
Michael Burnett
Simon McKearney
John Constable
Nick Sutherland
TOTAL
Opening
Balance
500,000
150,000
500,000
200,000
1,350,000
Addition
Vested
Closing
Balance
Opening
Balance
500,000
150,000
-
-
-
-
500,000
200,000
1,349,427
404,828
2,265,421
711,254
-
-
-
-
-
Addition Movement
- (1,349,427)
(404,828)
Closing
Balance
-
-
-
-
-
(81,393) 2,184,028
(32,557)
678,697
650,000
700,000
4,730,930
- (1,868,205) 2,862,725
Year ended 30 June 2019
Number of LTIP shares
Loan Value $
Name
Michael Burnett
Simon McKearney
John Constable
Nick Sutherland
TOTAL
Opening
Balance
Addition as
KMP
Addition
500,000
150,000
500,000
-
-
-
-
200,000
-
-
-
-
Closing
Balance
500,000
150,000
500,000
200,000
Opening
Balance
1,421,356
426,407
2,337,350
Addition as
KMP Movement
Closing
Balance
-
-
-
(71,929) 1,349,427
(21,579)
404,828
(71,929) 2,265,421
-
740,025
(28,771)
711,254
1,150,000
200,000
- 1,350,000
4,185,113
740,025
(194,208) 4,730,930
At the Helloworld Travel Annual General Meeting held on 14 November 2019, the Group’s shareholders approved the
adoption of the Helloworld Travel Limited Omnibus Incentive Plan (the Plan). Under the Plan, the Group can reward and
incentivise employees, directors (including both executive and non-executive directors), contractors and consultants by
offering shares, performance rights or options
45
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
Andrew Burnes
Cinzia Burnes
Number of
shares at
1 July 2019
10,460,531
10,138,014
The Burnes Group Pty Limited as trustee for
The Burnes Group Service Trust
18,530,105
Longbush Nominees Pty Ltd as trustee for the
Burnes Superannuation Fund
Michael Burnett
John Constable
Simon McKearney
Nick Sutherland
David Hall
TOTAL
10,000
500,000
500,000
150,000
200,000
-
40,488,650
Additions
Disposals
35,000
-
-
-
-
-
-
-
180,000
215,000
-
-
-
-
-
-
(150,000)
-
-
KMP
removal
Number of
shares at
30 June 2020
-
-
-
-
(500,000)
-
-
-
-
10,495,531
10,138,014
18,530,105
10,000
-
500,000
-
200,000
180,000
(150,000)
(500,000)
40,053,650
Andrew Burnes and Cinzia Burnes each have a beneficial interest in The Burnes Group Pty Limited which acts as the Trustee
of The Burnes Group Service Trust. They 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.
During the current year Mr Burnett resigned from Helloworld Travel and is no longer a KMP for disclosure. The shares which
were held by Simon McKearney under the LTIP vested during the year and were subsequently sold.
Entities related to David Hall acquired 180,000 shares on market during the financial year ended 30 June 2020.
Each of Andrew Burnes, Cinzia Burnes and David Hall participated in the Group’s Institutional Placement and Accelerated
Non-Renounceable Entitlement Offer (together, the Offer).
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
Andrew Burnes
CEO and Managing Director
6 months
6 months
In accordance with normal statutory entitlements
Group General Manager - Wholesale
Cinzia Burnes
& Inbound and Executive Director 6 months
6 months
In accordance with normal statutory entitlements
David Hall
CFO and Group Company Secretary 6 months
6 months
In accordance with normal statutory entitlements
Group General Manager –
John Constable
Retail & Commercial
6 months
6 months
In accordance with normal statutory entitlements
Group General Manager -
Simon McKearney
New Zealand
3 months
3 months
In accordance with normal statutory entitlements
Nick Sutherland
Group General Manager – Corporate 3 months
3 months
In accordance with normal statutory entitlements
46
helloworldlimited.com.au 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
$200,000 from 1 July 2019
The payment of the higher fee to the Chairman recognises the additional time
(previously, $175,000)
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.
$25,000)
Other than the Chairperson, Directors’ fees have not increased since 1 July 2011. Non-Executive Directors do not
receive any performance related remuneration or retirement allowances. The remuneration of Non-Executive Directors
for the years ended 30 June 2020 and 30 June 2019 is detailed in the following statutory table.
The process for review of Non-Executive Directors’ performance is explained in the Corporate Governance Statement.
47
3.3 Non-Executive Director remuneration
NON-EXECUTIVE DIRECTOR
Garry Hounsell (Chairman)
2020
2019
Mike Ferraro
2020
2019
Andrew Finch
2020
2019
2020 TOTAL
2019 TOTAL
Short-term benefits
Cash salary
($)
Post-employment
benefits
Superannuation
($)
Other
($)
154,385
175,000
91,346
125,000
-
-
245,731
300,000
-
-
-
-
-
-
-
-
Total
($)
168,197
191,625
100,024
136,875
-
-
13,812
16,625
8,678
11,875
-
-
22,490
28,500
268,221
328,500
Since the original appointment of Andrew Finch to the Board on 1 January 2017, by agreement, no fees have been paid
to Andrew Finch or Qantas Airways Limited in relation to his directorship.
During the year, material changes were made in respect of Director fees. The key changes were as follows:
Garry Hounsell (Chairman)
For the period 11 March 2020 to 30 June 2020, directors fees were reduced to zero. From 1 July 2020, Mr
Hounsell's fee was increased to 50% of the pre-COVID level.
Mike Ferraro
For the period 11 March 2020 to 30 June 2020, directors fees were reduced to zero.
For the year commencing 1 July 2020 Mr Ferraro's fees were increased to 50% of pre-COVID level.
3.4
Non-Executive Director shareholdings
NON-EXECUTIVE DIRECTOR
Garry Hounsell (Chairman)
Mike Ferraro
Andrew Finch
TOTAL
Number of
shares at
1 July 2019
138,500
17,569
-
156,069
Movement
-
-
-
-
Number of
shares at
30 June 2020
138,500
17,569
-
156,069
Both Garry Hounsell and Mike Ferraro participated in the Offer, acquiring 15,390 and 1,953 shares, respectively.
This concludes the remuneration report, which has been audited.
48
helloworldlimited.com.au Auditor Independence
Rounding
The amounts contained in this Directors’ Report and in
the Financial Report have been rounded to the nearest
$1,000 (where rounding is applicable) under the option
available to the Company under Australian Securities &
Investments Commission ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191.
Made in accordance with a resolution of the Directors.
Garry Hounsell
Chairman
Helloworld Travel Limited
Melbourne, 15 October 2020
The Directors received the declaration of independence
on page 50 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 50 and forms part of the Directors’ Report for
the financial year ended 30 June 2020. Details of the
amounts paid to PricewaterhouseCoopers, for audit and
non-audit services are set out in note 28 of the Financial
Statements on page 107 of the Financial Report.
49
50
helloworldlimited.com.au 51
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.
The Company has reviewed the 4th Edition of ASX
Corporate Governance Principles and Recommendations
released in February 2019 by the ASX Corporate
Governance Council and is working through what changes
are required before adoption on or before the year ending
30 June 2021.
This statement is current at 15 October 2020.
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.
52
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 ethics and 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 12.
Director Independence
As at 30 June 2020, 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; and
• Cinzia Burnes is the Company’s Group General Manager,
Wholesale and Inbound, Executive Director and a
substantial shareholder of the Company.
The length of each Directors’ tenure as a director is set
out in the Directors’ Report on pages 10 to 12.
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 Andrew Finch was the
nominated member to the Board by QH Tours Ltd.
Mr Finch brought to the Board the requisite skills which
are complementary to those of the other Directors and
enabled him to adequately discharge his responsibilities
as a Non- Executive Director.
As Executive Directors, Andrew Burnes in his role as CEO
and Managing Director and Cinzia 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.
53
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.
The following Directors were members of the
Nominations and Governance Committee:
• Garry Hounsell (Chairman)
• Andrew Burnes
• Cinzia Burnes
• Mike Ferraro
• Andrew Finch
Details of these Directors’ qualifications, their
attendance at Nominations and Governance Committee
meetings, and the number of meetings held during FY20
are set out in the Directors’ Report on pages 10 to 14.
54
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 58 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:
• Garry Hounsell (Chairman)
• Mike Ferraro
• Andrew Finch
Details of these Directors’ qualifications, their
attendance at Remuneration Committee meetings, and
the number of meetings held during FY20 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.
Directors are nominated, appointed and re-elected
to the Board in accordance with the Board’s policy on
these matters set out in the Charter, the Company’s
Constitution and the ASX Listing Rules. In considering
appointments to the Board, the extent to which the skills
and experience of potential candidates complement
those of the Directors in office is considered along with
an assessment of the nature of the skills, experience,
expertise, diversity and other attributes which would
benefit the Board in fulfilling its responsibilities.
Board performance
The Board undertakes an annual self-assessment of
its collective performance and the performance of its
committees, by way of a series of questionnaires. The
results are collated and discussed at a Board meeting and
any action plans are documented together with specific
performance goals which are agreed for the coming year.
helloworldlimited.com.au The outcomes from this Board and Committee
performance review were:
• That the Board was functioning well with very open
In accordance with this policy and ASX CGP3, the Board
has established the following measurable objectives in
relation to gender diversity:
communication between management and the Board;
• The Board will actively seek suitable women applicants
• The mix of skills and experience of the Board is
for Board vacancies;
appropriate for the size and complexity of the company
with all Directors making a strong contribution; and
• The focus of the Board will be to ensure the company
is well positioned to manage through the COVID-19
pandemic and be in a strong position to take advantage
of the opportunities as they arise.
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.
3 Ethical and responsible decision making
A Code of Ethics and Conduct 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 Code 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 Code
of Ethics and Conduct is available to all employees and is
also available in the Corporate Governance section of the
Company’s website.
Diversity
The Board has established a Diversity Policy which
supports the commitment of the Company to an inclusive
workplace that embraces and promotes diversity and
provides a framework for new and existing diversity
related initiatives, strategies and programs within the
business. A copy of the policy is available in the Corporate
Governance section of the Company’s website and the
terms are consistent with ASX CGP3.
• 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 no Director retired. The percentage of female
personnel reporting directly to the CEO was 17% at
30 June 2020 and 38% at 30 June 2019.
During the year the company delivered the following
diversity outcomes:
• Continued to implement a Reconciliation Action Plan
to raise awareness of cultural issues and workplace
practices to support the employment of Aboriginal and
Torres Strait Islander people;
• Further revised our methods in talent attraction and
selection in the recruitment of people from diverse
backgrounds by removing unconscious biases;
• Enhanced our employee health and hygiene activities
particularly in the context of a COVID safe workplace
• Promoted awareness of mental health services
available to our employees and immediate family
members. To support people who are experiencing
mental, financial or legal duress;
• Implemented our flexible work practices to allow
people to balance family and work priorities; and
• Employed dedicated talent experts to source, acquire
and benchmark people for our organisation.
55
Share trading
A Share Trading Policy is in place for Directors, senior
executives and employees. The objectives of the policy
are to minimise the risk of Directors and employees who
may hold material non-public information contravening
the laws against insider trading, ensure the Company
is able to meet its reporting obligations under the ASX
Listing Rules and increase transparency with respect to
trading in securities of the Company. A copy of the policy
is available in the Corporate Governance section of the
Company’s website.
Protected disclosures
The Group’s Whistle-blower Policy encourages employees
to report concerns in relation to illegal, unethical or
improper conduct in circumstances where they may be
apprehensive about raising their concern because of fear
of possible adverse repercussions. The Whistle-blower
Policy is available to all Helloworld Travel employees and
is also available in the Corporate Governance section of
the Company’s website.
Subject to COVID-19 restrictions, Helloworld Travel’s
specific diversity and inclusion goals and actions for
FY20 include:
• Developing a mentoring program to build the capability
and skill of female talent for senior leadership roles;
• Monitor and review for gender pay gaps and set
targets to create equality;
• Implement cultural awareness training across
the business to acknowledge the diversity of our
employee community;
• Enhance the career pathways strategy to incorporate
key attributes and leadership behaviours;
• Review our performance development and reward
programmes to continue to encourage high
performance, and reward key behaviours; and
• Continue to evolve our Employee Value Proposition
incorporating inclusivity and diversity across our
business and brands.
Indigenous initiatives
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.
Helloworld Travel is proud to support Aboriginal and
Torres Strait Island people. A number of initiatives
have been implemented leveraging our QBT business to
support the ongoing employment and development of
indigenous Australians. During the year we have:
• Promoted out Reconciliation Action Pan (RAP), and
are working towards its implementation across our
business; and
• Senior leaders from our QBT business participated
in an Aboriginal and Torres Strait Islander cultural
awareness session to be mindful of cultural norms and
leadership practices in the workplace.
The Helloworld Travel Reconciliation Action Plan is
designed to:
• Attract and retain indigenous employees; and
• Develop indigenous awareness through communication
and training.
Proportion of women in the organisation
There are 1,080 female employees in the Group
representing 69.6% of the workforce. There is one
female employee in executive role representing 17% of
employees who report directly to the CEO. There is one
female on the Board which represents 20% of the Board.
56
helloworldlimited.com.au 4
Integrity of financial reporting
6 Rights of shareholders
The Board has an Audit & Risk Committee to assist the
Board in the discharge of its responsibilities.
During the reporting period, the following Non-Executive
Directors were members of the Audit & Risk Committee:
• Mike Ferraro (Chairman)
• Andrew Finch
• Garry Hounsell
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.
Mike Ferraro, an independent Director, has been the
Committee Chairman for the full year. The composition
and operation of this committee is 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.
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.
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 2014 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
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.
57
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
• Approving the delegations of authority for day-to-day
management of the Company’s operations.
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.
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.
58
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 28 to 34 of the
Annual Report.
Internal Audit
An internal audit program is an important element of
the Company’s risk management processes. While the
Company does not have an in-house internal audit
function, it engages independent, expert consultant
PKF 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.
8 Remunerating fairly and responsibly
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. 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 37 to 49.
helloworldlimited.com.au Remuneration
Executive management
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 and operation of this
committee is consistent with ASX CGP 8.1. Details
of the Directors’ qualifications and attendance at
Remuneration Committee meetings are set out in the
Directors’ Report on pages 10 to 14.
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 there were no additional offers made 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.
59
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
REVENUE
Employee benefits expenses
Advertising and marketing expenses
Selling expenses
Communication and technology expenses
Occupancy expenses
Operating expenses
Depreciation and amortisation expense
Impairment expense
Finance expense
Profit on disposal of investments
Share of profit of associates accounted for using the equity method
PROFIT /(LOSS) BEFORE INCOME TAX EXPENSE
Income tax expense
PROFIT/(LOSS) AFTER INCOME TAX EXPENSE FOR THE YEAR
PROFIT/(LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Travel Limited
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges
Income tax benefit on cash flow hedges
Exchange differences on translation of foreign operations
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR, NET OF TAX
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Travel Limited
Basic earnings per share
Diluted earnings per share
CONSOLIDATED
2020
2019
Restated
$’000
Note
$’000
3
4
4
4
5
4
13
7
26
26
26
9
9
282,187
357,562
(120,317)
(139,390)
(24,433)
(39,264)
(18,354)
(4,343)
(41,888)
(32,742)
(67,947)
(4,099)
1,075
1,246
(68,879)
(1,106)
(35,696)
(50,543)
(20,479)
(4,248)
(24,607)
(28,343)
-
(3,354)
2,013
1,437
54,352
(16,309)
(69,985)
38,043
(111)
(69,874)
(69,985)
35
38,008
38,043
(359)
109
(2,318)
(2,568)
(759)
214
1,860
1,315
(72,553)
39,358
(111)
(72,442)
(72,553)
Cents
(56.5)
(56.5)
35
39,323
39,358
Restated
Cents
31.4
30.8
Comparatives have been restated for changes in accounting standards. For details regarding the restatement refer to note 2.
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
60
helloworldlimited.com.au
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2020
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Inventories
Derivative financial instruments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments accounted for using the equity method
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Provisions
Deferred revenue
Income tax payable
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
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
CONSOLIDATED
2020
2019
Restated
$’000
Note
$’000
10
11
12
30
11
13
14
15
16
17
18
19
21
22
20
19
23
21
24
25
26
27
131,861
204,755
39,991
34,482
540
-
97,141
66,681
471
368
206,874
369,416
4,692
17,436
14,697
24,538
5,939
17,109
17,608
24,529
300,747
338,446
-
362,110
568,984
93,967
9,145
20,914
53,802
5,748
816
404,447
773,863
210,944
8,509
15,622
96,939
478
183,576
332,492
100,519
20,614
40,512
5,639
1,445
168,729
352,305
56,428
19,986
44,664
3,004
5,151
129,233
461,725
216,679
312,138
419,466
(2,517)
416,219
693
(201,640)
(106,255)
215,309
1,370
310,657
1,481
216,679
312,138
Comparatives have been restated for changes in accounting standards. For details regarding the restatement refer to note 2.
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
61
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED
BALANCE AT 1 JULY 2018
Change in accounting policy (note 2)
RESTATED BALANCE AT 1 JULY 2018
Profit after income tax expense (restated)
Other comprehensive loss (restated)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Transactions with owners in their capacity as owners net of tax:
LTIP expensed
Franchise loyalty plan expensed
Sale of forfeited shares, net of transaction costs
Transfer of reserve for vested shares to share capital
Dividends
Dividends associated with LTIP
Transactions with non-controlling interest:
Acquisition through business combinations
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
Non-
controlling
interest
$’000
Total
equity
$’000
408,495
1,716
(120,338)
1,458
291,331
-
-
(736)
(4)
(740)
408,495
1,716
(121,074)
1,454
290,591
-
38,008
1,315
1,315
-
38,008
-
-
-
-
(23,657)
468
897
582
-
(3,817)
-
-
-
35
-
35
-
-
-
-
-
-
38,043
1,315
39,358
897
582
3,907
-
(23,657)
468
(8)
BALANCE AT 30 JUNE 2019
416,219
693
(106,255)
1,481
312,138
-
(8)
CONSOLIDATED
BALANCE AT 1 JULY 2019
Profit/(loss) after income tax expense
Other comprehensive income
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
Issue of new shares, net of transaction costs
Sale of forfeited shares, net of transaction costs
Proceeds on repayment of LTIP related loans
Acquisition of shares
Issue of shares to employees
Dividends
Dividends associated with LTIP
BALANCE AT 30 JUNE 2020
Issued
capital
$’000
Reserves
$’000
Accumulated
losses
$’000
416,219
693
(106,255)
-
(69,874)
-
(2,568)
(2,568)
Non-
controlling
interests
$’000
Total
equity
$’000
1,481
(111)
-
312,138
(69,985)
(2,568)
(69,874)
(111)
(72,553)
(844)
844
195
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(26,815)
460
-
-
-
-
-
-
-
-
-
-
-
195
7
277
669
2,301
(671)
671
(26,815)
460
419,466
(2,517)
(201,640)
1,370
216,679
Comparatives have been restated for changes in accounting standards. For details regarding the restatement refer to note 2.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
62
-
-
-
-
-
3,907
3,817
-
-
-
-
-
-
-
-
-
277
669
2,301
(671)
671
-
-
helloworldlimited.com.au CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
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/(USED IN) OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangibles
Payments for property, plant and equipment
Payments for acquisition of businesses, net of cash acquired
Payments for acquisition of controlled entities, net of cash acquired
Payments for disposal of controlled entities, net of cash disposed
Net cash acquired from acquisition of controlled entities
Proceeds from adjustment for acquired controlled entities
Proceeds from disposal of controlled entities, net of cash disposed
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of investment property
Dividends from associates
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Proceeds from loan funded LTIP repayments
Dividends paid to company shareholders
Loans provided to related parties for equity accounted investments
Loans repaid from related parties for equity accounted investments
Payments for shares acquired by employee share trust
Principal elements of lease payments
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 half year
Effects of exchange rate changes on cash and cash equivalents
CONSOLIDATED
2020
$’000
2019
Restated
$’000
Note
2,711,242
3,387,635
(2,749,226)
(3,321,035)
29
16
14
36
36
37
36
36
37
4
13
29
25
8
38
19
2,313
(4,007)
(1,761)
(41,439)
(16,596)
(2,878)
-
(21,751)
(1,215)
-
-
-
101
-
68
3,442
(3,177)
(17,633)
49,232
(19,334)
(7,798)
(6,063)
-
-
614
210
457
28
195
1,876
(42,271)
(29,815)
44,000
2,301
(26,355)
(245)
104
(671)
(7,769)
11,365
(72,345)
204,755
(549)
15,000
-
(23,189)
(2,450)
263
-
(9,240)
(19,616)
(199)
203,528
1,426
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
10
131,861
204,755
Comparatives have been restated for changes in accounting standards. For details regarding the restatement refer to note 2.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
63
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 Securities Exchange (ASX).
The financial statements of Helloworld Travel Limited and its controlled entities (the Group), for the year ended 30 June
2020 were authorised for issue in accordance with a resolution of the directors on 15 October 2020.
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 retail distribution networks of travel agents.
(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.
The report has been prepared on a going concern basis, which assumes the Group will be able to meet its obligations as
and when they fall due, refer section (c).
(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 40: significant accounting policies. The accounting policies adopted are consistent with the previous
financial year, except for the adoption of new and amended standards as set out in note 2: changes in accounting standards.
64
helloworldlimited.com.au (vi) Comparative periods
Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current period.
(c) Going concern
The financial performance of the Group is significantly related to demand for domestic and international travel.
COVID-19 has caused unprecedented impacts to travel and tourism as a result of border closures, mandatory quarantine
periods and restrictions on domestic and international travel.
Since the global pandemic was officially announced by the World Health Organisation (WHO) on 11 March 2020 there
continues to be a high level of uncertainty regarding the near-term outlook for the global travel industry. As a result, the
Chief Executive Officer and the Board (the Chief Operating Decision Makers or CODM’s) have carefully considered the
Group’s ability to continue as a going concern for the next 12 months and beyond from the date the financial statements
are issued. Based on their assessment, it has been concluded the that Group will continue to operate as a going concern. As
a result, the financial statements have been prepared on this basis.
The key considerations used by the CODM’s to assess Helloworld Travel’s ability to continue to operate are outlined below:
Liquidity considerations:
• At 30 June 2020, the Group had a cash balance of $131.9 million. In July/August 2020, Helloworld Travel
completed a $50.0 million fully underwritten equity raising to further enhance the Group’s liquidity position
($48.5 million net of offer costs).
• At 30 June 2020, short dated facilities totalling $17.9 million and $29.0 million were extended by a further
12 months, expiring April 2022 and September 2022 respectively.
• Subsequent to year-end, facility amendments were negotiated with Westpac. Net leverage and interest coverage
covenants are suspended for the calculation dates between September 2020 and September 2021.
• At the end of September 2020, the Group had circa $100.0 million of unrestricted cash, with an additional $8.9
million of headroom on existing facilities. This is believed to be sufficient to manage through a prolonged period
of disruption to the global travel industry.
• The Group has decided to prepay $20.0 million of borrowings in October 2020 which can be redrawn if required with
Westpac’s consent. This will reduce our annual interest costs by approximately $420,000 per annum at current rate.
• A monthly Liquidity requirement has been agreed to be $70.0 million at 30 September 2020 (this was met),
$50.0 million during quarter 2 FY21 and from 1 January 2021 $40.0 million through to the end of September
2021. The amount of $40.0 million is subject to negotiation in good faith after 1 October 2021.
• No dividends can be paid prior to 31 December 2021 without Bank consent.
• Previously agreed quarterly normalised EBITDA thresholds for the period 1 July 2020 to 30 September 2021
have been removed.
• The pricing of the Group’s facilities remains unchanged.
• The Group has complied with the financial covenants of its borrowing facilities during the relevant 2020 and
2019 periods.
Future cash flow considerations:
• As a result of COVID-19, action was taken to progressively reduce Helloworld Travel’s cost base. Cost reductions
have been carefully considered to ensure that the Group is able to respond effectively once travel volumes recover.
