Corporate Travel Management Annual Report 2014

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From humble beginnings...
2013-14 Annual Report

1994

2014

CTM Annual Report 2014CONTENTS

Chairman’s Report

Managing Director’s Report

Celebrating 20 Years

CTM SMART Technology

CTM Client Survey 2014

Directors

Leadership Team

Financials

CTM Annual Report 2014CTM Annual Report 2014CHAIRMAN’S
REPORT

I am pleased to present the 2014 Annual Financial Report
of Corporate Travel Management Limited (“CTM” or the
“Group”).

The Group has had another strong year, delivering
excellent growth in profitability and return on equity to
shareholders, despite the challenging economic conditions.
This result has been underpinned by enhanced services
to our clients, including the development of further
innovative products.

During the year, the Group expanded its global presence
with entry into the Asian market. A majority 75.1% interest
in Wealthy Aim Investments Limited (“Westminster Travel”)
was acquired on 29 January 2014. The Group now has
operations in Australia, New Zealand, North America
and Asia.

The past year also saw the Group achieve continued
strong organic growth in a challenging global economic
climate, which, together with the Asian acquisition, enabled
CTM to achieve a record turnover. A particular challenge
this year was the continuing intense competition in the
Australian domestic market, which had an impact on
Total Transaction Value.

The Group continued its investment in delivering innovative
client facing products to the market. This investment,
coupled with the continued high service levels, has allowed
the Group to have a strong year and establish a good
platform for continued growth moving forward.

In July 2014, the Company was awarded the Best National
Travel Management Company for the ninth time in eleven
years at the Australian Federation of Travel Agents awards.

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 corporate travel
solutions company.

I would also like to thank CTM’s shareholders, their Board,
and most importantly, CTM’s clients for their continuing
support.

The Board has declared a dividend of 7.5 cents per share
on 28 August, which will be paid on 10 October 2014
to all shareholders registered on 9 September 2014.

Tony Bellas

Chairman
Corporate Travel Management Limited
28 August 2014

CTM Annual Report 2014CTM Annual Report 2014
MANAGING
DIRECTOR’S
REPORT

Dear Shareholders,

Introduction

CTM has again delivered an excellent result in tough
economic conditions. Most pleasing was all CTM
regions experienced record profits, and all acquisitions
contributed to the organic profit growth. We remain
well placed to benefit from future upturns in the
general economic environment. The 75.1% acquisition
of Wealthy Aim Investments Limited (“Westminster
Travel”), on 29 January 2014, continues the global
expansion strategy and has the Group operating out
of 37 cities in 15 countries with over 1,300 employees.

Outstanding performance

In the year to 30 June 2014, CTM’s TTV (total
transaction value) of $1,384m (unaudited) was 56.6%
higher than the previous year and travel income of
$109.3m was 41.9% higher than the previous year.

CTM’s statutory net profit after tax (“NPAT”) of $15.8m
for the year to 30 June 2014 compares with $11.3m
(restated for voluntary change in accounting policy)
in the previous year, representing a 39.8% increase.

CTM Annual Report 2014CTM Annual Report 2014Financial position

Staff and client satisfaction

Employees

Positioning for the future

CTM is in a sound financial position, with total assets of
$247.8m at 30 June 2014, an increase of $131.8m or
113.6% from 30 June 2013. The growth in assets is largely
due to the acquisition of 75.1% of Westminster Travel.

■ CTM maintains a continuous feedback process through
innovation, to ensure productivity improvement for our
clients.

■ Client and staff survey’s response results were

The continued generation of strong cash flows contributed
to the Group’s sound financial position, with net cash flows
from operating activities of $11.8m over the year to 30
June 2014.

In January 2014, CTM raised a further $53.3m through the
equity market, to assist with funding the acquisition of the
Asian based agency, Westminster Travel.

Total equity of $132.9m at 30 June 2014 compares with
$69.1m at 30 June 2013, an increase of $63.8m or 92.3%
over the year.

The Group focused on the following initiatives during
the year:

at record levels.

Mergers and acquisitions

■ During the year, the Group completed the acquisition

of 75.1% of Westminster Travel, an Asian based travel
agent. The Group now has operations in Australia, New
Zealand, North America and Asia, across 37 cities in 15
countries.

■ In North America, the transition of two acquisitions into

the business, translated into organic growth and improved
profit margin, through leveraging our scale and synergies.

■ CTM continues to pursue additional EPS accretive

acquisitions.

Win and retain clients

Business drivers

■ CTM’s client service was enhanced through the delivery
of innovative technology, particularly implementing its
SMART Technology during the year.

■ CTM is now leveraging its expanding global footprint,
to grow the business through cross selling across its
regions, noting that CTM now manages 32 clients
across more than one CTM region.

■ Continued investment in sales and marketing resources
resulted in a record new client wins year, which positions
the Company well for FY15 and beyond. In addition, client
retention has continued to be strong, exceeding 97%.

The success of CTM’s business continues to be based
on the key drivers:

■ Strong client wins across the Group with CTM’s continued
investment in technology and business tools continuing
to strengthen CTM’s competitive advantage.

■ Continued high levels of client retention, underpinned

by high levels of client satisfaction and staff engagement.

■ Improving CTM’s internal processes and the competency
of CTM’s people, so that CTM’s service platform is most
effective in supporting CTM’s clients’ needs.

