Accounting and Financial Management Report: Helloworld Analysis

This report provides an in-depth analysis of the Australian Tourism and Travel services industry, with a specific focus on Helloworld Travel Limited. It begins with an executive summary and table of contents, followed by an introduction that highlights the company's specialization in retail, corporate, and wholesale travel products. The report examines the competitive conditions within the industry, noting the shift from brick-and-mortar models to online platforms and the impact of the COVID-19 pandemic. It then delves into the role of accounting information, differentiating between internal and external users and discussing the limitations of the accounting data, such as the use of EBITDA and inconsistencies in revenue recognition and policy application. The conclusion summarizes the key findings, emphasizing the growth potential of Helloworld and the challenges related to the completeness of financial information. References to the company's website, IBISWorld, and other sources are also provided.

Running head: ACCOUNTING &FINANCIAL MANAGEMENT
Accounting & Financial Management
Name of the Student
Name of the University
Author Note

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Executive Summary
This report contains an industry analysis and competitive landscape of the Australian Tourism
and Travel services industry with special focus on Helloworld Travel Limited. The report
provides an overview of the current position of the company with an in depth analysis of the
opportunities financial position of the company. It then focuses on the accounting information of
the company and its relevance to various users related to the company. Some of the issues with
the accounting information are identified. The conclusion summarises the findings of the report.

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Table of Contents
Introduction..................................................................................................................................3
Competitive Conditions in the industry.......................................................................................3
Role of Accounting Information..................................................................................................4
Conclusion...................................................................................................................................6
References....................................................................................................................................7

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Introduction
One of the major sources of the revenue generated in Australia in recent years is the
increase in the tourism related services. Some of the major players in the Australian travel
agency and tourism services industry include Flight Centre, Helloworld and Thomas Cook Plc.
Services include leisure travel services, travel consolidating services, inbound tour services and
other travel services. Activities include brooking service provision, ticket selling, ticket retailing
and travel agency operations. Helloworld Limited is an Australian travel-distribution company
with its headquarters in New South Wales. The specialities of the company include providing
Retail, Corporate and wholesale travel products and packages. The company consists of fully
branded travel agencies as well as associate agents throughout Australia and New Zealand. The
revenue, EBITDA and the returns provided to the shareholders have been increasing consistently
(Helloworldlimited.com.au. 2020).
Competitive Conditions in the industry
The Travel Agency and Tourism services industry in Australia has undergone a
significant amount of change in the past five years in terms of structure and the operational
conditions. The previously used brick and mortar model which generated high amounts of
commission and services fees for the business is being replaced with the online model. This has
increased the dependence of the company on online booking facilities specialists. In order to stay
in competition, a majority of these companies are undertaking the acquisitions of these websites.
As of the beginning of 2020, it was projected that the performance of the industry would be
extremely high up to the Financial Year 2024 (IBISWorld, 2020). However, the underlying
growth of the industry in the recent years has been impacted by the COVID-XX pandemic. The
recovery and the thriving of the industry depends on the speed at which the country recovers

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from the effects of this situation. Negative consumer confidence and high unemployment rates
are some of the issues currently faced by the industry. Some of the impacts of this issue on the
financial position of the industry is a decline in the revenue by 24.3% adjusted down from the
5.6% growth. However, it should be noted that this is only a temporary blip in the performance
levels and the effect is not expected to last on the industry in the long term. As of 2019, the
industry consisted of 6628 businesses and employed an estimated 40000 people across the
country. The profit margins of the industry are expected to remain positive due to the wide
margins created early by the online sales made by the company.
Some of the benefits that the company has in terms of the opportunities is the
large balance of cash funds maintained by the company. This allows the company to invest
immediately in the profitable business opportunities identified by it. Apart from this, the
company can also pay increased dividends to the shareholders on a consistent basis. The rate at
which acquisitions take place in the industry provide opportunities to the established companies
to maintain their dominance in the market Business (News Australia 2020). Some other
opportunities that have been made available to the company are the new environmental policies
which enable companies to implement and invest in new technologies. The core competencies of
the organisation can be used in developing the business in newer areas like travel services
through all modes of transport.
Role of Accounting Information
Like many of the Australian entities, Helloworld also prepares its annual financial
statements in accordance with the guidelines of the AASB which are then presented to the
different stakeholders of the business. However, it does not follow it fully which causes the
issues in the financial statements of the company. The users of the accounting information of the