The Group has a diversified business with a mix of domestic and international leisure travel, corporate travel and wholesale
travel. This means that Helloworld is well placed to benefit from a recovery in both domestic and international travel.
65
The key cost saving initiatives below have been included in Helloworld Travel's financial modelling and sensitivity testing.
These have been reviewed and assessed by the CODM’s to ensure that they are appropriate and reasonable.
• Accessing government COVID-19 wage subsidy schemes in Australia and New Zealand. Refer note 3.
• Implementation of hiring and salary freezes and restructuring of non-essential contractors and staff.
• Eliminating all non-essential expenditure including short term capital expenditure (travel, marketing, non-essential
software developments).
• Negotiating reduced rental across Helloworld Travel’s property portfolio.
• Implementing staff stand downs and reduced working hours across the business.
• Directors and direct reports to the CEO have agreed to reduced fees and salaries which continue into the 2021
financial year.
Refer to note 1 (d) (i) for more information regarding the impact of COVID-19 on Helloworld Travel.
(d) Use of critical accounting estimates and judgements
The preparation of financial statements requires management to make estimates, judgements and assumptions that
affect the application of 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) COVID-19 Pandemic
On 11 March 2020 the WHO declared a global pandemic as a result of the outbreak and spread of COVID-19. As a
result, governments across the world took action to close country borders and limited people to only essential travel.
Both Australia and New Zealand governments imposed these restrictions which resulted in a significant adverse
impact on Helloworld Travel’s ability to derive revenue from the sale of travel products and services.
As at 30 June 2020, many of these border restrictions across the world remained in place. Uncertainty remains with
regard to when they may open. The actions taken by Helloworld to mitigate the decline in revenue have been outlined
in note 1(c).
As a result of COVID-19, there has been an increase in estimation uncertainty when preparing the financial
statements. The key estimates and judgements used have been outlined in the notes to the financial statements.
These include the recoverability of assets, valuation of assets measured at fair value and the timeline regarding the
eventual recovery of the travel industry.
(ii)
Impairment of non-financial assets
The Group determines impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its
recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. Management’s estimation
of the recoverable amount requires the use of judgement and assumptions. The estimation of the recoverable amount
is most relevant to goodwill and intangible assets with indefinite useful lives, which are tested on an annual basis. Refer
note 16: intangible assets for the key assumptions, including a sensitivity analysis, used in this estimation of recoverable
amount of CGU’s to which goodwill and intangible assets with indefinite useful lives are allocated.
All other non-financial assets are tested for impairment when indicators of impairment exist. Refer note 13:
Investments accounted for using the equity method for further information.
(iii) Business acquisitions
Business acquisitions require key judgements in the identification, recognition and measurement of intangible
assets recognised on acquisition. For certain acquisitions, the Group is required to assess and value any contingent
consideration payable including the valuation of potential future purchases of non-controlling interests for existing
put options. Refer to note 30: financial risk management for details regarding the techniques and inputs used in the
valuation of contingent consideration and the redemption liability.
66
helloworldlimited.com.au In accordance with applicable accounting standards, Helloworld Travel has twelve months from the date of acquisition
to finalise the acquisition accounting for additional information obtained after the acquisition about circumstances that
existed at the acquisition date, including any purchase price allocation and income tax finalisation. The key judgements
used for business acquisitions undertaken are outlined in note 36: business acquisitions. In addition, the accounting
policies for acquisitions undertaken are outlined in note 40: significant accounting policies.
(iv) Override commission revenue
The Group enters into revenue contracts with airlines and other suppliers which include a variable consideration
element, known as override commissions. The override commission revenue accrual process is inherently
judgemental and requires the use of accounting estimates.
Override commission is calculated for the contract period with a supplier, 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. The Company has also considered the
prevailing level of uncertainty in the travel industry and the impact of COVID-19 on the estimates.
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 the associated override commission rates applicable to these forecast levels.
The accounting policy for override commission revenue is outlined in note 40: significant accounting policies.
(v) Lease terms of contracts with extension options
Extension and termination options are included in a number of the Group’s property leases. In determining the
lease term, which forms part of the initial measurement of the right of use asset and lease liability, management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option.
Extension options (or periods after termination options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated).
(e) New and amended accounting standards impacting the Group
(i) New and amended accounting standards for the year ended 30 June 2020
The Group has applied the following standards and amendments for the first time for its annual reporting period
commencing 1 July 2019:
• AASB 16: Leases
• AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation
• AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures
• AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015-2017 Cycle
• AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment or Settlement
• Interpretation 23 Uncertainty over Income Tax Treatments.
• AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19 Related Rent Concessions.
The Group changed its accounting policies and made retrospective adjustments as a result of adopting AASB 16:
Leases (AASB 16). The changes and adjustments are disclosed in note 2: changes in accounting standards.
In addition, the Group adopted AASB 2020-4 Amendments to Australian Accounting Standards – COVID-19 Related
Rent Concessions, which amends AASB 16 and became effective from 1 June 2020.
67
As a result, Helloworld Travel has elected to use the practical expedient available under Amendments to Australian
Accounting Standards – COVID-19 Related Rent Concessions when recognising rent concessions received from
certain landlords as a direct result of the COVID-19 pandemic. Helloworld Travel has elected to not assess whether
rental concessions have resulted in a lease modification. Rent concessions that have not resulted in a lease
modification, are considered variable lease payments. The difference between the remeasurement of the lease
liability and the right of use asset is recognised within occupancy expenses in the consolidated statement of profit or
loss and other comprehensive income.
The adoption of the other accounting standard amendments and interpretation did not have any impact on the
amounts recognised in the current period or any prior period and is not expected to materially affect future periods.
(ii) New accounting standard impacting the Group in future financial years
New accounting standards and interpretations have been published that are not mandatory for 30 June 2020 reporting
periods and have not been early adopted by the group. These standards are not expected to have a material impact on
the entity in the current or future reporting periods and on foreseeable future transactions.
(f) Changes to the Preliminary Final Report
Subsequent to the release of the Preliminary Final Report on the 31 August 2020, Helloworld Travel has finalised the
results for the year ended 30 June 2020. As a result, there have been reclassifications between expense categories in
the consolidated statement of profit or loss and other comprehensive income and reclassifications between assets and
liabilities in the consolidated statement of financial position. Profit/(loss) before income tax expense, underlying EBITDA
and net assets have not changed. There have been no changes to prior year balances.
(i) Consolidated statement of profit or loss and other comprehensive income
for the year ended 30 June 2020
Operating expenses
Impairment
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
30 June 2020
Preliminary Final
Report
Reported
$’000
Reclassifications
$’000
30 June 2020
Annual Report
Reported
$’000
(42,738)
(67,097)
(68,879)
850
(850)
(41,888)
(67,947)
-
(68,879)
(ii) Consolidated statement of financial position as at 30 June 2020
30 June 2020
Preliminary Final
Report
Reported
$’000
Reclassifications
$’000
30 June 2020
Annual Report
Reported
$’000
208,816
360,493
569,309
185,409
167,221
352,630
216,679
(1,942)
1,617
206,874
362,110
(325)
568,984
(1,833)
1,508
183,576
168,729
(325)
352,305
-
216,679
Total current assets
Total non-current assets
TOTAL ASSETS
Total current liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
68
helloworldlimited.com.au
2. Changes in accounting standards
The Group has applied AASB 16 for the first time for the full year reporting period commencing 1 July 2019. The Group
has adopted this accounting standard using the full retrospective approach, where comparatives have been restated to
align with the new accounting standard. As a result, the initial date of applying the new standard is the beginning of the
comparative period on 1 July 2018.
(a) AASB 16: Leases
AASB 16 replaces previous leases guidance, including AASB 117: Leases (AASB 117), Interpretation 4: Determining
whether an Arrangement contains a Lease, Interpretation 115: Operating Leases – Incentives and Interpretation 127:
Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
AASB 16 introduces a single, on balance sheet lease accounting model for lessees. The adoption of this new standard has
resulted in the Group recognising a right of use asset and related lease liability in connection with all operating leases except
for those identified as low value or those having a lease term of less than 12 months. Depreciation of right of use assets and
interest on lease liabilities is charged to the profit or loss statement and replaces straight line operating lease expense. Lessor
accounting does not change under the new standard with lessors continuing to classify leases as finance or operating leases.
(i) Measurement and recognition
AASB 16 primarily impacts the Group’s accounting for operating leases relating to commercial office premises, retail
properties and motor vehicles. The Group’s leases are typically for fixed periods between 3 to 10 years and may include
extension options. Lease terms are negotiated on an individual lease basis and contain a wide range of different terms
and conditions. None of the Group’s lease agreements impose any covenants, however leased assets may not be used as
security for borrowing purposes.
Payments made under operating leases, less any incentives received from the lessor, were previously charged to the
profit or loss statement on a straight line basis over the period of the lease pursuant to the requirements of AASB 117.
In applying AASB 16, a right of use asset representing the right to use the underlying asset and a corresponding lease
liability representing the obligation to make lease payments are recognised at the date at which the leased asset is
available for use by the Group.
The right of use asset is measured at cost, comprising the following:
• initial measurement of the lease liability;
• lease payments made in advance of the lease commencement date less any incentives received;
• initial direct costs; and
• estimate of any costs to dismantle and remove the asset at the end of the lease.
The Group depreciates the right of use assets on a straight line basis from the lease commencement date to the earlier
of the end of the useful life of the right of use asset or the end of the lease term. The Group also assesses the right of
use assets for impairment when such indicators exist.
At the lease commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease where that rate is readily available or using
the Group’s incremental borrowing rate for the respective period the lease was entered.
Lease payments included in the measurement of the lease liability consist:
• fixed payments less any incentives receivable;
• variable payments based on an index or rate;
• amounts expected to be payable under a residual value guarantee; and
• payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability is reduced for payments made and increased for interest incurred. The
liability is remeasured to reflect any reassessment or modification, or if there are changes relating to in-substance fixed
payments. When the lease liability is remeasured, the corresponding adjustment is made to the value of the right of use
asset, or the profit and loss statement if the right of use asset is already reduced to zero.
69
On initial recognition of the right of use asset and the lease liability, a corresponding deferred tax asset and deferred
tax liability are recognised to reflect the temporary differences that arise.
Under AASB 16, the Group’s accounting policy as a lessor has not changed from the comparative period. As a lessor, the
Group continues to classify and record its leases as either operating or finance leases. A lease is classified as a finance
lease if the arrangement transfers substantially all the risks and rewards incidental to ownership of the underlying asset
and classified as an operating lease if it does not. The Group currently has not entered any finance leases.
The financial impact of applying AASB 16 under the full retrospective method on the comparative consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of cash flows, and the
consolidated statement of financial position at 1 July 2018 and 30 June 2019, is outlined in note 2(b): transitional
financial statement impacts.
(ii) Key judgements
Definition of lease
The definition of a lease has been applied pursuant to AASB 117 and Interpretation 4 to contracts entered into or
modified before 1 July 2018.
The Group has determined that the new definition in AASB 16 will not significantly change the scope of contracts that
meet the definition of a lease for the Group.
The change in definition of a lease mainly relates to the concept of control. AASB 16 determines whether a contract
contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a period
of time in exchange for consideration. This is in contrast to the focus on risks and rewards as outlined in AASB 117 and
Interpretation 4.
Short term and low value leases
The Group has elected to apply the recognition exemptions to short term leases and leases of low value assets
available under AASB 16. Instead of recognising a right of use asset and lease liability, the payments in relation to
these are recognised as an expense in profit or loss on a straight line basis over the lease term. Short term leases
are leases with a lease term of 12 months or less. Low value assets comprise small items of office and information
technology related equipment.
Extension and termination options
Extension and termination options are included in a number of the Group’s property leases. In determining the lease
term, which forms part of the initial measurement of the right of use asset and lease liability, management considers
all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a
termination option.
Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated). Due to the Group’s continual focus on cost reduction and efficiency
initiatives, the Group has determined in most cases where applicable, that it is not reasonably certain that options to
extend or terminate those leases would be exercised.
70
helloworldlimited.com.au
(b) Transitional financial statement impacts
The Group has adopted AASB 16 under the full retrospective approach, where comparatives have been restated. There
is no significant financial impact on net assets and profit after tax in the current year arising from the adoption of the
new standard.
The opening consolidated statement of financial position as at 1 July 2018 has been restated, as well as the comparative
period of the consolidated statement of financial position, consolidated statement of profit or loss and other
comprehensive income and consolidated statement of cash flows. Line items that were not affected by the changes
have not been presented in the statement of cash flows extract set out in part (iv). As a result, the sub-totals and totals
disclosed in the statement of cash flows extract cannot be recalculated from the numbers provided.
(i) Consolidated statement of profit or loss and other comprehensive income
for the year ended 30 June 2019
REVENUE
Employee benefits expenses
Advertising and marketing expenses
Selling expenses
Communication and technology expenses
Occupancy expenses
Operating expenses
Depreciation and amortisation expense
Finance expense
Profit on disposal of investments
Share of profit of associates accounted for using the equity method
PROFIT BEFORE INCOME TAX EXPENSE
Income tax expense
PROFIT AFTER INCOME TAX EXPENSE FOR THE YEAR
PROFIT FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interest
Owners of Helloworld Travel Limited
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Change in fair value of cash flow hedges
Income tax benefit/(expense) on cash flow hedges
Exchange differences on translation of foreign operations
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
30 Jun 2019
Reported
$’000
AASB 16
Adjustment
$’000
30 Jun 2019
Restated
$’000
357,562
(139,390)
(35,696)
(50,543)
(20,479)
(12,902)
(24,673)
(20,420)
(2,421)
2,013
1,437
54,488
(16,334)
38,154
38
38,116
38,154
(759)
214
1,888
1,343
-
-
-
-
-
8,654
66
(7,923)
(933)
-
-
(136)
25
(111)
(3)
(108)
(111)
-
-
(28)
(28)
357,562
(139,390)
(35,696)
(50,543)
(20,479)
(4,248)
(24,607)
(28,343)
(3,354)
2,013
1,437
54,352
(16,309)
38,043
35
38,008
38,043
(759)
214
1,860
1,315
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
39,497
(139)
39,358
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
38
39,459
39,497
(3)
(136)
(139)
35
39,323
39,358
30 Jun 2019
Reported
Cents
AASB 16
Adjustment
Cents
30 Jun 2019
Restated
Cents
31.5
30.9
(0.1)
(0.1)
31.4
30.8
71
(ii) Consolidated statement of financial position as at 1 July 2018
30 Jun 2018
Reported
$’000
AASB 16
Adjustment
$’000
1 Jul 2018
Restated
$’000
203,528
-
203,528
81,273
48,361
524
1,471
(758)
-
-
-
80,515
48,361
524
1,471
335,157
(758)
334,399
2,489
17,546
175
14,143
-
327,225
1,957
363,535
-
-
-
(279)
21,222
-
209
2,489
17,546
175
13,864
21,222
327,225
2,166
21,152
384,687
698,692
20,394
719,086
196,158
-
14,251
97,760
8,124
807
317,100
(107)
9,898
(903)
-
-
(807)
8,081
41,465
-
-
14,476
37,128
3,154
8,514
90,261
407,361
(301)
(127)
(995)
13,053
21,134
196,051
9,898
13,348
97,760
8,124
-
325,181
41,465
14,476
36,827
3,027
7,519
103,314
428,495
291,331
(740)
290,591
408,495
1,716
(120,338)
289,873
1,458
-
-
(736)
(736)
(4)
408,495
1,716
(121,074)
289,137
1,454
291,331
(740)
290,591
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Accrued revenue
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
Right of use assets
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Provisions
Deferred revenue
Income tax payable
Other current liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
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
72
helloworldlimited.com.au (iii) Consolidated statement of financial position as at 30 June 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Inventories
Derivative financial instruments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments accounted for using the equity method
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Provisions
Deferred revenue
Income tax payable
Other current liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
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
30 Jun 2019
Reported
$’000
AASB 16
Adjustment
$’000
30 Jun 2019
Restated
$’000
204,755
97,605
66,681
471
368
-
204,755
(464)
-
-
-
97,141
66,681
471
368
369,880
(464)
369,416
5,939
17,109
18,267
-
338,344
768
-
-
(659)
24,529
102
48
5,939
17,109
17,608
24,529
338,446
816
380,427
24,020
404,447
750,307
23,556
773,863
210,983
-
15,451
96,939
478
483
324,334
(39)
8,509
171
-
-
(483)
8,158
56,428
-
-
19,986
45,206
3,352
7,970
112,956
437,290
(542)
(348)
(2,819)
16,277
24,435
210,944
8,509
15,622
96,939
478
-
332,492
56,428
19,986
44,664
3,004
5,151
129,233
461,725
313,017
(879)
312,138
416,219
721
(105,411)
311,529
1,488
-
416,219
(28)
(844)
(872)
(7)
693
(106,255)
310,657
1,481
313,017
(879)
312,138
73
(iv) Consolidated statement of cash flows for the year ended 30 June 2019 (extract)
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST)
(3,330,740)
9,705
(3,321,035)
30 Jun 2019
Reported
$’000
AASB 16
Adjustment
$’000
30 Jul 2019
Restated
$’000
Finance costs paid
NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for property, plant and equipment (i)
NET FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Principal elements of lease payments
NET CASH USED IN FINANCING ACTIVITIES
NET DECREASES IN CASH AND CASH EQUIVALENTS
(2,244)
40,460
(933)
8,772
(3,177)
49,232
(8,266)
(30,283)
-
(10,376)
(199)
468
468
(7,798)
(29,815)
(9,240)
(9,240)
(9,240)
(19,616)
-
(199)
(i) Under AASB 16, make good assets are recognised in right of use assets at the commencement of the lease.
Additions relating to make good assets in financial year 2019 have been reclassed from property, plant and equipment
to right of use assets. As a result, payments relating to make good assets are recognised as cash flows from operating
activities.
3. Revenue
The disaggregation of revenue by key types is provided as follows:
CONSOLIDATED
2020
$’000
2019
$’000
191,470
257,765
40,170
24,463
21,899
43,581
32,754
17,877
278,002
351,977
324
2,313
1,548
4,185
282,187
558
3,442
1,585
5,585
357,562
Commissions
Transaction and services fees
Marketing related activities
Other revenue from contracts with customers
REVENUE FROM CONTRACTS WITH CUSTOMERS
Rents and sublease rentals
Finance income
Sundry income
OTHER REVENUE
REVENUE
74
helloworldlimited.com.au
4. Expense items
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE INCLUDES THE FOLLOWING SPECIFIC EXPENSE ITEMS:
Defined contribution superannuation expense
LTIP expense
Employee share plan expense
Other employee benefits expense including salaries
Government wage subsidy scheme (i)
TOTAL EMPLOYEE BENEFITS EXPENSE
Depreciation of property, plant and equipment (note 14)
Depreciation of right of use assets (note 15)
Amortisation of intangible assets (note 16)
TOTAL DEPRECIATION AND AMORTISATION
Impairment of investments accounted for using the equity method (note 13)
Impairment of right of use assets (note 15)
Impairment of commercial agreements (note 16)
Impairment of goodwill (note 16)
IMPAIRMENT OF NON-CURRENT ASSETS
Fair value adjustment on contingent consideration receivable (ii)
Fair value adjustment on redemption liability (iii)
FAIR VALUE ADJUSTMENTS RELATING TO FINANCIAL ASSETS AND LIABILITIES
Gain on disposal of the US Wholesale Division (note 37)
Gain on disposal of Insider Journeys business (note 37)
Profit on disposal of investments (v)
PROFIT ON DISPOSAL OF INVESTMENTS
Loss allowance on trade receivables and accrued revenue
Business acquisition related expenses
Franchise loyalty plan expense
Other provision
Payments relating to Tempo Holidays and Bentours collapse (iv)
Rent concessions (vi)
Restructuring costs (vii)
Employee benefits expense
CONSOLIDATED
2020
$’000
2019
Restated
$’000
(8,928)
(195)
(671)
(9,412)
(897)
-
(123,215)
(129,081)
12,692
-
(120,317)
(139,390)
(6,029)
(8,823)
(17,890)
(32,742)
(850)
(90)
(1,507)
(65,500)
(67,947)
(883)
3,600
2,717
1,075
-
-
1,075
(7,666)
(1,198)
(7)
(2,639)
(702)
977
(6,877)
(5,162)
(8,011)
(15,170)
(28,343)
-
-
-
-
-
-
2,400
2,400
-
1,993
20
2,013
(461)
(241)
(582)
-
-
-
-
(i) During the current year, Helloworld Travel Limited received government wage subsidies for eligible employees in both
Australia and New Zealand, in the form of JobKeeper and New Zealand wage subsidy payments. These subsidies were
made available to companies to assist with the financial impacts of the COVID-19 pandemic. The Government wage
subsidies have been recognised within employee benefits expenses in the consolidated statement of profit or loss and
other comprehensive income.
Fair value adjustments relating to contingent assets and liabilities
(ii) The contingent consideration receivable relating to the sale of Insider Journeys is a financial asset recorded at fair
value through profit or loss in accordance with applicable accounting standards. During the current year, $180,000 of
consideration was received from Insider Journeys. As at 30 June 2020, the contingent consideration receivable has been
remeasured to its fair value of $170,000 (2019: $1,233,000) and the resulting fair value change of $883,000 has been
recognised within operating expenses in the consolidated statement of profit and loss. Refer note 30: financial risk
management for further details.
75
(iii) The redemption liability relates to the put option liability to acquire the non controlling 40.0% ownership interest in
Asia Escape Holidays on 1 July 2022. The put option is a financial liability recorded at fair value through profit or loss in
accordance with applicable accounting standards. As at 30 June 2020, the redemption liability has been remeasured to
its fair value of $1.2 million (2019: $4.8 million) and the resulting fair value change of $3.6 million (2019: $2.4 million)
has been recognised within operating expenses in the consolidated statement of profit and loss. Refer note 30: financial
risk management for further details.
Other expenses and revenue items
(iv) During the current year, discretionary amounts of $0.7 million were paid to the Group’s retail agents that were
impacted by the collapse of Tempo Holidays and Bentours.
(v) In the prior year, Helloworld Travel disposed of its single investment property in Australia with a carrying value of
$175,000. The sale proceeds amounted to $195,000, resulting in a profit on sale of $20,000. The Group does not hold
any further investment properties.
(vi) Helloworld Travel received rent concessions from certain landlords as a direct result of the COVID-19 pandemic
and has elected to use the practical expedient available under Amendments to Australian Accounting Standards –
COVID-19 Related Rent Concessions. Rent concessions that have not resulted in a lease modification, are considered
variable lease payments. Any difference between the remeasurement of the lease liability and the right of use asset is
recognised within occupancy expenses in the consolidated statement of profit or loss and other comprehensive income.
(vii) In response to the change in the travel market due to the COVID-19 pandemic, Helloworld Travel has undertaken
initiatives to deliver cost savings and efficiencies while preserving the key operations to support the eventual recovery
of both domestic and international travel. Refer note 1(c) for further information.
5. Finance income and expense
RECOGNISED IN PROFIT OR LOSS
FINANCE INCOME RECOGNISED IN REVENUE
Finance expense (i)
Finance expense on lease liabilities
Finance expense on make good provisions
FINANCE EXPENSE
NET FINANCE INCOME RECOGNISED IN PROFIT BEFORE INCOME TAX EXPENSE
(i) Finance expense includes $0.3 million of non-cash amortised borrowing costs.
6. Operating segments
(a) Description of segments
$’000
2,313
(3,029)
(1,030)
(40)
(4,099)
(1,786)
CONSOLIDATED
2020
2019
Restated
$’000
3,442
(2,421)
(933)
-
(3,354)
88
The reporting structure is based on a geographical basis of where the Group’s businesses are managed. Internal reports
reviewed and used by the Chief Executive Officer and the 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.
76
helloworldlimited.com.au Australia and New Zealand segments each have retail distribution operations, air ticketing, wholesale and 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 and are reported within segment expenses. The Rest of
World segment consists of an inbound travel business in Fiji, and Tourist Transport Fiji (TTF), being a vehicle transport
service provider in Fiji. The Group disposed of its U.S Wholesale Division on 30 June 2020. This business previously
formed part of the Group’s Rest of World segment.
