Annual Report
2018 – 2019
D E L I G H T I N G T R A V E L L E R S
Iconic
places
We help Australian and
international travellers discover
some of our country’s most
iconic locations
Unique
destinations
We provide safe and
consistent transport solutions
to unique destinations
across the country.
Brilliant
experiences
We create brilliant
memories with our holidays,
accommodation, tours
and activities
Amazing
people
Our friendly, energetic and
professional people help
travellers enjoy the very best
experience – every time
Cover: Magnetic Island, Queensland
This page: Sydney Harbour, New South Wales
SeaLink Travel Group
Five Year Financial Highlights
Chair Report
Review of Operations
Revenue History
Key Results
2
3
4
6
10
12
Directors’ Report
Financial Report
Auditor’s Report
Remuneration Report
ASX Additional Information
Corporate Governance
13
17
49
53
61
62
At SeaLink we believe travel is about connecting people, sharing experiences and creating brilliant memories. O U R B R A N D S
Sydney
Western Australia
Murray River
S E A L I N K T R A V E L G R O U P
SeaLink Travel Group
is one of Australia’s
most dynamic travel
companies, bringing our
nation’s best tourism and
transport experiences
to the world. With more
than 1,600 passionate
team members across
the country, we deliver
a fantastic service to
more than seven million
customers annually.
Kangaroo Island, South Australia
2
While SeaLink was founded in 1989 in
Adelaide, members of our travel family
have been connecting the world with
some of Australia’s most iconic places,
destinations and experiences since 1970.
With a vessel fleet of 78 and a coach
fleet of 60 vehicles, our Adelaide-based
company has continued a remarkable
period of growth, emerging as a
significant player on the national tourism
and transport scene. Our operations
currently extend across New South
Wales, Queensland, Northern Territory,
Western Australia, South Australia and
Tasmania, including:
• Cruises, ferry and charter services on
Sydney Harbour, Swan River and on
the Murray River
• Resort accommodation, restaurants,
touring and ferry services on Fraser
Island, Queensland
• Day tours, extended touring and
charter operations on Kangaroo Island
and on the South Australia mainland
• Passenger ferry services in Townsville,
Darwin and Perth
• Lunch and dinner cruises on the Swan
River and on Sydney Harbour
• Ferry and barging services in south-
east Queensland and Gladstone in
Queensland
• Exclusive 4WD foreign language
adventure-based tours
• Tour wholesaling to the travel trade
• Passenger, vehicle and freight ferry
• Accommodation and bistro
services from Kangaroo Island to the
South Australian mainland, North
Stradbroke Island and Southern
Moreton Bay Islands to south-east
Queensland and from Bruny Island to
the Tasmanian mainland
at Vivonne Bay, Kangaroo Island.
SeaLink listed on the Australian
Securities Exchange in October 2013
(ASX:SLK).
F I V E Y E A R F I N A N C I A L H I G H L I G H T S
SEALINK TRAVEL GROUP
PERFORMANCE
Operating Revenue
Underlying EBIT
EBIT margin
Underlying NPAT*
Underlying EPS* (basic)
Dividend per share (100% franked)
Payout ratio (Reported NPAT)
FINANCIAL STRENGTH
Net assets
NTA per share
Gearing
$m
$m
%
$m
cents
cents
%
$m
cents
%
2015
111.3
14.8
13.3
9.6
12.6
7.8
64.1
61.3
68.9
13
2016
176.8
35.3
19.9
23.1
24.4
12.0
54.3
137.0
89.0
33
2017
201.4
37.5
18.6
23.6
23.6
14.0
59.5
147.7
100.0
31
2018
209.4
33.6
16.0
22.1
21.8
14.5
74.5
152.2
101.0
46
2019
251.3
31.5
12.5
23.4
23.0
15.0
70.6
157.9
106.0
33
NET PROFIT AFTER TAX
UNDERLYING EARNINGS PER SHARE UNDILUTED
$25m
$20m
$15m
$10m
$5m
25 cents
20 cents
15 cents
10 cents
5 cents
FY15
FY16
FY17
FY18
FY19
FY15
FY16
FY17
FY18
FY19
Reported NPAT
Underlying NPAT
Underlying Earnings per share (ave) – undiluted
3
C H A I R R E P O R T
Dear Shareholders,
It has been a busy 12 months for the SeaLink Board and
management – a year where we have grown profitability
and increased the dividend to shareholders despite some
challenging trading conditions. The management team
under CEO and MD Jeff Ellison has worked hard to draw
benefit from a full year of the recently acquired Fraser Island
business and more than nine months of operations for the
Bruny Island contract.
The Board has also been focussed on growing shareholder
value through a mix of organic growth, the divestment
of under-performing or non-aligned assets and detailed
consideration of, and due diligence on various acquisition
opportunities that the Company anticipates will give
SeaLink the appropriate growth trajectory.
An example of such divestment was the sale of two
Capricornian class vessels, originally built to service the
LNG plants in Gladstone during the construction phase.
As we said when acquiring that business in 2015, we have
continued to utilise those vessels until such time as it made
sense to sell them to realise a profit. Vessel management is
a constant focus of the management team in a bid to keep
the fleet fresh and fully utilised.
While SeaLink has grown underlying profit, we have not been
satisfied with the final result. A combination of various weather
events, a slowing of the inbound visitor economy and the
traditional Federal Election hiatus has meant we fell short of
our ambition. This has meant the Board and management
have looked even more closely at cost control, giving us a
strong basis for improved performance in FY20.
An announcement regarding the new Chief Executive is
imminent and will be made as soon as possible. As forecast
last year, Jeff has continued to serve the business with great
professionalism, working hard on our M&A strategy as well
as overseeing the operating businesses.
Bruny Island, Tasmania
4
I would also like to thank my fellow Board colleagues for their
continued commitment and adding value through offering their
diversity of skills and experience and active participation into
the governance of the Group.
Finally, I would like to express my thanks to the SeaLink team
of more than 1,600 employees all around Australia for their
hard work and contribution during the year, and I look forward
to our continuing success together.
Andrew McEvoy
Chair
SeaLink Travel Group Limited
The Company has considerable “bench strength” with senior
managers who know their roles, manage their budgets and
operations with an eye for safety, customer service and
the appropriate level of profitability. All the members of the
One SeaLink team are constantly on the lookout for service
improvements, new product opportunities, new routes and
contracts. Customer safety and satisfaction are core to the
SeaLink ethos.
During the year we undertook considerable work on our
marketing platform in a bid to better cross-sell our assets.
SeaLink carries in excess of seven million passengers per annum
and we now gather better data and information about our
customers to help them seamlessly travel on SeaLink vessels,
stay in our accommodation facilities and take our trips and tours.
With a growing database on a single platform, SeaLink has the
ability to demonstrate and promote these other great Australian
destinations for our visitors and regular commuters.
The Company has declared a fully franked final dividend of
8.5 cents per share, bringing the total dividend for FY19 to
15.0 cents per share.
5
R E V I E W O F O P E R A T I O N S
Financial year 2019 has been a solid year benefiting from
past acquisitions and business development initiatives. In
particular both the Fraser Island business in Queensland and
our Bruny Island ferry operations in Tasmania performed ahead
of expectations as did many of our Queensland and Northern
Territory operations.
Our key tourism businesses were challenged by slower
international visitor growth, a number of unseasonal weather
events and unplanned local disruptions for example a national
election when the Australian market slowed.
Our focus on growth opportunities continues, particularly in the
transport industry. This is providing significant interest for the
Company as we seek strong and stable income streams away
from the fluctuations and seasonality of the tourism industry.
The Company has increased its final dividend by 0.5 cents per
share at 8.5 cents per share this financial year. This brings the
full year dividend to 15.0 cents per share, up from 14.5 cents
per share last year.
Result Overview
The Company recorded a statutory Net Profit after Tax (NPAT)
of $21.5m compared to a NPAT of $19.6m for the year ended
June 2018. From a comparative perspective, the Company
reported an underlying NPAT of $23.4m compared with
$22.1m in the prior year.
SeaLink’s achievements in its key business segments for the
year were:
• Successful integration of the Kingfisher Bay Resort Group
on Fraser Island (acquired March 2018)
• Successful commencement of the Bruny Island ferry service
in Tasmania
• Successful divestment of two Capricornian Class vessels
for a total of $9.9m
• Upgrade of staff accommodation and common areas on
Fraser Island
• Commencement of construction of two vessels to operate
the Bruny Island ferry service
• Commencement of whale watching tours in Townsville
• Establishment of whale watching on Stradbroke Island
with QYAC
• New Rottnest Island service operating above break even.
Similar to the prior year, the Kangaroo Island, Queensland
(Marine and Fraser Island) and Northern Territory operations all
performed well during the period. The Tasmanian operations
which commenced in September 2018 also performed
pleasingly ahead of expectations.
Contribution from our Captain Cook Cruises business in both
Western Australia and New South Wales continued to be well
below our expectations and following a detailed strategic review
and evaluation of options resulted in the decision to close the
fast passenger ferry operations in NSW. The WA business has
shown signs of improvement and we were pleased with the
performance and results from the Rottnest Island service that
commenced 18 months ago.
The Fraser Island business acquired in March 2018 delivered a
result ahead of the acquisition business case, and ahead of the
prior year.
The Company continues to focus on its strategy of growth
through acquisition as well as maximising organic revenue
growth and profitability from its existing businesses, including
the addition of new routes and products. We have an ongoing
focus and commitment to margin enhancement initiatives, via
pricing strategies as well as cost savings and efficiency gains.
Our underlying cash flow profile and the cash position at year
end is strong with all financial covenants comfortably met during
the year. Gearing (interest bearing debt to total tangible assets)
at year end was 33%, which is well within target gearing levels
and positions us well for future investment and growth.
We continue to develop our technology knowledge base to
provide data to better understand and manage capacity, yield
growth, variable pricing and the impacts of passenger trends.
SeaLink South Australia & Tasmania
Kangaroo Island SeaLink
Revenue from vehicles and freight to Kangaroo Island was up
0.5% on the prior year both of these being record carry numbers
but offset by a similar decrease in passenger revenues.
SeaLink day touring passengers were slightly down as a
result of the shift to self-drive touring and the introduction of
a competing passenger only service. Our charter business
benefited from the 28 cruise ships that visited Kangaroo Island
between October and March, and 26 are scheduled to visit in
FY20. In October 2018, we purchased a new 51 seat Scania
bus to further complement and enhance our bus charter and
coach touring opportunities.
SeaLink continued to drive operational efficiencies and
consolidated purchasing opportunities with both these
contributing to the reduction in operational costs.
Rottnest Island, Western Australia
6
During the period we successfully completed the mandated
15 year major out-of-water survey and maintenance works for
one of the Kangaroo Island vessels.
The South Australian Government also announced its
intention to tender the ferry service between Cape Jervis
and Penneshaw. The South Australian Government is yet to
outline the timing phases of this tender. Our current licence
to operate expires in July 2024.
SeaLink has committed to the construction of two new
vessels for the Bruny Island route, to be built in Tasmania
with the first delivery planned in December 2019 and the
second in March 2021.
SeaLink also attracted new revenue from the Aquaculture sector
in Southern Tasmania and has developed a strong business
relationship with the industry.
P.S. Murray Princess
Captain Cook Cruises
The PS Murray Princess has had a challenging year with
revenue down 9% from the record high achieved in the prior
year. Some of this under performance can be attributed to a
decrease in sales from key customers, uncertainty associated
with the 2019 Federal Election and the negative sentiments
relating to the condition of the Murray and Darling Rivers.
During the year a new Enterprise Bargaining Agreement was
negotiated and finalised with staff and crew.
The PS Murray Princess still made a significant contribution
to earnings and achieved Nett Promoter Scores (NPS) for
cruises in excess of 90%, an outstanding result which
underpins the quality of the product and consistent delivery
of our customer experience.
Bruny Island – Tasmania
After successfully winning the tender for the operation of ferry
services to Bruny Island in Southern Tasmania, ferry services
commenced on 23 September 2018.
Vehicle numbers were up on our original forecast with resident,
tourist and freight vehicles all contributing positively. SeaLink
introduced a new Light and Standard Ferry fare structure in
November 2018 with reduced fares on early morning services
and standard fares through the peak. Total vehicle numbers
were up 4% on 2017/18.
Operationally, the MV Moongalba relocated from our South
East Queensland operations to work on the route. SeaLink
took over the management of the Tasmanian Government
owned MV Mirambeena and has since purchased a third vessel
for the route, the MV Bowen. SeaLink is also working with
the Tasmanian Government to improve infrastructure at both
Kettering and Roberts Point, which should provide opportunities
to improve efficiencies on local and tourist travel.
Captain Cook Cruises New South Wales
The last 12 months have presented a challenging period for the
business as both international and domestic demand softened,
impacting our Sightseeing and Charter businesses. It was
also a year of consolidation of our strategic plan to increase
capacity, vessel utilisation and ferry routes to service Sydney
Harbour residents and visitors. We remained focused on
improving margins through tight cost control in our core tourism
and dining businesses particularly in our food and beverage
departments and focused on efficiency gains, with close
attention to personnel management.
During the period we tendered for the Sydney Ferries
contract unfortunately finishing behind the incumbent. Whilst
disappointing, it represented an opportunity to explore new
arrangements in a remodelled contract offering.
The Manly to Barangaroo Fast Ferry patronage continued to
grow slowly but continued to operate well below expectations.
We expect passenger growth to continue over the short to mid-
term resulting in profitable operations towards the end of the
2019/2020 financial year. The Company’s new ‘Tubby Class’
vessels were re-deployed to operate Sydney’s first on-demand
ferry service between Elizabeth Bay and Circular Quay.
Excluding Charters, sales increased 2% over the prior year,
before commission paid with growth coming in dining cruises
and our new ferry routes. Dining revenue increased by 1%,
despite soft international and domestic demand. This was due to
improved strategic distribution relationships driving solid results.
While the level of inbound tourism growth into Australia has
softened over the past year, we are confident in our dining
strategy to deliver improvements in yield. Sales continued
to increase from sightseeing and ‘Harbour Story’ cruises,
maintaining their popularity in our tourism offering.
Our strategic focus to develop strong online distribution
partnership arrangements was helped with finalisation of
partnerships with online consolidator, building our direct to
market channels in the Chinese and Asian markets.
We believe the business can continue to innovate and deliver
Sydney’s best dining sightseeing and cruising experience.
7
R E V I E W O F O P E R A T I O N S C O N T I N U E D
Captain Cook Cruises Western Australia
South-East Queensland
Business and trading conditions in Western Australia
commenced the year in the same vein as 2017 and 2018 with a
depressed local tourism economy that translated to a reduction
in local bookings.
During the year there has been a heightened focus on
developing and growing tourism on North Stradbroke Island by
both the Redland City Council and State Government given its
proximity to the greater Brisbane region.
As the year progressed, Western Australia reported positive
growth in the tourism sector across both visitation and spend
with Tourism WA securing an additional $12m to support both
domestic and international marketing campaigns designed
to drive short term growth. In addition to this, it also secured
a number of key sporting events to start the financial year,
specifically Manchester United v Leeds football in July 2019
and Bledisloe Cup in August 2019. Captain Cook Cruises
is well positioned to leverage these events with the exclusive
use of the jetty at Optus Stadium.
Western Australia also showcased Australia’s biggest tourism
tradeshow (Australian Tourism Exchange) in April 2019 and is
scheduled to host two further tourism events (Corroboree and
Dreamtime) in October 2019 and December 2019 respectively.
These events will assist in putting the ‘tourism spotlight’ back
on Western Australia and assist in growing inbound numbers.
Whilst the Captain Cook Cruises Swan River services continues
to be soft, the SeaLink Rottnest Island business has shown
double digit growth in passenger numbers despite strong
competition. Rottnest Island has set another record for
visitation with annual visitor numbers hitting 785,000 – nearly
a 7% increase on 17/18 numbers. More broadly, visitation to
Rottnest Island has grown 21% in the two years since SeaLink
commenced services. With the ‘Quokka Selfie’ phenomenon
in full swing and considerable Tourism WA marketing efforts
focused on Rottnest Island, we expect the demand to continue
to improve.
SeaLink Queensland
Gladstone
In Gladstone, a total of eight vessels remain engaged on
operational service contracts for the full year with the business
performing to expectations on these contracts.
An additional Capricornian vessel has also been re-deployed to
Gladstone with a view to attracting additional ad-hoc tourism
charter work and additional short-term work for Curtis Island
clients. Although tourism charter work to date has not been
realised as expected, additional short term work for Curtis
Island clients has exceeded expectations.
In April 2019 and June 2019, two Capricornian vessels were
sold to a New Zealand operator realising proceeds of $9.9
million. The lease arrangements for these vessels had expired
and a small profit on sale was achieved confirming our holding
book value of these vessels.
The 5th Capricornian vessel remains deployed in Perth servicing
Rottnest Island business.
In September 2018, the MV Quandamooka vehicle ferry returned
from charter in Weipa and provided additional capacity on the
Cleveland to North Stradbroke Island service during the peak
holiday times, and on weekends. The MV Quandamooka carries
50 cars and 400 passengers and has a licenced café on board.
In January 2019, we were successful in renewing the TransLink
contract to provide passenger ferry transfers from Redland Bay
to the Southern Moreton Bay Islands for another 5 years with
an additional two by one-year options.
We established a partnership with QYAC (Quandamooka
Yoolooburrabee Aboriginal Corporation) by providing a wet
charter vessel for the first Indigenous owned Whale Watching
cruise in Australia. The rocket class vessel was re-deployed
from Sydney for this cruise and offers the opportunity to create
new products to further enhance our business. Our ongoing
and developing working relationship with QYAC reinforces the
values of the SeaLink RAP (Reconciliation Action Plan) that
embraces and incorporates recognition, acknowledgement and
understanding of Aboriginal and Torres Strait Islander peoples
and culture into our everyday operations.
SeaLink Townsville
Overall revenue grew by 1.2% despite the extreme weather event
(flooding) in February 2019 causing service cancellations over an
extended period and a downturn in the youth adventure market.
Despite these challenges, Magnetic Island passenger numbers
increased by 2.4%, the highest recorded in a financial year.
Revenue from cruise ship charters was slightly down, however
revenue from the North Queensland Adventure series grew
by 44% as a result of expanding the tour season and the
introduction of whale watching tours.
A new vessel build was approved to replace the current
Palm Island passenger ferry and is expected to commence
service towards the end of 2020.
SeaLink Northern Territory
Overall revenue increased by 15% compared to FY18
despite static passenger numbers on the Mandorah route.
Tiwi Islands revenue continued to perform strongly on what was
already a solid prior year with a 5.3% increase in passenger
numbers and 7.2% increase in sales revenue across ferry and tour
services. This was due to increased travel by residents over the
wet season and increasing tourism numbers during peak season.
The Groote Eylandt Ferry & Bus service revenue increased 63%
on the prior year due to a full year contribution of bus operations
and expansion of ferry services adding to the community of
Numbulwar to the route.
Perth, Western Australia
8
The Mandorah and Tiwi Islands contracts have been extended
to 30 September 2019 whilst negotiations continue with the
Northern Territory Government on renewed contracts for
these routes. The Groote Eylandt contract is due to expire
in February 2020 and we have commenced discussions to
renew of this contract.
