Annual Report 2012
new
heights
innovating in all directions
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Corporate Travel Management Limited
ABN 17 131 207 611
Registered office:
27A/52 Charlotte Street
Brisbane Queensland 4000
travelctm.com
CTM Annual Report 2012
travelctm.com
Chairman’s Report
Managing Director’s Report
The CTM Innovation Engine
Innovating in the business model
Staff profile - Laura Ruffles
Innovating in operations
Staff profile – Adriana Pesavento
Innovating in client service
Staff profile - Kim Wethmar
Innovating in products
Staff profile - Andrea Joseph
Innovating for our people
Staff profile – Liz Kriewaldt
Senior leadership team
Directors
Financials
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CTM Annual Report 2012
CTM Annual Report 2012
chairman’s
report
I am pleased to present the 2012 Annual Report of Corporate
Travel Management Limited (“CTM”).
The Company has had another strong year, delivering
excellent growth in profitability and return to shareholders.
This result has been underpinned by enhanced services to our
clients, including the roll out of further innovative products.
The acquisition of Melbourne-based corporate travel
agency, ETM Travel Pty Ltd (“etm”) during the year added
significant depth to CTM’s corporate specific services, with its
complementary MICE (Meeting, Incentive, Conference and
Event) and VIP Leisure offerings, enabling CTM to present
a complete, integrated corporate travel solution to its clients.
As well, the acquisition of etm strengthens CTM’s presence in
the all-important Melbourne corporate market and completes
CTM’s national footprint. This choice was reinforced by etm
winning the Best Events Company at the July 2012 NTIA
awards.
The past year also saw the Company achieve continued
strong organic growth of its business in continuing challenging
global economic and market conditions, which, together
with the etm acquisition, enabled CTM to achieve a record
turnover.
During the year, the Company also completed a roll out
of a significant upgrade of the Company’s core operating
system, continuing the Company’s commitment to investment
in improved client-facing systems. This initiative delivers
enhanced client servicing capability to CTM’s staff and
enables significant productivity improvements, aimed at
maintaining CTM’s competitive advantage of delivering
superior customer service.
Other major initiatives have included the roll out of RTM
(Resource Travel Management), a specific Resource
industry offering that tailors solutions to the specific demands
and requirements of that industry. In addition, CTM’s BI
(Business Intelligence) solution has also been implemented,
with u-control, representing client KPI’s and data online at
any time, including air travel, car hire and hotel bookings.
u-explore offers a free form investigative analysis tool,
allowing searches for data relating to air, car and hotel spend
across a wide range of variants.
More recently, CTM announced the acquisition of USA based
agency, R&A Travel Inc, affording CTM a unique cross selling
opportunity. R&A is based in one of the US’s busiest business
travel hubs. This acquisition also represents a significant step
in the Company’s long term strategic plan to operate globally.
I would like to take this opportunity to thank the management
team and staff for their efforts and congratulate them on the
continued success of CTM as a leading-edge and profitable
Company.
I would like to thank our shareholders, the Board and most
importantly our clients for their continuing support
Consistent with its prospectus forecast, the Board has
declared a dividend of 6 cents per share. The dividend will be
paid on 12 October 2012 to all shareholders registered on 11
September 2012.
Tony Bellas
Chairman
Corporate Travel Management Limited
29 August 2012
3
The Company has had another
strong year, delivering excellent
growth in profitability and return
to shareholders.
Tony Bellas
Chairman, CTM
Jamie Pherous
CEO/Managing Director
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CTM Annual Report 2012
managing
director’s
report
Dear Shareholders,
Introduction
Financial position
I am pleased to present the 2012 report for CTM.
CTM has withstood the recent turbulent economic
times, both in Australia and the broader global
economy, to deliver a record profit. The Company
is also well placed to benefit from future upturns in
the general economic environment.
Outstanding performance
It has been a record year for CTM in terms of
financial performance.
In the year to 30 June 2012, CTM’s TTV (total
transaction value) of $681.3 million (unaudited)
was 35.6 percent higher than the previous year
and travel income of $64.7 million was 40.9 percent
higher than the previous year.
CTM’s statutory net profit after tax (“NPAT”) of
$11.8 million in the year to 30 June 2012 compares
with $8.3 million in 2010/11, representing a 42.7
percent increase.
CTM is in a sound financial position, with total
assets of $83.6 million at 30 June 2012, an
increase of $24.9 million or 42.4 percent from 30
June 2011.
Contributing to the Company’s sound financial
position was the continued generation of strong
cash flows, with net cash flows from operating
activities of $7.5 million over the year to 30 June
2012.
In February 2012, the Company raised a further
$7 million through the equity market, to assist with
funding the acquisition of the USA based agency,
R&A Travel.
Total equity of $53.0 million at 30 June 2012
compares with $38.2 million at 30 June 2011, an
increase of $14.8 million or 38.7 percent over the
year.
In the year to 30 June 2012, CTM’s
TTV (total transaction value) of $681.3
million (unaudited) was 35.6 percent
higher than the previous year and
travel income of $64.7 million
was 40.9 percent higher than the
previous year.
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5
Jamie Pherous - CEO/Managing Director
CTM Annual Report 2012
CTM Annual Report 2012
Positioning for the future
CTM’s continued investment in innovative client
facing technology, as well as the two strategic
acquisitions, has CTM positioned well to continue
to grow. The growth is also underpinned by
continued leading performance and client retention
during the year.
CTM’s focus remains upon listening to our clients
and staff, to ensure CTM’s service offering is both
innovative and cost effective, and CTM’s staff are
supported to offer the most personalised service
and expertise that our clients demand.
I look forward to working with all our staff, clients,
key suppliers and CTM’s Board in pursuing the
challenges and opportunities that lie ahead and to
continue to deliver outstanding results for CTM’s
clients and shareholders.
Jamie Pherous
Managing Director
Corporate Travel Management Limited
Business drivers
The success of CTM’s business continues to be
based on three key drivers:
• Retaining current business through delivering
outstanding service and demonstrating a return
on investment to our clients;
• Generating new business through a compelling
offering, underpinned by outstanding service
and continuous investment in innovative client
solutions; and
•
Improving internal productivity and developing
CTM’s people, so that they are most effective
in supporting CTM’s clients.
The past year has been successful on all counts,
with securing new clients wins and retention
of current clients being consistent with past
performance. In addition there continues to be
a focus on productivity efficiencies throughout
the whole business, which enables further
reinvestment in customer service platforms.
In addition, CTM has complemented its existing
business with two strategic acquisitions during the
past year:
•
•
In October 2011, CTM completed the
acquisition of ETM Travel Pty Ltd, a Melbourne
based agency, which enabled the Group to
enhance its events offering and provide a
complete integrated corporate travel solution to
clients. In addition, the acquisition provides an
opportunity to strengthen CTM’s position in the
Victorian market.
In July 2012, after balance date, CTM
acquired R&A Travel Inc, which is a US based
agency that provides the Company a unique
opportunity to cross-sell between the two
markets.
Both acquisitions support CTM’s proven
competency in being able to integrate people into
our culture, and empower people to operate more
effectively for their clients through a scalable and
efficient operating platform.
The business has continued to invest in its service
offering and, during the year, introduced new
products, including u-control and u-explore,
Ticketbank, pre-trip approval, as well as enhanced
functionalities in CTM’s core operating systems,
which is integral to the continued success of the
business moving forward. As well, the Company
rolled out RTM (Resource Travel Management), a
Resource industry focused tailored offering.
Employees
A highly skilled and motivated workforce is integral
to CTM’s success.
CTM’s culture is founded upon the notion of
listening to our staff in order to provide a great
workplace that empowers our people through good
process and great training to grow, evolve and
deliver superior service that CTM’s clients demand.
CTM continues to invest in its people, through
CTM’s in-house training programs, selective
recruitment and a commitment to provide the
resourcing to support CTM’s people in delivering
service excellence to CTM’s clients.
Over the past year, the total number of full time
employees (“FTE”) increased by 25% to 475,
reflecting acquisitions and CTM’s positioning to
underwrite growth with the most skilled talent.
Importantly, revenue increased by 40% reflecting
the Company’s continuing focus on productivity
improvement.
Staff ownership of CTM equity is an important pillar
for aligning the objectives of CTM with the personal
aspirations of our people. At 30 June 2012, over
30% of all staff employed were CTM shareholders.
The Board and the senior management team
appreciate the contribution that CTM’s staff have
made to the Company’s strong performance in
2011/12. Their professionalism and commitment
have been fundamental to the development of
CTM’s reputation as a highly valued business
partner for CTM’s clients.
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The
CTM
Engine
innovation
Operational innovations introduced
recently include an increased focus
on automation, to enhance the day-
to- day productivity of consultants, the
introduction of an internal feedback
system, to mine for the next ‘big
idea’ from the people who have day-
to-day contact with our clients, and
improvements to our internal systems
and our client-facing Online Booking
Tool.
We introduced many new people-
focused innovations in 2012, with the
primary initiative being the first annual
CTM All Stars event – incorporating
an employee conference and awards
night – recognising our best and
brightest while enabling three days of
education and ideas sharing.
VIBE survey – our annual VIBE
employee survey, gathering feedback
anonymously from all employees.
Extra mile program – recognising
consultants throughout the year for
going the ‘extra mile’ for clients.
Innovation is at the heart of
everything we do at Corporate
Travel Management. We take our
client, partner and staff input and
feed it into what we like to think
of as our innovation engine.
We develop new service and product platforms around our four
key business pillars. These products and services drive our
customers’ value equation further.
Increased
automation
Upgraded
Online
Booking
Tool
Operations
Programs
to boost
productivity
u-approve
pre-trip
approval
Ticketbank
credits on
hold
CTM
Business
Intelligence
Products
Compelling,
industry-leading
tools
During the 2011/2012 financial year
alone, CTM has introduced:
CTM Business Intelligence – providing
clients with real-time access to their
travel management data online at any
time.
Ticketbank – allowing clients to actively
search and use available credits on hold
for the first time.
u-approve – introducing a streamlined
online approach to pre-trip approval to
clients.
Internal
feedback
system
Extra
Mile
Program
VIBE
Survey
People
Staff support
and rewards
CTM
All Stars
Event
Resource
Travel
Management
Client
Service
Knowledge,
expertise and
tailored solutions
Specialised
Client
Value
Managers
Insight
through CTM
Business
Intelligence
At Corporate Travel Management,
we are constantly innovating
around client service.
We pride ourselves on offering
clients tailored, needs-driven
solutions with a focus on value.
A unique organisational structure
sees clients assigned a Client
Value Manager, as well as a
dedicated team of consultants,
all of whom have undergone
rigorous training to see them well-
schooled in the business of travel
management.
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CTM Annual Report 2012
t a
a f
i o n a l
N a t
T r a v e l
r y
I n d u s t
A w a r d s
BEST NATIONAL
CORPORATE TRAVEL
MANAGEMENT COMPANY
CTM
WINNER
2011
Awarded
Best National
Corporate Travel
Management
Company for
seven of the past
nine years
innovating in
the business
model
CTM is all about service. Founded upon the principles of value delivery and
transparency, CTM’s highly personalised service model and commitment
to innovation in both technology and ideas have seen CTM awarded as the
Australian Federation of Travel Agents (AFTA) Best National Corporate Travel
Management Company for seven of the past nine years.
CTM’s emphasis on service allows it to deliver a compelling point of difference for its
clients. CTM understands that a ‘one size fits all’ strategy is not an approach which
delivers value, which is why CTM tailors and personalises every element of the travel
management process.
This commitment to tailored solutions and exceptional service ensures maximum
return on the business travel investment of clients while delivering needs-driven
tailored solutions alongside a dynamic and flexible account management model.
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• Greater range of
innovation client
products and
services
• Rigour around
Sales Strategy
• Cross-sell across
CTM, USA and
MICE
• SME offering
• Use BI tool to offer
enhanced ROI
• Survey results linked to
business plans
• Aligned to KPIs
• Feedback to innovation
process for continuous
improvement
Client Win
and Retain
Acquisitions
• Bed-down USA
• Continue to explore
future acquisitions
Strategy
Staff and
Client
Satisfaction
Revenue
Per FTE
• Productivity project
well advanced
• Creates time to
service, eliminates
non productive
workflow
• Enhance client service
and experience
In the year to 30 June 2012
CTM’s TTV was 35.6% higher
than the previous year
2011
2012
$502m
TTV
$681m
TTV
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CTM Annual Report 2012
We pride ourselves on involving our
customers in the creation of new tools,
gaining their feedback and using that
feedback to bring innovative and
needs-driven solutions.
S t a ff
P ro fi l e
business model
Laura Ruffles
Chief Operating Officer
Tenure with CTM: 2.5 years
“At Corporate Travel Management, we realise that being innovative is not
just important, indeed, it is mandatory for those organisations who wish
to be successful,” said Laura Ruffles.
“We pride ourselves on involving our customers in the creation of our
new tools, in gaining their feedback and using that feedback to bring
innovative and needs-driven solutions to the market.
“Our approach means that we are able to provide our clients with
compelling and valuable offerings, while reinforcing our position as an
industry-leader as well as a valuable and flexible business partner for our
clients.
“The past 12 months have been very exciting at CTM and the next 12
months are shaping up to be equally interesting - I couldn’t be happier to
be part of the CTM team as we continue our mission to lead the way for
our clients and our staff.”
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CTM Annual Report 2012
C a s e
S t u d y
q u i c k l o o k
Focus: Consolidation
Client: Construction Industry
$1.8 Million cost savings
Through our consolidated approach to the negotiation of
direct supplier agreements, a cost saving of $1.8 Million
was achieved for our client, exceeding their desired $1
Million savings target by $800K.
Online uptake increase of 27%
Through the implementation of a consolidated travel
management program, the purchasing behaviour
throughout our client’s company changed significantly, with
an online uptake increase of 27% (from 57% to 85%).
The ability of CTM to initiate, implement and execute
a consolidated travel management plan in a deeply
fragmented organisation has proved critical for
the client.
Case
Study
quicklook
Focus: Cost Reduction
Client: Resource Sector
Total travel spend down by $5.4 Million
In the first year of implementation, our client’s domestic
travel spend was reduced by 22% ($3.2M) and
international travel spend by 32% ($2.2M).
These expense reductions were achieved despite
substantial increases in the number of sectors booked.
Changes to booking behaviour also enabled substantial
reductions to Average Sector Prices. In total, over 20%
total cost reductions were achieved.
Online uptake increase of 40%
Online Booking Tool usage increased from 20% to 60% in
the first week of CTM’s new travel policy implementation
and now sits consistently at this level or above.
These significant cost reductions were achieved
through changes to booking behaviour and increased
policy compliance which, together, contributed to
over $5.4M in savings for the company.
CTM exhibited its ability
to drive savings through
consolidation and
behavioural change.
CTM demonstrated an ability
to drive cost reductions
through tailored policy
management and fostering
behavioural change.
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innovating in
operations
A strong operational platform is a
necessary component to support
the innovations and efficiencies of a
company such as Corporate Travel
Management.
Corporate Travel Management continues to look at ways to innovate,
not only for its clients, but also for its staff, which is why the Company
has introduced various internal programs to support the operational
foundation, whilst also improving optimum workflow and efficiency.
Some innovations include an increased focus on automation, to enhance
the day to day productivity of consultants, the introduction of an internal
feedback system to mine for the next ‘big idea’ from the people who
have day-to-day contact with our clients, and improvements to our
internal systems and our client facing Online Booking Tool. Work has
also been undertaken to upgrade existing systems such as our Customer
Relationship Management tool, allowing staff to become more dynamic,
innovative and responsive in the management of our clients’ travel
programs.
CTM is also looking to the future, with a focus on succession planning,
career transition opportunities and a graduate program.
In the year to 30 June 2012
CTM’s NPAT was 42.7% higher
than the previous year
$8.3m
NPAT
2011
2012
(NPAT - Net Profit After Tax)
$11.8m
NPAT
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CTM Annual Report 2012
S t a ff
P ro fi l e
operations
Adriana Pesavento
Operations Manager (Victoria)
Tenure with CTM: 7.5 years
“The operational foundation of any business is critical to its success - at
CTM, we have chosen to base our foundation upon the building blocks of
innovation and strategy,” said Adriana Pesavento.
“By focusing in on innovation, we are able to be constantly aware of the
changing landscape of our dynamic industry, and be ready to adapt,
respond and tailor solutions for our clients according to the environmental
elements in play at any particular point in time.
“In short, this approach not only allows us to think differently to others
in the marketplace, but also allows us to deliver for our clients each and
every day.
“The growth, innovative approach, passion and pride that I see in action
every day give me enormous confidence as I continue my exciting
journey at a company which I believe has its best years ahead of it.”
The growth, innovative
approach, passion and pride
that I see in action every day
give me enormous confidence.
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resource travel
management
an offering from corporate travel management
Resource
Travel
Management
I n 2 0 1 2 w e
i n t r o d u c e d
R e s o u r c e
T r a v e l
M a n a g e m e n t .
Specialised
services and
products to move
resource industry
teams efficiently,
safely and cost
effectively.
innovating in
client service
Corporate travel management is unlike
any other travel management company.
We pride ourselves on going above and
beyond industry expectations and in
setting consistently new standards which
reinforce our multi-award winning status.
CTM’s unique and refreshing service offering provides clients with a genuine point
of difference to the global travel management chains with a focus on return on
investment, tailored and needs-driven solutions and expertise.
A unique organisational structure sees clients assigned a Client Value Manager as
well as a dedicated team of consultants, all of whom have undergone rigorous training
to see them well-schooled in the business of travel management.
This account management structure is supported by a unique approach to staff
remuneration. Salaries are directly attributable to performance and client service and
are not focused on commission, revenue or yield generated. Instead, CTM places the
focus upon its consultants’ ability to service CTM’s clients across a series of robust
metrics that are put in place to deliver outstanding outcomes across every client
objective.
Today, more than ever before, CTM employees are enabled to deliver in-depth
analysis and insight of client travel programs thanks to the introduction of CTM’s
Business Intelligence reporting platform. This cutting edge tool provides a wide array
of data available for analysis and presentation for the benefit of client programs.
www.travelrtm.com
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CTM Annual Report 2012
CTM’s culture revolves around
personalised service and as such
each and every one of our staff is
committed to delivering service
which adds value and exceeds
expectations for clients.
S t a ff
P ro fi l e
client service
Kim Wethmar
General Manager (New South Wales)
Tenure with CTM: 7 years
“Our people - our consultants, our client value managers and a
passionate support team - are the heart of our business and the face of
our service delivery,” said Kim Wethmar.
“CTM’s culture revolves around personalised service and, as such, each
and every one of our staff is committed to delivering service which adds
value and exceeds expectations for clients.
“CTM supports this dedication with continuous innovation in the delivery
of diagnostic tools and tailored travel solutions, and by taking an
inquisitive and creative approach to new client-driven systems, processes
and solutions.
“I am proud to know our clients value our approach as it provides them
a fresh and agile business partner which is constantly evolving and
enhancing its program with new and improved approaches that result
in cost savings, improved speed, more accurate bookings and more
detailed management information reporting than ever before.”
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21
in 2012 we launched
ctm business
intelligence
C T M B u s i n e s s
I n t e l l i g e n c e :
R e a l - t i m e
a c c e s s t o t ra v e l
m a n a g e m e n t d a t a
o n l i n e a t a n y t i m e
innovating in
products
Corporate Travel Management is
dedicated to developing the most
compelling and industry-leading
tools for our clients and for our
staff.
During the 2011/2012 financial year, CTM has introduced:
• CTM Business Intelligence – providing clients with real-time
access to their travel management data online at any time.
• Ticketbank – allowing clients to actively search and use
available credits on hold for the first time.
• u-approve - introducing a streamlined online approach to pre-
trip approval to clients.
Each of these products provide a perfect example of the CTM
philosophy of listening to clients and providing the tailored solutions
that they need and desire.