(b) Segment information provided to the CODMs
The CODMs assess the performance of the operating segments based on a financial measure of Underlying EBITDA,
which is not a measure prescribed by Australian Accounting Standards.
Underlying EBITDA represents earnings before interest expense, tax, depreciation and amortisation, adjusted to:
• include depreciation on right of use assets and interest expense on lease liabilities and make good provisions arising
from the application of AASB 16; and
• exclude large non-recurring items described in part (c) of this note.
A reconciliation of Underlying EBITDA to profit before income tax expense is provided in part (c) of this note.
Segment results for the Group are shown below:
CONSOLIDATED
YEAR ENDED 30 JUNE 2020
Commissions
Transaction and services fees
Marketing related activities
Other revenue from contracts with customers
REVENUE FROM CONTRACTS WITH CUSTOMERS
Other revenue
SEGMENT REVENUE
Segment expenses
Depreciation of right of use assets
Interest expense on lease liabilities
Equity accounted profits
Add back of trading losses relating to U.S Wholesale Division (i)
UNDERLYING EBITDA
CONSOLIDATED
YEAR ENDED 30 JUNE 2019
Commissions
Transaction and services fees
Marketing related activities
Other revenue from contracts with customers
REVENUE FROM CONTRACTS WITH CUSTOMERS
Other revenue
SEGMENT REVENUE
Segment expenses (i)
Depreciation of right of use assets
Interest expense on lease liabilities
Equity accounted profits
Add back of trading losses relating to U.S Wholesale Division (i)
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
152,801
34,224
4,445
191,470
35,475
18,756
18,776
225,808
3,530
229,338
(183,255)
(6,964)
(885)
1,246
-
39,480
4,328
5,530
496
44,578
497
45,075
(39,177)
(1,204)
(153)
-
-
4,541
367
177
2,627
7,616
158
7,774
40,170
24,463
21,899
278,002
4,185
282,187
(9,350)
(231,782)
(655)
(32)
-
2,284
21
(8,823)
(1,070)
1,246
2,284
44,042
Australia
$’000
New Zealand
$’000
Rest of World
$’000
Total
$’000
201,843
45,095
10,827
257,765
37,977
24,811
13,581
278,212
4,565
282,777
(214,853)
(6,019)
(680)
1,437
-
5,202
7,427
599
58,323
858
59,181
(46,129)
(1,232)
(184)
-
-
402
516
3,697
15,442
162
15,604
(16,140)
(760)
(69)
-
593
(772)
43,581
32,754
17,877
351,977
5,585
357,562
(277,122)
(8,011)
(933)
1,437
593
73,526
77
UNDERLYING EBITDA
62,662
11,636
(i) Trading losses relating to U.S Wholesale Division represents the EBITDA losses, excluding share service
allocations, associated with U.S Wholesale Division which was disposed of on the 30 June 2020.
(c) Other segment information
(i) EBITDA
A reconciliation of EBITDA to profit before income tax expense is provided as follows:
CONSOLIDATED
2020
2019
Restated
$’000
$’000
UNDERLYING EBITDA
Impairment of non-current assets (note 16)
Restructuring expense
Increase in loss allowance
Other provisions
Trading losses relating to U.S Wholesale Division
Business acquisition related and other expenses
Fair value adjustment on contingent consideration receivable (Insider Journeys)
Payments relating to Tempo Holidays and Bentours collapse
Fair value adjustment on redemption liability
Gain on disposal of the U.S Wholesale Division
Gain on disposal of Insider Journeys business
Gain on disposal of investments
TOTAL SIGNIFICANT ITEMS
Depreciation of property, plant and equipment
Amortisation of intangible assets
Finance expense on borrowings
PROFIT BEFORE INCOME TAX EXPENSE
44,042
73,526
(67,947)
(6,877)
(7,118)
(2,639)
(2,284)
(2,198)
(883)
(702)
3,600
1,075
-
-
(85,973)
(6,029)
(17,890)
(3,029)
(68,879)
-
-
-
-
(593)
(241)
-
-
2,400
-
1,993
20
3,579
(5,162)
(15,170)
(2,421)
54,352
Interest income on client funds is included within segment revenue and underlying EBITDA. Underlying EBITDA is
reconciled to profit before income tax expense.
(ii) Segment assets
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 $331.5 million (2019: $368.5 million).
Total non-current assets located in other countries total $30.7 million (2019: $35.1million). 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.
78
helloworldlimited.com.au 7. 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 17)
Increase/(decrease) in deferred tax liabilities (note 23)
DEFERRED INCOME TAX EXPENSE
$’000
5,361
(4,944)
689
1,106
4,573
(9,517)
(4,944)
(b) Reconciliation of income tax expense and tax at the statutory rate
CONSOLIDATED
2020
2019
Restated
$’000
9,912
5,701
696
16,309
(2,072)
7,773
5,701
PROFIT/(LOSS) BEFORE INCOME TAX EXPENSE
Tax at the statutory tax rate of 30%
Add/(deduct) tax effect of:
Gain on disposal of non-current assets
Non-deductible amortisation
Non-deductible non-cash impairment
Share based payment expense
Non-assessable income
Non-deductible other expenses
Tax losses
Differences in overseas tax rates
Tax offset for franked dividends from equity accounted investments
Under provision in prior year
INCOME TAX EXPENSE
(c) Tax expense relating to items of other comprehensive income
Cash flow hedges
TOTAL TAX (BENEFIT)/EXPENSE RELATING TO ITEMS OF OTHER COMPREHENSIVE INCOME
CONSOLIDATED
2020
$’000
(68,879)
(20,664)
2019
Restated
$’000
54,352
16,306
231
526
19,650
59
(1,198)
1,949
(18)
(100)
(18)
689
1,106
(604)
415
-
444
(840)
109
452
(240)
(429)
696
16,309
CONSOLIDATED
2020
$’000
2019
$’000
(109)
(109)
(214)
(214)
79
(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
2020
$’000
2019
$’000
-
-
171
51
All unused tax losses were incurred by non-Australian entities that are not part of the Australian tax consolidated group.
During the current year, Helloworld Travel divested its U.S Wholesale Division and undertook additional business
restructuring initiatives in Manila, Philippines and Mumbai, India. As a result, the unused tax losses for which no deferred
tax asset has been recognised by non-Australian entities will not be utilised in future periods by the 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.
8. Dividends paid and proposed
(a) Dividends
The amount of dividends paid during the year are:
Final dividend for year ended 30 June 2019 of 12.5 cents per share (2019: 11.0 cents per share),
distributed on 17 September 2019 (2019: 18 September 2018)
Final dividends associated with LTIP
Interim dividend for year ended 30 June 2020 of 9.0 cents per share (2019: 8.0 cents per share),
distributed on 19 March 2020 (2019: 15 March 2019)
Interim dividends associated with LTIP
DIVIDENDS PAID PER STATEMENT OF CASH FLOWS
CONSOLIDATED
2020
$’000
2019
$’000
15,590
(298)
11,225
(162)
26,355
13,696
(271)
9,961
(197)
23,189
All dividends paid or declared during the current year are fully franked.
The final dividend for the year ended 30 June 2019 was paid out of the 2019 financial year profits. The interim
dividend for the year ended 30 June 2020 was paid out of the 2020 financial half year profits.
No final dividend has been declared or proposed for the year ended 30 June 2020.
Pursuant to the Group’s financing arrangements, no dividends are permitted to be paid prior to December 2021 without
bank consent.
(b) Franking credits
The Group’s available franking credits are summarised below:
Franking credits available at the reporting date
Franking credits that will arise from income tax (receivable)/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
80
CONSOLIDATED
2020
$’000
2019
$’000
20,231
5,255
-
25,486
33,157
(1,014)
(6,678)
25,465
helloworldlimited.com.au 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. The Group is not
permitted to pay dividends prior to 31 December 2021 without the approval of Westpac Banking Corporation. In
accordance with tax consolidation legislation, the Company, as the head entity in the Australia tax consolidated
group, has assumed the benefit of franking credits of all entities.
9. Earnings per share
(a) Basic and diluted earnings per share (EPS)
Basic EPS attributable to the ordinary equity holders of the Company
Diluted EPS attributable to the ordinary equity holders of the Company
(b) Reconciliation of earnings used in calculating EPS
Profit/(loss) after income tax expense
Adjusted for profit/(loss) attributable to the non-controlling interest
NET PROFIT/(LOSS) FOR THE YEAR USED IN CALCULATING EPS
(c) Weighted average number of shares (WANOS)
WANOS USED IN CALCULATING BASIC EPS
Adjustment for shares issued under franchise loyalty plan
Adjustment for shares issued under LTIP
WANOS USED IN CALCULATING DILUTED EPS
CONSOLIDATED
2020
cents
(56.5)
(56.5)
2019
Restated
cents
31.4
30.8
CONSOLIDATED
2020
$’000
(69,985)
111
(69,874)
2019
Restated
$’000
38,043
(35)
38,008
CONSOLIDATED
2020
Number of
shares
2019
Number of
shares
123,737,691
120,884,688
2,466
258,456
-
2,200,000
123,740,157
123,343,144
Shares issued under the franchise loyalty plan and the LTIP prior to vesting conditions being met are excluded from basic EPS
due to the terms and conditions attached to these shares.
The franchise loyalty shares prior to vesting date are included in diluted EPS, reflecting the forward non-market vesting
conditions and the nil consideration paid on the issue of the shares. At 30 June 2019, 30,000 shares issued under the franchise
loyalty plan had not vested and were subject to future non-market conditions. These shares subsequently vested on 31 July
2019, with no further shares remaining under the franchise loyalty plan at 30 June 2020.
The LTIP shares prior to vesting date are included in diluted EPS, when the forward market vesting conditions attached to
these shares have been met. In the prior year, this included 2,200,000 shares in relation to the LTIP share allocation granted on
1 July 2016, which vested on 1 July 2019.
The LTIP shares prior to vesting date are excluded from diluted EPS, until the forward market vesting conditions attached to
these shares have been met. For the year ended 30 June 2020, Helloworld Travel has a weighted average number of potential
ordinary shares relating to the LTIP of 980,685 (2019: 1,204,384) which have been excluded from diluted EPS. At 30 June
2020, there are 850,000 (2019: 1,050,000) shares issued under the LTIP that have that have not yet vested and are subject to
future performance criteria.
Refer note 38: share based payments for further details on the nature of shares issued under the franchise loyalty plan and the LTIP.
81
(d) Information concerning the classification of securities
As at 30 June 2020, the Company had 124,720,842 (2019: 124,658,076) ordinary shares on issue. Refer note 25: issued
capital for further details on the movement of ordinary shares during the current year.
10. Cash and cash equivalents
Cash at bank and on hand (i)
Restricted cash at bank (ii)
CASH AND CASH EQUIVALENTS
(i) Cash at bank and on hand
Includes client cash which is not IATA restricted.
(ii) Restricted cash at bank
CONSOLIDATED
2020
$’000
2019
$’000
103,510
28,351
131,861
74,713
130,042
204,755
Includes cash held of $24.4 million (2019: $130.0 million) within legal entities of the Group that have International
Air Transport Association (IATA) requirements as part of providing ticketing travel arrangements. Qantas Holidays
Limited was IATA restricted in the prior year (representing $81.0 million of cash at 30 June 2019). $4.0 million
(2019: nil) relates to amounts borrowed to fund the TravelEdge acquisition. Payment is subject to satisfaction of
certain conditions.
11. Trade and other receivables
CONSOLIDATED
2020
2019
Restated
$’000
Trade receivables
Loss allowance
TRADE RECEIVABLES NET OF LOSS ALLOWANCE
Prepayments
Other receivables
CURRENT TRADE AND OTHER RECEIVABLES
Loans to related parties
Contingent consideration receivable (i)
Other receivables
NON-CURRENT TRADE AND OTHER RECEIVABLES
$’000
27,986
(4,517)
23,469
9,062
7,460
16,522
39,991
4,397
170
125
4,692
76,715
(724)
75,991
14,137
7,013
21,150
97,141
4,501
1,233
205
5,939
Trade receivables are non-interest bearing and are generally on 7 to 30 day payment terms from the date of invoice.
Fair value and credit risk
Due to the short term nature of 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.
(i) The contingent consideration receivable relates to deferred amounts owed to Helloworld Travel from the sale of
the Insider Journeys business on 30 June 2019, which is contingent on future trading performance. The contingent
consideration receivable is a financial asset measured at fair value through profit or loss, refer note 30: financial risk
management for more information.
82
helloworldlimited.com.au
Helloworld Travel has also considered the prevailing level of uncertainty in the travel industry and the impact of
COVID-19 on Helloworld Travel's ability to recover outstanding receivables from customers. These factors have been
included in the expected credit loss provision, refer note 30: financial risk management for more information.
Credit, foreign exchange and interest rate risk
Details regarding credit, foreign exchange and interest rate risk exposure are disclosed in note 30: financial risk
management.
12. Accrued Revenue
Accrued override commission
Other accrued revenue
Loss allowance
ACCRUED REVENUE
CONSOLIDATED
2020
2019
Restated
$’000
54,685
11,996
-
66,681
$’000
34,773
3,409
(3,700)
34,482
Accrued revenue relates to amounts owed to the Group at balance sheet date that have not yet been invoiced to the
customer or received as cash from the customer. The Group’s accrued revenue consists of:
• Accrued override commission, which relates to the estimate of override commission earned during the respective
customer contract period, but not yet invoiced at balance date; and
• Other accrued revenue, which relates to other revenue earned, but not yet invoiced.
Accrued override commission is considered a contract asset in accordance with applicable accounting standards. The
Group generates override commission from its contracts with airlines and leisure partners and the revenue accrual process
is inherently judgemental, refer note 1(d): use of critical accounting estimates and judgements for further details.
Once invoiced, override commissions are settled in line with the credit terms from the invoice date under normal
commercial terms and conditions.
The contract periods with airline and leisure partners for override commission varies, however in most cases is twelve
months. As a result, the accrued revenue recorded on the consolidated statement of financial position as at 30 June
is invoiced and settled in the following financial year. The estimated accrued override commission is subsequently
adjusted for any differences between Helloworld Travel’s initial estimate and finalisation with the respective
contractual partner. These prior year true ups mainly result from a change in the achievement of performance tiers
which were estimated while the contracts were in progress. Commission revenue adjustments in the current year of
$1.3 million (2019: $2.3 million) relate to prior year revenue true ups from the finalisation of commission revenue
that was estimated at the end of the financial year.
As at 30 June 2020, the balance of accrued override commission has decreased by $19.9 million to $34.8 million
reflecting the impact of COVID-19.
Helloworld Travel has also considered the prevailing level of uncertainty in the travel industry and the impact of
COVID-19 on Helloworld Travel's ability to recover outstanding override commissions from all airlines. These
factors have been included in the expected credit loss provision, refer note 30: financial risk management for more
information.
83
13. Investments accounted for using the equity method
Investment in associates and joint ventures
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 (i)
Hunter Travel Group Pty Ltd
HTG Australia Pty Ltd
Cooney Investments Pty Ltd
Inspire Travel Management Pty Ltd
Australia
Australia
Australia
Australia
Australia
CONSOLIDATED
2020
$’000
2019
$’000
17,436
17,436
17,109
17,109
OWNERSHIP INTEREST
2019
%
2020
%
50.0
12.0
25.0
20.0
40.0
50.0
12.0
25.0
20.0
40.0
(i) The majority of the balance as at 30 June 20 relates to Helloworld Travel's investment in Mobile Travel Holdings Pty
Limited and its subsidiaries, refer section (c).
(b) Movement in carrying amounts
OPENING BALANCE
Share of profit after income tax expense (i)
Dividends received
Impairment (i)
Other movements
CLOSING BALANCE
(i) Share of profit after income tax expense
CONSOLIDATED
2020
$’000
2019
$’000
17,109
1,246
(68)
(850)
(1)
17,546
1,437
(1,876)
-
2
17,436
17,109
During the current year, investments accounted for using the equity method were impacted by COVID-19. This resulted
in a decrease in share of profit after income tax expense in the current year. In addition, Helloworld Travel recognised an
impairment charge due to a decrease in future forecasted cash flows.
84
helloworldlimited.com.au (c) Investment in Mobile Travel Holdings Pty Limited and its subsidiaries (MTA)
MTA’s mobile travel consultants provide home based travel consulting services throughout Australia.
Helloworld Travel has a call option to acquire the remaining 50.0% ownership interest in MTA on 1 December 2021.
The associate party has a put option to sell its remaining 50.0% ownership interest to Helloworld Travel 30 days after
the expiry of the call option period. Refer note 31(c)(i) for more information.
(i) Reconciliation of the Group's investment in MTA
Reconciliation of movement of investment in MTA:
OPENING CARRYING AMOUNT
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
Intangible assets acquired on acquisition
CLOSING CARRYING AMOUNT
(ii) Summarised MTA financial information
CONSOLIDATED
2020
$’000
2019
$’000
14,878
1,270
-
16,148
15,310
1,318
(1,750)
14,878
CONSOLIDATED
2020
$’000
2019
$’000
2,252
13,896
16,148
982
13,896
14,878
The tables below 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 the 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
2020
$’000
18,132
726
18,858
14,172
182
14,354
4,504
2019
$’000
15,883
1,252
17,135
14,816
356
15,172
1,963
85
Summarised statement of profit or loss and other comprehensive income
Revenue
Operating expenses
Depreciation and amortisation
PROFIT BEFORE INCOME TAX
Income tax expense
PROFIT AFTER INCOME TAX
Other comprehensive income
TOTAL COMPREHENSIVE INCOME
(d) Contingent liabilities
MTA
2019
Restated
$’000
10,417
(6,112)
(541)
3,764
(1,129)
2,635
-
2,635
2020
$’000
9,607
(5,418)
(554)
3,635
(1,095)
2,540
-
2,540
There are no contingent liabilities recognised by an associate or joint venture for which the Group has a legal obligation to settle.
14. Property, plant and equipment
Land and
buildings
$’000
Equipment
including motor
vehicles
$’000
Leasehold
improvements
$’000
642
-
642
21
-
-
22
(10)
675
731
(56)
675
675
-
-
-
16
(11)
680
749
(69)
680
9,283
-
9,283
4,815
893
(2)
150
(3,561)
11,578
25,153
(13,575)
11,578
11,578
2,793
233
(3)
(45)
(4,344)
10,212
26,878
(16,666)
10,212
4,218
(279)
3,939
2,962
-
(19)
64
(1,591)
5,355
9,666
(4,311)
5,355
5,355
85
60
-
(21)
(1,674)
3,805
9,176
(5,371)
3,805
Total
$’000
14,143
(279)
13,864
7,798
893
(21)
236
(5,162)
17,608
35,550
(17,942)
17,608
17,608
2,878
293
(3)
(50)
(6,029)
14,697
36,803
(22,106)
14,697
CONSOLIDATED
BALANCE AT 1 JULY 2018
Change in accounting policy (note 2)
BALANCE AT 1 JULY 2018 RESTATED
Additions (restated)
Additions through business combinations (note 36)
Disposals
Foreign currency differences
Depreciation charge (note 4) - (restated)
BALANCE AT 30 JUNE 2019
AT 30 JUNE 2019
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2019
Additions
Additions through business combinations (note 36)
Disposals
Foreign currency differences
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2020
AT 30 JUNE 2020
Cost
Accumulated depreciation
NET BOOK AMOUNT
86
helloworldlimited.com.au 15. Right of use assets
CONSOLIDATED
BALANCE AT 1 JULY 2018
Additions
Additions through business combinations (note 36)
Disposals (iii)
Disposals through business sales
Modifications to lease terms
Variable lease payments
Foreign currency differences
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2019
AT 30 JUNE 2019
Cost
Accumulated depreciation
NET BOOK AMOUNT
BALANCE AT 1 JULY 2019
Additions (iii)
Additions through business combinations (note 36)
Disposals (iii)
Modifications to lease terms (iii)
Foreign currency differences
Impairment (ii) (note 4)
Depreciation charge (note 4)
BALANCE AT 30 JUNE 2020
AT 30 JUNE 2020
Cost
Accumulated depreciation
NET BOOK AMOUNT
(i) Sublease of right of use assets
Property
$’000
Motor Vehicles
$’000
Total
$’000
21,222
11,880
403
(1,196)
(212)
(1)
79
365
(8,011)
24,529
78
16
-
-
-
-
-
4
(56)
42
171
(129)
42
47,936
(23,407)
24,529
42
58
-
-
(1)
(2)
-
(47)
50
69
(19)
50
24,529
3,728
2,968
(1,888)
4,203
(89)
(90)
(8,823)
24,538
47,238
(22,700)
24,538
21,144
11,864
403
(1,196)
(212)
(1)
79
361
(7,955)
24,487
47,765
(23,278)
24,487
24,487
3,670
2,968
(1,888)
4,204
(87)
(90)
(8,776)
24,488
47,169
(22,681)
24,488
During the current year, Helloworld Travel recognised $0.3 million (2019: $0.6 million) of income relating to subleased right of use
assets. The sublease ceased on 6 February 2020 and $0.9 million of right of use assets were disposed of during the current year.
(ii) Impairment of right of use assets
As a result of COVID-19, right of use assets have been assessed for impairment. The recoverable amount of individual right
of use assets cannot be estimated because they do not generate individual cash flows, therefore right of use assets have
been assigned to their corresponding CGU. During the current year, right of use assets relating to ROW operations in India
have been impaired to nil (2019: $1.4 million). As a result, $0.1 million has been recognised as an impairment loss in the
profit or loss in the current year. Refer to note 16(c) for the key assumptions used in the calculation of impairment.
(iii) Property - right of use assets
Property right of use assets relate to the benefits derived from various leased offices under non-cancellable agreements.
During the current year, Helloworld Travel entered into an additional lease and renewed existing leases resulting in additions
of $3.7 million. In addition, the Group exited a lease, restructured offices in India and disposed of the U.S Wholesale Division
resulting in disposals of $1.9 million. Due to COVID-19, a number of leases were renegotiated which resulted in modifications
of $4.2 million. The difference between the remeasurement of the right of use assets and lease liabilities of $0.4 million was
recognised in the profit or loss in the current year.
87
16. Intangible assets
CONSOLIDATED
Retail
distribution
systems
$’000
Goodwill
$’000
Agent
network
$’000
Commercial
agreements
$’000
Customer
bases
$’000
Brand
names and
trademarks
$’000
Technology
assets
$’000
Total
$’000
BALANCE AT 1 JULY 2018
178,055
104,400
8,310
Additions
Additions through internally
generated projects
Adjustments to business
combinations – FY18
Additions through business
combinations – FY19 (ii) (note 36)
– (restated)
Disposals
Foreign currency differences
Transfer in/(out)
Amortisation charge (note 4)
-
-
(18,527)
6,648
-
1,440
90
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(54)
BALANCE AT 30 JUNE 2019 RESTATED 167,706
104,400
8,756
1,704
4,996
-
-
-
28
-
(2,121)
21,207
500
16,600
AT 30 JUNE 2019
Cost (restated)
491,411
104,400
8,810
24,260
Accumulated amortisation and
impairment
(323,705)
-
(54)
NET BOOK AMOUNT RESTATED
167,706
104,400
8,756
BALANCE AT 1 JULY 2019 RESTATED
167,706
104,400
8,756
Additions (i)
Additions through internally
generated projects (i)
Adjustments to business
combinations – FY19 (ii) (note 36)
Additions through business
combinations – FY20 (note 36)
Foreign currency differences
Impairment (note 4)
Amortisation charge (note 4)
-
-
(1,373)
21,145
(524)
(65,500)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50)
BALANCE AT 30 JUNE 2020
121,454
104,400
8,706
(3,053)
21,207
21,207
2,904
-
-
-
(145)
(1,507)
(3,383)
19,076
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,506
7,200
-
-
(282)
8,424
1,408
33,348 327,225
-
-
-
-
-
-
-
6,011
11,007
8,327
8,327
231
(1,196)
120
(12)
29
(90)
6,768
(12)
1,497
-
(243)
(12,752) (15,170)
1,165
35,212 338,446
9,143
85,883 723,907
(7,978)
(50,671) (385,461)
1,165
35,212 338,446
1,165
35,212 338,446
-
-
857
500
-
-
7,861
10,765
6,778
6,778
-
990
234
255
29,079
(414)
- (67,007)
(165)
(14,010) (17,890)
2,357
36,330 300,747
AT 30 JUNE 2020
Cost
Accumulated amortisation and
510,673
104,400
8,810
26,951
8,706
10,500
98,106 768,146
impairment
NET BOOK AMOUNT
(389,219)
-
121,454
104,400
(104)
8,706
(7,875)
19,076
(282)
8,424
(8,143)
(61,776) (467,399)
2,357
36,330 300,747
(i) During the current year, $1.0 million of commercial agreements additions were funded by shares which were issued
as part of the purchase consideration for the commercial agreement with Travel Brokers, refer note 25: issued capital.