The Tiwi Islands continue to be the primary tourism market and
further growth is expected on this route with the development
of new marine infrastructure on Bathurst Island, new tourist
accommodation coming online in late 2019, and the Northern
Territory Government’s investment into tourism marketing.
Fraser Island
During the 2019 financial year, we successfully integrated
the recently acquired Fraser Island business into SeaLink.
The successful integration of our sales and marketing functions
were a highlight of this process and the new structure is both
effective and efficient.
Fraser Island traded well in all areas with a total revenue growth
of 3% on the previous year in what many would characterise
as a flat tourism market. This growth in overall revenue was
reflected by an increase in our total EBITDA and this result
is a credit to the very stable and experienced team throughout
this business.
At an operational level we made some strategic investments in
the business which has resulted in positive change, the most
significant of which was the upgrading of staff accommodation
at both resorts. This investment will position us well to see
a reduction in staff turnover and ultimately improved guest
satisfaction scores which is a key driver in our ongoing success.
The Kingfisher Bay Resort had a strong year with revenue
exceeding forecast by 4.2% and the business benefited from
unprecedented publicity as a result of the visit in October
2018 by their royal highnesses the Duke and Duchess of
Sussex. While this event was fortuitous, we also undertook
some innovative and effective sales and marketing strategies
throughout the year to ensure that we maximised the
occupancy for this property. This included a successful year
in the wedding market as well as our continued strategy of
targeting direct sales rather than a continuation of the growth in
bookings via third parties.
The Eurong Beach Resort operations performed well for the
period while undertaking some important upgrades to facilities
to which our guests responded very positively. Our continued
focus on yield management has seen accommodation revenue
improve and this is expected to continue to be the case as
we move forward. The planned upgrade of the main food and
beverage outlet early in the new financial year will underpin the
continued improvement in the results from this business.
Our touring brand Fraser Explorer Tours had a mixed year with
very good performances from all products other than our youth
adventure market tour Cool Dingo.
Our marine business Fraser Island Barges also traded consistently
during the period, however some softness in commercial
traffic resulted in revenue being flat while some higher one-off
repairs and maintenance expenses for one vessel impacted our
operating costs.
The SeaLink Fraser Island businesses are well positioned
to continue to grow revenue and EBITDA in the future due
to planned strategic investment in key areas, excellent
management and focused sales and marketing activities which
will see us continue to outperform the domestic tourism market.
Future
The future outlook for SeaLink is very bright with our solid base
of diversified business across Australia in the transport, tourism
and now accommodation sector.
With international visitor growth at 3% and, the improved
exchange rate, this will make Australia a more attractive
holiday destination for both international visitors and Australian
residents. In addition, the transport industry is a proven significant
opportunity for SeaLink with its focus on logistics management
and the industry’s solid returns and many opportunities.
With a year of focus on growth through organic business
development, sales, network expansion, additional routes and
license extensions and acquisitions, 2019/20 financial year is
sure to be another record.
In summary, SeaLink’s overall plan for sustainable growth involves:
• Developing further revenue and cost saving opportunities
and efficiencies from acquisitions;
• Maximising Group opportunities from Fraser Island;
• Producing sustainable profits for the Rottnest Island route;
• Continuing to improve sales, yields and margins on transport
and tourism products;
• Continue to add and grow additional services within existing
locations and routes;
• Utilising existing sales and marketing skills to promote and
cross-sell existing and new products and services;
• Utilising in-house technical skills to improve booking processes
and websites to drive increased sales and productivity;
• Working with Governments to develop new routes; and
• Continuing to seek new business acquisition opportunities
that will enhance, leverage and complement our current
capabilities and growth strategies.
I would like to thank our employees, customers, suppliers,
Directors and shareholders for their ongoing support and
commitment over the past year. The hard-working talented people
at SeaLink are central to our ongoing future growth and success.
9
R E V E N U E H I S T O R Y
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
260 ($M)
240 ($M)
220 ($M)
200 ($M)
180 ($M)
170 ($M)
160 ($M)
150 (4M)
140 ($M)
130 ($M)
120 ($M)
110 ($M)
100 ($M)
90 ($M)
80 ($M)
70 ($M)
60 ($M)
50 ($M)
40 ($M)
30 ($M)
20 ($M)
10
10
Adelaide Sightseeing
Day Tours and
City Centre Travel
acquired.
1999
1998
Luxury Kangaroo
Island ferry
‘Sealion 2000’
built and launched.
Kangaroo Island
Booking Centre retail
specialist agency
acquired.
SeaLink selected as
Facility Managers for
new Adelaide Central
Bus Station.
SkyLink Adelaide
Airport Shuttle Service
and fleet of coaches
acquired.
Vivonne Bay Eco
Adventures built Bistro
and Function Centre.
CJ’s by the Sea café
opened at Cape Jervis
Ferry Terminal.
2007
Cape Jervis Ferry
Terminal built and
officially opened.
2005
2006
Kangaroo Island
Adventure Tours
soft adventure
business acquired.
2008
Big B Cartage
Limited – NZ
freight & trucking
company, majority
shareholding
acquired.
Premier Day Tour
business acquired.
Australian Holiday
Centres Melbourne
and Sydney
acquired.
Luxury Kangaroo
Island ferry ‘Spirit
of KI’ built and
launched.
2003
2004
Auckland NZ based ferry
company, Subritzky Ferries
acquired.
The Ski Connection ski
packaging and express
coach transport company
acquired.
Vivonne Bay Outdoor
Education Centre,
Kangaroo Island acquired.
260 ($M)
240 ($M)
220 ($M)
200 ($M)
180 ($M)
170 ($M)
160 ($M)
150 (4M)
140 ($M)
130 ($M)
120 ($M)
110 ($M)
100 ($M)
90 ($M)
80 ($M)
70 ($M)
60 ($M)
50 ($M)
40 ($M)
30 ($M)
20 ($M)
10
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2019
Commence
Tasmanian
operations with
Bruny Island contract
2018
Acquisition of
Kingfisher Bay
Resort Group,
Fraser Island.
Tiwi Islands, Northern Territory
11
Acquisition of Captain
Cook Cruises WA.
2016
Establishment of
SeaLink Northern
Territory and
commencement of ferry
services from Darwin.
Listed on the ASX.
2013
2015
Acquisition of
Transit Systems
Marine Businesses.
2014
Constructed
the Penneshaw
Terminal,
Kangaroo Island.
Kangaroo Island
Odysseys 4WD
Luxury Touring
business acquired.
2010
2011
Sunferries Townsville,
ferries to Magnetic
and Palm Island
acquired.
Captain Cook Cruises
and Matilda Cruises,
Sydney Harbour and
Murray River Cruises
acquired.
Sold SeaLink
New Zealand including
shareholding in Big B
Cartage Limited.
SkyLink Adelaide
Airport Shuttle
Service sold.
K E Y R E S U L T S
RESULTS IN BRIEF
Normalised results1
Revenue from ordinary activities
EBITDA (excl significant items)
One-off costs
Acquisition related costs (Fraser Island)2
Tender costs (CCC NSW)3
Impairment of Investment4
Depreciation and Amortisation
EBIT
Interest
Net Profit Before Tax attributable to the members of
SeaLink Travel Group Limited
Tax
Profit After Tax
1 Normalised Results have been adjusted for significant one off items for the period 30 June 2019
2 Costs associated with the acquisition of Fraser Island ($0.2m)
3 Costs associated with the unsuccessful tender bid for Sydney Ferries ($0.2m)
4 Impairment of Investment in UWAI ($1.6m)
JUNE 2019
$M
JUNE 2018
$M
CHANGE
%
248.8
47.9
–
–
–
(16.4)
31.5
(4.6)
26.9
(3.5)
23.4
208.2
46.5
–
–
–
(12.9)
33.6
(3.1)
30.5
(8.4)
22.1
19.5
3.0
n/a
n/a
–
27.5
(6.4)
43.8
(11.6)
(58.2)
6.0
DIVIDEND INFORMATION
FINAL DIVIDEND DATES
AMOUNT
PER SHARE
(CENTS)
FRANKED
AMOUNT
PER SHARE
(CENTS)
FRANKED
AMOUNT
Ex-dividend date
Record date
Payment date
30 June 2018
Interim Dividend
Final Dividend
30 June 2019
Interim Dividend
Final Dividend
6.5
8.0
6.5
8.5
6.5
8.0
6.5
8.5
100%
100%
100%
100%
NET TANGIBLE ASSETS
Net tangible assets
per ordinary share
3 September 2019
4 September 2019
17 September 2019
JUNE
2019 $
1.06
JUNE
2018 $
1.01
The report is based on the consolidated financial
statements which have been audited by Ernst & Young.
Additional Appendix 4E disclosure requirements can
be found in the Directors’ Report and the consolidated
financial statements.
Kangaroo Island, South Australia
12
D I R E C T O R S ’
R E P O R T
The Board of Directors of SeaLink Travel Group Limited
(“SeaLink” or “the Company’) has pleasure in submitting
its report for the year ended 30 June 2019.
Directors
The names and details of the Company’s Directors in office
during the financial year and until the date of this report are
set out below. Directors have been in office for the entire
period unless otherwise stated.
ANDREW J. McEVOY
MA INT. COMMS, B. ARTS
CHAIR
Mr McEvoy was appointed a
Director on 1 February 2015
and was appointed Chair
1 July, 2015. Mr McEvoy
holds a Bachelor of Arts
Degree from the University of
Melbourne and a Masters in
Communications from City
University in London.
Mr McEvoy has extensive
experience in the tourism
sector, and is a previous
Managing Director and CEO
of both Tourism Australia and
the South Australian Tourist
Commission. Most recently
he was Managing Director,
Life Media & Events at Fairfax
Media, where he managed
the new business portfolio,
including events and the key
lifestyle titles.
Mr McEvoy is Chair of
advocacy group Tourism and
Transport Forum (TTF) and a
Director of the Lux Group Ltd,
Ingenia Communities Ltd
and Voyages Indigenous
Tourism Australia.
Mr McEvoy is a member of
the Company’s Remuneration
and Nomination Committee.
JEFFREY R. ELLISON
B. ACC, FCA, FAICD
MANAGING DIRECTOR
AND CHIEF EXECUTIVE OFFICER
Mr Ellison holds a Bachelor
of Arts Degree in Accounting
from the University of South
Australia, is a Fellow of the
Chartered Accountants
Australia and New Zealand
and the Institute of Company
Directors. He has held the
position of Chief Executive
Officer since 1997 and was
appointed Managing Director
in 2008.
Mr Ellison is a member on
Tourism Australia Board
and the South Australian
Botanic Gardens and State
Herbarium Board. Mr Ellison
is a former Board member
of the South Australian
Tourism Commission,
Tourism and Transport
Forum Australia and the
Adelaide Convention Centre.
ANDREA J. STAINES
MBA FINANCE, B.EC, OAM
NON-EXECUTIVE DIRECTOR
FIONA A. HELE
B.COM, FCA, FAICD
NON-EXECUTIVE DIRECTOR
Ms Staines has extensive
experience in the transport
sector and is a former CEO of
Qantas subsidiary, Australian
Airlines (mk II), which she
co-launched. Ms Staines
currently sits on the Board
of UnitingCare, NDIA and
Freightways (NZ).
Ms Staines has been a
professional non-executive
director for over a decade, and
has held previous directorships
with a range of entities in the
transport, tourism and care
sectors, including Tourism
Australia, Aurizon, Australian
Rail Track Corporation,
Gladstone Ports Corporation
and North Queensland
Airports.
Ms Staines joined the Board
in 2016 and is Chair of the
Company’s Remuneration and
Nomination Committee and
a member of the Company’s
Audit and Risk Committee.
Ms Hele is a Chartered
Accountant with over
25 years’ experience in
both the private and public
sectors specialising in
strategic business advisory,
mergers and acquisition,
risk management and
corporate governance.
Ms Hele is a Fellow of
the Institute of Chartered
Accountants, Australia
and New Zealand, and
a Fellow of the Institute
of Company Directors.
Ms Hele is also a director
of Adelaide Venue
Management Corporation,
Celsus Securitisation Pty
Ltd and the South Australian
Water Corporation. Past
Directorships include the
South Australian Tourism
Commission and the Adelaide
Fringe Festival.
Ms Hele joined the Board
in 2016 and is Chair of the
Company’s Audit and Risk
Committee.
13
D I R E C T O R S ’
R E P O R T C O N T I N U E D
ANDREW D. MUIR
B.EC, MBA
COMPANY SECRETARY
Mr Muir (Chief Financial
Officer) was appointed
Company Secretary on
1 June 2018. Mr Muir has
held a number of similar
positions with other ASX
listed and private companies.
Mr Muir holds a Bachelor of
Economics and a Master of
Business Administration from
the University of Adelaide.
JOANNE H. McDONALD
LLB, B.EC, GAICD
(APPOINTED 21 AUGUST 2018)
LEGAL COUNSEL/COMPANY SECRETARY
Prior to joining SeaLink as
Legal Counsel and Company
Secretary, Ms McDonald was
Executive Manager Corporate
Governance and Company
Secretary for ElectraNet
Pty Ltd. Ms McDonald has
over 25 years‘ experience in
commercial and corporate law
including holding senior legal
and commercial positions
with other listed and statutory
corporations. She holds a
Bachelor of Laws (Hons) and
Bachelor of Economics from
the University of Adelaide.
CHRISTOPHER
D. SMERDON
MAICD
NON-EXECUTIVE DIRECTOR
Mr Smerdon has extensive
experience in the Information
Technology and Cyber
Security field. He is currently
Managing Director of Vectra
Corporation, a company
that provides specialist
Cyber Security services
to organisations handling
sensitive data, financial
information and large volumes
of credit card transactions.
Clients include banks, telcos,
utilities and large retailers.
Mr Smerdon was previously
Managing Director of Protech
Australasia Pty Ltd a national
Information Technology and
systems integrator. Other
Directorships currently held by
Mr Smerdon are with Tourism
& Allied Holdings Pty Ltd
and Aquaport Corporation
and Environmental Energy
Australia.
Mr Smerdon joined the Board
in 2002 and is a member
of the Company’s Audit and
Risk Committee.
TERRY J. DODD
NON-EXECUTIVE DIRECTOR
Mr Dodd has extensive
experience in business
management and the marine
industry. After qualifying as a
commercial diver in the USA
and working as a commercial
diver in the onshore and
offshore oil and gas industry,
he successfully established
a recreational diving business
and a travel agency in
North Queensland.
Mr Dodd is Managing
Director and owner of Pacific
Marine Group Pty Ltd, one
of Australia’s largest marine
construction and commercial
diving companies. Mr Dodd
was previously Managing
Director of Sunferries, a ferry
transport business based in
Townsville, prior to its sale
to SeaLink in March 2011
when Mr Dodd joined the
Board of SeaLink.
Mr Dodd is a member of the
Company’s Remuneration
and Nomination committee.
Stradbroke Island, Queensland
14
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE
As at the date of this report, the interests of the Directors’ in the shares and options of the Company were:
AJ McEvoy (Chair)
CD Smerdon
JR Ellison
TJ Dodd
FA Hele
AJ Staines
DIRECTORS’ MEETINGS
NUMBER OF ORDINARY SHARES
19,579
6,104,500
5,524,769
4,786,578
10,000
–
NUMBER OF OPTIONS OVER ORDINARY SHARES
100,000
–
–
–
–
–
The number of meetings of Directors (including meetings of committees of Directors) held during the last financial year and attended
by each Director were as follows:
Number of meetings held:
AJ McEvoy (Chair)
CD Smerdon
JR Ellison*
TJ Dodd
AJ Staines
FA Hele
NUMBER OF BOARD
MEETINGS ATTENDED
11
11
10
11
11
11
11
NUMBER OF AUDIT AND RISK
COMMITTEE MEETINGS ATTENDED
4
–
4
4
–
4
4
All current Directors were eligible to attend all meetings held.
* Mr Ellison attended the Board Committee meetings by invitation only.
NUMBER OF REMUNERATION
AND NOMINATIONS COMMITTEE
MEETINGS ATTENDED
6
6
–
6
6
6
–
COMMITTEE MEMBERSHIP
PRINCIPAL ACTIVITIES
As at the date of this report, the Company had an Audit
and Risk Committee and a Remuneration and Nomination
Committee. Members acting on the Committees of the Board
during the year were:
The principal activities of SeaLink during the year
were in providing:
• ferry services;
Audit and Risk
FA Hele (Chair)
AJ Staines
CD Smerdon
SHARE OPTIONS
Remuneration and Nomination
• tourism cruises, charter cruises
and accommodated cruising;
AJ Staines (Chair)
AJ McEvoy
TJ Dodd
• accommodation and restaurant services
at Fraser Island and Vivonne Bay;
• coach tours;
• tug and barge services;
• travel agency services; and
• packaged holidays.
Unissued shares
As at 30 June 2019, there were 100,000 (2018: 300,000) options outstanding to acquire ordinary shares in the Company.
No options to acquire shares or interests in the Company or a controlled entity were granted since the end of the financial year.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company.
Shares issued as a result of the exercise of options
During the year, no options were exercised by Directors. 200,000 options were exercised by employees at an issue price
of $2.50 per ordinary share.
15
D I R E C T O R S ’
R E P O R T C O N T I N U E D
DIVIDEND
The following dividends of the consolidated entity have been paid, declared or recommended since the end of the
preceding financial year:
Interim fully franked dividend for 2019 paid 12 April 2019.
CENTS PER ORDINARY
SHARE
6.5
AMOUNT
$6,592,892
Final fully franked dividend for the year ended 30 June 2018 and paid 3 October 2018.
8.0
$8,092,328
SeaLink’s Directors today declared an 8.5 cents per share fully franked final dividend payable on 17 September 2019 to
shareholders registered on 4 September 2019. This represents a 70.6% return of net profit after tax to shareholders, which is slightly
above the Company’s policy of returning 50% – 70% of after-tax profit, subject to business needs and ability to pay. The interim
dividend for the half-year ended 31 December 2018 was 6.5 cents per share.
The Board will continue to consider SeaLink’s growth requirements, its current cash position, market conditions and the need
to maintain a healthy balance sheet, when determining future dividends.
SIGNIFICANT CHANGES
IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs
of the Company during the year.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required
under Section 307C of the Corporations Act 2001 is included at
the end of the financial report.
MATTERS SUBSEQUENT TO
THE END OF THE FINANCIAL YEAR
NON-AUDIT SERVICES
A fully franked dividend of 8.5 cents per share was declared
by SeaLink’s Directors on 27 August 2019, representing a total
payment of $8,621,474 to be paid 17 September 2019 based on
the current number of ordinary shares.
Apart from the above, there are no significant events after the
end of the reporting period which have come to our attention.
The following non-audit services were provided by the
Company’s auditor, Ernst & Young. The directors are satisfied
that the provision of non-audit services is compatible with the
general standard of independence for auditors imposed by the
Corporations Act 2001.
Assurance related and acquisition related services
$Nil
OTHER
INDEMNIFICATION OF
OFFICERS AND DIRECTORS
The Company’s operations are not regulated by any significant
environmental regulation under a law of the Commonwealth or of
a State or Territory.