This approach will continue in 2012/2013, with a number of product
enhancements and developments already in the pipeline. The
release of these new products will again elevate the CTM product
offering, as well as further support the delivery of effective client
outcomes.
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CTM Annual Report 2012
S t a ff
P ro fi l e
products
Andrea Joseph
Internal Services Manager
Tenure with CTM: 6 months
“When it comes to product development at CTM, we strive to take a
collaborative, flexible approach to building compelling needs-driven
solutions for our clients,” said Andrea Joseph.
“By treating client feedback as an integral part of the product and service
development process, CTM is able to deliver innovative solutions which
improve the working lives of clients, increase the cost effectiveness and
efficiencies of their travel programs and tackle issues presented by our
dynamic and ever-challenging marketplace in a proactive and industry-
leading fashion.
“By doing so, we are able to create not only a rewarding program for our
clients, but also for ourselves. When you combine this with our extremely
hard working and dedicated team, who are always focused on the next big
opportunity to provide our clients with great service, it is clear why I love it
here at CTM.”
When it comes to product
development at CTM, we
strive to take a collaborative,
flexible approach to building
compelling needs-driven
solutions for our clients.
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CTM Annual Report 2012
innovating for
our people
Corporate Travel Management
recognises the vital role our people
play in our success. As a service-
orientated business, the development,
wellbeing and emotional happiness
of staff is paramount for continued
success.
In this vein, in 2011/2012, CTM undertook a number of staff initiatives,
including:
• The first annual CTM All Stars event – incorporating an employee
conference and awards night – recognising our best and brightest and
enabling three days of education and ideas sharing.
• VIBE survey – CTM’s annual VIBE employee survey, gathering
feedback anonymously from all employees.
• Extra mile program – recognising consultants throughout the year for
going the ‘extra mile’ for clients.
Feedback and outcomes from such initiatives allows CTM to continue as
an innovative leader in the corporate travel management space.
The collection of intelligence is critical in not only carving out competitive
advantages, but also assists CTM in creating and delivering needs-driven
travel management solutions for its clients.
40% increase
in revenue
25% increase in
FTE staff to 475
25%
increase
40%
increase
2012
26
26
2012
The innovations for staff at
CTM are a continually evolving
effort by CTM’s management,
not only relating to benefits
and recognition, but also
to innovations around our
technology.
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CTM Annual Report 2012
CTM have shown determined
efforts to attract, nurture
and retain its staff by way
of innovation.
S t a ff
P ro fi l e
our people
Liz Kriewaldt
Corporate Consultant,
CTM All Stars Value Award winner for Client Focus
Tenure with CTM: 6 years
“Over the nearly six years I have been with CTM, I have witnessed an
evolution of innovation in relation to staff programs,” said Liz Kriewaldt.
“CTM’s extra mile program and annual CTM All Stars awards, combined
with the opportunities allowed for through a flexible working environment,
are just a few of the innovative measures CTM have put in place to
create a healthier and more productive workplace.
“The effects these innovations have on staff morale and, for CTM, are
obvious - happy and satisfied staff will naturally create a high office
morale, which then translates into more effective dealings between
consultants and clients. Higher staff morale also delivers a high staff
retention rate and achieves greater office cohesiveness, with staff
members enjoying each other’s company.
“I see the innovations for staff at CTM as a continually evolving effort by
CTM’s management, not only relating to benefits and recognition, but
also to innovations around our technology approach. This also makes the
consultants’ work flow more seamless and productive, leading to greater
levels of customer satisfaction and client retention.
“I have been a travel consultant for more than twenty years and I
have seen a much more determined effort (in comparison to previous
employers) by CTM’s management to attract, nurture and retain its staff
by way of innovation.
“Working for CTM has been a very rewarding experience for me - I feel
each day, I have been allowed to work to the best of my abilities, in the
knowledge that my clients appreciate the service I can provide them.”
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29
senior
leadership
team
directors
CTM Annual Report 2012
Jamie Pherous
CEO/
Managing Director
Laura Ruffles
Chief Operating Officer
Steve Fleming
Chief Financial Officer
Tony Bellas
Chairman
Greg Moynihan
Independent Non-
Executive Director
Stephen Lonie
Independent Non-
Executive Director
Claire Gray
Executive Director
Global Development
Laura Ruffles, Corporate
Travel Management’s Chief
Operating Officer, has
significant local, regional and
global business experience.
In a career of more than 18
years, she has led teams
across strategy, operations,
product development,
relationship management,
sales, business planning and
technology. Laura plays a
key role in business planning,
innovation, client growth, profit
contribution and coaching her
management team.
Steve Fleming is
responsible for Corporate
Travel Management’s
finance function, treasury
management, key stakeholder
liaison, and strategic planning
in conjunction with the
Managing Director and Board.
Steve has more than 20 years’
experience in commercial
finance roles gained with high
growth companies across
a number of industries and
countries including Abbey
National, TrizecHahn,
Deutsche Morgan Grenfell and
Arthur Andersen.
Jamie Pherous, CEO/
Managing Director, founded
Corporate Travel Management
in 1994. He has built the
company from its headquarters
in Brisbane to become the
largest privately-owned travel
management company in
Australia and, in late 2010,
became successfully listed
on the Australian Securities
Exchange (ASX). Prior to
establishing CTM, Jamie
was employed by Arthur
Andersen (now Ernst & Young)
as a chartered accountant
specialising in business
services and the financial
consulting division in Australia,
Papua New Guinea, and the
United Arab Emirates.
Tony Bellas has more than
27 years experience in both
the government and private
sectors. Tony is currently
pursuing his own business
interests and has previously
held positions of CEO of
Ergon Energy, CS Energy
and Seymour Group. Prior
to this he was Queensland’s
Deputy Under Treasurer,
with oversight of a number
of Treasury operations
including Fiscal Strategy,
Office of Government Owned
Corporations and Office of
State Revenue.
Greg Moynihan is a former
CEO of Metway Bank Limited
and has also held senior
management and executive
positions with Citibank
Australia and Suncorp
Metway. Since leaving
Suncorp Metway in 2003,
Greg Moynihan has pursued
a number of business
interests, primarily in the
investment management and
private equity sectors.
Stephen Lonie is a Chartered
Accountant, with more than
40 years industry experience,
and is a former Managing
Partner of the international
accounting and consulting
firm, KPMG. He now
practices as an independent
management consultant and
business adviser. Stephen
is currently Chairman of
Jellinbah Resources Pty Ltd
(since 2002) and of UQ Sport
Ltd (since 2012), and a non-
executive Director of MyState
Limited (since 2011).
Claire Gray brings 25 years
experience of Corporate Travel
Management. Her career
within the travel industry
began in 1984 at Harvey
World Travel. In 1989, Claire
joined with Craig Smith to
form the independent travel
management company,
Travelogic - which merged with
Corporate Travel Management
in 2008 to create one of
the largest business travel
agencies in Australasia.
30
31
CTM Annual Report 2012
CTM Annual Report 2012
annual
financial
report
for the year ended
30 June 2012
Corporate Travel Management Limited
ABN 17 131 207 611
Registered office:
27A/52 Charlotte Street
Brisbane Queensland 4000
Directors’ Report
Corporate Governance Statement
Corporate Travel Management Limited Financial Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
1. Corporate information
2. Summary of significant accounting policies
3. Segment reporting
4. Revenue
5. Other Income
6. Expenses
7.
Income tax
8. Earnings per share
9. Dividends paid and proposed
10. Cash and cash equivalents
11. Trade and other receivables
12. Financial assets at fair value
13. Other current assets
14. Plant and equipment
15. Intangible assets
16. Impairment testing of goodwill
17. Trade and other payables
18. Borrowings
19. Provisions
20. Contributed equity, reserves and retained earnings
21. Financial risk management objectives and policies
22. Business combinations
23. Commitments and contingencies
24. Related party disclosures
25. Parent entity financial information
26. Auditors’ remuneration
27. Events occurring after the reporting period
28. Director and Executive disclosures
Directors’ Declaration
Independent Auditor’s Report to the members of
Corporate Travel Management Limited
Shareholder Information
Corporate Directory
34
46
54
55
56
57
58
58
68
70
70
71
72
75
76
77
79
80
80
81
82
83
84
85
87
88
90
92
97
98
100
101
101
102
104
105
107
109
32
33
CTM Annual Report 2012
Directors’ Report
The Directors present their report together with the financial
report of Corporate Travel Management Limited and its
controlled subsidiaries (the “Group”) for the financial period
ended 30 June 2012.
DIRECTORS
The Directors of the Group at any time during or since the
end of the financial year are:
• Mr T Bellas.
• Mr S Lonie.
• Mr G Moynihan.
• Mr J Pherous.
• Ms C Gray.
All Directors have been in office since the start of the
financial period to the date of this report.
INFORMATION ON DIRECTORS
Tony Bellas
MBA, BEcon, DipEd, FAIM, MAICD, ASA
Independent Non-Executive Director – Chairman
Tony Bellas has more than 27 years experience in both the
government and private sectors. Tony is currently pursuing
his own business interests and is the Principal of Qld
Infrastructure Partners. As well, Tony is currently a Non-
Executive Director of Australian Water (Qld) Pty Ltd (since
2010), Chairman of ERM Power Limited (since 2009) and
Director of Endeavour Foundation.
Tony has previously held positions of Chief Executive Officer
of Ergon Energy Ltd, CS Energy Ltd and Seymour Group
Pty Ltd. Prior to this appointment, he was Queensland’s
Deputy Under Treasurer, with oversight of a number of
Queensland Treasury operations including Fiscal Strategy,
Office of Government Owned Corporations and Office of
State Revenue.
In 1999, whilst at Queensland Treasury, Tony led the
teams responsible for the sale of the Queensland TAB
and the Queensland Government’s interest in the Bank
of Queensland. Tony was also a member of the team
that oversaw the merger, in 1996, of the Suncorp and
QIDC entities into the publicly listed company, Metway
Bank, creating the new group SuncorpMetway. His team
then managed the staged sell-down of the Queensland
Government’s shareholding in SuncorpMetway.
Former directorships in last 3 years:
• Non-Executive Director of Watpac Limited (2008 to
2010).
• Non-Executive Director of Guildford Coal Limited
(2010 to 2012).
Special responsibilities:
• Chair of the Board.
• Audit and Risk Management Committee member.
• Remuneration Committee member.
• Chair of Nominations Committee.
Jamie Pherous
BCom ACA
Managing Director and Chief Executive
Jamie Pherous founded Corporate Travel Management
in Brisbane in 1994. He has built the Company from its
headquarters in Brisbane to become the one of the largest
travel management companies in Australia and New
Zealand, employing more than 500 staff.
Prior to establishing Corporate Travel Management, Jamie
was employed by Arthur Andersen, now Ernst & Young, as a
Chartered Accountant, specialising in business services and
financial consulting in Australia, Papua New Guinea and the
United Arab Emirates.
Jamie was also a major shareholder and co-founder of an
online hotel booking engine, Quickbeds.com.au, which was
sold to Flight Centre Group in 2003.
Jamie is currently a Director of the Australian Federation of
Travel Agents.
Former directorships in last 3 years:
• None.
Special responsibilities:
• Managing Director.
Greg Moynihan
BCom, Grad Dip SIA, CPA, FFin, MAICD
Independent Non-Executive Director
Greg Moynihan is a former Chief Executive Officer of
Metway Bank Limited. He has also held senior management
and executive positions with Citibank Australia and
SuncorpMetway over a range of disciplines including
financial and capital management, investment management,
corporate strategy and marketing, as well as having primary
accountability for business operations covering general
insurance, business banking, retail banking and wealth
management.
Since leaving SuncorpMetway in 2003, Greg has pursued
a number of business interests, primarily in the investment
management and private equity sectors.
Greg is currently a Non-Executive Director of Ausenco
Limited (since 2008) and Sunwater Limited (since 2007),
Chairman of Urban Art Projects Pty Ltd and
a Director of several private investment
companies. He has previously held directorships
with Cashcard Australia Ltd, LJ Hooker
Ltd, RACQ Insurance Ltd, HFA Limited and
SuncorpMetway Ltd (various subsidiaries).
Former directorships in last 3 years:
• None.
Special responsibilities:
• Audit and Risk Management Committee
member.
• Chair of Remuneration Committee.
• Nominations Committee member.
Stephen Lonie
BCom, MBA, FCA, FFin, FAICD, FIMCA, ACS
Independent Non-Executive Director
Stephen Lonie is a Chartered Accountant with
more than 40 years industry experience, and is
a former Managing Partner Queensland of the
international accounting and consulting firm,
KPMG. He now practices as an independent
management consultant and business adviser.
Stephen is currently Chairman of Jellinbah
Resources Pty Ltd (since 2002) and a non-
executive Director of MyState Limited (since
2011).
Former directorships in last 3 years:
• Non-Executive Director Oaks Hotels &
Resorts Limited (2011 to 2011).
• Chairman Australian Agriculture Company
Limited (2009 to 2010).
• Chairman The Rock Building Society Limited
(2010 to 2011).
Special responsibilities:
• Chair of Audit and Risk Management
Committee.
• Remuneration Committee member.
• Nominations Committee member.
Claire Gray
DIP TTM
Executive Director
Claire Gray brings 25 years experience to
Corporate Travel Management. Her career
within the travel industry began in 1984 at
Harvey World Travel. In 1989, Claire joined
with Craig Smith to form the independent travel
management company, Travelogic, servicing
Macquarie Bank. Travelogic merged with
CTM Annual Report 2012
Corporate Travel Management in 2008 to create
one of the largest business travel agencies in
Australasia.
Claire currently holds senior roles in GlobalStar
Alliance including Operating Committee member
of the Board and Vice Chairman of the Asia
Pacific region. GlobalStar Alliance is a worldwide
network of travel management companies
owned and managed by local entrepreneurs in
approximately 66 countries.
Former directorships in last 3 years:
• None.
Special responsibilities:
• No additional special responsibilities noted.
COMPANY SECRETARIES
• Mrs L McCabe.
• Mr S Fleming.
Lyndall McCabe
Lyndall McCabe has held managerial positions
with Corporate Travel Management since
joining the Company in 2000, including Finance
Manager and National Operations and Human
Resources Manager.
Lyndall facilitated acquisitions including Rhodes
Corporate Travel and the establishment of a
start-up operation in Sydney.
She has more than 13 years experience in
the travel industry sector, having previously
been employed by a travel consolidator. In
2005, Lyndall became a shareholder and was
appointed as a Director of Corporate Travel
Management Group Pty Ltd (subsequently
resigned 23 June 2010 as part of Corporate
Travel Management’s transition to a listed public
corporation). Lyndall’s current role is Audit and
Risk Manager.
Lyndall is a member of the Chartered Secretaries
of Australia.
Steve Fleming
BBus (Accounting) ACA
Steve Fleming currently holds the position of
Chief Financial Officer and is responsible for
the finance function, treasury management, key
stakeholder liaison and strategic planning, in
conjunction with the Board.
34
35
CTM Annual Report 2012
Steve has more than 20 years experience in commercial finance roles gained with high growth companies across a number of
industries and countries including Abbey National, TrizecHahn, Deutsche Morgan Grenfell and Arthur Andersen. Prior to joining
Corporate Travel Management in 2009, Steve was Group Finance Manager of Super Retail Group.
Steve is a member of the Institute of Chartered Accountants.
INTERESTS IN SHARES AND OPTIONS
As at the date of this report, the relevant interests of the Directors in the shares of the Company are set out in the following
table. No Director held any options to acquire shares in the Company.
Director
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Mr J Pherous
Ms C Gray
Ordinary shares held
at 30 June 2012
200,000
200,000
200,000
26,599,728
5,424,999
MEETINGS OF DIRECTORS
The number of meetings of the Company’s Board of Directors and each Board Committee held during the year ended 30 June
2012, and the number of meetings attended by each Director were:
Full meetings of
directors
Audit & Risk
Management
Remuneration
Nominations
Committee meetings
DIVIDENDS
Per share
$’000
Final franked dividend approved
by the Board on 29 August 2012 in
relation to the 2012 financial year:
• On ordinary shares
6 cents
4,498
DIVIDENDS PAID AND PROPOSED IN THE YEAR
Per share
$’000
Interim for the year
• On ordinary shares
3 cents
2,241
Dividend provided but not paid at
30 June 2011
• On ordinary shares
5 cents
3,572
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year consisted
of managing the purchase and delivery of travel services for
its clients. There were no significant changes in the nature of
the activities of the Group during the year.
B
A
B
A
B
OPERATING AND FINANCIAL REVIEW
Director
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Mr J Pherous
Ms C Gray
A
B
10
8
10
10
8
10
10
10
10
10
A
2
2
2
*
*
2
2
2
*
*
3
2
3
*
*
3
3
3
*
*
1
1
1
*
*
1
1
1
*
*
A = Number of meetings attended.
B = Number of meetings held during the time the Director held office or was a member of the Committee during the year.
* Not a member of the relevant committee.
The Committee Charters provide that the following number of meetings are expected to be held in a year, and the number of
meetings shown have held for the year ended 30 June 2012. A full schedule of meetings is already in place for the year ended
30 June 2013.
Full meetings of Directors
Audit & Risk Management*
Remuneration
Nominations
Number of meetings
required per Charter
Number of meetings
held in year to 30 June 2012
10
4
3
2
10
2
3
1
* Some Audit and Risk Management meetings were held in conjunction with Board meetings.
Review of operations
The Company continued to engage in its principal activity,
being the provision of travel services, the results of which are
disclosed in the following statements.
Further discussion of operating results for the year is
included in the Chairman’s and Managing Director’s Reports
on pages 2 to 7.
Operating results for the year
The net profit after tax of the Group for the financial period,
after providing for income tax, amounted to $11,798,000.
Total Transaction Value (“TTV”) (unaudited)
TTV represents the amount at which travel products and
services have been transacted across the consolidated
entity’s operations whilst acting as agents for airlines and
other service providers, along with other revenue streams.
TTV does not represent revenue in accordance with
Australian Accounting Standards. TTV is stated net of GST.
TTV is utilised by management as a key travel industry
metric.
CTM Annual Report 2012
2012
$’000
2011
$’000
Total Transaction Value (TTV)
681,300
502,341
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors, there were no significant
changes in the state of affairs of the Group during the
financial year not otherwise disclosed in this report or the
consolidated financial statements.
SIGNIFICANT EVENTS AFTER BALANCE DATE
The acquisition of 100% of the shares of R&A Travel Inc
(“R&A”), a US based travel management company, was
completed on 2 July 2012. As part of this transaction, a
deposit of $244,459 (US $250,000) was paid prior to 30
June 2012, and $4,527,151 (US $4,613,620) of cash and
$516,515 (US $526,380) of shares is payable on completion.
Further contingent consideration of up to $3,885,782
(US $3,960,000) in cash and share earn-out may also be
payable on 31 August 2013 and 31 August 2014, based
on R&A Travel Inc achieving annual EBITDA earnings of
US $1,700,000 by 30 June 2014. Should actual EBITDA
earnings not reach this level by 30 June 2014, the amount of
the cash and share earn-out will be reduced.
The determination of the final amount of the total
consideration will depend on results to 30 June 2014 and,
at the date of this report, a formal assessment as to whether
these criteria will be met has not yet been finalised.
There have been no other matters or circumstances, not
otherwise dealt with in this report, that will significantly affect
the operation of the Company, the results of those operations
or the state of affairs of the Company or the Group for
subsequent financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
There were no likely developments in the operations of the
Group, from time to time, that have not been finalised at the
date of this report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group has determined that no particular or significant
environmental regulations apply to its operations.
REMUNERATION REPORT
This remuneration report sets out remuneration information
for Corporate Travel Management Limited’s non-executive
Directors, executive Directors and other key management
personnel of the group and the Company.
36
37
CTM Annual Report 2012
Directors and executives
disclosed in this report
(i) Directors
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Mr J Pherous
Ms C Gray
(ii) Other key
management personnel
Mr S Fleming
Ms L Ruffles
Ms N Fleming
Non-Executive Director.