A competent and motivated workforce is integral
to CTM’s success.

CTM’s culture is founded upon the notion of listening to
CTM’s staff, in order to provide a workplace that empowers
people, through good processes and excellent training, to
grow, evolve and deliver the superior service that CTM’s
clients demand. CTM continues to invest in its people
through its in-house training programs, selective recruitment
and a commitment to provide the resourcing to support its
people in delivering service excellence to clients.

Over the past year, the total number of employees
increased by 116.6% to 1,334, reflecting the Westminster
Travel acquisition and CTM’s positioning to underwrite
growth with the most skilled talent.

The Board and the senior management team appreciate
the contribution that CTM’s staff have made to the Group’s
strong performance in 2013/14. Their professionalism and
commitment have been fundamental to the development
of CTM’s reputation as a highly valued business partner
for its clients.

CTM’s continued investment in innovative client facing
technology, particularly the introduction of CTM SMART,
coupled with the entry into the Asian market, has the
Company well positioned for growth.

The entry into the Asian market is an exciting new phase
for the Group. With CTM now operating out of 37 cities in
15 countries, the Group is building on expansive global
footprint that positions itself for sustained growth.

CTM’s focus remains upon listening to its clients and staff,
to ensure its service offering is both innovative and cost
effective, and enabling staff to offer the personalised service
and expertise demanded by clients.

I look forward to working with staff, clients, key suppliers
and the 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
28 August 2014

CTM Annual Report 2014CTM Annual Report 2014CELEBRATING
20 YEARS

1994. In a diminutive office in the Brisbane
CBD, with a team of just two, a young
Jamie Pherous opened the doors to the
first Corporate Travel Management office.

With a vision of offering the market a fresh
and innovative alternative, Jamie and his
team set out to build a business renowned
for providing a highly personalised service,
developing innovative and flexible client
solutions and committed to demonstrating
a positive return on investment. Fast forward
20 years and it’s these same principles
which underpin everything CTM does.

CTM now employs over 1300 staff across 37
cities in 15 countries. Following a successful
listing on the ASX in 2010, the company has
grown to become one of the largest travel
management companies in Australia and
continues to expand across the globe.

Jamie attributes the company’s success
to a number of things but namely, our
relationship with our people and partners.

NOVEMBER 2013

CTM enters Asia market:
Acquisition of Westminster Travel

SEPTEMBER 2012

CTM increases New Zealand presence:
Strategic partnership with Tandem Travel

JULY/AUGUST 2014

CTM expands USA footprint:
Acquisition of USTravel and
Avia International Travel

OCTOBER 2011

CTM bolsters Melbourne presence:
Acquisition of ETM Group for event
management expertise

AUGUST 2010

CTM enters New Zealand market:
Acquisition of Cavalier Travel

MAY 2013

CTM expands USA footprint:
Acquisition of Travelcorp

JULY 2012

CTM enters USA market:
Acquisition of R&A Travel

JANUARY 2011

CTM expands its national footprint with
the acquisition of Travelcorp with offices
in Sydney, Perth and Melbourne

JANUARY 2007

CTM enters Perth market

NOVEMBER 2001

CTM enters Melbourne market

NOVEMBER 2003

CTM enters Sydney market

DECEMBER 1999

CTM’s first expansion:
Gold Coast office opened

MAY 1994

CTM founded with two
staff in Brisbane

CTM Annual Report 2014CTM Annual Report 2014

What our staff think 20 years on...

Andre Moten
General Manager AU/NZ, 13 years with CTM

Sarah Lane
Product Support Specialist, 12 years with CTM

“ My personal journey with CTM commenced in 2001 and
there have been many changes during my 13 year tenure.
However, much of what truly matters remains embedded in
the company’s DNA: a value proposition which is extremely
relevant to the market. This has been achieved through
extensive customer and prospect consultation on the need
for greater efficiency, value and innovation in the corporate
travel industry. CTM also continues to strive to be the
employer of choice in our market, to attract and retain
the best talent available.”

“ I joined CTM in 2002, when we operated out of 3 offices
with approximately 40 staff nationally. As our team of
people has grown, our technology has also developed
in order to provide greater efficiencies and online
experiences. I have been privileged to help create CTM’s
Product Support Team, which now spreads across three
office locations and provides support for 20 different
systems, including the evolving suite of CTM SMART
Technology tools. It’s exciting to see our team of people
continue to learn and develop their skills, whilst embracing
new technology and providing great service to our clients.”

“ As early as my interview at CTM 12 years ago, I

could sense I was on to a good thing. It’s been great
to watch the company expand and grow over that
time - all while staying true to our customer service
commitment and employee focused culture. I’m proud
to have played a part in it, and I’m pleased to say that,
after 12 years, we’re still on to a good thing!”

Julie Archer
Senior Corporate Consultant, 12 years with CTM

CTM Annual Report 2014CTM Annual Report 2014We wouldn’t have made 20 years without
our valued customers and suppliers.

Klinge & Co Pty Ltd
CTM client for 15 years

Energy Developments
CTM client for 11 years

“ Klinge & Co Pty Ltd has enjoyed a long and mutually
beneficial relationship with CTM spanning over 15 years.
From our perspective, I believe the success of CTM is in
direct relation to the personalised service provided to us,
not only during office hours but also when you need the
24 hours support which I have personally experienced
whilst travelling overseas on a number of occasions. We
are proud to have shared in their growth and successes
over the years, and wish Jamie and his team all the very
best for all their future ventures.”