No person has applied for leave of Court to bring proceedings on
behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
During the financial year, the Company renewed a contract
insuring the Directors of the Company (as named above),
and all executive officers of the Company and of any related
body corporate against a liability incurred in their capacity as
directors, 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 cover and the
amount of the premium.
ROUNDING
The amounts contained in this report and in the financial report
have been rounded to the nearest $1,000 (unless otherwise
stated) under the option available to the Company under
ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which the
legislative instrument applies.
The Company is party to Deeds of Indemnity in favour of
each of the Directors, referred to in this report who held office
during the year and certain officeholders of the Company. The
indemnities operate to the full extent permitted by law and are
not subject to a monetary limit. SeaLink is not aware of any
liability having arisen, and no claims have been made, during or
since the financial year ending 30 June 2019 under the Deeds
of Indemnity.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Company has agreed to
indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by
third parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young during
or since the financial year.
16
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED 30 JUNE 2019
CONTINUING OPERATIONS
NOTE
2019
$’000
2018
$’000
Revenue from contracts with customers
1A (a)
248,779
208,246
1A (b)
38
2,504
27
1,163
251,321
209,436
Interest income
Other income
Total income
DIRECT OPERATING EXPENSES
Direct wages
Repairs and maintenance
Fuel
Commission
Meals and beverage
Accommodation
Tour costs
Depreciation
Other direct expenses
ADMINISTRATION EXPENSES
Indirect wages
General and administration
Marketing and selling
Financing charges
Amortisation of customer contracts and permits
Impairment on investment
Business acquisition expenses
Total expenses
PROFIT BEFORE TAX FROM OPERATIONS
Income tax expense
Profit for the year from operations
Attributable to equity holders of the parent
EARNINGS PER SHARE
76,405
14,336
13,294
12,397
14,530
384
11,965
14,431
12,262
26,477
16,371
4,992
4,582
1,944
1,637
364
226,371
24,950
3,407
21,543
21,543
$0.212
$0.212
59,744
10,367
10,083
8,487
11,507
3,557
9,335
11,300
10,226
22,344
14,162
3,578
3,070
1,560
–
2,569
181,889
27,547
7,982
19,565
19,565
$0.193
$0.193
1B (b)
1B (a)
1B (b)
1B (g)
1B (h)
1C
Basic, profit for the year attributable to ordinary equity holders of the parent
Diluted, profit for the year attributable to ordinary equity holders of the parent
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (OCI)
FOR THE YEAR ENDED 30 JUNE 2019
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Net (loss) / gain on cash flow hedge (interest rate swap)
Deferred tax
Net other comprehensive (loss) / gain to be reclassified to Profit and Loss
in subsequent financial periods
Total comprehensive income for the year, net of tax
Attributable to equity holders of the parent
NOTE
3C
2019
$’000
2018
$’000
21,543
19,565
(2,588)
776
(1,812)
19,731
19,731
(724)
217
(507)
19,058
19,058
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT ARE INCLUDED ON PAGES 22-48
17
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIESFINANCIAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Prepayments
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Other financial assets
Deferred tax assets
Total Non-Current Assets
Total Assets
CURRENT LIABILITIES
Trade and other payables
Contract and other liabilities
Interest bearing loans and borrowings
Other financial liabilities
Provisions
Total Current Liabilities
NON-CURRENT LIABILITIES
Contract and other liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Other financial liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total Equity
NOTE
2A
2B
2C
2D
2E
2F
2K
2G
2I
2J
2L
2H
2I
2J
2K
2L
2H
3B
3C
2019
$’000
2018
$’000
11,904
12,355
4,921
5,684
4,263
39,127
201,396
53,383
1,637
5,936
262,352
301,479
13,578
7,684
822
943
11,027
34,054
776
94,957
9,132
2,832
1,813
109,510
143,564
157,915
96,057
(1,700)
63,558
157,915
3,242
11,004
4,738
6,334
2,000
27,318
210,101
55,327
3,274
4,539
273,241
300,559
10,623
6,643
1,350
137
9,600
28,353
805
107,187
9,293
1,050
1,649
119,984
148,337
152,222
95,557
(36)
56,701
152,222
18
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT ARE INCLUDED ON PAGES 22-48
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIESFINANCIAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED
BALANCE AT 1 JULY 2017
Profit for the period
(324)
–
(507)
(507)
Other comprehensive income
3C
Total comprehensive income for the period
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
Dividends paid or provided for
Issue of share capital
Share based payments
Balance at 30 June 2018
BALANCE AT 1 JULY 2018
Profit for the period
Other comprehensive income
Total comprehensive income for the period
3D
3B
7D
3C
–
–
–
(831)
(831)
–
(1,812)
(1,812)
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS
CASH FLOW
HEDGE RESERVE
$’000
NOTE
RETAINED
EARNINGS
$’000
SHARE BASED
PAYMENTS
$’000
TOTAL
$’000
CONTRIBUTED
EQUITY
$’000
95,557
–
–
–
–
–
–
51,804
19,565
–
19,565
(14,667)
–
–
95,557
56,701
95,557
–
–
–
–
500
–
56,701
21,543
–
21,543
(14,685)
–
–
646
147,683
–
–
–
–
–
151
795
795
–
–
–
–
–
148
943
19,565
(507)
19,058
(14,667)
–
151
152,222
152,222
21,543
(1,812)
19,731
(14,685)
500
148
157,915
Dividends paid or provided for
Issue of share capital
Issue of share options
Balance at 30 June 2019
3D
3B
7D
–
–
–
(2,643)
96,057
63,558
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT ARE INCLUDED ON PAGES 22-48
19
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIESFINANCIAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
NOTE
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net operating cash flows
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Proceeds from sale of property, plant and equipment
Cash was disbursed to:
Payments for property, plant and equipment
Investment in unlisted entity
Acquisition of new businesses
Net investing cash flows
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Dividend paid
Net financing cash flows
Net increase / (decrease) in cash held
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
2A
2D
7A
2J
2J
3D
2A
2019
$’000
251,606
(202,878)
38
(4,582)
(3,539)
40,645
12,605
12,605
(17,645)
–
–
(17,645)
(5,040)
500
–
(12,758)
(14,685)
(26,943)
8,662
3,242
11,904
2018
$’000
208,288
(161,567)
27
(3,070)
(15,127)
28,551
659
659
(13,654)
(3,274)
(44,728)
(61,656)
(60,997)
–
49,350
(1,945)
(14,667)
32,738
292
2,923
3,215
20
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT ARE INCLUDED ON PAGES 22-48
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIESFINANCIAL REPORT INDEX
SECTION 1: KEY NUMBERS – STATEMENTS OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
1A
1B
1C
1D
SECTION 2: KEY NUMBERS – STATEMENT OF FINANCIAL POSITION
2A
2B
2C
2D
2E
2F
2G
2H
2I
2J
2K
2L
SECTION 3: CAPITAL
3A
3B
3C
3D
3E
SECTION 4: RISK
4A
4B
SECTION 5: ACCOUNTING POLICIES
5A
5B
5C
5D
5E
SECTION 6: COMMITMENTS AND CONTINGENCIES
6A
6B
6C
SECTION 7: OTHER
7A
7B
7C
7D
7E
7F
Revenue and Other Income
Expenses
Tax expense
Operating segment reporting
Cash and cash equivalents
Trade and other receivables – current
Inventories
Property, plant and equipment
Intangible assets
Other financial assets
Trade and other payables
Provisions
Contract Liabilities and other liabilities
Interest bearing loans and borrowings
Deferred tax
Other financial liabilities
Capital management
Equity
Reserves
Dividends
Earnings per share
Financial risk management objectives and policies
Financial instruments
Basis of preparation
Significant accounting policies
Changes in accounting policies and disclosures
Accounting standards issued but not yet effective
Fair value measurement
Commitments
Contingencies
Events after the reporting period
Business combinations
Corporate information
Parent disclosure
Share option plans
Related party transactions
Related bodies corporate
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENT ARE INCLUDED ON PAGES 22-48
21
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIESFINANCIAL REPORT 1 STATEMENTS OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
REVENUE AND OTHER INCOME
A INCOME
(a) REVENUE FROM CONTRACTS WITH CUSTOMERS
TIMING OF REVENUE RECOGNITION
Goods transferred at a point in time
Services transferred over time
Total
(b) OTHER INCOME
Profit on the sale of fixed assets
Expired bookings and cancellation fees
Other
Total
(c) CONTRACT BALANCES
Contract Liabilities
Set out below is the amount of revenue recognised from:
Amounts included in contract liabilities at the beginning of the year
Performance obligations satisfied in previous years
The transaction price allocated to the remaining performance obligations
(unsatisfied or partially unsatisfied) as at 30 June are, as follows:
Within one year
More than one year
Total
B EXPENSES
(a) FINANCE COSTS
Interest expense
Borrowings
Leases
Finance charges
Total
(b) DEPRECIATION/AMORTISATION
Depreciation
Property, plant and equipment
Leased assets
Total depreciation
Amortisation of customer contracts and permits
(c) EMPLOYEE BENEFITS EXPENSE
Wages and salaries
Share based expense
Other employee benefits / entitlements
Superannuation
Workers Compensation costs
Total employee benefit expenses
(d) LEASE PAYMENTS IN INCOME STATEMENT
Lease and rental expenses
22
NOTE
2019
$’000
2018
$’000
248,416
363
248,779
207,872
374
208,246
2I
686
474
1,344
2,504
8,460
6,471
172
28,561
44,569
73,130
3,858
55
669
4,582
14,095
336
14,431
1,944
81,136
148
5,798
8,224
2,386
97,692
97
516
550
1,163
7,448
5,315
172
28,953
36,862
65,815
2,611
180
279
3,070
10,996
304
11,300
1,560
66,082
151
3,584
6,602
1,619
78,038
3,076
2,993
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT B MORE THAN ONE YEAR – CONTINUED
REVENUE AND OTHER INCOME
NOTE
(e) AUDITOR’S REMUNERATION
The following total remuneration was received, or is due and receivable, by
the auditor Ernst & Young of the parent entity and its affiliates in respect of:
Auditing the accounts
Other services – Assurance and due diligence
Total
(f) INVENTORY EXPENSE
Costs of inventories recognised as an expense
(g) IMPAIRMENT ON INVESTMENT
Relates to impairment of other financial assets 2F
(h) ACQUISITION EXPENSE
Costs involved in relation to business acquisitions (stamp duty, legal)
C TAX EXPENSE
The major components of income tax expense for the years ended 30 June 2019 and 2018 are:
Consolidated statement of profit and loss
Current tax
Deferred tax
Under / (over) provision in respect of prior years plus adjustments
Income tax expense reported in the income statement
Consolidated statement of other comprehensive income
Deferred tax related to items recognised and charged in OCI during the year:
Net loss / (gain) on revaluation of cash flow hedges
Tax expense reconciliation
Accounting profit before income tax
The prima facie income tax expense on pre-tax accounting profit reconciles to the
income tax expense as follows:
Income tax expense calculated at 30% of operating profit
Other (entertainment etc)
Non-deductible expenses (goodwill / share option cost)
Due to Impairment on Investment
Due to business combination acquisition
Effect of income that is exempt from taxation
Amounts under / (over) provided in prior years
Income tax expense reported in the income statement
2019
$’000
215
–
215
2018
$’000
197
–
197
30,134
21,987
1,637
364
4,189
(784)
2
3,407
–
2,569
7,846
102
34
7,982
776
217
24,950
27,547
7,485
17
44
492
–
(4,633)
2
3,407
8,264
49
45
–
460
(870)
34
7,982
D OPERATING SEGMENT REPORTING
Set out below is the disaggregation of the Group’s revenue from contracts with customers.
For management purposes, the Group has four main reporting segments –
• Kangaroo Island SeaLink (“SA”), offers ferry services, tours in South Australia, packaged holidays, retail travel services,
accommodation facilities at Vivonne Bay and accommodated cruising on the Murray River. It also includes the ferry services to
Bruny Island in Tasmania;
• Captain Cook Cruises (“CCC”) operates tourist cruises, lunch, dinner and charter cruises and ferry passenger services on Sydney
Harbour and in Perth;
• SeaLink Queensland (“QLD”) includes ferry and barging operations throughout Queensland and the Northern Territory. This unit
provides ferry passenger services as well as offering packaged holidays;
23
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT D OPERATING SEGMENT REPORTING CONTINUED
• SeaLink Fraser Island (“Fraser Island”) offers ferry services, tours on Fraser Island, retail outlets for fuel, food and alcohol,
accommodation facilities at Kingfisher Bay Resort and Eurong Beach Resort. Note this is a new segment from acquisition
on 26 March 2018; and
• Corporate (Head Office), provides finance, domestic and international sales and marketing, information and technology,
fleet management, health and safety and administration and risk management support.
The Board and Executive Committee monitors the operating results of each segment separately for the purpose of making
decisions about strategy, resource allocation, cost management and performance assessment. Segment performance is measured
consistently with operating profit or loss in the consolidated financial statements. Group income taxes and funding are managed
on a Group basis and are not allocated to the segments below. Transfer pricing between operating segments is on an arm’s length
basis in a manner similar to transactions with third parties.
Segment profit before tax – continuing operations
Inter-segment revenues are eliminated on consolidation and reflected in the eliminations column.
QLD
$’000
FRASER ISLAND
$’000
CORPORATE
$’000
ELIMINATIONS
$’000
CONSOLIDATED
$’000
2,910
(13,707)
–
SA
$’000
4,570
65,970
6,794
–
3,181
CCC
$’000
1,275
53,375
5,179
156
2,593
1,310
77,833
3,642
54,106
2,117
1,404
5,437
2,901
385
3,083
37
654
–
137
16,882
(3,028)
(1,175)
(1,255)
20,160
(2,460)
4,569
(10,942)
(2,562)
9,305
13,854
(2,430)
17,700
2,007
(1,637)
CCC
$’000
–
QLD
$’000
FRASER ISLAND
$’000
CORPORATE
$’000
ELIMINATIONS
$’000
CONSOLIDATED
$’000
980
–
2,871
(10,329)
–
SA
$’000
6,478
64,234
2,714
–
2,551
55,213
78,435
11,527
8,471
156
2,327
1,678
1,404
5,731
791
–
685
–
–
–
6
18,122
(3,226)
488
(1,086)
22,050
(1,722)
(1,020)
3,016
(9,050)
9,050
14,896
(598)
20,328
(4,036)
–
–
–
–
–
–
–
–
251,321
17,645
1,945
14,431
29,494
–
29,494
38
(4,582)
24,950
–
–
–
–
–
–
–
209,409
13,654
1,560
11,300
30,590
–
30,590
27
(3,070)
27,547
YEAR ENDED 30 JUNE 2019
Internal revenue
External revenue
RESULTS
Capital expenditure
Amortisation of customer contracts
Depreciation
Segment profit before interest and
allocations – continuing operations
Corporate allocations
Segment profit before interest and tax –
continuing operations
Interest income
Interest cost and finance charges
YEAR ENDED 30 JUNE 2018
Internal revenue
External revenue
RESULTS
Capital expenditure
Amortisation of customer contracts
Depreciation
Segment profit before interest and
allocations – continuing operations
Corporate allocations
Segment profit before interest and tax –
continuing operations
Interest income
Interest cost and finance charges
Segment profit before tax – continuing operations
24
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT THE FOLLOWING TABLE PRESENTS SEGMENT ASSETS AND LIABILITIES OF THE GROUP’S OPERATING SEGMENTS
QLD
$’000
FRASER ISLAND
$’000
CORPORATE
$’000
ELIMINATIONS
$’000
CONSOLIDATED
$’000
SA
$’000
52,576
112,167
CCC
$’000
51,929
7,933
131,530
7,819
45,501
120,387
49,504
6,781
142,475
7,222
53,130
6,512
52,198
4,654
694
–
8
–
–
–
–
–
289,859
134,431
289,686
139,044
CONSOLIDATED 2019
$’000
CONSOLIDATED 2018
$’000
289,859
5,684
5,936
301,479
134,431
–
9,132
143,563
289,686
6,334
4,539
300,559
139,044
–
9,293
148,337
AT 30 JUNE 2019
Operating assets
Operating liabilities
AT 30 JUNE 2018
Operating assets
Operating liabilities
RECONCILIATION OF ASSETS AND LIABILITIES
Segment operating assets
Current tax asset
Deferred tax assets
Group total assets
Segment operating liabilities
Current tax liabilities
Deferred tax liabilities
Group total liabilities
2 STATEMENT OF FINANCIAL POSITION
2019
$’000
2018
$’000
A CASH AND CASH EQUIVALENTS
(a) RECONCILIATION OF CASH
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following:
Cash
Cash on deposit
Total cash and cash equivalents
6,167
5,737
11,904
3,069
173
3,242
(b) RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Profit for the year after income tax
Non-cash items
21,543
19,565
Depreciation and amortisation of non-current assets
16,375
12,860
Deferred income
Loss / (Profit) on disposal of non-current assets
Impairment on Investment
Share option cost
Changes in net assets and liabilities
Tax balances increase / (decrease)
Current trade receivables (increase) / decrease
Current inventories (increase) / decrease
Other current assets decrease / (increase)
Current trade and other creditors increase / (decrease)
Employee entitlements increase / (decrease)
Net cash provided by operating activities
2,341
(686)
1,637
148
(908)
(1,351)
(183)
(2,263)
2,401
1,591
40,645
(345)
(75)
–
151
(7,362)
(694)
(1,335)
(42)
3,573
2,282
28,578
25
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT B TRADE AND OTHER RECEIVABLES – CURRENT
Trade receivables
Other
Allowance for expected credit loss
Total trade and other receivables
2019
$’000
2018
$’000
11,395
10,515
972
(12)
520
(31)
12,355
11,004
Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance is made for trade receivables
and other assets, as the Group applies a simplified approach in calculating expected credit losses (ECLs). Therefore, the Group
does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
ALLOWANCE FOR CREDIT LOSS
Opening Balance
Charge for the Year
Utilised
Closing balance
As at 30 June, the ageing analysis of trade receivables is as follows:
INDIVIDUALLY
IMPAIRED
$’000
INDIVIDUALLY
IMPAIRED
$’000
(31)
–
19
(12)
(24)
(22)
15
(31)
2019 – CONSOLIDATED
Expected loss rate
Expected credit loss
2018 – CONSOLIDATED
Expected loss rate
Expected credit loss
TOTAL
11,395
12
7,377
31
C INVENTORIES
Fuel (at cost)
Goods held for resale (at cost)
Spare parts
Total current inventories
0–30 DAYS
31–60 DAYS
61–90 DAYS
OVER 90 DAYS
9,130
0.03%
2
6,403
0.03%
2
1,679
0.10%
2
463
0.25%
1
449
0.25%
1
250
0.25%
1
2019
$’000
438
1,848
2,635
4,921
137
5.00%
7
230
12%
27
2018
$’000
460
1,508
2,770
4,738
26
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
NOTE
2019
$’000
2018
$’000
D PROPERTY, PLANT AND EQUIPMENT
LAND AND BUILDINGS
Cost
Opening balance
Additions
Transfers
Acquired through business combinations
7A
Disposals
Closing balance
Accumulated depreciation
Opening balance
Disposals
Transfers
Depreciation for the year
Closing balance
Total land and buildings, net
PLANT AND EQUIPMENT
Cost
Opening balance
Transfers
Transfer from capital works-in-progress
Acquired through business combinations
Additions
Disposals
Closing balance
Accumulated depreciation
Opening balance
Transfers
Depreciation for the year
Disposals
Closing balance
Total plant and equipment, net
PLANT AND EQUIPMENT UNDER LEASE
Cost
Opening balance
Additions
Transfers
Disposals
Closing balance
Accumulated depreciation
Opening balance
Depreciation for the year
Transfers
Disposals
Closing balance
Total leased plant and equipment, net
1B (b)
7A
1B (b)
1B (b)
46,170
284
–
–
–
46,454
3,744
–
–
844
4,588
41,866
30,093
8
877
–
2,902
(795)
33,085
9,662
–
4,068
(692)
13,038
20,047
3,302
–
–
(64)
3,238
519
336
–
(31)
824
2,414
20,255
297
–
25,618
–
46,170
3,105
–
–
639
3,744
42,426
20,689
(12)
–
8,526
1,652
(762)
30,093
8,151
–
2,099
(588)
9,662
20,431
2,290
1,012
–
–
3,302
215
304
–
–
519
2,783
27
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT FERRIES
Cost
Opening balance
Additions
Acquired through business combinations
Transfers from capital works-in-progress
Disposals
Closing balance
Accumulated depreciation
Opening balance
Depreciation for the year
Transfers
Disposals
Closing balance
Total ferries, net
CAPITAL WORKS-IN-PROGRESS
Opening balance
Additions
Transfers to ferries and other PPE
Closing balance – as described below
Total property, plant and equipment, net
NOTE
7A
1B (b)
2019
$’000
2018
$’000
184,235
5,988
–
3,662
(15,413)
178,472
42,030
9,184
–
(3,631)
47,583
130,889
2,256
8,465
(4,541)
6,180
201,396
173,052
4,070
3,400
4,381
(668)
184,235
34,028
8,258
–
(256)
42,030
142,205
–
6,623
(4,367)
2,256
210,101
At 30 June 2019, there were three vessels under construction, three bus refurbishments underway and the fitout for the upgrade
facilities in Queensland. At 30 June 2018, there were two vessels under construction, three bus re-builds and the fitout for the
new corporate office in Adelaide. Refer also to Note 6A for capital commitments.