As a result, $16.6 million of cash payments for intangibles were recognised in investing activities in the consolidated
statement of cash flows.
(ii) ) During the current year, the Show Group acquisition accounting was finalised resulting in an adjustment to goodwill
of $(1.4) million, refer note 36 for more information. Included within this adjustment to goodwill was the finalisation
of the acquisition accounting resulting $(1.5) million decrease in goodwill offset by a restatement of the goodwill
recognised on acquisition in the prior year, amounting to $0.1 million. The prior year restatement relates to the adoption
of AASB 16 in the current year.
88
helloworldlimited.com.au (a) Nature of intangible assets
(i) Goodwill and retail distribution systems
Goodwill and retail distribution systems were acquired as part of business combinations and are not amortised for
accounting purposes. Further details on the nature of these intangible assets and the results of the annual impairment
testing is outlined in section (b) of this note.
In the prior year, adjustments to goodwill through FY18 business combinations of $(18.5) million relates to the finalisation
of the acquisition accounting for the Magellan Travel Group; Flight Systems Group; and Asia Escape Holidays. These
adjustments mainly relate to the recognition and measurement of separate identifiable intangible assets measured at fair
value which were disaggregated from provisional goodwill. The additions to goodwill through FY19 business combinations
of $6.5 million relates to provisional goodwill acquired from the acquisition of Show Group amounting to $5.6 million and
Williment Travel Group amounting to $0.7 million. In addition, $0.3 million of provisional goodwill was recognised from the
acquisition of a former Australian retail franchise store for nil consideration.
In the current financial year, adjustments to goodwill through the FY19 business combinations of $(1.4) million relates to
the finalisation of the acquisition accounting for Show Group of $(1.5) million and Williment Travel Group of $0.1 million.
The additions to goodwill through FY20 business combinations of $21.1 million relates to goodwill acquired from the
acquisition of TravelEdge amounting to $19.2 million and the provisional goodwill acquired from the acquisition of Atlas
Limited amounting to $1.9 million.
In accordance with applicable accounting standards, Helloworld Travel has 12 months from the date of acquisition to
finalise the acquisition accounting. Refer note 36: business acquisitions for details on the acquisitions undertaken.
(ii) Agent networks
The agent networks represent agreements with travel agents for the provision of Wholesale and Inbound travel products such
as packaged tours. The agent network intangible assets have been acquired as part of business combinations.
The agent networks acquired of $8.8 million includes $8.3 million relating to the agent network acquired from the AOT merger
in FY16. This asset is considered an indefinite life asset and not amortised for accounting purposes. Further details on the
nature of this intangible asset and the results of the annual impairment testing is outlined in section (b) of this note.
In the prior year, $0.5 million relating to the Asia Escape Holidays agent network was disaggregated from provisional goodwill
and measured at fair value. The agent network of Asia Escape Holidays is a separately identifiable intangible asset that is
being amortised over its useful life of 10 years.
(iii) Commercial agreements
Commercial agreements represent the value attributable to agreements entered into with travel agents, servicing leisure and
corporate travel, that are part of the Helloworld Travel member network. In addition, this intangible asset category includes
long term supplier agreements relating to revenue contracts that were acquired as part of a business combination.
In the prior year, $16.6 million of commercial agreements relating to the Magellan Travel Group acquisition was disaggregated
from provisional goodwill and is being amortised over its useful life of 12 years.
In the current year, Helloworld Travel has entered into agreements for the distribution of travel products as part of the Group’s
continued distribution expansion. The New Zealand commercial agreements entered into, amounting to $2.9 million (2019:
$5.0 million), are being amortised over the contracted term of the applicable agreement (between 3 and 5 years).
In addition, as a result of COVID-19, commercial agreements have been assessed for impairment. The recoverable amount
of individual commercial agreements are determined based on their fair value less costs to sell. During the current year, New
Zealand commercial agreements have been impaired. As a result, $1.5 million has been recognised as an impairment loss in
the profit or loss in the current year.
89
(iv) Customer bases
Customer bases represents the value attributable to key customer relationships with within the corporate business. The
customer bases intangible assets have been acquired as part of business combinations. During the current year, $1.5 million
relating to Show Group’s customer relationships and $7.2 million relating to TravelEdge’s customer relationships were
disaggregated from provisional goodwill and are being amortised over their useful life of 8 years and 14 years respectively.
(v) Brand names and trademarks
Brand names and trademarks are intangible assets acquired as part of past business acquisitions and include the wholesale
business brands which are being amortised over their respective useful life of 20 years. In addition, $0.9 million relating to
Show Group’s recognisable brand name and $0.5 million relating to TravelEdge’s recognisable brand name were disaggregated
from provisional goodwill during the current year and are being amortised over their useful life of 20 years and 10 years
respectively.
(vi) Technology assets
Technology assets consist of external software, website and other technology assets that were acquired through
external suppliers or via business combinations, which provide future economic benefits to the Group. In addition,
technology assets also include capitalised internal labour costs incurred by the Group in the development and
enhancement of the Group’s technology platforms.
During the prior year, Helloworld Travel finalised the valuation of the technology assets acquired from the acquisition of
the Flight Systems Group. The technology acquired of $4.0 million, provisionally determined at $3.8 million as at 30 June
2018, relates to technology developed for the Skiddoo travel booking system and related flight distribution systems
that enables customers to access travel related products via the Skiddoo website and software systems.
Technology assets are amortised over a useful life of 2.5 years to 5 years, except for the booking system and related
website technology acquired from the Flight Systems Group that is being amortised over 10 years.
(b) Indefinite life intangible assets
(i) Goodwill by cash generating unit (CGU) group
Australia retail distribution operations
Australia wholesale and inbound
Australia travel management
New Zealand
GOODWILL, NET OF IMPAIRMENT
CONSOLIDATED
2020
$’000
34,610
43,518
29,101
14,225
2019
Restated
$’000
34,610
95,196
25,102
12,798
121,454
167,706
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 expected to benefit from the business combination.
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. TravelEdge Group, acquired on 1
October 2019, is reported as part of the Australia travel management CGU. The New Zealand CGU equates to the New
Zealand reportable segment for management reporting purposes, and includes Atlas Limited which was acquired on 1
October 2019. There is no goodwill allocated to the Rest of World CGU, which equates to the Rest of World reportable
segment for management reporting purposes.
The recoverable amount of the Group’s CGU’s is determined based on the value in use calculations given the Group
derives its value through use and has no intention to sell these assets. The key assumptions used in the calculation are
outlined in section (c).
90
helloworldlimited.com.au (ii) Retail distribution systems
Retail distribution systems
Magellan distribution systems
TOTAL RETAIL DISTRIBUTION SYSTEMS – INDEFINITE LIFE
CONSOLIDATED
2020
$’000
2019
$’000
97,400
7,000
97,400
7,000
104,400
104,400
Retail distribution system assets are acquired as part of business acquisitions undertaken and result in separate
identification and valuation of indefinite life intangible assets.
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.
The recoverable amount of the retail distribution systems has been assessed at 30 June 2020 using an excess
earnings calculation methodology. The key assumptions used in the calculation are outlined in section (c).
The impairment testing undertaken for the year ended 30 June 2020 supports the carrying value of the retail
distribution systems and no impairment was recognised.
(iii) Agent network
Agent network – indefinite life
CONSOLIDATED
2020
$’000
2019
$’000
8,310
8,310
The indefinite life 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 wholesale and inbound 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 provide future benefits and is entirely allocated to the Australia
wholesale and inbound CGU.
The recoverable amount of the agent network has been assessed at 30 June 2020 using an excess earnings calculation
methodology. The key assumptions used in the calculation are outlined in section (c).
The impairment testing undertaken for the year ended 30 June 2020 supports the carrying value of the agent network and
no impairment was recognised.
91
(c) Impairment losses recognised during the year
The recoverable amount of the Group’s CGUs (including the carrying value of right of use assets) and the Group’s
investment in MTA is determined based on the value in use calculations given the Group derives its value through use
and has no intention to sell these assets. These calculations use cash flow projections for the next five financial years
and a steady state terminal value calculation at the end of year 5. There were no changes to valuation methodology in
the current financial year.
The financial performance of the Group is significantly related to demand for domestic and international travel.
COVID-19 has caused unprecedented impacts to travel and tourism as a result of border closures, mandatory quarantine
periods and restrictions on domestic and international travel. As a consequence, the Group has recognised a total
impairment loss of $67.9 million as outlined below.
The impairment charge relating to goodwill and commercial agreements has no impact on the Group’s banking
covenants.
YEAR ENDED 30 JUNE 2020
GOODWILL
Australia Wholesale and Inbound (i)
TravelEdge (ii)
IMPAIRMENT LOSS RELATING TO GOODWILL
Commercial Agreements
Right of use assets
IMPAIRMENT LOSS RELATING TO NON-CURRENT ASSETS
Investments accounted for using the equity method (note 13)
TOTAL IMPAIRMENT LOSS
Impairment of
non-current assets
$’000
51,800
13,700
65,500
1,507
90
67,097
850
67,947
(i) Australia wholesale and inbound: The Group’s Australia wholesale and inbound CGU is predominantly leveraged
to international travel and is therefore expected to generate materially lower cash flows (relative to pre-COVID-19
levels) over coming years.
(ii) TravelEdge Group: TravelEdge Group was acquired on 1 October 2019 and prior to COVID-19, was expected to
contribute earnings and cash flows commensurate with the purchase price. In light of COVID-19, TravelEdge Group’s
near-term cash flows will be below those assumed at the time of acquisition. TravelEdge Group historically derived
around 30% of its TTV from international travel. AASB 136 Impairment of Assets requires TravelEdge Group to be
tested for impairment immediately before being absorbed into the Australia travel management CGU.
92
helloworldlimited.com.au
Key assumptions
The Group’s rationale and explanation of the assumptions used in the value in use calculations are described below.
AREA
COMMENTARY
DOMESTIC TRAVEL RESTRICTIONS
INTERNATIONAL TRAVEL RESTRICTIONS
TOTAL TRANSACTION VALUE (TTV)
Australia retail distribution operations CGU
The impact of COVID-19 has continued to evolve. A Stage 4 lockdown remains in place across
parts of Victoria, including Melbourne. Domestic borders within Australia remain constrained.
In August 2020, New Zealand reimposed strict lockdowns. These actions adversely impacted
domestic travel and tourism. The Group’s forecasts assume that current domestic border
restrictions remain in place through to the end of 2020.
The Group’s forecasts assume that current restrictions on Australian residents travelling
overseas will be extended to the end of 2020. Trans-Tasman travel is assumed to commence in
early 2021, and will grow as a proportion of TTV when compared to historical levels. International
travel is forecast to gradually increase from July 2021 which is predicated upon further easing
of international border restrictions. In the absence of a vaccine, international border openings
are likely dependent on containment of COVID-19 in such countries and the establishment of
additional screening in airports and ports which are currently being explored by international
agencies such as IATA and the World Health Organisation.
The majority of TTV has historically been derived from outbound international travel.
FY21 TTV is forecast to be 88.1% lower than FY19 levels, before gradually recovering to
FY19 levels by FY25, consistent with IATA’s July 2020 estimates. IATA updated their 2020
estimates in September which did not change significantly from their previous estimates.
These changes would have an immaterial impact on Helloworld Travel's impairment
calculations.
Australia wholesale and inbound CGU
The majority of TTV has historically been derived from international travel. FY21 TTV forecast to
be 93.0% lower than FY19 levels. FY25 TTV is expected to approximate FY19 levels.
Australia travel management CGU
(excluding TravelEdge)
New Zealand
TravelEdge
REVENUE MARGINS
OPERATING EXPENSES
Employee benefits expenses
FY21 TTV forecast to be 49.7% lower than FY19 levels. Relative to FY19 levels, TTV is
forecast to recover to FY19 levels by FY23. This CGU has a higher relative proportion of
domestic travel by corporate customers when compared to the Australia retail distribution
operations CGU and Australia wholesale and inbound CGU.
The New Zealand CGU comprises inbound and outbound leisure and corporate travel.
FY21 TTV forecast to be 86.6% lower than FY19 levels. Due to strong growth in TTV pre
COVID-19, the forecast recovery results in FY23 TTV exceeding that achieved in FY19.
FY21 TTV forecast to be 61.6% lower than FY19 levels. Relative to FY19 levels, TTV is
forecast to recover to FY19 levels by FY25. This CGU has a higher relative proportion of
domestic travel by corporate customers similar to the Australia travel management CGU.
Revenue margins are forecast to remain at historical levels for each revenue stream, allowing
for changes in TTV mix within the respective CGU.
Employee benefits expenses are forecast based on the significantly reduced cost structure
implemented as a result of COVID-19 and are net of JobKeeper subsidy which is assumed
to be collected through to cessation of the benefit in March 2021. Expenditure is forecast
to increase in dollar terms from FY21 to FY25 in line with the forecast TTV trends outlined
above, assuming further attrition and the extension of a reduced workforce until travel
returns. As a percentage of revenue, employee benefits expenses are forecast to revert to
pre- COVID-19 levels between FY22 and FY25.
Other expenses
Variable costs have been forecast as a percentage of TTV or revenue, based on historical trends.
TAX
CAPITAL EXPENDITURE
WORKING CAPITAL
LONG-TERM GROWTH
DISCOUNT RATES
Fixed costs are forecast to remain at historical levels, adjusted only for discretionary
expenditure and committed cost reductions.
Tax is forecast based on the prevailing corporate tax rates that apply to the CGU.
Forecast capital expenditure is based on historical levels, adjusted to exclude relocation
costs and expansion or growth related items which have been incurred in prior years.
Working capital movements are forecast net of movements in client cash. Working capital is
forecast based on forecast revenues. Employee leave entitlements are forecast to reduce
(resulting in cash outflows) through attrition between FY21 – FY25 as the Group’s workforce
reduces to levels commensurate with TTV.
The terminal value calculations have an equivalent revenue and operating expense growth
assumption of 2.0% (2019: 2.5%), with the exception of Australia Wholesale and Inbound
CGU 0.5% (2019: 2.5%).
Revenue and operating expense growth projections have been benchmarked against long-
term inflation estimates.
Discount rates applied in the testing of recoverable amounts reflect the post-tax weighted
average cost of capital. An 11.5% discount rate has been applied to the respective CGU’s
with goodwill allocated (2019: 10.0%).
The increase in the post-tax discount rate applied in the current year reflects the estimation
uncertainty resulting from COVID-19.
93
Sensitivity analysis
It is not certain how long the current domestic and international travel restrictions will continue, and the recovery
profile as travel restrictions are eased. The following outlines the impacts of changes in material assumptions.
The recoverable amount is based on operating and cashflow performance stabilising, however the timing of cashflow
benefits arising from initiatives could be influenced by market conditions. The recoverable amount is sensitive to
changes in all of the key assumptions. The impact of these changes in key assumptions is shown in the table below and
has been calculated in isolation from other changes.
RESULTANT IMPAIRMENT CHANGE
TTV reduction to key
assumption (notes i and ii)
5.0%
Long-term growth
decrease
0.5%
Discount rate
increase
0.5%
GOODWILL
Australia retail distribution operations
No impairment
No impairment
No impairment
Australia wholesale and inbound
Additional impairment of
$11.5 million
Additional impairment of
$2.2 million
Additional impairment of
$3.2 million
Australia travel management
No impairment
No impairment
No impairment
TravelEdge
New Zealand
MTA
Additional impairment of
$1.4 million
Additional impairment of
$0.4 million
Additional impairment of
$0.6 million
No impairment
Impairment
of $0.4 million
No impairment
Impairment
of $0.3 million
No impairment
Impairment
of $0.5 million
(i) Total Transaction Value (TTV) is a non-statutory measure. 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. TTV does not represent revenue in accordance with
Australian Accounting Standards. TTV does not represent Group cash inflows as some transactions are settled directly
between the customer and the supplier.
(ii) A reduction in forecast TTV has a corresponding impact on forecast revenues and variable operating expenditures,
working capital and tax.
Significant judgements or estimates
The allocation of goodwill to the cash-generating units as well as the computation of the recoverable amount is subject
to the judgement of management. This encompasses the estimation of future cash flows, the determination of the
discounting rate, and the growth rates on the basis of historical data and current forecasts.
94
helloworldlimited.com.au 17. Deferred tax assets
(a) Deferred tax assets
Employee benefits
Payables and accruals
Property, plant and equipment
Lease liabilities
Tax losses
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
2020
2019
Restated
$’000
$’000
6,644
7,636
695
8,854
667
2,606
27,102
(27,102)
-
16,793
10,309
27,102
5,138
11,452
1,715
8,549
2,054
1,486
30,394
(29,578)
816
19,322
11,072
30,394
CONSOLIDATED
Employee
benefits
$’000
Payables and
accruals
$’000
Property
plant and
equipment
$’000
Lease
liabilities
$’000
Tax losses
$’000
Other
$’000
Total
$’000
BALANCE AT 1 JULY 2018 RESTATED
4,515
11,918
1,399
7,312
1,837
4,559
31,540
(Charged)/credited
- to profit or loss (restated)
- to other comprehensive income
Additions through business combinations
BALANCE AT 30 JUNE 2019 RESTATED
191
-
432
5,138
(1,022)
316
1,237
217
1,133
2,072
-
556
-
-
-
-
-
-
(4,206)
(4,206)
-
988
11,452
1,715
8,549
2,054
1,486
30,394
BALANCE AT 1 JULY 2019 RESTATED
5,138
11,452
1,715
8,549
2,054
1,486
30,394
(Charged)/credited
- to profit or loss
- to other comprehensive income
Additions through business combinations
BALANCE AT 30 JUNE 2020
1,506
(5,189)
(1,020)
305
(1,387)
1,212
(4,573)
-
-
6,644
-
1,373
7,636
-
-
-
-
-
-
(92)
-
(92)
1,373
695
8,854
667
2,606
27,102
95
18. Trade and other payables
Trade payables
Accruals (i)
Other payables
TRADE AND OTHER PAYABLES
CONSOLIDATED
2020
2019
Restated
$’000
169,265
30,035
11,644
210,944
$’000
57,556
27,390
9,021
93,967
Trade creditors are non-interest bearing and are normally settled within 7 to 30 day payment terms from the date of
invoice. Non trade payables and accruals are non interest bearing. The Group’s contractual arrangements generally allow
the Group to defer payment of travel related payables until funds have been received from the customer or agent.
Details regarding foreign exchange risk exposure are disclosed in note 30: financial risk management.
(i) The Group made retrospective adjustments as a result of adopting AASB 16, refer note 2. changes in accounting
standards.
19. Lease liabilities
Lease liabilities
CURRENT LEASE LIABILITIES
Lease liabilities
NON-CURRENT LEASE LIABILITIES
CONSOLIDATED
2020
$’000
2019
$’000
9,145
9,145
20,614
20,614
8,509
8,509
19,986
19,986
96
helloworldlimited.com.au
(a) Movements in lease liabilities
Movements in each class of lease liability (current and non-current) during the financial year, are set out below:
Property
$’000
Motor Vehicles
$’000
CONSOLIDATED
BALANCE AT 1 JULY 2018
Additions
Additions through business combinations
Disposals
Disposals through business sales
Interest expense
Lease payments
Variable lease payments
Foreign currency differences
BALANCE AT 30 JUNE 2019
Current
Non-current
BALANCE AT 30 JUNE 2019
BALANCE AT 1 JULY 2019
Additions
Additions through business combinations
Disposals
Disposals through business sales
Interest expense
Lease payments
Modifications to lease terms
Other adjustments to lease liabilities
Foreign currency differences
BALANCE AT 30 JUNE 2020
Current
Non-current
BALANCE AT 30 JUNE 2020
Total
$’000
24,374
13,523
374
(779)
(230)
864
79
16
-
-
-
3
(60)
(10,104)
-
4
42
36
6
42
42
25
-
(3)
-
2
(51)
36
-
(1)
50
23
27
50
77
396
28,495
8,509
19,986
28,495
28,495
3,475
2,888
(1,170)
(197)
1,030
(8,799)
3,807
360
(130)
29,759
9,145
20,614
29,759
24,295
13,507
374
(779)
(230)
861
(10,044)
77
392
28,453
8,473
19,980
28,453
28,453
3,450
2,888
(1,167)
(197)
1,028
(8,748)
3,771
360
(129)
29,709
9,122
20,587
29,709
(i) Property – current and non-current lease liabilities
Lease liabilities payment obligations relate to various leased offices under non-cancellable agreements. During the
current year, Helloworld Travel entered into an additional lease and renewed existing leases resulting in additions of
$3.5 million. In addition, the Group exited a lease resulting in disposals of $1.2 million. Lease liabilities relating to
India and the U.S Wholesale Division were not disposed of during the current year. Leases were renegotiated which
resulted in modifications of $3.8 million. The difference between the remeasurement of lease liabilities and the right
of use assets of $0.4 million was recognised in the profit or loss in the current year.
(ii) Amounts recognised in the consolidated statement of cash flows
The total cash outflow for lease liabilities during the year ended 30 June 2020 was $8.8 million (2019: $10.1 million),
comprising of interest expense on lease liabilities of $1.0 million (2019: $0.9 million), recognised as operating
activities, and principal elements of lease liabilities of $7.8 million (2019: $9.2 million), recognised as financing
activities.
97
(b) Future rental payments excluded from lease liabilities:
In light of COVID-19 and the Group’s continual focus on cost reduction and efficiency initiatives, the Group has
determined, that uncertainty exists regarding the likelihood of the Group agreeing to extend all lease terms beyond
the minimum period. As a result, the undiscounted potential future rental payments relating to periods following the
exercise date of extension options are not included in the lease liabilities. The extension options held are exercisable
only by the Group and not by the lessors.
20. Borrowings
Secured bank loans
Deferred borrowings costs
NON-CURRENT BORROWINGS
(a) Financing arrangements:
CONSOLIDATED
2020
$’000
2019
$’000
101,000
(481)
100,519
57,000
(572)
56,428
The Group has secured financing arrangements with the Westpac Banking Corporation (Westpac) of $119.0 million
(2019: $90.0 million) as outlined below:
CONSOLIDATED
Secured bank loan – multi currency
Secured multi-option revolving credit facility
Secured bank loan facility – AUD
Expiry Date
Facility A - May 2022
Facility B - May 2022
Facility C – April 2022
Secured bank loan facility – TravelEdge acquisition (i)
Facility D – September 2022
TOTAL FACILITIES
Secured bank loan – multi currency
Secured multi-option revolving credit facility
Secured bank loan facility – AUD
Secured bank loan facility – TravelEdge acquisition (i)
FACILITIES DRAWN DOWN AT THE REPORTING DATE
Secured multi-option revolving credit facility
Secured bank loan facility – AUD
2020
$’000
40,000
30,000
20,000
29,000
119,000
39,500
17,500
15,000
29,000
101,000
8,623
2,888
2019
$’000
40,000
30,000
20,000
-
90,000
39,500
17,500
-
-
57,000
12,017
-
BANK GUARANTEES AND LETTERS OF CREDIT AT THE REPORTING DATE
11,511
12,017
Secured bank loan – multi currency
Secured multi-option revolving credit facility
Secured bank loan facility – AUD
UNUSED AT THE REPORTING DATE
500
3,877
2,112
6,489
500
483
20,000
20,983
(i) Secured bank loan facility – TravelEdge acquisition
On 25 September 2019, Helloworld Travel entered into a bank loan facility to finance the acquisition of TravelEdge.