Non-Executive Director.
Non-Executive Director.
Managing Director.
Executive Director.
Chief Financial Officer.
Chief Operating Officer.
General Manager Corporate Services (included in other executives until
commencing extended leave 16 February 2012).
Changes since the end of the reporting period
There have been no changes to this list since the end of the reporting period.
Role of the Remuneration Committee
The Remuneration Committee is a Committee
of the Board. The role of the Remuneration
Committee is to advise on remuneration and
issues relevant to remuneration policies and
practices, including for senior executives and
non-executive Directors.
Corporate Travel Management’s Corporate
Governance Statement provides further
information on the role of this Committee.
Principles used to determine the nature and
amount of remuneration
Non-executive Directors
Fees and payments to non-executive Directors
reflect the demands which are made on, and the
responsibilities of, the Directors. Non-executive
Directors’ fees and payments are reviewed
annually by the Board. The Chair’s fees are
determined independently to the fees of non-
executive Directors. The Chair is not present at
any discussions relating to determination of his
own remuneration.
Non-executive Directors do not receive
performance-based remuneration.
38
38
Directors’ fees
The current base fees were last reviewed with
effect from 1 July 2011.
Non-executive Directors’ fees are determined
within an aggregate Directors’ fee pool limit,
which is periodically recommended for approval
by shareholders. The maximum approved
amount currently stands at $350,000.
Retirement allowances for non-executive
Directors
Superannuation contributions required under the
Australian superannuation guarantee legislation
are made and are deducted from the Directors’
overall fee entitlements.
Executive Remuneration Framework
The objective of the Group’s executive reward
framework is to ensure reward for performance
is competitive and appropriate for the results
delivered. The framework aligns executive
reward with achievement of strategic objectives
and the creation of value for shareholders, and
conforms with market practice for delivery of
reward.
The Board ensures that executive reward
satisfies the following key criteria for good
reward governance practices:
• Competitiveness and reasonableness;
• Alignment to the interests of shareholders;
• Performance linkage / alignment of executive
compensation;
• Transparency; and
• Capital management.
The Group has structured an executive
remuneration framework that is considered to be
market competitive and complementary to the
reward strategy of the organisation.
The two key elements of the framework are:
• Alignment to shareholders’ interests:
- Has economic profit as a core component
of plan design;
- Focuses on sustained growth in
shareholder wealth, consisting of dividends
and growth in share price, and delivering an
appropriate return on assets, as well as
focusing the executive on key non-financial
drivers of value; and
- Attracts and retains high caliber executives.
• Alignment to program participants’ interests:
- Rewards capability and expertise;
- Reflects competitive reward for contribution
to growth in shareholder wealth;
- Provides a clear structure for earning
rewards; and
- Provides recognition for individual and team
contributions.
The framework provides for a mix of fixed and
variable remuneration, and a blend of short and
long-term incentives. As executives gain seniority
with the Group, the balance of this mix shifts to a
higher proportion of ‘at risk’ rewards.
The current executive remuneration framework
currently has two components:
• Base remuneration and benefits, including
superannuation; and
• Short-term performance incentives.
There is currently no long-term incentives
program in place, however, this component will
be assessed during the coming year, noting
that the Managing Director is currently the
Company’s major shareholder.
CTM Annual Report 2012
The combination of these components comprises
an executive’s total remuneration. The Group
intends to continue to review incentive plans
during the year ending 30 June 2013, to ensure
continued alignment with the Company’s
financial and strategic objectives.
Fixed remuneration and benefits
Base remuneration and benefits are structured
as a total employment cost package, which
may be delivered as a combination of cash
and prescribed non-financial benefits at the
executives’ reasonable discretion.
Executives are offered a competitive base
remuneration package that comprises the fixed
component of remuneration and rewards. An
external remuneration consultant has provided
analysis and advice to ensure base remuneration
reflects the market for a comparable role.
Base remuneration for executives is reviewed
annually, to ensure the executive’s remuneration
is competitive with the market. An executive’s
remuneration is also reviewed on promotion.
There is no guaranteed base remuneration
increase included in any executives’ contracts.
Executives receive benefits, including motor
vehicle benefits.
Superannuation
Superannuation contributions are paid
in accordance with relevant Government
legislation, to employee nominated defined
contribution superannuation funds.
Short-term incentives
If the Group achieves a pre-determined profit
target set by the Remuneration Committee, a
short-term incentive (“STI”) pool is available
to executives and other eligible participants.
Cash incentives (bonuses) are payable around
30 September each year. Using a profit target
ensures variable reward is only available when
value has been created for shareholders and
when profit is consistent with Corporate Travel
Management’s approved business plan. The
incentive pool is leveraged for performance
above the threshold, to provide an incentive for
executive out-performance.
Executives have a target STI opportunity
depending on the accountabilities of the role
and impact on the organisation or business unit
39
CTM Annual Report 2012
CTM Annual Report 2012
performance. The maximum target bonus opportunity in the
2012 year was 31% of base remuneration.
the discretion to adjust short-term incentives downwards in
light of unexpected or unintended circumstances.
Each year, the Remuneration Committee considers the
appropriate targets and key performance indicators (“KPI”s),
to link the STI plan and the level of payout if targets are met,
including setting any maximum payout under the STI plan,
and minimum levels of performance to trigger payment of
STI.
For the year ended 30 June 2012, the KPIs linked to STI
plans were based on Group objectives, with the key financial
metrics being consolidated Earnings Before Interest, Tax,
Depreciation and Amortisation.
The Remuneration Committee is responsible for assessing
whether the KPIs are met. The Remuneration Committee has
The STI target annual payment is reviewed annually.
Long-term incentives
There are currently no long-term incentives programs in
place, however, this position will be assessed during the
coming year, in conjunction with consideration to introduce
an Employee Share Plan.
Details of remuneration
Amounts of remuneration
Details of the remuneration of the Directors and the key
management personnel of the Group, as defined in AASB
124 Related Party Disclosure are set out in the following
tables.
Key management personnel of the group
Short-term employee benefits
Long-term benefits
Cash salary
and fees
Short-term
incentive
Annual
leave
Non-
monetary
benefits
Super-
annuation
$
$
$
$
$
Long
service
leave
$
Total
$
70,000
50,000
50,000
170,000
-
-
-
-
-
-
-
-
-
-
-
-
6,300
4,500
4,500
15,300
-
-
-
-
76,300
54,500
54,500
185,300
300,000
86,605
(13,846)
9,840
34,794
5,006
422,399
123,884
-
-
269,231
86,605
(7,786)
110,051
5,479
14,962
-
-
-
-
-
123,884
32,025
1,730
381,805
10,398
650
141,540
223,461
40,479
(6,185)
6,509
23,755
2,878
290,897
1,196,627
219,168
(12,855)
16,349
116,272
10,264
1,545,825
Name
2012
Non-executive Directors
T Bellas
S Lonie
G Moynihan
Sub-total non-executive
Directors
Executive Directors
J Pherous
C Gray
Other key management
personnel of the group
L Ruffles
N Fleming b
S Fleming
Total key management
personnel compensation
40
Name
2011
Non-executive Directors
T Bellas
S Lonie
G Moynihan
Sub-total non-executive
Directors
Executive Directors
J Pherous
C Gray a
Other key management
personnel of the group
L Ruffles
N Fleming
S Fleming
Short-term employee benefits
Long-term benefits
Cash salary
and fees
Short-term
incentive
Annual
leave
Non-
monetary
benefits
Super-
annuation
$
$
$
$
$
Long
service
leave
$
Total
$
69,192
49,423
49,423
168,038
-
-
-
-
-
-
-
-
300,000
73,385
(15,000)
127,023
-
250,000
88,385
-
-
177,923
60,876
6,923
185,000
60,876
2,565
-
-
-
-
-
-
-
-
-
-
6,227
4,448
4,448
15,123
-
-
-
-
75,419
53,871
53,871
183,161
33,605
5,697
397,687
-
-
127,023
29,105
450
367,940
21,492
1,862
269,076
22,129
867
271,437
121,454
8,876
1,616,324
Total key management
personnel compensation
1,207,984
283,522
(5,512)
Listed Director and other key management personnel of the Group are included in this disclosure for the period they held the
applicable roles. Disclosure is for the full year unless as follows:
a. Appointed as Director 22 September 2010.
b.
Included in key management personnel until commencing
extended leave from 16 February 2012.
* Balances include prior period incentives paid in excess of amounts previously provided.
** Balances reflect the net impact of leave accrued and leave taken.
41
CTM Annual Report 2012
The relative proportions of remuneration that are fixed or linked to performance are as follows:
Directors of Corporate Travel
Management Limited
T Bellas
S Lonie
G Moynihan
J Pherous
C Gray (a)
Other key management
personnel of the group
L Ruffles
N Fleming (b)
S Fleming
Fixed remuneration
At risk – STI
2012 %
2011 %
2012 %
2011 %
100%
100%
100%
72%
100%
71%
100%
76%
100%
100%
100%
82%
100%
76%
77%
78%
-
-
-
28%
0%
29%
0%
24%
-
-
-
18%
0%
24%
23%
22%
Listed Director and other key management personnel of the Group are included in this disclosure for the
period they held the applicable roles. Disclosure is for the full year unless as follows:
a. Appointed as Director 22 September 2010.
b.
Included in key management personnel until commencing extended leave from 16 February 2012.
Service agreements
There are no fixed-term service agreements with Directors or key management personnel. Standard
contracts are in place for key executive employees and are reviewed annually. Employees can
terminate employment with the Group in accordance with statutory notice periods.
Share-based compensation
There are currently no share-based compensation programs in place, however, this position will be
assessed during the coming year, in conjunction with the consideration to introduce an Employee Share
Plan.
Details of remuneration: Bonuses and share-based compensation benefits
For each cash bonus included in the following tables on pages 43 - 44, the percentage of the available
bonus that was paid in the financial year, and the percentage that was forfeited because the person
did not meet the service and performance criteria is disclosed. No part of the bonus is payable in future
years.
There were no share-based compensation benefits (options) in place during the year.
CTM Annual Report 2012
Name
Directors of Corporate Travel
Management Limited
T Bellas
S Lonie
G Moynihan
J Pherous
C Gray
Other key management
personnel of the group
L Ruffles
N Fleming
S Fleming
Bonus 2012
Bonus 2011
Paid
%
Forfeited
%
Paid
%
Forfeited
%
*
*
*
*
*
*
*
*
*
60%
40%
100%
*
*
*
67%
33%
100%
*
*
100%
44%
56%
100%
*
*
*
0%
*
0%
0%
0%
*Not eligible for any bonus arrangements during the financial year.
Loans to Directors and Executives
Information on loans to Directors and Executives, including
amounts, interest rates and repayment terms are set out in
note 24 to the financial statements.
No proceedings have been brought or intervened in on
behalf of the Company with leave of the Court under section
237 of the Corporations Act 2001.
Shares under option
There are currently no unissued ordinary shares of Corporate
Travel Management Limited under option.
OFFICERS’ INDEMNITY & INSURANCE
An Officers’ Deed of Indemnity, Access and Insurance is
in place for Directors, key management personnel, the
Company Secretaries and some other executives. Liabilities
covered include legal costs that may be incurred in defending
civil or criminal proceedings that may be brought against the
officers in their capacity as officers of the Company or its
controlled entities. Disclosure of premiums paid is prohibited
under the insurance contract.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of
the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to 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.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on
assignments additional to its statutory audit duties, where the
auditor’s expertise and experience with the Company and/or
the Group are important.
The Board has considered the position and, in accordance
with the advice received from the Audit Committee,
is satisfied that the provision of non-audit services is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services
by the auditor did not compromise the auditor independence
requirements of the Corporations Act 2001 as none of the
services undermine the general principles relating to auditor
independence as set out in APES110 Code of Ethics for
Professional Accountants.
During the year, the following fees were paid or payable for
services provided by the auditor of the consolidated entity, its
related practices and non-related audit firms:
42
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43
CTM Annual Report 2012
CTM Annual Report 2012
Amounts received or due and receivable by:
PricewaterhouseCoopers Australia:
• Audits and review of the financial reports of the entity and any other
entity in the consolidated group
• Other services in relation to the entity and any other entity in the
consolidated group:
- Tax compliance
- Tax services – acquisitions
- Transaction services – Initial Public Offering
Other PricewaterhouseCoopers network firms:
• Other services in relation to the entity and any other entity in the
consolidated group:
- Tax compliance
- Tax services – acquisitions
Consolidated
2012
$
2011
$
271,737
330,870
64,522
36,000
17,990
-
-
215,288
372,259
564,148
8,843
31,916
3,530
-
40,759
3,530
413,018
567,678
AUDITORS’ INDEPENDENCE DECLARATION
A copy of the auditors’ independence declaration, as required under section 307C of the Corporations
Act 2001, is appended to this Directors’ Report.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and
Investments Commission, relating to the ‘’rounding off’’ of amounts in the Directors’ Report. Amounts
in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest
thousand dollars or in certain cases, to the nearest dollar.
Signed in accordance with a resolution of the Directors.
Auditor’s Independence Declaration
As lead auditor for the audit of Corporate Travel Management Limited for the year ended 30 June
2012, I declare that to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Corporate Travel Management Limited and the entities it controlled
during the period.
Brett Delaney
Brisbane
Partner 29 August 2012
PricewaterhouseCoopers
Mr T Bellas
Chairman
Brisbane, 29 August, 2012
Mr J Pherous
Managing Director
44
44
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
17
45
CTM Annual Report 2012
CTM Annual Report 2012
Corporate Governance Statement
Corporate Travel Management Limited (the
“Company”) and the Board are committed
to achieving and demonstrating the highest
standards of corporate governance. The
Board continues to review the framework and
practices, to ensure they meet the interests of
shareholders. The Company and its controlled
entities together are referred to as the Group in
this statement.
A description of the Group’s main corporate
governance practices is set out in this Corporate
Governance Statement. All these practices,
unless otherwise stated, were in place from the
date of the Initial Public Offering (15 December
2010) and they comply with the ASX Corporate
Governance Principles and Recommendations
(including 2010 Amendments).
PRINCIPLE 1: LAY SOLID FOUNDATIONS
FOR MANAGEMENT AND OVERSIGHT
Responsibility of the Board
The Board is responsible for the corporate
governance of the Company and has adopted
a Corporate Governance Charter (“Charter”).
A guiding principle of the Charter is that the
Board act honestly, conscientiously and fairly, in
accordance with the law and in the interests of
Shareholders, with a view to building sustainable
value for the shareholders, employees and other
stakeholders. Responsibility for the operational
conduct of the Company’s business has been
delegated to the Managing Director, who reports
to the Board regularly.
The Board’s broad function is to:
a. Chart strategy and set business and financial
targets for the Company;
b. Monitor the implementation and execution of
strategy;
c. Monitor performance against business and
financial targets;
d. Appoint and oversee the performance of
executive management; and
e. Generally, to fulfil an effective leadership role
in relation to the Company and the Group.
Power and authority in certain areas is
specifically reserved to the Board, consistent
with its function. These areas include:
a. Composition of the Board, including
appointment and removal of Directors;
b. Oversight of the Company’s operation,
including its control and accountability
systems;
c. Appointing and removing the Managing
Director;
d. Ratifying the appointment and, where
appropriate, the removal of senior
management including the Chief Financial
Officer, Chief Operating Officer and the
Company Secretary;
e. Reviewing and overseeing systems of risk
management and internal compliance and
control, codes of ethics and conduct, and
legal and regulatory compliance;
f. Monitoring senior management’s
performance and implementation of strategy;
g. Approving and monitoring financial and other
reporting;
h. The overall corporate governance of the
Company including the strategic direction,
establishing goals for management and
monitoring the achievement of these goals;
and
i. The oversight of Board’s Committees
(“Committees”).
A performance assessment for the Board was
completed in the 2012 financial year.
PRINCIPLE 2: STRUCTURE THE BOARD TO
ADD VALUE
The Board operates in accordance with the
broad principles set out in its charter, which
is available from the corporate governance
information section of the Company’s
website at www.travelctm.com.au. The Board
Charter details the Board’s composition and
responsibilities.
Board composition
The Board Charter states that the composition
of the Board should be subject to the following
principles:
a. The Board should comprise at least four
Directors with a broad range of experience,
qualifications, diversity, expertise, skills
and contacts relevant to the Group and its
business;
b. Half of the Board must be Non-Executive Directors,
independent from management; and
c. A majority of independent Directors, including the
Chairman, unless, in the circumstances of the Company,
it is reasonable for the Director not to be an Independent
Director and fully disclosed under the ASX Principles.
perceived to, materially interfere with the
Director’s ability to act in the best interests of the
Company; and
g. Has not served on the Board for a period which
could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the
best interest of the Company.’
Independence is determined by having regard to whether the
Director is free from any interest and any business or other
relationship, which could, or could reasonably be perceived
to, materially interfere with the Director’s ability to exercise
independent judgement.
A former Chief Executive Office will not qualify as an
Independent Director unless there has been at least three
years between ceasing such employment and sitting on the
Board.
The Board members may be deemed to not be independent
based upon the length of their membership on the Board and
their associated interests as shareholders and associates of
clients.
The Board must regularly assess whether each Director
remains an Independent Director in the light of the interests
disclosed by them, and each Director must provide the Board
with all relevant information for this purpose.
Directors’ independence
The Board has adopted the following definition of an
Independent Director:
‘An Independent Director is a Director who is not a member
of management i.e. a non-executive Director and who:
a.
Is not a substantial Shareholder of the Company, or an
officer of a substantial Shareholder, and is not otherwise
associated, directly or indirectly, with a substantial
Shareholder of the Company;
b. Has not, within the last three years:
(i)
(ii)
Been employed in an executive capacity by the
Company or another Group member; or
Been a Director after ceasing employment in an
executive capacity for the Company or another
Group member;
c. Has not, within the last three years, been a principal of a
professional advisor to the Company or another Group
member or an employee materially associated with the
service provided, except where the advisor might be
considered to be independent due to the fact that fees
payable by the Company to the advisor’s firm represent
an insignificant component of the advisor’s firm overall
revenue;
d.
Is not:
(i)
a material supplier or customer of the Company or
another Group member; or
(ii) an officer of or associated, directly or indirectly,
with a material supplier or customer;
e. Has no material contractual relationship with the
Company or another Group member other than as
a Director;
f.
Is free from any interest and any business or
other relationship, which could, or could reasonably be
Board members
Details of the members of the Board, their experience,
expertise, qualifications, term of office, relationships affecting
their independence and their independent status are set
out in the Directors’ report under the heading ‘Information
on Directors’. At the date of signing the Directors’ report,
the Company has two executive Directors and three non-
executive Directors. The three non-executive Directors have
no relationships adversely affecting their independence and
are deemed to be independent under the principles set out,
noting that:
• T Bellas and G Moynihan are currently Directors of
clients of the Group as detailed in note 24 to the financial
statements. Arrangements for these clients are on similar
terms to other clients thus these relationships are not
considered to be of a value or significance that adversely
affect these Directors’ independence.
Term of office
Under the Company’s Constitution, at least one third of all
Directors, being the longest serving Directors, must retire
at each Annual General Meeting. Directors, excluding the
Chief Executive Office, if a Director, must also retire if a third
Annual General Meeting falls during the period in which
they have held office. Retiring Directors are eligible to be
re-elected.
Chairman and Chief Executive Officer (“CEO”)
The Chairman must be appointed from within the Board
membership, having regard to the requirement for a clear
division of responsibility at the head of the Company. The
Board must agree a division of responsibilities between the
Chairman and Chief Executive Officer, which should be set
out in a statement of position or authority.
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CTM Annual Report 2012
CTM Annual Report 2012
The Chairman is responsible for leadership of the Board and
for the efficient organisation and conduct of the Board. The
Chairman should facilitate the effective contribution by all
Directors and promote constructive and respectful relations
amongst Directors, and between the Board and the Group’s
Senior Executives.
