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REX American Resources Corporation

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FY2018 Annual Report · REX American Resources Corporation
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Regaining 
Lost Ground

ANNUAL REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018
REGIONAL EXPRESS HOLDINGS LIMITED

REGIONAL EXPRESS HOLDINGS LIMITED 

 1

regional express value statement

What does it profit a company if it gains the Whole World and loses its soul

COMPANY   
Staff members are part of the Rex family. This comes with 
both privileges and responsibilities.

We  expect  every  staff  member  to  take  ownership  of 
issues encountered:

•	Ownership means that if something is wrong then it is 

everyone’s job to fix it.

•	Matters  that  cannot  be  handled  by  the  staff  member 
ought to be pursued further with senior management.

•	Staff  have  the  right  to  make  mistakes  if  they  act  in 
the best interest of the customer and the company.

We strive to be a learning organisation where we actively 
seek  to  identify  issues  no  matter  how  small  in  order  to 
continually transform ourselves to a better organisation:

•	This  entails  a  culture  where  issues  are  highlighted  as 
learning experiences even though they may place our 
colleagues in a bad light.

•	An  excellent  airline  is  one  that  is  outstanding  in  a 

thousand small ways.

We believe that we can only count on ourselves for our 
continued success:

•	All staff members must embrace the ‘can do’ and ‘will 
do’ spirit that has been the defining characteristic of our  
initial success.

•	Hard work is the cornerstone of our work ethic.

•	All staff share in the profits and so all staff are expected 

to contribute his/her fair share.

We  value  open  communication  and  will  strive  to  create 
an environment that removes barriers to communication:

•	Staff  members  have  a  right  to  be  heard  regardless  of 

their position.

•	Staff members are encouraged to contact directly the 
members of the Management Committee and Board if 
they see the need.

We respect the dignity of each staff member and will treat 
each other with respect and fairness:

•	The  customer  does  not  always  come  first  and  we 
will  stand  by  our  staff  member  if  the  customer  is 
unreasonable.

•	While  we  can  be  single-minded  in  tackling  issues 
and  problems,  we  will  focus  on  the  issue  and  not 
the person.

•	We  accept  that  staff  members  may  have  different 
talents and capabilities and will strive to fit the job to 
the person rather than the other way around.

•	Important  decisions  concerning  staff  matters  are 
always  referred  to  the  Management  Committee  to 
ensure transparency, fairness and consistency.

We are committed to standing behind our staff members 
and their families and will do all we can to help them in 
their times of special need:

•	We believe in the value of the family and will strive to 
create  a  working  environment  that  is  supportive  of 
the family.

•	All  staff  members  have  the  right  to  appeal  to  the 
Management  Committee  if  special  assistance  or 
consideration is needed.

CUSTOMER
We are committed to providing our customers with safe 
and reliable air transportation with heartfelt hospitality.

As  a  regional  carrier,  we  constantly  strive  to  keep  fares 
low through our commitment to simplicity, efficiency and 
good value.

We  are  committed 
treating  our  customers  as 
individuals  and  will  respond  to  all  their  comments  
and complaints.

to 

COMMUNITY 
Rex  is  mindful  of  the  tremendous  social  and  economic 
impact its services have on the regional communities and 
works  in  partnership  with  these  communities  to  balance 
their needs against Rex commercial imperatives.

We  are  also  committed  to  giving  back  to  the  regional 
communities by supporting worthwhile charitable causes 
which are focused on helping the less fortunate.

We are committed to preserving the environment to the 
measure of our capabilities.
CONTRACTORS
We believe that our suppliers are partners in our business.

In  all  our  dealings  with  suppliers  we  will  seek  to 
be  fair  and  honest  and  will  strive  to  work  only  with  
like-minded suppliers.
CAPITAL
Rex believes that its shareholders’ interest is best served 
by  pursuing  a  path  of  steady  but  sustainable  growth  of 
its earnings.

that  maximizing  shareholders’ 

returns 
We  believe 
in  the  long  term  is  not  incompatible  with  our  duties 
and  responsibilities  towards  our  other  stakeholders 
outlined above.

 
 
 
 
foreword

regaining lost ground
Last year, this Foreword was captioned “CLEARER SKIES AHEAD” as the resurgent 
Australian economy gave Rex confidence to forecast strong performance. True to 
form, Rex has turned in a 41% rise in profits, bringing its Profit Before Tax (PBT) 
for FY18 to $25M, a result not seen since 2012. 

Rex joins the rarefied club of probably not more than five listed carriers worldwide 
that have not made a statutory loss (excluding write-downs) in the last 15 years. 
In fact, since the GFC of 2010, the Rex Group has still managed to generate an 
average  Gross  Return  on  revenue  (PBT/Revenue)  of  6.2%  compared  to  0.8% 
returns for the Qantas Group, while the Virgin Group is hopelessly entrenched 
in negative territory having close to $1.5 billion of accumulated statutory losses 
before tax.

Our strong results have generated healthy cash surplus, and with no major capital 
investments  in  sight,  shareholders  will  be  pleased  to  know  that  the  Board  has 
decided on a final dividend of 8 cents per share, bringing the total dividend for 
the FY to 12 cents per share. The Rex Board continues to affirm its support for a 
healthy dividend payout ratio for the new FY and will be recommending an interim 
dividend if the half-yearly results live up to expectations.

While celebrating our past successes, Rex is ever mindful of the brewing global 
and domestic strong headwinds ahead, the potential for fuel price to spiral up 
with the Iran oil sanctions, global trade war, acute pilot shortage and a devastating 
drought in regional Australia. Rex Management and Board  will  be  extra vigilant, 
cautious and defensive in all strategic decisions so as not to be caught flat-footed.  
Having seen through equally tumultuous times in the last 15 years – record drought, SARS, wars, 
volcanic  ash,  stratospheric  fuel  prices,  GFC  –  that  has  brought  down  20  regional  carriers  in 
Australia, 3 in the recent months alone – I am quietly confident that we have the wherewithal to 
withstand the possible storm that could be coming if it does materialise.

LIM KIM HAI
eXecutiVe chairman 

In fact, the Rex Group today has a much larger network and better operational efficiencies than 
in FY 11/12 when we had  our record PBT of $35M.  We are also  now training  pilots for other 
international  airlines.  This  plus  the  fact  that  the  Australian  economy  continues  to  show  strong 
signs of growth with a marked pick up in the resource sector give us the assurance that the best 
is yet to be.  I am confident that Rex will continue to improve on its profitability in the new FY, albeit 
not at the giddy pace experienced in the last two years. 

Here I would like to pause and pay compliment to all our staff who have had to go way above 
and  beyond  themselves  to  ensure  that  our  schedule  is  disrupted  as  little  as  possible  by  the 
crippling pilot shortage hitting regional aviation, caused by the major domestic carriers’ rapacious 
poaching of pilots. I would like to single out the pilot group in particular who have accepted last 
minute  call-outs  so  that  regional  passengers  do  not  miss  their  hospital  appointments  or  the 
important business meeting. Rex, and indeed the regional communities we service, owe them a 
huge debt of gratitude.

I would also like to thank my Management Committee for turning in another sterling year under 
extremely stressful conditions and the Board for its continued guidance, wisdom and support.

lim Kim hai
executive chairman
29 august 2018

Corporate i nformation

this annual report covers both regional express holdings limited as an individual entity and the consolidated 
entity comprising regional express holdings limited and its subsidiaries.

the group’s functional and presentation currency is aud ($).

SOLICITOR
Baker & mcKenzie
level 27, amp centre
50 Bridge street
sydney, nsW 2000

BANKER
Westpac Banking corporation

AUDITOR
deloitte touche tohmatsu

DIRECTORS
lim Kim hai
the hon. John sharp am
lee thian soo
neville howell
chris hine
James davis
prof. ronald Bartsch 

COMPANY SECRETARIES
irwin tan 
Benjamin ng 
richard Kwan

REGISTERED OFFICE
81 – 83 Baxter road
mascot, nsW 2020
(ph): 02 9023 3555
(fax): 02 9023 3599

SHARE REGISTRY
link market services limited
level 12, 680 george street
sydney, nsW 2000

 
Contents

04 DIRECTORS’ REPORT

26  AUDITOR’S INDEPENDENCE  

DECLARATION

26 CORPORATE GOVERNANCE STATEMENT

32 FINANCIAL STATEMENTS

34  CONSOLIDATED STATEMENT Of  

PROfIT OR LOSS

35  CONSOLIDATED STATEMENT Of  

OTHER COMPREHENSIvE INCOME OR LOSS

36  CONSOLIDATED STATEMENT Of  

fINANCIAL POSITION

37  CONSOLIDATED STATEMENT Of 

CASH fLOwS

38  CONSOLIDATED STATEMENT Of  

CHANGES IN EqUITy

39  NOTES TO THE CONSOLIDATED 

fINANCIAL STATEMENTS

72 DIRECTORS’ DECLARATION

72 INDEPENDENT AUDITOR’S REPORT

77 ASX ADDITIONAL INFORMATION

 
 
 
 
 
 
 
 
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

direCtors' 
report

1 Board of direCtors

In compliance with the provisions of the Corporations Act 2001, the directors of Regional Express Holdings Limited (‘Rex’) submit 
herewith the annual report for Rex and its consolidated entities (the ‘Group’) for the Financial Year ended 30 June 2018 (FY18). 

The names and particulars of the directors of Rex during or since the end of the FY are:

Lim Kim Hai

Executive Chairman

Appointed 27 June 2003 and  
re-appointed 16 November 2006,  
25 November 2009, 27 November 2012 and  
27 November 2015.

Mr. Lim started his career as a Defence Engineer 
specialising  in  underwater  warfare.  After  10 
years he left to start his own business. Currently 
he  has  a  portfolio  of  investment  and  business 
interests in diverse sectors and countries. He is 
also the Chairman of a biomedical company in 
Singapore, Lynk Biotechnologies Pte Ltd. 

from 

the  prestigious 

Mr.  Lim  obtained  his  Masters  in  Electronics 
Engineering 
‘Grande 
Ecoles’  engineering  colleges  in  France  where 
he  was  awarded  a  French  Government 
scholarship.  He  later  returned  to  France  to 
complete  a  Masters  of  Public  Administration 
at  the  elite  Ecole  Nationale  d’Administration  in 
Paris on a Singapore Government scholarship. 
Mr.  Lim  also  holds  a  Masters  of  Business 
Administration  from  the  National  University  of 
Singapore. 

Mr. Lim was one of the founding shareholders 
and  directors  of  Rex  in  August  2002.  He  has 
been the Executive Chairman of the Rex Group 
of companies since July 2003.  

THE Hon. JoHn SHarp am
Deputy Chairman and  
independent Director

Appointed 14 April 2005 and re-appointed  
19 November 2008, 23 November 2011,  
27 November 2013 and 29 November 2016.

LEE THian Soo 

non-Executive Director

Appointed 27 June 2003 and re-appointed  
16 November 2006, 25 November 2009,  
27 November 2012 and 27 November 2015. 

Mr.  Lee  has  extensive  international  business 
experience  and  currently  is  the  Chairman 
and  owner  of  a  company  supplying  specialty 
to 
medical  devices,  systems  and  drugs 
healthcare institutions in the ASEAN region. 

Mr. Lee was one of the founding shareholders 
and directors of Rex in August 2002.

The  Honourable  John  Sharp  AM  is  an  aviator, 
having  been  a  licensed  pilot  of  both  fixed 
wing  and  rotary  wing  aircraft.  Mr.  Sharp  was 
a  member  of  the  House  of  Representatives  of 
the  Commonwealth  Parliament  for  14  years 
(1984  –  1998).  He  retired  from  the  House  of 
Representatives  in  1998  and  established  his 
own  high  level  aviation  and  transport  consulting 
company. Mr. Sharp is a former Chairman of the 
Aviation Safety Foundation of Australia. In 2001, 
he became a director of Airbus Group, Australia 
Pacific, a position he retired from in June 2015. 
He  has  retired  as  Chairman  of  the  Parsons 
Brinkerhoff  Advisory  Board,  an  engineering  and 
design  company  operating  throughout  Australia 
and the region. He is Chairman of Pel-Air Aviation 
Pty Ltd and is also a director of Power and Data 
Corporation Pty Limited and a director of Lurssen 
Australia.  Mr.  Sharp  is  the  Honorary  Treasurer 
of  John  McEwan  House  and  has  retired  as  the 
Chairman of Winifred West Schools Foundation. 
He  has  been  a  member  of  the  University  of 
Wollongong  Vice  Chancellor’s  Advisory  Board.  
He is also currently a director of the Tudor House 
Foundation.  Mr.  Sharp  served  as  a  director 
of  the  Flight  Safety  Foundation  following  his 
receipt  of  the  Foundation’s  Presidential  Citation 
for  Aviation  Safety,  the  first  Australian  to  receive 
this  award.  He  has  also  been  a  director  of  the 
French,  Australian  Chamber  of  Commerce  and 
Industry, and Co-Chair of the Cancer Council of 
NSW Southern Highlands Branch. He is currently 
a  director  of  the  Climate  Change  Authority.  Mr. 
Sharp’s extensive experience in aviation, regional 
air  services  and  as  the  former  Federal  Minister 
for  Transport  and  Regional  Development  in  the 
Federal  Government,  adds  significantly  to  the 
expertise and standing of the Board.

Mr. Sharp was named a Member of the Order of 
Australia  for  significant  service  to  the  people  and 
Parliament  of  Australia,  to  the  aviation  industry, 
and  to  the  community  during  Queen’s  Birthday 
Honours in June 2018. 

6 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
JamES DaviS 
independent Director

proF. ronaLD BarTSCH
independent Director 

Appointed 26 August 2004 as  
Executive Director.
Appointed Managing Director on 27 
May 2008 and retired 1 July 2011.
Appointed 23 November 2011 as an 
Independent Director, re-appointed 26 
November 2014, and  
21 November 2017.

Engineering 

in 
Mr.  Davis  has  a  degree 
Aeronautical 
and 
commenced  his  aviation  career 
the  Civil  Aviation  Safety 
with 
Authority  (CASA)  before  obtaining 
his Air Transport Pilot Licence. He 
flew  with  airlines 
subsequently 
for 
in  Australia  and  overseas 
26  years,  accumulating  some 
12,500  flying  hours.  Mr  Davis 
joined Hazelton Airlines in 1999 as 
Flight  Operations  and  Standards 
Manager  and  later  became  Chief 
Pilot. He has been with Rex since 
its  inception  in  2002,  occupying 
the positions of Executive General 
Manager  Operations,  Managing 
Director  Operations,  Chief  of 
Staff of the Chairman’s Office and 
Managing  Director.  Mr.  Davis  is  a 
former  Chairman  of  the  Australian 
Airline  Pilot  Academy  Pty  Ltd 
(AAPA)  and  a  former  Director  of 
Rex  Group  companies  Pel-Air 
Aviation  Pty  Ltd  and  Air  Link  Pty 
Ltd.  He  is  currently  Chairman  of 
the  Regional  Aviation  Association 
of Australia (RAAA).

Appointed 23 November 2010 and 
re-appointed 23 November 2011, 
26 November 2014, and 
 21 November 2017.

Professor Bartsch has over 35 years’ 
experience in the aviation industry in 
a variety of senior operational, safety 
and regulatory roles. He was head of 
safety and regulatory compliance for 
Qantas  Airways  Limited’s  AOC  and 
manager of the CASA Sydney Airline 
Transport Field Office. 

in 

Professor Bartsch is an experienced 
pilot  and  has  extensive  legal  and 
regulatory experience. He has formal 
qualifications 
law,  education, 
philosophy  and  science,  and  is  the 
author of the definitive legal textbook 
on  aviation  law.  Professor  Bartsch 
is  an  international  aviation  safety 
consultant  and  senior  visiting  fellow 
with  the  School  of  Aviation  at  the 
University  of  New  South  Wales  and 
the College of Law at the Australian 
National  University.  He  is  a  former  
aviation  specialist  member  of  the 
Administrative  Appeals 
Tribunal 
and  author  of  several  publications 
including  Aviation  Law  in  Australia, 
International  Aviation  Law  and 
Drones in Society. 

nEviLLE HowELL
Chief operating officer

Appointed 1 July 2014 as Executive 
Director and re-appointed 
26 November 2014 and  
21 November 2017.

Mr.  Howell  has  over  37  years  of 
aviation  experience  and  has  been 
with the Company since its inception 
in  August  2002.  He  operated  the 
Saab  340  as  a  First  Officer  and 
Captain  for  over  18  years  for  both 
Hazelton  Airlines  and  Regional 
Express. Prior to his role as GM Flight 
Operations  (GMFO)  and  Chief  Pilot, 
Mr.  Howell  was  Manager  Training  & 
Checking  and  Deputy  Chief  Pilot. 
He  is  an  extensively  qualified  and 
experienced  simulator  and  aircraft 
instructor and has held positions as 
both Training and Check Captain. Mr. 
Howell was the Chief Flying Instructor 
and Chief Pilot for the first integrated 
pilot  training  academy  in  Australia 
and has provided cadet pilot training 
for  both  domestic  and  international 
carriers.  He  is  a  qualified  lecturer 
in  a  number  of  aviation  subjects 
and  has  a  Diploma  of  Aviation.  He 
has  held  a  number  of  Civil  Aviation 
Safety  Authority  (CASA)  delegations 
since  1984.  As  GMFO  Mr.  Howell 
was responsible for all facets of the 
Company’s 
flight  operations  and 
all  operational  matters  affecting  the 
safety of flight operations. Mr. Howell 
became  Chief  Operating  Officer 
in  July  2014.  As  Chief  Operating 
Officer he is responsible for Regional 
Express  operations  including  flight 
operations, continuing airworthiness, 
maintenance 
airport 
operations  and  the  human  factors 
group. Mr. Howell is the Accountable 
Manager for the Regional Express Air 
Operator Certificate (AOC).  

control, 

CHriS HinE
Group Flight operations advisor 
and Chairman, australian  
airline pilot academy

Appointed 1 March 2011 as Executive 
Director and re-appointed  
23 November 2011. 

Appointed 1 July 2014 as Non-
Executive Director and re-appointed  
26 November 2014. 

Appointed Executive Director and 
Group Flight Operations Advisor  
18 May 2015 , and re-appointed 
 21 November 2017.

Mr.  Hine  has  over  25  years  of 
aviation  experience  including  15 
years as a First Officer and Captain 
of Metroliner and Saab 340 aircraft 
and  is  a  well-accomplished  and 
knowledgeable  instructor.  He  has 
been  with  the  Company  since  its 
inception in August 2002 and is the 
Group  Flight  Operations  Advisor, 
Chairman’s Office and Chairman of 
the Australian Airline Pilot Academy. 
Preceding  his  current  role  he  was 
the  Chief  Operating  Officer  and 
General  Manager  Flight  Operations 
and  Chief  Pilot.  Prior  to  Rex  he 
worked  for  Kendell  Airlines  from 
1995,  during  which  time  he  held 
various Check and Training Captain 
positions.  As  Chief  Operating 
Officer  he  was  responsible  for  the 
Company’s  operations 
including 
flight 
operations,  maintenance 
control,  airport  operations  and  the 
human factors group. Mr. Hine has 
also  had  experience  as  a  lecturer 
in  Cockpit  Systems  Management 
for the Bachelor of Applied Science 
(Civil  Aviation)  degree  at 
the 
University of South Australia. 

REGIONAL EXPRESS HOLDINGS LIMITED 

 7

 
 
 
2 senior management exeCutives

The names and particulars of the senior management executives of Rex during or since the end of the FY are:

nEviLLE HowELL

Chief operating officer

warriCK LoDGE
General manager, network  

Strategy & Sales

irwin Tan
General manager, Corporate Services 
e

mayooran 
THanaBaLaSinGam 
General manager, information 

Technology and Communications

including 

leads  a 
Mr.  Thanabalasingam 
Information  Technology 
team  of 
(IT)  professionals  responsible  for 
ensuring  day-to-day  operations 
of  the  airline.  With  over  15  years 
of  experience  and  an  extensive 
background 
information 
in 
technology,  he  has  managed  a 
range  of  IT  projects  and  initiatives 
the 
for  Rex 
Internet 
the  Amend 
Booking  Engine, 
Booking Engine, Web Check-in and 
numerous Mobile/iPad applications. 
Mr. 
a 
Master  of  Business  Administration 
from  Charles  Sturt 
(Computing) 
University.  He  also  has  a  Graduate 
Certificate 
Management 
(Information  Technology)  as  well 
as  an  Associate  Diploma  of 
Electrical  Engineering  /  Computer 
Engineering. 
commenced 
He 
with  Rex 
in  April  2004.  Mr. 
Thanabalasingam  is  a  member  of 
the  Rex  Management  Committee 
and  a  Director  of  the  Australian 
Airline Pilot Academy (AAPA).

Thanabalasingam 

has 

in 

Tan’s 

Mr. 
background  was 
originally  in  genetic  research  after 
graduating  with  first  class  honours 
in biotechnology from the University 
of  New  South  Wales  in  Sydney. 
Mr.  Tan  left  the  field  of  genetic 
research  when  he  joined  Morrison 
Express Logistics in 1999 and then 
Singapore Airlines in 2001. He was 
later transferred to Singapore Airlines 
Cargo  as  an  executive  where  he 
took  on  various  appointments  in 
product  development,  advertising, 
sales  and  airline  alliances  before 
taking  on 
role  of  Regional 
Marketing  Manager  for  the  South 
West  Pacific  region  in  2003.  Mr. 
Tan  joined  Rex  in  July  2005  and 
was  appointed 
the  Company 
Secretary  on  7  September  2005. 
Mr. Tan is also a member of the Rex 
Management Committee.

the 

Mr.  Howell  is  a  member  of  the 
Rex  Management  Committee.  A 
description  of  his  qualifications, 
skills  and  experience  is  included 
on page  7. 