Tom Klinge, Managing Director, Klinge Group of Companies

“ Energy Developments has worked with CTM for 11 years
in developing a travel management program that delivers
ongoing value to our business. Their pro-active approach
to identifying saving opportunities across airfares, hotel
and car rental expenditure, and dedicated consulting
team continually reinforces the value that we place on
their services.”

Shane Achilles, Contracts Manager, Energy Developments

Sabre
20 year supplier partnership

“ Since CTM’s inception in 1994, Sabre and CTM have enjoyed a
strong partnership based upon mutual support and respect.
Like Sabre, CTM is acknowledged as an industry
innovator committed to developing the very best in
customised solutions which deliver direct and
indirect savings for corporate clients. We have
been proud to support them in achieving this
goal from day one, and look forward to
even greater partnership opportunities
as CTM expands globally.”

Brett Henry, Vice President
Commercial, Abacus
International Pty Ltd.”

CTM Annual Report 2014CTM Annual Report 2014

CTM SMART
TECHNOLOGY

In 1994, the internet was the next big thing
in technology and the mobile phone was just
coming of age. 20 years on, CTM’s SMART
Technology is redefining the business travel
experience through intuitive and self-managed
technology solutions exclusive to CTM
and our clients.

END TO END TRAVEL MANAGEMENT PROGRAM

CTM SMART TECHNOLOGY

APPROVE

BOOK

MANAGE

REPORT

SMART
TAXI

SMART
RISK

SMART
APPROVE

SMART
DATA

SMART
PORTAL

PATENTED ‘PROPRIETARY’
TECHNOLOGY

MOBILE AND TABLET OPTIMISED

AGNOSTIC AND AGILE

INTUITIVE AND USER FRIENDLY

CTM Annual Report 2014CTM Annual Report 2014CTM CLIENT SURVEY 2014
Customer satisfaction remains our priority

96%

AGREE

Consultants are
courteous at
all times.

98%

Are satisfied with
the level of service
they receive.

Consultants
complete
bookings
accurately
every time.

AGREE

94% AGREE
Consultants
are always able to
answer all questions.

2014

95% AGREE
CTM continuously
identifies additional
savings opportunities.

Customers
rated our
after hours
support
service.

98%

VERY HAPPY

Winner of AFTA award
‘Australia’s Best Travel
Management Company’
9 out of past 11 years.

95%

AGREE

Their Strategic Account
Plan is of high value.

CTM Annual Report 2014CTM Annual Report 2014DIRECTORS

Tony Bellas
Chairman

Tony Bellas has more than 28 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.

Stephen Lonie
Independent Non-Executive
Director

Stephen Lonie is a Chartered
Accountant with more than 41
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).

Greg Moynihan
Independent Non-Executive
Director

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.

Admiral Robert J.
Natter, US Navy (Ret.)
Independent Non-Executive
Director

Robert Natter has more than
10 years’ experience in both the
government and private sectors
in the North American market,
currently as Chairman of G4S
Government Solutions Inc. and
on the U.S. Naval Academy Alumni
Association Board. During his
Navy career he served as the
Commander in Chief to the U.S.
Atlantic Fleet and as the First
Commander of U.S. Fleet Forces
Command. Robert retired from
military service a decade ago.

Claire Gray
Executive Director Global
Development

Claire Gray brings 30 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 -
which merged with Corporate
Travel Management in 2008 to
create one of the largest business
travel agencies in Australasia.

CTM Annual Report 2014CTM Annual Report 2014SENIOR
LEADERSHIP
TEAM

Jamie Pherous
Managing Director

Steve Fleming
Global Chief Financial Officer

Laura Ruffles
CEO Australia and New Zealand

Romeo Cuter
CEO USA

Jamie Pherous, Managing
Director, founded Corporate Travel
Management in 1994. He 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.

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 21 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.

Laura Ruffles, Corporate Travel
Management’s Chief Executive
Officer AU/NZ, has significant
local, regional and global business
experience. In a career of more
than 19 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.

Romeo Cuter joined CTM in April
2014 with an extensive background
in travel and proven ability to deliver
results in the areas of branding,
staff retention and motivation, sales
excellence and rapid growth. His
previous experience includes tenure
with large global corporations in
sales and marketing leadership
roles.

Larry Lo
Managing Director
Westminster CTM

Larry Lo brings 23 years’ travel
industry experience to the
Corporate Travel Management
leadership team. Larry is
responsible for the local and
regional sales and operations
of CTM’s Asian operations at
Westminster CTM. He was a
Director of the Travel Industry
Council of Hong Kong (TIC) from
2010 to 2012 and is currently
Vice Chairman of the Society
of International Air Transport
Association Passenger Agents
(SIPA). He holds a Bachelor
Degree in Business Management.