The expiry of this facility has been extended to September 2022.
As at 30 June 2020, $29.0 million of the facility had been drawn down, with $22.6 million paid as cash consideration
for the acquisition of TravelEdge, $4.0 million has been retained by the Group pending satisfaction of certain
conditions (refer note 10: cash and cash equivalents); and the remainder applied to working capital requirements.
98
helloworldlimited.com.au (b) Secured multi-option revolving credit facility:
During the current year, Helloworld Travel renegotiated the terms and conditions of its Westpac Banking Corporation
(Westpac) facility agreements, totalling $119.0 million. The key changes are outlined below:
• The term of facilities C and D totalling $49.0 million were extended from their original expiration date. As a result, all
facilities are classified as non-current at 30 June 2020.
• During the current financial year, there have been no breaches of the Westpac debt covenants. Subsequent to 30 June
2020, Helloworld renegotiated its banking covenants as described in Note 1(c) which provides Helloworld Travel with
additional flexibility to manage its liquidity during the COVID-19 pandemic.
The Group has complied with the financial covenants of its borrowing facilities during the relevant 2020 and 2019 periods.
(c) Bank guarantees and letters of credit:
Facilities used at 30 June 2020 of $112.5 million (June 2019: $69.0 million) includes bank guarantees and letters of
credit on issue totalling $11.5 million (June 2019: $12.0 million).
(d) Secured liabilities and assets pledged as security
The total secured liabilities (current and non-current) are as follows:
SECURED BANK LOAN
CONSOLIDATED
2020
$’000
2019
$’000
101,000
57,000
The financing arrangements are secured over the assets of the entities in the Deed of Cross Guarantee (note 35) and certain
New Zealand entities within the Group, which form the "obligor group" as defined under the Westpac facility agreement. The
obligor group includes the group parent entity of Helloworld Travel Limited and its investment holdings in subsidiaries.
(e) Set-off of assets and liabilities:
There are currently no contractual arrangements establishing a legal right to set-off assets and liabilities with any
financial institutions.
(f) 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 30: financial risk management.
99
21. Provisions
Employee benefits - annual leave
Employee benefits - long service leave
Lease make good
Restructuring
Other
CURRENT PROVISIONS
Employee benefits - long service leave
Lease make good
Other
NON-CURRENT PROVISIONS
(a) Movement in provisions
CONSOLIDATED
2020
$’000
5,640
9,054
63
5,998
159
2019
Restated
$’000
6,587
8,021
848
-
166
20,914
15,622
1,510
1,490
2,639
5,639
1,666
1,338
-
3,004
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 2018 RESTATED
Reversals through business sales
Provisions charged to fixed assets
Provision charged/(released) to income statement
Payments made from provision
BALANCE AT 30 JUNE 2019
Current
Non-current
BALANCE AT 30 JUNE 2019
BALANCE AT 1 JULY 2019
Additions through business combinations
Provisions charged to fixed assets
Provision charged/(released) to income statement
Payments made from provision
BALANCE AT 30 JUNE 2020
Current
Non-current
BALANCE AT 30 JUNE 2020
(b) Nature and timing of provisions
(i) Lease make good
Lease
make good
$’000
Restructuring
$’000
Other
$’000
Total
$’000
1,601
-
1,080
(442)
(53)
2,186
848
1,338
2,186
2,186
80
242
(548)
(407)
1,553
63
1,490
1,553
132
-
-
78
(210)
-
-
-
-
-
-
-
6,877
(879)
5,998
5,998
-
5,998
219
(6)
-
29
(76)
166
166
-
166
1,952
(6)
1,080
(335)
(339)
2,352
1,014
1,338
2,352
166
2,352
-
-
2,632
-
2,798
159
2,639
2,798
80
242
8,961
(1,286)
10,349
6,220
4,129
10,349
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 to the extent required in the associated contracts. 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 effect of unwinding the discounting of the provision is
recognised as a finance expense.
100
helloworldlimited.com.au
During the current year, Helloworld Travel consolidated their operations resulting in the relocation of staff from the
Bourke St and Camberwell St offices. As a result, restoration payments relating to both properties were settled during
the current financial year. The difference between the restoration payments and the make good provisions recognised
on balance sheet was released to the profit or loss in the current financial year. Helloworld Travel assigned its lease
for 80 Pacific Highway to a third party during the current financial year. As a result, the Group’s make good obligations
relating to this lease were settled with the third party.
The Group made retrospective adjustments as a result of adopting AASB 16, refer note 2: changes in accounting standards.
(ii) Restructuring
Restructuring provisions are recognised as an expense when the Group has made a commitment to restructure a part of
the business. Balance provided for at 30 June 2020 are expected to be settled in the following financial year.
(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.
22. Deferred revenue
Supplier incentives (i)
Unearned income (ii)
DEFERRED REVENUE
(i) Supplier incentives
CONSOLIDATED
2020
2019
Restated
$’000
5,508
91,431
96,939
$’000
8,374
45,428
53,802
Helloworld Travel receives incentives from suppliers upfront when entering into long term contracts. Incentives
deferred at 30 June 2020 relate to contracts with terms of between 7 to 10 years. Incentives are recognised in the
consolidated statement of profit or loss and other comprehensive income over the life of the contract based on
specific performance criteria.
During the current year, Helloworld Travel received additional incentives in the form of cash payments from suppliers.
In addition, the acquisition of TravelEdge Group resulted in a further increase in supplier incentives. Refer note 36:
business acquisitions for more information.
(ii) Unearned Income
The Group also receives monies from customers prior to travel booking finalisation, which is recorded in the statement
of financial position as unearned income as at 30 June.
Unearned income is considered a contract liability in accordance with applicable accounting standards. Unearned
income commissions are recognised as revenue in the consolidated statement of profit or loss and other comprehensive
income when the travel has occurred.
During the current year, unearned income decreased by $46.0 million to $45.4 million as a result of COVID-19 which
resulted in a decline in new bookings and cancellation of travel bookings made prior to COVID-19. Unearned income
includes amounts due to both agents and suppliers, and commission earned by Helloworld Travel. Only the commission
element earned on these bookings will impact revenue in the consolidated statement of profit or loss and other
comprehensive income.
101
23. Deferred tax liabilities
(a) Deferred tax liabilities
Accrued revenue
Property, plant and equipment
Right of use assets
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
$’000
19,931
160
7,311
37,156
3,056
67,614
(27,102)
40,512
9,199
58,415
67,614
CONSOLIDATED
2020
2019
Restated
$’000
26,149
2,116
7,359
34,937
3,681
74,242
(29,578)
44,664
17,948
56,294
74,242
CONSOLIDATED
Accrued
revenue
$’000
Property
plant and
equipment
$’000
Right
of use
assets
$’000
Indefinite
life
intangibles
$’000
Other
$’000
Total
$’000
BALANCE AT 1 JULY 2018 RESTATED
21,363
1,577
6,366
33,813
3,082
66,201
(Charged)/credited
- to profit or loss (restated)
- to other comprehensive income
Additions through business combinations
4,786
539
993
-
-
-
-
-
-
974
-
150
BALANCE AT 30 JUNE 2019 RESTATED
26,149
2,116
7,359
34,937
481
(214)
332
3,681
7,773
(214)
482
74,242
BALANCE AT 1 JULY 2019 RESTATED
26,149
2,116
7,359
34,937
3,681
74,242
(Charged)/credited
- to profit or loss
- to other comprehensive income
Additions through business combinations
BALANCE AT 30 JUNE 2020
(6,218)
(1,956)
(48)
-
-
-
-
-
-
19,931
160
7,311
(91)
-
2,310
37,156
(1,204)
(9,517)
(109)
688
3,056
(109)
2,998
67,614
102
helloworldlimited.com.au
24. Other liabilities
Redemption liability (i)
Other non-current liabilities
OTHER NON-CURRENT LIABILITIES
CONSOLIDATED
2020
$’000
1,200
245
1,445
2019
Restated
$’000
4,800
351
5,151
(i) The redemption liability relates to the estimated consideration payable by Helloworld Travel for the remaining 40.0%
non-controlling interest in Asia Escape Holidays in FY23. The redemption liability is a financial liability measured at fair
value through profit or loss at the end of each reporting period. During the current year, the redemption liability was
revalued to $1.2 million (2019: $4.8 million) and the gain of $3.6 million was recognised in the current year’s profit or
loss. The remeasurement gain has been excluded from Underlying EBITDA in note 6: operating segments. For further
details on the assumptions used in the remeasurement, refer note 30: financial risk management.
25. Issued capital
(a) Shares on issue
CONSOLIDATED
2020
shares
2019
shares
2020
$’000
2019
$’000
Issued capital – fully paid
123,870,842
121,378,076
419,492
416,346
Issued capital – issued, but not vested (i)
850,000
3,280,000
(26)
(127)
ISSUED CAPITAL
124,720,842
124,658,076
419,466
416,219
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. During the current year, 2,200,000 loan funded LTIP shares granted on 1 July 2016
met their vesting conditions, 30,000 shares under the franchise loyalty plan vested for nil consideration and 200,000 shares
relating to the LTIP did not meet vesting conditions and were relinquished by the participants. As a result, the issued, but not
vested capital decreased by 2,430,000 shares.
103
(b) Movements in shares on issue
CONSOLIDATED
BALANCE
Note Date
Number
of Shares
$’000
1 July 2018
124,508,076
408,495
Forfeited LTIP shares converted to fully paid capital (i)
Forfeited LTIP shares converted to fully paid capital (i)
Forfeited franchise loyalty plan shares converted to fully paid capital (ii)
Vested and exercised franchise loyalty plan shares (iii)
Transfer of shares issued under legacy performance rights
28 August 2018
29 August 2018
29 August 2018
31 October 2018
31 October 2018
Forfeited LTIP shares (iv)
38
26 March 2019
Costs associated with selling forfeited shares
-
-
-
-
-
150,000
-
2,600
1,300
26
2,567
1,250
-
(19)
BALANCE
BALANCE
Forfeited LTIP shares utilised as purchase consideration (iv)
Issue of new shares (iv)
Acquisition of shares (v)
Issue of shares to employees (v)
Proceeds on repayment of LTIP related loans (vi)
Costs associated with capital raising
BALANCE
30 June 2019
124,658,076
416,219
1 July 2019
1 July 2019
1 July 2019
16 December 2019
17 December 2019
23 August 2019 to
30 December 2019
124,658,076
416,219
-
62,766
-
-
-
-
669
280
(671)
671
2,301
(3)
30 June 2020
124,720,842
419,466
(i) Forfeited LTIP shares converted to fully paid capital
During the prior year, 900,000 shares relating to the LTIP did not meet vesting conditions and were relinquished by
the participants. These shares were subsequently disposed of at a weighted average share price of $5.08, amounting
to $4.6 million, of which $3.9 million was received in the prior year. As a result, these shares are now fully paid and no
longer subject to the previous vesting conditions.
(ii) Forfeited franchise loyalty plan shares converted to fully paid capital
During the prior year, 5,000 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 $5.20, resulting in
proceeds of $26,000. As a result, these shares are now fully paid and no longer subject to the previous vesting conditions.
(iii) Vested and exercised franchise loyalty plan shares
On 31 October 2018, 675,500 shares under the franchise loyalty plan vested at nil consideration. As at 30 June 2020,
there are nil (2019: 30,000) shares issued under the franchise loyalty plan. The share based payment expense relating
to the vested franchise loyalty shares was transferred to issued capital in the prior year.
(iv) Forfeited LTIP shares utilised as purchase consideration
During the prior year, 150,000 shares relating to the LTIP did not meet vesting conditions and were relinquished by
the participants. On 1 July 2019, these 150,000 shares ($0.7 million) along with a further 62,766 ($0.3 million) were
provided as part of the purchase consideration for commercial agreements entered into in New Zealand for the
distribution of travel products as part of the Group’s distribution expansion.
(v) New omnibus incentive plan
At the Helloworld Travel Annual General Meeting held on 14 November 2019, the Group’s shareholders voted for
the adoption of the Helloworld Travel Limited Omnibus Incentive Plan (the Plan). Under the Plan, the Group can
reward and incentivise employees, directors (including both executive and non-executive directors), contractors and
consultants by offering shares, performance rights or options. Any financial instruments granted under the Plan are
held via an employee share trust (the Trust) established with Perpetual Corporate Trust Limited.
104
helloworldlimited.com.au On 16 December 2019, 146,932 shares were purchased under the Plan at a cost of $4.57 per share, amounting to
$671,479, which has been recorded as a share based payment expense in the current year. These shares have been
granted to employees that have met eligibility criteria, up to the value of $1,000 per employee. These shares are held by
the Trust and will be transferred to the employees upon the earlier of resignation or completion of three years of service
from grant date. No shares were granted or issued to non-executive directors.
(vi) Proceeds on repayment of LTIP related loans
On 1 July 2019, 2,200,000 loan funded LTIP shares granted on 1 July 2016 met their vesting conditions as determined by
the Board, based on meeting Total Shareholder Returns (TSR) and individual Key Performance Indicator (KPI) targets over
the three year vesting period. As at 30 June 2020, there were 850,000 (2019: 3,250,000) LTIP shares that had not yet
vested and were subject to future performance criteria.
During the current financial year, repayments associated with 2,200,000 of loan funded LTIP shares totalling $2.3 million
were received and have been recognised in issued capital. In addition, $0.3 million of dividends were offset against the
outstanding loan balance during the current finance year. As a result, the outstanding loan balance recorded off balance
sheet, relating to loan funded LTIP shares that have vested, amounts to $3.3 million (2019: $5.9 million) of which $2.9 million
(2019: $4.7 million) relates to KMP as disclosed in note 32: related party transactions (g).
26. Reserves
Foreign currency translation reserve
Hedging reserve
Share based payments reserve
Redemption reserve
RESERVES
(a) Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Hedging
reserve
$’000
Share based
payments
reserve
$’000
Redemption
reserve
$’000
CONSOLIDATED
BALANCE AT 1 JULY 2018
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation (restated)
Share based payment expense
Transfer of reserve for vested shares to share capital
Foreign
currency
translation
reserve
$’000
2,617
-
-
1,860
-
-
1,639
(759)
214
-
-
-
BALANCE AT 30 JUNE 2019 RESTATED
4,477
1,094
BALANCE AT 1 JULY 2019 RESTATED
Revaluation - gross
Revaluation - deferred tax
Foreign currency translation
Share based payment expense
Released to profit or loss on disposal
Transfer of predecessor accounting reserve
to accumulated losses
BALANCE AT 30 JUNE 2020
4,477
-
-
(896)
-
(1,422)
-
2,159
1,094
(359)
109
-
-
-
(844)
-
4,660
(7,200)
-
-
-
1,479
(3,817)
2,322
-
-
-
-
-
(7,200)
2,322
(7,200)
-
-
-
202
-
-
-
-
-
-
-
-
2,524
(7,200)
CONSOLIDATED
2020
2019
Restated
$’000
$’000
2,159
-
2,524
(7,200)
(2,517)
4,477
1,094
2,322
(7,200)
693
Total
$’000
1,716
(759)
214
1,860
1,479
(3,817)
693
693
(359)
109
(896)
202
(1,422)
(844)
(2,517)
105
(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 40: significant accounting policies. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of. $1.4 million has been recorded in the current year’s profit and loss relating to
the disposal of U.S Wholesale division.
(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 40:
significant accounting policies. Amounts are reclassified to the consolidated statement of profit or loss and
other comprehensive income when the associated underlying hedge transaction also affects profit and loss. As a
consequence of COVID-19, the Group has temporarily ceased hedging given the difficulties in reliably estimating the
quantum and timing of foreign currency denominated receipts and payments.
(iii) Share based payments reserve
The share based payments reserve is used to recognise the fair value of shares 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. Once the vesting conditions of the respective share schemes are met
and the shares are exercised, the accumulated amount of the share based payment reserve relating to the vested shares is
transferred to share capital.
(iv) Redemption reserve
The redemption reserve relates to Helloworld Travel’s option to purchase the remaining 40.0% non-controlling interest
in Asia Escape Holidays and was determined in the sale and purchase agreement for the 60.0% controlling interest in
the business. Upon exercise or forfeiture, the balance of the redemption reserve will be recycled through accumulated
losses. The Group has recognised a financial liability for the estimated amount payable which is subject to remeasurement.
Non-cash gains or losses on remeasurement are reflected in the profit or loss at the end of each reporting period and are
excluded from underlying EBITDA, refer note 6: operating segments.
27. Accumulated losses
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
(106,255)
(121,074)
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
(69,874)
(26,815)
460
844
38,008
(23,657)
468
-
(201,640)
(106,255)
CONSOLIDATED
2020
$’000
2019
Restated
$’000
106
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28. 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 assurance services
OTHER SERVICES - PwC AUSTRALIA
Taxation compliance services
Taxation consultancy services
Due diligence services
Consultancy services
TOTAL OTHER SERVICES – PwC AUSTRALIA
TOTAL SERVICES - PwC AUSTRALIA
NETWORK FIRMS OF PwC AUSTRALIA
Audit services
Taxation compliance services
Taxation consultancy services
Compliance services
Consultancy services
CONSOLIDATED
2020
$
2019
$
918,277
20,400
976,600
33,000
78,780
-
906,000
152,796
1,137,576
2,076,253
177,725
36,736
5,212
4,814
-
104,642
41,579
-
292,981
439,202
1,448,802
204,873
34,410
44,664
13,286
21,012
TOTAL SERVICES - NETWORK FIRMS OF PwC AUSTRALIA
224,487
318,245
NON-PwC AUDIT FIRMS
Audit services - unrelated firms
Taxation compliance
Taxation consultancy
Compliance services
Consultancy services
TOTAL SERVICES - NON-PwC AUDIT FIRMS
49,789
21,795
38,800
-
46,534
156,918
60,190
85,394
14,330
1,423
-
161,337
107
29. Cash flow reconciliation
(a) Reconciliation of profit/(loss) after income tax to net cash from operating activities
CONSOLIDATED
2020
2019
Restated
$’000
$’000
PROFIT/(LOSS) AFTER INCOME TAX EXPENSE FOR THE YEAR
(69,985)
38,043
Adjustments for:
Depreciation and amortisation expense
Impairment expense
Share based payment expense
Proceeds from forfeited shares sales, net of costs
Profit on disposal of property, plant and equipment
Profit on disposal of investments
Loss allowance on trade receivables
Share of profit of associates accounted for using the equity method
Fair value adjustment on redemption liability
Fair value adjustment on contingent receivable
Amortisation of borrowing costs
Non-cash revaluation of lease liability
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in accrued revenue
Decrease in derivative financial instruments
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
Decrease in deferred revenue
Increase in provisions
(Decrease)/increase in other liabilities
Movements in tax balances
NET CASH FROM/(USED) OPERATING ACTIVITIES
32,742
67,947
873
-
(101)
(1,075)
8,368
(1,246)
(3,600)
883
275
191
57,109
31,619
360
(69)
(142,869)
(28,975)
7,306
(361)
(831)
(41,439)
28,343
-
1,479
3,907
(24)
(2,013)
461
(1,437)
(2,400)
-
177
-
(5,776)
(17,448)
346
68
9,776
(5,441)
1,641
1,371
(1,841)
49,232
(b) Reconciliation of assets and liabilities arising from financing activities
The movements in assets and liabilities impacting financing activities are outlined below:
CONSOLIDATED - 2020
Cash flows
Non-cash
Balance
1 July 2019
$'000
Proceeds of
borrowings
$’000
Payments
relating to
leases (i)
$'000
Movement
in related
party loans
$'000
Other
movements
(ii)
$'000
Foreign
exchange
movement
$'000
Balance
at 30 June
2020
$'000
Current and non-current lease liabilities
Non-current borrowings - secured bank loan
Non-current receivables - loans to related parties
NET DEBT FROM FINANCING ACTIVITIES
28,495
57,000
(4,501)
80,994
-
(7,769)
44,000
-
-
-
44,000
(7,769)
-
-
104
104
9,163
(130)
29,759
-
-
-
-
101,000
(4,397)
9,163
(130)
126,362
CONSOLIDATED - 2019
Cash flows
Non-cash
Balance
1 July 2018
$'000
Proceeds of
borrowings
$’000
Payments
relating to
leases (i)
$'000
Movement
in related
party loans
$'000
Other
movements
(ii)
$'000
Foreign
exchange
movement
$'000
Balance
at 30 June
2019
$'000
Current and non-current lease liabilities
Non-current borrowings - secured bank loan
Non-current receivables - loans to related parties
NET DEBT FROM FINANCING ACTIVITIES
24,374
42,066
(2,314)
64,126
-
(9,240)
15,000
-
-
-
15,000
(9,240)
-
-
(2,187)
(2,187)
12,966
-
-
395
(66)
28,495
57,000
-
(4,501)
12,966
329
80,994
108
helloworldlimited.com.au
(i) Payments relating to leases
Payments relating to leases include principal cash payments relating to lease liabilities.
(ii) Other movements
Lease liabilities other movements include interest paid on lease liabilities as the Group classifies this as cash flows from
operating activities. Refer note 19: lease liabilities for further information on lease liabilities non-cash movements.
30. Financial risk management
The Group’s principal financial instruments are outlined below. 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 40:
significant accounting policies.
Financial risk management is carried out under policies approved by the Board of Directors. The Group identifies, evaluates
and actively manages 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.
The Group holds the following financial instruments:
CONSOLIDATED
2020
2019
Restated
$’000
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables (excluding contingent consideration receivable)
FINANCIAL ASSETS AT AMORTISED COST
Contingent consideration receivable
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
DERIVATIVE FINANCIAL INSTRUMENTS
FINANCIAL LIABILITIES
Trade and other payables (excluding contingent consideration payable)
Borrowings (excluding deferred borrowings costs)
FINANCIAL LIABILITIES AT AMORTISED COST
Redemption liability
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
$’000
131,861
35,451
167,312
170
170
-
93,967
101,000
194,967
1,200
1,200
204,755
87,710
292,465
1,233
1,233
368
210,944
57,000
267,944
4,800
4,800
Trade and other receivables (excluding contingent consideration receivable) consists of current trade and other receivables of
$40.0 million (2019: $97.1 million) less prepayments of $9.1 million (2019: 14.1 million), plus non-current trade and other
receivables of $4.7 million (2019: $5.9 million) less contingent consideration receivable of $0.2 million (2019: $1.2 million).
(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.
109
Management monitors rolling forecasts of the Group’s liquidity reserves (comprising the undrawn facilities outlined in note
20: borrowings) and cash and cash equivalents (outlined in note 10: 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 20: borrowings. Due to the current disruption in the travel industry, Helloworld has taken additional
measures to ensure liquidity is managed prudently, refer note 1(c): going concern.
Subsequent to year end, Helloworld Travel completed a $50.0 million fully underwritten equity raise ($48.5 million net of
costs) to strengthen the balance sheet and provide additional liquidity to manage the prolonged period of disruption to the
global travel industry. Refer note 39: events after the reporting period for further information.
(i) Maturities of financial liabilities
The tables below analyse and arrange 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 of discounting is not significant.
Contractual maturities of financial liabilities
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
CONSOLIDATED - 2020
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Trade and other payables
Lease liabilities
Restructuring provision
Redemption liability
93,967
93,967
29,759
4,911
-
-
-
-
-
93,967
7,438
5,539
3,403
3,356
2,200
31,619
-
4,772
5,998
-
5,998
1,200
-
-
1,100
2,730
-
-
-
1,200
-
-
-
-
-
-
-
-
-
5,998
1,200
- 105,354
3,066
11,511
Interest bearing liabilities – secured (i)
101,000
Bank guarantees and letter of credit
-
1,083 74,025 29,146
3,039
1,380
841
455
TOTAL
231,812 102,708 14,892 82,843 36,726
3,858
3,356
5,266 249,649
CONSOLIDATED - 2019
NON-DERIVATIVE FINANCIAL INSTRUMENTS
Contractual maturities of financial liabilities
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 (restated)
210,944 210,944
-
-
-
-
-
- 210,944
Lease liabilities (restated)
28,495
4,429
3,806
5,577
5,896
4,324
2,225
3,838
30,095
Redemption liability
Interest bearing liabilities – secured (i)
Bank guarantees and letter of credit
4,800
57,000
-
-
1,237
2,158
-
-
-
4,800
1,218
2,409 59,084
5,518
-
1,071
-
42
-
-
-
-
-
4,800
63,948
3,227
12,016
TOTAL
301,239 218,768 10,542
7,986 66,051
9,166
2,225
7,065 321,803
(i) Excludes deferred borrowing costs.