The Chief Executive Officer is responsible for implementing
Group strategies and policies. The Board’s Charter specifies
that these roles are separate and are to be undertaken
by separate people. The Chief Executive Officer must not
become the Chairman within three years of ceasing to be
Chief Executive Officer.
Induction
The induction provided to new Directors and senior
managers enables them to actively participate in the Board’s
decision-making processes as soon as possible. It ensures
that they have a full understanding of the Company’s
financial position, strategies, operations, culture, values and
risk management policies. It also explains the respective
rights, duties, responsibilities, interaction and roles of the
Board and senior executives and the Company’s meeting
arrangements.
Commitment
Board meetings are normally held monthly, and are expected
to occur not less than ten times in any year.
The number of meetings of the Company’s Board of
Directors and of each Board Committee held during the year
ended 30 June 2012, and the number of meetings attended
by each director is disclosed on page 36.
It is the Company’s practice to allow its executive Directors to
accept appointments outside the Company with prior written
approval of the Board. No appointments of this nature were
accepted during the year ended 30 June 2012.
Conflict of interests
Where Directors are currently Directors of clients of the
Group, as detailed in note 24 to the financial statements,
arrangements for these clients are on similar terms to other
clients and no matters involving these specific clients were
required to be discussed at a Board or Committee level
during the current year.
In accordance with the Board’s charter, should a potential
conflict be noted, the Director concerned is required to
declare the interests in those dealings to the Company and
take no part in decisions relating to them or the preceding
discussions. In addition, the Director would not receive any
papers from the Group pertaining to those dealings.
Independent professional advice
With the prior approval of the Chairman, which may not be
unreasonably withheld or delayed, each Director has the
right to seek independent legal and other professional advice
concerning any aspect of the Company’s operations or
undertakings, in order to fulfil their duties and responsibilities
as Directors. Any reasonable costs incurred are borne by the
Company.
Performance assessment
The Board undertakes an annual self-assessment of its
collective performance, the performance of the Chair and
of its Committees. The assessment also considers the
adequacy of induction and continuing education, access
to information and the support provided by the Company
Secretary. Management is invited to contribute to this
appraisal process. The results and any action plans are
documented, together with specific performance goals which
are agreed for the coming year.
An external assessment of the Board’s policies and
procedures, and its effectiveness generally must be
conducted by independent professional consultants at
intervals of three years or less.
The commitments of non-executive Directors are considered
by the Nominations Committee prior to the Directors’
appointment to the Board of the Company and are reviewed
each year, as part of the annual performance assessment.
An internal assessment was performed in July 2011 and the
first external assessment is currently in progress in August
2012.
Prior to appointment or being submitted for re-election,
each non-executive Director is required to specifically
acknowledge that they have and will continue to have the
time available to discharge their responsibilities to the
Company.
The Chair undertakes an annual assessment of the
performance of individual Directors and meets privately with
each Director to discuss this assessment. Descriptions of
the process for performance assessment for the Board and
senior executives are available on the Company’s website.
Non-executive Directors
The non-executive Directors must meet at least twice each
financial year for a private discussion of management issues.
Relevant matters arising from these meetings are shared
with the full Board.
Board Committees
The Board has established a number of Committees to
assist in the execution of its duties and to allow detailed
consideration of complex issues. Current Committees of the
Board are the Audit and Risk Management, Nomination and
Remuneration Committees.
Each Committee must consist of only non-executive
Directors, the majority of whom are also Independent
Directors. The Chairman of each Committee must be an
Independent Director and not Chairman of the Board. Each
Committee must consist of no fewer than three members.
Each Committee has its own written Charter, setting out its
role and responsibilities, composition, structure, membership
requirements and the manner in which the Committee is to
operate. All of these Charters are reviewed on an annual
basis and are available on the Company’s website. All
matters determined by Committees are submitted to the full
Board as recommendations for Board decisions.
Minutes of Committee meetings are tabled at the subsequent
Board meeting. Additional requirements for specific reporting
by the Committees to the Board are addressed in the Charter
of the individual committees.
Nomination Committee
The purpose of this Committee is to provide advice and
make recommendations to the Board about the appointment
of new Directors, to ensure that it is comprised of individuals
who are best able to discharge the responsibilities of
Directors, having regard to the law and the highest
standards of governance. The role of the Committee, to
the extent delegated by the Board, also extends to making
recommendations in relation to the appointment of senior
management. Its members are Tony Bellas (Chairman),
Stephen Lonie and Greg Moynihan.
Details of Director attendance at Nomination Committee
meetings are set out in the Directors’ report on page 36.
The Committee has responsibility to:
a. Review and recommend to the Board the size and
composition of the Board;
b. Assess and develop a skills matrix, to identify the skills
required by the Board, competencies of Board members
and the extent to which the required skills, experience,
qualification and diversity are represented on the Board;
c. Assist the Board to identify suitable candidates for Board
membership and re-election;
d. Establishing processes for:
(i)
(ii)
(iii)
Ensuring the Board complies with the
Diversity Policy and that any diversity
profile identified by the Board is taken
into account in the selection and appointment
of candidates;
The evaluation of performance and
independence of the Board and individual
Directors;
Identifying, assessing and enhancing
the skills set of Directors;
(iv) Reviewing and ensuring appropriate
induction programs are in place; and
(v) Reviewing corporate governance issues as
required; and
e. Reporting to the Board on:
(i)
(ii)
Succession planning for Directors,
executives and other senior managers;
and
The diversity profile of employees.
When a new Director is to be appointed, the Committee uses
the skills matrix to prepare a short-list of candidates with
appropriate skills and experience. A number of channels are
used to source candidates, to ensure the Company benefits
from a diverse range of individuals in the selection process.
Where necessary, advice is sought from independent search
consultants.
The Committee’s nomination of existing Directors for
reappointment is not automatic and is contingent on their
past performance, contribution to the Company and the
current and future needs of the Board and Company. The
Board and the Committee are also aware of the advantages
of Board renewal and succession planning.
Notices of meetings for the election of Directors comply
with the ASX Corporate Governance Council’s best practice
recommendations.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE
DECISION MAKING
Code of ethics and values
The Company has developed and adopted a detailed code
of ethics and values to guide Directors in the performance
of their duties. The code reflects the highest standards of
behaviour and professionalism and the practices necessary
to maintain confidence in the Group’s integrity and takes into
account legal obligations and reasonable expectations of the
Company’s stakeholders.
The code of ethics forms part of the Company’s Corporate
Governance Charter, which has been formally adopted and
can be inspected on the Company’s website.
The Directors are satisfied that the Group has complied with
its policies on ethical standards.
Share Trading Policy
A Share Trading and Continuous Disclosure Policy has been
adopted by the Board, to provide guidance to the Directors,
identified employees including senior management, and
other employees (“staff”) where they are contemplating
dealing in securities of the Company or the securities of
entities with whom the Group may have dealings.
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CTM Annual Report 2012
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The Code of Conduct for transactions in securities is as
follows:
The Company defines diversity to include, but not be limited
to, gender, age, ethnicity and cultural background.
Company’s business. Its members are Stephen Lonie
(Chairman), Greg Moynihan and Tony Bellas.
a. The Share Trading and Continuous Disclosure Policy
incorporates a Code of Conduct for Transactions in
Securities (“Transactions Code”). The Transactions
Code acknowledges that it is desirable that Directors
and senior management hold securities in the Company
and is designed to ensure any dealings by Directors
and senior management and their associates in the
Company’s securities or securities of other entities is fair
and transparent.
b. The Transactions Code’s purpose is to restrict share
trading by Directors and staff to circumstances where it
is unlikely that there would be any perception of insider
trading in relation to dealings in the Company’s securities
or securities of other entities.
c. The Transactions Code prohibits share trading by
Directors and staff in securities where they are in
possession of price sensitive information. The prohibition
extends to dealings through related parties, as defined
in the Corporations Act, and to encouraging family or
friends to so deal. Communication of price sensitive
information by a Director or staff member to a person
who is reasonably likely to trade in securities is also
prohibited. A comprehensive definition of ‘price sensitive
information’ adopted by the Board is included in the
Transactions Code.
d. The Transactions Code clearly sets out the permitted
trading windows and excepted trading circumstances
by Directors and Officers of the Company. At all other
times, trading by Directors and officers of the Company
is prohibited unless written authority to trade is received
and the transaction would not be contrary to law,
for speculative gain, use insider information nor be
perceived as unfair.
The code requires written approval from the Chairman in
advance of any transactions by staff for securities valued
over $50,000.
The Directors are satisfied that the Group has complied with
its policies regarding trading in securities.
A copy of the Share Trading Policy is available on the
Company’s website.
Diversity policy
The Company is committed to complying with the diversity
recommendations published by ASX and promoting diversity
among employees, consultants and senior management,
and has adopted a policy in relation to diversity (“Diversity
Policy”).
The Diversity Policy adopted by the Board outlines the
Company’s commitment to fostering a corporate culture that
embraces diversity and provides a process for the Board
to determine measurable objectives and procedures to
implement and report against to achieve its diversity goals.
The Nomination Committee is responsible for implementing
the Diversity Policy, setting the Company’s measureable
objectives and benchmarks for achieving diversity and
reporting to the Board on compliance with the Diversity
Policy.
As part of its role, the Remuneration Committee is
responsible for formulating and implementing a Company
remuneration policy. Under the Diversity Policy, a facet of
this role includes reporting to the Board annually on the
proportion of men and women in the Group’s workforce and
their relative levels of remunerations.
The Board will assess and report annually to Shareholders
on the Group’s progress towards achieving its diversity
goals.
The Committee is responsible for a number of matters
including:
a. Board and Committee structures, to facilitate a proper
review function by the Board;
b.
Internal control framework, including management
information systems;
c. Compliance with internal controls;
d.
Internal audit function and management processes
supporting external reporting;
e. Review of financial statements and other financial
information distributed externally;
f. Review of the effectiveness of the audit function;
g. Review of the performance and independence of the
external auditors;
h. Review of the external audit function, to ensure prompt
remedial action by management, in relation to any
deficiency in or breakdown of controls;
i. Assessing the adequacy of external reporting for the
needs of Shareholders; and
j. Monitoring compliance with the Company’s Code of
The Diversity Policy is available on the Company’s website
Conduct.
In accordance with this policy and ASX Corporate
Governance Principles, the Board will establish objectives
in relation to gender diversity, if considered required. The
position at 30 June 2012 is detailed as follows:
Number of total employees
Percentage of total employees
Number of employees in senior
executive positions
Percentage of employees in
senior executive positions
Actual
Men
Women
107
21%
8
408
79%
7
53%
47%
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL
REPORTING
Audit and Risk Management Committee
The purpose of this Committee is to report to the Board on
the establishment, maintenance and operation of control
systems, including in relation to financial monitoring,
internal and external reporting, as well as the adoption
and application of appropriate ethical standards for the
management of the Company and the conduct of the
In fulfilling its responsibilities, the Audit and Risk
Management Committee:
• Receives regular reports from management and the
external auditors;
• Reviews the processes the Chief Executive Officer and
Chief Financial Officer have in place to support their
certifications to the Board;
• Reviews any significant disagreements between the
auditors and management, irrespective of whether they
have been resolved;
• Meets with the external auditors at least twice a year, or
more frequently if necessary;
• Meets separately with the external auditors at least twice
a year without the presence of management; and
• Provides the external auditors with a clear line of direct
communication at any time to either the Chair of the
Audit and Risk Management Committee or the Chair of
the Board.
The Audit and Risk Management Committee has authority,
within the scope of its responsibilities, to seek any
information it requires from any employee or external party.
Meetings of the Committee are expected to be held at
least four times each year. A broad agenda is laid down for
each regular meeting according to an annual cycle. The
Committee invites the external auditor to attend each of its
meetings.
Details of Director attendance at Audit and Risk Management
Committee meetings are set out in the Directors’ report on
page 36.
External auditors
The Company and the Audit and Risk Management
Committee policy is to appoint external auditors who
clearly demonstrate quality and independence. The
performance of the external auditor is reviewed annually
and applications for tender of external audit services are
requested as deemed appropriate, taking into consideration
assessment of performance, existing value and tender costs.
PricewaterhouseCoopers (“PwC”) was appointed as the
external auditor in 2010. It is PwC’s policy to rotate audit
engagement partners on listed companies at least every
five years, and, in accordance with that policy, a new audit
engagement partner will be introduced no later than for the
year ended 30 June 2015.
An analysis of fees paid to the external auditors, including a
break-down of fees for non-audit services, is provided in the
Directors’ Report and in note 26 to the financial statements.
It is the policy of the external auditors to provide an annual
declaration of their independence to the Audit and Risk
Management Committee.
The external auditor will attend the annual general meeting
and be available to answer shareholder questions about the
conduct of the audit and the preparation and content of the
audit report.
PRINCIPLES 5 AND 6: MAKE TIMELY AND BALANCED
DISCLOSURES AND RESPECT THE RIGHTS OF
SHAREHOLDERS
Continuous disclosure and shareholder communication
A Share Trading and Continuous Disclosure Policy has been
adopted by the Board to provide guidance to the Directors,
identified employees including senior management, and
other employees (“staff”) where the disclosure of information,
which may materially affect the price or value of the
Company’s shares, is required.
The Board has adopted a Continuous Disclosure Policy
(“Disclosure Policy”), within the Share Trading and
Continuous Disclosure Policy, which sets out procedures to
be adopted by the Board to ensure the Company complies
with its continuous disclosure obligations, to keep the market
fully informed of information which may have a material effect
on the price or value of the Company’s securities and to
correct any material mistake or information in the market.
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CTM Annual Report 2012
CTM Annual Report 2012
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Remuneration Committee
The purpose of this Committee is to report to the Board on remuneration and issues relevant to remuneration policies and
practices including the remuneration of senior management and Non-Executive Directors. Its members are Greg Moynihan
(Chairman), Stephen Lonie and Tony Bellas.
The functions performed by the Committee are as follows:
a. Reviewing and evaluating of market practices and trends in remuneration matters;
b. Making recommendations to the Board in relation to the Company’s remuneration policies and procedures;
c. Monitoring the performance of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, other members of
senior management and Non-Executive Directors;
d. Making recommendations to the Board in relation to the remuneration of the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, other members of senior management and Non-Executive Directors; and
e. Preparing for the Board any report that may be required under applicable legal or regulatory requirements about
remuneration matters.
Meetings are expected to be held at least three times each year. A broad agenda is laid down for each regular meeting
according to an annual cycle.
Details of Director attendance at Remuneration Committee meetings are set out in the Directors’ report on page 36.
Further information on Directors’ and executives’ remuneration, including principles used to determine remuneration, is set out in
the Directors’ Report under the heading ‘Remuneration Report’.
The Board is responsible for determining whether information
would have a material effect on the price or value of the
Company’s securities. The Disclosure Policy provides a
framework for the Board and officers of the Company to
internally identify and report information which may need
to be disclosed and sets out practical implementation
processes in order to ensure any identified information is
adequately communicated to ASX and Shareholders.
The Share Trading and Disclosure Policy also sets out the
exceptions to the disclosure requirements and outlines when
disclosure may be required in relation to the Company’s
financing arrangements and the approval and disclosure
process in relation to Director margin loans.
Any non-compliance with the Share Trading and Continuous
Disclosure Policy will be regarded as an act of serious
misconduct. The Share Trading and Continuous Disclosure
Policy is available on the Company’s website.
The Company Secretary has been nominated as the
person responsible for communications with the Australian
Securities Exchange (“ASX”). This role includes responsibility
for ensuring compliance with the continuous disclosure
requirements in the ASX Listing Rules and overseeing and
coordinating information disclosure to the ASX, analysts,
brokers, shareholders, the media and the public.
All information disclosed to the ASX is posted on the
Company’s website as soon as it is disclosed to the ASX.
When analysts are briefed on aspects of the Group’s
operations, the material used in the presentation is released
to the ASX and posted on the Company’s website.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
The Board is responsible for satisfying itself annually,
or more frequently as required, that management has
developed and implemented a sound system of risk
management and internal control. Detailed work on this task
is delegated to the Audit and Risk Management Committee
and reviewed by the full Board.
The Audit and Risk Management Committee is responsible
for ensuring that there are adequate policies in relation to
risk management, compliance and internal control systems.
It monitors the Company’s risk management by overseeing
management’s actions in the evaluation, management,
monitoring and reporting of material operational, financial,
compliance and strategic risks. In providing this oversight,
the Committee:
• Reviews the framework and methodology for risk
identification, the degree of risk the Company is willing
to accept, the management of risk and the processes for
auditing and evaluating the Company’s risk management
system;
• Reviews Group-wide objectives in the context of these
categories of corporate risk;
• Reviews and, where necessary, approves guidelines and
policies governing the identification, Assessment and
management of the Company’s exposure to risk;
• Reviews and approves the delegations of financial
authorities and addresses any need to update these
authorities on an annual basis; and
• Reviews compliance with agreed policies.
The Committee recommends any actions it deems
appropriate to the Board for its consideration.
Management is responsible for designing, implementing
and reporting on the adequacy of the Company’s risk
management and internal control system and has to report
to the Audit and Risk Management Committee on the
effectiveness of:
• The risk management and internal control system during
the year; and
• The Company’s management of its material business
risks.
Corporate reporting
In complying with recommendation 7.3, the Chief Executive
Officer and Chief Financial Officer have made the following
certifications to the Board, that:
• The Company’s financial reports are complete and
present a true and fair view, in all material respects, of
the financial condition and operational results of the
Company and Group and are in accordance with relevant
accounting standards; and
• The statement is founded on a sound system of risk
management and internal compliance and control
which implements the policies adopted by the Board
and that the Company’s risk management and internal
compliance and control is operating efficiently and
effectively in all material respects in relation to financial
reporting risks.