NOTE
2019
$’000
2018
$’000
E INTANGIBLE ASSETS
Goodwill – at cost
Cost
Opening balance
Additions thorough business combinations
7A
Closing balance
Accumulated Impairment
Opening and closing balance
Total goodwill
Customer contracts and permits
Opening balance
Additions through business combinations
Closing balance – at cost
Less – amortisation during the period
Total customer contracts
Total intangible assets, net
28
47,929
–
47,929
(129)
47,800
7,527
–
7,527
(1,944)
5,583
53,383
40,429
7,500
47,929
(129)
47,800
5,888
3,199
9,087
(1,560)
7,527
55,327
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT Goodwill acquired through business
acquisitions has been allocated to
KI Odysseys ($209,000), SeaLink
Queensland ($6,420,000), Australian
Holiday Centre Sydney ($129,000),
Captain Cook Cruises WA ($3,590,000),
Transit Systems Marine business
($30,081,000) and Fraser Island
($7,500,000) being cash generating
units (CGU’s). The Group’s impairment
testing compares the carrying value of
each CGU with its recoverable amount
as determined using a value in use
calculation. Australian Holiday Centre
has been fully provided for in previous
financial years.
The majority of goodwill associated with
the Transit Systems marine business and
Fraser Island Group is not deductible
for income tax purposes. The Group
performed its annual impairment test at
30 June 2019.
The assumptions for determining the
recoverable amount are based on past
experience and Senior Management’s
expectations for the future.
The cash flow projections are based on
annual financial budgets approved by
senior management extrapolated using
a growth rates as below for a five-year
period as approved by management.
For all CGU’s, an EBIT multiple of
between 6 and 7 times year five earnings
has been used to determine the terminal
value based on senior management’s
expectations of market price for these
types of businesses.
A pre-tax discount rate of 10.5%
(2018: 11.0%) was applied to cash flow
projections and terminal value to arrive at
the recoverable amount. As a result of the
updated analysis, management did not
identify an impairment for any of the
CGU’s.
KEY ASSUMPTIONS USED IN THE
VALUE IN USE CALCULATIONS
The calculation of value in use for both
cash generating units is most sensitive to
the following key material assumptions:
SeaLink Queensland:
• Passenger numbers to Magnetic
Island – An increase of 2% in traffic
has been inbuilt into forecast sales
based on increased tourism flow
into Australia as well as a growing
population base in Townsville.
• Vessel repairs – These are estimated
to increase at CPI (2% assumed)
adjusted for significant expected
engine rebuilds and refurbishments.
KI Odyssey:
• Passengers for KIO – An increase
of 1-2% in traffic has been inbuilt
to the forecast based on increased
tourism flow into Australia, increased
marketing focus and higher online
sales expected.
Captain Cook Cruises WA:
• Passenger revenue for CCC WA –
An increase of 2% in traffic as well
as a 2% pricing increase based on
increased tourism flow and growth
from Elizabeth Quay and 7% growth in
the Rottnest Island operation.
Transit Systems Marine business:
• Revenue for the Transit Marine
business – An increase in revenue
of 3% to reflect small traffic growth
as well as a 2% pricing increase
based on increased tourism flow to
Stradbroke Island, CPI increases built
F OTHER FINANCIAL ASSETS
Investment in UWAI Limited (i)
Opening balance
Movement in fair value
Closing balance
(i) Represents the investment in UWAI Limited.
into fixed contracts and growth in
vessel charter rates.
• No change to the current level of
capital expenditure has been assumed
for all CGU’s.
Management have assessed the changes
to the key assumptions in the model,
unless there was a large unforeseeable
event, there would not be an impairment
in goodwill for any of the CGU’s other
than CCC-WA. If annual growth is less
than 4% year on year the CGU would be
impaired.
The current carrying value of the CGU
is $19.015m and this exceeds the
recoverable amount by $3.2m. If growth
was 4% year on year the carrying value
of the CGU is $15.8m and this exceeds
the recoverable amount by nil.
CUSTOMER CONTRACTS AND
PERMITS
Customer contracts of $7.4m are
associated with several government
contracts for ferry services in Southern
Moreton Bay, a ferry contract for sand
transport and contracts associated with
ferry transport in Gladstone and Perth.
Contracts are amortised over their
estimated finite life.
The amortisation period ranges between
5 and 7 years.
As part of the Fraser Island acquisition,
touring and access permits were
acquired with a fair value of $3,200,000.
During the period, the Company
recorded an amortisation of $1,944,000
associated with customer contracts and
permits with an associated reduction in
the Deferred Tax Liability of $584,000.
2019
$’000
3,274
(1,637)
1,637
2018
$’000
–
3,274
3,274
On 19 March 2018, SeaLink entered into a Simple Agreement for Future Equity (“SAFE”) with UWAI Limited for USD$2.5m. The
SAFE contains a debt contract with an option to convert to equity. The investment has been impaired based on fair market valuation.
The fair value hierarchy is Level 3 for the investment, as there are significant unobservable inputs.
G TRADE AND OTHER PAYABLES
CURRENT (ALL UNSECURED)
Trade creditors (i)
Sundry payables and accruals
Total current trade and other payables
(i) Trade creditors are non-interest bearing and are normally settled on 14–60 day terms.
6,188
7,390
13,578
5,790
4,833
10,623
29
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
H PROVISIONS
CURRENT
Employee entitlements
NON-CURRENT
Employee entitlements
I CONTRACT LIABILITIES AND OTHER LIABILITIES
CURRENT
Deferred income – Government grant
Contract liability – Prepaid travel (a)
Total current liabilities
NON-CURRENT
Deferred income – Government grant
Total non-current liabilities
2019
$’000
11,027
1,813
2019
$’000
597
7,087
7,684
776
776
2018
$’000
9,600
1,649
2018
$’000
172
6,471
6,643
805
805
(a) As part of providing ferry services to passengers, vehicles and freight, and cruises, customers pay a portion or all of the balance owing in
advance of travel date. Under revenue recognition principles, the payment for travel is not recognised as revenue until the travel paid for
has departed. The balance above therefore relates to bookings with departure dates on or after 1 July 2019 (2018: 1 July 2018).
Government Grants
A new grant was received during the year to commence operations in Bruny Island Tasmania. All grants are released to income
equally over the expected useful life of the asset. Previous grants released to income totalled $454,702 (2018:$171,639).
J INTEREST BEARING LOANS AND BORROWINGS
CURRENT
Secured:
Bank and other loans (i)
Lease liabilities (ii)
Total current interest bearing liabilities
NON-CURRENT
Secured:
Bank and other loans (i)
Lease liabilities (ii)
Total non-current interest bearing liabilities
(i) Security, terms and conditions – Loans and Overdraft
NOTE
6A
6A
2019
$’000
–
822
822
92,500
2,457
94,957
2018
$’000
–
1,350
1,350
104,050
3,137
107,187
First registered mortgage over property situated at Penneshaw, Kangaroo Island SA, Neutral Bay Marina NSW and Russell Island
QLD. First ranking registered company charge over all the assets and undertakings of all asset holding and trading subsidiaries.
Registered ship mortgages over all vessels in the fleet that are not leased, except for the CCC WA vessels. Various guarantee
facilities have been provided as surety on a range of lease contracts. Guarantees provided total $2,355,735 (2018: $1,421,663)Bank
loans have been drawn down under an interchangeable bill facility with a limit of $118.0m with ANZ which matures 30 November
2020. The facility is provided on a fixed and floating rate basis. As at year end the balance of $30m had a fixed rate of 3.85% (2018:
$30m, 3.93%) and the balance of $62.5m was at a floating rate of 2.2% (2018: $74.05m, 3.5%).The current facility limit will reduce
by $5m by June 2020. This limit is reviewed annually. As part of the interchangeable facility with ANZ, $15m has been allocated for
lease facilities. Committed financing facilities of $133,653,431 (2018: $134,339,598 ) were available to the consolidated entity at the
end of the financial year. As at that date, $109,715,166 (2018: $109,987,903) of these facilities were in use.
During the current year, there were no defaults or breaches.
(ii) Secured over the assets leased. Leases are fixed rate with a lease term of between 48 and 60 months.
Interest bearing loans and borrowings have a fair value of $95,756,000 (2018: $108,545,613) and a carrying value of
$94,779,000 (2018: $108,537,239). During the year, interest bearing borrowings of $12,758,000 were repaid from funds raised
through cashflow from operations. No drawdowns were made.
30
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT J INTEREST BEARING LOANS AND BORROWINGS
(CONT)
Reconciliation of debt to financing cashflows
Current interest-bearing loans and borrowings
Current obligations under lease/hire purchase
Non-current Interest-bearing loans and borrowings
Non-current obligations under lease/hire purchase
Total liabilities from financing activities
K DEFERRED TAX
Deferred income tax at 30 June relates to the following:
1 JULY 2018
$’000
CASHFLOWS
$’000
NEW LEASES
$’000
30 JUNE 2019
$’000
–
1,350
104,050
3,137
108,537
–
(528)
(11,550)
(680)
(12,758)
–
–
–
–
–
–
822
92,500
2,457
95,779
STATEMENT OF FINANCIAL POSITION
2018
$’000
2019
$’000
STATEMENT OF PROFIT AND LOSS
2018
$’000
2019
$’000
CONSOLIDATED
Deferred tax assets
Provision for doubtful debts
Government grants
Prepaid revenue
Accruals
Capital expense timing differences
Revaluation of cash flow hedge
(interest rate swap)
Property, plant and equipment
Employee entitlements
Total deferred tax assets
Deferred tax liabilities
Property, plant and equipment
Intangible assets
Consumables
Prepayments
Total deferred tax liabilities
Deferred income tax expense
3
–
412
179
357
1,133
–
3,852
5,936
8,111
830
143
48
9,132
9
–
293
41
464
357
–
3,375
4,539
7,774
1,298
166
55
9,293
6
–
(119)
(138)
106
–
–
(477)
337
(468)
(23)
(7)
(6)
(345)
293
31
47
–
(286)
65
(333)
468
(17)
(19)
(783)
(102)
L OTHER FINANCIAL LIABILITIES
Derivative designated as hedging instrument
CURRENT
Interest rate swap
NON-CURRENT
Interest rate swap
NOTE
4B
2019
$’000
943
2,832
2018
$’000
137
1,050
31
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT 3 CAPITAL
A CAPITAL MANAGEMENT
The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios to support its business
and maximise shareholder value. The Group manages its capital structure and makes adjustments to it in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders,
return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the year.
The Group monitors capital using a gearing ratio, which is measured as net interest bearing debt divided by total tangible assets.
This ratio aligns with one of the key financier’s covenants. The Group’s policy is to maintain a gearing ratio at less than 60%.
As at 30 June 2019, the gearing ratio was 33.9% (2018: 45.9%).
CONTRIBUTED EQUITY
NO. OF SHARES ON ISSUE
NOTE
2019
$’000
2018
$’000
2019
’000
2018
$’000
B EQUITY
ISSUED AND FULLY PAID ORDINARY SHARES
(ALL ISSUED SHARES FULLY PAID)
Opening balance
Conversion of options
Issue of shares through a Share Placement
Issue of shares through a Share Purchase Plan
Issue of shares as purchase consideration
Deferred tax associated with share issue expenses
7D
7A
95,557
500
–
–
–
–
95,557
101,154
101,154
–
–
–
–
–
275
–
–
–
–
–
–
–
–
–
Total
96,057
95,557
101,429
101,154
C RESERVES
SHARE OPTION RESERVE
Opening balance
Share option expense
Closing balance
NOTE
2019
$’000
795
148
943
2018
$’000
644
151
795
The Share Option reserve is used to record the value of options and performance rights issued to directors and senior employees as part of their remuneration
(refer Note 7D).
CASH FLOW HEDGE RESERVE
Opening balance
Revaluation of interest rate hedge
Closing balance
Total reserves
4B
(831)
(1,812)
(2,643)
(1,700)
(324)
(507)
(831)
(36)
32
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT D DIVIDENDS
Dividends on ordinary shares declared and paid during the period:
Interim dividend for 2019: 6.5 cents (2018: 6.5 cents)
Final dividend for 2018: 8.0 cents (2017: 8.0 cents)
Dividends on ordinary shares proposed for approval (not recognised as a liability as at 30 June):
Final dividend for 2019: 8.5 cents (2018: 8.0 cents)
FRANKING CREDIT BALANCE
The amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the financial year
Franking credits that will arise from (be utilised in) the payment of income tax as at the end of
the financial year.
Total Franking Credit Balance
2019
$’000
2018
$’000
6,593
8,092
6,575
8,092
8,621
8,092
49,999
–
52,752
–
49,999
52,752
2019
$’000
2018
$’000
E EARNINGS PER SHARE
Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders by the weighted
average number of ordinary shares outstanding during the year. Diluted earnings per share are calculated by dividing net profit
for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary
shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted share computations:
Net profit attributable to ordinary equity holders of the parent and for basic earnings
and adjusted for the effect of dilution
21,543
19,565
Weighted average number of ordinary shares for basic earnings per share
Effect of dilution from share options and performance rights
Weighted average number of ordinary shares adjusted for dilution
2019
$’000
2018
$’000
101,412
101,154
–
200
101,412
101,354
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and date
of these financial statements.
EARNINGS PER SHARE
Basic, profit for the year attributable to ordinary equity holders of the parent
Diluted, profit for the year attributable to ordinary equity holders of the parent
$0.212
$0.212
$0.193
$0.193
33
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT 4 RISK
A FINANCIAL RISK MANAGEMENT
OBJECTIVES AND POLICIES
The Group’s principal financial liabilities
comprise of loans and borrowings and
trade and other payables. The main
purpose of these financial liabilities
is to finance the Group’s operations
and to provide guarantees to support
its operations. The Group’s principal
financial assets include trade and
other receivables, cash and short-term
deposits that derive directly from its
operations. The Group also enters
into derivative transactions for the
purposes of hedging interest rate and
fuel price risk.
The Group is exposed to market
risk, credit risk and liquidity risk.
The Group’s senior management
oversees the management of these
risks and is supported by Audit and
Risk Committee that oversees the
appropriate financial risk governance
framework for the Group. It is the
Group’s policy that no trading in
derivatives for speculative purposes
may be undertaken. The Board
reviews and agrees policies for
managing each of these risks,
which are summarised follows:
MARKET RISK
Market risk is the risk that the fair
value of future cash flows of a financial
instrument will fluctuate because of
changes in market prices. Market
risk comprises of three types of risk:
interest rate risk, currency risk and
other price risk, such as equity price
risk and commodity risk.
Financial instruments affected
by market risk include loans and
borrowings, deposits and derivative
financial instruments.
The Group is not exposed directly to
any material foreign currency risk.
INTEREST RATE RISK
Interest rate risk is the risk that the fair
value or future cash flows of a financial
instrument will fluctuate because of
changes in market interest rates.
The Group’s exposure to the risk of
changes in market interest rates relates
primarily to the Group’s long-term debt
obligations with floating rates.
The Group manages its interest
rate risk by having a balanced
portfolio of fixed and variable rate
loans and borrowings.
The Group’s policy is to keep between
40% and 60% of its borrowings at
fixed rates of interest. To manage this,
the Group enters into either fixed rate
leases for larger assets, uses cash
advance facilities which are variable
interest rate based, uses interest rate
hedges or enters into longer term fixed
rate loans.
At 30 June 2018, 55% of the Group’s
interest bearing borrowings are
effectively at a fixed rate of interest
(2017: 55%).
The sensitivity analyses in the following
sections relate to the position as at
30 June 2019 and 30 June 2018.
It has been prepared on the basis
that the amount of net debt, the
ratio of fixed to floating interest rates
of the debt and derivatives are all
constant and on the basis of the hedge
designations in place at 30 June 2019.
The table below sets out the carrying
amount, by maturity, of the financial
instruments exposed to interest
rate risk:
WEIGHTED AVERAGE
EFFECTIVE INTEREST RATE
WITHIN 1 YEAR
1 TO 5 YEARS
2019
%
2018
%
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
TOTAL
2018
$’000
–
–
–
–
11,904
3,242
–
–
–
1,637
3,274
11,904
1,637
3,242
3,274
–
–
–
–
–
–
–
62,500
74,050
62,500
74,050
30,000
2,457
30,000
3,137
30,000
3,280
30,000
4,487
(93,320)
(103,913)
(82,239)
(102,021)
822
11,082
1,350
1,892
FINANCIAL ASSETS
Floating rate
Cash assets
Financial assets (i)
FINANCIAL LIABILITIES
Floating rate
Overdraft (ii)
Bank and other loans
Fixed rate
Bank and other loans
Leases (ii)
Net exposure
0.6
1.5
0.3
1.5
2.20
2.20
3.5
3.54
3.85
3.71
3.93
3.69
(i) classified at fair value through Profit and Loss
(ii) classified at amortised cost
34
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT INTEREST RATE SENSITIVITY
At 30 June, if interest rates had moved as illustrated in the table below, with all other variables held constant, post tax profit and
equity would have been affected as follows:
JUDGEMENT OF REASONABLY
POSSIBLE MOVEMENTS
Movement of 0.5% increase in rates
Movement of a 1% decrease in rates
PROFIT AFFECT
PROFIT AFFECT
EQUITY AFFECT
EQUITY AFFECT
CONSOLIDATED
30 JUNE 2019
$’000
CONSOLIDATED
30 JUNE 2018
$’000
CONSOLIDATED
30 JUNE 2019
$’000
CONSOLIDATED
30 JUNE 2018
$’000
(324)
648
(364)
728
(206)
(425)
(108)
(1,306)
The movements in post tax profit are due to higher/lower interest income from variable rate cash balances and cash advances.