(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.
110
helloworldlimited.com.au Prior to COVID-19, foreign exchange risk was measured through a forecast of highly probable 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 Group’s hedging policy requires management to document at the inception of the hedging transaction, the economic
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, whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in
offsetting changes in the cash flows of hedged items.
The Board’s risk management policy was to hedge forecasted foreign currency cash flows in the wholesale businesses using
forward foreign exchange contracts and to not enter into, issue or hold derivative financial instruments for speculative trading
purposes. As a consequence of COVID-19, the Group has temporary ceased hedging foreign currency payables due to the
uncertainty as to whether bookings will result in foreign currency payments.
Derivatives
Helloworld Travel has entered into forward foreign exchange contracts to hedge forecasted foreign currency payables.
As at 30 June, the Group has the following derivative financial instruments:
CURRENT ASSETS
Forward foreign exchange contracts – cash flow hedges
TOTAL CURRENT DERIVATIVE FINANCIAL INSTRUMENT ASSETS
CONSOLIDATED
2020
$’000
2019
$’000
-
-
368
368
Derivatives are presented as current assets 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 40: significant accounting policies.
Exposure
As at 30 June 2020, 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 including accrued revenue 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)
CONSOLIDATED
2020
$’000
AUD
equivalent
2019
$’000
AUD
equivalent
(3,910)
(448)
(198)
(2,352)
8,512
(508)
1,096
(250)
(902)
(417)
(1,272)
5,834
(3,691)
(698)
111
Sensitivity
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 and that all other variables including interest rates, remain constant.
10% increase (2019: 10%)
10% decrease (2019: 10%)
(ii)
Interest rate risk
CONSOLIDATED
Impact on profit/(loss)
before income tax expense
2020
$’000
(736)
973
2019
$’000
1,009
(1,234)
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.
Exposure
As at 30 June 2020, the Group had term deposits amounting to $17.1 million (2019: $55.7 million) with an average interest
rate of 3.0% per annum (2019: 3.2%). In addition, the Group had drawn down borrowings of $101.0 million (2019: $57.0
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 (2019: 100 basis points)
Decrease by 100 basis points (2019: 100 basis points)
BORROWINGS
Increase by 100 basis points (2019: 100 basis points)
Decrease by 100 basis points (2019: 100 basis points)
(c) Credit risk
CONSOLIDATED
Impact on net profit
before tax
2020
$’000
171
(171)
(1,010)
1,010
2019
$’000
557
(557)
(570)
570
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, accrued revenue and
favourable derivatives, resulting in financial loss to the Group. Credit risk is measured at fair value.
112
helloworldlimited.com.au 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. A portion of Helloworld Travel’s credit risk is also mitigated
through offsetting receivable and payable balances between Helloworld Travel and key suppliers. In addition, the Group’s
key customers include various Australian Government agencies which have a low risk of default.
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.
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 loss allowance.
The table below sets out the maximum exposure to credit risk as at 30 June:
Cash and cash equivalents
Trade and other receivables (including contingent consideration receivable) (i)
Accrued revenue
Derivative financial instruments
TOTAL CREDIT RISK EXPOSURE
CONSOLIDATED
2020
$’000
131,861
44,683
34,482
-
2019
Restated
$’000
204,755
103,080
66,681
368
211,026
374,884
(i) The Group made retrospective adjustments as a result of adopting AASB 16, refer note 2: changes in accounting standards.
Impairment of financial assets
The Group has three types of financial assets that are subject to the expected credit loss model:
• Trade receivables
• Accrued revenue
• Investments and other financial assets at amortised cost (such as other receivables and loans to related parties)
The Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and accrued revenue, refer note 40: significant accounting policies for more
information regarding the calculation of impairment losses.
The Group undertakes a debtor by debtor review with a provision for each debtor calculated based on each debtors
recent and longer term history of debt repayments.
113
On this basis, the loss allowance as at 30 June 2020 and 30 June 2019 was determined as follows for both trade
receivables and accrued revenue:
CONSOLIDATED - 2020
Trade receivables
Accrued revenue
GROSS CARRYING AMOUNTS
Expected loss rate
Trade receivables
Accrued revenue
LOSS ALLOWANCES
NEITHER PAST DUE NOR IMPAIRED
CONSOLIDATED - 2019
Trade receivables
Accrued revenue
GROSS CARRYING AMOUNTS
Expected loss rate
Trade receivables
Accrued revenue
LOSS ALLOWANCES
Not past due
$’000
Past Due
1-30 days
$’000
Past due
31-60 days
$’000
Past due
61-90 days
$’000
More than
90 days
$’000
12,145
38,182
50,327
7.9%
(253)
(3,700)
(3,953)
46,374
1,214
1,371
7,898
5,358
-
-
-
-
1,214
1,371
7,898
5,358
1.6%
(20)
-
(20)
1,194
1.5%
(20)
-
(20)
1,351
13.0%
(1,029)
-
(1,029)
6,869
59.6%
(3,195)
-
(3,195)
2,163
Not past due
$’000
Past Due
1-30 days
$’000
Past due
31-60 days
$’000
Past due
61-90 days
$’000
More than
90 days
$’000
Total
$’000
27,986
38,182
68,168
(4,517)
(3,700)
(8,217)
57,951
Total
$’000
76,715
66,681
61,720
66,681
128,401
-
-
-
-
7,219
4,396
1,985
1,395
-
-
-
-
7,219
4,396
1,985
1,395
143,396
0.1%
(10)
-
(10)
7,209
1.3%
(59)
-
(59)
4,337
11.9%
(236)
-
(236)
1,749
30.0%
(419)
-
(419)
976
(724)
-
(724)
142,672
NEITHER PAST DUE NOR IMPAIRED
128,401
The Group recognised a larger allowance for expected credit losses due to the COVID-19 pandemic. The gross carrying
amount of trade receivables and accrued revenue as at 30 June 2020 was assessed based on management’s judgement
using information available at the time. The allowance incorporates management’s review of specific debtors which have
been individually assessed due to indications that the debt owed may not be repaid.
The expected credit loss allowance includes the following:
• A total provision of $1.5 million has been raised against the Virgin Group’s receivables.
• In addition, provisions of $6.7 million were made across a number of other customers and suppliers, where
information available at the time indicated that the debt owed may not be repaid. The full amount has been expensed
through the expected credit loss.
As at 30 June 2020, trade receivables of $11.6 million (2019: $14.3 million) were aged between 1 and more than 90 days
past due but not impaired. These relate to a number of independent counterparties for whom there is no recent history
of default.
Movements in the loss allowance for both trade receivables and accrued revenue are as follows:
BALANCE AT 1 JULY
Acquisitions through business combinations
Additional loss allowance recognised
Writeback of loss allowance
Receivables written off during the year as uncollectable
Other
BALANCE AT 30 JUNE
114
CONSOLIDATED
2020
$’000
2019
$’000
724
20
7,666
61
(272)
18
8,217
589
31
461
(213)
(152)
8
724
helloworldlimited.com.au During the current year, a loss allowance of $7.7 million (2019: $0.5 million) relating to receivables and accrued revenue
arising from contracts with customers was recognised in the statement of profit or loss and other comprehensive income.
Impairment of other financial assets at amortised cost
There are no significant other receivables, or classes of receivables, that have been recognised that would otherwise,
without negotiation, be past due or impaired. It is expected that all other amounts will be received when due. The Group
does not hold any collateral in relation to receivables.
(d) Fair values
The 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 – non-current
TOTAL LIABILITIES
(e) Fair value hierarchy
2020
2019
Carrying
amount
$’000
4,397
4,397
Fair
value
$’000
4,397
4,397
100,519
100,519
101,000
101,000
Carrying
amount
$’000
4,501
4,501
56,428
56,428
Fair
value
$’000
4,501
4,501
57,000
57,000
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 different levels have been defined as follows:
• Level 1: fair value of financial instruments traded in active markets is based on quoted market 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 financial 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.
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.
The table below analyses financial instruments carried at fair value, by valuation method.
CONSOLIDATED - 2020
Contingent consideration receivable (i)
Interest bearing assets
TOTAL ASSETS
Redemption liability (ii)
Interest bearing liabilities
TOTAL LIABILITIES
Level 1
$’000
Level 2
$’000
-
-
-
-
-
-
-
-
-
-
-
-
Level 3
$’000
170
4,397
4,567
1,200
101,000
102,200
Total
$’000
170
4,397
4,567
1,200
101,000
102,200
115
CONSOLIDATED - 2019
Net derivative financial assets
Contingent consideration receivable (i)
Interest bearing assets
TOTAL ASSETS
Redemption liability (ii)
Interest bearing liabilities
TOTAL LIABILITIES
Level 1
$’000
Level 2
$’000
-
-
-
-
-
-
-
368
-
-
368
-
-
-
Level 3
$’000
-
1,233
4,501
5,734
4,800
57,000
61,800
Total
$’000
368
1,233
4,501
6,102
4,800
57,000
61,800
(i) Valuation of contingent consideration payable
On 30 June 2019, Helloworld Travel sold its Insider Journeys business for a total consideration of $2.4 million, which
included a contingent consideration receivable of $1.2 million, that was recognised and reported as a non current
receivable on the consolidated statement of financial position.
The contingent consideration of $1.2 million was determined in accordance with the sale contract and was based on a fixed
percentage of annual eligible total transaction value achieved by the purchaser of the Insider Journeys business during the
subsequent three year period commencing 1 July 2019. The contingent consideration expected for each future year (FY20-
FY22) is calculated quarterly and invoiced to the purchaser for settlement based on the eligible total transaction value
achieved. Any future remeasurement of the consideration is recognised in the consolidated statement of profit or loss.
The eligible total transaction value used in the calculation of the contingent consideration was based on Helloworld Travel’s
knowledge of the business, the future business operating plans outlined by the new owners and the expected industry
and economic conditions. This methodology resulted in a projected eligible total transaction value for the future three
years which was applied to the set percentage specified in the contract, to determine the fair value of the contingent
consideration receivable as at 30 June 2019.
During the current year, $0.2 million of consideration was received from the purchaser of Insider Journeys. Based on the
current estimates of future sales and the updated economic conditions, the remaining contingent consideration receivable
has been remeasured to its fair value of $0.2 million as at 30 June 2020. The fair value adjustment of $0.9 million has been
recognised within operating expenses in the consolidated statement of profit and loss. The change in fair value reflects the
high level of uncertainty regarding the future recovery of the travel industry to pre-COVID-19 levels.
(ii) Valuation of the redemption liability
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 their 40.0% ownership interest to Helloworld
Travel at the same point in time.
The signed sale and purchase agreement for the original 60.0% controlling interest purchased on 31 May 2018 outlines the
conditions and mechanism for determining the expected amount of consideration payable for the remaining 40.0% ownership
interest. The consideration is determined using Asia Escape Holidays’ financial performance in FY22 as a valuation multiple.
The option can be exercised on 1 July 2022 and the consideration is payable in FY23 via 75.0% cash and 25.0% shares in
Helloworld Travel.
The financial liability in relation to the put option of the remaining non-controlling interest in Asia Escape Holidays is recorded
as a redemption liability in note 24: other liabilities and the potential future purchase of the remaining ownership interest is
recorded in the redemption reserve within equity. In accordance with applicable accounting standards, the option is valued at
each reporting date and any changes in the fair value measurement of the redemption liability in subsequent financial years
are recorded in the profit or loss.
In the current year, Helloworld Travel has reviewed and revised its key assumptions used in determining the fair value
of the redemption liability. Based on the current estimates of future sales and the updated economic conditions, the
revised projected financial performance in FY22 has been lowered, resulting in the redemption liability being valued at
$1.2 million as at 30 June 2020. The fair value adjustment of $3.6 million has been recognised within operating expenses
in the profit or loss in the current year. The change in fair value reflects the high level of uncertainty regarding the future
recovery of the travel industry to pre-COVID-19 levels.
116
helloworldlimited.com.au (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 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.
Due to the impacts of COVID-19, the Group has a stronger focus on its liquidity position, which includes considering
future capital raisings and no final dividend being declared for the current period. Refer to note 39: events after the
reporting period for more information regarding capital raisings.
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. Subsequent to year-end, with respect to borrowings, additional covenant amendments were negotiated with
Westpac, refer note 20: borrowings.
31. Commitments and contingencies
(a) Commitments
The Group has no commitments as at 30 June 2020.
The Group has not entered into any material new lease agreements post 30 June 2020.
(b) Guarantees
The Group has on issue bank guarantees and letters of credit as at 30 June 2020 totalling $11.5 million (2019: $12.0
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 34: parent entity information.
(c) Business acquisition commitments
(i) Purchase of remaining ownership interest in MTA
In FY17, Helloworld Travel acquired 50.0% ownership in MTA for a total consideration of $14.2 million. The sale and
purchase agreement for the original 50.0% interest purchased outlines the conditions and mechanism for determining
the basis of the consideration for the remaining 50.0% ownership interest. Helloworld Travel has a call option to acquire
the remaining 50.0% ownership interest in MTA on 1 December 2021. The associate party has a put option to sell its
remaining 50.0% ownership interest to Helloworld Travel 30 days after the expiry of the call option period.
117
(ii) Commercial agreements entered into with BCD Travel and Gilpin Travel include options to
purchase 100% of the ownership interests in these businesses
During the prior year, Helloworld Travel entered into commercial agreements for the distribution of travel products. Two
agreements included conditions on the future potential purchase of these businesses in the financial year ending 2024.
In addition, the owners of the businesses have a put option to sell 100% of their ownership interest to Helloworld Travel
at the same point in time.
The value of the commitment for these arrangements is based on a future valuation of the financial performance of the
respective business in the preceding financial year prior to the exercise of the option, at a set market based valuation
multiple. As there is no current ownership control by Helloworld Travel in these businesses, no put option financial
instrument valuation is included in the 2020 financial statements.
(d) Contingencies
As at 30 June 2020, there are no significant contingent assets or contingent liabilities.
32. Related party transactions
(a) Subsidiaries
Details relating to subsidiaries are included in note 33: particulars in relation to controlled entities.
(b) Ultimate and direct parent
Helloworld Travel Limited is the legal owner of the Group. Refer to note 34: 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 13: 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:
• Entities related to Andrew Burnes and Cinzia Burnes hold 31.4% as at 30 June 2020 (2019: 31.4%) 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. Cinzia Burnes is an Executive Director of the Company.
• QH Tours Limited, a wholly owned subsidiary of Qantas Airways Limited, holds 15.4% as at 30 June 2020 (2019: 15.4%) 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
2020
$
2019
$
3,505,048
3,815,454
53,242
232,000
112,147
31,180
503,646
120,448
3,902,437
4,470,728
Detailed remuneration disclosures are provided in the remuneration report, contained within the Directors Report.
118
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
2020
$’000
2019
$’000
887
28,542
558
53,347
5,104
6,955
769
5,555
824
1,156
6,149
7,740
1,475
15,029
1,339
1,827
Terms and conditions and nature 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. 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 Group’s operations. Helloworld Travel
derived revenue from Qantas Airways Limited and its controlled entities (Qantas), through commercial agreements and
incur expenses under an agreement with Qantas for services including shared services, IT services, labour recharges,
frequent flyer arrangement, intellectual property rights and website agreements. Transactions and balances with these
entities are included in part (f) above.
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 loan transactions
(i) Hunter Travel Group Pty Ltd (HTG):
CONSOLIDATED
2020
$’000
2019
$’000
130
165
4,344
4,501
On 31 August 2017, Helloworld Travel provided a five year loan to the owners of HTG, amounting to $1.3 million. In the
prior year, Helloworld Travel provided an additional five year loan to the owners of HTG, amounting to $2.5 million. During
the current year, no repayments were made by the owners. As at 30 June 2020, the outstanding loan balance amounts to
$3.4 million (2019: $3.4 million).
119
The loan was provided to the HTG business to support its strategic business expansion. The loan was made on an arm’s
length basis under normal commercial terms and conditions and is secured by the assets of the borrowers. 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. Under the terms of the loan agreement, Helloworld Travel has the
right to convert some of the outstanding loan balance to HTG shares at specified conversion periods in three to five
years from the loan date, to increase its possible shareholding in HTG from 12% up to a maximum of 25%.
(ii) Cooney Investments Pty Ltd:
On 29 August 2018, Helloworld Travel provided a five year loan to the owners of Cooney Investments Pty Ltd, amounting
to $1.6 million. During the current year, repayments of $0.2 million (2019: $0.3 million) were received. As at 30 June 2020,
the outstanding loan balance amounts to $1.0 million (2019: $1.2 million).
(g) Transactions with key management personnel (KMP)
During the current year, the LTIP shares granted on 1 July 2016 to Michael Burnett (the Group’s previous Chief
Financial Officer) of 500,000 shares and Simon McKearney of 150,000 shares met their vesting conditions. The
Board determined the vesting conditions were met at the end of the grant performance period of 1 July 2019
based on the company’s financial performance exceeding the total shareholder returns target and individual key
performance targets over the three year vesting period.
In in prior year, Nick Sutherland was appointed as a KMP, resulting in the disclosure of 200,000 previously allocated
shares.
As at 30 June 2020, there are 700,000 (2019: 1,350,000) shares allocated under the LTIP program to KMP. A loan
is provided to each participant equal to the number of shares issued at market value. As at 30 June 2020, the loan
to the KMP amounts to $2.9 million (2019: $4.7 million). The movement in the loan value is a result of repayments
made by KMP and due to dividends earned which are offset against the future loan payable.
The loans are interest free and non-recourse and are accordingly not recorded as receivables on the Group’s
balance sheet. The loans are to be repaid to Helloworld Travel after vesting conditions are met and must be repaid
on the earlier of, the sale of the shares or 10 years after grant date. If the shares fail to vest, the shares will be
forfeited and the loan extinguished. During the vesting period, the shares receive dividends as per ordinary paid up
shares. The dividends earned on the shares are offset against any future loan payable under the scheme until the
loan is repaid.
Set out below is the summary of the shares and loan value with the KMP:
Year ended 30 June 2020
Number of Shares
Loan Value ($)
Name
Role
Opening
Balance
Addition as
KMP Granted
Vested
Closing
Balance
Opening
Balance Movement
Closing
Balance
M Burnett
Chief Financial Officer
500,000
S McKearney Group GM - New Zealand
150,000
J Constable
Group GM - Retail &
Commercial
N Sutherland Group GM - Corporate
500,000
200,000
1,350,000
-
-
-
-
-
- (500,000)
- (150,000)
-
-
1,349,427 (1,349,427)
404,828
(404,828)
-
-
-
-
- 500,000
2,265,421
(81,393) 2,184,028
- 200,000
711,254
(32,557)
678,697
- (650,000) 700,000
4,730,930 (1,868,205) 2,862,725
Year ended 30 June 2019
Number of Shares
Loan Value ($)
Name
Role
Opening
Balance
Addition as
KMP Granted
Vested
Closing
Balance
Opening
Balance Movement
Closing
Balance
M Burnett
Chief Financial Officer
500,000
S McKearney Group GM - New Zealand
150,000
J Constable
Group GM - Retail &
Commercial
500,000
-
-
-
N Sutherland Group GM - Corporate
-
200,000
1,150,000 200,000
-
-
-
-
-
- 500,000
1,421,356
(71,929) 1,349,427
- 150,000
426,407
(21,579)
404,828
- 500,000
2,337,350
(71,929) 2,265,421
- 200,000
-
711,254
711,254
-1,350,000
4,185,113
545,817 4,730,930
120
helloworldlimited.com.au The detailed KMP remuneration disclosures are provided in the Remuneration Report, contained within the Directors Report.
33. Particulars in relation to controlled entities as at 30 June 2020
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 40. The proportion of ownership interest
shown in this table is equal to the proportion of voting power held.
NAME
COUNTRY OF INCORPORATION
OWNERSHIP INTEREST
2019
%
2020
%
Helloworld Travel Limited 1, 2
ACN 003 683 967 Pty Limited 2
AOT Group Limited 2
AOT Inbound Pty Limited 2
AOT Retail Pty Limited 2
ATS Pacific Pty Limited 2
Aus STS Holdco II Pty Limited 2
Australian Online Travel Pty Limited 2
Best Flights Pty Limited 2
Communico Services Pty Limited 2, 3
Flight Systems Pty Limited 2
Granted Worldwide Pty Limited 2, 3
GSS Travel NZ Pty Limited 2, 3
Harvey Holidays Pty Limited 2
Harvey World Travel Franchises Pty Limited 2
Harvey World Travel Group Pty Limited 2
Helloworld Franchising Pty Limited 2
Helloworld Group Pty Limited 2
Helloworld IP Pty Limited 2
Helloworld Services Pty Limited 2
Helloworld Travel Services (Australia) Pty Limited
Helloworld Travel Services Group Pty Limited 2
Helloworld Travel Services Holdings Pty Limited 2
Helloworld Travel Southland Pty Limited 2
Jetset Pty Limited 2
Jetset Travelworld Network Pty Limited 2
JTG Corporate Pty Limited 2
Keygate Holdings Pty Limited
Luxury Getaways Pty Limited 2
Magellan Travel Pty Limited 2
Nexus Point Travel Pty Limited 2, 3
Pillowpoints Pty Limited 2
Qantas Holidays Limited 2
QBT Pty Limited 2
Quay Services Pty Limited 2, 3
Retail Travel Investments Pty Limited 2
Show Group Pty Limited 2
Skiddoo IT Pty Limited 2
Skiddoo Pty Limited 2
Sunlover Holidays Pty Limited 2
Transonic Travel Pty Limited 2
Traveledge Pty Limited 3
Travelpoint Pty Limited 2
Travelscene Pty Limited 2
Travelworld Pty Limited 2
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
60.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
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
60.0
100.0
100.0
-
100.0
100.0
100.0
-
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0
100.0
121
NAME
COUNTRY OF INCORPORATION
OWNERSHIP INTEREST
2019
%
2020
%
Viva Holidays Pty Limited 2, 3
AOT Business Consulting (Shanghai) Limited
Allied Tour Service (Pacific) Pte Limited
Coral Sun (Fiji) Pte Limited
Great Sights (Fiji) Pte Limited
Tourist Transport (Fiji) Pte Limited
Helloworld Travel Services Greece M.I.K.E 3
AOT India PVT LTD
AOT New Zealand Limited
Atlantic and Pacific Business Travel Limited
Australian Travel Service (Pacific) Limited
Atlas Limited 3
Biztrav Limited
GP Holiday Shoppe Limited
Gullivers Pacific Limited
Harvey World Travel (2008) Limited
Helloworld NZ Franchising Limited
Helloworld NZ Limited
Helloworld Travel Services (NZ) Limited
Just Tickets Limited
Pacific Leisure Group Limited
Show Group (NZ) Limited
Sunlover Holidays Limited
Travel Brokers Limited
United Travel Limited
Williment Travel Group Limited
Skiddoo Management Inc.
Skiddoo Philippines Inc.
Helloworld Travel Singapore Pte. Ltd
Skiddoo Pte. Ltd
Concorde International Travel Inc.
Helloworld Travel Services USA Inc.
1. Helloworld Travel Limited
Australia
China
Fiji
Fiji
Fiji
Fiji
Greece
India
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Philippines
Philippines
Singapore
Singapore
United States of America
United States of America
100.0
100.0
100.0
60.0
60.0
60.0
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
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
-
-
100.0
100.0
60.0
60.0
60.0
-
100.0
100.0
100.0
100.0
-
76.6
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
Helloworld Travel Limited is the legal owner of the Group. Refer note 34: parent entity information for further details.