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CTM Annual Report 2012
CTM Annual Report 2012
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2012
Consolidated Statement of Financial Position
As at 30 June 2012
Revenue
Other Income
Total revenue and other income
Employee benefits expenses
Occupancy expenses
Depreciation and amortisation expenses
Information technology and telecommunications expenses
Travel and entertainment expenses
Administrative and general expenses
Other expenses
Total operating expenses
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income for the period, net of tax
Total comprehensive income for the year, attributable
to the ordinary equity holders of Corporate Travel
Management Limited
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the Company:
- Basic (cents per share)
- Diluted (cents per share)
Note
4
5
6
6
6
7
2012
$’000
65,551
683
66,234
2011
$’000
46,782
-
46,782
(38,691)
(26,403)
(2,198)
(1,400)
(3,764)
(1,289)
(2,052)
-
(1,712)
(857)
(3,047)
(745)
(1,896)
(331)
(49,394)
(34,991)
(60)
16,780
(4,982)
11,798
-
(116)
11,675
(3,407)
8,268
-
11,798
8,268
16.3
16.3
13.5
13.5
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value
Other current assets
Total Current Assets
Non-current Assets
Plant and equipment
Intangible assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Interest bearing borrowings
Borrowings - related parties
Income tax payable
Provisions
Total Current Liabilities
Non-current Liabilities
Trade and other payables
Provisions
Deferred tax liabilities
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
Note
10
11
12
13
14
15
17
18
18,24
19
17
19
7
20(a)
20(b)
20(c)
2012
$’000
12,210
25,676
16
396
2011
$’000
15,681
12,463
15
273
38,298
28,432
2,572
42,744
45,316
83,614
1,348
28,934
30,282
58,714
22,927
15,717
839
-
2,096
1,850
81
217
1,618
1,267
27,712
18,900
266
766
1,861
2,893
30,605
53,009
34,344
(3)
18,668
53,009
269
508
806
1,583
20,483
38,231
25,548
-
12,683
38,231
54
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
55
CTM Annual Report 2012
CTM Annual Report 2012
Consolidated Statement of Changes in Equity
For the year ended 30 June 2012
Attributable to equity
holders of the parent
Note
Contributed
equity
$’000
Retained
earnings
$’000
Reserves
$’000
Total equity
$’000
Balance at 30 June 2010
6,583
5,165
Total comprehensive income for the year
-
8,268
Transactions with owners in their capacity as
owners:
Shares issued
Dividends declared or paid
Balance at 30 June 2011
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Shares issued
Dividends declared or paid
Net exchange differences on translation of
foreign controlled entity
20
9
20
9
20
18,965
-
-
(750)
25,548
12,683
-
11,798
8,796
-
-
-
(5,813)
-
8,796
(5,813)
Balance at 30 June 2012
34,344
18,668
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
-
-
-
-
-
-
-
-
(3)
(3)
(3)
11,748
8,268
18,965
(750)
38,231
11,798
8,796
(5,813)
(3)
2,980
53,009
Consolidated Statement of Cash Flows
For the year ended 30 June 2012
Note
2012
$’000
2011
$’000
Cash flows from operating activities
Receipts from customers (including GST)
60,421
47,748
Payments to suppliers and employees (including GST)
(50,180)
(35,690)
Interest received
Finance costs
Income tax received/ (paid)
274
(54)
(2,973)
139
(76)
54
Net cash flows from operating activities
10
7,488
12,175
Cash flows from investing activities
Payment for plant and equipment
Payment for intangibles
Proceeds from sale of plant and equipment
(2,135)
(701)
-
(489)
(129)
38
Purchase of controlled entities, net of cash acquired
22,15
(9,482)
(10,272)
Payment for business acquired
22
-
(547)
Net cash flows used in investing activities
(12,318)
(11,399)
Cash flows from financing activities
Proceeds from issue of new shares
20
6,709
18,390
Proceeds from borrowings
Repayments of borrowings
Repayment of related party loans
Receipt from related party receivable
Dividends paid
Net cash flows from financing activities
Net (decrease) / increase in cash and cash equivalents
Effects of exchange rate changes on cash and cash
equivalents
24
24
9
881
(544)
(217)
337
(5,813)
1,353
(3,477)
82
(1,838)
(2,796)
-
(750)
13,088
13,864
6
-
Cash and cash equivalents at beginning of year
15,681
1,817
Cash and cash equivalents at end of year
10
12,210
15,681
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
56
57
CTM Annual Report 2012
Notes to the Financial Statements
For the year ended 30 June 2012
1. CORPORATE INFORMATION
The financial report of Corporate Travel
Management Limited and its controlled entities
(the “Group”) for the year ended 30 June 2012
was authorised for issue in accordance with a
resolution of Directors on 29 August 2012. The
Directors have the power to amend and reissue
the financial statements.
Interpretations issued by the Australian
Accounting Standards Board (“AASB”) that
are relevant to its operations and effective
for the current annual reporting period. The
adoption of these new and revised Standards
and Interpretations did not have any material
financial impact on the amounts recognised in
the financial statements of the Group.
Corporate Travel Management Limited is a
company limited by shares, incorporated and
domiciled in Australia.
The nature of the operations and principal
activities of the Group are described in the
Directors’ Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of preparation
These general purpose financial statements have
been prepared in accordance with Australian
Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board
and the Corporations Act 2001. Corporate Travel
Management Limited is a for-profit entity for the
purpose of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the
Group also comply with International Financial
Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board
(“IASB”).
The financial report is presented in Australian
dollars and all values are rounded to the nearest
thousand dollars ($’000), unless otherwise
stated.
These financial statements have been prepared
under the historical cost convention, as modified
by the revaluation of available-for-sale financial
assets, financial assets and liabilities, at fair
value through profit or loss and certain classes of
plant and equipment.
(b) Statement of compliance
In the current year, the Group has adopted
all of the new and revised Standards and
Certain new accounting standards and
interpretations have been published that are
not mandatory for the reporting period ending
30 June 2012. The Group will continue to
assess the impact of these standards, however,
there are currently no new standards which
management consider will have a significant
impact on the amounts recognised in the
financial statements.
(c) Basis of consolidation
The consolidated financial statements comprise
the financial statements of Corporate Travel
Management Limited and its controlled entities
(the “Group”).
Subsidiaries are all those entities over which the
Group has the power to govern the financial and
operating policies, to obtain benefits from their
activities. The existence and effect of potential
voting rights that are currently exercisable or
convertible are considered when assessing
whether a Group controls another entity.
The financial statements of subsidiaries are
prepared for the same reporting period as the
parent Company, using consistent accounting
policies. Adjustments are made to bring into line
any dissimilar accounting policies that may exist.
In preparing the consolidated financial
statements, all intercompany balances and
transactions, income and expenses and
profit and losses resulting from intra-Group
transactions 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.
(d) Business combinations
The purchase method of accounting is used to
account for all business combinations regardless
of whether equity instruments or other assets
are acquired. The consideration transferred
is measured as the fair value of the assets
acquired, shares issued or liabilities incurred
or assumed at the date of exchange, and, for
acquisitions prior to 1 July 2009, included costs
directly attributable to the combination. For
acquisitions after 1 July 2009, acquisition-related
costs are expensed in the period in which the
costs are incurred, rather than being added to
the cost of the business combination, as required
by revised AASB 3 Business combinations.
Where equity instruments are issued in a
business combination, the fair value of the
instruments is their published market price as at
the date of exchange. Transaction costs arising
on the issue of equity instruments are recognised
directly in equity. The consideration transferred
also includes the fair value of any asset or
liability resulting from a contingent consideration
arrangement.
With limited exceptions, all identifiable assets
acquired and liabilities and contingent liabilities
assumed in a business combination are
measured initially at their fair values at the
acquisition date. The excess of the consideration
transferred of the business combination over
the net fair value of the Group’s share of the
identifiable net assets acquired is recognised
as goodwill. If the consideration transferred of
the acquisition is less than the Group’s share of
the net fair value of the identifiable net assets of
the subsidiary, the difference is recognised as
a gain in the profit and loss in the Consolidated
Statement of Comprehensive Income, but only
after a reassessment of the identification and
measurement of the net assets acquired.
Where settlement of any part of the cash
consideration is deferred, the amounts payable
in the future are discounted to their present
value, as at the date of exchange. The discount
rate used is the entity’s incremental borrowing
rate, being the rate at which a similar borrowing
could be obtained from an independent financier
under comparable terms and conditions.
Contingent consideration is classified either
as equity or a financial liability. Amounts
classified as a financial liability are subsequently
remeasured to fair value, with changes in fair
CTM Annual Report 2012
value recognised in other income or other
expenses in the Consolidated Statement of
Comprehensive Income.
(e) Segment reporting
AASB 8 Operating Segments requires a
‘management approach’, under which segment
information is presented on the same basis as
that used for internal reporting purposes.
Operating segments are reported in a manner
that is consistent with the internal reporting
provided to the chief operating decision makers.
The chief operating decision-makers have been
identified as a group of key senior managers,
which is the steering committee that makes
strategic decisions.
Goodwill is allocated by management to groups
of cash-generating units on a segment level.
(f) Critical accounting estimates and judge-
ments
Estimates and judgements are continually
evaluated and are based on historical experience
and other factors, including expectations of
future events that may have a financial impact
on the entity and that are considered to be
reasonable under the circumstances.
(i) Critical accounting judgements
In the process of applying the Group’s
accounting policies, management has made
no judgements, apart from those judgements
involving estimations, which have a significant
effect on the amounts recognised in the financial
statements.
(ii) Critical accounting estimates and assump-
tions
The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal
the related actual results. The estimates and
assumptions that have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year are discussed in this report, as
follows:
• Value of intangible assets relating to
acquisitions
The Group has allocated portions of the
cost of acquisitions to client contracts and
relationships intangibles, valued using the
58
58
59
CTM Annual Report 2012
CTM Annual Report 2012
multi-period excess earnings method. These
calculations require the use of assumptions.
are included in the fair value reserve in other
comprehensive income.
•
Impairment of goodwill
The Group determines whether goodwill
is impaired on an annual basis. This
assessment requires an estimation of the
recoverable amount of the cash-generating
units to which the goodwill is allocated. Refer
to notes 2(o) and 16 for further details.
•
Impairment of intangible with finite life
Intangible assets are tested for impairment
where an indicator of impairment exists,
either individually or at the cash-generating
unit level. This assessment requires an
estimation of the recoverable amount of
the cash-generating units to which the
intangibles are allocated. Refer to note 2(o)
for further details.
• Lease-make good
The Group estimates its liability to provide
for the restoration of leased premises by
reference to historical data and by specific
estimates on a premise by premise basis.
(g) Foreign currency translation
(i) Functional and presentation currency
Items included in each of the Group entities’
financial statements are measured using the
currency of the primary economic environment
in which the entity operates (‘the functional
currency’). The consolidated financial statements
are presented in Australian dollars, which is the
Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the transaction dates. Foreign
exchange gains and losses resulting from
the settlement of such transactions and from
the translation at year-end exchange rates of
monetary assets and liabilities denominated in
foreign currencies are recognised in the profit
and loss in the Consolidated Statement of
Comprehensive Income, except when deferred
in equity as qualifying cash flow hedges and
qualifying net investment hedges.
Translation differences on non-monetary
financial assets and liabilities, such as equities
held at fair value through profit or loss, are
recognised in profit or loss as part of the fair
value gain or loss. Translation differences on
non-monetary financial assets, such as equities
classified as available-for-sale financial assets,
(iii) Foreign operations
The results and financial position of all the
foreign operations that have different functional
currencies different to the presentation currency
are translated into the presentation currency as
follows:
• Assets and liabilities for each Consolidated
Statement of Financial Position item
presented are translated at the closing rate
at the date of that statement;
•
Income and expenses for each profit and
loss item in the Consolidated Statement of
Comprehensive Income are translated at
average exchange rates; and
• All resulting exchange differences are
recognised as a separate component of
equity.
Exchange differences arising from the translation
of any net investment in foreign operations and
of borrowings and other financial instruments
designated as hedges of such investments are
recognised in other comprehensive income.
When a foreign operation is sold or any
borrowings forming part of the net investment are
repaid, a proportionate share of such exchange
differences is recognised in the profit and loss in
the Consolidated Statement of Comprehensive
Income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on
the acquisition of foreign operations are treated
as the foreign operations’ assets and liabilities
and translated at the closing rate.
(h) Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable. Amounts
disclosed as revenue are net of returns,
allowances, rebates and amounts collected on
behalf of third parties.
The Group recognises revenue when the amount
of revenue can be reliably measured, it is
probable that future economic benefits will flow
to the entity and specific criteria set out in the
following paragraphs have been met for each of
the Group’s activities. The amount of revenue
is not considered to be reliably measureable
until all contingencies relating to the sale have
been resolved. The Group bases its estimates
on historical results, taking into consideration the type of
customer, the type of transaction and the specifics of each
arrangement.
Revenue is recognised for the major business activities as
follows:
Operating lease payments, which do not transfer to the
Group substantially all the risks and benefits incidental to
ownership of the leased item, are recognised as an expense
in the profit and loss in the Consolidated Statement of
Comprehensive Income on a straight-line basis over the
lease term.
• Sales revenue
Sales revenue represents commission or net revenue
earned on transactions made through the provision of
travel services, and includes any commissions payable
by suppliers after completion of the transaction.
•
Interest revenue
Interest income is recognised using the effective interest
method.
• Dividends
Revenue is recognised when the Group’s right to receive
the payment is established.
• Other revenue
Other revenue is recognised when the right to receive
the revenue is established.
(i) Finance costs
This expense is recognised as interest accrues, using
the effective interest method. This method calculates the
amortised cost of a financial liability and allocates the interest
expense over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future
cash payments through the expected life of the financial
liability to the net carrying amount of the financial liability.
(j) Leases
The determination of whether an arrangement is or contains
a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a rights to use the
asset.
Finance leases, which transfer to the Group 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. The corresponding rental
obligations, net of finance charges, are included in other
short-term and long-term payables.
Lease payments are apportioned between the finance
charges and reduction of the lease liability to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly against
income.
Capitalised leased assets are amortised over the shorter of
the estimated useful life of the asset or the lease term.
Incentives for entering into operating leases are recognised
on a straight-line basis over the term of the lease.
Lease income from operating leases, where the Group is a
lessor, is recognised in income on a straight-line basis over
the lease term.
(k) Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of
Financial Position comprise cash at bank and 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.
Client cash represents amounts from clients held before
release to service and product suppliers.
For the purpose of the consolidated cash flow statement,
cash and cash equivalents consist of cash and cash
equivalents as defined, net of outstanding bank overdrafts.
(l) Trade and other receivables
Trade and client receivables, which generally have 7-30 day
terms, are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest
method, less an allowance for impairment.
Client receivables result from the provision of travel
services to clients. Trade receivables result from other
activities relating to the provision of travel services, such as
commissions payable by suppliers.
Collectability of trade and client 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. 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.
The amount of the impairment loss is recognised in the profit
and loss in the Consolidated Statement of Comprehensive
Income within administration expenses. When a trade
receivable, for which an impairment allowance had been
recognised, becomes uncollectible in a subsequent
60
60
61
CTM Annual Report 2012
period, it is written off against the allowance
account. Subsequent recoveries of amounts
previously written off are credited against
administration expenses in the profit and loss in
the Consolidated Statement of Comprehensive
Income.
(m) Income tax and other taxes
The income tax expense (or revenue) for the
period is the tax payable on the current period’s
taxable income based on the applicable income
tax rate for each jurisdiction, adjusted by
changes in deferred tax assets and liabilities
attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the
countries where the Company’s subsidiaries and
associates operate and generate taxable income.
Management periodically evaluates positions
taken in tax returns with respect to situations
in which applicable tax regulation is subject to
interpretation. It establishes provisions, where
appropriate, on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities
and their carrying amounts in the consolidated
financial statements. However, the deferred
income tax is not accounted for if it arises from
initial recognition of an asset or liability in a
transaction other than a business combination
that, at the time of the transaction, affects neither
accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates and
laws that have been enacted or substantially
enacted by the end of the reporting period and
are expected to apply when the related deferred
income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised for
deductible temporary differences and unused
tax losses only if it is probable that future
taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax liabilities and assets are not
recognised for temporary differences between
the carrying amount and tax bases of
investments in controlled entities where the
parent entity is able to control the timing of the
reversal of the temporary differences and it is
probable that the differences will not reverse in
the foreseeable future.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets and liabilities and when the
deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are
offset where the entity has a legally enforceable
right to offset and intends either to settle on a
net basis, or to realise the asset and settle the
liability simultaneously.
Current and deferred tax is recognised in profit
or loss, except to the extent that it relates to
items recognised in other comprehensive income
or directly in equity. In this case, the tax is also
recognised in other comprehensive income or
directly in equity, respectively.
Other taxes
Revenues, expenses and assets are recognised
net of the amount of GST except:
• When 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, which 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
Consolidated Statement of Financial Position.
Cash flows are included in the consolidated cash
flow statement 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.
(n) Plant and equipment
Plant and equipment is stated at historical
cost less accumulated depreciation and any
accumulated impairment losses. Historical cost
includes expenditure that is directly attributable
to the acquisition of the item. All other repairs
and maintenance costs are charged to the
profit and loss in the Consolidated Statement
of Comprehensive Income during the reporting
period in which they are incurred.
Depreciation is calculated at the following rates:
Item
Rate
Plant and equipment
under lease
Motor Vehicles
Plant and equipment
Leasehold improvements
Computer hardware
Other plant and equipment
18.75% -
diminishing
value
Over life of
lease
40.00% -
straight line
37.5% -
diminishing
value
The assets’ residual values, useful lives and
amortisation methods are reviewed, and
adjusted, if appropriate, at each financial year
end.
Impairment
The carrying values of plant and equipment are
reviewed for impairment when events or changes
in circumstances indicate that the carrying value
may not be recoverable.
The recoverable amount of plant and equipment
is the higher of fair value less costs to sell and
value in use. In assessing value in use, the
estimated future cash flows are discounted to
their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
asset.
For an asset that does not generate largely
independent cash inflows, the recoverable
amount is determined for the cash-generating
unit to which the asset belongs.
If any such indication exists and where
the carrying values exceed the estimated
recoverable amount, the assets or cash-
generating units are then written down to their
recoverable amount.
CTM Annual Report 2012
Derecognition
An item of plant and equipment is derecognised
upon disposal or when no future economic
benefits are expected to arise from the continued
use of the asset.
Any gain or loss arising on derecognition of the
asset, calculated as the difference between the
net disposal proceeds and the carrying amount
of the asset, is included in profit or loss in the
year the asset is derecognised.
(o) Goodwill
Goodwill acquired on a business combination is
initially measured at cost, being the excess of
the consideration transferred for the business
combination over the Group’s interest in the net
fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities.
Following initial recognition, goodwill is measured
at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment, annually,
or more frequently, if events or changes in
circumstances indicate that the carrying value
may be impaired.
As at the acquisition date, any goodwill acquired
is allocated to each of the cash-generating
units that are expected to benefit from the
combination’s synergies.
Impairment is determined by assessing the
recoverable amount of the cash-generating unit
to which the goodwill relates.
Where the recoverable amount of the cash-
generating unit is less than the carrying
amount, an impairment loss is recognised. This
impairment loss is recorded in administration
expenses.
Where goodwill forms part of a cash-generating
unit and part of the operation within that unit
is disposed, the goodwill associated with the
disposed operation is included in the carrying
amount of the operation when determining the
gain or loss on disposal of the operation.
Disposed goodwill in this circumstance is
measured on the basis of the relative values of
the disposed operation and the portion of the
cash-generating unit retained.
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CTM Annual Report 2012
(p) Intangible assets
Acquired from a business combination
Intangible assets from a business combination are capitalised at fair value as at the date of acquisition.
Following initial recognition, the cost model is applied to the class of intangible assets.
Software acquired not as part of a business combination
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses
that will contribute to future period financial benefits through revenue generation and/or cost reduction
are capitalised to software and systems.
The useful lives of these intangible assets are assessed to be finite.
Where amortisation is charged on assets with finite lives, this expense is taken to the profit and loss
in the Consolidated Statement of Comprehensive Income in the expense category ‘depreciation and
amortisation’.
Intangible assets are tested for impairment where an indicator of impairment exists, and, in the case of
indefinite life intangibles, annually, either individually or at the cash-generating unit level. Useful lives are
also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
A summary of the policies applied to the Group’s intangible assets is as follows:
Item
Method
Internally generated/
acquired
Client contracts and
relationships
Based on projected cash flows over estimated useful
lives, currently ranging over two years
Intellectual Property
5.00% - straight line
Software
40.00% - straight line
Acquired
Acquired
Acquired
Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the profit and loss in the Consolidated
Statement of Comprehensive Income when the asset is derecognised.
(q) Impairment of non-financial assets, other
than goodwill and intangible assets
At each reporting date, the Group assesses
whether there is an indication that an asset may
be impaired. Where an indicator of impairment
exists, the Group makes a formal estimate of
recoverable amount. Where the carrying amount
of an asset exceeds its recoverable amount, the
asset is considered impaired and is written down
to its recoverable amount.
Recoverable amount is the greater of fair
value less costs to sell and value in use. It is
determined for an individual asset, unless the
asset’s value in use cannot be estimated to be
close to its fair value less costs to sell and it
does not generate cash inflows that are largely
independent of those cash flows from other
assets or groups of assets, in which case, the
recoverable amount is determined for the cash-
generating unit to which the asset belongs.
In assessing value in use, the estimated 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.
(r) Trade and other payables
Trade and other payables and client creditors are
carried at original invoice amount and represent
liabilities for goods and services provided to
the Group to the end of the financial year that
are unpaid and arise when the Group becomes
obliged to make future payments in respect
of the purchase of these goods and services.
These amounts are unsecured and are paid
within terms ranging from 7 to 30 days from
recognition.
Client creditors result from provision of travel
services and products to clients. Trade payables
result from other activities required to provide
those travel services, such as corporate
services.