Mr.  Lodge  manages  a 
team 
responsible for scheduling, pricing, 
revenue  management,  sales  and 
commercial  analysis.  His  duties 
include  the  monitoring  of  network 
performance  and  analysis  of 
both  existing  and  new  market 
opportunities. Mr. Lodge has more 
than  25  years  of  regional  airline 
experience in the specialised areas 
of scheduling, pricing and revenue 
management and held the position 
of  Manager  Network  Planning  with 
Kendell  Airlines,  having  joined  that 
company  in  1992.  Mr.  Lodge  has 
been with Rex since its inception in 
2002 and is also a member of the 
Rex Management Committee.

8 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
pnG yEow Ta T
General manager, Engineering

marK BurGESS  
Deputy General manager, Engineering 

DaviD BrooKSBy
national airports manager

pauL FiSHEr
General manager, Flight operations 

Chief operating officer, air Link

and Chief pilot

from 

Mr  Png.  has  been 
in  aviation 
engineering for more than 35 years 
and  has  many  years  of  experience 
in  various  senior  management 
positions.  He  graduated  with  an 
Honours  Degree  in  Electrical  and 
Electronic  Engineering 
the 
UK.  Mr.  Png  joined  Rex  in  June 
2007  as  the  Logistics  Advisor  and 
subsequently  as  the  Engineering 
Advisor  in  the  Chairman’s  Office. 
He  became  the  Deputy  General 
Manager  and  Part  145  Alternate 
Accountable Manager for both Rex 
and Air Link Approved Maintenance 
Organisations 
in  June 
2013.  He  is  a  member  of  the 
Rex 
Engineering  Management 
Committee  and  a  member  of  the 
Rex Management Committee.

(AMOs) 

Mr.  Burgess  is  a  Licensed  Aircraft 
Maintenance  Engineer  with  over 
30  years’  experience  and  has 
been  with  the  Company  since  its 
inception in 2002. 

Mr.  Burgess’  career  began  as  an 
apprentice  in  the  British  Armed 
Forces  where  he  maintained 
helicopters for 12 years and left as 
a  Senior  Rank.  He  continued  his 
career  in  the  oil  and  gas  industry 
with  CHC  Helicopters  and  also 
British  Midland  Regional  Prop  and 
Jet  regular  public  transport  (RPT) 
services.  He  migrated  to  Australia 
in 2001 to work for Kendell Airlines 
in  Wagga  Wagga  and  became 
Production  Leader  co-ordinating 
maintenance  and  manpower  on 
heavy checks for Saab 340 aircraft. 
In  2008  Mr.  Burgess  moved  to 
Adelaide  as  the  Line  Maintenance 
Supervisor  and  oversaw  expansion 
of  Rex  maintenance  activities  from 
line  to  heavy  maintenance.  He  is 
a  member  of  the  Rex  Engineering 
Management Committee.

joining 

Mr Brooksby holds dual roles within 
the company as both the National 
Airports  Manager  for  Rex  and  the 
Chief Operating Officer for Air Link. 
Mr.  Brooksby  has  held  previous 
senior  roles  in  a  management 
and  operational  capacity  at  each 
of  Rex’s  major  airports  including 
Adelaide,  Sydney,  Brisbane  and 
Melbourne 
the 
since 
company  in  April  2006.  Prior  to 
commencing  employment  with 
Rex,  Mr.  Brooksby  worked  as  a 
contracted  outport  agent  with 
his  family’s  business  at  Mount 
Gambier airport where his father is  
the  Company’s  longest  standing 
contracted ground handling agent, 
having  been  contracted  by  Rex/
Kendell  since  1982  to  provide 
ground  handling  services.  Mr. 
Brooksby  graduated 
the 
University of South Australia with a 
Bachelor of Management in 2003. 
Mr. Brooksby is also a member of 
the Rex Management Committee.

from 

Mr.  Fisher  has  over  28  years 
of  aviation  experience  and  has 
been  with  the  Company  since  its 
inception  in  August  2002.  He  has 
operated  the  Saab  340  as  a  First 
Officer  and  Captain  for  over  14 
years for both Hazelton Airlines and 
Regional  Express.  Prior  to  his  role 
as  GM  Flight  Operations  (GMFO) 
and Chief Pilot, Mr. Fisher served in 
various roles within the Training and 
Checking  department 
including 
the  Adelaide  Flight  Operations 
Manager, 
Standards 
Flight 
the  Training  & 
Manager  and 
Checking  Manager 
/  Deputy 
Chief  Pilot.  He  holds  a  number 
of  Civil  Aviation  Safety  Authority 
(CASA)  delegations.  As  GMFO  he 
is  responsible  for  all  facets  of  the 
Company’s  flight  operations  and 
all operational matters affecting the 
safety of flight operations.

REGIONAL EXPRESS HOLDINGS LIMITED 

 9

 
 
 
 
 
03  direCtorsHips of otHer listed Companies 

During the year under review, no directors appointed as at 30 June 2018 served as a director with any other company listed on the ASX.

04  direCtors’ sHareHoldings

The following table sets out each director’s relevant interest in shares and options of Rex as at the date of this report. No debentures or 
rights exist.

Directors

Lim Kim Hai

The Hon. John Sharp AM

Lee Thian Soo

Neville Howell

Chris Hine

James Davis

Ronald Bartsch

Fully paid ordinary shares
direct interest

Fully paid ordinary shares 
indirect interest

Share options

18,998,346

50,000

7,722,181

30,499

76,346

200,866

-

5,755,513

275,032

3,727,181

-

-

-

-

-

-

-

-

-

-

-

05  direCtors’ meetings

The following table sets out the number of directors’ meetings (including meetings of committees of directors) held during the FY and the 
number of meetings attended by each director (while they were a director or committee member). During the FY, four Board meetings; two 
Remunerations, Nominations and Disciplinary Committee meetings; two Audit and Corporate Governance Committee meetings; and four 
Safety and Risk Management Committee meetings were held.

Directors

No. of Meetings Held:

Attendance:

Lim Kim Hai

The Hon. John Sharp AM

Lee Thian Soo

Neville Howell

Chris Hine

James Davis

Ronald Bartsch 

Remunerations, 
Nominations and 
Disciplinary Committee

Board

Audit & Corporate 
Governance Committee

Safety & Risk 
Management 
Committee

4

4

4

3

4

4

4

4

2

-

2

-

-

-

2

-

2

-

2

-

-

-

2

-

4

-

-

-

4

4

-

4

10 

REGIONAL EXPRESS HOLDINGS LIMITED

 
06  remuneration of direCtors and senior management

Information about the remuneration of directors and senior management is set out in the remuneration report of this directors’ report, on 
pages 21 to 24.

07  sHares under option or issued on exerCise of options 

No options were granted or exercised in FY18.

08  former partners of tHe audit firm

No directors or officers in Rex or the Group have been a partner or director of Deloitte Touche Tohmatsu, the Group’s auditor.

09  CompanY seCretaries

Mr. Irwin Tan holds the position of Rex Company Secretary. A description of his qualifications, skills and experience is included 
on page 9.

Mr. Benjamin Ng, having completed his Bachelor of Science followed by an MBA in the UK, started his career with the German multi-
national  chemical  company,  Henkel  in  Malaysia.  In  his  eight  years  with  Henkel/Cognis,  he  held  various  positions  ranging  from  sales, 
marketing, business analysis and cost controlling. In 2001, he was posted to headquarters in Germany for just over a year where he was 
the cost controller for the Asia Pacific Region. Upon his return to Malaysia, he oversaw the controlling department of Cognis for three years. 
Mr. Ng joined Rex in April 2006 and was appointed Company Secretary on 10 October 2007. 

Mr. Richard Kwan started his career with Rex after graduating with a Bachelor of Aviation (Hons) from the University of New South Wales 
(UNSW) in 2010. He has held various roles within the Corporate Services and Network Strategy & Sales departments. Specifically, Richard 
focusses on analysis, project and contract management within the Rex Group of companies, including the Queensland & Western Australia 
regulated routes and Pel-Air contracts. He has subsequently obtained a Master of Commerce from UNSW and has been certified as a 
PRINCE2 Practitioner. Richard was appointed Company Secretary on 26 September 2016. 

10  prinCipal aCtivities

The Group’s principal activity during the FY was the provision of air services principally for the transportation of passengers and freight.

REGIONAL EXPRESS HOLDINGS LIMITED 

 11

11  organisation & group struCtures 

REGIONAL EXPRESS AIRLINE ORGANISATION STRUCTURE

12 

REGIONAL EXPRESS HOLDINGS LIMITED

 
REGIONAL EXPRESS GROUP HOLDINGS STRUCTURE 

REGIONAL EXPRESS HOLDINGS LIMITED 

 13

12  review of operations 

SUMMARY

At the commencement of FY18, the Rex RPT network serviced 58 airports throughout all states of Australia. FY18 was the second full 
year of Rex’s Western Australian operations having commenced service on the WA State Government regulated routes of Perth/Albany 
and Perth / Esperance in February 2016.

In FY18, partnership agreements were either renewed or entered into with the regional councils that own and operate the following 
regional airports: Albany, Armidale, Bamaga (NPA), Bathurst, Ballina, Broken Hill, Burnie, Ceduna, Coober Pedy, Esperance, Grafton, 
Mildura, Moruya, Narrandera, Newcastle, Orange, Parkes, Snowy Mountains, Taree, Wagga Wagga and Whyalla. 

There were no partnership agreements during the FY with the following regional airports: Albury, Dubbo, Griffith, Kangaroo Island, King 
Island, Lismore, Merimbula, Mount Gambier, Port Lincoln or any of the regional airports associated with the Queensland regulated routes.

The Rex Community Fare Scheme is a Rex initiative to ensure fare affordability and to foster passenger growth. As a result of partnership 
agreements with local councils and airport owners, Rex implemented the Rex Community Fare Scheme on the following routes during 
FY18;

•	 Broken Hill to Adelaide ($139) 
•	 Burnie to Melbourne ($129)
•	 Moruya to Sydney ($119)
•	 Parkes to Sydney ($99)
•	 Cairns to Mount Isa ($200)
•	 Orange to Sydney ($109)

The above Rex Community Fares were in addition to those that were in place prior to the commencement of FY18 which included 
Albany to Perth ($129), Esperance to Perth ($129) and Broken Hill to Sydney ($200).

This FY saw an additional 12 Rex cadets inducted as First Officers (FOs), taking the number of former cadets flying in the Group 
to 108, of which 32 have already reached the rank of Captain. Since the inception of the Rex cadet programme conducted at the 
Group’s pilot training academy, the Australian Airline Pilot Academy (AAPA), in excess of 220 cadet graduates have been trained to 
meet with the demands of the Rex Group. In order to combat the high attrition rates, Rex was compelled to recruit pilots externally 
and 45 direct entry pilots were inducted. A total of 49 First Officers were upgraded to the rank of Captain this FY of which 28 were 
former cadets and 21 direct entry.

In  December  2017,  Rex  celebrated  the  10th  Anniversary  of  AAPA.  The  event  coincided  with  a  graduation  ceremony  of  the  21st 
cohort of Rex Cadet Pilots and the graduation of a Vietnamese cadet, destined for Vietnam Airlines. 

The Ceremony was officiated by Guest of Honour, the Hon. Peter Dutton MP, Minister for Immigration and Border Protection, and 
attended by other distinguished guests from the aviation and local community . 

The Saab 340 Full  Flight Simulator (FFS) located at AAPA has been in high demand this FY as a result of the high  attrition rates 
associated with the global pilot shortage. The FFS completed 1855 hours of initial and recurrent pilot training. The FFS provides 
significant cost savings, allowing Rex Pilots to be trained and checked in accordance with new Civil Aviation Safety Authority (CASA) 
regulatory reform requirements that would otherwise have been completed in the aircraft. CASA has renewed the Flight Simulator 
Qualification Certificate until April 2019.

The in-house designed Electronic Flight Bag (EFB) continues to provide savings and operational efficiencies to all Saab 340 aircraft 
in the Rex Group. All Saab 340 flight decks are equipped with two iPads containing operational apps and access to the full suite 
of company and aircraft manuals. The evolution of the EFB has allowed Rex Flight Operations to expand the suite of applications 
to  incorporate  a  customized  Navigation,  Weather  and  Chart  Service  that  provides  unprecedented  access  to  information  with  the 
tap of a button. The progressive removal of hard copy manuals allows the aircraft to shed unnecessary weight which translates to 
significant fuel savings. 

14 

REGIONAL EXPRESS HOLDINGS LIMITED

 
Rex21 Cadets, pictured alongside a Viet Flight Training (VFT) Cadet at the Australian 
Airline Pilot Academy (AAPA) Graduation Ceremony and 10th Anniversary Celebrations

MATERIAL RISK AND RISK MANAGEMENT 

The  Company  recognises  that  it  has  a  responsibility  to  conduct  its  activities  in  an  environmentally  and  socially  responsible  manner. 
The Group’s Environmental Management Program available on the Rex website details the Environmental Management Program (EMP), 
incorporating the Group’s environmental policy, targets, prevention of pollution, management strategies to mitigate the risk of environmental 
impact and continuous environmental improvement (ASX Recommendation 7.4). 

Like all Australian airlines, the Company is subject to economic risks. The Company identifies the following risks that could adversely affect 
the entity’s prospects for future FYs (ASX Recommendation 7.1):

•	 Fuel price – The Group hedged part of its fuel requirements in FY18 which delivered over $1M in savings. The Group continues to 

closely monitor Brent Crude prices. 

•	 Foreign exchange rates – The Group’s main financial risk is its exposure to the US dollar and hence its main objective is to minimise 
the impact of USD fluctuation on its operations. However with significant purchases in spares in prior years, as well as the acquisition 
of the majority of its fleet as opposed to leasing, the Group’s exposure to USD expenditure is reduced. The Group will continue to 
monitor the exchange rate closely and will hedge whenever the rates are favourable. 

The Company has also highlighted the risk of pilot attrition. The Company runs its own pilot cadet training programme which has 
been operating successfully from its pilot training academy AAPA in Wagga Wagga, NSW. More than half of the active pilot strength 
within Rex is made up of graduates from this programme. 

REGIONAL EXPRESS HOLDINGS LIMITED 

 15

ROUTE NETwORK DEVELOPMENTS 

On 11 September 2017, Rex commenced servicing the Port Augusta to Adelaide route with 3 return flights weekly resulting in capacity 
of 10,000 seats per year. This followed the exit of Sharp airlines from the Port Augusta to Adelaide route on 31 May 2017. The Rex Port 
Augusta service extends through to Coober Pedy which means, for the first time, air services linking Port Augusta to Coober Pedy. 

Effective 30 October 2017, Rex redeployed proposed flight schedule improvements for the  Merimbula to Sydney route across  to  the 
Moruya to Sydney route. This followed Rex publicly withdrawing an earlier offer to expand the air services between Merimbula and Sydney 
due to Rex not being able to reach a partnership agreement with the Bega Valley Shire Council (BVSC), the owner of Merimbula airport. 
Rex had entered into a five year partnership agreement with the Eurobodalla Shire Council (Moruya) in FY16, making Moruya the natural 
choice when the additional Sydney airport slots and capacity became available.

In addition to the flight schedule improvements between Moruya and Sydney, Rex also implemented a new $119 Community Fare between 
Moruya and Sydney under the umbrella of the 5 year partnership agreement with the local council.

In  December  2017,  the  West  Australian  (WA)  Government  announced  Rex  as  the  preferred  tenderer  for  the  regulated  Perth  to 
Carnarvon  /  Monkey  Mia  (Shark  Bay)  route.  The  announcement  followed  an  extensive  competitive  tender  process  by  the  WA 
Government  and  comes  on  the  back  of  Rex  commencing  operations  in  WA  in  February  2016  to  operate  the  regulated  Perth  to 
Albany and Perth to Esperance routes. 

This was followed by an announcement by the WA Government on 28 February, that Rex was the successful tenderer to operate the 
Regular Public Transport (RPT) air services on the Perth – Carnarvon / Monkey Mia route. This conferred on Rex the sole right to operate 
on the route for a term of five years, commencing on 2 July 2018. Rex will service the route with 24 weekly services between Perth and 
Carnarvon and 12 weekly services between Perth and Monkey Mia, representing a 20 per cent increase in flight frequency for Carnarvon 
and a 50% increase in flight frequency for Monkey Mia in comparison to the current flight frequency offered by the previous operator. 

In January 2018, Rex exited the Taree to Sydney route with the last service operating on Saturday 27 January 2018. Rex had serviced the 
Taree to Sydney route for almost 10 years following the collapse of Big Sky Express Airlines in late 2006. The Taree to Sydney route was 
loss-making for Rex, however the impetus to withdraw was triggered by the Mid Coast Council’s refusal to supply necessary infrastructure 
at the airport. Rex had earlier given the Mid Coast council one year to find a replacement airline and when Rex was informed by the council 
that a replacement had been found, Rex publicly announced its intention to withdraw from the route.

The Rex services between Taree and Sydney had been shared with Newcastle so with effect from 28 January Rex began servicing the 
Newcastle to Sydney route with 36 weekly dedicated services. 

Effective 29 January Rex increased the number of weekday flights between Orange and Sydney from four return services to five return 
services daily. This resulted in a total of 58 weekly services between Orange and Sydney which represents close to 18,000 additional seats 
per year, taking the annual seats to approximately 100,000 per year.

In May 2018, Rex reduced services between Mount Gambier and Adelaide in a bid to better utilise scarce resources amid the industry-
wide pilot shortage. Rex cancelled five return weekly services between Mt Gambier and Adelaide which leaves in place thirty six flights per 
week or approximately 61,000 seats per year which is more than sufficient for the 47,000 annual passengers on the route. 

16 

REGIONAL EXPRESS HOLDINGS LIMITED

 
The graphs below set out the evolution in monthly passenger carriage and monthly passenger revenue over the last eight FYs.

REGIONAL EXPRESS HOLDINGS LIMITED 

 17

FLEET CHANGES

In February 2018, Air Link sold its only Beech 1900 aircraft. Two additional Saab 340 B+ aircraft were acquired in FY18, bringing the 
total Saab fleet to 57 aircraft. Of the 57 Saab 340 aircraft in the Rex Group, 40 are fully owned, 15 are mortgaged with approximately 
one year left to run and two are on lease. 

ENTERPRISE AGREEMENTS (EA) 

The Rex Flight Attendant Enterprise Agreement (EA) has been successfully voted in and is currently with the Fair Work Commission for 
approval. The Airline Services Collective Agreement was successfully voted in on 22 August 2018.

OPERATIONAL AND SERVICE STANDARDS 

In  FY18,  Rex  recorded  83.8%  on-time  departure  performance  as  reported  by  the  Bureau  of  Infrastructure,  Transport  and  Regional 
Economics (BITRE). 

Rex completed FY18 with the lowest cancellation rate of all Australian airlines, recording 1.3% of all flights cancelled. Other main regional 
carriers QantasLink and Virgin Australia Regional Airlines ranked 5th and 7th respectively. 

airline

QantasLink

Virgin Australia Regional Airlines 

Qantas

Virgin Australia

Jetstar

Tigerair

on-Time Departure

Cancellation rate (%)

Fy 2018

Fy 2017

Fy 2018

Fy 2017

3rd

2nd

5th

4th

1st

6th

7th

4th

5th

2nd

1st

3rd

7th

6th

1.3%

2.3%

2.6%

1.5%

1.6%

1.3%

2.6%

0.8%

2.6%

1.5%

1.2%

2.2%

1.8%

1.3%

COMMUNITY INVOLVEMENT 

During FY18 Rex contributed $322 thousand in sponsorships to worthy charitable and community causes across the network.

Rex is committed to regional and remote Australia and is proud to be able to give directly back to the local communities we service. From 
corporate partnerships to sponsoring local events, by providing flights to raffle, or air travel for locals, guests and performers, Rex continues 
to  support  the  unique  vibrancy  of  regional  Australia.  Connecting  the  country  to  the  city  by  providing  valuable  fare  assistance  to  medical 
passengers highlights that our ethos of ‘Our Heart is in the Country’ remains strong.

Some of the activities Rex supported during the FY: 

•	 Tunarama Festival, Port Lincoln SA

•	 Relay for Life, Cancer Council, Orange NSW

•	 Ceduna  Area  School's  Kokoda  Trail  Expedition,  Reconciliation 

SA, Ceduna SA

•	 Royal  Flying  Doctors  Service  and  Angel  School,  Doomadgee, 

Normanton and Mornington Island QLD

•	 Parkes Elvis Festival, Parkes NSW

•	 Dirt n Dust Festival, Julia Creek QLD

•	 Table  Tennis  Exhibition,  Cooper  Pedy  Table  Tennis  Club,  

Coober Pedy SA

•	 Order of the Outback Ball, Burke Shire Council, Burketown QLD

•	 Lingalonga Early Years Learning Centre, Esperance WA

18 

REGIONAL EXPRESS HOLDINGS LIMITED

Julia Creek Dirt n Dust Festival, Queensland

 
13  CHanges in state of affairs 

No  changes  in  the  state  of  affairs  were  observed  by  the  Group  during  the  reporting  period  apart  from  what  is  reported  in  the 
Operational Review.

14  suBseQuent events 

On 2 July 2018 Rex commenced operations on the Regular Public Transport (RPT) air services on the Perth – Carnarvon / Monkey 
Mia route.

15  future developments 

Rex Flight Attendants (FA) will be issued with company iPad's in the coming months. The iPads will contain the full suite of company 
manuals, reducing further the burden of maintaining hard copy manuals and the associated costs. FA iPad's will initially be used in 
conjunction with the Pilots’ iPad's and their new ‘Briefcase App’ which allows crew to retrieve the last completed trim and passenger 
seating plan. The long term plan will be the development of applications for cashless bar sales and catering orders. 