2. Deed of cross guarantee
These entities are included in the Deed of Cross Guarantee, refer note 35: deed of cross guarantee for further details.
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 standalone financial statements.
3. Changes to controlled entities during the current year
During the current year, the following entities were established or acquired following a business acquisition:
• On 4 July 2019, Helloworld Travel registered a new wholly owned entity, Viva Holidays Pty Limited.
122
helloworldlimited.com.au • On 1 October 2019, Helloworld Travel acquired 100% of the TravelEdge Group, consisting of the following legal
entities providing corporate travel management services:
• TravelEdge Pty Limited
• Communico Services Pty Limited
• GSS Travel NZ Pty Limited
• Granted Worldwide Pty Limited
• Nexus Point Travel Pty Limited
• Quay Services Pty Limited
• On 17 February 2020, Helloworld Travel registered a new wholly owned entity, Helloworld Travel Services Greece
M.I.K.E. Following incorporation, this legal entity in Greece provides back office technology system development for
the wholesale and inbound businesses of the Group.
• On 1 March 2020, Helloworld Travel completed the acquisition of 100% of the issued capital of Atlas Limited, a travel
agent member in New Zealand providing corporate and leisure travel solutions.
On 30 June 2020, Helloworld Travel divested its U.S Wholesale Division. This sale included the disposal of two legal
entities registered in the USA:
• Concorde International Travel Inc.
• Helloworld Travel Services USA Inc.
34. 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/(loss) after income tax
TOTAL COMPREHENSIVE INCOME/(LOSS)
Summarised statement of financial position
Total current assets
Total non-current assets
TOTAL ASSETS
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share based payments reserve
Accumulated losses
TOTAL EQUITY
PARENT
2020
$’000
(82,122)
(82,122)
2019
$’000
25,490
25,490
PARENT
2020
$’000
71,656
159,662
231,318
5,469
5,469
2019
$’000
75,857
255,017
330,874
-
-
225,849
330,874
576,300
2,525
573,052
2,321
(352,976)
(244,499)
225,849
330,874
123
(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 35: 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 2020 the tax consolidated group had a tax payable of
$5.4 million (2019: $1.0 million receivable).
(d) Parent entity contingencies
As at 30 June 2020, 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.
35. Deed of cross guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, the entities identified in note
31: 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 in the prior year. 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:
• Communico Services Pty Ltd
• Granted Worldwide Pty Ltd
• GSS Travel NZ Pty Ltd
• Harvey Holidays Pty Ltd
• Nexus Point Travel Pty Ltd
• Qantas Holidays Limited
• Quay Services Pty Ltd
• Viva Holidays Pty Ltd
The consolidated income statement and statement of financial position have been prepared in accordance with
the accounting policy note 40: 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.
124
helloworldlimited.com.au (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 expenses
Operating expenses
Depreciation and amortisation expense
Impairment charges
Finance expense
Profit on disposal of investments
Share of profit in associates accounted for using the equity method
PROFIT/(LOSS) BEFORE INCOME TAX BENEFIT
Income tax benefit
PROFIT/(LOSS) AFTER INCOME TAX BENEFIT
OTHER COMPREHENSIVE INCOME/(LOSS)
Exchange differences on translation of foreign operations
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
CLOSED GROUP
2020
$’000
2019
Restated
$’000
150,148
155,543
(76,822)
(27,212)
(10,860)
(2,000)
(29,605)
(12,982)
(66,350)
(3,372)
1,075
(25)
(78,005)
6,918
(71,087)
(73,636)
(33,613)
(8,350)
(118)
(15,260)
(11,110)
-
(2,761)
-
119
10,814
3,589
14,403
570
(255)
(70,517)
14,148
(i) Revenue includes $10.0 million (2019: $22.5 million) in dividends received from Australian entities outside the
Closed Group. These dividends are not assessable income for tax purposes.
(b) Closed Group movement in accumulated losses
CLOSED GROUP
2020
$’000
2019
Restated
$’000
ACCUMULATED LOSSES AT THE BEGINNING OF THE FINANCIAL YEAR
(185,866)
(177,635)
Change in accounting policy (i)
Profit after income tax benefit
Dividends
Dividends associated with LTIP
Retained earnings transferred in due to change in closed group
Transfer of predecessor accounting reserve to accumulated losses
-
(71,087)
(26,815)
460
35,818
170
(192)
15,150
(23,657)
468
-
-
ACCUMULATED LOSSES AT THE END OF THE FINANCIAL YEAR
(247,320)
(185,866)
(i) On 1 July 2019, Helloworld Travel adopted AASB 16: Leases, with the effective date of transition being 1 July 2018.
A change in accounting policy has arisen in the Australian Share Services businesses within the Closed Group that
hold the majority of property leases. For further details on the nature of the Group’s accounting policy change, refer
note 2: changes in accounting standards.
125
CLOSED GROUP
2020
$’000
2019
Restated
$’000
87,933
26,168
6,607
185
-
120,893
4,474
1,091
16,399
180,461
23,605
88,243
314,273
435,166
29,834
42,471
11,171
146
1,011
84,633
4,656
1,463
17,974
160,136
14,625
164,146
363,000
447,633
132,355
173,121
6,220
21,461
5,239
42,086
207,361
100,519
13,922
25,820
997
1,419
142,677
350,038
5,822
9,990
246
17,310
206,489
56,428
15,486
19,106
2,438
5,125
98,583
305,072
85,128
142,561
337,327
(4,879)
334,079
(5,652)
(247,320)
(185,866)
85,128
142,561
(c) Closed Group statement of financial position as at 30 June
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Inventories
Income tax receivable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax assets
Investments
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Provisions
Income tax payable
Deferred revenue
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
126
helloworldlimited.com.au
36. Business acquisitions
Summary of current year business acquisitions
During the current year, Helloworld has undertaken two acquisitions. The net cash flow and total purchase consideration
for each acquisition is summarised below:
2020
ACQUISITION OF CONTROLLED ENTITIES
TravelEdge Group (a)
Atlas Limited (b)
TOTAL BUSINESS ACQUISITIONS
Net outflow of cash –
investing activities
$’000
Total purchase
consideration
$’000
20,325
1,426
21,751
22,587
2,056
24,643
The details of the acquisitions undertaken during the current year are outlined below:
(a) Acquisition of the TravelEdge Group
(i) Summary of acquisition
On 1 October 2019, Helloworld Travel acquired 100% of the TravelEdge Group, one of Australia’s largest privately
owned corporate travel management companies. TravelEdge operates through six divisions, providing corporate
travel management solutions, event and group planning and delivery, holiday and leisure services and travel prizing
and incentives. The acquisition expands the Group’s corporate and travel business.
Details of the purchase consideration, net assets acquired and goodwill of TravelEdge are as follows:
Purchase price
Completion adjustments
PURCHASE CONSIDERATION
The final assets and liabilities recognised from the TravelEdge acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Property, plant and equipment
Right of use asset
Intangible assets - software
Intangible assets - brand
Intangible assets – customer relationships
Deferred tax assets
Trade and other payables
Provisions
Lease liability
Deferred revenue
Deferred tax liability
Income tax payable
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
24,000
(1,413)
22,587
$’000
2,262
5,082
4,943
195
2,968
232
500
7,200
387
(12,061)
(1,349)
(2,888)
(1,680)
(2,310)
(149)
3,332
19,255
22,587
127
During the current year, Helloworld Travel updated the acquisition accounting to reflect the identification and
measurement of separate intangible assets of brand names and customer bases, which were disaggregated from
provisional goodwill. Brand names of $0.5 million represents the value attributable on acquisition to the benefits
associated with having a recognisable brand name and is amortised over a useful life of 10 years. Customer
relationships of $7.2 million represents the value attributable on acquisitions to key corporate customers and is
amortised over a useful life of 14 years.
The assets and liabilities of TravelEdge acquired by Helloworld Travel are recorded at fair value for accounting
purposes, resulting in goodwill of $19.2 million. The acquisition accounting was determined at 30 June 2020 and
subsequent adjustments may arise within 12 months of the acquisition date, including finalisation of the fair value
of the net assets acquired, the allocation of the purchase price to the separate identifiable intangible assets and the
impact of tax finalisation.
The goodwill acquired primarily represents processes and technical knowledge acquired, the enlarged product
and service offering that Helloworld Travel can now provide to its customers, future synergy opportunities, the
experience of TravelEdge’s management and the future profitability of the business and the acquired customers.
The goodwill has been allocated to the Australia travel management cash generating unit and is not deductible for tax
purposes.
AASB 136 Impairment of Assets requires TravelEdge Group to be tested for impairment immediately before being
absorbed into the Australia travel management CGU. An impairment loss of $13.7 million has been recognised in the
current financial year. Refer to note 16: intangible assets (c) for more information.
(ii) Purchase consideration – cash outflow
Cash paid
Cash and cash equivalents acquired
NET OUTFLOW OF CASH – INVESTING ACTIVITIES
$’000
(22,587)
2,262
(20,325)
(iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 1 October 2019 to 30 June 2020, and excluding acquisition costs of $1.2 million,
TravelEdge contributed revenue of $7.9 million and net profit before income tax expense of $0.1 million to the Group’s results.
If the date of acquisition had been 1 July 2019, the Group revenue and net profit before income tax expense for the year
ended 30 June 2020 would have been $294.7 million and $(67.8) million respectively. These results were based on the
aggregation of TravelEdge’s pre-acquisition and Helloworld Travel’s post acquisition results, excluding one-off vendor
related sale costs and Group acquisition costs.
(iv) Acquisition related costs
Acquisition related costs of $1.2 million were incurred in the acquisition and are included in operating 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.
(b) Atlas Limited (Atlas)
(i) Summary of acquisition
On 1 March 2020, Helloworld Travel completed the acquisition for 100% of Atlas Limited, a boutique travel
management company providing tailored solutions for corporate, groups, conference and leisure travel. Atlas focuses
on using the latest technology and on-line travel solutions to enhance their product offerings and overall customer
experience. The acquisition will allow Helloworld Travel to expand in the New Zealand corporate travel sector, while
complementing existing corporate operations in New Zealand with additional expertise, knowledge and technology.
128
helloworldlimited.com.au Details of the purchase consideration, net assets acquired and goodwill of Atlas are as follows:
Purchase price
PURCHASE CONSIDERATION
The provisional assets and liabilities recognised from the Atlas acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Property, plant and equipment
Intangible assets - software
Trade and other payables
Deferred revenue
Income tax payable
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
2,056
2,056
$’000
630
282
58
85
5
(785)
(105)
(4)
166
1,890
2,056
The assets and liabilities of Atlas acquired by Helloworld Travel are recorded at fair value for accounting purposes,
resulting in goodwill of $1.9 million. The acquisition accounting was provisionally determined at 30 June 2020 and
subsequent adjustments may arise within 12 months of the acquisition date, including finalisation of the fair value
of the net assets acquired, the allocation of the purchase price to the separate identifiable intangible assets and the
impact of tax finalisation.
The provisional goodwill acquired primarily represents processes and technical knowledge acquired, the enlarged
product and service offering that Helloworld Travel can now provide to its customers, future synergy opportunities,
the experience of Atlas’s management and the future profitability of the business and the acquired customers. The
provisional goodwill has been allocated to the New Zealand cash generating unit and is not deductible for tax purposes.
(ii) Purchase consideration – cash outflow
Cash paid
Cash and cash equivalents acquired from controlled entities
NET INFLOW OF CASH – INVESTING ACTIVITIES
$’000
(2,056)
630
(1,426)
(iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 1 March 2020 to 30 June 2020, Atlas contributed revenue of $1.0 million and net profit
before income tax expense of $0.2 million to the Group’s results.
If the date of acquisition had been 1 July 2019, the Group revenue and net profit before income tax expense for the year
ended 30 June 2020 would have been $283.7 million and $(68.7) million respectively. These results were based on the
aggregation of Atlas’s pre-acquisition and Helloworld Travel’s post acquisition results.
(iv) Acquisition related costs
Acquisition related costs of $0.1 million were incurred 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.
129
Summary of prior year business acquisitions
During the current year, Helloworld has finalised the acquisition accounting for prior year acquisitions. The net cash
flow and total purchase consideration for each acquisition is summarised below:
2018
ACQUISITION OF BUSINESSES
Show Group business (c)
ACQUISITION OF CONTROLLED ENTITIES
Williment Travel Group Limited (d)
ADJUSTMENTS TO FY18 ACQUISITIONS OF CONTROLLED ENTITIES
Asia Escape Holidays settlement adjustment (e)
TOTAL BUSINESS ACQUISITIONS
Net outflow/(inflow)
of cash – investing
activities
$’000
Total purchase
consideration
$’000
6,063
7,000
(614)
760
(210)
5,239
-
7,760
The details of the acquisition accounting related to prior year acquisitions, including any updates made in the current
year in accordance with applicable accounting standards are outlined below:
(c) Acquisition of the Show Group business (Show Group)
(i) Summary of acquisition
On 20 December 2018, Helloworld Travel acquired 100% of the Show Group business, a leading travel management
specialist and freight logistics organisation servicing the entertainment, film, arts, fashion, corporate and sporting
industries. The acquisition enables Helloworld Travel to grow in the specialised travel and logistics segment, while
complementing our existing travel management business portfolio.
Details of the purchase consideration, net assets acquired and goodwill of Show Group are as follows:
Cash paid
PURCHASE CONSIDERATION
The final assets and liabilities recognised from the Show Group acquisition are as follows:
$’000
7,000
7,000
Cash and cash equivalents
Trade and other receivables
Accrued revenue
Property, plant and equipment
Right of use asset
Intangible assets – software
Intangible assets – brand
Intangible assets – customer bases
Deferred tax assets
Trade and other payables
Provisions
Lease liability
Deferred revenue
Deferred tax liability
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
130
Provisional at
30 June 2019
$’000
Adjustments
$’000
Final at
30 June 2020
$’000
937
5,714
650
893
-
120
-
-
417
(5,197)
(1,365)
-
(740)
-
1,429
5,571
7,000
-
(70)
-
-
403
-
857
1,506
65
-
(176)
(374)
(74)
(709)
1,428
(1,428)
-
937
5,644
650
893
403
120
857
1,506
482
(5,197)
(1,541)
(374)
(814)
(709)
2,857
4,143
7,000
helloworldlimited.com.au
During the current year, Helloworld Travel finalised the acquisition accounting primarily to reflect the identification
and measurement of separate intangible assets of brand names and customer bases, which were disaggregated from
provisional goodwill. Brand names of $0.9 million represents the value attributable on acquisition to the benefits
associated with having a recognisable brand name and is amortised over a useful life of 20 years. Customer bases of
$1.5 million represents the value attributable on acquisition to Show Group’s customer relationships and is amortised
over a useful life of 8 years.
The assets and liabilities of Show Group acquired by Helloworld Travel are recorded at fair value, resulting in goodwill
of $4.1 million. The goodwill acquired primarily represents systems, processes and technical knowledge acquired, the
enlarged product and service offering that Helloworld Travel now offers to its customers, future synergy opportunities,
the experience of the Show Group’s management and the future opportunities arising from exposure to a new market.
It will not be deductible for tax purposes. The goodwill has been allocated to the Australia travel management cash
generating unit.
(ii) Purchase consideration – cash outflow
Cash paid
Cash and cash equivalents acquired
NET OUTFLOW OF CASH – INVESTING ACTIVITIES
$’000
(7,000)
937
(6,063)
(iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 20 December 2018 to 30 June 2019, Show Group contributed revenue of $10.7 million
and net profit before income tax expense of $0.1 million to Helloworld Travel’s results.
If the date of the Show Group acquisition was 1 July 2018, the enlarged Group revenue and net profit before income tax
expense for the year ended 30 June 2019 would have been $376.6 million and $57.5 million respectively. These results
are based on the aggregation of Helloworld Travel’s and Show Group’s 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 Williment Travel Group Limited (Williment Travel)
(i) Summary of acquisition
On 5 June 2019, Helloworld Travel acquired 100% of the issued capital of Williment Travel Group Limited, a New
Zealand sports travel specialist. The acquisition of Williment Travel provides Helloworld Travel with the ability to
offer a broader range of unique travel offerings to its network members.
Details of the purchase consideration, net assets acquired and goodwill of Williment Travel are as follows:
Cash paid
PURCHASE CONSIDERATION
$’000
760
760
131
The final assets and liabilities recognised from the Williment Travel acquisition are as follows:
Cash and cash equivalents
Trade and other receivables
Deferred tax assets
Trade and other payables
Provisions
Deferred revenue
Income tax payable
NET ASSETS ACQUIRED (EXCLUDING GOODWILL)
Goodwill resulting from the acquisition
FAIR VALUE OF NET ASSETS ACQUIRED
$’000
1,374
4,697
15
(239)
(52)
(5,913)
(24)
(142)
902
760
The assets and liabilities of Williment Travel acquired by Helloworld Travel are recorded at fair value, resulting in
goodwill of $0.9 million. The goodwill acquired primarily represents processes and technical industry acquired,
the enlarged product and service offering that Helloworld Travel can now provide to its customers, future synergy
opportunities and the future profitability of the business. It will not be deductible for tax purposes. The goodwill has
been allocated to the New Zealand 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
(760)
1,374
614
(iii) Revenue and profit before income tax expense contribution
From the date of the acquisition, 5 June 2019 to 30 June 2019, Williment Travel contributed revenue of $0.3 million and
net profit before income tax expense of $0.2 million to Helloworld Travel’s results.
If the date of the Williment Travel acquisition was 1 July 2018, the Group revenue and net profit before income tax
expense for the year ended 30 June 2019 would have been $361.2 million and $55.7 million respectively. These results
are based on the aggregation of Helloworld Travel’s and Williment Travel’s results.
(iv) Acquisition related costs
Acquisition related costs of less than $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 Keygate Holdings Pty Ltd (trading as Asia Escape Holidays)
During the prior year, Helloworld Travel received $0.2 million in cash as a result of a settlement adjustment.
132
helloworldlimited.com.au 37. Business disposals
(a) Current year disposal of U.S Wholesale Division
On 30 June 2020, Helloworld Travel divested its U.S Wholesale Division.
The U.S Wholesale Division formed part of the Group’s Rest of World segment.
The consideration and resulting profit on disposal is outlined below:
Settlement adjustment payable
Carrying amount of net liabilities sold
LOSS ON DISPOSAL OF NET LIABILITIES SOLD
Foreign currency translation reserve released to profit or loss on disposal
Transaction costs
PROFIT ON DISPOSAL OF U.S WHOLESALE DIVISION
The financial summary of the current year cash flow impact resulting from the disposal is outlined below:
Cash and cash equivalents disposed within business
NET OUTFLOW OF CASH – INVESTING ACTIVITIES
The financial summary of the profit or loss excluded from underlying operating segment results:
$’000
(1,860)
1,663
(197)
1,422
(150)
1,075
$’000
(1,215)
(1,215)
Revenue
Operating expenses
LOSS BEFORE INCOME TAX EXPENSE
Depreciation and amortisation
Interest expense
TRADING LOSSES RELATING TO U.S WHOLESALE DIVISION
U.S WHOLESALE
DIVISION
2020
$’000
3,765
(6,587)
(2,822)
519
19
(2,284)
2019
$’000
6,704
(7,515)
(811)
218
-
(593)
(b) Prior year disposal of Insider Journeys businesses
On 30 June 2019, Helloworld Travel sold its Insider Journeys business to Eight at Work Holding Pty Ltd, a member of an
international tour operation group with multiple destination management company (DMC) operations in South East Asia.
As part of the sale, Helloworld Travel:
• Disposed of its legal entities in Vietnam, Laos and the United Kingdom;
• Disposed of its assets and liabilities in the Cambodia branch operations; and
• Disposed of its Australia based Insider Journeys business that sells travel products into Asia.
Insider Journeys formed part of the Rest of World segment and there is no goodwill allocated to this segment or the
Insider Journeys business. The Insider Journeys business was not considered core to Helloworld Travel’s operations, nor
its future business direction. The revenue in the prior year from the Insider Journeys business was $4.5 million and the
loss before income tax expense was $(0.7) million.
133
The financial summary of the consideration and resulting profit on disposal is outlined below:
Cash consideration
Settlement adjustment receivable
Contingent consideration receivable
TOTAL CONSIDERATION
Carrying amount of net assets sold
Disposal costs
PROFIT ON DISPOSAL OF INSIDER JOURNEYS BUSINESS
The financial summary of the prior year cash flow impact resulting from the disposal is outlined below:
Cash consideration on sale
Cash and cash equivalents disposed within business
NET INFLOW OF CASH – INVESTING ACTIVITIES
$’000
980
140
1,233
2,353
(180)
(180)
1,993
$’000
980
(523)
457
The settlement adjustment receivable of $0.1 million, reported within current trade and other receivables in the
consolidated statement of financial position, relates to the excess working capital on 30 June 2019 compared with the
target working capital outlined in the sale and purchase contract. The working capital adjustment was received during
the current financial year.
The contingent consideration receivable of $1.2 million was deferred and reported as a non current receivable on the
consolidated statement of financial position, refer note 11: trade and other receivables. The contingent consideration
was calculated based on a fixed percentage of eligible total transaction value expected by the new owners of the Insider
Journeys business during the subsequent three year period commencing 1 July 2019.
The contingent consideration expected for each future year (FY20-FY22) will be calculated based on the eligible
total transaction value achieved and invoiced quarterly, with settlement from the new owners on normal commercial
terms. The contingent consideration is a financial asset measured through profit or loss and therefore any future
remeasurement of the consideration is taken to the consolidated statement of profit or loss. Refer note 30: financial
risk management for further details.
38. Share based payments
(a) Omnibus incentive plan
Background
At the Helloworld Travel Annual General Meeting held on 14 November 2019, the Group’s shareholders voted for the
adoption of the Helloworld Travel Limited Omnibus Incentive Plan (the Plan). Under the Plan, the Group can reward and
incentivise employees, directors (including both executive and non-executive directors), contractors and consultants
by offering shares, performance rights or options. Any financial instruments granted under the Plan are held via an
employee share trust (the Trust) established with Perpetual Corporate Trust Limited.
Key attributes and valuation of the FY20 grants
During the current year, 146,932 shares were granted under the omnibus incentive plan. The shares were issued for
nil consideration and have no future performance criteria. The shares are held by the Trust and will be transferred to
the employees upon the earlier of resignation or completion of three years of service from grant date. All shares rank
equally in all respects with existing shares from the date of their issue. Dividends on these shares are payable to the
respective employee from date of issue.
134
helloworldlimited.com.au
The fair value of the shares issued under the Plan is based on the number of shares issued at grant date and the 5 day
volume weighted average price prior to the 11 December 2019 which equates to $4.57 per share. As a result, the total
share based payment expense recognised in the current year in the statement of profit or loss and other comprehensive
income amounts to $0.7 million.
(b) Loan funded long term incentive plan (LTIP)
Key attributes and valuation
The key attributes of the plan and grants provided since inception are:
FY19 grants
FY18 grants
FY17 grant
Grant date
Vesting date
Number of shares issued
Issue and exercise price
50% vesting
100% vesting
Performance criteria
26 March 2019
1 April 2018
31 December 2020
31 December 2020
150,000
$4.67 per share
$5.50 share price
$6.50 share price
TSR and KPIs
700,000
$4.67 per share
$3.81 per share
$5.50 share price
$5.50 share price
$6.50 share price
$6.50 share price
TSR and KPIs
TSR and KPIs
1 July 2017
1 July 2020
850,000
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 total of 4,300,000 loan funded LTIP shares have been issued over the three year period since the inception of the
program. During the current year, nil (2019: 150,000) shares were granted under the LTIP.
A loan is provided to the participant at grant date equal to the share value at the scheme commencement multiplied
by 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 restriction is placed on the shares until the vesting date has been reached and the
performance criteria have been assessed. Should the shares vest, they will be removed from the holding restriction. 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 are 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. The fair value was determined using a version of the Black Scholes
model incorporating a Monte Carlo simulation analysis to value the market-based performance conditions.