COMMODITY RISK – FUEL PRICE
The Group did not have any fuel forward
derivatives to hedge changes in the
underlying prices of fuel at 30 June
2019. A 12 month fuel hedge is in place
commencing 1 July 2019. The group is
exposed to changes in fuel price on the
volumes that are not fixed price.
CREDIT RISK
Credit risk is the risk that a counterparty
will not meet its obligations under a
financial instrument or customer contract,
leading to a financial loss.
The Group is exposed to credit risk from
its operating activities (primarily trade
receivables and other financial assets)
and from its financing activities, including
deposits with banks, foreign exchange
transactions and other financial
instruments. There are no major
concentrations of credit risk.
There were no exposures that comprised
more than 30% of trade receivables.
Collection of this debt is not considered
doubtful.
TRADE RECEIVABLES
Customer credit risk is managed by
each business unit subject to the
Group’s established policy, procedures
and control relating to customer credit
risk management. Credit quality of
a customer is assessed based on
references, industry knowledge, ability to
pay and individual credit limits are defined
in accordance with this assessment.
Outstanding customer receivables are
regularly monitored with an analysis
reported to the Board monthly.
An impairment analysis is performed at
each reporting date on an individual basis
for major clients. The maximum exposure
to credit risk at the reporting date is the
carrying value of each class of financial
assets disclosed in Note 2B. The Group
does not hold collateral as security.
As required by IFRS 9, the Group used
the simplified approach in calculating
expected credit loss (ECL) for trade
receivables and contract assets that
did not contain a significant financing
component. The Group applied the
practical expedient to calculate ECL
using a provision matrix.
FINANCIAL INSTRUMENTS AND
CASH DEPOSITS
Credit risk from balances with banks and
financial institutions is managed by the
Audit and Risk Committee in accordance
with the Group’s policy.
Investments of surplus funds are only
placed with the Group’s major bank.
LIQUIDITY RISK
The Group monitors its risk to a shortage
of funds using a liquidity planning tool.
The Group’s objective is to maintain a
balance between continuity of funding
and flexibility through the use of bank
overdrafts, bank loans, interchangeable
limits, finance leases and hire purchase
contracts.
The Group’s policy is to ensure that
the core funding limits have no less
than a 12 month maturity date. The
Group assessed the concentration of
risk with respect to refinancing its debt
and concluded it to be low. Access to
sources of funding is sufficiently available
and debt maturing within 12 months can
be rolled over with existing or alternative
lenders.
35
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT The table below sets out the maturity profile of the Group’s financial liabilities based on contracted undiscounted payments.
Estimated variable interest expense is based upon the rate applying as at 30 June 2019.
ON DEMAND
$’000
0–3 MONTHS
$’000
3–12 MONTHS
$’000
YEAR ENDED 30 JUNE 2019
Interest-bearing loans and borrowings
Trade and other payables
Other financial liabilities
Financial guarantee contracts
Leases/hire purchase
Total
YEAR ENDED 30 JUNE 2018
Interest-bearing loans and borrowings
Trade and other payables
Other financial liabilities
Financial guarantee contracts
Leases/hire purchase
Total
B FINANCIAL INSTRUMENTS
CASH FLOW HEDGE FOR
INTEREST RATE RISK
In the prior period, the Group entered
into a 5 year fixed term interest rate
swap effective from
1 May 2018 at a rate of 2.74% before
interest margin and line fees. The
Interest rate swap is designed as a
cashflow hedge.
–
–
–
1,550
–
1,550
–
–
–
1,550
–
1,550
810
13,578
–
–
205
14,593
911
11,952
–
–
403
13,266
1–5 YEARS
$’000
92,500
–
633
–
2,700
95,833
–
338
–
3,522
TOTAL
$’000
95,738
13,578
633
1,550
3,521
115,020
107,692
11,952
338
1,550
4,871
107,910
126,403
2,428
–
–
–
616
3,044
–
–
–
946
3,677
2,731
104,050
The terms of the interest rate swap
have a close match to the variable
interest rate liability arising from bill
facilities.
Consequently, the hedges were
assessed to be highly effective.
The fair value adjustment required
was assessed as material and, the
gross difference of $3,775,000 was
recorded as a financial liability
with the associated tax effect forming
part of Deferred Tax Asset. The net
difference of $1,812,000 is shown
through the statement of other
comprehensive income.
The interest rate swap is categorised
as a Level 2 within the fair value
hierarchy with the carrying value
based on market interest rates
which are actively traded and quoted
through the Australian banking
system. Management mitigates risk
by swapping floating rate debt to fixed
rate. As at year end $30m bank loans
are fixed.
5 ACCOUNTING POLICIES
A BASIS OF PREPARATION
B SIGNIFICANT ACCOUNTING
POLICIES
(a) PRINCIPLES OF
CONSOLIDATION
The consolidated financial statements
comprise the financial statements of
the Group and its subsidiaries as at
30 June. Control is achieved when the
Group is exposed, or has rights, to
variable returns from its involvement
with the investee and has the ability to
affect those returns through its power
over the investee. Specifically, the
Group controls an investee if and only
if the Group has:
• Power over the investee (i.e. existing
rights that give it the current ability
to direct the relevant activities of the
investee)
The consolidated financial statements
for the year ended 30 June 2019 have
been prepared in accordance with
the requirements of the Corporations
Act 2001, Australian Accounting
Standards and other authoritative
pronouncements of the Australian
Accounting Standards Board.
The financial report is a general
purpose financial report, has also
been prepared on a historical cost
basis except for derivatives which use
fair value, and presented in Australian
dollars. The Group is a for-profit entity
for the purposes of preparing the
financial report.
The consolidated financial statements
also comply with International
Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board.
36
• Exposure, or rights, to variable returns
from its involvement with the investee,
and
• The ability to use its power over the
investee to affect its returns.
The financial statements of the
subsidiaries are prepared for the same
reporting period as the Parent, using
consistent accounting policies.
In preparing the consolidated
financial statements, all intercompany
balances, transactions, unrealised
gains and losses resulting from intra-
group transactions and dividends
have been eliminated in full.
Subsidiaries are fully consolidated
from the date on which control is
obtained by the Group and cease
to be consolidated from the date
on which control is transferred
out of the Group.
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
(b) FINANCIAL LIABILITIES
Financial liabilities are classified, at
initial recognition, as financial liabilities
at fair value through profit or loss,
loans and borrowings, payables, or
as derivatives designated as hedging
instruments in an effective hedge, as
appropriate. All financial liabilities are
recognised initially at fair value and, in
the case of loans and borrowings and
payables, net of directly attributable
transaction costs. A financial liability
is derecognised when the obligation
under the liability is discharged or
cancelled or expires.
Interest rate derivatives which are
designated and documented as part
of a cash flow hedge relation ship, are
measured at fair value with changes
in fair value recognised in other
comprehensive income if the hedge
relationship is 100% effective.
The ineffective portion of any fair value
adjustment is recognised through
Profit and Loss.
(c) INVENTORIES
Inventories, which includes spare
parts, are valued at the lower of cost
and net realisable value. Spare parts
are expensed as consumed or when
they become obsolete as a result of
a change to vessel strategy.
Costs are assigned to inventory on
hand by the method most appropriate
to each particular class of inventory,
with the majority being valued on
either a first in first out or weighted
average cost.
(d) TAXES
Income taxes
Current tax assets and liabilities for
the current and prior periods are
measured at the amount expected
to be recovered or paid to the
taxation authorities. The tax rates
and tax laws used to compute the
amount are those that are enacted or
substantively enacted by the balance
date.
Deferred income tax is provided on all
temporary differences at the balance
date between the tax bases of the
assets and liabilities and their carrying
amounts for financial reporting
purposes.
combination and that, at the time of
the transaction, affects neither the
accounting profit nor the taxable profit
or loss; or
• when the taxable temporary difference
is associated with investments in
subsidiaries, associates or interests in
joint arrangements, the timing of the
reversal of the temporary differences
can be controlled and it is probable
that temporary difference will not
reverse in the foreseeable future.
Deferred income tax assets are
recognised for all deductible
temporary differences, carry-forward
of unused tax credits and unused
tax losses, to the extent that it is
probable that taxable profit will be
available against which the deductible
temporary differences and the carry-
forward of unused tax credits and
unused tax losses can be utilised,
except:
• when the deferred income tax asset
relating to the deductible temporary
difference arises from the initial
recognition of an asset or liability in
a transaction that is not a business
combination and, at the time of
the transaction, affects neither the
accounting profit nor taxable profit or
loss; or
• when the deductible temporary
difference is associated with
investments in subsidiaries, associates
or interests in joint arrangements, in
which case a deferred tax asset is
only recognised to the extent that it is
probable that the temporary difference
will reverse in the foreseeable
future and the taxable profit will be
available against which the temporary
difference can be utilised.
The carrying amount of deferred tax
assets is reviewed at each balance
date and reduced to the extent that
it is no longer probable that sufficient
taxable profit will be available to allow
all or part of the deferred income tax
asset to be utilised.
Unrecognised deferred income
tax assets are reassessed at each
balance date and recognised to the
extent that it has become probable
that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred tax asset and deferred tax
liabilities are offset only if a legally
enforceable right exists to set off
current tax assets against current
tax liabilities and the deferred tax
assets and liabilities relate to the same
taxable entity and the same taxation
authority.
Goods and Services Tax (GST)
Revenues, expenses and assets are
recognised net of the amount of GST
except:
• where the GST incurred on a
purchase of goods and services is
not recoverable from the taxation
authority, in which case the GST is
recognised as part of the cost of
acquisition of the asset or as part of
the expense item as applicable; and
• receivables and payables are stated
with the amount of GST included.
The net amount of GST recoverable
from, or payable to, the taxation
authority is included as part of
receivables or payables in the
Statement of Financial Position.
Cash flows are included in the
Statement of Cash Flows on a gross
basis and the GST component of
cash flows arising from investing
and financing activities, which is
recoverable from, or payable to, the
taxation authority are classified as
operating cash flows.
Commitments and contingencies are
disclosed net of the amount of GST
recoverable from, or payable to, the
taxation authority.
(e) LEASES
Where the Group is a lessee:
Finance leases, which transfer
substantially all the risks and benefits
incidental to ownership of the leased
item, are capitalised at the inception of
the lease at the fair value of the leased
property or, if lower, at the present
value of the minimum lease payments.
Lease payments are apportioned
between the finance charges and
reduction of the leased liability so as to
achieve a constant rate of interest on
the remaining balance of the liability.
Finance charges are recognised as an
expense in the Statement of Profit
and Loss.
Deferred income tax liabilities are
Deferred income tax assets and
Capitalised leased assets are
recognised for all taxable temporary
differences except:
• when the deferred income tax liability
arises from the initial recognition of
goodwill or of an asset or liability in
a transaction that is not a business
liabilities are measured at the tax rates
that are expected to apply to the year
when the asset is realised or the liability
settled, based on the tax rates (and
tax laws) that have been enacted or
substantially enacted at balance date.
depreciated over the shorter of the
estimated useful life of the asset and
the lease term if there is no reasonable
certainty that the company will obtain
ownership by the end of the lease term.
37
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
Operating leases are not capitalised
and payments are charged as an
expense in the Statement of Profit and
Loss on a straight line basis over the
lease term.
(f) BUSINESS COMBINATIONS
AND GOODWILL
If the business combination is
achieved in stages, the previously
held equity interest is remeasured at
its acquisition date fair value and any
resulting gain or loss is recognised
in profit or loss. Any contingent
consideration to be transferred by
the acquirer will be recognised at
fair value at the acquisition date.
Contingent consideration classified as
an asset or liability that is a financial
instrument and within the scope
of AASB 9 Financial Instruments:
Recognition and Measurement, is
measured at fair value with changes
in fair value recognised in either
profit or loss or as a change to
other comprehensive income. If the
contingent consideration is not within
the scope of AASB 9, it is measured
in accordance with the appropriate
AASB. Contingent consideration
that is classified as equity is not
remeasured and subsequent
settlement is accounted for within
equity.
Goodwill is initially measured at cost,
being the excess of the aggregate of
the consideration transferred and the
amount recognised for non-controlling
interest over the net identifiable assets
acquired and liabilities assumed.
If the fair value of the net assets
acquired is in excess of the aggregate
consideration transferred, the gain is
recognised in profit or loss.
After initial recognition, goodwill
is measured at cost less any
accumulated impairment losses. For
the purpose of impairment testing,
goodwill acquired in a business
combination is, from the acquisition
date, allocated to each of the
Group’s cash-generating units that
are expected to benefit from the
combination, irrespective of whether
other assets or liabilities of the
acquiree are assigned to those units.
Where goodwill has been allocated to
a cash-generating unit and part of the
operation within that unit is disposed
of, the goodwill associated with the
disposed operation is included in
the carrying amount of the operation
when determining the gain or loss on
disposal. Goodwill disposed in these
circumstance is measured based on
38
the relative values of the disposed
operation and the portion of the cash-
generating unit retained.
(g) EMPLOYEE BENEFITS
Provision is made for employee
benefits accumulated as a result
of employees rendering services
up to the reporting date. These
benefits include wages and salaries,
annual leave and long service leave.
Liabilities arising in respect of wages
and salaries, annual leave and any
other employee benefits expected
to be settled within twelve months
of the reporting date are measured
at their nominal amounts based
on remuneration rates which are
expected to be paid when the liability
is settled. All other employee benefit
liabilities are measured at the present
value of the estimated future cash
outflow to be made in respect of
services provided by employees up to
the reporting date. In determining the
present value of future cash outflows,
the market yield as at the reporting
date on high quality corporate
bonds, which have terms to maturity
approximating the terms of the related
liability, are used.
(h) IMPAIRMENT OF NON-FINANCIAL
ASSETS
At each reporting date, the
consolidated entity reviews the
carrying value of its tangible and
intangible assets of cash generating
units to determine whether there is
any indication that those assets have
been impaired. If such an indication
exists, the recoverable amount of the
asset, being the higher of the asset’s
fair value less costs of disposal and
value in use, is compared to the
assets carrying value. Any excess
of the assets carrying value over its
recoverable amount is expensed to
the Statement of Profit and Loss.
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 an asset that does not generate
largely independent cash inflows,
recoverable amount is determined
for the cash generating unit to which
the asset belongs, unless the asset’s
value in use can be estimated to be
close to its fair value.
Goodwill is tested for impairment
annually (as at June 30) and when
circumstances indicate the carrying
value may be impaired.
The Group’s impairment test for
goodwill and intangible assets with
indefinite lives is based on value-in-
use calculations that use a discounted
cash flow model.
There were no changes in the carrying
value of goodwill allocated to the cash
generating units nor any impairment of
goodwill during the year.
(i) PROPERTY, PLANT AND
EQUIPMENT
Plant and equipment is stated at
historical cost less accumulated
depreciation and any accumulated
impairment losses. Such cost includes
the cost of replacing parts that are
eligible for capitalisation when the
cost of replacing the parts is incurred.
Similarly, when each major inspection
is performed, its cost is recognised
in the carrying amount of the plant
and equipment as a replacement
only if it is eligible for capitalisation.
All other repairs and maintenance are
recognised in the Statement of Profit
and Loss as incurred.
Depreciation is calculated on a
straight-line basis over the estimated
useful life of the specific assets until
an asset’s residual is reached. Vessel
depreciation is reviewed annually to
take into account further capitalisation
of costs, vessel usage or changed
market conditions.
Estimated useful life is as follows:
Buildings
LIFE
14 – 40 years
Plant and equipment
3 – 20 years
Plant and equipment
under lease
Ferry
3 – 5 years
5 – 25 years
Expenses incurred and capitalised
into capital work-in-progress includes
all materials used and direct labour
incurred on the project.
Capital work-in-progress is transferred
into property, plant and equipment
and begun to be depreciated once the
asset is available for use by the group.
(j) REVENUE FROM CONTRACTS
WITH CUSTOMERS
Revenue from transport
of passengers, freight and
accommodation is recognised at the
time of delivery of the service to the
customer, which is the time where the
control is transferred and when each
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
separate performance obligation in
the customer contract is fulfilled given
the short time services are provided
(less than a day). This typically occurs
on a departure date or booking date
basis whereby customers or groups
who have paid for services have
actually departed on those travel or
accommodation services. The revenue
is recognised in the month of the said
departure date.
Some of the ferry and freight
transports have a series of
performance obligations, but as the
duration of these transports are short
term the impact from splitting these
contract into “distinct services” does
not have material impact.
Revenue in relation to retailing of travel
services is recognised on a gross
basis when customers have paid for
their travel services.
negotiated by the Group with the
supplier. Under AASB 15, the Group
does not have control over the
services provided either before or after
they are transferred to customers,
and hence is an agent in these
contracts. This results in a decrease
in revenue from the sale or the goods
and services and cost of sales and
an increase in revenue from rendering
the services by the difference since
they are recorded at net. Based on
the modified retrospective approach
the impact reported is to decrease
Revenue from contracts with
customers and to decrease Direct
operating expenses $4,946,000
(2018: $4,599,000).
Interest
Revenue is recognised as interest
accrues using the effective interest
method.
Revenue is recognised at the amount
Operating leases
that reflects the consideration to which
the Group expects to be entitled in
exchange for transferring goods or
services to a customer, excluding
GST and after deduction of trade
discounts. Trade Receivables typically
do not contain a significant financing
component. The general credit terms
are overall short and are following
market terms.
Accounting estimates and judgements
are made in order to determine time
of delivery and account for income
accruals when it is deferred.
These accounting estimates and
judgements are based on experience
and continuous follow-up on service
delivered.
Principal versus agent
considerations and transition to
AASB 15
From time to time, the Group enters
into contracts or arrangements
with its customers, on their behalf,
to provide travel, accommodation,
tours and entrance fees. Under
these contracts, the Group provides
procurement services and is not
primarily responsible for fulfilling the
promise to provide the specified
service. The Group does not have
inventory risk before or after the
specified service has been transferred
to the customer and the Group has
no discretion in establishing the price
for the service. However, the Group’s
consideration in these contracts is
determined as the difference between
the maximum purchase price quoted
by the customer and the final price
Rental income arising from operating
leases on occupied properties is
accounted for on a straight-line basis
over the lease terms and is included
in revenue in the statement of profit or
loss due to its operating nature.
Income arising from operating leases
of vessels is accounted for on a
straight-line basis over the lease terms
and is included in revenue in the
statement of profit or loss due to its
operating nature.
Contract liabilities
A contract liability is the obligation
to transfer goods or services to
a customer for which the Group
has received consideration (or an
amount of consideration is due)
from the customer. If a customer
pays consideration before the
Group transfers goods or services
to the customer, a contract liability
is recognised when the payment
is made or the payment is due
(whichever is earlier). Contract
liabilities are recognised as revenue
when the Group performs under
the contract.