Rex Flight Operations and Information Technology departments are trialling a new application developed in-house for the calculation 
of  weight  and  balance  and  performance  data  for  the  Saab  340  fleet.  This  new  application  will  be  incorporated  in  the  aircrafts 
Electronic Flight Bag (EFB). Given the speed of the iPad's internet connection, this application will reduce the time taken to generate 
weight and balance and performance data. There will no longer be a requirement for printed trim sheets as the data will be saved 
to  a  server  and  transmitted  via  Bluetooth  to  the  FA  iPads  so  they  have  an  electronic  copy  of  the  passenger  seating  plan.  The 
new application has been approved by a Civil Aviation Safety Authority (CASA) delegate. This initiative along with the transition to 
electronic documents will facilitate the ongoing implementation of our weight deduction program with a weight savings greater than 
50kg which transfers to improved operational efficiencies and fuel savings. 

16  environmental regulations 

During FY18, Rex continued to be an active participant in programs aimed at maximising energy efficiency and reducing greenhouse 
gas emissions in accordance with the National Greenhouse Energy Reporting Act 2007 (NGER).

Rex is due to submit its 9th NGER report to the Clean Energy Regulator in October 2018.

17  dividends

In the light of a clear trend of the recovery of the Australian economy, the Directors have decided on a final dividend payout of 8 cents 
for every share to be paid out in November 2018.

18  indemnifiCation of offiCers and auditors 

During the FY, the Company paid a premium in respect of a contract insuring the directors of the Company (as named above), the 
company secretaries (as named above), and all executive officers of the Company and of any related body corporate against a liability 
incurred  as  such  a  director,  secretary  or  executive  officer  to  the  extent  permitted  by  the  Corporations  Act  2001.  The  contract  of 
insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the FY, except to the extent permitted by law, indemnified or agreed to indemnify an 
officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

REGIONAL EXPRESS HOLDINGS LIMITED 

 19

19  remuneration report 

REMUNERATIONS, NOMINATIONS AND DISCIPLINARY COMMITTEE

Rex’s board of directors has established a Remunerations, Nominations and Disciplinary Committee for the purpose of determining 
and reviewing compensation arrangements for the directors and the senior management executives of the Group. This committee 
has a process for performance evaluation of the board, its committees and key executives of Rex. The committee’s role is to assess 
the appropriateness of the nature and amount of remuneration of directors and senior management executives on a periodic basis.

REMUNERATION POLICY

Remuneration levels are set to enable Rex and its subsidiaries to attract and retain appropriately qualified and experienced directors 
and  senior  management  executives,  who  will  create  sustainable  value  for  shareholders  and  other  stakeholders.  They  also  fairly 
and responsibly reward directors and senior management, having regard to the performance of the Group, the performance of the 
individual and the external compensation environment.

REMUNERATION STRUCTURE

In accordance with best practice corporate governance, a distinction has been drawn between the remuneration structure of Rex’s 
non-executive  directors  and  that  of  its  senior  management  executives.  This  enables  Rex  to  maintain  the  independence  of  non-
executive directors and reward senior management executives for their performance of duties and their dedication.

Rex has set in place a remuneration model for all staff which calls for staff accepting a lower fixed annual salary increase in exchange 
for a profit share and a share plan. 

•	 Profit	Share	Incentive	Plan

The  profit  share  incentive  scheme,  established  in  FY06,  continues  to  award  eligible  employees  a  share  of  Rex’s  profit  before 
tax  (PBT)  based  on  an  agreed  percentage  (excluding  contributions  from  subsidiaries  and  associates)  for  the  FY  immediately 
preceding the award. The profit share is allocated on an equal share basis. Permanent part time employees receive an amount 
proportional to their employment hours. The Board continues to offer this to all non-Enterprise Agreement (EA) employees who are 
not the subject of an adverse recommendation by the Remunerations, Nominations and Disciplinary Committee.

•	 Share	Gift	Plan

Rex established the share gift plan (effective from FY06) for its executive directors and eligible employees. The plan is offered 
to  EA  groups  that  opt  for  the  plan  and  all  non-EA  employees  who  are  not  the  subject  of  an  adverse  recommendation  by  the 
Remunerations,  Nominations  and  Disciplinary  Committee.  This  plan  is  not  based  on  any  performance  measures  (other  than 
eligibility for non-EA employees). The plan was established to show its recognition of employees’ contribution to Rex by providing 
an  opportunity  to  share  in  its  future  growth  and  profitability  and  to  align  the  interests  of  the  employees  more  closely  with  the 
interests of the shareholders. As such, the share gift plan entitles eligible employees to a fixed value of shares in exchange for a 
percentage of their base salaries. Therefore there are no vesting conditions attached to the share gift.

During  the  FY,  79  thousand  fully  paid  ordinary  shares  were  acquired  by  the  Rex  Tax  Exempt  Employee  Share  Plan  Trust  and 
Rex  Tax  Deferred  Employee  Share  Plan  Trust  which  are  managed  by  Rex  Investment  Holdings  in  accordance  to  the  Rex  Tax 
Exempt  Employee  Share  Plan  Trust  Deed  and  Rex  Tax  Deferred  Employee  Share  Plan  Trust  Deed.  The  shares  purchased  are 
solely for the benefit of employees as part of the employee share plan. The Group does not have a beneficial interest in the trust.

20 

REGIONAL EXPRESS HOLDINGS LIMITED

 
direCtor and senior management details

The following persons acted as directors of the Company during or since the end of the FY:

Lim Kim Hai (Chairman)

The Hon. John Sharp AM (Deputy Chairman)

Lee Thian Soo

Neville Howell

Chris Hine

James Davis

Prof. Ronald Bartsch

The term ‘senior management’ is used in this remuneration report to refer to the following persons. Except as noted, the named 
persons held their current position for the whole of the FY and since the end of the FY:

Neville Howell (Chief Operating Officer)

Warrick Lodge (General Manager, Network Strategy & Sales)

Irwin Tan (General Manager, Corporate Services / Company Secretary)

Mayooran Thanabalasingam (General Manager, Information Technology and Communications) 

Png Yeow Tat (General Manager, Engineering)

Mark Burgess (Deputy General Manager, Engineering)

Paul Fisher (General Manager, Flight Operations & Chief Pilot)

David Brooksby (National Airports Manager, Rex & Chief Operating Officer, Air Link)

REGIONAL EXPRESS HOLDINGS LIMITED 

 21

remuneration of direCtors and senior management 
The directors and other nominated key management personnel received the following amounts as compensation for their services 
as directors and executives of the Company and/or the Group during the year:

 Short-term benefits 

 Cash salary 
& fees 

Cash profit 
sharing & 
other bonuses 

 Post 
employment 
benefits 

 Long-term 
benefits 

Share gift
provision

Pension & 
super-annuation

Long service 
leave

Share gift 
issued

 $ 

-

-

137,829 

135,643 

224,711 

209,876 

90,000 

90,000 

30,000 

30,000 

35,000 

35,000 

40,000 

40,000 

174,833 

166,249 

184,929 

181,249 

179,833 

171,249 

199,705 

184,619 

169,750 

156,938 

139,517 

136,688 

149,614 

129,868 

 $ 

-

-

933 

16 

 $ 

-

-

 $ 

-

-

 $ 

-

-

Total

 $ 

-

-

13,183 

1,797 

 2,114 

155,856 

12,887 

1,760 

 2,113 

152,419 

41,167 

25,019 

19,862 

19,005 

3,497 

3,247 

 3,899 

 3,849 

293,136 

260,996 

- 

- 

- 

- 

- 

- 

- 

- 

41,167 

25,019 

40,875 

25,019 

41,167 

25,019 

38,458 

33,642 

41,167 

25,019 

23,998 

18,284 

31,167 

22,850 

8,550 

8,550 

- 

- 

3,325 

3,325 

3,800 

3,800 

17,145 

16,443 

17,849 

17,485 

17,492 

16,790 

18,766 

17,718 

16,790 

15,797 

14,695 

14,391 

15,389 

13,918 

- 

- 

- 

- 

- 

- 

- 

- 

2,914 

2,770 

2,831 

2,770 

2,831 

2,770 

5,000 

4,618 

2,831 

2,615 

3,491 

3,419 

2,498 

1,900 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 3,327 

 3,284 

 3,327 

 3,284 

 3,327 

 3,284 

 3,694 

 3,647 

 3,140 

 3,100 

 2,735 

 2,700 

 2,282 

 2,253 

98,550 

98,550 

30,000 

30,000 

38,325 

38,325 

43,800 

43,800 

239,386 

213,765 

249,811 

229,807 

244,650 

219,112 

265,623 

244,244 

233,678 

203,469 

184,436 

175,482 

200,950 

170,789 

1,755,721 

1,667,379 

300,099 

199,887 

166,846 

160,109 

27,690 

25,869 

 27,845 

 27,514 

2,278,201 

2,080,758 

Directors/Executives 

EXECuTivE DirECTorS

Lim Kim Hai (1)

Executive Chairman

CHriS HinE 

Excecutive Director & Group Flight Operations 
Advisor

nEviLLE HowELL

Executive Director & Chief Operating Officer

non-EXECuTivE DirECTorS

JoHn SHarp

Deputy Chairman

LEE THian Soo

Non-Executive Director

ronaLD BarTSCH

Non-Executive Director

JamES DaviS

Non-Executive Director

SEnior manaGEmEnT EXECuTivES

warriCK LoDGE

GM, Network Strategy & Sales

irwin Tan

GM, Corporate Services

mayooran THanaBaLaSinGam 

GM, ITC

pauL DaviD FiSHEr

GM, Flight Operations & Chief Pilot

pnG yEow TaT

GM, Engineering

marK BurGESS

Deputy GM, Engineering

DaviD BrooKSBy

 National Airports Manager

ToTaL

FY

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

2018

2017

(1) Lim Kim Hai undertook to forfeit his Director’s fee since November 2008 in response to the global economic crisis and continued to do so in this reporting period in the light of the continuing difficult environment. 

22 

REGIONAL EXPRESS HOLDINGS LIMITED

 
VALUE OF OPTIONS ISSUED TO DIRECTORS AND EXECUTIVES  

No options lapsed, were granted or were exercised during the year.

RELATIONSHIP BETwEEN THE REMUNERATION POLICY AND C OMPANY PERFORMANCE 

In addition to the profit share and share gift schemes that apply to all non-EA staff, a Key Manager bonus, fixed by the Remunerations, 
Nominations and Disciplinary Committee, was given to selected members of executive management based on an assessment of the 
recipient’s performance during the year. 

The tables below set out summary information about the Group’s results and movements in shareholder wealth for the five years 
to June 2018:

Revenue

Net profit / (loss) before tax

Net profit / (loss) after tax 

Share price at start of year

Share price at end of year

Interim dividend

Final dividend 1,2

Basic earnings / (loss) per share

Basic earnings / (loss) per share

30 June 2018
$’000

30 June 2017
$’000 

30 June 2016
$’000

30 June 2015
$’000

30 June 2014
$’000

295,537

25,075

16,913

280,967

17,810

12,620

261,906

(10,703)

(9,557)

256,217

9,296

6,672

253,336

10,662

7,725

30 June 2018

30 June 2017

30 June 2016

30 June 2015

30 June 2014

$1.11

$1.43

$0.04

$0.10

15.7 cps

15.7 cps

$0.77

$1.11

-

-

11.7 cps

11.7 cps

$1.04

$0.77

-

-

(8.8) cps

(8.8) cps

$0.75

$1.04

-

-

6.2 cps

6.2 cps

$1.125

$0.75

-

-

7.0 cps

7.0 cps

1 The final dividend is per share fully franked and after corporate tax of 30%.

2 Declared after the balance date and reflected in the financial statements of the year of payment. 

KEY TERMS OF EMPLOYMENT CONTRACTS

Employment contracts between the senior management executives and the Group do not have a specified duration. A notice of four 
weeks must be given for senior management executives to terminate their contract. There are no extraordinary termination payments 
set out in the contracts of the senior management executives of the Group.

KEY MANAGEMENT PERSONNEL EqUITY HOLDINGS

The following table details the shareholdings (total of direct and indirect shareholdings) of directors and key management personnel in the 
Group:

Balance at
1 July 2017

Increase / (Decrease)
during the year

Balance at
30 June 2018

Directors:

Lim Kim Hai

The Hon. John Sharp

Lee Thian Soo

Neville Howell

Chris Hine

James Davis

Key management personnel:

Warrick Lodge

Irwin Tan

Mayooran Thanabalasingam

Paul Fisher

Png Yeow Tat

Mark Burgess

David Brooksby

24,753,859

313,032

11,449,362

30,922

74,407

200,866

155,348

31,132

83,710

40,054

24,644

18,106

19,467

-

12,000

-

(423)

1,939

-

3,052

3,052

3,052

3,389

2,881

3,408

2,094

24,753,859

325,032

11,449,362

30,499

76,346

200,866

158,400

34,184

86,762

43,443

27,525

21,514

21,561

During the financial year, no options were granted to (2017: nil), nor exercised (2017: nil) by key management personnel for ordinary 
Rex shares. No options remained unpaid or to be exercised at the year end.

REGIONAL EXPRESS HOLDINGS LIMITED 

 23

 
 
 
 
 
 
20  proCeedings on BeHalf of tHe CompanY 

No proceedings have been brought on behalf of the Group, nor has any application been made in respect of the Group under s.237 
of the Corporations Act 2001.

21  non-audit serviCes 

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 
26 to the financial statements.

The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on 
the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. 

The directors are of the opinion that the services as disclosed in Note 26 to the financial statements do not compromise the external 
auditor’s independence, based on advice received from the Audit Committee, for the following reasons:

•	 all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, 

and

•	 none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 
Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing 
or auditing the auditor’s own work, acting in a management or decision-making capacity for the company, acting as advocate for the 
company or jointly sharing economic risks and rewards.

22  rounding off of amounts 

In accordance with Legislative Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the 
rounding off of amounts in the financial statements, amounts in the financial statements have been rounded to the nearest hundred 
thousand dollars in accordance with that Legislative instrument, unless otherwise indicated.

Signed in accordance with a resolution of directors made pursuant to s.298 (2) of the Corporations Act 2001.

On behalf of the Directors

Neville Howell 
Chief Operating Officer 
29 August 2018

24 

REGIONAL EXPRESS HOLDINGS LIMITED

 
AUDITOR’S INDEPENDENCE DECLARATION

Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Grosvenor Place 
225 George Street 
Sydney, NSW, 2000 
Australia 

Phone: +61 2 9322 7000 
www.deloitte.com.au 

The Board of Directors 
Regional Express Holdings Limited 
81 – 83 Baxter Road 
MASCOT  NSW  2020  

29 August 2018 

Dear Board Members 

Regional Express Holdings Limited 

In  accordance  with  section  307C  of  the  Corporations  Act  2001,  I  am  pleased  to  provide 
the  following  declaration  of  independence  to  the  directors  of  Regional  Express  Holdings 
Limited. 

As  lead  audit  partner  for  the  audit  of  the  financial  statements  of  Regional  Express 
Holdings Limited for the financial year ended 30 June 2018, I declare that to the best of 
my knowledge and belief, there have been no contraventions of: 

(i)  the  auditor  independence  requirements  of  the  Corporations  Act  2001  in 

relation to the audit; and 

(ii)  any applicable code of professional conduct in relation to the audit.   

Yours sincerely 

DELOITTE TOUCHE TOHMATSU 

Jamie C. Gatt 
Partner  
Chartered Accountant 

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Touche Tohmatsu Limited  


REGIONAL EXPRESS HOLDINGS LIMITED 

 25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate governanCe  
statement 

Corporate governanCe statement 
The Board is committed to sound corporate governance to ensure shareholder expectations are met and that Regional Express 
Holdings (the Company) is in compliance with the Australian Securities Exchange (ASX) Corporate Governance Council’s Principles 
of Good Corporate Governance and Best Practice Recommendations (ASX Recommendations). 

As required by the ASX Listing Rules this statement sets out the extent to which the Company has complied with the ASX Recommendations 
during the FY to 30 June 2018 and identifies any of the ASX Recommendations not followed and the reason why the Company has not 
adopted the ASX Recommendations. This statement adopts the ordering and numbering of the ASX Recommendations.

PRINCIPLE 1: LAY SOLID FOUNDATION FOR MANAGEMENT AND O VERSIGHT

The Board has adopted a charter that details the roles and responsibilities of the Board and those of the Management Committee 
to achieve the objectives of delivering shareholder value. The Board regularly reviews the division of functions between the Board 
and  management  to  ensure  that  it  continues  to  be  appropriate  to  the  needs  of  the  company  (ASX  Recommendation  1.1).  The 
Remunerations,  Nominations  and  Disciplinary  Committee  undertake  appropriate  checks  before  appointing  a  person,  or  putting 
forward to security holders a candidate for election, as a director. The biography of each director standing for election or re-election 
is expressly mentioned in the Notice of Meeting of the company’s AGM (ASX Recommendation 1.2). The Directors and Management 
Committee have a clear understanding of their roles and responsibilities and of the company’s expectations of them as set out in their 
employment contracts (ASX Recommendation 1.3). The Company Secretaries are integral in advising the Board and its committees 
on  governance  matters,  ensuring  that  board  and  committee  policy  and  procedures  and  followed,  and  helping  to  organise  and 
minuting discussions of board and committee meetings (ASX Recommendation 1.4). 

The  performance  of  each  Management  Committee  member  is  evaluated  against  goals  and  objectives  with  the  assistance  of  the 
Remunerations, Nominations and Disciplinary Committee. The performance of the Management Committee was reviewed in FY 17 
(ASX Recommendation 1.7). The performance of the Directors and Board Committees are reviewed periodically with the assistance 
of the Remunerations, Nominations and Disciplinary Committee. The performance and the composition of the Board Committees 
were reviewed in FY17 (ASX Recommendation 1.6). 

The  Board’s  Charter,  Board  Committee  Charters,  Share  Trading  Policy,  Continuous  Disclosure  Policy  and  Code  of  Conduct  are 
available for access by shareholders and the general public in the corporate governance section of the Company’s website (ASX 
Recommendation 3.5). 

PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE

The	 Remunerations,	 Nominations	 and	 Disciplinary	 Committee  has  been  established  by  the  Board  of  the  Company  (ASX 
recommendation 2.1) and applies to the Company and its subsidiaries to support and advise the Board in fulfilling its responsibilities 
to shareholders, employees and other stakeholders of the Company by endeavouring to ensure that:

•	 the directors and senior management of the Group are remunerated fairly and appropriately;
•	 the Group’s remuneration policies and outcomes strike an appropriate balance between the interests of the Company’s shareholders, 
and rewarding and motivating the Group’s executives and employees in order to secure the long term benefits of their energy and 
loyalty; 

•	 the human resources policies and practices are consistent with and complementary to the strategic direction and objectives of the 

Company as determined by the Board;

•	 it reviews and advises the Board on the composition of the Board and its Committees;
•	 it reviews the performance of the Board, the chairman of the Board, the executive and non-executive directors, and other individual 

members of the Board; and

•	 proper succession plans are in place for consideration by the Board.

This Committee is chaired by James Davis and has one other member, the Hon. John Sharp AM. The Committee had five meetings 
during  the  FY  attended  by  all  members  of  the  Committee.  Descriptions  of  the  members’  qualifications,  skills  and  experience  are 
included in the Directors’ Report.

The  Board  acknowledges  the  ASX  recommendations  to  have  the  Committee  compose  of  a  majority  of  independent  directors  and 
have at least three members. The Committee is currently made up of two independent directors. The Board feels at this stage that two 
members are sufficient for the Remunerations, Nominations and Disciplinary Committee given the size of the Company and Board. 

The Remunerations, Nominations and Disciplinary Committee has a formal charter which is available on the Company’s website. 

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report 
are set out in the Director’s Report.

REGIONAL EXPRESS HOLDINGS LIMITED 

 27

Below is the Rex Board skills matrix outlining the skills that the board currently has (ASX Recommendation 2.2):

Lim
Kim Hai

JoHn 
SHarp

LEE  
THian Soo

ronaLD
BarTSCH

JamES 
DaviS

CHriS 
HinE

nEviLLE 
HowELL

BUSINESS / ENTREPRENEURIAL EXPERIENCE

POLITICAL EXPERIENCE

CORPORATE GOVERNANCE

SAFETY AND RISK MANAGEMENT

FINANCE

LEGAL

REGULATORY KNOWLEDGE AND EXPERIENCE

INDUSTRY 
EXPERIENCE

PILOT

ENGINEERING KNOWLEDGE 

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

The  membership  of  the  Board  during  the  year  ended  30  June  2018,  including  independence  status  was  as  follows  (ASX 
Recommendation 2.3):

Director

Status

Date of appointment 

Lim Kim Hai

Executive Chairman

The Hon. John Sharp AM Deputy Chairman and Independent Director

Lee Thian Soo

Non-Executive Director

Neville Howell

Chief Operating Officer & Executive Director

Appointed 27 June 2003 and re-appointed 16 November 2006,  
25 November 2009, 27 November 2012 and 27 November 2015.

Appointed 14 April 2005 and re-appointed 19 November 2008,  
23 November 2011, 27 November 2013 and 29 November 2016.

Appointed 27 June 2003 and re-appointed 16 November 2006,  
25 November 2009, 27 November 2012 and 27 November 2015.

Appointed 1 July 2014 and re-appointed 26 November 2014, and  
21 November 2017.

Chris Hine

Executive Director & 
Group Flight Operations Advisor

James Davis

Independent Director

Ronald Bartsch

Independent Director

Appointed 1 March 2011 and re-appointed 23 November 2011 as Executive 
Director, Appointed 26 November 2014 as Non-Executive Director, Appointed 
18 May 2015 as Executive Director and Group Flight Operations Advisor, 
re-appointed 21 November 2017.

Appointed 26 August 2004 as Executive Director and re-appointed  
23 November 2011, and Re-appointed as Independent Director  
26 November 2014 and 21 November 2017.

Appointed 23 November 2010 and re-appointed 23 November 2011,  
26 November 2014, and 21 November 2017.