CTM Annual Report 2014CTM Annual Report 2014FINANCIAL
REPORT

Directors’ report 26

Corporate governance statement 45

Corporate Travel Management
Limited Financial Report

Consolidated statement of comprehensive income 56
Consolidated statement of financial position 57
Consolidated statement of changes in equity 58
Consolidated statement of cash flows 59

Notes to the Financial Statements

1. Corporate information 60
2. Summary of significant accounting policies 60
3. Segment reporting 75
4. Revenue 77
5. Other income 78
6. Expenses 78
7. Income tax 79
8. Earnings per share
82
83
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. Fair value measurement
23. Business combinations
24. Commitments and contingencies
25. Interests in other entities
26. Related party disclosures
27. Share-based payments
28. Parent entity financial information
29. Deed of cross guarantee
30. Auditors’ remuneration
31. Events occurring after the reporting period
32. Voluntary change in accounting policy

Directors’ declaration

84
85
86
86
87
88
89
91
92
93
94
96
99
100
104
106
108
110
112
112
115
116
116

118

Independent auditor’s report to the members
of corporate travel management limited 119
Shareholder information 121
Corporate directory 125

CTM Annual Report 2014CTM Annual Report 2014Directors’ Report

The Directors present their report, together with the
financial report of Corporate Travel Management
Limited and its controlled subsidiaries (CTM or “the
Group”), for the financial period ended 30 June 2014.

Former directorships in last 3 years:
■ Non-Executive Director of Guildford Coal Limited

(2010 to 2012).

DIRECTORS

The Directors of the Group at any time during
or since the end of the financial year are:

■ Mr Tony Bellas.
■ Mr Stephen Lonie.
■ Mr Greg Moynihan.
■ Mr Jamie Pherous.
■ Ms Claire Gray.
■ Admiral Robert J.Natter, U.S. Navy (Ret.)

(appointed 5 February 2014).

All Directors have been in office since the start of
the financial period to the date of this report, unless
otherwise noted.

INFORMATION ON DIRECTORS

TONY BELLAS
MBA, BEcon, DipEd, FAIM, MAICD, ASA
Independent Non-Executive Director – Chairman

Tony Bellas has more than 28 years experience in
both the government and private sectors. Tony is the
Principal of Queensland Infrastructure Partners, as
well as, Chairman of ERM Power Limited, since 2009,
and Shine Corporate Limited, since 2013.

Tony Bellas has previously held positions of Chief
Executive Officer of Ergon Energy Ltd, CS Energy
Ltd, Seymour Group Pty Ltd, and was previously
Queensland’s Deputy Under Treasurer.

Tony Bellas was also Chair of the Independent
Review Panel appointed by the Queensland
Government to review the Queensland Government
electricity network businesses, which submitted
its report to the Queensland Government in
December 2012.

Special responsibilities:
■ Chair of the Board.
■ Chair of Nominations Committee.
■ Audit Committee member.
■ Risk Management Committee member.
■ Remuneration Committee member.

JAMIE PHEROUS
BCom CA
Managing Director

Jamie Pherous founded Corporate Travel
Management Ltd (CTM) 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, New Zealand, North America
and Asia, now employing more than 1,300 staff.

Prior to establishing CTM, Jamie Pherous 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 Pherous was also a major shareholder and
co-founder of an online hotel booking engine,
Quickbeds.com.au, which was sold to The Flight
Centre Group in 2003.

Jamie Pherous 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, SFFin, MAICD
Independent Non-Executive Director

Greg Moynihan is a former Chief Executive Officer
of Metway Bank Limited. He has also held senior
executive positions with Citibank Australia and
Suncorp Metway.

Former directorships in last 3 years:
■ Non-Executive Director CMI Limited (2012

to 2013).

■ Non-Executive Director Oaks Hotels & Resorts

Limited (2011).

■ Chairman The Rock Building Society Limited

(2010 to 2011).

Since leaving Suncorp Metway in 2003, Greg has
focussed on his commitments as a non-executive
company director, as well as pursuing business
interests in the investment management and private
equity sectors.

Special responsibilities:
■ Chair of Audit Committee.
■ Chair of Risk Management Committee.
■ Remuneration Committee member.
■ Nominations Committee member.

Greg is currently a non-executive director of Sunwater
Limited (since 2007), Shine Corporate Limited (since
2013), and a Director of several private companies.
He has previously held public company Directorships
with Cashcard Australia Ltd, LJ Hooker Ltd, RACQ
Insurance Ltd, HFA Limited and Ausenco Limited.

Former directorships in last 3 years:
■ Ausenco Limited (2008 to 2013).

Special responsibilities:
■ Chair of Remuneration Committee.
■ Nominations Committee member.
■ Audit Committee member.
■ Risk Management Committee member.

STEPHEN LONIE
BCom, MBA, FCA, FFin, FAICD, FIMCA, MACS
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 Lonie is currently Chairman of Jellinbah
Resources Pty Ltd, since 2002, and a non-executive
Director of MyState Limited, since 2011, Dart Energy
Limited, since 2013, and Retail Food Group Limited,
since 2013.

CLAIRE GRAY
MBA, DIP TTM
Executive Director

Claire Gray brings 30 years experience to CTM.
In 1989, Claire Gray joined with Craig Smith to
form the independent travel management company,
Travelogic, servicing Macquarie Bank Ltd. Travelogic
merged with CTM in 2008, to create one of the largest
business travel agencies in Australasia.

Claire Gray brings over 10 years experience in global
travel management having held executive roles with
Globalstar Travel Management.

Claire Gray graduated from her 2 year MBA
programme through the Thunderbird School of
Global Management majoring in Global Business
Management, in May 2014.

Former directorships in last 3 years:
■ None.

Special responsibilities:
■ Business development.