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entity can be classified into two categories. These are the internal users and the external users.
The internal users of the financial statements include the managers and owners of the entity who
are responsible for managing it. They are also responsible for preparing the books of accounts.
Hence, any accounting information like the choice of accounting policies and the assumptions
are decided by these parties. Some of the external users of the accounting information of
Helloworld include the employees, prospective investors, customers, government units and
creditors of the company (Collier 2015). The future investors find the accounting information
useful to determine the future prospects of the company. This helps them in determining whether
to invest in a company or not. The employees use the accounting information to determine
whether the company can provide higher wages to them in the long run. It also helps them
understand the long-term financial health of the company. The government units act as a
regulator and they use this information to determine whether the company is preparing the
financial statements in a fair manner or not. The creditors use the information to determine the
credit worthiness of the company and decide whether to lend funds to it in the future or not.
However, it is not always possible to provide the information which is wanted by the
users. Some of this is due to the limitations of the nature of accounting. One such limitation is
that the accounting information is provided for only a selected period of time like a Financial
Year. The performance of the company may have improved after that. Some of the decisions
made by the company are not in lines with the guidance prescribed by AASB. The EBITDA is
used as a measure by the company to assess its financial performance. The main limitations of
EBITDA is that it ignores aspects like depreciation, amortisation and interest expenses of the
company (Sui 2017). This fails to provide information about the capital structure or the credit
worthiness of the company. The TTV or Total transaction value provided by the company does

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not follow the guidelines of AASB in terms of revenue recognition. In case of some of the
comparatives, the figures in the financial statements are changed by the company. The changes
in the accounting policies have a retrospective effect which makes parts of the information from
the old financial statements irrelevant. This means information belonging to previous years is
also changed. Like in the 2019-20 reports, the accumulated losses of the company increased by
$9730 which was greater than the losses previously reported. There is also a lack of consistency
in the policies followed by the company. While most of the assets and liabilities are recorded at
historical costs, the financial assets like derivatives are recorded at fair value. Hence, this lack of
consistency sometimes creates uncertainty in measuring the performance of the company
(Magnan, Menini and Parbonetti 2015).
Conclusion
On the basis of the above discussion, it can be suggested that Helloworld is currently
operating in an industry with high growth potential. The huge amounts of cash flows and the
sustained revenue growth suggest that the company will likely grow in the future. Other benefits
faced by it include the huge number of acquisitions taking place in the industry. However, the
lack of appropriate financial information given by the entity due to its priority to incomplete
items like EBIT in the accounting information is an issue. It makes it difficult for all the
stakeholders to use the information in making decisions about the company.

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References
Business News Australia. (2020). Helloworld to acquire TravelEdge Group. [online] Available
at: https://www.businessnewsaus.com.au/articles/helloworld-to-acquire-traveledge-group.html
[Accessed 4 Apr. 2020].
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision
making. John Wiley & Sons.
Helloworldlimited.com.au. (2020). Helloworld Travel Limited – Helloworld Travel Limited.
[online] Available at: https://www.helloworldlimited.com.au/ [Accessed 4 Apr. 2020].
IBISWorld, I. (2020). Market Research Reports & Analysis | IBISWorld AU. [online]
Ibisworld.com.au. Available at: https://www.ibisworld.com.au/industry-trends/market-research-
reports/administrative-support-services/travel-agency-tour-arrangement-services.html [Accessed
4 Apr. 2020].
Magnan, M., Menini, A. and Parbonetti, A., 2015. Fair value accounting: information or
confusion for financial markets?. Review of Accounting Studies, 20(1), pp.559-591.
Standard, I.A., 2015. Presentation of Financial Statements. Balance Sheet, 54, p.80A.
Sui, Y., 2017. The Research on the Applications and Limitations of EBITDA. DEStech
Transactions on Environment, Energy and Earth Sciences, (icseep).