The Board acknowledges the ASX Recommendation that a majority of the Board should be independent directors (ASX Recommendation 
2.4). Although the Board has only three directors out of seven that qualify as independent non-executive directors, Lee Thian Soo is only 
considered non-independent by virtue of his share ownership and is considered by the Board to be effectively an independent Director. 
The Board believes that every director on the current Board will make decisions in the best interests of all shareholders and in accordance 
with their duties as directors. 

The Board also acknowledges that it is desirable that the Chairman be an independent director and for his role to be segregated from 
that of the Chief Executive Officer (ASX Recommendations 2.5). However, the Board views the Chairman’s history of leadership of the 
Company as an advantage, both at the management level and at the Board level. This has resulted in performance that matches the 
best airlines in the world. The Board acknowledges that if the Chair is not an independent director, the Deputy Chairman should be an 
independent director, which is the case. 

The Board is responsible for the management of the affairs of the Company and its subsidiaries (the Group), including:

(A) 

STRATEGIC AND FINANCIAL PERFORMANCE

•	 Developing and approving the corporate strategy.
•	 Evaluating, approving and monitoring the strategic and financial plans and objectives of the Group.
•	 Evaluating, approving and monitoring the annual budgets and business plans.
•	 Determining the Company’s dividend policy, the operation of the Company’s dividend re-investment plan (if any), and the amount and 

timing of all dividends.

•	 Evaluating, approving and monitoring major capital expenditure, capital management and all major acquisitions, divestitures and other 

corporate transactions, including the issue of securities of the Company.

•	 Approving all accounting policies, financial reports and material reporting and external communications by the Group.
•	 Appointment of the Chairman of the Company.

28 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
(B)  

EXECUTIVE MANAGEMENT

•	 Appointing,  monitoring  and  managing  the  performance  of  the  Chief  Operating  Officer  or  Managing  Director  and  other 

executive directors.

•	 Managing succession planning for the executive directors and such other key management positions which may be identified 

from time to time.

•	 Appointing the Company Secretary.
•	 With  the  advice  and  assistance  of  the  Remunerations,  Nominations  and  Disciplinary  Committee,  reviewing  and  approving  the 

performance and remuneration of the individual Board members and policies with respect to remuneration of any employees

(C) 

AUDIT 

•	 Upon the recommendation of the Audit and Corporate Governance Committee, appointing the external auditor and determining its 

remuneration and terms of appointment.

•	 Ensuring  that  effective  audit  and  regulatory  compliance  programmes  are  in  place  to  protect  the  Group’s  assets  and  

shareholder value.

•	 Approving and monitoring the Group’s audit framework. Approving and, with the assistance and advice of the Audit and Governance 

Committee, monitoring compliance with the Group’s audit policies and protocol.

•	 Monitoring the Group’s operations in relation to, and compliance with relevant regulatory and legal requirements.

(D)  

CORPORATE GOVERNANCE

•	 At least once every two years the Board will, with the assistance and advice of the Audit and Corporate Governance Committee, 
review  the  performance  and  effectiveness  of  the  Company’s  corporate  governance  policies  and  procedures  and,  if  appropriate, 
amend those policies and procedures as necessary.

•	 The Board will review and approve all disclosures related to any departures from the ASX Principles of Good Corporate Governance.
•	 The Board will review and approve the public disclosure of any of the Group’s policies and procedures.
•	 The  Board  will  supervise  the  public  disclosure  of  all  matters  that  the  law  and  ASX  Listing  Rules  require  to  be  publicly  disclosed, 

consistent with the Continuous Disclosure Compliance Policy approved by the Board.

•	 The Board will approve the appointment of directors to committees established by the Board.
•	 The Board will approve and monitor delegations of authority.

(E) 

RISK MANAGEMENT 

•	 The Company recognises that the management of business and economic risk is an integral part of its operations and has for many 
years integrated risk management processes into its operations to ensure continuity of the business and to minimise any impact on its 
performance. The Board has established a sound system of risk oversight and management and internal control which involve the Safety 
and Risk Management Committee and the Audit and Corporate Governance Com mittee. 

•	 Ensuring that effective risk management programmes are in place to protect the Group’s assets and shareholder value.
•	 Approving and monitoring the Group’s risk framework, including (but not limited to) systems of risk management and internal control. 
•	 Approving and, with the assistance and advice of the Risk Management Committee, monitoring compliance with the Group’s risk.
•	 The Charters of both committees are available on the Company’s website. 

(F)  

STRATEGIC PLANNING

•	 The Board will be actively and regularly involved in strategic planning.
•	 Strategic planning will be based on the identification of opportunities and the full range of business risks that will determine which of 

those opportunities are most worth pursuing.

•	 The Board will, on an ongoing basis, review how the strategic environment is changing, what key business risks and opportunities are 

appearing, how they are being managed and what, if any, modifications in strategic direction should be adopted.

(G)   PERFORMANCE EVALUATION

•	 At least once per year the Board will, with the advice and assistance of the Remunerations, Nominations and Disciplinary Committee, 
review and evaluate the performance of the Board, each Board Committee, and each individual director against the relevant Charters, 
corporate governance policies, and agreed goals and objectives (ASX Recommendation 2.5).
•	 Following each review and evaluation the Board will consider how to improve its performance.
•	 The Board will agree and set the goals and objectives for the Board and its Committees each year, and if necessary, amend the 

relevant Charters and policies.

•	 With the advice and assistance of the Remunerations, Nominations and Disciplinary Committee, the Board will review and approve the 

remuneration of the Company’s executive and non-executive directors.

REGIONAL EXPRESS HOLDINGS LIMITED 

 29

The evaluation of the Board, its committees and directors was carried out during the FY as set out above.

A Director of the Company is entitled to seek independent professional advice (including, but not limited to, legal, accounting and 
financial advice) at the Company’s expense on any matter connected with the discharge of his or her responsibilities, in accordance 
with the procedures and subject to the conditions set out in the Board Charter.

The  Board  believes  that  its  members  have  the  appropriate  skill  set  and  knowledge  to  effectively  perform  their  roles  as  directors 
without requiring further professional development. Our board members have a vast wealth of experience in the aviation industry and 
beyond as a majority of them have aircraft pilot qualifications. 

The Company has a program for inducting new Directors. 

PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING

Directors and the Management Committee are required to maintain the highest legal, moral and ethical standards of conduct. The 
Board has adopted the Code of Conduct which provides guidance to all staff on compliance with legal and other obligations (ASX 
Recommendation 3.1).

The Company has established a Share Trading Policy (ASX Recommendation 1.3). Under this policy, Directors and Management 
Committee are prohibited from trading in securities of the Company without prior approval from the Board.

The Company employs all staff on their merits and is committed to recognising and valuing the contributions of staff from diverse 
backgrounds. The Company has established a Diversity Policy (ASX Recommendation 1.5).

The  Company  does  not  believe  in  an  affirmative  action  policy  and  setting  of  artificial  targets  for  staff  of  various  backgrounds 
(gender, religious, cultural, racial etc) but rather in ensuring that all staff are able to develop to their full extent of their capabilities 
and contributions. 

The Company was compliant with the Workplace Gender Equality Act 2012 as reported by the Workplace Gender Equality Agency. 

As at the end of the reporting period the proportion of female employees in the Company was 34.9%. There were twelve women 
holding management positions in the Company. There were no female Board members or Management Committee members. 

In accordance with the requirements of the Workplace Gender Equality Act 2012 (Act), Regional Express Holdings Limited lodged 
its annual public report (2017-2018) with the Workplace Gender Equality Agency (Agency).

To access a copy of the report refer to the Rex website under Corporate and Social Responsibilities. 

Details on the reporting process can be located at the Workplace Gender Equality Website: www.wgea.gov.au

The Code of Conduct, Share Trading Policy and Diversity Policy are available on the Company’s website.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING 

The Audit and Corporate Governance Committee has been established by the Board of the Company (ASX recommendation 4.1) 
to assist the Board in fulfilling its commitment to ensure the integrity of the Company’s financial reports and Corporate Governance policies:

•	 assisting the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control relating to 
all matters affecting the Group’s financial performance, the audit process, and the Company’s process for monitoring compliance with 
laws and regulations and the code of conduct; 

•	 advising the Board on good governance standards and appropriate corporate governance policies for the Group; and

•	 critically reviewing the Group’s performance against its corporate governance policies.

In FY18, this Committee was chaired by the Hon. John Sharp AM and has one other member, James Davis. Descriptions of the members’ 
qualifications, skills and experience are included in the Directors’ Report. The Committee had two meetings during FY18 attended by all 
then-current members of the Committee.

The Board acknowledges the ASX recommendations to have the Committee composed of a majority of independent directors, chaired 
by an independent director and have at least three members (ASX Recommendation 4.1). 

The Committee is currently made up of two non-executive directors of which both are independent. The Board feels that the directors 
in the audit committee will make decisions that are in the best interests of the shareholders in their duties as audit committee members 
and directors of the company. The Board also feels at this stage that two members are sufficient for the audit committee given the size 
of the company and Board.

The Audit and Corporate Governance Committee has a formal Charter which is available on the Company’s website (ASX Recommendation 4.1).

The Chief Operating Officer and the General Manager (GM) Corporate Services who oversees the finance department, provide written assurance 
to the Board as to the integrity of the financial statements and that they are founded on a sound system of risk management and internal controls 
which are operating effectively and efficiently (ASX Recommendation 4.2).

The Board acknowledges the ASX Recommendation to have the Chief Executive Officer and Chief Financial Officer provide this statement to the 
Board. The Board believes that it is appropriate for Chief Operating Officer and GM Corporate Services to provide the statement. 

The directors have ensured that the Company’s External Auditor attends all Annual General Meetings and is available to answer shareholders’ 
questions about the conduct of the audit and the preparation and content of the Auditor’s report thereon (ASX Recommendation 4.3).

30 

REGIONAL EXPRESS HOLDINGS LIMITED

 
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE 

The Company complies with the continuous disclosure obligations of the ASX Listing Rules and, in doing so, immediately notifies the 
market of any material price sensitive information. The Company has adopted and implemented a Continuous Disclosure Policy which 
sets out the procedure for the identification of material price sensitive information and reporting of such information to the company 
secretaries for review (ASX Recommendation 5.1). The Continuous Disclosure Policy is available on the Company’s website. 

PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS  

It  is  the  Company’s  policy  that  the  principal  communication  with  shareholders  apart  from  the  Company  website  is  the  provision 
of  the  Annual  Report,  including  the  Financial  Statements,  half  yearly  investor  briefings  and  the  Annual  General  Meeting  (and  any 
extraordinary meetings held by the Company). Shareholders are encouraged to participate in half-yearly investor briefings either by 
attendance or by dialling in through the Company’s teleconferencing facilities and are invited to put questions to the Chairman of the 
Board in that forum (ASX Recommendation 6.3). The Company’s website provides additional information and greater detail about 
the Company, including ASX and media releases and access to statements regarding corporate governance related matters (ASX 
Recommendation 6.1). 

The Board acknowledges the ASX recommendation of facilitating effective two-way communication with investors. Shareholders are 
able to contact the company through the company secretaries (ASX Recommendation 6.2). 

The Company acknowledges that some security holders prefer the speed, convenience and environmental friendliness of electronic 
communications  over  more  traditional  methods  of  communication.  To  this  end  the  Company  provides  its  security  holders  with 
the  option  of  receiving  either  a  hard  or  soft  copy  of  its  annual  report  and  notice  of  meeting  for  its  Annual  General  Meeting  (ASX 
Recommendation 6.4). 

PRINCIPLE 7: RECOGNISE AND MANAGE RISK

The Company has integrated risk management processes into its operations to ensure continuity of the business and to minimise 
any impact on its performance. 

The  Board  has  established  policies  for  a  sound  system  of  risk  oversight  and  management  and  internal  control  which  involve  the 
Safety and Risk Management Committee (Recommendation 7.1).

The Safety and Risk Management Committee has been established by the Board of the Company and applies to the Company 
and its subsidiaries to support and advise the Board in fulfilling its responsibilities to shareholders, employees and other stakeholders 
of the Company by:

•	 assisting the Board in fulfilling its development, oversight and review responsibilities for the safety culture and safety management 

processes as defined by the separate safety policies published for each Air Operator Certificate holder within the Group; and

•	 implementing and supervising the Group’s operational risk assessment framework.

The Board acknowledges the ASX recommendation to have the Committee composed of a majority of independent directors and 
chaired by an independent director and have at least three members (ASX Recommendation 7.1).

The Committee is currently made up of one independent director. The Board feels that the directors in the Safety and Risk Management 
Committee  will  make  decisions  that  are  in  the  best  interests  of  the  shareholders  in  their  duties  as  Safety  and  Risk  Management 
Committee members and directors of the company. The Board also feels at this stage that two members are sufficient for the Safety 
and Risk Management Committee given the size of the company and Board. 

The Safety and Risk Management Committee has a formal Charter which sets out the responsibilities of the Committee as well as 
the Company’s policies on risk oversight and management. The Charter is available on the Company’s website.

The Board reviews the safety and risk management report prepared by the Group’s Safety Manager at each Board meeting (ASX 
Recommendation 7.2).

Being  an  airline,  Rex  is  required  by  the  Civil  Aviation  Safety  Authority  to  have  a  safety  and  compliance  department.  Staffed  by 
approximately  12  full  time  equivalent  employees,  this  department  conducts  internal  audits  of  all  Rex’s  operations  including  flight 
operations, engineering and airport operations. The head of this department, the GM Human Factors, has a direct reporting line to 
the Board and Chairman (ASX Recommendation 7.3). 

The Company has outlined its main material risk sources that could adversely affect the entity’s prospects for future FYs and has 
explained how these risks are managed in the Directors’ Report (ASX Recommendations 7.1 and 7.4). 

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

The Board has established a Remunerations, Nominations and Disciplinary Committee. The membership, responsibilities and number 
of meetings held have been set out under Principle 2. Also set out under Principle 2 is the explanation as to why the membership of 
the Committee differs from the ASX Recommendations.

Details  of  the  Board  and  Management  Committee  remuneration  structures  are  contained  in  the  Remuneration  Report  (ASX 
Recommendation 8.2 and 8.3).

REGIONAL EXPRESS HOLDINGS LIMITED 

 31

FINANCIAL
STATEMENTS

Consolidated statement of profit or loss  

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Passenger revenue

Freight revenue

Charter revenue

Other passenger services and amenities

Other revenue

Total revenue

Finance income

other gains / (losses)

Flight and port operation costs (excluding fuel)

Fuel costs

Salaries and employee-related costs

Selling and marketing costs

Engineering and maintenance costs

Office and general administration costs

Finance costs

Depreciation and amortisation

Total costs and expenses

profit before tax

Tax expense

profit after tax

profit attributable to

Members of the parent

Earnings per share

Basic

Diluted

Notes to the financial statements are included on pages 39 to 71.

Note

4

4

4

4

4

4

5

2018
$’000

 260,302 

 1,437 

 25,735 

 2,601 

 5,462 

 295,537 

 1,153 

 289 

 (55,341)

 (32,690)

 (107,726)

 (7,948)

 (42,325)

 (7,681)

 (1,975)

 (16,218)

 (271,904)

2017
$’000

 249,349 

 1,418 

 22,983 

 2,601 

 4,616 

 280,967 

 770 

 194

 (54,476)

 (30,928)

 (105,533)

 (7,465)

 (39,936)

 (7,540)

 (1,975)

 (16,268)

 (264,121)

 25,075 

 17,810 

 (8,162)

 (5,190)

 16,913 

 12,620 

 16,913 

 16,913 

 12,620 

 12,620 

16

16

 cents per share

 cents per share 

 15.7 

 15.7 

 11.7 

 11.7 

REGIONAL EXPRESS HOLDINGS LIMITED 

 33

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of otHer CompreHensive inCome or loss

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

profit after tax

other comprehensive loss

Hedge reserve

Revaluation of cash flow hedges

Income tax effect

other comprehensive loss, net of tax

Total comprehensive income

Notes to the financial statements are included on pages 39 to 71.

Note

15

15

2018
$’000

2017
$’000

 16,913 

 12,620 

 (70)

 21 

 (49)

 (899)

 270 

 (629)

 16,864 

 11,991 

34 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
Consolidated statement of finanCial position

AS AT 30 JUNE 2018

Current assets

Cash and bank balances

Trade and other receivables

Inventories

Other financial assets

Total current assets

non-current assets

Other receivables

Inventories

Available for sale investments carried at fair value – shares

Deferred tax assets

Property, plant and equipment

Aircraft

Other property, plant and equipment

Goodwill and other intangible assets

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Unearned revenue

Borrowings

Provisions

Current tax payable

Other financial liabilities

Total current liabilities

non-current liabilities

Borrowings

Provisions

Deferred tax liabilities

Total non-current liabilities

Total liabilities

net assets

Equity

Issued capital

Reserved shares

Retained earnings

Share-based payments reserve

Other reserves

Total equity

Note

22

6

7

23

6

7

5

8

9

10

11

12

13

5

23

12

13

5

14

15

15

15

2018
$’000

 25,965 

 12,081 

 11,778 

 - 

 49,824 

5,808

12,356

 9

1,585

 93,091 

 111,714 

 824 

 225,387 

 275,211 

 18,813 

 24,693 

 7,509 

 9,328 

 5,728 

 - 

 66,071 

 9,045 

 611 

- 

 9,656 

 75,727 

2017
$’000

 26,257 

 10,805 

 12,793

 140 

 49,995 

 6,515 

11,852

 9 

-

 96,712 

 106,872 

 853 

 222,813 

 272,808 

 18,330 

 22,698 

 7,075 

 7,172 

 1,172 

 70 

 56,517 

 16,551 

 1,371 

 1,924 

 19,846 

 76,363 

 199,484

 196,445 

 72,024 

 (2,256)

 126,521 

 1,605 

 1,590 

 199,484 

 72,024 

 (3,246)

 124,670 

 1,358 

 1,639 

 196,445 

Notes to the financial statements are included on pages 38 to 70.

REGIONAL EXPRESS HOLDINGS LIMITED 

 35

 
 
 
 
 
 
 
 
 
Note

22 (B)

Consolidated statement of CasH flows

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Receipts from customers

Payments to suppliers, employees and others

Interest paid

Income tax paid

net cash flows from operating activities

Interest received

Proceeds from disposal of property, plant and equipment

Payments for property, plant and equipment - aircraft and other

Payments for property, plant and equipment - software

net cash flows used in investing activities

Dividends paid

Shares purchased as reserve shares

Repayment of borrowings – non-related parties

net cash flows used in financing activities

net decrease in cash held

Cash at the beginning of the financial year

Cash at the end of the financial year

22 (A)

Notes to the financial statements are included on pages 38 to 70

2018
$’000

326,068

(279,926)

(1,526)

(7,115)

37,501

 1,153 

 1,951 

(18,484)

(193)

(15,573)

(15,062)

(86)

(7,072)

(22,220)

(292)

26,257

25,965

2017
$’000

312,112

(280,218)

(1,912)

(3,869)

26,113

 770 

 2,262 

(20,446)

(130)

(17,544)

 - 

(2,488)

(6,645)

(9,133)

(564)

26,821

26,257

36 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
Consolidated statement of CHanges in eQuitY

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Attributable to equity holders of the Company

Issued 
capital
$’000

Reserved 
shares
$’000

Retained 
earnings
$’000

Share-based 
payments 
reserve
$’000

Cash flow 
hedge 
reserve
$’000

at 1 July 2016

Profit for the year

Other comprehensive loss, net of tax

Total comprehensive income / (loss)

Shares purchased as reserve shares

Share gift issued - gift

Share gift plan provision transfer

Share gift plan provision

at 30 June 2017

at 1 July 2017

Profit for the year

Other comprehensive loss, net of tax

Total comprehensive income / (loss)

Dividends paid

Shares purchased as reserve shares

Share gift issued - gift

Share gift plan provision

at 30 June 2018

 72,024 

 (1,821)

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 (2,488)

 1,063 

 - 

 - 

112,050 

 12,620 

 - 

 12,620 

 - 

 - 

 - 

 - 

 72,024 

 (3,246)

 124,670 

 1,587 

 - 

 - 

 - 

 - 

 (1,063)

 (521)

 1,355 

 1,358 

 72,024 

 (3,246)

 124,670 

 1,358 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 (86)

 1,076 

 - 

 16,913 

 - 

 16,913 

 (15,062)

 - 

 - 

 - 

 72,024 

 (2,256)

 126,521 

 - 

 - 

 - 

 - 

 - 

 (1,076)

 1,323 

 1,605 

Notes to the financial statements are included on pages 38 to 70

General 
reserve 
$’000

Total
 equity
 $’000

 1,590 

 186,108 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 12,620 

 (629)

 11,991 

 (2,488)

 - 

 (521)

 1,355 

 678 

 - 

 (629)

 (629)

 - 

 - 

 - 

 - 

 49 

 1,590 

 196,445 

 49 

 - 

 (49)

 (49)

 - 

 - 

 - 

 - 

 - 

 1,590 

 196,445 

 - 

 - 

 - 

 - 

 - 

 - 

 - 

 16,913 

 (49)

 16,864 

 (15,062)

 (86)

 - 

 1,323 

 1,590 

 199,484 

REGIONAL EXPRESS HOLDINGS LIMITED 

 37

 
 
 
 
 
 
 
notes to tHe Consolidated finanCial statements

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

Note

Content

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

General Information

Application of New and Revised Accounting Standards

Critical Accounting Judgements and Key Sources of Estimation Uncertainty

Revenues and Expenses

Income Tax

Trade and Other Receivables

Inventories

Property, Plant and Equipment

Goodwill and Other Intangible Assets

Trade and Other Payables

Unearned Revenue

Borrowings

Provisions

Issued Capital

Reserved Shares and Other Reserves

Earnings Per Share

Dividends

Commitments for Expenditure

Contingent Liabilities and Contingent Assets

Subsidiaries

Acquisition of Businesses

Notes to the Consolidated Statement of Cash Flows

Financial Instruments

Key Management Personnel Compensation

Related Party Transactions

Remuneration of Auditors

Events After the Reporting Period

Segment Information

Parent Entity Disclosures

Significant Accounting Policies

38 

REGIONAL EXPRESS HOLDINGS LIMITED

 
01  general information

Regional  Express  Holdings  Limited  (the  Company)  is  listed  on  the  Australian  Securities  Exchange  (Trading  under  symbol  ‘REX’), 
incorporated and operating in Australia. The Company’s registered office and its principal place of business is at 81 – 83 Baxter 
Road, Mascot, NSW 2020, Australia. Principal activities of the Group are the provision of air services principally for the transportation 
of passengers and freight.