(s) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised
at the fair value of consideration received less
directly attributable transaction costs.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured
at amortised cost using the effective interest
method.
CTM Annual Report 2012
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12
months after the reporting date.
Borrowing costs
Borrowing costs are recognised as an expense
using the effective interest method. The Group
does not currently hold qualifying assets but, if
it did, the borrowing costs directly associated
with this asset would be capitalised, including
any other associated costs directly attributable to
the borrowing and temporary investment income
earned on the borrowing.
Borrowings are removed from the Consolidated
Statement of Financial Position when the
obligation specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has
been extinguished or transferred to another party
and the consideration paid, including any non-
cash assets transferred or liabilities assumed, is
recognised in profit or loss as other income or
finance costs.
Where the terms of a financial liability are
renegotiated and the entity issues equity
instruments to a creditor to extinguish all or
part of the liability (debt for equity swap), a gain
or loss is recognised in profit or loss, which is
measured as the difference between the carrying
amount of the financial liability and the fair value
of the equity instruments issued.
(t) Financial guarantee contracts
Financial guarantee contracts are recognised
as a financial liability at the time the guarantee
is issued. The liability is initially measured at
fair value and, subsequently, at the higher of
the amount determined in accordance with
AASB 137 Provisions, Contingent Liabilities
and Contingent Assets and the amount initially
recognised less cumulative amortisation, where
appropriate.
The fair value of financial guarantees is
determined as the present value of the difference
in net cash flows between the contractual
payments under the debt instrument and the
payments that would be required without the
guarantee, or the estimated amount that would
be payable to a third party for assuming the
obligations.
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CTM Annual Report 2012
Where guarantees in relation to loans or other
payables of subsidiaries or associates are
provided for no compensation, the fair values are
accounted for as contributions and recognised as
part of the cost of the investment.
(u) Provisions
Provisions are recognised when the Group
has a present legal or constructive obligation
as a result of a past event, it is probable that
an outflow of resources embodying economic
benefits will be required to settle the obligation
and a reliable estimate can be made of the
amount of the obligation. Provisions are
measured at the present value of management’s
best estimate of the expenditure required to
settle the present obligation at the end of the
reporting period. The discount rate used to
determine the present value is a pre-tax rate
that reflects current market assessments of the
time value of money and the risks specific to
the liability. The increase in the provision due
to the passage of time is recognised as interest
expense.
Where the Group expects some or all of a
provision to be reimbursed, for example, under
an insurance contract, the reimbursement is
recognised as a separate asset, but only when
the reimbursement is virtually certain. The
expense relating to any provision is presented
in the profit and loss in the Consolidated
Statement of Comprehensive Income, net of any
reimbursement.
If the effect of the time value of money is
material, provisions are determined by
discounting the expected future cash flows
at a pre-tax rate that reflects current market
assessments of the time value of money and,
where appropriate, the risks specific to the
liability.
Where discounting is used, the increase in
the provision due to the passage of time is
recognised as a finance cost.
(v) Employee Benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries including
non-monetary benefits, expected to be settled
within 12 months of the reporting period, are
recognised in other payables and accruals
in respect of employees’ services up to the
reporting date. Liabilities for annual leave
and accumulated sick leave, expected to be
settled within 12 months of the reporting period,
are recognised in the provision for employee
benefits in respect of employees’ services up
to the reporting date. They are measured at the
amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulated sick
leave are recognised when the leave is taken
and are measured at the rates paid or payable.
(ii) Long service leave
Liabilities for long service leave are recognised
in the provision for employee benefits and
measured at the present value of expected
future payments to be made in respect of
services provided by the employees up to the
reporting date, using the projected unit credit
method. Consideration is given to the expected
future wage and salary levels, experience of
employee departures, and periods of service.
Expected future payments are discounted using
market yields at the reporting date on national
government bonds, with terms to maturity and
currencies that match, as closely as possible, the
estimated future cash outflows.
(iii) Retirement benefit obligations
Contributions to defined contribution funds are
recognised as an expense as they become
payable. Prepaid contributions are recognised
as an asset to the extent that a cash refund or
reduction in the future payments is available.
(iv) Bonus plans
The Group recognises a provision for future
bonus payments where it is contractually obliged
or where there is a past practice that has created
a constructive obligation.
(v) Termination benefits
Termination benefits are payable when
employment is terminated before the normal
retirement date, or when an employee accepts
voluntary redundancy in exchange for these
benefits. The Group recognises termination
benefits when it is demonstrably committed to
either terminating the employment of current
employees according to a detailed formal plan
without possibility of withdrawal, or providing
termination benefits as a result of an offer made
to encourage voluntary redundancy. Benefits
falling due more than 12 months after reporting
date are discounted to present value.
(w) Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issue of new shares or options are shown
in equity as a deduction, net of tax, from the
proceeds.
(x) Dividends
Provision is made for the amount of any dividend
declared, being appropriately authorised and no
longer at the discretion of the entity, on or before
the end of the financial year but not distributed at
balance dates.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
end of the reporting period.
(y) Earnings per share
Basic earnings per share are calculated as net
profit attributable to members of the parent,
adjusted to exclude any costs of servicing equity
(other than dividends) divided by the weighted
average number or ordinary shares, adjusted for
any bonus element.
Diluted earnings per share are calculated as
net profit attributable to members of the parent,
divided by the weighted average number or
ordinary shares and dilutive potential ordinary
shares, adjusted for any bonus element, and
adjusted for:
• Costs of servicing equity (other than
dividends);
• The after tax effect of dividends and interest
associated with dilutive potential ordinary
shares that have been recognised as
expenses; and
• Other non-discretionary changes in revenues
or expenses during the period that would
result from the conversion into potential
ordinary shares.
(z) Parent entity financial information
The financial information for the parent entity,
Corporate Travel Management Limited, disclosed
in note 25, has been prepared on the same basis
as the consolidated financial statements, except
as follows:
(i) Investments in subsidiaries, associates and
joint venture entities
CTM Annual Report 2012
Investments in subsidiaries, associates and
joint venture entities are accounted for at cost
in the financial statements of Corporate Travel
Management Limited. Dividends received from
associates are recognised in the parent entity’s
profit or loss, rather than being deducted from
the carrying amount of these investments.
(ii) Tax consolidation legislation
Corporate Travel Management Limited and its
wholly-owned Australian controlled entities have
implemented the tax consolidation legislation.
The head entity, Corporate Travel Management
Limited and the controlled entities in the tax
consolidated group account for their own
current and deferred tax amounts. These tax
amounts are measured as if each entity in the
tax consolidated group continues to be a stand-
alone taxpayer in its own right.
In addition to its own current and deferred
tax amounts, Corporate Travel Management
Limited also recognises the current tax liabilities
or assets and the deferred tax assets arising
from unused tax losses and unused tax credits
assumed from controlled entities in the tax
consolidated group.
The entities have also entered into a tax
funding agreement under which the wholly-
owned entities fully compensate Corporate
Travel Management Limited for any current tax
payable assumed and are compensated by
Corporate Travel Management Limited for any
current tax receivable and deferred tax assets
relating to unused tax losses or unused tax
credits that are transferred to Corporate Travel
Management Limited under the tax consolidation
legislation. The funding amounts are determined
by reference to the amounts recognised in the
wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax
funding agreement are due upon receipt of the
funding advice from the head entity, which is
issued as soon as practicable after the end of
each financial year. The head entity may also
require payment of interim funding amounts, to
assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities are
recognised as current amounts receivable from
or payable to other entities in the Group. Any
difference between the amounts assumed and
66
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67
CTM Annual Report 2012
CTM Annual Report 2012
amounts receivable or payable under the tax funding agreement are recognised as a contribution to or
distribution from wholly-owned tax consolidated entities.
(iii) Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of
subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions
and recognised as part of the cost of the investment.
3. SEGMENT REPORTING
(a) Description of segments
The operating segments are based on the reports reviewed by the Group of key senior managers that
comprise the steering committee which makes strategic decisions.
The group of key senior managers considered to be the ‘chief operating decision makers’ (“CODM”)
include Jamie Pherous (CEO), Laura Ruffles (COO), Steve Fleming (CFO) and Nova Fleming (General
Manager Corporate Services, until extended leave commencing 16 February 2012).
The CODM considers the business from a travel service perspective only.
There are currently no non-reportable segments.
(b) Segment information provided to the Chief Operating Decision Makers
As the Group currently only reports as a single service segment, being travel services, the balances
reported in the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial
Position and the Consolidated Statement of Cash Flows represent the results of this single segment.
There is no difference in the following items in the financial statements and the version reported to the
CODM:
• Revenue from the sale of travel services;
• Revenue from external parties; and
• Assets and liabilities.
The Group operates predominantly in Australia, with a portion of the business also operating in New
Zealand.
All revenue from external parties relates to Australia and New Zealand. Segment revenues are allocated
based on the location of offices rather than by client location or destination.
Travel Services
Australia
$’000
New Zealand
$’000
Total
$’000
63,406
1,255
64,661
30 June 2012
Revenue from the sale of travel
services
Revenue from other sources
1,528
45
1,573
Revenue from external parties
64,934
1,300
66,234
Non-current assets
- Plant and equipment
- Intangibles
30 June 2011
Revenue from the sale of travel
services
2,546
42,054
26
690
2,572
42,744
Travel Services
Australia
$’000
New Zealand
$’000
Total
$’000
44,740
1,167
45,907
Revenue from other sources
842
33
875
Revenue from external parties
45,582
1,200
46,782
Non-current assets
- Plant and equipment
- Intangibles
1,319
28,241
29
693
1,348
28,934
No clients are deemed to be major clients for the purpose of disclosing any reliance on major customers.
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CTM Annual Report 2012
4. REVENUE
Revenue from the sale of travel services
Revenue from other sources
Rental income
Interest
Other revenue
Total Revenue
5. OTHER INCOME
Re-measurement income of the fair value of contingent consideration -
scrip earn-out - note 22(a)
2012
$’000
2011
$’000
64,661
45,907
274
274
342
890
217
317
341
875
65,551
46,782
2012
$’000
2011
$’000
683
-
6. EXPENSES
CTM Annual Report 2012
2012
$’000
2011
$’000
Profit before income tax includes the following
specific expenses:
Depreciation and amortisation included in Statement of Comprehensive Income
Depreciation of non-current assets –plant and equipment - note 14
Amortisation of non-current assets – intangibles - note 15
Finance costs
Bank loans
Finance charges under hire purchase contracts
Net exchange differences
Other interest
Other expenses
Re-measurement (income)/expense of the fair value of contingent consideration -
scrip earn-out - note 22(c)
Issue costs incurred in relation to existing shares as part of the IPO – note 20
1,056
344
1,400
36
7
(10)
27
60
-
-
-
648
209
857
10
9
38
59
116
199
132
331
Other expense disclosures
Defined contribution superannuation expense
2,671
1,899
Rental expense relating to operating leases
Minimum lease payments – operating leases
1,637
1,272
Net loss on the disposal of plant and equipment and intangible assets
-
32
70
70
71
CTM Annual Report 2012
7. INCOME TAX
Income tax expense
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
2012
$’000
2011
$’000
Current income tax charge
3,484
2,666
Adjustment in respect of current income tax of previous years
(35)
(61)
Deferred income tax
Relating to origination and reversal of temporary differences
1,533
802
Income tax expense reported in the Consolidated Statement of Comprehensive
Income
4,982
3,407
Decrease in deferred tax assets
Increase in deferred tax liabilities
48
220
1,485
582
1,533
802
Accounting profit before income tax
16,780
11,675
At the Group’s statutory income tax rate of 30% (2011: 30%)
5,034
3,503
Tax effect of amounts which are not deductible/(assessable) in calculating taxable
income:
Non-deductible amounts
Other amounts
(85)
18
(67)
21
1
22
Recognition of temporary differences previously not brought to account
50
(57)
Adjustments for current tax of prior periods
Income tax expense
72
72
(35)
(61)
4,982
3,407
CTM Annual Report 2012
2012
$’000
2011
$’000
Deferred income tax
Deferred tax assets
Provisions and expenses not yet deductible
1,726
1,617
Tax losses carried forward
Other
Set-off against deferred tax liabilities
Net deferred tax assets
Deferred tax liabilities
393
41
53
2,160
1,670
(2,160)
(1,670)
-
-
Difference tax to accounting depreciation/amortisation
32
76
Accrued income assessable in year of receipt
Set-off against deferred tax assets
Net deferred tax liabilities
3,989
2,400
4,021
2,476
(2,160)
(1,670)
1,861
806
Deferred tax assets expected to be recovered within 12 months
1,965
1,370
Deferred tax assets expected to be recovered after more than 12 months
195
300
2,160
1,670
Deferred tax liabilities expected to be settled within 12 months
4,021
2,413
Deferred tax liabilities expected to be settled after more than 12 months
63
4,021
2,476
73
CTM Annual Report 2012
Deferred tax assets
2012
Provisions and expenses not
yet deductible
Tax losses carried forward
Other
2011
Provisions and expenses not
yet deductible
Other
Deferred tax liabilities
2012
Difference tax to accounting
depreciation /amortisation
Accrued income assessable in
year of receipt
2011
Difference tax to accounting
depreciation /amortisation
Accrued income assessable in
year of receipt
At 1 July
Transfer from
income tax
receivable
(Charged)/
credited in
year via P&L
$’000
$’000
$’000
(Charged)/
credited
in year via
equity
$’000
Acquisition of
subsidiaries
At 30 June
$’000
$’000
1,617
-
53
1,670
902
63
965
-
-
-
-
385
-
385
(36)
-
(12)
(48)
(210)
(10)
(220)
88
-
-
88
443
-
443
57
393
-
450
97
-
97
1,726
393
41
2,160
1,617
53
1,670
At 1 July
Transfer from
income tax
receivable
(Charged)/
credited in
year via P&L
$’000
$’000
$’000
(Charged)/
credited
in year via
equity
$’000
Acquisition of
subsidiaries
At 30 June
$’000
$’000
76
2,400
2,476
258
1,398
1,656
-
-
-
-
-
-
(104)
1,589
1,485
(182)
764
582
-
-
-
-
-
-
60
-
60
-
238
238
32
3,989
4,021
76
2,400
2,476
Tax consolidation
Corporate Travel Management Limited and its
100% owned Australian resident subsidiaries
have formed a tax consolidated group with
effect from 1 July 2008. The accounting policy in
relation to this tax consolidation is set out in note
2(m). Corporate Travel Management Limited is
the head entity of the tax consolidated group.
Members of the Group have entered into a tax
sharing agreement in order to enable Corporate
Travel Management Limited to allocate income
tax expense to the wholly owned subsidiaries
on a pro-rata basis. In addition, the agreement
provides for the allocation of income tax liabilities
amongst the entities should the head entity
default on its tax payment obligations.
CTM Annual Report 2012
Tax effect accounting by members of the tax
consolidated group
Members of the tax consolidated group have
entered into a tax funding agreement. The tax
funding agreement provides for the allocation of
current taxes to members of the tax consolidated
group in accordance with their accounting profit
for the period, while deferred taxes are allocated
to members of the tax consolidated group in
accordance with the principles of AASB 112
Income Taxes. Allocations under the tax funding
agreement are made at the end of each quarter.
The allocation of taxes under the tax funding
agreement is recognised as an increase/
decrease in the subsidiaries’ inter-company
accounts with the tax consolidated group head
company, Corporate Travel Management
Limited.
8. EARNINGS PER SHARE
The following information reflects the income and share data used in the basic and diluted earnings per
share computations.
Net profit attributable to ordinary equity holders of the
parent
2012
$’000
2011
$’000
11,798
8,268
2012
Shares
2011
Shares
Weighted average number of ordinary shares for basic and
diluted earnings per share
72,445,981
61,164,521
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CTM Annual Report 2012
CTM Annual Report 2012
9. DIVIDENDS PAID AND PROPOSED
10. CASH AND CASH EQUIVALENTS
2012
$’000
2011
$’000
Ordinary shares
Final franked dividend declared or paid for the year ended 30 June 2011 of 5
cents (2010: $12.39*) per fully paid share.
3,572
750
Interim franked dividend for the year ended 30 June 2012 of 3 cents (2011: $nil)
per fully paid share.
2,241
-
Approved by the Board of Directors on 29 August 2012 (not recognised as a
liability as at 30 June 2012).
Final franked dividend for the year ended 30 June 2012 of 6 cents (2011: 5 cents)
per fully paid share.
4,498**
3,572**
5,813
750
* Had the calculation of this dividend been performed on a consistent basis to retrospectively include the impact of the
share split in December 2010, the dividend paid would have been 1.5 cents per share.
** This dividend applies to all shares including the post balance date share issue, refer note 20.
2012
$’000
2011
$’000
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 at 30% (2011:
30%)
6,675
3,985
• Plus franking credits that will arise from the income tax payable/(the receipt
of income tax receivable) as at the end of the financial year
2,096
1,618
Equals the amount of franking credits available for future reporting periods
8,771
5,603
• Less impact on the franking account of dividends proposed or declared
before the financial report was authorised for issue but not recognised as a
distribution to equity holders during the period
(1,928)
(1,531)
Balance of franking credits available for subsequent years
6,843
4,072
Current Assets
Cash at bank and on hand
Cash on short term deposit
Client accounts (note 2(k))
Current Liabilities
Bank overdraft
2012
$’000
2011
$’000
5,685
3,907*
-
6,000
6,525
5,774*
12,210
15,681
-
-
-
-
Net cash assets per Statement of Cash Flows
12,210
15,681
* Client funds of $3,061,000 have been reclassified for comparability.
Cash at bank earns interest at floating rates based on daily bank deposit rates: 2012: 0.00%-3.50%
(2011: 0.00%-4.75%).
The client accounts earn interest at floating rates based on daily bank deposit rates: 2012: 0.00%-5.20%
(2011: 0.00%-5.20%).
The weighted average interest rate for the year was 1.74% (2011: 4.22%).
A bank overdraft facility of $125,000 (2011: $125,000) was in place but unused at 30 June 2012. The
overdraft incurs interest at floating rates based on daily bank overdraft rates: 2012: 11.21% (2011:
11.06%).
Security for the bank overdrafts is detailed in note 18.
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CTM Annual Report 2012
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Reconciliation of profit after income tax to net cash flows from operating
activities
Profit for the year
Adjustments for:
Depreciation and amortisation
Diminution in value of investments
Make good provision accretion
Net exchange differences
IPO costs included in financing cashflow
2012
$’000
2011
$’000
11,798
8,268
1,400
857
(1)
16
4
2
(10)
38
-
132
Re-measurement of the fair value of contingent consideration
(683)
199
Net loss on disposal of non-current assets
-
32
Changes in operating assets and liabilities
(Increase) in prepayments
Decrease in deferred tax balances
Decrease in current tax liability/(receivable)
Increase in payables and provisions
Net cash flow from operating activities
Disclosure of financing facilities
Refer to note 18 and note 21.
Non-cash financing and investing activities
(93)
(91)
1,532
417
478
3,003
5,452
3,571
7,488
12,175
Acquisition of assets by means of finance leases (note 14)
-
-
11. TRADE AND OTHER RECEIVABLES
Trade receivables (i)
Client receivables (i)
Allowance for doubtful debts
Other receivables
2012
$’000
2011
$’000
14,022
8,040
11,100
4,244
(203)
(259)
24,919
12,025
757
438
25,676
12,463
(i) Trade and client receivables are non-interest bearing and are generally on terms ranging from 1 to 30
days.
Allowance for doubtful debts
As at 30 June 2012, current trade receivables of the Group with a nominal value of $203,000 (2011:
$259,000) were impaired. The amount of the provision is $203,000 (2011: $259,000). An allowance for
doubtful debts is made when there is objective evidence that a receivable is impaired. The amount of
the allowance has been measured as the difference between the carrying amount of the receivables
and the estimated future cash flows expected to be received from the relevant debtor. There were no
impaired trade receivables for the parent in 2012 or 2011.