(k) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the
statement of financial position
comprise cash at bank, on hand
and short term deposits with an
original maturity of three months or
less that are readily convertible to
known amounts of cash and which
are subject to an insignificant risk of
changes in value.
For the purpose of the statement of
cash flows, cash and cash equivalents
consist of cash and cash equivalents
as defined above, net of outstanding
bank overdrafts. Bank overdrafts are
included within interest-bearing loans
and borrowing in current liabilities on
the statement of financial position.
(l) TRADE AND OTHER
RECEIVABLES
Trade receivables, which generally
have 14 - 60 day terms, are
recognised at an amount that reflects
the consideration to which an entity
expects to be entitled in exchange for
transferring goods or services to
a customer.
Collectability of trade receivables is
reviewed on an ongoing basis at an
operating unit level. Individual debts
that are known to be uncollectible
are written off when identified. An
impairment provision is recognised
when there is objective evidence that
the Group will not be able to collect
the receivable. Financial difficulties
of the debtor, default payments or
debts more than 60 days overdue
are considered objective evidence
of impairment. The amount of the
impairment loss is the receivable
carrying amount compared to the
present value of estimated future
cash flows, discounted at the original
effective interest rate.
(m) CONTRIBUTED EQUITY
Ordinary shares are classified as
equity. Incremental costs directly
attributable to the issue of new shares
or options are shown in equity as
a deduction, net of tax, from the
proceeds.
(n) TRADE AND OTHER PAYABLES
Trade payables and other payables
are carried at amortised costs and
represent liabilities for goods and
services provided to the consolidated
entity prior to the end of the financial
year that are unpaid and arise when
the consolidated entity becomes
obliged to make future payments
in respect of the purchase of these
goods and services.
(o) FOREIGN CURRENCY
TRANSACTIONS AND BALANCES
Functional and presentation currency
The functional currency of each of
the group’s entities is measured using
the currency of the primary economic
environment in which that entity
operates. The consolidated financial
statements are presented in Australian
39
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
dollars which is the parent entity’s
functional and presentation currency.
Transaction and balances
Transactions in foreign currencies
are initially recorded in the functional
currency by applying the exchange
rates ruling at the date of the
transaction. Monetary assets and
liabilities denominated in foreign
currencies are retranslated at the rate
of exchange ruling at the reporting
date.
Non-monetary items that are
measured in terms of historical cost in
a foreign currency are translated using
the exchange rate as at the date of
the initial transaction. Non-monetary
items measured at fair value in a
foreign currency are translated using
the exchange rates at the date when
the fair value was determined.
(p) GOVERNMENT GRANTS
Government grants are recognised
when there is reasonable assurance
that the grant will be received and all
attaching conditions will be complied
with. When the grant relates to an
asset, the fair value is credited to
a deferred income account and is
released to the Statement of Profit
and Loss over the expected useful life
of the relevant asset by equal annual
instalments.
When the grant relates to an expense
item, it is recognised as income over
the periods necessary to match
the grant on a systematic basis
to the costs that it is intended to
compensate.
(q) TAX CONSOLIDATION AND
TAX SHARING
SeaLink Travel Group’s wholly owned
Australian subsidiaries have formed an
income tax consolidated group under
the tax consolidation regime effective
1/1/05. SeaLink Travel Group Ltd is
the head entity of the tax consolidated
group.
Each of the controlled entities in the
tax consolidated group continue to
account for their own current and
deferred tax amounts. The Group has
applied the Group allocation approach
in determining the appropriate amount
of current taxes and deferred taxes
to allocate to members of the tax
consolidated group.
Allocations under the tax funding
agreement are made at the end of
each reporting period. The allocation
of taxes under the tax funding
arrangement is recognised as an
40
increase/decrease in the subsidiaries’
intercompany accounts with the tax
consolidated group head company.
(r) BORROWING COSTS
Borrowing costs directly attributable
to the acquisition, construction or
production of an asset that necessarily
takes a substantial period of time to
get ready for its intended use or sale
are capitalised as part of the cost of
the asset. All other borrowing costs
are expensed in the period in which
they occur. Borrowing costs consist
of interest and other costs that an
entity incurs in connection with the
borrowing of funds.
(s) INTEREST BEARING LOANS AND
BORROWINGS
All loans and borrowings are initially
measured at fair value adjusted for
directly attributable costs. Initial
recognition occur when the Group
becomes a party to the contractual
provisions of the agreement and
derecognised when the obligation
under the liability is discharged or
cancelled or expires.
Subsequent recognition, interest
bearing loans and borrowings are
subsequently measured at amortised
cost using the effective interest method.
Gains and losses are recognised in the
Statement of Profit and Loss when the
liabilities are derecognised. The loan
is derecognised when the obligation
under the liability is discharged or
cancelled or expires.
(t) INTANGIBLE ASSETS
Intangible assets acquired separately
are measured on initial recognition
at cost. The cost of intangible
assets acquired in a business
combination is their fair value at the
date of acquisition. Following initial
recognition, intangible assets are
carried at cost less any accumulated
amortisation and accumulated
impairment losses.
The useful lives on intangible assets
are assessed as either finite or
indefinite.
Intangible assets with finite lives are
amortised over the useful life and
assessed for impairment whenever
there is an indication that the
intangible asset may be impaired.
The amortisation period and the
amortisation method for an intangible
asset with a finite life are reviewed
at least at the end of each reporting
period. The amortisation expense on
intangible assets with finite lives is
recognised in the statement of profit
and loss as the expense category that
is consistent with the function of the
intangible assets.
Intangible assets with indefinite lives
are not amortised, but are tested for
impairment annually, either individually
or at the cash generating level.
The assessment of indefinite life
is reviewed annually to determine
whether the indefinite life continues to
be supportable.
(u) CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
The Directors evaluate estimates and
judgements incorporated into the
financial report based on historical
knowledge and best available current
information. Estimates assume a
reasonable expectation of future
events and are based on current
trends and economic data, obtained
both externally and within the
consolidated entity.
Key Estimates – Impairment
The consolidated entity assesses
impairment at each reporting date
by evaluating conditions specific
to the consolidated entity that may
lead to impairment of assets. Where
an impairment trigger exists, the
recoverable amount of the asset is
determined. Value-in-use calculations
performed in assessing recoverable
amounts incorporate a number of key
estimates, such as passenger numbers,
growth rates and terminal value.
Key Estimates – Doubtful debts
provision
Useful life of vessels – Estimated
useful life of vessels is based on
current and forecast utilisation, market
experience and knowledge of the
types of vessel the company owns.
The useful life of a vessel is generally
between 5-25 years. Residual value
at end of useful life is based on
experience and knowledge of the
market for used vessels.
(v) FAIR VALUES
The Group measures the interest rate
swap derivative at fair value at each
balance sheet date.
Fair value is the price that would
be received to sell an asset or
paid to transfer a liability in an
orderly transaction between market
participants at the measurement
date. The fair value measurement is
based on the presumption that the
transaction to sell the asset or transfer
the liability takes place either:
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
• In the principal market for the asset or
The Group uses valuation techniques
liability, or
• In the absence of a principal market,
in the most advantageous market for
the asset or liability
The fair value of an asset or a liability is
measured using the assumptions that
market participants would use when
pricing the asset or liability, assuming
that market participants act in their
economic best interest.
A fair value measurement of a non-
financial asset takes into account a
market participant’s ability to generate
economic benefits by using the asset
in its highest and best use or by selling
it to another market participant that
would use the asset in its highest and
best use.
C CHANGES IN ACCOUNTING
POLICIES AND DISCLOSURES
The accounting policies adopted in
the preparation of the consolidated
financial statements are consistent
with those followed in the preparation
of the Group’s annual financial
statements for the year ended 30
June 2018 except for the adoption of
new standards AASB 9 and AASB 15,
effective 1 July 2018. Several other
new amendments and interpretations
apply for the first time in 2018,
but do not have a material impact
on recognition, measurement and
disclosure for the year ended 30th
June 2019.
AASB 15:
The Group applies, for the first time,
AASB 15 Revenue from Contracts
with Customers that requires re-
statement of previous financial
statements.
The impact on the statement of profit
or loss (increase/(decrease)) for the
twelve months ended 30 June 2019
is as follows:
FOR THE YEAR ENDED
2019
$’000
2018
$’000
ADJUSTMENTS
Revenue from
contracts with
customers
(a)
(4,946)
(4,599)
Cost of sales (a)
(4,946)
(4,599)
that are appropriate in the
circumstances and for which sufficient
data are available to measure fair
value, maximising the use of relevant
observable inputs and minimising the
use of unobservable inputs.
All assets and liabilities for which fair
value is measured or disclosed in the
financial statements are categorised
within the fair value hierarchy,
described as follows, based on the
lowest level input that is significant to
the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market
prices in active markets for identical
assets or liabilities
From time to time, the Group enters
into contracts or arrangements
with its customers, on their behalf,
to provide travel, accommodation,
tours and entrance fees. Under
these contracts, the Group provides
procurement services and is not
primarily responsible for fulfilling the
promise to provide the specified
service. The Group does not have
inventory risk before or after the
specified service has been transferred
to the customer and the Group has
no discretion in establishing the price
for the service. However, the Group’s
consideration in these contracts
is determined as the difference
between the maximum purchase
price quoted by the customer and the
final price negotiated by the Group
with the supplier. Upon the adoption
of AASB 15, the Group determined
that it does not control the goods or
services before they are transferred to
customers, and hence is an agent in
these contracts. This change resulted
in a decrease in revenue from the sale
or the goods and services and cost
of sales and an increase in revenue
from rendering the services by the
difference.
The Group adopted AASB 15 using
the modified retrospective method
of adoption and there is no material
impact on the statement of financial
position, statement of cash flows or
basic and diluted EPS.
Profit for the period
–
–
AASB 9
(a) Principal versus agent considerations
AASB 9 Financial Instruments replaces
AASB 139 Financial Instruments:
Recognition and Measurement for
annual periods beginning on or
• Level 2 — Valuation techniques
for which the lowest level input
that is significant to the fair value
measurement is directly or indirectly
observable
• Level 3 — Valuation techniques
for which the lowest level input
that is significant to the fair value
measurement is unobservable
For assets and liabilities that are
recognised in the financial statements
on a recurring basis, the Group
determines whether transfers
have occurred between Levels
in the hierarchy by re-assessing
categorisation (based on the lowest
level input that is significant to the fair
value measurement as a whole) at the
end of each reporting period.
after 1 July 2018, bringing together
all 3 aspects of the accounting for
financial instruments: classification
and measurement; impairment; and
hedge accounting. The group applied
AASB 9 prospectively and has not
restated the comparative information,
which continues to be reported under
AASB 39. On transition to AASB 9 the
investment in Uwai was classified at
FVTPL consistent with the treatment
under AASB 139. Trade and other
receivables continue to be accounted
for at amortised costs. Management
utilise the general approach to
calculate the ECL provision on the
investment in UWAI.
The adoption of AASB 9 has
fundamentally changed the Group’s
accounting for impairment losses
for financial assets by replacing IAS
39’s incurred loss approach with a
forward-looking expected credit loss
(ECL) approach. AASB 9 requires
the Group to recognise an allowance
for ECLs for all debt instruments not
held at fair value through the profit or
loss and contract assets. The new
methodology for impairment did not
result in an impact on transition to
AASB 9.
The Group adopted AASB 9 using
the modified retrospective method
of adoption and there is no material
impact on the statement of profit and
loss, financial position, statement of
cash flows or basic and diluted EPS.
The Group has not early adopted any
standard, interpretation or amendment
that has been issued but is not yet
effective.
41
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
D ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
For the year ended 30 June 2020, the Group applies, for the first time AASB 16 Leases. The impact on the Group’s Financial
Statements as at 1 July 2019 would be recognise the right of use asset (ROU asset) $14,495,000 and corresponding lease liability
$14,495,000.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and
have not been adopted by the Group for the annual reporting period ending 30 June 2019 are outlined in the table as follows:
REFERENCE TITLE
SUMMARY
AASB
16
Leases
IFRIC
23
Income
Taxes
The key features of AASB 16 are as follows:
AASB 16 provides a new lease accounting model which requires a lessee
to recognise a right of use asset representing its right to use the underlying
asset and lease liabilities, for leases with a term of more than 12 months,
unless the underlying asset is of a low value. The depreciation of the right
of use asset and interest on the lease liability will be recognised in the
consolidated income statement.
Impact on the Group:
SeaLink operates predominantly as a lessee and the impact will affect
primarily the accounting for operating leases and to a lessor extent financial
leases.
All operating leases have been reviewed and assessed as if they were
a finance lease to determine the value of the right of use asset, after
considering the term and current monthly payments.
The Group expects to apply the modified transitional approach, with election
of the option to retrospectively measure the right-of-use asset using a
transition discount rate. The cumulative effect of adopting AASB 16 will be
recognised as an adjustment to the opening balance of retained earnings as
at 1 July 2019, with no restatement of comparative information
Uncertainty over Income Tax Treatments
IFRIC 23 provides clarification for the application of the recognition
and measurement requirements in IAS 12 Income Taxes when there is
uncertainty over income tax treatments.
The Changes will not have a material impact on the Group
APPLICATION DATE
OF STANDARD
APPLICATION DATE
FOR GROUP
1 January 2019
1 July 2019
1 January 2019
1 July 2019
E FAIR VALUE MEASUREMENT
Set out below is a comparison by category of carrying amounts and fair values of the Group’s financial assets and financial
liabilities at balance date:
2019
CARRYING AMOUNT
$’000
2019
NET FAIR VALUE
$‘000
2018
CARRYING AMOUNT
$’000
2018
NET FAIR VALUE
$‘000
11,904
1,637
12,355
92,500
–
3,775
3,279
13,578
11,904
1,637
12,355
92,500
–
3,775
3,256
13,578
3,242
3,274
11,004
104,050
–
1,187
4,487
11,952
3,242
3,274
11,004
104,050
–
1,187
4,496
11,952
ECONOMIC ENTITY
FINANCIAL ASSETS
Cash
Other financial assets
Trade and other receivables
FINANCIAL LIABILITIES
Bill facilities
Other loans
Interest rate swap
Lease and hire purchase
Trade and sundry creditors
42
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
The fair value of the financial assets and liabilities is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
Management assessed that cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
Although Bill facilities held have a maturity longer than 12 months, from a re-pricing perspective, all facilities re-price within 12 months.
Fair values of the Group’s Bill facilities and lease and hire purchase liabilities is estimated by discounting future cash flows using
rates currently available for debt on similar terms, credit risk and remaining maturities. These have been determined under a Level 2
fair value hierarchy.
6 COMMITMENTS AND CONTINGENCIES
A COMMITMENTS
NOTE
30 JUNE 2019
$’000
30 JUNE 2018
$’000
1,542
712
2,254
20,879
170
21,049
(a) CAPITAL COMMITMENTS
Vessels and buses (i)
Other
Total
(i) Vessels and buses include 3 new vessels and 2 buses.
(b) COMMITMENTS UNDER NON-CANCELLABLE OPERATING LEASES
(NOT INCLUDING ANY OPTIONS TO EXTEND):
Not later than one year
Later than one year but not later than five years
Later than five years
Total
(c) FINANCE LEASE COMMITMENTS:
Not later than one year
Later than one year but not later than five years
Minimum lease payments
Future finance charges
Net finance lease liability
Included in Interest Bearing Loans and borrowings as:
Current liability
Non-current liability
Total
(d) OPERATING LEASE COMMITMENTS — SEALINK AS LESSOR
The Group has a number of vessels on lease arrangements with several marine operators and a property lease for a portion
of its tenancy at the Townsville terminal.
822
2,700
3,522
(243)
3,279
3,507
9,223
3,355
16,085
822
2,457
3,279
2J
3,436
9,258
2,866
15,560
1,350
3,522
4,872
(385)
4,487
1,350
3,137
4,487
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
Within one year
After one year but not more than five years
Total
B CONTINGENCIES
There were no contingencies of material note as at 30 June 2019 (2018: Nil).
C EVENTS REPORTED AFTER BALANCE DATE
–
–
–
1,546
–
1,546
A fully franked dividend of $8,621,474 representing 8.5 cents per share based on the current number of ordinary shares was
declared by the Directors on 27 August 2019 to be paid 20 September 2019. Apart from this matter, no events have occurred
subsequent to year end which would, in the absence of disclosure, cause the financial report to be misleading.
43
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
7 OTHER
A BUSINESS COMBINATIONS
Acquisitions in the year ended 30 June 2018:
Acquisition of Kingfisher Bay Resort Group – Fraser Island
On 26th March, 2018, the Group acquired 100% of the Queensland based resort, tourism and marine business formerly owned
by Cosmos. The acquisition involved the purchase of shares in various entities as well as the acquisition of properties on Fraser
Island, Queensland.
Kingfisher Bay resort Group business (“Fraser Island”) consists of the following:
• Ferry operations operating to Fraser Island from Hervey Bay,
• Resort accommodation and related facilities located at Kingfisher Bay on Fraser Island,
• Resort accommodation and related facilities located at Eurong Beach on Fraser Island,
• Day touring and coach operations;
• Freehold residential land and development land located on Fraser Island;
The acquisition has expanded SeaLink’s geographic base as well as creating opportunities for expansion. It has been accounted
for using the acquisition method. The consolidated financial statements include the results of Fraser Island for the period from
26 March 2018 until 30 June, 2018.
NOTE
FAIR VALUE RECOGNISED ON ACQUISITION
$’000
ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Permits
Deferred tax asset
Total Assets
LIABILITIES
Trade and other payables
Unearned revenue
Interest bearing loans and borrowings
Operating lease liability
Current tax liabilities
Provisions
Deferred tax liabilities
Total Liabilities
Total identifiable assets at fair value
Goodwill arising on acquisition
Purchase consideration transferred
This consisted of:
Shares issued at fair consideration
Cash paid
Total purchase consideration
There was no contingent consideration.
44
2E
2E
2,995
2,600
1,298
421
37,544
3,199
788
48,845
3,755
383
–
–
–
2,069
5,410
11,617
37,228
7,500
44,728
–
44,728
44,728
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT The fair value of vessels included in Property, Plant and Equipment is $34.9m. These are based on external valuations and
internal assessment. The Deferred Tax Asset mainly comprises the tax effect on employee provisions. The Deferred Tax Liability
mainly arises as resort land and buildings have been recognised as being “held for use”, and as such do not have an amortisable
tax base for reporting purposes. Were the asset ever sold by the Group the capital gains tax cost base would be recognised at
that point in determining any tax implications.
The amounts disclosed above for Property Plant and Equipment, Deferred Tax Liabilities and Goodwill are final and unchanged
from the 2018 report.
Goodwill
The majority of goodwill relates to the Kingfisher Bay Resort and associated tourism activities, none of which is expected to be
deductible for income tax purposes. Goodwill represents the expected future return over and above the fair value of net assets
acquired.
From the date of acquisition, Fraser Island has contributed $11.5m to revenue and $1.0m loss to the earnings before tax from
continuing operations. If the combination had taken place at the start of the financial year, revenue from continuing operations for
the Group would have been $58.2m and EBITDA from continuing operations for the Group would have been $7.9m.