02  appliCation of new and revised aCCounting standards

In the current year, the Group has applied all amendments to AASBs issued by the Australian Accounting Standards Board (AASB) 
that are mandatorily effective for an accounting period that begins on or after 1 July 2017, and therefore relevant for the current year 
end. The application of these amendments does not have any material impact on the disclosures or the amounts recognised in the 
Group’s consolidated financial statements.

APPLICATION OF NEw AND REVISED ACCOUNTING STANDARDS NOT YET EFFECTIVE

At the date of authorisation of the financial statements, the Standards and Interpretations that were issued but not yet effective are 
listed below. The potential impact of these Standards and Interpretations has not yet been fully determined. The Group does not 
intend to adopt any of these announcements before their effective dates.

STANDARD/INTERPRETATION AND NATURE OF THE CHANGE AND IMPACT
AASB 9 ‘Financial Instruments’ (and the relevant amending standards) (AASB 9): The standard introduces a number of new and revised 
classifications of financial assets and liabilities compared to AASB 139 ‘Financial Instruments: Recognition and Measurement’ and 
addresses the classification, measurement and de recognition of these financial assets and financial liabilities. AASB 9 introduces new 
rules for hedge accounting and a new methodology for measurement of impairment of financial assets including accounting for expected 
credit loss.

The Group classifies fuel swap derivatives as cash flows hedges, and recognises material financial assets and liabilities to which AASB 
9 will apply at amortised cost under AASB 139. The classification of financial assets and liabilities to which AASB 9 will apply are as 
follows:

Classification under AASB 139

Cash and cash equivalents

Classification under AASB 9

Cash and cash equivalents

Financial assets and liabilities at amortised cost

Financial assets and liabilities at amortised cost

Derivatives designated as cash flow hedges

Derivatives designated as cash flow hedges

Investment – available for sale

Investment – fair value through other comprehensive income

Based on a review of these instruments, the recognition and measurement of these instruments is not expected to change apart from 
the investment classified as available for sale which will now be “investment – fair value through other comprehensive income”. If and 
when this investment is derecognised, the cumulative gain or loss will not be recognised in profit or loss and will be recognised in other 
comprehensive income. Changes to hedging requirements for cash flow hedges such as jet fuel swaps and foreign exchange contracts 
are not likely to result in a change in recognition and measurement of these instruments. 

Apart from these impacts, it is anticipated that the financial statements of the Group will not be significantly impacted by these amendments. 
The expected credit loss model for calculating impairment of financial assets is not expected to have a material impact on the Group.

The Group will apply the standard from 1 July 2018.

AASB 15 ‘Revenue from Contracts with Customers’, AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 
15’, AASB 2015-8 ‘Amendments to Australian Accounting Standards – Effective date of AASB 15’ (AASB 15): AASB 15 will replace AASB 
118 ‘Revenue’ which covers revenue arising from the sale of goods and the rendering of services and AASB 111 ‘Construction Contracts’ 
which covers construction contracts.

The new standard introduces a five-step model to determine when and how much revenue should be recognised. The standard permits 
either a full retrospective or a modified retrospective approach for the adoption.

The Group has assessed the impact of this change on the recognition and measurement of revenues of the Group and related disclosures 
in  the  financial  statements.  Based  on  a  review  of  the  Group’s  revenue  streams  and  contracts,  the  adoption  of  the  new  standard  will 
not have a material impact on the financial results. However some changes in the presentation of certain revenue items and additional 
disclosure may be required. 

The Group will apply the standard from 1 July 2018.

REGIONAL EXPRESS HOLDINGS LIMITED 

 39

AASB 16 ‘Leases’ (AASB 16): AASB 16 introduces new requirements in relation to lease classification and recognition, measurement and 
presentation and disclosures of leases for lessees and lessors. For lessees a (right-of-use) asset and a lease liability will be recognised on 
the balance sheet in respect of all leases subject to limited exceptions. The accounting for lessors will not significantly change.

The Group is a party to a small number of operating lease agreements and significant change to the recognition and measurement of the 
Group’s finance leases is not expected. On the basis that there are no changes to lease arrangements, the new standard is expected to 
have some impact on the recognition and measurement of lease-related expenses, assets or liabilities.

The Group has commenced an assessment of the impact of this change on disclosures in the financial statements. At the date of this 
report this assessment is not complete.

The Group will apply the standard from 1 July 2019.

At the date of report, there are no pronouncements approved by the IASB/IFRIC that have yet to be issued by the AASB.

03   CritiCal aCCounting Judgements and  
KeY sourCes of estimation unCertaintY

In the application of the Group’s accounting policies, which are described in Note 30, the directors are required to make judgments, 
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. 
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. 
Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in 
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if 
the revision affects both current and future periods.

KEY SOURCES OF ESTIMATION UNCERTAINTY

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance date, that 
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

IMPAIRMENT OF GOODwILL

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill 
has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-
generating unit and a suitable discount rate in order to calculate present value.

The carrying amount of goodwill at the balance date was $518 thousand (2017: $518 thousand) with no impairment loss recognized 
during the year (2017: nil).

FAIR VALUE OF DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS

As described in Note 23, management uses their judgment in selecting an appropriate valuation technique for financial instruments 
not quoted in an  active market. Valuation techniques commonly used by market practitioners are applied. For derivative  financial 
instruments, assumptions are made based on quoted market rates adjusted for specific features of the instrument.

USEFUL LIVES OF PROPERTY, PLANT AND EqUIPMENT

As  described  in  Note  30  (S),  the  Group  reviews  the  estimated  useful  lives  of  property,  plant  and  equipment  at  the  end  of  each 
reporting period. During the current year, it is determined that the useful lives of property, plant and equipment correctly reflected the 
rate at which the assets are consumed.

EMPLOYEE ENTITLEMENTS

Management  judgement  is  applied  in  determining  the  following  key  assumptions  used  in  the  calculation  of  long  service  leave  at 
balance date:

•	 future increases in wages and salaries;
•	 future on-cost rates; and
•	 experience of employee departures and period of service.

40 

REGIONAL EXPRESS HOLDINGS LIMITED

 
04  revenues and expenses

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018

other revenue 

Training income 

Net sales proceeds (engineering parts)

Rental income 

Insurance claim 

Training subsidy 

Engineering services 

Other income 

Finance income 

Interest 

other gains / (losses) 

Net foreign currency (loss) / gain 

Gain / (loss) on disposal of property, plant and equipment 

Salaries and employee-related costs 

Wages and salaries (including bonus – profit share scheme) 

Workers’ compensation costs 

Superannuation costs - defined contribution plan 

Expense of share-based payments 

office and general administrative costs 

Bad debts recovered / (written-off) 

Finance costs 

Interest on bank borrowings and finance leases

Interest expense

The weighted average interest rate on borrowings is 9.1% per annum, and 4.2% per annum for finance leases. 

Depreciation and amortisation 

Depreciation and amortisation of property, plant and equipment 

Amortisation of development costs and software 

Lease payments included in consolidated statement of profit or loss 

Included in flight and port operation costs 

Minimum lease payments – operating lease 

2018
$’000

 3,338 

 761 

 266 

 168 

 112 

 110 

 707 

 5,462 

 1,153 

 1,153 

(394)

683

289

 (98,622)

 (981)

 (6,800)

 (1,323)

 (107,726)

 38 

 38 

 (1,975)

 (1,975)

 (15,996)

 (222)

 (16,218)

 (783)

 (783)

2017
$’000

 2,697 

 709 

 123 

 262 

 217 

 80 

 528 

 4,616 

 770 

 770 

348

(154)

194

(96,103)

(1,223)

(6,852)

(1,355)

(105,533)

(92)

(92)

 (1,975)

 (1,975)

 (15,965)

 (303)

 (16,268)

 (801)

 (801)

REGIONAL EXPRESS HOLDINGS LIMITED 

 41

 
 
 
 
 
 
 
 
 
 
 
05  inCome tax

INCOME TAX RECOGNISED IN PROFIT OR LOSS

Tax expense comprises: 

Current tax expense 

Prior period tax expense 

Deferred tax (benefit) / expense relating to the origination and reversal of temporary 
differences 

2018
$’000

2017
$’000

                               11,300 

                                 3,399 

                                     581 

                                          - 

 (3,719)

                                 1,791 

Total tax expense 

                                 8,162 

                                 5,190 

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to 
the income tax expense in the financial statements as follows: 

Profit / (loss) before tax from operations 

 25,075 

 17,810 

Tax expense calculated at 30% 

Tax on non-deductible expense / (non-assessable income) 

Prior period tax expense 

Previously unrecognised and unused tax losses and tax offsets now recognised as deferred 
tax assets 

Tax expense 

Effective tax rates

 7,523 

 58 

 581 

- 

 8,162 

32.5%

 5,343 

 (37)

 - 

 (116)

 5,190 

29.1%

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits 
under Australian tax law. There has been no change in the corporate tax rate when compared with the previous reporting period. 

The following current and deferred tax amounts have been recognised in the statement of financial position. 

Current tax assets and liabilities 

Current tax payable 

Income tax attributable: 

Parent entity 

Deferred tax balances 

Deferred tax assets comprise: 

Temporary differences 

Deferred tax liabilities comprise: 

Temporary differences 

 2018
$’000 

 2017
$’000

                                 5,728 

                                 1,172 

                                 5,728 

                                 1,172 

                                 7,276 

                                 6,922 

                                 7,276 

                                 6,922 

 (5,691)

 (5,691)

                                (8,846)

(8,846)

 (1,924)

net deferred tax assets / (liabilities) 

                                 1,585

42 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable and deductible temporary differences arise from the following: 

Opening balance
$’000

 Charged to income 
$’000

 Charged to equity
$’000

 Closing balance 
$’000

30 June 2018

Gross deferred tax liabilities

Inventories

Prepayments 

Grant receivable 

Property, plant & equipment 

Other items

Gross deferred tax assets

Employee-related provisions

Property, plant & equipment 

Payables 

Other liabilities 

Other items

(6,445)

(1,165)

 (303)

  (761)

    (172)

 (8,846)

 2,987 

 2,063

   901 

   659 

312

 6,922  

 2,912 

  122 

   37 

    18 

    45 

    3,134 

  499 

  48 

   (138)

 151 

  (206)

  354 

    - 

       - 

    - 

   - 

   21 

       21 

 - 

 - 

- 

   - 

 - 

-

  (3,533)

  (1,043)

   (266)

   (743)

   (106)

   (5,691)

  3,486 

  2,111 

  763 

   810 

    106 

   7,276 

 net deferred tax 

    (1,924)

    3,488 

    21 

      1,585 

30 June 2017

Gross deferred tax liabilities

Inventories

Prepayments 

Grant receivable 

Property, plant & equipment 

Other items

Gross deferred tax assets

Employee-related provisions

Property, plant & equipment 

Payables 

Other liabilities 

Other items

   (5,910)

      (1,294)

    (280)

   (393)

  (24)

    (7,901)

 2,673 

 2,918 

    951 

   599 

   358 

  7,499 

                (535)

      129 

    (23)

   (368)

   (417)

    (1,214)

    314 

      (855)

      (50)

      60 

       (46)

         (577)

 - 

 - 

 - 

 - 

 269 

 269 

 - 

 - 

-

-

 - 

 - 

     (6,445)

     (1,165)

     (303)

    (761)

    (172)

    (8,846)

   2,987 

   2,063 

   901 

    659 

   312 

   6,922 

net deferred tax

    (402)

         (1,791)

        269 

     (1,924)

REGIONAL EXPRESS HOLDINGS LIMITED 

 43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
06  trade and otHer reCeivaBles

Current 

Trade receivables 

 Provision for doubtful debts 

Sundry debtors and other debtors 

Prepayments 

non-current 

Other receivables – at amortised cost 

2018
$’000

 7,504 

 (31)

 7,473 

 2,693 

 1,915 

 12,081 

 5,808 

 5,808 

2017
$’000

6,304

(31)

6,273

 3,258 

 1,274 

 10,805 

 6,515 

 6,515 

Trade receivables are non-interest bearing and are generally on 30 day terms. A provision for doubtful debts is made when there is 
objective evidence that a trade receivable is impaired. The amount of the provision has been measured as the difference between 
the carrying amount of the trade receivables and the estimated future cash flows expected to be received from the relevant debtors. 
The Group has provided fully for all receivables deemed irrecoverable based on historical experience.

Before accepting new customers, the Group assesses the potential customer’s credit quality and defines credit limits by customer. 
Limits attributed to customers are reviewed regularly.

Majority of the Group’s revenue is derived from sales made through credit cards where counterparties are either banks or the credit 
card companies.

ageing of past due but not impaired 

60 - 90 days 

91 - 120 days or more 

Total 

Average age (days) 

movement in the provision for doubtful debts 

Balance at the beginning of the year

Impairment losses on receivables

Balance at the end of the year 

ageing of impaired trade receivables 

120+ days 

Total 

07  inventories

Consumable spares at cost

Current

Non-current

44 

REGIONAL EXPRESS HOLDINGS LIMITED

2018
$’000

 5 

 - 

 5 

 30 

 (31)

-

 (31)

 (31)

 (31)

2018 
$’000

 11,778 

 12,356 

2017
$’000

 - 

 - 

 - 

 30 

 (31)

-

 (31)

 (31)

 (31)

2017
$’000

 12,793 

 11,852 

 
 
 
 
 
 
 
 
08  propertY, plant and eQuipment

at 30 June 2018

Aircraft

Other property, plant and equipment 

Rotable assets

Engines

Plant and equipment

Land and buildings

Leasehold improvements

Motor vehicles

Furniture and fittings

Computer equipment

 Opening gross 
carrying amount
$’000 

 Additions 
$’000

 Disposals /
Reclassification
$’000

 Closing gross
carrying amount 
$’000

 185,249 

 6,536 

 (4,364)

 187,421 

 79,273 

 9,944 

 11,888 

 36,160 

 1,340 

 2,574 

 1,080 

 2,791 

 8,654 

 1,183 

 762 

 1,006 

 17 

 166 

 64 

 96 

 (4,616)

 (219)

 (630)

 - 

 - 

 (44)

 (123)

 (996)

 (6,628)

 83,311 

 10,908 

 12,020 

 37,166 

 1,357 

 2,696 

 1,021 

 1,891 

 150,370 

 Other property, plant and equipment 

 145,050 

 11,948 

 Total property, plant and equipment 

 330,299 

 18,484 

 (10,992)

 337,791 

at 30 June 2017

aircraft

Other property, plant and equipment

Rotable assets

Engines

Plant and equipment

Land and buildings

Leasehold improvements

Motor vehicles

Furniture and fittings

Computer equipment

Other property, plant and equipment

Total property, plant and equipment

194,344

264

(9,359)

185,249

71,498

6,171

11,478

29,973

1,408

2,503

1,108

2,340

126,479

320,823

7,959

4,090

828

6,187

10

86

58

964

20,182

20,446

(184)

(317)

(418)

-

(78)

(15)

(86)

(513)

(1,611)

79,273

9,944

11,888

36,160

1,340

2,574

1,080

2,791

145,050

(10,970)

330,299

REGIONAL EXPRESS HOLDINGS LIMITED 

 45

 
 
 
 
at 30 June 2018

Aircraft

Other property, plant and equipment 

Rotable assets

Engines

Plant and equipment

Land and buildings

Leasehold improvements

Motor vehicles

Furniture and fittings

Computer equipment

Other property, plant and equipment

at 30 June 2017

Aircraft

Other property, plant and equipment 

Rotable assets

Engines

Plant and equipment

Land and buildings

Leasehold improvements

Motor vehicles

Furniture and fittings

Computer equipment

Other property, plant and equipment

 Opening accumulated 
depreciation and 
impairment
$’000 

Disposals /
Reclassification
$’000

 Depreciation
 charge for the year 
$’000

Closing accumulated 
depreciation and 
impairment 
$’000

 (88,537)

 3,462 

 (9,255)

 (94,330)

 (17,554)

 (2,759)

 (6,810)

 (5,845)

 (1,165)

 (1,536)

 (926)

 (1,583)

 (38,178)

(14,548)

(2,521)

(6,118)

(4,991)

(1,196)

(1,373)

(941)

(1,845)

(33,533)

 4,426 

 58 

 627 

 - 

 - 

 33 

 121 

 996 

 6,261 

 9,723 

 (3,337)

 (721)

 (1,044)

 (970)

 (54)

 (192)

 (48)

 (373)

 (16,465)

 (3,422)

 (7,227)

 (6,815)

 (1,219)

 (1,695)

 (853)

 (960)

 (6,739)

 (38,656)

 (15,994)

 (132,986)

29

317

408

-

78

15

85

513

1,445

8,555

(3,035)

(555)

(1,100)

(854)

(47)

(178)

(70)

(251)

(17,554)

(2,759)

(6,810)

(5,845)

(1,165)

(1,536)

(926)

(1,583)

(6,090)

(38,178)

(15,965)

(126,715)

Total property, plant and equipment

 (126,715)

(85,772)

7,110

(9,875)

(88,537)

Total property, plant and equipment

(119,305)

46 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 at 30 June 2018 

 Aircraft 

 Other property, plant and equipment 

 Rotable assets 

 Engines 

 Plant and equipment 

 Land and buildings 

 Leasehold improvements 

 Motor vehicles 

 Furniture and fittings 

 Computer equipment 

 Other property, plant and equipment 

 Total property, plant and equipment 

 at 30 June 2017

 Aircraft 

 Other property, plant and equipment 

 Rotable assets 

 Engines 

 Plant and equipment 

 Land and buildings 

 Leasehold improvements 

 Motor vehicles 

 Furniture and fittings 

 Computer equipment 

 Other property, plant and equipment 

 Total property, plant and equipment 

 Opening net 
carrying amount 
$’000

 Closing net 
carrying amount 
$’000

 96,712 

 93,091 

 61,719 

 7,185 

 5,078 

 30,315 

 175 

 1,038 

 154 

 1,208 

 106,872 

 203,584 

 66,846 

 7,486 

 4,793 

 30,351 

 138 

 1,001 

 168 

 931 

 111,714 

 204,805 

 108,572 

 96,712 

 56,950 

 3,650 

 5,360 

 24,982 

 212 

 1,130 

 167 

 495 

 92,946 

 201,518 

 61,719 

 7,185 

 5,078 

 30,315 

 175 

 1,038 

 154 

 1,208 

 106,872 

 203,584 

No impairment loss has been recognised over items of property, plant and equipment during the year (2017: nil).

REGIONAL EXPRESS HOLDINGS LIMITED 

 47

 
 
09  goodwill and otHer intangiBle assets

Goodwill
$’000

Software and 
development costs
$’000

at 30 June 2018

Cost

Accumulated amortisation

net carrying amount

Total goodwill and other intangible assets

reconciliation

At 1 July 2017, net of accumulated amortisation

Additions

Amortisation at 30 June 2018

at 30 June 2018, net of accumulated amortisation

Total goodwill and other intangible assets

at 30 June 2017

Cost

Accumulated amortisation

net carrying amount

Total goodwill and other intangible assets

reconciliation

At 1 July 2016, net of accumulated amortisation

Additions

Amortisation at 30 June 2017

at 30 June 2017, net of accumulated amortisation

Total goodwill and other intangible assets

 518 

 - 

 518 

 518 

 - 

 - 

 518 

 518 

 - 

 518 

 518 

 - 

 - 

 518 

 2,351 

 (2,045)

 306 

 824 

 335 

193 

 (222)

 306 

 824 

 2,158 

 (1,823)

 335 

 853 

 508 

 130 

 (303)

 335 

 853 

IMPAIRMENT TESTING OF GOODwILL AND NON-CURRENT ASSETS

The  Group  has  identified  the  following  Cash  Generating  Units  (CGUs)  for  the  purposes  of  assessing  the  carrying  value  of  the  

Group’s assets:

•	 Pel-Air Aviation Pty Limited (Pel-Air)

•	 Regional Express Holdings Limited (Rex)

Goodwill of $518 thousand relating to the passenger routes acquired in the acquisition of Air Link Pty Limited was transferred into 
the Rex CGU, as these routes are now operated by Rex. 

48 

REGIONAL EXPRESS HOLDINGS LIMITED

 
VALUE-IN-USE CALCULATIONS

The recoverable amount of Pel-Air and Rex CGUs has been determined based on value-in-use calculations.

The  value  in  use  calculations  of  Rex  and  Pel-Air  use  cash  flow  projections  based  on  financial  budgets  approved  by  the  Board 
covering a 5 year forecast period, and a terminal value based upon an extrapolation of cash flows beyond the 5 year period using a 
constant growth rate which does not exceed the long term inflation rate. The cash flows are based on management’s expectations 
regarding  the  market,  fleet  plans  including  the  purchase  of  aircraft  and  operating  costs.  The  discount  rate  applied  reflects  the 
weighted average cost of capital based on the risk-free rate for ten year Australia government bonds adjusted for a risk premium to 
reflect the risk of each CGU.

KEY ASSUMPTIONS

The following key assumptions were used in determining the value-in-use valuation models for the Rex and Pel-Air CGUs: 

Key Assumptions

(i) Discount rate

(ii) Revenue growth

(iii) Fuel cost escalation

(iv) Operating cost escalation

Rex CGU

11.0%

1.5%

1.0%

1.5%

Pel-Air CGU

10.5%

1.5%

1.0%

1.5%

(i) Post-tax discount rate applied to the cash flow projections. 
(ii) Revenue growth based on historical experience and market conditions, fleet plans and competitor behaviour. 
(iii)  The fuel cost escalation has been set with regard to the prevailing purchase price of fuel to the extent fuel costs 

cannot be recovered from customers.