0-30 days
31-60 days
60+ days
Balance at 30 June
Movements in provision for doubtful debts were as follows:
At 1 July
Charge/(release) for the year
Amounts written off
Movements through acquisitions of entities
Balance at 30 June
2012
$’000
2011
$’000
-
-
203
203
259
(22)
(34)
-
203
-
-
259
259
155
85
(21)
40
259
As of 30 June 2012, trade receivables of $6,914,000 (2011: $4,057,000) were past due but not impaired. Operating
units are following up on these receivables with the relevant debtors and are satisfied that payment will be received in
full.
(Increase) in trade and other receivables
(12,401)
(4,257)
The ageing of these trade and client receivables is as follows:
78
78
79
CTM Annual Report 2012
CTM Annual Report 2012
The ageing analysis of these trade and client receivables is as follows:
0-30 days
31-60 days
60+ days
Balance at 30 June
2012
$’000
2011
$’000
3,306
2,223
811
648
2,797
1,186
6,914
4,057
Other balances within trade, client and other receivables do not contain impaired assets and are not
past due. It is expected that these other balances will be received when due.
Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate their
fair value. The maximum exposure to credit risk is the fair value of receivable. Collateral is not held as
security, nor is it the Group’s policy to transfer (on-sell) receivables to special purposes entities.
Market risk
There is not considered to be any additional risk due to the market.
Interest rate risk
Detail regarding interest rate risk exposure is disclosed in note 21.
12. FINANCIAL ASSETS AT FAIR VALUE
Current Assets
Shares in unlisted companies
Shares in listed companies
13. OTHER CURRENT ASSETS
Prepayments
2012
$’000
2011
$’000
6
10
16
6
9
15
396
273
14. PLANT AND EQUIPMENT
2012
Cost
Accumulated amortisation/depreciation
At 1 July, net of accumulated amortisation/
depreciation
Additions
Additions through the acquisition of entities/
businesses (note 22)
Disposals
Amortisation/depreciation charge for the year
At 30 June, net of accumulated amortisation/
depreciation
2011
Cost
Accumulated amortisation/depreciation
At 1 July, net of accumulated amortisation/
depreciation
Additions
Additions through the acquisition of entities/
businesses (note 22)
Disposals
Amortisation/depreciation charge for the year
At 30 June, net of accumulated amortisation/
depreciation
Plant and
equipment
under lease
$’000
Plant and
equipment
owned $’000
Total
plant and
equipment
$’000
160
(51)
109
117
-
-
-
(8)
109
160
(43)
117
181
-
-
(55)
(9)
117
5,499
(3,036)
2,463
1,231
2,245
35
-
5,659
(3,087)
2,572
1,348
2,245
35
-
(1,048)
(1,056)
2,463
2,572
3,173
(1,942)
1,231
3,333
(1,985)
1,348
1,376
1,557
501
10
(17)
(639)
1,231
501
10
(72)
(648)
1,348
Leased assets and assets under hire purchase agreements are pledged as security for the related
finance lease and hire purchase liabilities.
No additions during the year (2011: $nil) were financed under finance lease agreements.
Additions of $141,000 (2011: $12,000) relate to the lease make good asset recognised under AASB 137
Provisions, Contingent Liabilities and Contingent Assets. This amount corresponds with the provision for
make good in note 19.
80
80
81
CTM Annual Report 2012
15. INTANGIBLE ASSETS
Client
contracts and
relationships
$’000
Intellectual
property
$’000
Software
$’000
Goodwill
$’000
2012
Cost
Accumulated amortisation
At 1 July, net of accumulated amortisation
Additions
Additions through the acquisition of entities/
businesses (note 22)
Disposals
761
(616)
145
223
-
200
-
189
(101)
1,248
(489)
88
98
-
-
-
Amortisation charge for the year
(278)
(10)
Change due to changes in foreign currency
exchange rates
At 30 June, net of accumulated amortisation
2011
Cost
Accumulated amortisation
At 1 July, net of accumulated amortisation
Additions
Additions through the acquisition of entities/
businesses (note 22)
Disposals
Amortisation charge for the year
Change due to changes in foreign currency
exchange rates
At 30 June, net of accumulated amortisation
-
145
561
(338)
223
-
-
350
-
(127)
-
223
-
88
189
(91)
98
107
-
-
-
(9)
-
98
Total
intangible
assets
$’000
44,140
(1,396)
42,744
28,934
701
41,942
(190)
41,752
28,513
-
13,229
13,443
-
-
10
-
(344)
10
41,752
42,744
28,703
(190)
28,513
11,359
-
29,923
(989)
28,934
11,512
129
759
100
701
14
-
(56)
-
759
470
(370)
100
46
129
-
17,179
17,529
(2)
(73)
-
100
-
(25)
-
(2)
(234)
-
28,513
28,934
CTM Annual Report 2012
16. IMPAIRMENT TESTING OF GOODWILL
For the purposes of impairment testing, the cash generating unit has been defined as the lowest level of
travel services operations to which goodwill relates, where individual cash flows can be ascertained for
the purposes of discounting future cash flows.
The carrying amount of Goodwill allocated to the cash
generating unit:
Travel Services
2012
$’000
2011
$’000
41,752
28,513
41,752
28,513
The recoverable amount of the cash generating unit has been determined based on financial budgets
set for the next financial year and management cashflow projections for subsequent years
Pre tax discount rate applied to the cash flow projection
14.83%
15.58%
Cash flows beyond the next financial year, up to year 5, are
extrapolated using a growth rate of:
Travel
Travel
Services 2012
Services 2011
Revenue; and
Operating costs.
Terminal value
3.5%
3.0%-4.0%
3.5%
3.1%
6 times
6 times
Key assumptions used in value in use calculations for the years ended 30 June 2012 and 30 June 2011
The following key assumptions were applied to the cash flow projections when determining the value in
use:
• Budgeted revenue values – the basis used to determine the value assigned to the budgeted sales
volume is the average value achieved in the year immediately before the budgeted year, adjusted
for growth and other known circumstances.
• Budgeted operating expenses – the basis used to determine the value assigned to the budgeted
costs is the average value achieved in the year immediately before the budgeted year, adjusted for
growth and other known circumstances.
• Terminal value – calculated based on a multiple of estimated Year 5 Earnings before interest, tax,
depreciation and amortisation.
Sensitivity to changes in assumptions
Management recognises that there are various reasons that the estimates used in these assumptions
may vary. For cash generating units, there are possible changes in key assumptions that could cause
the carrying value of the unit to exceed its recoverable amount. The change required to each of the
key assumptions to cause the carrying value of a unit to exceed its recoverable amount are shown as
follows:
Assumption
Possible change considered
Change required to indicate an
impairment
Growth rates – Travel Services:
Revenue
Reduction in yield rates, client retention
Decrease of 6.4% to (2.9%)
Operating costs
Higher labour and/or other support costs
Increase of 7.4% to 10.4%-11.4%
82
82
83
CTM Annual Report 2012
17. TRADE AND OTHER PAYABLES
Current
Trade payables (i)
Client creditors (i)
Other payables and accruals
Contingent consideration payable – note 22(a)
Non-current
Other payables and accruals
2012
$’000
949
14,486
3,475
4,017
22,927
266
266
2011
$’000
268
5,842
3,732
5,875
15,717
269
269
(i) Trade payables and client creditors are non-interest bearing and are normally settled on terms rang-
ing from 7 to 30 days.
Fair value
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair
value.
Interest rate and liquidity risk
Information regarding interest rate and liquidity risk exposure is set out in note 21.
18. BORROWINGS
Current
Interest bearing borrowings
CTM Annual Report 2012
Maturity
2012
$’000
2011
$’000
Obligations under hire purchase contracts (i)
Loans (ii)
2013
2013
Borrowings - Related parties (note 24)
Helen Logas
52
787
839
-
-
62
19
81
217
217
(i) Hire purchase contracts
The remaining hire purchase contract is secured by a limited unsupported guarantee in the name of J
Pherous, in excess of the residual loan values.
(ii) Loans
The loans, as part of the overall facilities including term loans, overdraft, merchant facilities, and bank
guarantees, are fully secured by a fixed and floating charge over all existing and future assets and
undertakings of Corporate Travel Management Group Pty Ltd.
The loan balance held at 30 June 2012 was an interest only facility. The facility was converted on 6 July
2012 to have a repayment schedule.
The interest rates applicable to these facilities are 7.96%-9.51% (2011: 5.81%-9.95%).
The weighted average interest rate for all borrowings, including the overdraft during the year, was 8.06%
(2011: 8.98%).
(iii) Borrowings from related parties
Balances owed to other related parties relate to unpaid dividends owed to shareholders. The balances
were unsecured, had no fixed repayment plans and did not accrue interest. Repayments expected to be
made in the next 12 months are disclosed as current balances.
See note 24 for details on the movements in these balances in the current year.
84
84
85
CTM Annual Report 2012
CTM Annual Report 2012
Fair values
Unless disclosed in the following table, the carrying amount of the Group’s current and non-current
borrowings approximate their fair value. The fair values have been calculated by discounting the
expected future cash flows at prevailing market interest rates varying from 7.96%-9.51% (2011: 5.81%-
9.95%) depending on the type of borrowing.
Obligations under hire purchase
contracts
Loans
Carrying amount
Fair value
2012
$’000
52
787
839
2011
$’000
62
19
81
2012
$’000
49
758
807
2011
$’000
59
19
78
Interest rate and liquidity risk
Details regarding interest rate and liquidity risk are disclosed in note 21.
Financial facilities
As at 30 June 2012, the Group had facilities with the Westpac Bank, including term loans, overdraft,
merchant facilities and bank guarantees, that were fully secured by a fixed and floating charge over all
existing and future assets and undertakings of Corporate Travel Management Group Pty Ltd.
As at the signing of this report, the Group has contracted for new facilities with the ANZ bank, covering
overdraft, merchant facilities, bank guarantees and an accessible line of credit. The transition to these
new ANZ facilities is currently in progress.
19. PROVISIONS
At 1 July 2011
Arising during the year
Acquisition of subsidiary
Utilised
Current 2012
Non-current 2012
Current 2011
Non-current 2011
Employee
entitlements
$’000
Make good
provision
$’000
1,688
2,652
278
(2,217)
2,401
1,777
624
2,401
1,252
436
1,688
87
157
-
(29)
215
73
142
215
15
72
87
Total
$’000
1,775
2,809
278
(2,246)
2,616
1,850
766
2,616
1,267
508
1,775
Make good provision
In accordance with the Company’s contractual obligations under tenancy lease agreements, the
Company is required to restore the leased premises on the expiry of the lease term.
The assumptions used to calculate the provision were based on current assessments of the possible
timing of the restoration liability crystallising and on current restoration costs being accreted at rates of
2.6% to 3.1% (2011: 2.6% to 4.5%).
86
86
87
CTM Annual Report 2012
CTM Annual Report 2012
20. CONTRIBUTED EQUITY, RESERVES AND RETAINED EARNINGS
(a) Contributed equity
Ordinary shares
Issued and fully paid
2012
$’000
2011
$’000
34,344
25,548
Effective 1 July 1998, the Corporations’ legislation abolished the concepts of authorised capital and par
value shares. Accordingly, the Group does not have authorised capital nor par value in respect of its
issued shares.
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the
Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
Company.
Opening balance as at 1 July 2010
Share split (i)
Shares issued (i)
At 30 June 2011
Shares issued (ii)
Shares issued (iii)
At 30 June 2012 (iv)
Number of
shares
60,509
50,309,491
20,000,000
70,370,000
1,075,800
3,255,800
74,701,600
$’000
6,583
-
18,965
25,548
2,000
6,796
34,344
Shares issued
(i) A total of 20.0m shares were issued as part of the Initial Public Offering (“IPO”) in December 2010.
Prior to the IPO, existing shareholders undertook a share split at a ratio of 1:832.4381. Issue costs of
$1.610m ($1.127m net of tax) were incurred as part of the IPO. Of these costs incurred, the portion
relating to existing shares of $0.132m ($0.092m net of tax) has been recognised in administrative and
general expenses in the Consolidated Statement of Comprehensive Income.
(ii) A total of 1,075,800 shares were issued on 4 August 2011, as part of the deferred consideration for
the Travelcorp business combination - refer note 22.
(iii) A total of 3,255,800 shares were issued on 27 February 2012, as part of a share placement.
(iv) A total of 269,400 shares were issued on 2 July 2012, as part of the initial consideration for the US
business combination - refer note 27.
Capital management
Corporate Travel Management Limited maintains a conservative funding structure that allows the
Company to meet its operational and regulatory requirements, while providing sufficient flexibility to fund
future strategic opportunities.
The Group’s capital structure includes a mix of debt (refer to note 18), general cash (refer to note 10)
and equity attributable to the parent’s equity holders.
When determining dividend returns to shareholders, Corporate Travel Management Limited’s Board
considers a number of factors, including the Company’s anticipated cash requirements to fund its
growth and operational plans and current and future economic conditions.
While payments may vary from time to time, according to these anticipated needs, the Board’s current
policy is to return between 50% to 60% of net profit after tax to shareholders.
Total borrowings
Total equity
Gearing ratio
(b) Foreign currency translation reserve
Movements in this reserve were as follows:
Balance 1 July
Net exchange differences on translation of foreign operations
Balance 30 June
(c) Retained earnings
Movements in retained earnings were as follows:
Balance 1 July
Net profit for the year
Dividends
Balance 30 June
2012
$’000
839
53,009
1.58%
2012
$’000
-
(3)
(3)
2011
$’000
81
38,231
0.21%
2011
$’000
-
-
-
2012
$’000
2011
$’000
12,683
11,798
(5,813)
18,668
5,165
8,268
(750)
12,683
88
88
89
CTM Annual Report 2012
CTM Annual Report 2012
21. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise deposits with banks, overdraft facilities and
borrowings.
The main purpose of these financial instruments is to raise finance for the Group’s operations. The
Group has various other financial assets and liabilities, such as trade receivables and trade payables,
which arise directly from its operations. It is, and has been throughout the period under review, the
Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising
from the Group’s financial instruments are cash flow interest rate risk, liquidity risk and credit risk.
The Board reviews and agrees policies for managing each of these risks which are summarised in
this note. The Group is not exposed directly to foreign exchange or commodity trading risks. The only
foreign exchange impacts relate to revaluation on consolidation of the New Zealand subsidiary and the
revaluation of intercompany balances between the New Zealand subsidiary and the rest of the Group.
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect
of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the
financial statements.
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s
long-term debt obligations with a floating interest rate and the Group’s policy is to manage its interest
cost using a mix of the financial instruments described in this report. The level of debt is disclosed in
note 18.
At balance date, the Group had the following mix of financial assets and liabilities exposed to Australian
variable interest rate risk:
Financial Assets
Cash
Financial Liabilities
Overdraft
Borrowings
Net exposure
2012
$’000
12,210
12,210
-
(839)
(839)
2011
$’000
15,681
15,681
-
(81)
(81)
11,371
15,600
The Group constantly analyses its interest rate exposure. Within this analysis, consideration is given to
potential renewals of existing positions, alternative financing and the mix of fixed and variable interest
rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the
Statement of Financial Position date. At 30 June 2012, if interest rates had moved, as illustrated in
the following table, with all other variables held constant, post tax profit would have been affected as
follows:
Judgements of reasonably possible movements:
+2% (200 basis points)
- 2% (200 basis points)
2012
$’000
(163)
163
2011
$’000
(218)
218
These movements in profit are due to higher/lower interest costs from variable rate debt and cash balances.
Credit risk
The Group trades only with recognised, creditworthy third parties and the Group’s policy is that all
clients which wish to trade on credit terms are subject to credit verification procedures and subsequent
risk limits which are set for each individual client in accordance with the Group’s policies.
In addition, receivable balances are monitored on an ongoing basis, with the result that the Group’s
exposure to bad debts is not considered to be significant.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash
and cash equivalents, the Group’s exposure to credit risk arises from default of the counter party, with a
maximum exposure equal to the carrying amount of these instruments.
The Group trades only with recognised, creditworthy third parties, and, as such, collateral is not
requested nor is it the Group’s policy to securitise its trade and other receivables.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the
use of bank overdrafts, bank loans and hire purchase contracts.
The Group manages liquidity risk by monitoring cash flows and estimating future operational draws on
cash reserves.
The following table reflects all contractually fixed pay-offs, repayments and interest resulting from
recognised financial assets and liabilities as at 30 June 2012. No derivative financial instruments are
held and for other obligations, the respective undiscounted cash flows for the respective upcoming fiscal
years are presented. Cash flows for financial assets and liabilities without fixed amount or timing are
based on the conditions existing at 30 June 2012.
The remaining contractual maturities of the Group’s financial liabilities are:
1 year or less
1-5 years
Over 5 years
Contractual Cashflows
Carrying amount
2012
$’000
23,797
266
-
2011
$’000
16,016
269
-
2012
$’000
23,766
266
-
2011
$’000
16,015
269
-
24,063
16,285
24,032
16,284
90
90
91
CTM Annual Report 2012
22. BUSINESS COMBINATIONS
a) ETM
On 3 October 2011, the Group acquired 100% of the issued shares in ETM Travel Pty Ltd (“etm”), a
Melbourne based travel management company, which enabled the Group to enhance its events offering
and provide a complete integrated corporate travel solution to clients. In addition, the acquisition
strengthens the Group’s presence in the Victorian market.
The initial cost of the acquisition was $8,500,000, with further contingent consideration payable as at 31
August 2012, as set out in this note.
The potential undiscounted amount of all the future payments that the Group could be required to
make, to the extent that net profit before tax in the earn out period from 3 October 2011 to 30 June 2012
exceeds $1,275,000 ranges from $1 and is capped at $4,100,000.
At the acquisition date, the projected result for the nine months ending 30 June 2012 was assessed, to
determine the acquisition date fair value of this contingent consideration as at the acquisition date, as
set out in the following table. Any subsequent adjustment to the final contingent consideration, based
on the actual result as at 30 June 2012, is reflected in the Consolidated Statement of Comprehensive
Income.
Purchase consideration:
Initial cash paid/payable*/**
Acquisition date fair value contingent consideration – cash earn-out **
Total acquisition date fair value contingent consideration
Re-measurement of the fair value of the contingent consideration – cash earn-out
recognised as income in the Statement of Comprehensive Income – note 5**
Final purchase consideration payable
$’000
8,500
4,100
12,600
(683)
11,917
*$7,900,000 paid in the year to 30 June 2012 and the balance of $600,000 payable 31 August 2012.
** The estimated future amounts payable totalling $4,017,000 have been included in current Trade and Other Payables
in the Consolidated Statement of Financial Position at 30 June 2012.
The provisional fair values of the assets and liabilities of the etm business acquired as at the date of
acquisition are as follows:
CTM Annual Report 2012
Item
Cash and cash equivalents
Accounts receivable
Receivable from related parties
Other assets
Plant and equipment
Software
Client contracts and relationships
Trade and other payables
Provisions
Borrowings
Deferred tax balances
Net identifiable assets/(liabilities) acquired
Goodwill on acquisition
Net assets acquired
Acquiree’s
carrying amount
$’000
Fair Value
$’000
2,633
2,156
337
544
35
14
-
2,633
2,156
337
544
35
14
200
(6,239)
(6,239)
(278)
(421)
450
(769)
(278)
(421)
390
(629)
13,229
12,600
The consideration payable for the combination effectively includes amounts in relation to the benefit of
expected synergies, revenue growth and the assembled workforce of the acquiree, which has resulted
in goodwill of $13,229,000. No portion of this goodwill balance is expected to be deductible for tax
purposes.
Acquisition related costs of $132,000 are included in administrative and general expenses in the
Consolidated Statement of Comprehensive Income. The acquired business contributed revenues of
$7,035,000 and net profit after tax of $1,257,000 to the Group for the period 3 October 2011 to 30 June
2012. If the acquisition had occurred on 1 July 2011, Group consolidated revenue and consolidated
profit for the year ended 30 June 2012 would have been $68,579,000 and $12,217,000 respectively.