CTM Annual Report 2014CTM Annual Report 2014

ADMIRAL ROBERT J. NATTER
U.S. Navy (Ret.)
Independent Non-Executive Director

Robert Natter retired from military service a decade
ago and now has more than 10 years experience in
both the government and private sectors in the North
American market. Robert is the Chairman of G4S
Government Solutions Inc. since 2012, and U.S.
Naval Academy Alumni Association Board since 2012.

Robert Natter also holds Directorships with Eyelock
since 2011, BAE Systems In., since 2005, and
National U.S. Navy SEAL Museum Board, since 2000.
He is also on the Advisory Board of Physical Optics
Corp., since 2010.

STEVE FLEMING
BBus (Accounting) CA

Steve Fleming is CTM’s Chief Financial Officer and
is responsible for the finance function, treasury
management, key stakeholder liaison and strategic
planning, in conjunction with the Board and the
Managing Director.

Steve Fleming 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 CTM in 2009, Steve Fleming was
Group Finance Manager of Super Retail Group Ltd.

Steve Fleming is a member of the Institute of
Chartered Accountants in Australia.

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 Tony Bellas

Mr Stephen Lonie

Mr Greg Moynihan

Mr Jamie Pherous

Ms Claire Gray

Admiral Robert J. Natter

Ordinary shares held
at 30 June 2014

229,630

23,000,000

5,003,624

92,000

In Robert Natter’s navy career, he served as the
Commander in Chief to the U.S. Atlantic Fleet and as
the First Commander of U.S. Fleet Forces Command,
overseeing all Continental U.S. Navy bases, facilities
and training operations.

Former directorships in last 3 years:
■ None.

Special responsibilities:
■ Remuneration Committee member.
■ Nominations Committee member.

COMPANY SECRETARIES
■ Mrs Lyndall McCabe.
■ Mr Steve Fleming.

LYNDALL MCCABE

Lyndall McCabe has held managerial positions with
CTM since joining the Company in 2000, including
Finance Manager and National Operations and
Human Resources Manager.

She has more than 18 years experience in the travel
industry sector, having previously been employed by a
travel consolidator. In 2005, Lyndall McCabe became
a shareholder and was appointed as a Director of
CTM, from which she subsequently resigned 23 June
2010 as part of CTM’s transition to a listed public
corporation. Lyndall McCabe’s current role is CTM’s
Audit and Risk Manager.

Lyndall McCabe is a member of the Governance
Institute of Australia.

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 2014, and the number of meetings attended by each Director were:

Committee meetings

Full meetings
of directors

Audit

Risk

Remuneration

Nominations

Management

Director

Mr Tony Bellas

Mr Stephen Lonie

Mr Greg Moynihan

Mr Jamie Pherous

Ms Claire Gray

Admiral Robert J. Natter

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 2014. A full schedule of meetings
is also in place for the year ended 30 June 2015.

Number of
meetings
required
per Charter

Number of
meetings
held in
year to 30
June 2014

Full meetings of Directors

Audit

Risk Management

Remuneration

Nominations

DIVIDENDS

Dividends paid to members during the financial
year were as follows:

Final ordinary dividend for the year ended
30 June 2013 of 6.5 cents per fully paid
share paid on 11 October 2013

Interim ordinary dividend for the year ended
30 June 2014 of 4.5 cents per fully paid
share paid on 11 April 2014

2014
$’000

5,084

4,045

9,129

Since the end of the financial year, the Directors
have recommended the payment of a final ordinary
dividend of $6,744,853 (7.5 cents per fully paid
share), to be paid on 10 October 2014 out of
retained earnings at 30 June 2014.

CTM Annual Report 2014CTM Annual Report 2014PRINCIPAL 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.

To fund the Westminster Travel acquisition, CTM
undertook a renounceable rights issue of 4 new
ordinary shares for every 27 shares held. As a result
of this rights issue, on 24 January 2014, CTM issued
11,366,052 ordinary shares for a consideration of
$4.60 per share.

OPERATING AND FINANCIAL REVIEW

Group overview

The Group continued to engage in its principal activity,
being the provision of travel services, the results of
which are disclosed in the following statements.

On 29 January 2014, the Group announced
completion of the acquisition of 75.1% of Wealthy
Aim Investments Limited (“Westminster Travel”) in
Asia. Westminster Travel is an award winning travel
management and services provider with offices in five
Asian countries/territories – Hong Kong, Singapore,
China, Macau and Taiwan. The acquisition was
funded through a renounceable rights issue
of $53.3m.

Following the acquisition of Westminster Travel, the
Group operates out of 37 cities in 15 countries and
employs over 1,300 people.

As part of the transaction, on 29 January 2014, CTM
entered into a loan agreement whereby it loaned
the vendors HK$117,420,074. The loan was funded
from CTM’s banking facilities with ANZ Bank and
was repayable in HK$, within six months, including
all associated costs, and was secured against the
remaining 24.9% shares in Westminster Travel. The
loan was fully repaid according to the terms of the
loan agreement on 28 March 2014, including interest
paid of $45,894. Refer Note 26.

On 23 December 2013, the Group renegotiated its
facility with the ANZ Bank. The facility now includes
accessible lines of credit totalling $31.7m. In addition,
there are facilities for overdraft, merchant facilities and
bank guarantees. The total facility is $40.3m and has
terms ranging from 5 months to 3 years. The amount
of this facility used, which relates mainly to bank
guarantees, as at 30 June 2014, was $1.5m.