(iv)  Operating cost escalation has been estimated with regard to CPI adjustment for domestic costs and prevailing spot 

rate for overseas purchases.

As a result of the impairment testing performed at the CGU level, the Group assessed that the recoverable amount was greater than 
carrying amount and no impairment loss on these CGUs has been recognised in the current year (FY2017: nil).

SENSITIVITY ANALYSIS

The  Group  has  performed  a  sensitivity  analysis  by  considering  reasonable  changes  in  key  assumptions,  including  discount  rate, 
revenue growth, operating cost escalation, fuel cost escalation and capital expenditure.

The changes in the following table to assumptions used in the impairment review would, in isolation, lead to an increase or decrease 
in  the  recoverable  amount.  Changes  in  one  assumption  could  be  accompanied  by  a  change  in  another  assumption,  which  may 
increase or decrease the recoverable amount of the CGU.

Post tax discount rate %

Revenue %

Operating cost escalation %

Fuel cost escalation %

Capital expenditure %

Rex recoverable amount

Pel-Air recoverable amount

Increase/
Decrease by

(Decrease) / Increase
$’000

Increase / (Decrease)
$’000

(Decrease) / Increase
$’000

Increase / (Decrease)
$’000

0.5%

0.5%

0.5%

0.5%

5.0%

      (10,275) 

        47,079 

      (35,426) 

        (5,599) 

        11,479 

           (712) 

              735 

      (46,238) 

           2,478 

        (2,412) 

        34,793 

           (1,774) 

           1,725 

           5,500 

              (76) 

                74 

        (4,378) 

           4,378 

           (129) 

              129 

REGIONAL EXPRESS HOLDINGS LIMITED 

 49

 
 
 
 
 
10  trade and otHer paYaBles

Current

Trade payables

Other payables

Total

2018
$’000

9,537

9,276

18,813

2017
$’000

8,919

9,411

18,330

Trade payables are non-interest bearing and are normally settled on 7 to 30-day terms. Other payables are non-interest bearing and have 
an average term of 7 to 30 days. 

11  unearned revenue

Current 

Unearned passenger and charter revenue

Unearned training revenue

Total

12  Borrowings

Current 

Loan facility

Finance leases

non-current 

Loan facility

Finance leases

2018
$’000

24,037 

656

24,693

2018
$’000

 3,519 

 3,990 

 7,509 

 8,072 

 973 

 9,045 

2017
$’000

22,447

251

22,698

2017
$’000

3,214 

3,861 

7,075 

11,591 

4,960 

16,551 

Effective
interest rate %

9.1%

4.2%

9.1%

4.2%

The loan facility was used by a subsidiary, VAA Pty Ltd, to fund a number of aircraft assets. The loan is repayable over 10 years from 
July 2011 to June 2021.

The finance leases were for purchase of Saab aircraft. The aircraft has been part of the operational fleet and was acquired at their 
lease end in March 2014. The leases expire in August 2019.

The liabilities are secured over the assets being funded, the carrying value of which exceeds the outstanding liabilities. 

50 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
13  provisions

 Current 

 Employee benefits 

 Profit share, pilot retention bonus 

 Annual leave and long service leave 

 non-current 

 Employee benefits 

 Long service leave 

 Total employee benefits provisions 

 profit share, pilot retention bonus 

 Balance at the beginning of the year 

 Arising during the year 

 Utilised 

 Balance at the end of the year 

annual leave and long service leave 

 Balance at the beginning of the year 

 Arising during the year 

 Utilised 

 Balance at the end of the year 

14  issued Capital

Fully paid ordinary shares

At the beginning of the year

Movement during the year

at the end of the year

2018
$’000

 4,080 

 5,248 

 9,328 

 611 

 9,939 

 3,247 

 2,768 

 (1,935)

 4,080 

 5,296 

 6,900 

 (6,337)

 5,859 

2017
$’000

 3,247 

 3,925 

 7,172 

 1,371 

 8,543 

 1,911 

 2,198 

 (862)

 3,247 

 5,359 

 6,785 

 (6,848)

 5,296 

2018

No. ’000

 110,155 

 - 

 110,155 

$’000

No. ’000

$’000

2017

 72,024 

 - 

 72,024 

 110,155 

 - 

110,155 

 72,024 

 - 

72,024 

 Share units held as reserved shares by subsidiary company was 1,857 thousand (2017: 2,766 thousand).

REGIONAL EXPRESS HOLDINGS LIMITED 

 51

 
 
 
 
 
 
 
 
 
 
15  reserved sHares and otHer reserves

Share-based payments reserve

Balance at the beginning of the year

Share gift issued

Share gift plan provision transfer

Share gift plan provision recognised

Balance at the end of the year

Cash flow hedge reserve

Balance at the beginning of the year

Revaluation of cash flow hedges, net of tax

Balance at the end of the year

General reserve

Balance at the beginning of the year

Movement during the year

Balance at the end of the year

2018
$’000

2017
$’000

                        1,358 

                        1,587 

                      (1,076)

                      (1,063)

                                 - 

                         (521)

                        1,323 

                        1,355 

                        1,605 

                        1,358 

 49 

 (49)

 - 

 1,590 

 - 

 1,590 

 678 

 (629)

 49 

 1,590 

 - 

 1,590 

The cash flow hedge reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative 
deferred gain or loss on the hedge is recognised in profit or loss when the hedged transaction impacts the profit or loss, or is included as 
a basis adjustment to the non-financial hedged item, consistent with the applicable accounting policy.

The general reserve is used from time to time to transfer profits from retained profits. There is no policy of regular transfer.

Reserved  share  account  represents  on  market  purchase  of  shares  by  the  Group  which  is  eventually  granted  to  executives  and 
employees as part of their remuneration.

The share-based payments reserve arises on the grant of shares to executives and employees under the employee share gift plan. 
Amounts are transferred out of the reserve and into issued capital when the shares are issued. Rex has established the share gift 
plan for its executive directors and eligible employees since FY 06.

The  board  decided  that  this  plan  will  be  offered  to  EA  groups  that  opt  for  the  plan,  and  all  non-EA  employees  who  are  not  the 
subject  of  an  adverse  recommendation  by  the  Remunerations,  Nominations  and  Disciplinary  Committee.  This  plan  is  not  based 
on  any  performance  measures  as  it  was  established  to  show  its  recognition  of  employees’  contribution  to  Rex  by  providing  an 
opportunity to share in its future growth and profitability and to align the interests of the employees more closely with the interests 
of the shareholders.

Eligible employees who accept an offer of shares under the share plan will be entitled to receive the equivalent of 2% of their base 
salary  in  shares  each  financial  year.  Such  shares  will  be  issued  to  eligible  employees  on  the  relevant  award  dates.  Non  eligible 
employees are given the opportunity to salary sacrifice amounts to acquire Rex shares, with allocation of shares equal to 2% of the 
their base salary.

52 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
16  earnings per sHare

Basic earnings per share

Diluted earnings per share

The earnings used in the calculation of basic and diluted earnings per share are as follows:

Net profit

Earnings used in the calculation of basic earnings per share

Earnings used in the calculation of diluted earnings per share

2018
Cents per share

2017
Cents per share

 15.7 

 15.7 

2018
$’000

 16,913 

 16,913 

 16,913 

 11.7 

 11.7 

2017
$’000

 12,620 

 12,620 

 12,620 

The  weighted  average  number  of  ordinary  shares  used  in  the  calculation  of  basic  and  diluted  earnings  per  share  are  as  follows:

Weighted average number of ordinary shares for the purpose of basic earnings per share

Weighted average number of ordinary shares for the purpose of diluted earnings per share

17  dividends

2018
No. ‘000

 107,966 

 107,966 

2017
No. ‘000

 107,644 

 107,644 

During the financial year, a fully franked interim dividend of 4 cents per share was paid to holders of fully paid ordinary shares on 31 
May 2018, and amounted to $4,406 thousand. 

In respect of financial year ended 30 June 2018, the directors have recommended a fully franked final dividend of 8 cents per share 
be paid to holders of fully paid ordinary shares (2017: 10 cents). This has not been included as a liability in these financial statements 
and the dividend will be paid to all shareholders on the Register of Members. The total estimated dividend to be paid is $8,812 
thousand (2017: $11,015 thousand).

The movement in the franking account balance, including impact for dividends declared after the year end, is noted below:

Adjusted franking account balance

Franking credit recognised that will arise from income tax payable as at the end of financial year

Impact on franking account balance of dividends not recognised

18  Commitments for expenditure

(A) CAPITAL EXPENDITURE COMMITMENTS

2018
$’000

 38,213 

5,728                   

(3,777)

2017
$’000

 37,574 

 1,172 

 (4,721)

There are no commitments for the acquisition of property, plant and equipment as at 30 June 2018 (2017: nil).

(B) OPERATING LEASE COMMITMENTS

Not later than one year

Later than one year and not later than five years

Later than five years

2018
$’000

                848 

             1,535 

                776 

             3,159 

2017
$’000

                848 

             2,346 

                813 

             4,007 

REGIONAL EXPRESS HOLDINGS LIMITED 

 53

(C) FINANCE LEASE LIABILITIES

Some aircraft were purchased under finance leases. The leases expire in August 2019. The Group takes ownership of the aircraft at 
the end of the lease terms. The Group’s obligations under the finance leases are secured by the lessors’ title to the leased aircraft.

The fair value of the finance lease liabilities is approximately equal to their carrying amount.

Minimum lease payments

Present value of minimum lease payments

Not later than one year

Later than one year and not later than five years

Less future finance charges

Present value of minimum lease payments

Included in the consolidated financial statements as (Note 12)

Current borrowings

Non-current borrowings

2018
$’000

4,140 

984 

5,124 

 (161) 

4,963 

2017
$’000

4,140 

5,120 

9,260 

 (439)

8,821 

2018
$’000

3,990 

973 

4,963 

- 

4,963 

3,990 

973 

4,963 

2017
$’000

3,861 

4,960 

8,821 

- 

8,821 

3,861 

4,960 

8,821 

19  Contingent liaBilities and Contingent assets

There are no contingent liabilities nor contingent assets as at 30 June 2018 (2017: nil).

20  suBsidiaries

Name of entity

parent entity

Regional Express Holdings Limited

Subsidiaries

Regional Express Pty Limited

Rex Freight & Charter Pty Limited

Rex Investment Holdings Pty Limited

Air Link Pty Limited

Pel-Air Aviation Pty Limited

Australian Airline Pilot Academy Pty Limited

VAA Pty Ltd

Country of incorporation

2018

2017

Ownership Interest %

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Australia

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Regional Express Holdings Limited is the head entity within the tax-consolidated group. These subsidiary companies are members of the 
tax-consolidated group.

21  aCQuisition of Business

No business was acquired during the year.

54 

REGIONAL EXPRESS HOLDINGS LIMITED

 
22  notes to tHe Consolidated statement of CasH flows

(A) RECONCILIATION OF CASH AND CASH EqUIVALENTS

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in 
money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown 
in the statement of cash flows is reconciled to the related items in the statement of financial position as follows:

Cash and bank balances

Short term deposits

(B)  RECONCILIATION OF PROFIT / (LOSS) FOR THE YEAR  
TO NET CASH FLOwS FROM OPERATING ACTIVITIES

2018
$’000

10,965

15,000

25,965

2018
$’000

 16,913 

 16,218 

 1,323 

 34 

 (683)

 (1,153)

 (569)

 511

 140 

 (3,509)

 4,556 

 (70)

 2,443 

 1,396 

 (49)

 37,501 

2017
$’000

16,257

10,000

26,257

2017
$’000

 12,620 

 16,268 

 1,355 

 (65)

 154 

 (770)

 (246)

 (1,681)

 965 

 1,218 

 103 

 (66)

 (4,386)

 1,273 

 (629)

 26,113 

Limit
$’000

15,064

9,339

2,900

559

1,000

4,237

620

33,719

2018

Used
$’000

11,595

5,035

-

-

-

4,099

92

20,821

Limit
$’000

12,699

5.519

2,900

559

1,000

4,537

620

27,834

2017

Used
$’000

14,809

8,870

-

-

-

4,117

84

27,880

Profit for the year

Depreciation and amortisation

Share-based payment

Unrealised foreign exchange loss / (gain)

(Gain) / loss on disposal of non-current assets

Interest received

Increase in receivables

Decrease / (increase) in inventories

Decrease in other financial assets

(Decrease) / increase in deferred tax

Increase in current tax payable

Decrease in other financial liabilities

Increase / (decrease) in trade payables

Increase in provisions

Decrease in other liabilities

net cash flows from operating activities

(C) FINANCING FACILITIES

Maximum facilities available and reviewed annually:

Loan facility (fund aircraft purchases)

Leases (fund aircraft purchases)

Tape negotiations authority

Letter of credit

Set off

Guarantee

Credit card

The facilities are secured by the Group’s operating cash flows and properties located in South Australia, Adelaide, New South Wales at 
Don Kendell Drive Forest Hill, and Robey Street Mascot.

There were no non-cash movements in borrowings in the year (2017:nil) See Note 12 for movements in borrowings.

REGIONAL EXPRESS HOLDINGS LIMITED 

 55

23  finanCial instruments

(A) CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that the entities in the Group will be able to continue as a going concern while maximising 
the return to stakeholders. 

The Group’s overall strategy remains unchanged from 2017.

The capital structure of the Group consists of debt as disclosed in Note 12 and attributable to equity holders of the parent comprising 
issued capital, reserves as disclosed in Notes 14, 15 respectively, and retained earnings. 

Operating cash flows are used to acquire assets required for the Group’s operations, tax, dividends, share buy-backs and repayment 
of maturing debt. The Group’s policy is to borrow centrally only if required.

GEARING RATIO

The Group’s Board reviews the capital structure on a semi-annual basis. As a part of this review the Board considers the cost of capital 
and the risks associated with each class of capital. The Board will balance its overall capital structure through the payment of dividends, 
new share issue and share buy-backs as well as the issue of new debt or the redemption of existing debt.

The Group’s financing facilities include a $29 million loan facility which is fixed-interest bearing and repayable over 10 years from July 
2012 to June 2021.

During FY 14, the Group finalised the purchase of 25 latest generation Saab 340B + aircraft. These aircraft were originally operating in 
the Rex fleet under a lease. The acquisition was partly funded by operating cash flows with the rest from bank finance leases.

The net cash position at the end of the financial year was as follows:

Debt (i)

Cash and cash equivalents

Excess cash and cash equivalents over debt

Equity (ii)

Excess cash to equity ratio

(i) Debt is defined as long- and short-term borrowings, as detailed in Note 12.

(ii) Equity includes all capital and reserves of the Group that are managed as capital.

(B) CATEGORIES OF FINANCIAL INSTRUMENTS

Financial assets

Loans and receivables 

Cash and bank balances

Derivative financial instruments

Available-for-sale financial assets

Financial liabilities

Amortised cost

Derivative financial instruments

2018
$’000

 16,554 

 25,965 

 9,411 

2017
$’000

 23,626 

 26,257 

 2,631 

 199,484 

 196,445 

4.7%

1.3%

2018
$’000

 15,974 

 25,965 

 - 

 9 

 35,367 

 - 

2017
$’000

 16,046 

 26,257 

140

 9 

 41,956 

 70

(C) 

FINANCIAL RISK MANAGEMENT OBJECTIVES

The  Group  is  exposed  to  foreign  exchange,  fuel  price,  interest  rate  and  liquidity  risk.  Management  of  these  risks  is  governed  by 
the  Group’s  policy  approved  by  the  Board  of  Directors,  which  provides  written  principles  on  the  management  of  financial  risks. 
Compliance with policies and exposure limits is reviewed by the Audit and Corporate Governance Committee and the Board on an 
ongoing basis. The Group does not enter into trade financial instruments, including derivative financial instruments, for speculative 
purposes. The Treasury function, which co-ordinates the hedging of financial risks from time to time, is managed by the Group’s 
Corporate Services Department and reports regularly to the Board and Audit and Corporate Governance Committee.

56 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
 
 
(D) 

FOREIGN CURRENCY RISK MANAGEMENT

The Group undertakes certain transactions denominated in USD, hence exposures to exchange rate fluctuations arise. Exchange 
rate exposures are managed using forward foreign exchange contracts.

The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the financial 
year is as follows:

Liabilities

2018
USD$’000

 1,394 

2017
USD$’000

 1,448 

Assets

2018
USD$’000

 - 

2017
USD$’000

 - 

FOREIGN CURRENCY SENSITIVITY ANALYSIS

The Group is mainly exposed to USD for the following main purchases, approximate amounts per annum are:

•	 USD	16	million	for	engineering	purchases
•	 USD	16	million	for	engine	care	and	maintenance
•	 USD	4	million	for	airline	reservation	systems	usage
•	 USD	1	million	for	aircraft	insurance	policies
•	 USD	1	million	for	operating	leases

The  following  table  details  the  Group’s  sensitivity  to  a  10%  increase  and  10%  decrease  in  the  Australian  Dollar  against  the  USD.  The 
sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end 
for a 10% change in foreign currency rates. For a weakening of the Australian Dollar against the respective currency there would be an 
equal and opposite impact on the profit and other equity, and the balances below would be negative.

Profit or loss

The Group’s sensitivity to foreign currency has remained constant

FORwARD FOREIGN EXCHANGE CONTRACTS

2018
$’000

 190

2017
$’000

 190 

The Group may enter into forward foreign exchange contracts to manage the risk associated with anticipated sales and purchase 
transactions up to twelve months and up to 100% of the exposure generated. Basis adjustments are made to the carrying amounts 
of non-financial hedged items when the anticipated sale or purchase transaction takes place. No foreign exchange contracts were 
outstanding at 30 June 2018.

(E) FUEL PRICE RISK MANAGEMENT

The Group may use jet fuel swap contracts to hedge exposure to movements in the price of aviation fuel. Jet fuel swaps are taken out 
from time to time to hedge exposures to a maximum of 12 months in accordance with the Group’s risk management policies. The group 
uses fuel swaps linked to the Platts Singapore Kerosene benchmark to hedge exposures to jet fuel. No jet fuel swaps were outstanding 
at 30 June 2018.

The following table sets out the timing of the notional amount and the hedged jet fuel price of the Group’s fuel hedging instruments:

Hedged price 
$ per L 

Notional amount
L’000

Less than 1 year 
L’000

1 to 2 years 
L’000

2 to 5 years 
L’000

AUD fuel costs

2018

2017

-

0.4830

-

19,898

-

19,898

-

-

-

-

REGIONAL EXPRESS HOLDINGS LIMITED 

 57

The following table details the sensitivity of the Group’s financial assets and liabilities to a 20% increase and 20% decrease in the 
jet  fuel  price.  A  positive  number  indicates  an  increase  in  profit  or  loss  and  other  equity  where  the  jet  fuel  price  weakens.  For  an 
increase in the jet fuel price there would be an equal and opposite impact on the profit and other equity, and the balances below 
would be negative. This analysis assumes that all other variables remain constant and based on the designated hedge relationship 
at the reporting date.

20% increase

20% decrease

Carrying amount 
$’000 

Profit/(loss)
$’000

Equity
$’000

Profit/(loss)
$’000

Equity 
L’000

2018

Derivative asset – jet fuel swap

Derivative liability – jet fuel swap

2017

Derivative asset – jet fuel swap

Derivative liability – jet fuel swap

-

-

-

140

(70)

70

-

-

-

-

-

-

-

-

-

1,092

830

1,922

-

-

-

-

-

-

-

-

-

(1,092)

(830)

(1,922)

(F) INTEREST RATE RISK MANAGEMENT

The Group has very little exposure to interest rate risk as its borrowings detailed in Note 12 are at a fixed interest rate. As such the 
Group does not hedge its interest rate exposure. The Group’s exposures to interest rates on financial assets and financial liabilities 
are detailed in the liquidity risk management section of this note.

(G) CREDIT RISK MANAGEMENT

The  Group  has  limited  exposure  to  credit  risk  as  the  majority  of  its  revenue  is  derived  from  sales  made  through  credit  cards  where 
counterparties are either banks or the credit card companies. The disputes to the credit card charges amount to less than $50,000 a year.

The Group does not have any significant credit risk exposure to  any single counterparty or any group of counterparties having  similar 
characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high 
credit-ratings assigned by international credit-rating agencies. 

(H) LIqUIDITY RISK MANAGEMENT

Ultimate  responsibility  for  liquidity  risk  management  rests  with  the  Board  of  Directors,  who  has  built  an  appropriate  liquidity  risk 
management  framework  for  the  management  of  the  Group’s  short,  medium  and  long-term  funding  and  liquidity  management 
requirements. The Group’s operating activities generate positive annual cash flow. The Group tries to maintain a $10 million cash 
balance by the end of each financial year. As and when required, the Group uses financing facilities as detailed in Note 22. 

LIqUIDITY AND INTEREST RISK TABLES

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The amounts disclosed 
are based on the contractual undiscounted principal and interest cash flows of financial liabilities based on the earliest date on which 
the Group can be required to pay. The table includes both interest and principal cash flows.

2018

Non-interest bearing

Interest bearing

2017

Non-interest bearing

Interest bearing

 1 month
$’000

1-3 months
$’000

3 months to a year
$’000

1-5 years
$’000

5+ years
$’000

 18,813 

 369 

 19,182 

 18,330 

 369 

 - 

 1,774 

 1,774 

 - 

 1,774 

 - 

 6,429 

 6,429 

 - 

 6,429 

 - 

 9,847 

 9,847 

 - 

 18,414 

 - 

 - 

 - 

 - 

 - 

 - 
The interest-bearing liabilities have a weighted average effective interest rate of 9.1% per annum for the 10-year bank loan (FY2012 
to FY2021), and 4.2% per annum for the bank finance leases maturing in August 2019.