92
92
93
CTM Annual Report 2012
CTM Annual Report 2012
b) New Zealand business (prior period)
The Group acquired the business of a New Zealand based travel management company, effective from
3 August 2010. The cost of the acquisition at acquisition date was $629,000 (NZ $775,000), with a
further $95,000 (NZ $125,000) available on earn out.
Purchase consideration:
Cash paid*
Contingent consideration paid on 1 August 2011
Total purchase consideration
*This amount includes the deposit of $81,950 paid prior to June 2010.
$’000
629
95
724
The fair values of the assets and liabilities of the New Zealand business acquired as at the date of
acquisition are as follows:
Plant & equipment
Client contracts and relationships
Total Fair Value of Identifiable Net Assets
Goodwill on acquisition
Fair Value $’00
10
17
27
697
The consideration paid for the combination effectively included amounts in relation to the benefit of
expected synergies, revenue growth, future market development and the assembled workforce of
acquiree, which has resulted in goodwill of $697,000. No portion of this goodwill balance is expected to
be deductible for tax purposes.
c) Travelcorp (prior period)
On 3 January 2011, the Group acquired 100% of the issued shares in Travelcorp Holdings Pty Ltd, a
Sydney based travel management company. The initial cost of the acquisition was $11,125,000, with
further contingent consideration payable as at 31 July 2011, as set out in this note.
The potential undiscounted amount of all future payments that the Group could be required to make
based on the financial criteria were as follows:
• $3,875,000 in cash earn-out, based on Travelcorp achieving Net Profit Before Tax (NPBT) earnings
of $1,500,000 for the six months ending 30 June 2012, calculated under certain specific criteria
included in the purchase agreement; and
• Further scrip earn-out calculated on a four times multiple on the amount by which the Travelcorp
business exceeds NPBT above $1,500,000 for the 6 month period ending 30 June 2012, calculated
under certain specific criteria included in the purchase agreement. There was no cap on the scrip
earn-out.
At the acquisition date, the projected result for the six months ending 30 June 2011 was assessed to
determine the acquisition date fair value of this contingent consideration as at the acquisition date, as
set out in the following table. Any subsequent adjustment to the final contingent consideration paid,
based on the actual result as at 30 June 2012, has been reflected as an expense in the Consolidated
Statement of Comprehensive Income.
Purchase consideration:
Initial Cash paid
Acquisition date fair value contingent consideration – cash earn-out*
Acquisition date fair value contingent consideration – scrip earn-out*
Total acquisition date fair value purchase consideration
Re-measurement of the fair value of the contingent consideration – scrip earn-out recognised
as an expense in the Statement of Comprehensive Income – note 6*
Final purchase consideration paid as at 31 July 2011
* At 30 June 2012, $nil (2011: $5,875,000) was reported as contingent consideration payable in Note 17.
$’000
11,125
3,875
1,801
16,801
199
17,000
94
94
95
CTM Annual Report 2012
The provisional fair values of the assets and liabilities of the Travelcorp business acquired as at the date
of acquisition are as follows:
Cash and cash equivalents
Accounts receivable
Other assets
Goodwill
Client contracts and relationships
Trade and other payables
Provisions
Deferred tax balances
Net identifiable assets/(liabilities) acquired
Goodwill on acquisition
Net assets acquired
Acquiree’s
carrying amount
$’000
Fair Value
$’000
853
3,152
10
2,657
-
853
3,152
11
-
333
(3,737)
(3,737)
(152)
(141)
2,642
(152)
(141)
319
16,482
16,801
The consideration paid for the combination effectively included amounts in relation to the benefit of
expected synergies, revenue growth and the assembled workforce of acquiree, which has resulted
in goodwill of $16,482,000. No portion of this goodwill balance is expected to be deductible for tax
purposes.
23. COMMITMENTS AND CONTINGENCIES
Operating lease commitments – Group as
lessee
The Group has entered into commercial leases
for the rental of premises. These leases have
an average life of between 1 and 3 years. There
are no restrictions placed upon the lessee by
entering into these leases.
Future minimum rentals payable under non-
cancellable operating leases as at 30 June are
as follows:
Within one year
After one year but not
more than five years
2012
$’000
1,341
2011
$’000
1,669
1,985
1,376
More than five years
-
-
3,326
3,045
Other Loan Commitments
The Group has hire purchases contracts for
various items of plant and equipment.
CTM Annual Report 2012
Capital Commitments
There were $38,000 of capital commitments as
at reporting date (2011: $151,000).
Contingencies
Guarantees/Letter of credit facilities
The Group has provided bank guarantees and
letters of credit in relation to various facilities
with vendors and in accordance with local travel
agency licensing and International Air Transport
Regulations. Guarantees provided by the parent
are held on behalf of other group entities.
Guarantees provided for:
Various vendors
2012
$’000
1,448
1,448
2011
$’000
1,196
1,196
Guarantees, as part of the overall facilities
including term loans, overdraft, merchant
facilities and bank guarantees, are fully secured
by a fixed and floating charge over all existing
and future assets and undertakings of Corporate
Travel Management Group Pty Ltd.
Future minimum payments under the hire
purchases contracts are as follows:
There were no other contingencies as at
reporting date (2011 - $nil).
2012
$’000
2011
$’000
53
-
53
63
-
63
(1)
(1)
52
62
Within one year
After one year but not
more than five years
Total minimum lease
payments
Less amounts
representing finance
charges
Present value of
minimum lease
payments
96
96
97
CTM Annual Report 2012
CTM Annual Report 2012
24. RELATED PARTY DISCLOSURES
(i) Controlled Entities
The consolidated financial statements include the financial statements of Corporate Travel Management
Limited and the subsidiaries listed in the following table:
Percentage of
Equity Interest Held
Investment
Country of
Incorporation
2012
%
2011
%
2012
%
2011
%
Name
Corporate Travel Management
Group Pty Ltd
Sainten Pty Ltd
Floron Nominees Pty Ltd
WA Travel Management Pty Ltd
Travelogic Pty Ltd
Australia
Australia
Australia
Australia
Australia
Corporate Travel Management (New
Zealand) Limited
New Zealand
Travelcorp Holdings Pty Ltd
Travelcorp (Aust) Pty Ltd
ETM Travel Pty Ltd
Corporate Travel Management
North America Limited
Total investments in controlled
entities – at cost
Australia
Australia
Australia
US
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
20,990
20,990
3,094
2,907
180
1
-
3,094
2,907
180
1
-
16,801
16,801
-
12,600
-
-
-
-
56,573
43,973
Corporate Travel Management Limited is the ultimate parent entity - refer to notes 2(a) and 2(c) with
respect to the basis of preparation and basis of consolidation accounting policies.
ETM Travel Pty Ltd was acquired in the business combination completed on 3 October 2011.
Corporate Travel Management North America Limited was incorporated on 29 June 2012 to hold the
USA business acquired 2 July 2012.
(ii) Deed of Cross Guarantee
Entities subject to class order relief
Corporate Travel Management Limited, Corporate Travel Management Group Pty Ltd, Floron Nominees
Pty Ltd, Sainten Pty Limited, Travelogic Pty Limited, WA Travel Management Pty Ltd, Travelcorp
Holdings Pty Ltd, Travelcorp (Aust) Pty Ltd, ETM Travel Pty Ltd and Corporate Travel Management
(New Zealand) Limited are parties to a Deed of Cross Guarantee under which each company
guarantees the debts of the other companies.
By entering into the Deed, the wholly owned Australian entities have been relieved from the requirement
to prepare a financial report and Directors’ report under Class Order 98/1418 (as amended by Class
Orders 98/2017, 00/0321, 01/1087, 02/0248 and 02/1017) issued by the Australian Securities and
Investments Commission.
Closed Group Class Order Disclosures
Corporate Travel Management Limited and all of its controlled entities are party to the above Deed of
Cross Guarantee and represent a ‘Closed Group’ for the purposes of the Class Order.
As the consolidated financial statements cover all parties to the Deed of Cross Guarantee, no separate
disclosure of consolidated information of the Closed Group has been made.
(iii) Transactions with Directors and Director related entities
During the year, $227,319 (2011: $203,802) has been paid to a party related to J Pherous for rent and
outgoings in relation to an office lease. The balance outstanding at 30 June 2012 is $19,268 (2011:
$nil).
Directors of the Group hold other directorships as detailed in the Directors’ Report. Where any of these
related entities are clients of the Group, the arrangements are on similar terms to other clients.
Details of security provided by Directors and their related parties are detailed in note 18 and note 24.
(iv) Transactions with shareholders and shareholder related entities
Balances of loans outstanding to shareholders in relation to unpaid dividends are detailed in note 18.
The balances were unsecured, had no fixed repayment plans and did not accrue interest.
Details of security provided by shareholders and their related parties are detailed in note 18 and note
24.
Borrowings owed to shareholders
Balance 1 July
2012
$
2011
$
217,058
2,162,616
Loans recognised from the acquisition of entities/businesses
-
850,000
Repayments of loan balances outstanding
Balance 30 June
(217,058)
(2,795,558)
-
217,058
(v) Transactions other related parties
Receivables from the former etm Directors were held as at the etm acquisition date (refer note 22).
These balances related to the finalisation of the loan owed by etm at that date. The balances were
unsecured, had no fixed repayment plans and did not accrue interest.
Receivables from other related parties
Balance 1 July
2012
$
-
Receivables recognised from the acquisition of entities/businesses
337,437
Repayments of loan balances outstanding
Balance 30 June
(337,437)
-
2011
$
-
-
-
-
98
98
99
CTM Annual Report 2012
CTM Annual Report 2012
25. PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information
The individual financial statements of the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Retained earnings
Profit or loss for the year
Total comprehensive income
2012
$’000
2011
$’000
11,121
68,064
6,548
6,548
54,747
6,769
61,516
(12,615)
(12,615)
9,360
53,786
7,868
7,868
45,951
(33)
45,918
(681)
(681)
(b) Guarantees entered into by the parent entity
The parent entity is party to the overall financing arrangements and related security, as detailed in note
18 and note 24.
In addition, the parent is party to the Group’s cross guarantee arrangements, as detailed in note 24.
There are no other financial guarantees provided by the parent entity
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2012 or 30 June 2011.
(d) Contractual commitments
The parent entity did not have any contractual commitments at 30 June 2012 or 30 June 2011.
26. AUDITORS’ REMUNERATION
The auditor of the Group is PricewaterhouseCoopers
Amounts received or due and receivable by PricewaterhouseCoop-
ers Australia:
•
•
Audits and review of the financial reports of the entity and any
other entity in the consolidated group
Other services in relation to the entity and any other entity in
the consolidated group:
- Tax compliance
- Tax services – acquisitions
- Transaction services – Initial Public Offering
Other PricewaterhouseCoopers network firms:
•
Other services in relation to the entity and any other entity in
the consolidated group:
- Tax compliance
- Tax services – acquisitions
2012
$
2011
$
271,737
330,870
64,522
36,000
-
372,259
8,843
31,916
40,759
17,990
-
215,288
564,148
3,530
-
3,530
413,018
567,678
27. EVENTS OCCURRING AFTER THE REPORTING PERIOD
Other than the following items, there have been no other matters or circumstances not otherwise dealt
with in this report, that will significantly affect the operation of the Group, the results of those operations
or the state of affairs of the Group or subsequent financial years.
The acquisition of 100% of the shares of R&A Travel Inc (“R&A”), a US based travel management
company, was completed on 2 July 2012. As part of this transaction, a deposit of $244,459 (US
$250,000) was paid prior to 30 June 2012, and $4,527,151 (US $4,613,620) of cash and $516,515 (US
$526,380) of shares is payable on completion. Further contingent consideration of up to $3,885,782
(US $3,960,000) in cash and share earn-out may also be payable on 31 August 2013 and 31 August
2014, based on R&A Travel Inc achieving annual EBITDA earnings of US $1,700,000 by 30 June 2014.
Should actual EBITDA earnings not reach this level by 30 June 2014, the amount of the cash and share
earn-out will be reduced.
The determination of the final amount of the total consideration will depend on results to 30 June 2014
and, at the date of this report, a formal assessment as to whether these criteria will be met has not yet
been finalised.
100
100
101
CTM Annual Report 2012
28. DIRECTOR AND EXECUTIVE DISCLOSURES
a) Details of key management personnel
(i) Directors
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Mr J Pherous
Ms C Gray
(ii) Other executives
Mr S Fleming
Ms L Ruffles
Ms N Fleming
Non-Executive Director.
Non-Executive Director.
Non-Executive Director.
Managing Director.
Executive Director.
Chief Financial Officer.
Chief Operating Officer.
General Manager Corporate Services (included in other executives until
commencing extended leave 16 February 2012).
There were no changes in key management personnel after reporting date and before the date the
financial report was authorised for issue.
b) Compensation of key management personnel
Compensation by Category: key management personnel
Short-term
Post employment
Long-term benefits
2012
$
2011
$
1,419,289
1,485,994
116,272
121,454
10,264
8,876
1,545,825
1,616,324
c) Compensation options: Granted during the year
During the financial year, no share options were granted as equity compensation benefits (2011: nil).
CTM Annual Report 2012
d) Shares held by Key Management Personnel
Balance at 30
June 2011
Purchased
Disposed
Other
changes
during year
Balance at 30
June 2012
Directors
Ordinary shares
Mr J Pherous
Ms C Gray
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Other key management
personnel of the group
Ordinary shares
Ms L Ruffles
Mr S Fleming
Ms N Fleming
Directors
Ordinary shares
Mr J Pherous
Ms C Gray
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Other key management
personnel of the group
Ordinary shares
Ms L Ruffles
Mr S Fleming
Ms N Fleming
26,599,728
5,424,999
200,000
200,000
200,000
150,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,599,728
5,424,999
200,000
200,000
200,000
150,000
150,000
-
Balance at 30
June 2010
Purchased
Disposed
Other
changes
during year
Balance at 30
June 2011
31,954
6,517
-
-
-
-
-
-
-
-
200,000
200,000
200,000
150,000
150,000
-
-
-
-
-
-
-
-
-
26,567,774*
26,599,728
5,418,482*
5,424,999
-
-
-
-
-
-
200,000
200,000
200,000
150,000
150,000
-
* A share split was performed prior to the Initial Public Offering as detailed in Note 20.
All equity transactions with key management personnel, other than those transactions arising from
the exercise of remuneration options, have been entered into under terms and conditions no more
favourable than those the Group would have adopted if dealing at arm’s length.
e) Loans to Key Management Personnel
There were no loans provided to or received from key management personnel during the financial year
(2011: $nil).
f) Other transactions and balances with Key Management Personnel
Details of other transactions with Key Management Personnel are set out in note 24.
102
102
103
CTM Annual Report 2012
Directors’ Declaration
In the Director’s opinion:
a. The financial statements and notes set out on pages 54-105 are in accordance with the
Corporations Act 2001, including:
(i)
Complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012
and of its performance for the financial year ended on that date; and
b. There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable; and
c. At the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in note 24 will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the deed of cross guarantee described in note 24.
Note 2(a) confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial
Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Mr T Bellas
Chairman
Brisbane, 29 August, 2012
Mr J Pherous
Managing Director
CTM Annual Report 2012
Independent auditor’s report to the members of
Corporate Travel Management Limited
Report on the financial report
We have audited the accompanying financial report of Corporate Travel Management Limited
(the company), which comprises the consolidated statement of financial position as at 30 June
2012, the statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year ended on that date, a summary of
significant accounting policies, other explanatory notes and the directors’ declaration. The
consolidated entity comprises the company and the entities it controlled at the year's end or from
time to time during the financial year.
Directors’ responsibility 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 is free from material misstatement, whether due to fraud
or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards
require that we comply with relevant ethical requirements relating to audit engagements and plan
and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial report 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 entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
Our procedures include reading the other information in the Annual Report to determine whether
it contains any material inconsistencies with the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
PricewaterhouseCoopers, ABN 52 780 433 757
Riverside Centre, 123 Eagle Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
104
104
66
105
CTM Annual Report 2012
CTM Annual Report 2012
Independent auditor’s report to the members of
Corporate Travel Management Limited (continued)
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Corporate Travel Management Limited is in accordance with the
Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2012 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report and notes also comply with International Financial Reporting
Standards as disclosed in Note 2.
Report on the Remuneration Report
We have audited the remuneration report included in pages 11 to 15 of the directors’ report for the
year ended 30 June 2012. 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.
Auditor’s opinion
In our opinion, the remuneration report of Corporate Travel Management Limited for the year
ended 30 June 2012, complies with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Brett Delaney Brisbane
29 August 2012
Partner
Shareholder Information
The shareholder information set out below was applicable at 24 August 2012.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number of
Shareholders
112
502
280
285
40
1,219
There were 16 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed as follows:
Pherous Holdings Pty Limited
Claire Lesley Gray
Steven Craig Smith
Matthew Michael Cantelo
Mr Matthew Dalling
J P Morgan Nominees Australia Limited
National Nominees Limited
Aust Executor Trustees SA Limited
HSBC Custody Nominees (Australia) Limited
RBC Investor Services Australia Nominees Pty Limited
Helen Logas
J P Morgan Nominees Australia Limited
(continued on next page)
Ordinary shares
Number held
Percentage of
issued shares
26,599,728
35.89%
5,424,999
4,779,649
3,460,032
3,420,282
2,338,355
1,567,912
1,563,210
1,407,288
1,368,055
1,075,800
835,328
7.32%
6.45%
4.67%
4.61%
3.15%
2.12%
2.11%
1.90%
1.85%
1.45%
1.13%
106
106
67
107
CTM Annual Report 2012
Matimo Pty Limited
Doobie Investments Pty Limited
AMJJAS Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Lyndall Mccabe
BNP Paribas Noms Pty Ltd
BNP Paribas Noms Pty Ltd
Mr Michael Pherous and Mrs Diane Pherous
Citicorp Nominees Pty Limited
Ordinary shares
Number held
Percentage of
issued shares
784,157
784,157
730,759
674,500
667,911
570,001
496,415
410,000
321,053
1.06%
1.06%
0.99%
0.91%
0.90%
0.77%
0.67%
0.55%
0.43%
59,279,591
79.98%
C. Substantial holders
Substantial holders (including associate holdings) in the Company are set as follows:
Ordinary shares
Pherous Holdings Pty Limited
Claire Lesley Gray
Steven Craig Smith
Matthew Michael Cantelo (including personal holdings and an
interest in Doobie Investments Pty Limited)
Number held
Percentage of
issued shares
26,599,728
35.89%
5,424,999
4,779,649
4,244,189
7.32%
6.45%
5.73%
Mr Matthew Dalling (including personal holdings and an interest in
Matimo Pty Limited)
4,204,439
5.67%
Ordinary shares voting rights
On a show of hands, every member present at a meeting in person or by proxy shall have one vote. Upon a
poll, each share shall have one vote. There are currently no options held.
108
108
CTM Annual Report 2012
corporate
directory
Directors
Mr T Bellas
Mr S Lonie
Mr G Moynihan
Mr J Pherous
Ms C Gray
Joint Company Secretaries
Auditor
Mrs L McCabe
Mr S Fleming
Principal registered office in Australia
27A Elizabeth Arcade
52 Charlotte Street
Brisbane QLD 4000
Share registry
Link Market Services Limited
Level 15, 324 Queen Street
Brisbane QLD 4000
PricewaterhouseCoopers
Riverside Centre
Level 15, 123 Eagle Street
Brisbane QLD 4000
Stock exchange listings
Corporate Travel Management Limited shares
are listed on the Australian Securities Exchange
Website address
www.travelctm.com
Annual Report 2012
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Corporate Travel Management Limited
ABN 17 131 207 611
Registered office:
27A/52 Charlotte Street
Brisbane Queensland 4000
travelctm.com