Group financial performance

Key financial metrics are summarised in the
following table:

2014
$’000

2013
$’000

Change
%

Total Transaction Value (TTV) (unaudited)

Total revenue and other income

Earnings before interest, tax, depreciation and amortisation (EBITDA)
adjusted for acquisition / non-recurring costs

Profit before related income tax expense

Income tax expense

Net profit after tax:

Attributable to members

Attributable to minority interest

1,383,759

883,804

110,477

77,557

28,864

19,587

22,978

6,399

15,970

4,702

15,845

11,268

734

Earnings per share (EPS) basic (cents per share)

19.0 cents

14.9 cents

Total dividends paid/proposed in relation to financial period

Net assets

Net operating cash flow

10,790

132,884

11,835

8,074

69,119

16,002

56.6

42.4

47.4

43.9

36.0

40.7

100

27.5

33.6

92.3

(26.0)

The net profit after tax of the Group for the
financial period, amounted to $15,845,000 (2013:
$11,268,000).

Review of underlying operations

Australia and New Zealand (“ANZ”)

The result was underpinned by a 56.6% increase
in TTV, to $1,384m (unaudited).

EBITDA adjusted for acquisition / non-recurring
costs grew by 47.4% to $28,864m. Refer Note 3
for the reconciliation to profit before income tax
from continuing operations.

Total Transaction Value (TTV) (unaudited)

TTV represents the amount at which travel products
and services have been transacted across the
Group’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 and
is not subject to audit. TTV is stated net of GST.
TTV is utilised by management as a key travel
industry metric.

2014
$’000

2013
$’000

TTV net of GST (unaudited)

1,383,759

883,804

CTM continues to maintain a strong financial position,
with net current assets of $30.2m and total equity of
$132.9m. At 30 June 2014, the Group had nil interest
bearing debt and has continued to generate strong
operating cash flows.

The business growth has been funded by a
combination of operating cash flow and a capital
raising in January 2014 of $53.3 million, applied to
fund the Westminster Travel acquisition. In addition
to the Westminster Travel acquisition, there has been
further deferred acquisition payments of $2.0m and
capital expenditure of $2.1m during the year, which
have been funded through operating cash flow.

The Company continues to pay dividends at its stated
divided policy level, with a final dividend declared at
7.5 cents per share (full year: 12 cents).

Revenue and other income, in the ANZ operation
increased by 1.8% despite a 0.4% fall in TTV
(unaudited). The ANZ operation’s TTV (unaudited)
was impacted by declining average ticket prices
and tough economic conditions. Average ticket prices
and client activity appear to have steadied in recent
months.

Encouragingly, the adjusted EBITDA margin increased
from 26.6% in 2013 to 27.7% in 2014, as the region
was able to generate more productivity gains.

North America

TTV (unaudited) in North America rose by 7.4%
on a like for like basis, with 2014 TTV (unaudited)
at $306.4m. Revenue increased by 23.2% to $22.8m
as a result of synergies from business integration
and strong organic growth.

The adjusted EBITDA margin improved from 16.3%
to 22.6%, due to synergies operating across North
America.

CTM now has operations in 17 cities across 7 states
in North America. The momentum and scale now in
place bodes well for future activities.

Asia

The new operations in Asia contributed $360m
of TTV (unaudited) for the 5 months from date of
acquisition to 30 June 2014. The yield in the Asian
business is lower than ANZ and North America due
to the Wholesale business line, which operates at a
much lower yield than Corporate, Leisure and Events
businesses.

In Hong Kong, Westminster Travel, as a Tier 1
consolidator, acts as a markets channel for major
airlines, selling tickets to Third Party Tier 2 travel
agents, as well as through its own, corporate and
leisure businesses. This wholesale business reflects
the operating structure of the travel industry in Hong
Kong, and is an important part of Westminster Travel’s
business operations in Hong Kong, as it provides the
platform to generate higher TTV and volume rebates
for Westminster Travel.

CTM Annual Report 2014CTM Annual Report 2014EBITDA margin, however, is strong at 23.4%
which has improved from 22.0% for the
corresponding period.

Strategy and future performance

The Group continues to focus on its key strategic
drivers, being:

■ Retaining current clients.
■ Winning new clients.
■ Improving productivity.

In the 2014 financial year, the Group has executed
well on these key business drivers, notwithstanding
the tough economic conditions in the Australian
market.

Client retention has been successful during the year
and the Group has had a record year in securing new
clients, including some significant new clients in North
America.

A vast proportion of CTM’s cost base is employee
costs, which highlights the importance of productivity
initiatives. During the year, there has been an increase
in productivity, but not through a reduction of service.
In fact, service levels have risen as automation
has replaced manual processes, providing CTM’s
consultants with the time to operate more effectively
and for the benefit of clients.

The acquisition of Westminster Travel in Asia gives
the Group presence in three of the four major travel
markets.

The Group intends to continue its growth globally
through acquisition, with aspirations to be in every
major region (Asia, Europe, North America and
Australia/New Zealand), as well as pursuing organic
growth, underpinned by continued investment in staff
training and new client facing technology.

The next twelve months will also involve leveraging
global synergy opportunities, where available, and a
greater focus on cross-selling between regions.

Material business risks

The Group is subject to both specific risks to its
business activities and risks of a general nature.