The fair value of the respective grants with key assumptions used in determining its value is outlined as follows:
FY19 grants
FY18 grants
FY17 grant
Grant date
Vesting date
26 March 2019
1 April 2018
31 December 2020
31 December 2020
Fair value of instrument
$0.99
$0.99
1 July 2017
1 July 2020
$0.78
1 July 2016
1 July 2019
$0.77
The fair value incorporates:
Expected price volatility (i)
30% to 40%
30% to 40%
35% to 45%
35% to 45%
Expected dividend yield
Risk free interest rate
3.40%
2.50%
3.40%
2.50%
3.75%
2.41%
2.00%
1.78%
(i) The expected price volatility was based on the historic volatility, adjusted for any expected changes to future
volatility due to publicly available information.
135
Financial summary
The movement in the number of shares held under the loan funded LTIP is summarised as follows:
Year ended 30 June 2020
Number of shares under holding restriction
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price ($)
Opening
balance
01-Jul-16
1-Jul-16
01-Jul-17
01-Jul-17
1-Jul-19
1-Jul-20
01-Apr-18
01-Apr-18
1-Jan-21
26-Mar-19 01-Apr-18
1-Jan-21
3.00
3.81
4.67
4.67
TOTAL
2,200,000
200,000
700,000
150,000
3,250,000
Granted (i)
Lapsed (ii) Vested (iii)
Closing
balance
(iv)
Vested and
exercisable
at the end of
the year (v)
-
-
-
-
-
-
-
(200,000)
-
(2,200,000)
-
-
-
-
200,000
500,000
150,000
(200,000)
(2,200,000)
850,000
-
-
-
-
-
Year ended 30 June 2019
Number of shares under holding restriction
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price ($)
Opening
balance
Granted (i)
Lapsed (ii) Vested (iii)
Closing
balance
(iv)
Vested and
exercisable
at the end of
the year (v)
01-Jul-16
1-Jul-16
01-Jul-17
01-Jul-17
1-Jul-19
1-Jul-20
01-Apr-18
01-Apr-18
1-Jan-21
26-Mar-19 01-Apr-18
1-Jan-21
3.00
3.81
4.67
4.67
2,450,000
850,000
700,000
-
-
-
-
150,000
(250,000)
(650,000)
-
-
- 2,200,000
-
-
-
200,000
700,000
150,000
TOTAL
4,000,000
150,000
(900,000)
- 3,250,000
-
-
-
-
-
(i) During the current year, nil (2019: 150,000) shares were granted under the loan funded LTIP;
(ii) During the current year, 200,000 (2019: 900,000) shares lapsed due to the resignation of certain employees;
(iii) On 1 July 2019, 2,200,000 loan funded LTIP shares met their vesting conditions as determined by the Board,
based on meeting TSR and individual KPI targets over the three year vesting period. As at 30 June 2020, 850,000
(2019: 3,250,000) LTIP shares remain with future vesting conditions to be met.
(iv) On 1 July 2020, 200,000 loan funded LTIP shares under the grant date of 1 July 2017 did not met their vesting
conditions as determined by the Board, based on meeting TSR and individual KPI targets over the three year vesting period.
(v) As at 30 June 2020, nil shares (2019: nil) had met vesting conditions, which had not yet been exercised.
(c) Franchise loyalty shares
Background
Helloworld Travel issued shares to franchisees, who had elected to participate in the franchise loyalty plan. The shares
were issued for nil consideration and have the non-market condition of remaining with the Helloworld Travel network
during the vesting period. If the franchisee left the Helloworld Travel network prior to the vesting date, the shares
allocated to the respective franchisee are forfeited.
At the vesting date, franchisees that satisfied the required conditions of the scheme were able to deal with their
allocated shares without restriction. 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.
The franchise loyalty plan ceased on 1 August 2019 after the final FY18 grant vested.
136
helloworldlimited.com.au Key attributes and valuation
The key attributes of the plan and grants provided since inception are:
Grant date
Vesting date
Number of shares issued
Market price at issue
Vesting conditions
FY18 grants
FY17 grant
1 February 2018
24 November 2017
20 December 2016
1 November 2018
1 August 2019
1 November 2018
32,750
30,000
666,000
$4.79 per share
$4.94 per share
$3.75 per share
Non-market condition
Non-market condition
Non-market condition
During the current year, no shares were issued under the franchise loyalty plan. As a result, a total of 728,750
franchise loyalty shares have been issued over the three year period since the inception of the program.
The fair value of the shares issued under the franchise loyalty plan was based on the number of shares issued at grant
date and the market price at issue date. The issue price is the closing market price on the ASX at the date of issue.
The fair value of the shares is amortised over the vesting period as a share based payment expense.
Financial summary
The movement in the number of shares held under the franchise loyalty plan is summarised as follows:
Year ended 30 June 2020
Number of shares under holding restriction
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price ($)
Opening
balance
Granted (i)
Lapsed (ii) Vested (iii)
Vested and
exercisable
at the end of
the year (iv)
Closing
balance
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
-
30,000
-
30,000
-
-
-
-
-
-
-
-
-
(30,000)
-
(30,000)
-
-
-
-
-
-
-
-
Year ended 30 June 2019
Number of shares under holding restriction
Grant
Date
Start of
performance
period
End of
performance
period
Exercise
price ($)
Opening
balance
Granted (i)
Lapsed (ii) Vested (iii)
Vested and
exercisable
at the end of
the year (iv)
Closing
balance
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
647,750
30,000
32,750
710,500
-
-
-
-
(5,000)
(642,750)
-
-
-
-
30,000
(32,750)
-
(5,000)
(675,500)
30,000
-
-
-
-
(i) During the current year, nil (2019: nil) shares were granted under the franchise loyalty plan;
(ii) During the current year, nil (2019: 5,000) shares lapsed and were subsequently sold on market, reflecting certain
franchisees leaving the Helloworld Travel network;
(iii) During the current year, 30,000 (2019: 675,500) shares issued under the franchise loyalty plan with a grant date
of 24 November 2017 met their vesting conditions. As a result, the holding restrictions were removed. As at 30 June
2020, nil (2019: 30,000) franchise loyalty shares remain with future vesting conditions to be met.
(iv) As at 30 June 2020, there were nil shares (2019: nil) that met vesting conditions, but were not yet exercised.
137
(d) Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period are as follows:
Share based payment expense under loan funded LTIP
Share based payment expense under franchise loyalty plan
Share based payment expense under omnibus incentive plan
TOTAL SHARE BASED PAYMENTS EXPENSE
CONSOLIDATED
2020
$’000
2019
$’000
195
7
671
873
897
582
-
1,479
The share based payment expenses relating to the loan funded LTIP and franchise loyalty plan were recognised in the
share based payments reserve, which forms part of the reserves in the consolidated statement of financial position. The
share based payment expense relating to the omnibus incentive plan was recognised as an increase in share capital.
39. Events after the reporting period
No matter or circumstance has arisen since 30 June 2020 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:
(a) Equity raising
Subsequent to year end, Helloworld Travel completed a $50.0 million fully underwritten equity raise to strengthen the
balance sheet and provide additional liquidity to manage the prolonged period of disruption to the global travel industry.
The $50.0 million equity raise comprised of an institutional placement and an entitlement offer ($48.5 million net
of costs). It resulted in the issue of 30.3 million new fully paid ordinary shares in Helloworld Travel, representing
approximately 24.3% of existing shares on issue. The shares ranked equally with existing shares on issue. The issue
price of $1.65 per share represented a 16% discount to the last traded price prior to announcement of the equity raise
of $1.97 on 15 July 2020.
(b) Westpac loan facility banking covenants
Subsequent to year-end, with respect to borrowings, additional covenant amendments were negotiated with Westpac,
refer note 1(c): Going concern.
(c) Restructure of the New Zealand business
Post year end, the Group commenced a restructure of our New Zealand operations, further reducing headcount by 160
personnel at a cost of $2.4 million including all entitlements. The charge will be reflected in our FY21 statutory results.
(d) Further government travel restrictions in response to COVID-19 pandemic
The impact of COVID-19 has continued to evolve. A Stage 4 lockdown remains in place across parts of Victoria,
including Melbourne. Domestic borders within Australia remain constrained. These actions adversely impact domestic
travel and tourism.
138
helloworldlimited.com.au 40. 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 2020 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 40(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.
139
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. Unless the adjustment relates to additional information obtained within twelve
months from the date of acquisition, about circumstances that existed at the acquisition date.
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.
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helloworldlimited.com.au Foreign exchange gains or losses that relate to borrowings are presented in the statement of 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 revenue, predominantly in the form of commissions.
Revenue is recognised when the performance obligations under the relevant revenue contracts have been met. The specific
accounting policies for the Group’s key revenue streams are outlined below:
(i) Commissions
Commissions consist of at source commissions and override commissions which are based on achievement of volume based
sales targets with specific airline and leisure partners. The Group acts in the capacity of an agent rather than principal with
the facilitation of tour, travel and accommodation services as the Group’s customer is a travel agent or supplier. As a result,
commission revenue is recognised as the net amount of commission received or receivable by the Group. The revenue policy
for the various types of commissions across the Group is outlined below:
At source commissions - retail and travel management businesses
The Group’s retail and travel management businesses receive at source commission from suppliers for the arrangement
of travel, tours and travel related products. Revenue is recognised at the point of time when tickets, itineraries or travel
documents are issued (ticketed date) as this is when the performance obligation is met to the travel agent or supplier.
At source commissions - Wholesale and Inbound
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 time when all aspects of holiday packaged
travel, including booking, ticketing and management amendments have been arranged (departure date), as this is when the
performance obligation has been met to the travel agent or supplier.
The Group’s Inbound business in Australia, New Zealand and Fiji receive at source commission for the arrangement of airline
tickets, tours and travel. Revenue is recognised at the point of time when the traveller’s tour or travel has commenced
(departure date) as this is when the performance obligation has been met to the travel agent or supplier.
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Other types of at source commissions
The Group also receives commissions from sales of travel related products such as insurance, foreign currency
purchasing services and incentives from suppliers. These commissions are recognised as revenue at a point of time
when the performance obligation is met.
Override commission revenue
The Group also receives variable consideration in relation to the above performance obligations in the form of volume
based override commissions from airline and leisure partners across the air, land and cruise travel products sold.
Generally, override commissions are only received on departed travel sales (for air and cruise) or on commencement of
hotel stays (for land). On this basis, revenue is recognised on departure date or commencement date as this reflects the
point in time when this variable consideration is highly probable of not being subject to significant reversal.
Each supplier has separate contractual agreements with the Group and the contractual rates, performance tiers and
contract periods vary accordingly. Override commission revenue is calculated and recognised using the applicable
tiered earning rates per the agreements.
(ii) Transaction and service fees
The Group’s travel management businesses 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 point of time when tickets are issued (ticketed date) as this is when the performance
obligation is met to the consumer for the booking of travel arrangements and the transaction price is fixed. Where
amendments occur after the initial transaction, these are treated separately and additional transaction fees will apply.
(iii) Marketing related activities
The Group receives contributions from suppliers to compensate for the costs incurred in relation to the production
of brochures, in relation to marketing campaigns and activities, and for travel conferences organised by the Group.
Revenue is recognised at a point of time when the marketing related activity is undertaken as the performance
obligation to the supplier has been met.
(iv) Other revenue from contracts with customers
Other revenue from contracts with customers consists of franchise fees generated across the rental distribution
network, transport and logistics revenue generated in the corporate business in Australia, the tourist transport
business in Fiji and revenue generated from the operation of call centres to support various COVID-19 contact tracing
programmes. Franchise fees mainly consist of network fees and information technology service fees relating to services
provided to the Group’s retail network members. Network membership fees are recognised over a period of time on a
straight line basis over the life of the contract and information technology service fees are recognised over time when
the services are undertaken. Revenue for transport and logistics services is recognised at a point of time on a gross
basis as the Group is acting as the principal in the delivery of the service and performance obligation to the customer.
(v) Other revenue
Other revenue consists primarily of rental income from the sub lease of surplus office space and the lease of one
investment property, finance income earned from cash and term deposits and sundry income relating to all other
ancillary income. Rental income is recognised over a period of time based on the term of the lease. Finance income
and sundry income are recognised on an accrual basis at a point of time.
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helloworldlimited.com.au (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.
Restricted cash includes cash held within legal entities of the Group that have International Air Transport Association
(IATA) requirements as part of providing ticketing travel arrangements.
(f) Trade receivables
Trade receivables relate to contracts with customers and are recognised initially at the fair value of the amount of
consideration that is unconditional. The Group holds trade receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortised cost using the effective interest rate method, less any
loss allowance. Trade receivables are generally collected within 7 to 30 days from the date of invoice. They are presented
as current assets unless collection is not expected within 12 months from the reporting date. Bad debts are written off as
incurred. Non-current receivables are carried at the present value of future net cash inflows expected to be received.
Collectability of receivables (including accrued revenue) is reviewed on an ongoing basis at an operating business unit
level. Individual debts that are known to be uncollectable are written off when identified. The Group applies the simplified
approach to measuring expected credit losses which, uses a lifetime expected loss allowance for receivables. To measure
the expected credit losses, receivables are grouped based on shared credit risk characteristics and days past due. The
expected loss rates applied to receivables at 30 June are based on historical loss rates adjusted to reflect current and
forward looking market factors.
The loss allowance is recognised in profit or loss within operating expenses. Subsequent recoveries of amounts previously
written off are recognised within operating expenses in profit or loss.
(g) Accrued revenue
Accrued revenue relates to amounts owed to the Group at balance sheet date that have not yet been invoiced to the
customer or received as cash from the customer. The Group’s accrued revenue mainly relates to the estimate of conditional
override commission revenue earned during the respective customer contract period but not yet invoiced at balance
date. In addition, accrued revenue includes other unconditional 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.
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(i) Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment losses.
Cost includes any expenditure that is directly attributable to the acquisition of property, plant and equipment. 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:
• Land and buildings
• Equipment including motor vehicles
• 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.
(j) Intangible assets
(i) Goodwill
Goodwill on acquisition of subsidiaries is included in intangible assets and the goodwill measurement policy is outlined
in note 40(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:
• Agent network relating to Asia Escape Holidays
• Commercial agreements
• Brand names and trademarks
• Technology assets
• Customer bases
10 years
5 to 12 years
7 to 20 years
2.5 to 10 years
8 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.
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helloworldlimited.com.au
Retail distribution systems and the AOT agent network asset 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.
(k) Investments and other financial assets
Financial assets measured at amortised cost and fair value through OCI are initially measured at fair value plus directly
attributable transaction costs. Financial assets measured at fair value through profit or loss are initially measured at fair value.
Investments and other financial assets are classified, at initial recognition, and subsequently into the following
measurement categories, financial assets at amortised cost, fair value through profit or loss or fair value through OCI.
The initial and subsequent classification depends on the Group’s business model for managing the financial assets and the
contractual terms of the cash flows.
• Amortised cost – relates to assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest. Assets are subsequently measured using the effective interest
rate method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
• Fair value through profit or loss – relates to assets that are not held for collection of contractual cash flows nor held
to sell at a future date. As a result, the assets that do not meet the criteria for amortised cost or fair value through
OCI are subsequently measured at fair value. Gains and losses are recognised net in the profit or loss in the period in
which they arise.
• Fair value through OCI – relates to assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest, and held to sell at a future date. Assets are subsequently
measured at fair value with movements in the carrying amount recognised in other comprehensive income, except for
impairment, interest income and foreign exchange gains or losses which are recognised in the profit or loss. When a
financial asset is derecognised, the gain or loss is reclassified from equity to the profit or loss.
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 derecognised 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.
(l) Impairment of non financial 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
non financial 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 relating to non financial assets 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.
(m) 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.
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Trade and other payables are unsecured and are normally settled within 7 to 30 day payment terms from the date
of invoice. 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.
(n) Leases
(i) Nature of leasing activities
The Group has operating leases relating to commercial office premises, retail properties and motor vehicles. The
Group’s leases are typically for fixed periods between 3 to 10 years and may include extension options. Lease terms are
negotiated on an individual lease basis and contain a wide range of different terms and conditions. None of the Group’s
lease agreements impose any covenants, however leased assets may not be used as security for borrowing purposes.
(ii) Measurement and recognition
The Group determines whether a contract contains a lease on the basis of whether the customer has the right to
control the use of an identified asset for a period of time in exchange for consideration. Upon determining the
contract is a lease, the Group applies a single recognition and measurement approach for all leases, except for short
term leases and leases of low value assets. A right of use asset representing the right to use the underlying asset
and a corresponding lease liability representing the obligation to make lease payments are recognised at the date at
which the leased asset is available for use by the Group.
Right of use asset
The right of use asset is measured at cost, comprising the following:
• initial measurement of the lease liability;
• lease payments made in advance of the lease commencement date less any incentives received;
• initial direct costs; and
• estimate of any costs to dismantle and remove the asset at the end of the lease.
The Group depreciates the right of use assets on a straight line basis from the lease commencement date to the
earlier of the end of the useful life of the right of use asset or the end of the lease term. The Group also assesses the
right of use assets for impairment when such indicators exist, refer note 40(l) impairment of non financial assets for
more information.
Subsequent to initial measurement, when the lease liability is remeasured, a corresponding adjustment is made to the
value of the right of use asset, or the profit and loss statement if the right of use asset is already reduced to zero.
Lease liability
At the lease commencement date, the Group measures the lease liability at the present value of the lease payments unpaid
at that date, discounted using the interest rate implicit in the lease where that rate is readily available or using the Group’s
incremental borrowing rate for the respective period the lease was entered.
Lease payments included in the measurement of the lease liability consist:
• fixed payments less any incentives receivable;
• variable payments based on an index or rate;
• amounts expected to be payable under a residual value guarantee; and
• payments arising from options reasonably certain to be exercised.
On initial recognition of the right of use asset and the lease liability, a corresponding deferred tax asset and deferred
tax liability are recognised to reflect the temporary differences that arise.
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helloworldlimited.com.au Subsequent to initial measurement, the liability is reduced for payments made and increased for interest incurred. The
liability is remeasured to reflect any reassessment or modification, or if there are changes relating to in-substance
fixed payments. In addition, the liability is adjusted when an index or rate change takes effect resulting in an increase in
variable lease payments.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Helloworld Travel has elected to use the practical expedient available under Amendments to Australian Accounting
Standards – COVID-19 Related Rent Concessions when recognising rent concessions received from certain landlords
as a direct result of the COVID-19 pandemic. Helloworld Travel has elected to not assess whether rental concessions
have resulted in a lease modification. Rent concessions that have not resulted in a lease modification, are considered
variable lease payments. The difference between the remeasurement of the lease liability and the right of use asset is
recognised within occupancy expenses in the consolidated statement of profit or loss and other comprehensive income.
(iii) Incremental borrowing rate
The Group cannot determine the interest rate implicit in the lease, therefore, the Group’s estimated incremental
borrowing rate has been used to measure lease liabilities. The incremental borrowing rate is the rate of interest that
the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain
an asset of a similar value to the right of use asset in a similar economic environment. The Group has estimated the
incremental borrowing rate using market based interest rates adjusted for entity specific conditions.
(iv) Variable lease payments
Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred
to produce inventories) in the period in which the event of condition that triggers the payment occurs.
(v) Short term leases and leases of low value assets
The Group has elected to apply the recognition exemptions to short term leases and leases of low value assets
available under AASB 16. Instead of recognising a right of use asset and lease liability, the payments in relation to
these are recognised as an expense in profit or loss on a straight line basis over the lease term. Short term leases
are leases with a lease term of 12 months or less. Low value assets comprise small items of office and information
technology related equipment.
(vi) Extension and termination options
Extension and termination options are included in a number of the Group’s property leases. These extension options
are at the discretion of Helloworld and provide management with the flexibility to manage the leased-asset portfolio
in line with the Group’s needs. Extension options (or periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not terminated).
(o) 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.
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(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.
Remeasurement from experience adjustments and changes in 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 the omnibus Incentive plan, 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 38: share based payments.
Long term incentive plan and franchise loyalty plan
The fair value of the share based payments for the loan funded 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 holding restrictions on the appropriate amount of shares for the
employee or franchisee. The proceeds received (if any) net of any directly attributable transactions costs are recognised
directly to equity.
Omnibus incentive plan
The fair value of the share based payments for omnibus incentive plan is recognised as an employee benefits expense
with a corresponding increase in equity in issued capital. The total amount expensed is determined by reference to the fair
value of the instrument granted, which is based on the 5 day volume weighted average price prior to issue. The instruments
issued under the omnibus incentive plan have no conditions that impact the fair value of the shares.
(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.
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helloworldlimited.com.au (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.
(p) 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.
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.
(q) 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 the future. The revenue commission from these transactions will be released to the profit or loss in the next
financial year in accordance with the revenue recognition policy outlined in note 40(d).
(r) Financial liabilities (redemption liability)
As part of the acquisition of Asia Escape Holidays, the Group has entered a call and put 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 entry 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 profit or loss. The Group will derecognise the financial liability when the obligation is either exercised,
cancelled or expired.
(s) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in 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 includes interest expense recorded on
an accrual basis and the unwinding of the deferred borrowing costs.
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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.
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.
(t) 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 economic 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.
(u) 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.
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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 when 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 when 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.
(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.
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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.
(v) Issued capital
Ordinary shares are classified as issued capital within equity. Incremental costs directly attributable to the issue of new
shares or options are shown in issued capital as a deduction, net of tax (unrecoverable GST), from the proceeds.
(w) 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.
(x) Parent entity financial information
The financial information for the legal parent entity, Helloworld Travel Limited is disclosed in note 34: parent entity
information and has been prepared on the same basis as described in the Group policies, 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.
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helloworldlimited.com.au DIRECTORS’ DECLARATION
In the directors’ opinion:
(a)
The consolidated financial statements and notes that are set out on pages 60 to 152 and the Remuneration report
in the Directors’ Report set out on pages 10 to 59, 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 2020 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations), other
mandatory professional reporting requirements and the Corporations Regulations 2001; and
(b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable; and
(c)
At the date of this declaration there are reasonable grounds to believe that the Company and the Group entities
identified in note 33 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 35 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, 15 October 2020
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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 18 September 2020.
(a) Distribution of equity securities
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
4,118
2,731
604
489
63
8,005
Number
of shares
1,935,091
6,681,260
4,609,310
12,313,569
129,488,615
155,027,845
%
1.25
4.31
2.97
7.94
83.53
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 18 September 2020 was 1,543
holders holding 281,037 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
THE BURNES GROUP PTY LTD
Q H TOURS LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ANDREW JAMES BURNES
CINZIA BURNES
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
LONGBUSH NOMINEES PTY LTD
JOHN ARMOUR
CS FOURTH NOMINEES PTY LIMITED
ANDREW S JONES & KAREN L JONES
NATIONAL EXCHANGE PTY LTD
PRUDENTIAL NOMINEES PTY LTD
JOHN CONSTABLE
BNP PARIBAS NOMINEES PTY LTD
TREVOR E JONES & SONIA L JONES
CROWNACE PTY LTD
BELDISHA PTY LTD
Number
of shares
20,630,306
20,348,287
19,223,454
13,894,596
12,878,991
10,495,531
10,138,014
7,095,737
2,505,384
1,222,121
717,272
533,079
500,000
500,000
500,000
500,000
475,000
437,879
390,000
272,973
%
13.31
13.13
12.40
8.96
8.31
6.77
6.54
4.58
1.62
0.79
0.46
0.34
0.32
0.32
0.32
0.32
0.31
0.28
0.25
0.18
123,258,624
79.51
163
(c) Substantial shareholders
The number of shares held by substantial shareholders and their associates are set out below:
SUBSTANTIAL SHAREHOLDER
SINTACK PTY LTD
THE BURNES GROUP PTY LTD AND ASSOCIATES
Q H TOURS LTD
ANDREW JAMES BURNES
CINZIA BURNES
Number
of shares
20,630,306
21,570,408
19,223,454
10,495,531
10,138,014
%
13.31
13.91
12.40
6.77
6.54
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helloworldlimited.com.au ABN: 60 091 214 998 ASX CODE: HLO