The profit before tax achieved in the first 9 months of the financial year has been extracted from the vendor’s accounting systems
using unaudited accounts and using the vendor’s accounting policies as it is impractical to revise accounts on a consistent policy
basis. The vendor’s unaudited accounts were reviewed in detail as part of management’s due dilligence process.
ADDITIONAL CASH FLOWS ON ACQUISITION:
Transaction costs of the acquisition (included in cash flows from Operations)
Transaction costs associated with issuance of shares
Total additional cash flows on acquisition
$’000
(364)
–
(364)
B CORPORATE INFORMATION
The consolidated financial statements of the SeaLink Travel Group Limited for the year ended 30 June 2019 were authorised for
issue in accordance with a resolution of Directors on 27 August 2019.
SeaLink Travel Group Limited is a limited company incorporated and domiciled in Australia whose shares are publicly traded.
The Company listed on the Australian Stock Exchange on 16 October, 2013. The principal business units of the Company
and its subsidiaries (the Group) are described in Note 1D.
C INFORMATION RELATING TO SEALINK TRAVEL GROUP LIMITED (‘THE PARENT
ENTITY’)
Current Assets
Non-current Assets
Total Assets
Current Liabilities / (Asset)
Non-current Liabilities
Total Liabilities / (Asset)
Net Assets
Contributed equity
Reserves
Retained profits
Total Parent Equity
Profit or loss of the parent entity
Total comprehensive income of the parent entity
2019
$’000
2018
$’000
–
81,608
81,608
(15,919)
2,206
(13,713)
95,321
96,057
943
(1,679)
95,321
14,685
14,685
–
82,687
82,687
(14,344)
2,206
(12,138)
94,825
95,557
795
(1,527)
94,825
14,667
14,667
The parent has entered into various cross-guarantees with its subsidiaries to support borrowings across the Group.
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, SeaLink Travel Group Limited and subsidiaries
have entered into a new deed of cross guarantee on 3 June 2019 to incorporate the newly acquired Kingfisher Bay Resort Group
– Fraser Island. The effect of the deed is that SeaLink Travel Group Limited has guaranteed to pay any deficiency in the event
of winding up any controlled entity or if they do not meet their obligations under the terms of overdrafts, loans, leases or other
liabilities subject to the guarantee. The controlled entities have also given a similar guarantee in the event SeaLink Travel Group
Limited is wound up or it does not meet its obligations under the terms of the overdrafts, loans, leases or other liabilities subject
to the guarantee.
45
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT D SHARE OPTION PLANS
(a) RECOGNISED SHARE-BASED PAYMENT EXPENSES
Expense arising from options issued in 2015
Expense arising from performance rights issued in 2016
Expense arising from options issued in 2017
Expense arising from performance rights issued in 2017
Total expense
(b) TYPES OF SHARE OPTION PLANS
Employee Share Option Plan
The fair value of the share option
“ESOP”
Share options are generally granted
to senior executives with more than
12 months service. The ESOP is
designed to align participants interests
with those of shareholders. When a
participant ceases employment prior
to the vesting of their share options,
the share options are forfeited.
In November 2014, 200,000 share
options were granted to an employee
under the SeaLink Employee Option
Plan. The exercise price of the options
was $2.50 and the contractual life
5 years. The options vest after a
period of 1 year as long as the senior
employee is still employed on such
date.
granted was valued at $0.176 per
share being $35,200, the cost being
expensed over the vesting period.
In October 2016, 100,000 share
options were granted to the Chair
under the SeaLink Employee Option
Plan. There were no performance
related conditions attaching to the
options. The options vest after a
period of 3 years as long as the Chair
remains in the role as Non-Executive
Director.
The fair value of the share option
granted was valued at $4.11 per
share being $411,000, the cost being
expensed over the vesting period.
2019
$’000
–
11
137
–
148
2018
$’000
–
14
137
–
151
Employee Performance Rights
Performance rights are generally
granted to senior executives with more
than 12 months service. The ESOP is
designed to align participants interests
with those of shareholders. When a
participant ceases employment prior
to the vesting of their performance
rights or where the performance hurdle
is not met, the performance rights
lapse. Should all conditions be met,
one ordinary share is issued for each
performance right at no consideration.
The performance hurdle is measured
against a minimum share price quoted
on the ASX. This future price hurdle
usually targets a 10% compound
growth rate from the share price at the
date of issue of the performance rights.
The amount recognised as an expense
is only adjusted when performance
rights do not vest due to non-market-
related conditions.
The fair value of the performance rights granted is estimated at the date of grant using a custom binomial lattice pricing model,
taking into account terms and conditions upon which the performance rights were granted.
Effective date issued
Number of Performance Rights issued
Minimum hurdle share price
Dividend yield
Expected volatility (as per valuation)
Risk free interest rate
Expected life (years)
Valuation per performance right
* Performance Rights issued to Mr J Ellison
2016 Issue
2017 Issue*
2017 Issue
85,000
$ 3.20
3.35%
27.6%
3.35%
3.0
$ 0.618
160,000
n/a
2.69%
29.4%
1.61%
3.0
$ 4.11
45,000
$ 5.94
2.69%
29.4%
1.61%
3.0
$1.72
The following tables illustrate the number and weighted average exercise price (“WAEP”) of and movements in all share options
and performance rights during the year:
OPTIONS
Outstanding at the beginning of the year
Granted (under the Employee Share Option Plan)
Forfeited
Exercised
Outstanding at year end
46
2019
NUMBER
’000
300
–
–
(200)
100
2019
WAEP
$
1.67
nil
n/a
n/a
1.67
2018
NUMBER
’000
200
100
–
–
300
2018
WAEP
$
1.67
nil
n/a
n/a
1.67
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT
THE OUTSTANDING BALANCE IS REPRESENTED BY
TYPE
ESOP
Directors
2019
–
100
100
No ordinary shares were issued during the year as a result of conversion of share options (2018: Nil).
PERFORMANCE RIGHTS
Outstanding at the beginning of the year
Granted (under the Employee Share Option Plan)
Forfeited
Exercised
Outstanding at year end
2019
NUMBER
’000
265
(75)
–
–
190
2019
WAEP
$
n/a
nil
nil
n/a
nil
2018
NUMBER
’000
280
–
(15)
–
265
2018
200
100
300
2018
WAEP
$
n/a
nil
nil
n/a
nil
E RELATED PARTY TRANSACTIONS
(a) NAMES AND POSITIONS HELD OF KEY MANAGEMENT PERSONNEL
IN OFFICE AT ANY TIME DURING THE FINANCIAL YEAR ARE
Directors
Mr A McEvoy
Mr J Ellison
Mr C Smerdon
Mr T Dodd
Mrs A Staines
Mrs F Hele
Other Key Management Personnel
Ms D Gauci
Mr A Muir
Ms J McDonald
Mr C Benson
Mr P Victory
Mr M Niemann
Ms B Martlew
Chairman – (non-executive)
Managing Director and Chief Executive Officer
Director – (non-executive)
Director – (non-executive)
Director – (non-executive)
Director – (non-executive)
Chief Operating Officer
Chief Financial Officer and Company Secretary
General Counsel and Company Secretary
Chief Information Officer
General Manager, Growth and Innovation
Group Fleet Manager
Group HR Manager
(b) TRANSACTIONS WITH RELATED PARTIES
During the year, the following purchases/services were made with entities associated with directors at normal market prices:
• Purchases and services totalling $101,106 from Vectra Corporation Ltd, a company associated with Mr C Smerdon
(2018: $33,308);
• Purchases and services totalling $13,662 from Pacific Marine, a company associated with Mr T Dodd (2018: $Nil);
47
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT (c) KEY MANAGEMENT PERSONNEL REMUNERATION
Short-term
Post employment
Other long-term benefits – LSL
Termination Benefits
Share-based payment
Total
2019
$’000
2,438
180
67
–
1
2,686
2018
$’000
2,472
176
50
–
105
2,803
The amounts disclosed in the table are the amounts recognised as an expense during the reporting period related to key
management personnel.
There are no loans to directors or key management personnel.
F RELATED BODIES CORPORATE
The following subsidiaries are incorporated in Australia and are all 100% owned
Australia Inbound Pty Ltd
Avonward Pty Ltd
Big Red Cat Pty Ltd
BITS Assets Pty Ltd
BITS Ferry Services Pty Ltd
Captain Cook Cruises Pty Ltd
Curtis Island Assets Pty Ltd
Curtis Island Services Pty Ltd
Kangaroo Island Adventure Tours Pty Ltd
Kangaroo Island Odysseys Pty Ltd
Kangaroo Island SeaLink Pty Ltd
KBRV Resort Operations Pty Ltd
KBRV Services Pty Ltd
Magnetic Island Cruise Corporation Pty Ltd
PDW Pty Ltd
Sea Stradbroke Services Pty Ltd
SeaLink Ferries Pty Ltd
SeaLink Fraser Island Pty Ltd
SeaLink KI Ferries Pty Ltd
SeaLink Marina Pty Ltd
SeaLink Northern Territory Pty Ltd
SeaLink Queensland Pty Ltd
SeaLink Tasmania Pty Ltd
SeaLink Vessels Pty Ltd
STG Properties Pty Ltd
Stradbroke Assets Pty Ltd
Stradbroke Ferries Pty Ltd
Sunferries Travel Pty Ltd
The Living Classroom Pty Ltd
The South Australian Travel Company Pty Ltd
TravelLink Pty Ltd
TravelLink Technology Pty Ltd
TSA Ferry Group Pty Ltd
Vivonne Bay Outdoor Education Centre Pty Ltd
Vyscot Pty Ltd
48
SEALINK TRAVEL GROUP LIMITED AND ITS CONTROLLED ENTITIES – NOTES TO FINANCIAL STATEMENTS FOR YEAR END 30 JUNE 2019FINANCIAL REPORT Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SEALINK TRAVEL GROUP
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of SeaLink Travel Group Limited (the Company) and its subsidiaries (collectively the Group),
which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit and loss,
the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting
policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a)
giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019 and of its
consolidated financial performance for the year ended on that date; and
b)
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report
of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our
report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond
to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.
Goodwill impairment assessment
Why significant
The Group annually assesses the carrying value of goodwill as required by Australian Accounting Standards.
The Group determined the recoverable amount of its individual cash generating units (CGUs) to which the goodwill was allocated on
a value in use basis.
This was considered a key audit matter due to the judgment exercised by the Group in this calculation which involved consideration
of the following:
• estimation of future cash flows expected to be derived from the respective assets;
• expectations about possible variations in the amount or timing of cash flows;
• appropriate discount rates, to discount the calculated future cash flows to their present value; and
• uncertainty associated with the achievement of forecast cash flows specific to the respective assets. In particular the Captain
Cook WA CGU has underperformed against budget expectations predominantly in light of the start-up nature of the Rottnest
Island services, requiring more focus on the cash flows and assumptions for this CGU.
Refer to note 2E to the financial report for related disclosure.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
49
AUDITOR’S REPORT
Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com
How our audit addressed the key audit matter
Our audit procedures included the following:
• Agreed the projected cash flows for 2020 to Board approved budgets.
• Tested the mathematical accuracy of the cash flow models.
• Assessed the value in use calculations and the growth assumptions for budgets included within each of the impairment models.
In doing so, we considered the historical accuracy of the Group’s 5 year cash flow forecasts;
• Involved our valuation specialists to assess the discount rate, growth rates and terminal values used in the model for the identified
higher risk CWA CGU.
• Compared the recoverable amount calculated within the value in use models to the carrying value recorded at 30 June 2019.
• Considered the relationship between market capitalisation and net assets of the Group.
• Considered multiple sensitivities over the forecasts and key estimates for the higher risk CGU, including possible changes in
growth rates, discount rates and budget accuracy.
• Considered the adequacy of the related financial report disclosures.
Carrying value of ferries
Why significant
The Group carries owned ferries at cost less accumulated depreciation and any accumulated impairment losses.
This was considered a key audit matter due to the value of ferries relative to total assets together with the judgment involved in
assessing the residual values of the ferries.
Refer to note 2D to the financial report for related disclosure.
How our audit addressed the key audit matter
Our audit procedures included the following:
• Analysed the performance of each ferry to determine whether any indications of impairment were present in accordance with
Australian Accounting Standards.
• Assessed recorded depreciation for each ferry taking into account remaining useful life and the expected residual value
determined by the Group and the external experts involved in these assessments.
• Assessed the residual values of ferries through consideration of the Group’s evaluation of market information for similar assets.
• Involved our valuation specialists to assess the carrying value of the ferries and to review the valuation methodology used by the
Group.
• Analysed the planned and actual utilisation of each ferry. We also assessed the impact of customer contracts associated with the
planned usage and the Group’s plan for each ferry.
• Where carrying values of ferries were supported by third party valuations of ferries, we assessed the competence, capability and
objectivity of the third party valuers used by the Group and evaluated the appropriateness of their work to support the recorded
valuations.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the Company’s
2019 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be
included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual
Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance
conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
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 on the other information obtained prior to the date of this auditor’s report, 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.
50
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AUDITOR’S REPORT Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters relating 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 judgment 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 Company’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
Company’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 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 Company 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 fair presentation.
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 to the directors, we determine those matters that were of most significance in the audit of the
financial report of the current year 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
51
AUDITOR’S REPORT Ernst & Young
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8417 1600
Fax: +61 8 8417 1775
ey.com
REPORT ON THE AUDIT OF THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2019.
In our opinion, the Remuneration Report of SeaLink Travel Group Limited for the year ended 30 June 2019, complies with section
300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our
audit conducted in accordance with Australian Auditing Standards.
Ernst & Young
David Sanders
Partner
Adelaide
27 August 2019
AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF SEALINK TRAVEL GROUP LIMITED
As lead auditor for the audit of SeaLink Travel Group Limited for the financial year ended 30 June 2019, I declare to the best
of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of SeaLink Travel Group Limited and the entities it controlled during the financial year.
Ernst & Young
David Sanders
Partner
Adelaide
27 August 2019
52
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
AUDITOR’S REPORT This Remuneration Report forms
part of the Directors’ Report and sets
out the remuneration arrangements
of SeaLink Travel Group Limited
(Company) Directors and Executives
for the financial year ended
30 June 2019.
It also details the remuneration
strategy and financial results.
This information has been audited
as required by Section 308 (3C)
of the Corporations Act 2001.
Contents:
1. Remuneration Strategy
2. Remuneration Framework
3. Key Management Personnel (KMP)
4. Remuneration of KMP
5. Executive Contracts
6. Overview of Company Performance
7. Options, Shareholdings and
Performance Rights of KMP
8. Remuneration Governance
1. REMUNERATION STRATEGY
SeaLink’s remuneration strategy for remunerating and rewarding Executives ensures that:
• Remuneration is consistent with competitive market rates to attract and retain high calibre candidates;
• Parity exists for similar roles to maintain stability within the Executive group; and
• Executives are incentivised to drive and sustain long term growth and increase shareholder value.
2. REMUNERATION FRAMEWORK
The Remuneration and Nominations Committee annually reviews and recommends to the Board for approval any adjustments to
the remuneration framework and levels necessary to ensure:
1) Fixed Remuneration is market competitive;
2) Short Term Incentives (STI) are performance-based and reward achieving or exceeding strategic and operational goals of the
Company and the Business Unit in the relevant financial year. The STI were chosen as they reflect the core drivers of short term
performance and also provide a framework for delivering sustainable value to the Company, its shareholders and customers; and
3) Long Term Incentives are performance-based and drive performance and behaviours that address long term sustainability and
growth of the Company, and optimise shareholder returns.
TABLE 2.1
FIXED REMUNERATION
SHORT TERM INCENTIVES (STI)
LONG TERM INCENTIVES (LTI)
Fixed remuneration is comprised of a base
salary and 9.5% superannuation.
Base salary is determined by market
rates for roles comparable in scope,
responsibility and geography, combined
with individual capability and performance.
LTI are “at-risk” components offered to
KMPs.
LTI are approved by the Board on an
annual basis.
LTI are in the form of options or
performance rights.
LTI are discretionary and do not form part
of the employment contract.
LTI are forfeited if a KMP resigns before the
option or performance right has vested.
STI are “at-risk” cash components paid to
KMPs when agreed stretch targets have
been met.
STI are approved by the Board on an
annual basis.
STI are a percentage of base salary, usually
between 10% and 60%.
STI are discretionary and do not form part
of the employment contract.
To receive payment, an eligible employee
must fulfil criteria such as remaining an
employee at the time of payment.
At least 50% of each KMP STI is tied to
financial performance of the Company and
the relevant Business Unit in the relevant
financial year.
53
REMUNERATION REPORT 3. KEY MANAGEMENT PERSONNEL (KMP)
KMP are those Executives having the authority and responsibility for planning, directing and controlling major activities of the
Company, directly or indirectly, including any Director (whether Executive or otherwise) of the Company. The term Executive includes
the Managing Director and other Senior Executives of the Company.
From 1 July 2018 to 30 June 2019 the KMP (unless otherwise stated) were:
TABLE 3.1
NON-EXECUTIVE DIRECTORS (NED’S)
A McEvoy
T Dodd
C Smerdon
A Staines
F Hele
Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
EXECUTIVE DIRECTOR
J Ellison
CEO and Managing Director
OTHER KMP
A Muir
A Hayes
D Gauci
A Haworth
P Victory
C Benson
J McDonald
B Martlew
M Niemann
Chief Financial Officer & Company Secretary
Chief Operating Officer
Chief Operating Officer
General Manager – Captain Cook - NSW
General Manager – Growth and Innovation
Chief Information Officer
Legal Counsel & Company Secretary
General Manager - People & Culture
National Fleet Manager
Resigned 4 December 2018
Ceased 30 June 2018
Appointed 12 June 2018
Appointed 11 July 2018
4. REMUNERATION OF KMP
DIRECTORS
The Board seeks to set aggregate and individual remuneration at levels that provide the Company with the ability to attract and
retain Directors of the highest calibre, whilst incurring an expense that is acceptable to shareholders.
Aggregate and individual fee levels and structure are reviewed annually against those paid to Non-Executive Director (NED) of listed
companies with a similar market capitalisation.
The Company’s constitution and the ASX Listing Rules specify that the NED fee pool shall be determined from time to time by
shareholder vote at a General Meeting. At the Annual General Meeting (AGM) in October 2016, shareholders approved an increase
in the NED aggregate fee pool to $750,000. A two percent increase is planned for the 2019/2020 Financial Year.
The remuneration of NED consists of Director fees which are currently set as follows:
• The Chair receives an annual fee of $136,577 p.a. plus statutory superannuation; and
• All other NED’s receive $68,288 p.a. plus statutory superannuation.
There are no additional fees for chairing or serving on a sub-committee of the Board. NED do not receive retirement benefits.
There is no requirement for Directors to hold shares in the Company. Other than the Chair, who received a Long-Term Incentive
retention grant of Options approved by shareholders at the October 2016 AGM, no other NED participated in incentive programs.
54
REMUNERATION REPORT
NED remuneration for the years ended 30 June 2018 and 30 June 2019 is detailed in Table 4.1 below:
TABLE 4.1
NON-EXECUTIVE
DIRECTOR
A McEvoy
A Staines
C Smerdon
T Dodd
F Hele
DIRECTOR
FEE
136,577
134,000
68,288
67,000
68,288
67,000
68,288
67,000
68,288
67,000
YEAR
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
SHORT
TERM
INCENTIVE
–
NON-
MONETARY
BENEFITS
–
OTHER
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
SUPER
12,975
12,730
6,487
6,365
6,487
6,365
6,487
6,365
6,487
6,365
LONG TERM
BENEFIT LSL
–
PERFORM.