These risks include:

■ Global terrorism and pandemics: International
travel remains susceptible to the impact of
regional terrorism and health pandemics
■ Economic conditions: Economic downturn may

have an adverse impact on the Group’s operating
performance.

■ Information technology: The Group relies heavily
on outsourced technology platforms. Whilst all
systems are licensed, any disruption to supply or
performance of systems may have a long term
impact on client and supplier satisfaction.

■ Competition: The Group operates in a competitive

market, and current competitors or new
competitors may become more effective.

■ Key personnel: The Group is reliant on talent and
experience to run its business. The Group’s ability
to retain and attract key people is important to its
continued success.

■ Employee costs: Employee costs represent a
significant component of the Group’s total cost
base. Legislative changes in relation to employee
costs may have an adverse impact on the Group’s
cash flow and profitability.

VOLUNTARY CHANGE IN ACCOUNTING POLICY

During the year, the Group made a voluntary change
to its accounting policy in relation to Pay Direct
Commissions (“PDC”). In assessing the revenue
recognition policy, the Directors noted several factors
including a deteriorating rate of PDC recoveries and
the uncertainty that surrounds PDCs at the time of
travel booking. These factors made it increasingly
difficult to reliably estimate PDC revenue at time of
booking.

The Directors concluded that it was not probable that
revenue would flow to CTM until the point of receipt.
Hence, the Directors consider that this voluntary
change in accounting policy will allow a more reliable
measurement and recognition of PDC in the future.

PDC revenue is now being recognised based on
receipt of commission, as opposed to previous
recognition based on a booking received. Full details
of the impact of the voluntary change are found in
Note 32.

SIGNIFICANT CHANGES IN THE STATE OF
AFFAIRS

LIKELY DEVELOPMENTS AND EXPECTED
RESULTS

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.

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.

OTHER MATTERS

During the year, CTM issued 25,000 Ordinary
shares to Admiral Robert J. Natter, in consideration
for consultancy services in relation to CTM’s North
American operations. On 5 February 2014, CTM
appointed Admiral Natter, as an independent Non-
Executive Director, based in North America. Admiral
Natter, has been actively engaged with CTM as a
consultant since September 2013, and brings with
him a wealth of knowledge and experience in the
North American market.

During the year, CTM made an unsecured short term
bridging loan to Mr Jamie Pherous of $3,867,716
(2013: Nil) at an arm’s length interest rate of 6.66%,
based on a 100 day term. The loan was fully repaid
according to the terms of the loan agreement on 17
December 2013, including interest paid of $57,886
(2013: Nil).

SIGNIFICANT EVENTS AFTER BALANCE DATE

USTravel

The acquisition of 100% of the shares of USTravel Inc.
(“UST”), a North American based travel management
company, was completed on 1 July 2014. As part of
this transaction, an initial consideration of $5,561,441
(US $5,250,000) was paid via a mixture of cash
and CTM Limited shares. Further cash contingent
consideration of up to $2,919,320 (US $2,750,000)
may also be payable on 31 August 2015, based on
UST achieving annual profit before tax earnings of
$US1,600,00 by 30 June 2015. Should actual profit
before tax earnings not reach this level by 30 June
2015, the amount of the earn-out will be reduced.

Avia International Travel

On 6 August 2014, CTM announced the acquisition
of Avia International Travel (“Avia”), a travel
company based in Houston, Texas, effective from
1 September 2014. As part of this transaction, an
initial consideration of $4,454,644 (US $4,125,000)
will be paid via a mixture of cash and CTM Limited
shares. Further cash contingent consideration of up to
$5,175,159 (US $4,875,000) may also be payable on
30 November 2015, based on Avia achieving annual
profit before tax earnings of $US1,800,000 by 31
August 2015. Should actual profit before tax earnings
not reach this level by 31 August 2015, the amount of
the earn-out will be reduced.

No other matter or circumstance has arisen since 30
June 2014 that will significantly affect the Group’s
operation, the results of those operations or the state
of affairs of the Company or the Group for subsequent
financial years.

CTM Annual Report 2014CTM Annual Report 2014REMUNERATION 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.

Directors and executives disclosed in this report

(i) Directors

Mr Tony Bellas

Mr Stephen Lonie

Mr Greg Moynihan

Non-Executive Director.

Admiral Robert J. Natter

Non-Executive Director (appointed on 5 February 2014).

Mr Jamie Pherous

Managing Director & Chief Executive Officer.

Ms Claire Gray

Executive Director.

(ii) Other key management personnel

Mr Steve Fleming

Chief Financial Officer.

Ms Laura Ruffles
Mr Larry Lo
Mr Romeo Cuter

Chief Executive Officer - Australia & New Zealand.
Chief Executive Officer – Asia (since 29 January 2014).
Chief Executive Office – North America (since 2 April 2014).

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.

CTM’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.

Directors’ fees

The current base fees were last reviewed with
effect from 1 July 2013.

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 $600,000 (2013: $400,000).

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, which:

▪ 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 calibre executives.

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 three components:

■ Base remuneration and benefits, including

superannuation;

■ Short-term performance incentives; and
■ Long-term incentives through participation
in the Share Appreciation Rights Plan.

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 2015, 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. 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.

■ Alignment to program participants’ interests,

which:

Executives receive benefits, including motor vehicle
benefits as part of the fixed remuneration package.