 18,699 

 18,414 

 1,774 

 6,429 

58 

REGIONAL EXPRESS HOLDINGS LIMITED

 
(I) 

FAIR VALUE OF FINANCIAL INSTRUMENTS

Except as disclosed below, the Directors consider that the carrying amounts of the financial assets and financial liabilities recorded 
at the amortised cost in the financial statements approximate their fair values.

(J) 

FAIR VALUE HEIRARCHY

The table below analyses financial instruments carried at fair value. The different levels have been defined as follows:

•	 Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
•	 Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) 

or indirectly (i.e. derived from prices); and

•	 Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 

There were no transfers between levels during the year.

 Level 1
$’000

Level 2
$’000

Level 3
$’000

Total
$’000

30 June 2018

Financial assets carried at fair value

Derivative asset – jet fuel swap

Financial liabilities carried at fair value

Derivative liability – jet fuel swap

30 June 2017

Financial assets carried at fair value

Derivative asset – jet fuel swap

Financial liabilities carried at fair value

Derivative liability – jet fuel swap

-

-

-

-

-

-

140

(70)

-

-

-

-

-

-

140

(70)

For financial instruments not quoted in active markets, the Group uses valuation techniques such as present value, comparison to 
similar instruments for which market observable prices exist and other relevant models used by market participants. These valuation 
techniques use both observable and unobservable market inputs.

Fuel  swap  hedging  contracts  are  financial  instruments  that  use  valuation  techniques  with  only  observable  market  inputs  and  are 
included in Level 2 above. Future cash flows are estimated based on forward rates (from observable forward rates at the end of the 
reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties. 

The Group does not have any Level 3 financial instruments.

24  KeY management personnel Compensation

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short-term benefits

Post-employment benefits

Other long-term benefits

Share-based payment

2018
$

 2,055,820 

 166,846 

 27,690 

 27,845 

 2,278,201 

2017
$

 1,867,266 

 160,109 

 25,869 

 27,514 

 2,080,758 

REGIONAL EXPRESS HOLDINGS LIMITED 

 59

25  related partY transaCtions

(A) EqUITY INTERESTS IN SUBSIDIARIES

Details of interests in subsidiaries are disclosed in Note 20 to the consolidated financial statements.

(B) TRANSACTIONS wITH KEY MANAGEMENT PERSONNEL 

(I) KEY MANAGEMENT PERSONNEL COMPENSATION

Details of key management personnel compensation are disclosed in Note 24 to the consolidated financial statements.

(II) LOANS TO KEY MANAGEMENT PERSONNEL

There have been no loans made to key management personnel. 

(C) OTHER RELATED PARTY TRANSACTIONS

The Branksome Residences Pty Ltd (“Branksome”), a related entity of the Chairman, provides hotel, conference and venue hire services 
to the Group. Total purchases of goods and services from Branksome were $177 thousand during the year (2017: $nil). In addition, the 
Group provides administrative support services to Branksome and Greatland Development Pty Ltd, a related entity of the Chairman. The 
total income earned by the Group from these entities was $50,000 and $10,000 respectively (2017: $0 and $40 thousand). 

26  remuneration of auditors

Audit and review of the consolidated financial statements

Other non-audit services - tax compliance, tax advice

The auditor of the Group is Deloitte Touche Tohmatsu.

27  events after tHe reporting period 

2018
$’000

305,550

36,225

341,775

2017
$’000

315,000

37,800

352,800

On 2 July 2018 Rex commenced operations on the Regular Public Transport (RPT) air services on the Perth – Carnarvon / Monkey 
Mia route.

In August 2018, Rex signed a Memorandum of Understanding (MOU) with Ansett Aviation Training (AAT), headquartered in Melbourne, 
to relocate their Saab 340 Full Flight Simulator (FFS) to Sydney. Rex has been utilising the AAT FFS for initial and recurrent pilot training 
since  2002.  Sydney  is  the  largest  pilot  crew  base  in  the  Rex  network  and  moving  the  AAT  FFS  to  Sydney  will  provide  significant 
operational efficiencies and restrain the associated costs in transport and accommodation when sending flight crew to Melbourne. The 
FFS will be housed in an existing Rex building adjacent to its Sydney headquarters. 

60 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
28  segment information

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly 
reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

Information reported to the Group’s Chief Executive Officer for the purposes of resource allocation and assessment of performance is more 
specifically focused on the category of customer for each type of service.

The Group’s reportable segments under AASB 8 are as follows:

•	 Regular public transport
•	 Charter

The accounting policies of the reportable segments are the same as the Group’s accounting policies.

The following is an analysis of the Group’s revenue and results by reportable operating segment for the year:

Revenue

2018
$’000

 269,802 

 25,735 

 295,537 

2017
$’000

257,984

22,983

280,967

Continuing operations

Regular public transport

Charter

Finance income

Other gains / (losses)

Central administration costs and directors’ salaries

Finance costs

Profit before tax

Tax expense / benefit

Consolidated segment revenue and profit

 295,537 

 280,967 

Segment result

2018
$’000

 28,994 

 4,295 

 33,289 

 1,153 

 289 

 (7,681)

 (1,975)

 25,075 

 (8,162)

 16,913 

2017
$’000

24,048

2,313

26,361

770

194

(7,540)

(1,975)

17,810

(5,190)

 12,620 

The revenue reported above represents revenue generated from external customers. There were no intersegment sales.

Segment  result  represents  the  profit  earned  by  each  segment  without  allocation  of  central  administration  costs  and  directors’ 
salaries. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment 
of segment performance.

The  following  is  an  analysis  of  the  Group’s  assets  and  liabilities  by  reportable  operating  segment  as  at  the  end  of  the  year:

Continuing operations

Regular public transport

Charter

Total assets / liabilities
Other segment information for the year is as follows:

Continuing operations

Regular public transport

Charter

Assets

2018
$’000

220,161

55,050

275,211

2017
$’000

213,100

59,708

272,808

Liabilities

2018
$’000

50,859

24,868

75,727

Depreciation and amortisation

Additions to non-current assets

2018
$’000

11,860

4,358

16,218

2017
$’000

11,178

5,090

16,268

2018
$’000

18,591

86

18,677

2017
$’000

45,329

31,034

76,363

2017
$’000

20,097

479

20,576

REGIONAL EXPRESS HOLDINGS LIMITED 

 61

 
 
 
 
 
 
29  parent entitY disClosures

(a) FinanCiaL poSiTion

assets

Current assets

Non-current assets

Total assets

Liabilities

Current liabilities

Non-current liabilities

Total liabilities

Equity

Issued capital

Retained earnings

Share-based payments reserve

Cash flow hedge reserve

General reserve

Total equity

(B) FinanCiaL pErFormanCE

Profit for the year

Other comprehensive income

Total comprehensive income

2018
$’000

 40,470 

 185,931 

 226,401 

 57,471 

 3,144 

 60,615 

 72,024 

 91,972 

 1,474 

 - 

 316 

 165,786 

 12,840 

 (49)

 12,791 

2017
$’000

 39,320 

 179,181 

 218,501 

 48,258 

 2,099 

 50,357 

72,024

94,555

1,200

49

316

168,144

10,335

(629)

9,706

(C) 

 GUARANTEES ENTERED INTO BY THE PARENT ENTITY IN RELATION TO THE DEBTS OF  
ITS SUBSIDIARIES

During FY 11, the parent entity entered into a deed of cross guarantee in relation to the debts of Pel-Air Aviation Pty Ltd, Rex Freight 
and Charter Pty Ltd, Rex Investment Holdings Pty Ltd and Australian Airline Pilot Academy Pty Ltd.

By entering into the deed, the wholly owned entities have been relieved from the requirements to prepare a financial report and directors’ 
report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission (‘ASIC’).

The above companies represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties to the Deed of 
Cross Guarantee that are controlled by Regional Express Holdings Limited, they also represent the ‘Extended Closed Group’.

The statement of profit or loss and other comprehensive income and statement of financial position of the ‘Closed Group’ can be found 
in the consolidated statement of profit or loss and other comprehensive income and statement of financial position along with the note 
on Regional Express Holdings Limited as parent found in note 29 (A) and (B).

(D) 

CONTINGENT LIABILITIES OF THE PARENT ENTITY

As at 30 June 2018, no contingent liabilities or assets existed (2017: nil).

(E) 

 COMMITMENTS FOR THE ACqUISITION OF PROPERTY, PLANT AND EqUIPMENT BY THE  
PARENT ENTITY

As at 30 June 2018, the parent entity has no commitment for the acquisition of property, plant and equipment.

62 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
30  signifiCant aCCounting poliCies

(A) 

STATEMENT OF COMPLIANCE

These financial statements are general purpose financial statements which have been prepared in accordance with the Corporations 
Act 2001, Accounting Standards and Interpretations, and comply with other requirements of the law. The financial statements include 
the consolidated financial statements of the Group. For the purpose of preparing the consolidated statements, the Company is a 
for-profit entity.

Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the 
financial statements and notes of the Group comply with International Financial Reporting Standards (‘IFRS’). 

The financial statements were authorised for issue by the directors on xx August 2018.

(B) 

BASIS OF PREPARATION

The  consolidated  financial  statements  have  been  prepared  on  the  basis  of  historical  cost,  except  for  the  revaluation  of  certain 
financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical 
cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, 
unless otherwise noted.

The  consolidated  financial  statements  have  been  prepared  on  a  going  concern  basis.  In  preparing  the  consolidated  financial 
statements the directors note that the Group is in a net current asset deficiency position, due to the nature of the operations whereby 
customers make payment for booked flights prior to the flights being taken. The directors have prepared a cash flow forecast which 
indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month 
period  from  the  date  of  signing  this  financial  report.  Based  on  the  cash  flow  forecasts  and  other  factors  referred  to  above,  the 
directors are satisfied that the going concern basis of preparation is appropriate. 

In accordance with Legislative Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the 
rounding off of amounts in the financial statements amounts in the financial statements have been rounded to the nearest hundred 
thousand dollars in accordance with that Legislative Instrument, unless otherwise indicated.

(C) 

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) 
controlled by the Company and its subsidiaries. Control is achieved when the Company:

•	 has power over the investee;
•	 is exposed, or has rights, to variable returns from its involvement with the investee; and
•	 has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or 
more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, 
it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the 
investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting 
rights in an investee are sufficient to give it power, including:

•	 the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
•	 potential voting rights held by the Company, other vote holders or other parties;
•	 rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the Company has, or 
does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns 
at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses 
control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included 
in  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  from  the  date  the  Company  gains  control  until 
the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income 
are  attributed  to  the  owners  of  the  Company  and  to  the  non-controlling  interests.  Total  comprehensive  income  of  subsidiaries  is 
attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having 
a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the 
Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions 
between members of the Group are eliminated in full on consolidation.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are 
accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted 
to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling 
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners 
of the Company.

REGIONAL EXPRESS HOLDINGS LIMITED 

 63

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between 
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying 
amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously 
recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed 
of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as 
specified/permitted by applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control 
is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on 
initial recognition of an investment in an associate or a joint venture.

(D) 

REVENUE

Revenue  is  measured  at  the  fair  value  of  the  consideration  received  or  receivable.  Revenue  is  reduced  for  rebates  and  other 
similar allowances.

RENDERING OF SERVICES

Revenue from providing air passenger, charter and freight services is recognised when the relevant flights are made. 

DIVIDEND AND INTEREST INCOME

Dividend from investments is recognised when the shareholder’s right to receive payment has been established provided that it is 
probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Interest income from or financial assets is recognised when it is probable that the economic benefits will flow to the Group and the 
amount of revenue can be measured reliably.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, 
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s 
net carrying amount on initial recognition.

(E) 

BORROwING COSTS

Borrowing  costs  directly  attributable  to  the  acquisition,  construction  or  production  of  qualifying  assets,  which  are  assets  that 
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until 
such time as the assets are substantially ready for their intended use or sale. 

Investment  income  earned  on  the  temporary  investment  of  specific  borrowings  pending  their  expenditure  on  qualifying  assets  is 
deducted from the borrowing costs eligible for capitalisation.

(F) 

CASH AND CASH EqUIVALENTS

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily 
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown within borrowings in current liabilities in the consolidated statement of financial position.

(G) 

FOREIGN CURRENCIES

The individual financial statements of each Group entity are presented in its functional currency being the currency of the primary 
economic environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial 
position of each entity are expressed in Australian dollars (‘$’), which is the functional currency of the Group and the presentation 
currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are 
recorded at the rates of exchange prevailing on the dates of the transactions. At each balance date, monetary items denominated 
in foreign currencies are retranslated at the rates prevailing at the balance date. Non-monetary items carried at fair value that are 
denominated  in  foreign  currencies  are  retranslated  at  the  rates  prevailing  on  the  date  when  the  fair  value  was  determined.  Non-
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on transactions 
entered into in order to hedge certain foreign currency risks (refer to Note 23).

(H) 

DERIVATIVE FINANCIAL INSTRUMENTS

The Group enters into jet fuel swap derivatives to hedge exposures to jet fuel prices. It is the Group’s policy not to enter into or hold 
derivative  financial  instruments  for  speculative  trading  purposes.  Derivative  financial  instruments  are  recognised  at  fair  value  both 
initially and on an ongoing basis. Transaction costs attributable to the derivative are recognised in profit or loss when incurred. 

HEDGE ACCOUNTING

The Group designates certain derivatives as hedges of highly probable forecast transactions (cash flow hedges). At the inception of the 
hedge, the Group documents the relationship between hedging instruments and hedged items, including the risk management objective 
and strategy for undertaking each hedge. The Group also documents its assessment, both at hedge inception and on an ongoing basis, 
of whether the hedging instruments that are used in hedge transactions have been and will continue to be highly effective.

64 

REGIONAL EXPRESS HOLDINGS LIMITED

 
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other 
comprehensive income and accumulated under the heading of cash flow hedge reserve. The gain or loss relating to the ineffective portion 
is recognised immediately in profit or loss as part of other gains and losses.

Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. However, when 
the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses 
previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, 
or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred 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 deferred in equity is recognised immediately in profit or loss.

Any derivative financial instruments not designated into an effective hedge relationship are classified as a current asset or a current liability 
at fair value through profit and loss.

(I) 

EMPLOYEE BENEFITS

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service leave, and 
sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of short term employee benefits are measured at their nominal values using the remuneration rate 
expected to apply at the time of settlement.

Liabilities  recognised  in  respect  of  long  term  employee  benefits  are  measured  as  the  present  value  of  the  estimated  future  cash 
outflows to be made by the Group in respect of services provided by employees up to reporting date.

(J) 

FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of 
the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the 
acquisition  or  issue  of  financial  assets  and  financial  liabilities  (other  than  financial  assets  and  financial  liabilities  at  fair  value 
through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, 
on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value 
through profit or loss are recognised immediately in profit or loss.

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract 
whose  terms  require  delivery  of  the  investment  within  the  timeframe  established  by  the  market  concerned,  and  are  initially 
measured at fair value, net of transaction costs except for those financial assets classified as at fair value through profit or loss 
which are initially measured at fair value.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’, 
‘available-for-sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the 
financial assets and is determined at the time of initial recognition.

EFFECTIVE INTEREST METHOD

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over 
the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected 
life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at fair value through 
profit or loss’.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:

(i) 

(ii) 

  has been acquired principally for the purpose of selling in the near future;

i s a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern 
of short-term profit-taking; or 

(iii) 

is a derivative that is not designated and effective as a hedging instrument. 

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. 
The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. 

Fair value is determined in the manner described in Note 23.

REGIONAL EXPRESS HOLDINGS LIMITED 

 65

AVAILABLE-FOR-SALE FINANCIAL ASSETS

Certain shares and redeemable notes held by the Group are  classified as being available-for-sale  and are  stated  at  fair  value. 
Fair value is determined in the manner described in Note 23. Gains and losses arising from changes in fair value are recognised 
directly  in  the  investments  revaluation  reserve  with  the  exception  of  impairment  losses,  interest  calculated  using  the  effective 
interest  method  and  foreign  exchange  gains  and  losses  on  monetary  assets  which  are  recognised  directly  in  profit  or  loss. 
Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the 
investments revaluation reserve is included in profit or loss for the period.

Dividends on available-for-sale equity instruments are recognised in profit and loss when the Group’s right to receive payments 
is established.

LOANS AND RECEIVABLES

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market 
are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method 
less impairment. 

Interest is recognised by applying the effective interest rate.

IMPAIRMENT OF FINANCIAL ASSETS

When an available for sale asset is considered to be impaired, cumulative gains/losses previously recognised in other comprehensive 
income are reclassified to profit or loss in the period.

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance date. 
Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial 
recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried 
at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of 
estimated future cash flows, discounted at the original effective interest rate. 

The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use 
of  an  allowance  account.  Subsequent  recoveries  of  amounts  previously  written  off  are  credited  against  the  allowance  account. 
Changes in the carrying amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases 
and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised 
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is 
reversed does not exceed what the amortised cost would have been had the impairment not been recognised. 

In  respect  of  available-for-sale  equity  instruments,  any  subsequent  increase  in  fair  value  after  an  impairment  loss  is  recognised 
directly in equity.

DERECOGNITION OF FINANCIAL ASSETS

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the 
financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor 
retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its 
retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks 
and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises 
a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration 
received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated 
in equity is recognised in profit or loss.

On  derecognition  of  a  financial  asset  other  than  in  its  entirety  (e.g.  when  the  Group  retains  an  option  to  repurchase  part  of  a 
transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise 
under  continuing  involvement,  and  the  part  it  no  longer  recognises  on  the  basis  of  the  relative  fair  values  of  those  parts  on  the 
date  of  the  transfer.  The  difference  between  the  carrying  amount  allocated  to  the  part  that  is  no  longer  recognised  and  the  sum 
of  the  consideration  received  for  the  part  no  longer  recognised  and  any  cumulative  gain  or  loss  allocated  to  it  that  had  been 
recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in 
other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised 
on the basis of the relative fair values of those parts.

66 

REGIONAL EXPRESS HOLDINGS LIMITED

 
(K) 

  FINANCIAL LIABILITIES AND EqUITY INSTRUMENTS 

CLASSIFICATION OF DEBT OR EqUITY

Debt  and  equity  instruments  are  classified  as  either  liabilities  or  as  equity  in  accordance  with  the  substance  of  the  contractual 
arrangement. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its 
liabilities. Equity Instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

FINANCIAL LIABILITIES

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities.

FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. 
The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the 
manner described in Note 23. 

OTHER FINANCIAL LIABILITIES

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. 

Other  financial  liabilities  are  subsequently  measured  at  amortised  cost  using  the  effective  interest  method,  with  interest  expense 
recognised on an effective yield basis. 

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense 
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the 
expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

(L) 

GOODwILL

Goodwill  acquired  in  a  business  combination  is  carried  at  cost  established  at  date  of  the  acquisition  of  the  business  less 
accumulated impairment losses if any. 

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGUs), or groups of 
CGUs, expected to benefit from the synergies of the business combination. CGUs (or groups of CGUs) to which goodwill has 
been allocated are tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill 
might be impaired.

If the recoverable amount of the CGU (or group of CGUs) is less than the carrying amount of the CGU (or groups of CGUs), the 
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or groups of CGUs) and 
then to the other assets of the CGU (or groups of CGUs) pro-rata on the basis of the carrying amount of each asset in the CGU 
(or groups of CGUs). An impairment loss recognised for goodwill is recognised immediately in profit or loss and is not reversed 
in a subsequent period.

On disposal of an operation within a CGU, the attributable amount of goodwill is included in the determination of the profit or loss 
on disposal of the operation.

(M)  GOVERNMENT GRANTS

Government grants are assistance by the government in the form of transfers of resources to the Group in return for past or future 
compliance with certain conditions relating to the operating activities of the entity. Government grants include government assistance 
where there are no conditions specifically relating to the operating activities of the Group other than the requirement to operate in 
certain regions or industry sectors.

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching 
to  them  and  that  the  grants  will  be  received.  Government  grants  are  recognised  in  profit  or  loss  on  a  systematic  basis  over  the 
periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, 
government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets 
are recognised as deferred revenue in the statement of financial position and transferred to profit or loss on a systematic and rational 
basis over the useful lives of the related assets.

Government  grants  that  are  receivable  as  compensation  for  expenses  or  losses  already  incurred  or  for  the  purpose  of  giving 
immediate  financial  support  to  the  Group  with  no  future  related  costs  are  recognised  in  profit  or  loss  in  the  period  in  which  they 
become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference 
between proceeds received and the fair value of the loan based on prevailing market interest rates.

Government  assistance  which  does  not  have  conditions  attached  specifically  relating  to  the  operating  activities  of  the  entity  is 
recognised in accordance with the accounting policies above.

REGIONAL EXPRESS HOLDINGS LIMITED 

 67

(N) 

 IMPAIRMENT OF OTHER TANGIBLE AND INTANGIBLE ASSETS OTHER THAN GOODwILL 

At  each  reporting  date,  the  Group  reviews  the  carrying  amounts  of  its  tangible  and  intangible  assets  to  determine  whether  there  is 
any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset 
is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are 
independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. 
Where  a  reasonable  and  consistent  basis  of  allocation  can  be  identified,  corporate  assets  are  also  allocated  to  individual  cash-
generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent 
allocation basis can be identified.

Intangible  assets  with  indefinite  useful  lives  and  intangible  assets  not  yet  available  for  use  are  tested  for  impairment  annually  and 
whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash 
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of 
money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of 
the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in profit or loss immediately, 
unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. 

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised 
estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that 
would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of 
an impairment loss is recognised in profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal 
of the impairment loss is treated as a revaluation increase.

(O) 

TAXATION

Income tax expense represents the sum of the tax currently payable and deferred tax.