RIGHTS/
OPTIONS
137,000
TOTAL
286,552
–
–
–
–
–
–
–
–
–
137,000
283,730
–
–
–
–
–
–
–
–
74,776
73,365
74,776
73,365
74,776
73,365
74,776
73,365
EXECUTIVES
The Company does not adopt a philosophy of excessive “at risk components” for Executive remuneration.
There is no requirement for KMP to hold shares in the Company.
KMP remuneration for the years ended 30 June 2018 and 30 June 2019 is detailed in Table 4.2 below:
TABLE 4.2
EXECUTIVE
J Ellison
D Gauci*
A Muir
A Haworth#
P Victory
C Benson**
J McDonald***
B Martlew
M Niemann
A Hayes##
YEAR
2019
SALARY
526,547
2018
520,599
2019
297,057
2018
254,438
2019
300,269
2018
250,000
2019
–
2018
276,055
2019
202,827
2018
198,773
2019
2018
2019
2018
2019
2018
195,000
3,750
168,269
–
129,808
101,594
2019
192,782
2018
189,002
2019
263,191
2018
293,224
SHORT
TERM
INCENTIVE
68,629
NON-
MONETARY
BENEFITS
66,963
31,933
23,442
22,500
12,500
–
6,250
12,179
21,890
4,875
–
8,750
–
5,200
–
6,270
3,783
–
–
–
–
–
–
–
–
–
–
OTHER
1,770
SUPER
23,000
7,690
23,000
25,000
24,540
25,017
23,750
–
25,569
19,568
21,480
18,525
356
15,986
–
12,332
9,536
18,527
19,001
22,442
19,988
–
–
–
–
–
–
–
LONG TERM
BENEFIT LSL
19,735
PERFORM.
RIGHTS
–
TOTAL
639,682
24,410
21,956
6,175
2,802
686
–
–
642,662
515
376,461
3,090
311,685
–
–
–
350,588
286,936
–
12,122
3,090
323,086
8,112
5,945
497
–
211
–
3,348
3,433
10,188
6,816
(318)
318
515
243,200
3,090
251,178
–
–
–
–
–
–
218,897
4,106
193,215
–
150,687
114,563
343
228,110
2,060
220,662
–
–
285,314
313,530
# Ceased to be a KMP 1 July 2018
## Resigned 4 December 2018
* Appointed COO 29 April 2019 – previously Chief Marketing Officer
** Appointed CIO 12 June 2018
*** Appointed Legal Counsel and Company Secretary 11 July 2018
55
REMUNERATION REPORT SHORT TERM INCENTIVES
The Company measures key performance indicators (KPIs) covering financial and non-financial, Group and business unit measures
of performance. For each KPI, a target and stretch objective is set. Group Net Profit After Tax (NPAT) and business unit Earnings
Before Interest and Tax (EBIT) are the measures against which management and the Board assess the short term financial
performance of the Group.
The non-financial measures in the STI include:
• Implementation of growth initiatives
• Customer satisfaction
• Safety
• Leadership / contribution.
For KMP, bonuses varied by Executive depending on the influence on the Company and the Business Unit, achievement of defined
business goals, achievement of specific Business Unit EBIT budgets as well as the extent to which the Company achieved the
Board approved budget for the year. These are in line with prior year.
Table 4.3 outlines the bonuses payable to KMP for the reporting period.
TABLE 4.3
EXECUTIVE
J Ellison
D Gauci
A Muir
P Victory
C Benson
J McDonald
B Martlew
M Niemann
CASH BONUS
AT RISK (MAXIMUM)
$274,517
ACHIEVEMENT
OF GOALS
• Group exceeds budgeted NPAT by 5% not met.
• Growth in shareholder value of 10% (measured by EPS)
DISCRETIONARY
PERFORMANCE
–
TOTAL
BONUS
$68,629
$58,061
$60,000
$40,596
$19,500
$17,500
$13,000
$19,293
not met
• 25% of KPI’s met
• 55% of KPI’s met
• Group exceeds budgeted NPAT by 5% not met
• 38% of KPI’s met
• 30% of KPI’s met
• 25% of KPI’s met
• 50% of KPI’s met
• 40% of KPI’s met
• 33% of KPI’s met
–
–
-
–
–
–
–
$31,933
$22,500
$12,179
$4,875
$8,750
$5,200
$6,270
As a result of the above, the proportion of remuneration that was performance based as follows:
TABLE 4.4
YEAR
2019
2018
J Ellison
D Gauci
A Muir
C Benson J MacDonald
B Martlew
M Niemann
P Victory
11%
73%
8%
79%
6%
34%
2%
–
5%
–
3%
–
3%
2%
5%
9%
5. EXECUTIVE CONTRACTS
MANAGING DIRECTOR
The Company and Mr Ellison entered into a Managing Director Service Agreement which commenced on 16 October 2013 for an
initial term of 5 years. This agreement was subsequently extended by 12 months to 16 October 2019, and provides the ability to
further extend the term of employment by mutual consent.
Either party can terminate the agreement by notice – Mr Ellison may terminate his employment with the Company at any time by
giving the Company 90 days written notice, and the Company may terminate his employment without cause at any time after the
expiration of the Initial Term by 90 days written notice or by making a payment in lieu of notice. In the event of serious misconduct
or where other specific circumstances warrant summary dismissal, the Company may terminate the Management Director Service
Agreement and Mr Ellison’s employment immediately without notice.
Upon conclusion of Mr Ellison’s employment, he will be subject to a restraint of trade for a period of six months.
Under the Managing Director Service Agreement, Mr Ellison receives a total fixed remuneration package of $549,547 per annum
(including salary and superannuation) for his position as Managing Director of the Company. Mr Ellison is also entitled to a travel
allowance of up to $10,000 per annum for family to travel with him on business related travel.
56
REMUNERATION REPORT Mr Ellison is entitled to a performance bonus for the reporting period of up to 50% of annual salary, based on the following criteria,
with an individual bonus attached to each criterion:
• SeaLink Travel Group achieving Group budget NPAT;
• SeaLink Travel Group exceeding Group budgeted NPAT by 10%; and
• Reaching specifically defined Key Performance indicators.
OTHER KMP
Remuneration arrangements for all other KMP are formalised in employment agreements. Standard KMP termination conditions are
as follows:
TABLE 5.1
Resignation
NOTICE PERIOD
4 weeks
or 8 weeks
Termination for cause
None
Termination in cases of death,
disablement, redundancy or
notice without cause
4 weeks
or 8 weeks
PAYMENT IN
LIEU OF NOTICE
4 weeks
or 8 weeks
None
4 weeks
or 8 weeks
TREATMENT OF STI
ON TERMINATION
Unvested awards forfeited
TREATMENT OF LTI
ON TERMINATION
Unvested awards forfeited
Unvested awards forfeited
Unvested awards forfeited
Subject to Remuneration
Committee discretion
Subject to Board discretion
6. OVERVIEW OF COMPANY PERFORMANCE
Table 6.1 shows the performance of the Company as measured by Net Profit After Tax (NPAT) from continuing operations, earnings
per share, gross dividends paid, dividend paid per share and share price at year end:
TABLE 6.1
Revenue
NPAT
Gross Dividend paid
Earnings per share (cents)
Dividend paid per share (cents)
Share Price ($)
30 JUNE 2014
$’000
104,422
30 JUNE 2015
$’000
111,748
30 JUNE 2016
$’000
177,459
30 JUNE 2017
$’000
201,407
30 JUNE 2018
$’000
209,436
30 JUNE 2019
$’000
251,321
7,233
5,499
11.8
7.4
1.89
9,349
5,761
12.6
7.8
2.19
22,349
7,624
23.6
12.0
4.08
23,832
13,654
23.6
14.0
4.07
19,565
14,667
19.3
14.5
4.43
21,543
15,214
21.3
15.0
3.81
Table 6.2 highlights the performance of the SeaLink share price since it was listed relative to S&P ASX300:.
The Compound Annual Growth Rate (CAGR) of SeaLink’s share price during the period was 17.57% compared with the CAGR of
the S&P ASX 300 which was 4.08%.
TABLE 6.2
57
REMUNERATION REPORT 7. OPTIONS, SHAREHOLDINGS AND PERFORMANCE RIGHTS OF KMP
Options held by KMP
TABLE 7.1
YEAR END
30 JUNE 2018
BALANCE
01/07/2017
GRANT
DATE
AWARDED/
(FORFEITED)
EXERCISED
BALANCE
30/06/2018
FAIR VALUE
PER OPTION
AT AWARD
DATE*
INTRINSIC
VALUE
OF OPTIONS
EXERCISED/
SOLD
EXPIRY
DATE
DIRECTORS
A McEvoy
Total
TABLE 7.2
100,000 25/10/2016
100,000
–
–
–
–
100,000
100,000
$4.11
26/10/2019
–
–
–
YEAR END
30 JUNE 2019
BALANCE
01/07/2018
GRANT
DATE
AWARDED/
(FORFEITED)
EXERCISED
BALANCE
30/06/2019
FAIR VALUE
PER OPTION
AT AWARD
DATE*
INTRINSIC
VALUE OF
OPTIONS
EXERCISED/
SOLD
EXPIRY
DATE
DIRECTORS
A McEvoy
Total
100,000
25/10/2016
100,000
–
–
–
–
–
100,000
100,000
$ 4.11
26/10/2019
–
–
–
–
*No options awarded for the period, therefore no Fair Value applicable.
As at 30 June 2019, 100,000 options to KMP remained outstanding. In addition to the above, Nil share options (2018: 200,000)
share options, which vested in October 2015 were held by senior staff.
SHAREHOLDINGS HELD BY KMP
TABLE 7.3
YEAR END 30 JUNE 2018
BALANCE
01/07/2017
EXERCISE
OF OPTIONS
ACQUIRED/
(SOLD)
BALANCE
30/06/2018
AMOUNT PAID PER
SHARE ON OPTION
EXERCISE
DIRECTORS
A McEvoy
J Ellison
T Dodd
F Hele
A Staines
C Smerdon
14,350
5,524,769
5,212,000
10,000
–
6,104,500
OTHER KEY MANAGEMENT PERSONNEL
D Gauci
A Haworth
A Muir
P Victory
C Benson
J McDonald
B Martlew
M Niemann
A Hayes
10,000
51,650
–
88,125
–
–
4,500
–
–
Total
58
17,019,894
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,229
–
(176,010)
–
–
–
–
(7,205)
–
(28,236)
–
–
–
–
–
19,579
5,524,769
5,035,990
10,000
–
6,104,500
10,000
44,445
–
59,889
–
–
4,500
–
–
(206,222)
16,809,172
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
REMUNERATION REPORT
TABLE 7.4
YEAR END 30 JUNE 2019
BALANCE
01/07/2018
EXERCISE
OF OPTIONS
ACQUIRED/
(SOLD)
BALANCE
30/06/2019
AMOUNT PAID PER
SHARE ON OPTION
EXERCISE
DIRECTORS
A McEvoy
J Ellison
T Dodd
F Hele
A Staines
C Smerdon
19,579
5,524,769
5,035,990
10,000
–
6,104,500
OTHER KEY MANAGEMENT PERSONNEL
D Gauci
A Muir
P Victory
C Benson
J McDonald
B Martlew
M Niemann
A Hayes*
10,000
–
59,889
–
–
4,500
–
–
Total
16,769,227
*Resigned 4 December 2018.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(249,412)
–
–
–
8,000
–
17,236
9,324
–
–
10,000
–
19,579
5,524,769
4,786,578
10,000
–
6,104,500
18,000
–
77,125
9,324
–
4,500
10,000
–
(204,852)
16,564,375
–
–
–
–
–
–
–
–
–
–
–
–
–
–
All equity transactions with KMP have been entered into under terms and conditions no more favourable than those the Company
would have adopted if dealing at arm’s length.
PERFORMANCE RIGHTS OF KEY MANAGEMENT PERSONNEL
Performance rights are generally granted to Senior Executives as part of a long-term incentive. When a participant ceases
employment prior to the vesting of their performance rights or where the performance hurdle is not met, the performance rights are
forfeited. Should all conditions be met, one ordinary share is issued for each performance right at no consideration. The hurdle price
is usually set using a 10% compound annual growth rate applied to the share market price at date of issue.
There were no performance rights issued in the 12-month period to 30 June 2019.
The following Performance Rights have been issued to KMP in prior periods:
TABLE 7.5
KEY MANAGEMENT
PERSONNEL
BALANCE
01/07/2017
AWARDED/
(FORFEITED)
BALANCE
30/06/2018
HURDLE
PRICE
FAIR VALUE PER
PERF. RIGHT AT
AWARD DATE
ISSUE
DATE
VESTING
DATE
DIRECTORS
J Ellison
A Muir
160,000
15,000
–
–
160,000
15,000
*
$6.08
25/10/2016
09/01/2017
$4.11
$1.72
25/10/2019
07/01/2020
* The conditions attached to the Performance Rights issued to Mr Ellison were approved at the AGM in 2016 and are as follows:
1) Mr Ellison must remain in continuous employment with the Company as Managing Director until the third anniversary of the date
of grant of the Performance Rights; and
2) For the Performance Rights to vest in total, the Company must achieve a target compounding annual growth rate (CAGR) of
earnings per share (EPS) of 12% for the three-year measurement period, applied to the base period being 2016 financial year.
A threshold CAGR over that three-year period of 10% will result in 25% of the Performance Rights vesting, with pro rata vesting
for achievement for between 10% and 12% of CAGR for the three-year measurement period.
59
REMUNERATION REPORT 8. REMUNERATION GOVERNANCE
The Remuneration Committee is comprised of three NEDs. Mr Dodd, who is a member of the Committee, is not regarded as
independent, for the reasons set out in the Company’s Corporate Governance Statement. Those factors do not impact Mr Dodd’s
ability to carry out his duties on the Committee.
This Committee has delegated authority for some matters related to remuneration arrangements for Executives, and is required
to make recommendations to the Board on other matters. Specifically, the Board approves the remuneration arrangements of the
Managing Director, following recommendations from the Remuneration Committee.
The Board also sets the aggregate remuneration of all NEDs, which is then subject to shareholder approval. The Remuneration
Committee approves, having regard to the recommendations made by the Managing Director, the level of the short-term annual
performance incentives for KMP or any discretionary bonuses.
The Remuneration Committee meets regularly throughout the year. The Managing Director attends certain Remuneration Committee
meetings by invitation, where Management input is required. However, the Managing Director is not present during discussions
related to his own remuneration arrangements.
Signed in accordance with a resolution of the Directors.
On behalf of the Directors
A Staines
Chair, Remuneration Committee
SeaLink Travel Group Limited
Sydney
27 August 2019
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of SeaLink Travel Group Limited, I state that:
1. In the opinion of the directors:
(a) the financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s financial position as at 30 June 2019 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors from the Chief Executive
Officer and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for the year ended
30 June 2019.
On behalf of the Board
SeaLink Travel Group Limited
Andrew McEvoy
Chair
27 August, 2019
60
REMUNERATION REPORT
ASX
ADDITIONAL INFORMATION
Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows.
The information is current as of 27 August 2019.
A DISTRIBUTION OF EQUITABLE SECURITIES
(i) Ordinary share capital, entitled to vote and entitled to dividends: 101,429,103 fully paid ordinary shares are held by
2,835 individual shareholders.
(ii) Options
100,000 options are held by one individual option holders. Options do not carry a right to vote or to participate in dividends.
Options do not carry a right to vote or to participate in dividends.
The number of shareholders, by size of holding, in each class are:
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Holdings less than a marketable parcel
(based on a closing price of $3.51 on 27 August 2019)
B SUBSTANTIAL SHAREHOLDERS
ORDINARY SHAREHOLDERS
MR C SMERDON
MR J R ELLISON
SARTO PTY LTD (ZAPPIA)
C TWENTY LARGEST HOLDERS OF QUOTED EQUITY SECURITIES
ORDINARY SHAREHOLDERS
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
PRESCOTT NO 22 PTY LTD – THE PRESCOTT NO 22 A/C
SARTO PTY LTD – R ZAPPIA & SONS P/FUND A/C
BNP PARIBAS NOMS PTY LTD
SUNROP PTY LTD – SUNROP UNIT A/C
ARISTOS NOMINEES PTY LTD – BJ MAYFIELD FAMILY A/C
EQUILINK PTY LTD – F A MANN FAMILY A/C
HEBDEN PTY LTD – J R ELLISON FAMILY A/C
BNP PARIBAS NOMINEES PTY LTD – AGENCY LENDING DRP A/C
BELAHVILLE PTY LTD
FLAVON NOMINEES PTY LTD – THE DACRO A/C
WITRON PTY LTD – WITTMANN RETIRE FUND A/C
LASHMAR NOMINEES PTY LTD HATUMA LODGE
MR JEFFREY ROY ELLISON & MRS TONI ALICE ELLISON
GLADYS WILLSON
MR KEVIN WILLSON
MS LYNN WRIGHT
Total Securities of Top 20 Holdings
Total of Securities
FULLY PAID ORDINARY SHARES
315,651
3,280,593
3,589,657
10,036,613
84,206,589
101,429,103
209
OPTIONS
–
–
–
2
–
–
–
NUMBER
6,104,500
5,524,769
5,329,812
%
6.03
5.46
5.25
BALANCE AS AT
27/08/2019
11,513,787
6,204,664
6,031,042
5,758,127
5,594,000
5,031,000
3,770,099
3,717,753
3,563,692
3,548,000
3,524,769
2,223,028
2,125,000
1,901,362
1,877,077
1,752,488
1,751,000
1,172,500
1,102,500
818,500
72,980,388
101,429,103
%
11.352%
6.117%
5.946%
5.677%
5.515%
4.960%
3.717%
3.665%
3.513%
3.498%
3.475%
2.192%
2.095%
1.875%
1.851%
1.728%
1.726%
1.156%
1.087%
0.807%
71.952%
61
Head Office
Level 3, 26 Flinders Street Adelaide
Web www.sealinktravelgroup.com.au
Email info@sealinktravelgroup.com.au
Phone +61 8 8202 8688
ABN 49 109 078 257
ACN 109 078 257
ASX Code SLK
CORPORATE GOVERNANCE
The Board of Directors of SeaLink Travel Group Limited (“SeaLink”)
is responsible for the corporate governance of the Company and
its controlled entities (the Group), monitoring the operational and
financial performance of the Group, overseeing its business strategy
and approving its strategic direction.
The ASX Listing Rules require listed entities to disclose the extent to
which they have followed the best practice recommendations set by
the ASX Corporate Governance Council during a reporting period.
The underlying principles are as follows:
1. Lay solid foundations for management and oversight
2. Structure the Board to add value
3. Act ethically and responsibly
4. Safeguard integrity in corporate reporting
5. Make timely and balanced disclosure
6. Respect the rights of shareholders
7. Recognise and manage risk
8. Remunerate fairly and responsibly
Each of these principles are dealt with in detail on our
website in our Corporate Governance Statement available at
sealinktravelgroup.com.au/corporate-governance