CURRENT TAX

The  tax  currently  payable  is  based  on  taxable  profit  for  the  year.  Taxable  profit  differs  from  profit  before  tax  as  reported  in  the 
consolidated statement of profit or loss and other comprehensive income/statement of profit or loss because of items of income or 
expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current 
tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

DEFERRED TAX

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated 
financial  statements  and  the  corresponding  tax  bases  used  in  the  computation  of  taxable  profit.  Deferred  tax  liabilities  are 
generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary 
differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences 
can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from 
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the 
taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, 
and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable 
that  the  temporary  difference  will  not  reverse  in  the  foreseeable  future.  Deferred  tax  assets  arising  from  deductible  temporary 
differences associated with such investments and interests are only recognised to the extent that it is probable that there will be 
sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the 
foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no 
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled 
or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting 
period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in 
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current 
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current 
tax assets and liabilities on a net basis.

68 

REGIONAL EXPRESS HOLDINGS LIMITED

 
CURRENT AND DEFERRED TAX FOR THE PERIOD

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive 
income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income or directly 
in equity, respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect 
is included in the accounting for the business combination.

(P) 

INTANGIBLE ASSETS

INTANGIBLE ASSETS ACqUIRED SEPARATELY

Intangible assets with finite lives that are acquired separately are recorded at cost less accumulated amortisation and impairment 
losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation 
method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted 
for on a prospective basis. Intangible assets with indefinite lives that are acquired separately are carried at cost less accumulated 
impairment losses. 

A summary of the policies applied to the Group’s finite intangible assets is as follows:

Intangible asset
Amortisation method used
Impairment test / recoverable amount testing

Computer software
4 years straight line
where an indicator of impairment exists

(q) 

INVENTORIES

Inventories are valued at the lower of cost and net realisable value. Costs of inventories are determined on a first in first out basis. 
Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the 
sale or replacement cost price in relation to the consumables.

Consumables expected to be consumed within 12 months are classified as current or non-current where consumption are expected 
in a period beyond 12 months.

During  the  year,  the  Group  undertook  a  review  of  the  usage  rates  of  consumables,  and  reclassified  those  consumables  for 
which consumption is not expected within 12 months to non-current. Comparatives have been restated to reflect consistency of 
presentation. 

(R) 

LEASING

Leases  are  classified  as  finance  leases  when  the  terms  of  the  lease  transfer  substantially  all  the  risks  and  rewards  incidental  to 
ownership to the lessee. All other leases are classified as operating leases.

GROUP AS LESSOR

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs 
incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a 
straight line basis over the lease term.

GROUP AS LESSEE

Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the present value of the 
minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the 
statement of financial position as a finance lease obligation. 

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate 
of  interest  on  the  remaining  balance  of  the  liability.  Finance  charges  are  recognised  immediately  in  profit  and  loss,  unless  they 
are  directly  attributable  to  qualifying  assets,  in  which  case  they  are  capitalised  in  accordance  with  the  Group’s  general  policy  on 
borrowing  costs.  Refer  to  Note  30E.  Contingent  rentals  are  recognised  as  expenses  in  the  periods  in  which  they  are  incurred. 
Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating  lease  payments  are  recognised  as  an  expense  on  a  straight-line  basis  over  the  lease  term,  except  where  another 
systematic  basis  is  more  representative  of  the  time  pattern  in  which  economic  benefits  from  the  leased  asset  are  consumed. 
Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In  the  event  that  lease  incentives  are  received  to  enter  into  operating  leases,  such  incentives  are  recognised  as  a  liability.  The 
aggregate  benefits  of  incentives  are  recognised  as  a  reduction  of  rental  expense  on  a  straight-line  basis,  except  where  another 
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

REGIONAL EXPRESS HOLDINGS LIMITED 

 69

(S) 

PROPERTY, PLANT AND EqUIPMENT

Land  and  buildings,  plant  and  equipment,  leasehold  improvements  and  equipment  under  finance  lease  are  stated  at  cost  less 
accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the item. In the 
event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable 
in the future to their present value as at the date of acquisition.

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation is calculated 
on  a  straight  line  basis  so  as  to  write  off  the  net  cost  of  each  asset  over  its  expected  useful  life  to  its  estimated  residual value. 
Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the 
straight line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual 
reporting period, with the effect of any changes recognised on a prospective basis.

The rates applied are as follows:
Aircraft 
Building   
Computer Equipment 
Engines   
Furniture & Fittings 
Leasehold Improvements  over the unexpired lease period
Motor Vehicles 
Plant & Equipment  
Rotable Assets 

15,000 to 60,000 hours
20 to 40 years
4 to 5 years
10 to 20 years
8 to 10 years

7 years
8 years
5 to 20 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise 
from the continued use of the asset. Any gain or loss arising in the disposal or retirement of an item of property, plant and equipment 
is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

(T) 

PROVISIONS

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable 
that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting 
date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cashflows 
estimated to settle the present obligation, its carrying amount is the present value of those cashflows (where the effect of the time 
value of money is material).

When  some  or  all  of  the  economic  benefits  required  to  settle  a  provision  are  expected  to  be  recovered  from  a  third  party,  the 
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can 
be measured reliably.

(U) 

SHARE-BASED PAYMENTS

Equity-settled  share-based  payments  with  employees  and  others  providing  similar  services  are  measured  at  the  fair  value  of  the 
equity instrument at the grant date. Details regarding the determination of the fair value of the equity-settled share-based transactions 
are set out in Note 15. 

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over 
the vesting period, based on the Group’s estimate of shares that will eventually vest with and corresponding to increase in equity.

Equity-settled share-based payment transactions with other parties other than employees are measured at the fair value of the goods 
and services received, except where the fair value cannot be estimated reliably, in which case they are measured at the fair value of 
the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the fair value 
of the liability. At the end of each reporting period until the liability is settled, and the date of settlement, the fair value of the liability is 
measured, with any changes in fair value recognised in profit or loss for the year.

Reserved share account represents on market purchase of shares by the Group which are eventually granted to executives and 
employees as part of their remuneration.

(V) 

GOODS AND SERVICES TAX

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i.  

ii. 

 where  the  amount  of  GST  incurred  is  not  recoverable  from  the  taxation  authority,  it  is  recognised  as  part  of  the  cost  of 
acquisition of an asset or as part of an item of expense; or

for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the statement of cash flows on a gross basis. 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.

70 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
DIRECTORS’ DECLARATION

The directors declare that:

(a) 

(b) 

(c) 

 in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when 
they become due and payable; 

  t he attached financial statements are in compliance with International Financial Reporting Standards, as stated in Note 30 to 
the consolidated financial statements;

 in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 
2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance 
of the consolidated entity; and

(d) 

    the directors have been given the declarations required by s.295A of the Corporations Act 2001.

At the date of this declaration, the Company is within the class of companies affected by ASIC Class Order 98/1418. The nature of 
the deed of cross guarantee is such that each company which is party to the deed guarantees to each creditor payment in full of 
any debt in accordance with the deed of cross guarantee.

In the directors’ opinion, there are reasonable grounds to believe that the Company and the companies to which the ASIC Class 
Order applies, as detailed in Note 29 to the financial statements will, as a group, be able to meet any obligations or liabilities to which 
they are, or may become, subject by virtue of the deed of cross guarantee.

Signed in accordance with a resolution of the directors made pursuant to s.295 (5) of the Corporations Act 2001.

On behalf of the Directors

Neville Howell

Chief Operating Officer

29 August 2018

REGIONAL EXPRESS HOLDINGS LIMITED 

 71

INDEPENDENT AUDITOR’S REPORT



Deloitte Touche Tohmatsu 
ABN 74 490 121 060 
Grosvenor Place 
225 George Street 
Sydney, NSW, 2000 
Australia 

Phone: +61 2 9322 7000 
www.deloitte.com.au 

Independent Auditor’s Report to the Members of 
Regional Express Holdings Limited 

Report on the Audit of the Financial Report 

Opinion  

We have audited the financial report of Regional Express Holdings Limited (the “Company”) and 
its subsidiaries (the “Group”), which comprises the consolidated statement of financial position 
as at 30 June 2018, consolidated statement of profit or loss and other comprehensive income, 
consolidated statement of changes in equity and consolidated statement of cash flows for the 
year  then  ended,  and  notes  to  the  financial  statements,  including  a  summary  of  significant 
accounting policies and other explanatory information, and the directors’ declaration. 

In  our  opinion  the  accompanying  financial  report  of  the  Group,  is  in  accordance  with  the 
Corporations Act 2001, including:  

(i)  

giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its 
financial performance for the year then ended; and  

(ii)  

complying with Australian Accounting Standards and the Corporations Regulations 2001. 

Basis for Opinion 

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities 
under those standards are further described in the Auditor’s Responsibilities for the Audit of the 
Financial Report section of our report. We are independent of the Group in accordance with the 
auditor independence requirements of the Corporations Act 2001 and the ethical requirements 
of  the  Accounting  Professional  and  Ethical  Standards  Board’s  APES  110  Code  of  Ethics  for 
Professional  Accountants  (the  Code)  that  are  relevant  to  our  audit  of  the  financial  report  in 
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.  

We confirm that the independence declaration required by the Corporations Act 2001, which has 
been given to the directors of the Company, would be in the same terms if given to the directors 
as at the time of this auditor’s report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 
basis for our opinion. 

Liability limited by a scheme approved under Professional Standards Legislation. 

Member of Deloitte Touche Tohmatsu Limited  

72 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Key Audit Matters  

Key  audit  matters  are  those  matters  that,  in  our  professional  judgement,  were  of  most 
significance  in  our  audit  of  the  financial  report  for  the  current  period.  These  matters  were 
addressed  in  the  context  of  our  audit  of  the  financial  report  as  a  whole,  and  in  forming  our 
opinion thereon, and we do not provide a separate opinion on these matters.  

Key Audit Matter  

How the scope of our audit addressed 
the Key Audit Matter  

Valuation of unearned revenue 

As at 30 June 2018, the Group recognised 
unearned revenue of $24.693 million in the 
consolidated 
financial 
statement 
position. 

of 

The  Group’s  calculation  of  unearned 
revenue in respect of flights purchased but 
not yet flown requires significant judgment, 
requiring  significant  volumes  of  data  from 
flight  booking  systems  and  passenger 
reports to be analysed and matched, along 
with  estimated  adjustments  to  unearned 
revenue such as the level of no-shows. 

  Our  procedures  included,  but  were  not 

limited to: 

  Assessing 

the  accounting  policies 
adopted  by  the  Group  in  relation  to 
revenue recognition; 

 

 

Testing  a  sample  of  controls  in  the 
determination of unearned revenue; 

Testing  the  integrity  of  the  flight 
booking 
systems  and  passenger 
reports by comparing a sample of flight 
information  to  the  cash  receipt  and 
flight data; 

  Agreeing the inputs in the reconciliation 
of unearned revenue to external flight 
booking systems; and 

  Challenging  the  assumptions  used  by 
management  in  relation  to  the  rate  of 
no-shows 
the  no-show 
revenue  to  be  recognised  in  profit  or 
loss. 

to  assess 

We also assessed the appropriateness of the 
disclosures in Note 4, Note 11 and Note 30 
to the financial statements. 

REGIONAL EXPRESS HOLDINGS LIMITED 

 73

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
How the scope of our audit addressed 
the Key Audit Matter  

  Our  procedures  included,  but  were  not 

limited to: 

  Assessing identification of the CGUs and 
indicators  of 

determining  whether 
impairment exist; 

  Assessing  management’s  assertions 
and  estimates  regarding  estimated 
useful  lives  and  residual  values  using 
valuation  reports  published  by  third 
party specialists, industry data and the 
Group’s historical experience and future 
operating plans; 

  Challenging  the  assumptions  used  in 
management’s  impairment  analysis  by 
assessing 
of 
management’s  past  estimates  and 
taking  into  account  recent  industry 
developments  and  each  CGU’s  future 
operating plans;  

reliability 

the 

  Assessing  the  reasonableness  of  the 
in 
basis  adopted  by  management 
determining  the    other  key  inputs  and 
assumptions underlying the calculations 
in the models; and 

 

Performing  sensitivity  analysis  on  the 
key model inputs and assumptions. 

We also assessed the appropriateness of the 
disclosures  in  Note  9  to  the  financial 
statements.  



Key Audit Matter  

Carrying  value  of  aircraft  and  other 
property plant & equipment 

As  at  30  June  2018  the  Group  has 
recognised  aircraft  and  other  property 
plant  &  equipment  of  $93.091  million  and 
in 
$111.714  million 
the 
consolidated 
financial 
position. 

respectively 

statement 

of 

Management  conducts  impairment  tests 
annually (or more frequently if impairment 
indicators 
the 
recoverability  of  the  carrying  value  of 
aircraft  and  other  property,  plant  & 
equipment.  

assess 

exist) 

to 

Impairment  indicators  are  assessed  with 
reference either to the asset in question or 
the  cash-generating  unit  (CGU)  to  which 
the asset relates. The Group has identified 
two CGUs for the purposes of assessing the 
carrying  value  of  aircraft  and  other 
property, plant & equipment: 

 

Pel-Air Aviation Pty Limited (Pel-Air); 
and 

  Regional  Express  Holdings  Limited 

(REX). 

The  Group  measures  the  recoverable 
amount  of  the  CGUs  through  value  in  use 
models. 

As  disclosed  in  Note  9  to  the  financial 
statements,  there  are  a  number  of  key 
estimates  made  which  require  significant 
judgement  in  determining  the  inputs  into 
these models which include: 

  Growth  rates  for  revenue,  operating 

costs and fuel costs; 
  Capital expenditure; and 
  Discount rate. 

74 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Other Information 

The  directors  are  responsible  for  the  other  information.  The  other  information  comprises  the 
information included in the annual report for the year ended 30 June 2018, but does not include 
the financial report and our auditor’s report thereon.  

Our opinion on the financial report does not cover the other information and we do not express 
any form of assurance conclusion thereon. 

In  connection  with  our  audit  of  the  financial  report,  our  responsibility  is  to  read  the  other 
information and, in doing so, consider whether the other information is materially inconsistent 
with  the  financial  report  or  our  knowledge  obtained  in  the  audit  or  otherwise  appears  to  be 
materially  misstated.  If,  based  on  the  work  we  have  performed,  we  conclude  that  there  is  a 
material misstatement of this other information; we are required to report that fact. We have 
nothing to report in this regard. 

Responsibilities of the Directors for the Financial Report 

The directors are responsible for the preparation of the financial report that gives a true and fair 
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for 
such internal control as the directors determine is necessary to enable the preparation of the 
financial report that gives a true and fair view and is free from material misstatement, whether 
due to fraud or error. 

In preparing the financial report, the directors are responsible for assessing the Group’s ability 
to continue as a going concern, disclosing, as applicable, matters related to going concern and 
using the going concern basis of accounting unless the directors either intend to liquidate the 
Group or to cease operations, or have no realistic alternative but to do so.  

Auditor’s Responsibilities for the Audit of the Financial Report  

Our objectives are to obtain reasonable assurance about whether the financial report as a whole 
is  free  from  material  misstatement,  whether  due  to  fraud  or  error,  and  to  issue  an  auditor’s 
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a 
guarantee  that  an  audit  conducted  in  accordance  with  the  Australian  Auditing  Standards  will 
always detect a material misstatement when it exists. Misstatements can arise from fraud or 
error and are considered material if, individually or in the aggregate, they could reasonably be 
expected to influence the economic decisions of users taken on the basis of this financial report. 

As  part  of  an  audit  in  accordance  with  the  Australian  Auditing  Standards,  we  exercise 
professional judgement and maintain professional scepticism throughout the audit. We also: 

 

Identify and assess the risks of material misstatement of the financial report, whether 
due to fraud or error, design and perform audit procedures responsive to those risks, 
and obtain audit evidence that is sufficient and appropriate to provide a basis for our 
opinion. The risk of not detecting a material misstatement resulting from fraud is higher 
than  for  one  resulting  from  error,  as  fraud  may  involve  collusion,  forgery,  intentional 
omissions, misrepresentations, or the override of internal control. 

  Obtain an understanding of internal control relevant to the audit in order to design audit 
procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of 
expressing an opinion on the effectiveness of the Group’s internal control. 

 

Evaluate  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of 
accounting estimates and related disclosures made by the directors. 

  Conclude  on  the  appropriateness  of  the  directors’  use  of  the  going  concern  basis  of 
accounting and, based on the audit evidence obtained, whether a material uncertainty 
exists  related  to  events  or  conditions  that  may  cast  significant  doubt  on  the  Group’s 
ability to continue as a going concern. If we conclude that a material uncertainty exists, 
we are required to draw attention in our auditor’s report to the related disclosures in the 

REGIONAL EXPRESS HOLDINGS LIMITED 

 75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


financial  report  or,  if  such  disclosures  are  inadequate,  to  modify  our  opinion.  Our 
conclusions  are  based  on  the  audit  evidence  obtained  up  to  the  date  of  our  auditor’s 
report. However, future events or conditions may cause the Group to cease to continue 
as a going concern. 

 

Evaluate the overall presentation, structure and content of the financial report, including 
the disclosures, and whether the financial report represents the underlying transactions 
and events in a manner that achieves a fair presentation. 

  Obtain sufficient appropriate audit evidence regarding the financial information of the 
entities  or  business  activities  within  the  Group  to  express  an  opinion  on  the  financial 
report. We are responsible for the direction, supervision and performance of the Group’s 
audit. We remain solely responsible for our audit opinion. 

We  communicate  with  the  directors  regarding,  among  other  matters,  the  planned  scope  and 
timing of the audit and significant audit findings, including any significant deficiencies in internal 
control that we identify during our audit. 

We  also  provide  the  directors  with  a  statement  that  we  have  complied  with  relevant  ethical 
requirements  regarding  independence,  and  to  communicate  with  them  all  relationships  and 
other  matters  that  may  reasonably  be  thought  to  bear  on  our  independence,  and  where 
applicable, related safeguards. 

From the matters communicated with the directors, we determine those matters that were of 
most significance in the audit of the financial report of the current period and are therefore the 
key audit matters. We describe these matters in our auditor’s report unless law or regulation 
precludes  public  disclosure  about  the  matter  or  when,  in  extremely  rare  circumstances,  we 
determine  that  a  matter  should  not  be  communicated  in  our  report  because  the  adverse 
consequences of doing so would reasonably be expected to outweigh the public interest benefits 
of such communication. 

Report on the Remuneration Report  

Opinion on the Remuneration Report 

We have audited the Remuneration Report included in pages 21 to 24 of the Directors’ Report 
for the year ended 30 June 2018. 

In  our  opinion,  the  Remuneration  Report  of  Regional  Express  Holdings  Limited,  for  the  year 
ended 30 June 2018, complies with section 300A of the Corporations Act 2001. 

Responsibilities  

The  Directors  of  Regional  Express  Holdings  Limited  are  responsible  for  the  preparation  and 
presentation of the Remuneration Report in accordance with section 300A of the Corporations 
Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our 
audit conducted in accordance with Australian Auditing Standards.  

DELOITTE TOUCHE TOHMATSU 

Jamie Gatt 
Partner 
Chartered Accountants 
Sydney, 29 August 2018 

76 

REGIONAL EXPRESS HOLDINGS LIMITED

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASX ADDITIONAL INFORMATION AS AT 13 SEPTEMBER 2018  
This is required by the ASX, but falls outside of the audit opinion and therefore has no impact on the audit report issued.

NUMBER OF HOLDERS OF EqUITY SECURITIES

Ordinary share capital

110,154,375 fully paid ordinary shares are held by 2,091 individual shareholders.

All issued ordinary shares carry one vote per share and carry the rights to dividends.

DISTRIBUTION OF HOLDERS OF EqUITY SECURITIES

 Fully paid ordinary Shares

investors

684

966

189

203

49

2,091

194

 Fully paid

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Total

Unmarketable Parcels

SUBSTANTIAL SHAREHOLDERS 

ordinary Shareholders

KIM HAI LIM 

JOE TIAU TJOA 

THIAN SOO LEE 

MING YEW SEE TOH & HUI ING TJOA 

JOO CHYE CHUA 

HUI LING TJOA 

ANACACIA PTY LTD 

TwENTY LARGEST HOLDERS OF qUOTED E qUITY SECURITIES 

 Fully paid

ordinary Shareholders

KIM HAI LIM 

JOE TIAU TJOA 

THIAN SOO LEE 

MING YEW SEE TOH & HUI ING TJOA 

JOO CHYE CHUA 

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 

HUI LING TJOA 

ANACACIA PTY LTD 

REX INVESTMENT HOLDINGS PTY LIMITED 

LAY KHIM NG 

PACIFIC CUSTODIANS PTY LIMITED 

STRATEGIC VALUE PTY LTD 

J P MORGAN NOMINEES AUSTRALIA LIMITED 

CITICORP NOMINEES PTY LIMITED 

MICHAEL KARL KORBER 

THIAN SONG TJOA 

B & R JAMES INVESTMENTS PTY LIMITED 

GUY FARROW 

NEWECONOMY COM AU NOMINEES PTY LIMITED 

BOON HUAT GOH 

Securities

363,922

2,609,114

1,483,667

5,611,638

100,086,034

110,154,375

21,130

number

18,998,346

16,234,094

7,722,181

7,454,362

7,454,362

5,755,513

5,740,601

number

18,998,346

16,234,094

7,722,181

7,454,362

7,454,362

7,216,753

5,755,513

5,740,601

4,908,666

3,727,181

1,812,362

1,673,632

1,501,698

1,440,616

1,120,000

800,000

600,000

557,616

460,244

394,500

issued Capital (%)

0.33

2.37

1.35

5.09

90.86

100.00

0.02

percentage

17.25

14.74

7.01

6.77

6.77

5.22

5.21

percentage

17.25

14.74

7.01

6.77

6.77

6.55

5.22

5.21

4.46

3.38

1.65

1.52

1.36

1.31

1.02

0.73

0.54

0.51

0.42

0.36

REGIONAL EXPRESS HOLDINGS LIMITED 

 77