▪ Rewards capability and expertise;
▪ Reflects competitive reward for contribution

to growth in shareholder wealth;

▪ Provides a clear structure for earning rewards;

and

Superannuation

Superannuation contributions are paid in accordance
with relevant Government legislation, to employee
nominated defined contribution superannuation funds.

▪ Provides recognition for individual and team

Short-term incentives

contributions.

If the Group achieves a pre-determined profit target
set by the Remuneration Committee, a short-term

CTM Annual Report 2014CTM Annual Report 2014incentive (“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 CTM’s approved
business plan. The incentive pool is leveraged for
performance above the threshold, to provide an
incentive for executive superior performance.

Executives have a target STI opportunity depending
on the accountabilities of the role and impact on
the organisation or business unit performance. The
maximum target bonus opportunity in the 2014 year
was approximately 67% (2013: 49%) of base fixed
remuneration and benefits.

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.

The Remuneration Committee is responsible
for assessing whether the KPIs are met. The
Remuneration Committee also has absolute
discretion to adjust short-term incentives, in light
of unexpected or unintended circumstances.

The STI target annual payment is reviewed annually.

Payments made under the STI plan over the last four
years have typically risen and fallen in line with the
Group’s financial results. For the year ended 30 June
2014, the key performance indicators (KPIs) linked to
STI plans were based on the Group objectives, with
the key financial metrics being consolidated Earnings
Before Interest, Tax, Depreciation and Amortisation.

The relationship between STI and Corporate Travel
Management Ltd’s performance over the last 5 years
is set out in the following table:

Profit for the year attributable to owners of Corporate
Travel Management Ltd ($’000)

Basic earnings per share (cents)

Dividend payments ($’000)

Dividend payout ratio (%)

Increase / (decrease) in share price %

Total KMP STI as a percentage of profit / (loss) for the
year (%)

2014

2013
restated

2012

2011

2010

15,845

11,268

11,798

8,268

3,317

19.0

9,129

57.6%

56.6%

0.9%

14.0

7,497

66.5%

111.3%

16.3

5,813

49.3%

(0.5%)

2.6%

1.9%

13.5

750

9.1%

100%

3.4%

6.6

0.0%

n/a

4.4%

Long-term incentives

In the prior year, the Company introduced a long-term
incentive scheme via a Share Appreciation Rights
Plan.

The plan is designed to focus executives on delivering
long-term shareholder returns. Under the plan,
participants are granted shares only if performance
conditions pertaining to the earnings per share growth
are met and the employee is still employed at the end
of the vesting period.

Participation in the plan is at the Board’s absolute
discretion and no individual has a contractual right
to participate in the plan.

Details of remuneration

Details of the remuneration of the Directors and the
key management personnel of the Group are set out
in the following tables.

Short-term benefits

Long-term benefits

Name

2014

Cash
salary
and fees

Short-
term
incentive*

Annual
leave

Non-
monetary
benefits

Super-
annuation

Long
service
leave

Non-executive Directors

Tony Bellas

Stephen Lonie

Greg Moynihan
Admiral Robert J.
Natter
Sub-total
non-executive
Directors

99,769

77,212

35,804

289,997

Executive Directors

Jamie Pherous

300,000

Claire Gray

94,747

9,229

7,142

3,649

27,162

26,538

2,172

27,750

5,756

Other key management personnel of the group

Laura Ruffles

293,269

100,000

26,539

Steve Fleming

260,000

40,000

23,000

Larry Lo ^

165,748

Romeo Cuter ^

95,572

4,420

Total

Share
appreci-
ation
rights

108,998

84,354

39,453

317,159

362,216

94,747

38,227

27,750

929

3,786

4,101

24,338

486,159

6,659

361,510

171,097

95,572

Total key
management
personnel
compensation

1,499,333

140,000

80,497

2,172

121,818

13,643

30,997

1,888,460

* Balances include a prior period incentive of $30,000 paid to Laura Ruffles, in excess of amounts previously provided.
^ Larry Lo was appointed as Chief Executive Officer - Asia on 29 January 2014 and Romeo Cuter was appointed as Chief

Executive Officer - North America on 2 April 2014. Admiral Robert J. Natter was appointed as Director on 5 February 2014.
The amounts presented in the previous tables, represent remuneration paid from the dates of these respective appointments.

CTM Annual Report 2014CTM Annual Report 2014Short-term benefits

Long-term benefits

Cash
salary
and fees

Short-
term
incentive

Annual
leave**

Non-
monetary
benefits

Super-
annuation

Long
service
leave**

Name

2013

Non-executive Directors

Tony Bellas

Stephen Lonie

Greg Moynihan

Sub-total
non-executive
Directors

89,615

64,712

219,039

Executive Directors

Jamie Pherous

300,000

8,065

5,824

19,713

3,462

4,927

27,000

4,986

Total

Share
appreci-
ation
rights

97,680

70,536

238,752

340,375

273,915

Claire Gray

107,415

166,500

Other key management personnel of the group

Laura Ruffles

275,000

90,000

(1,115)

Steve Fleming

248,942

40,000

1,102

33,075

26,105

701

1,417

9,317

406,978

317,566

Total key
management
personnel
compensation

1,150,396

296,500

3,449

4,927

105,893

7,104

9,317

1,577,586

** Balances reflect the net impact of leave accrued and leave taken.

Directors and other key management personnel of the Group are included in this disclosure
for the period they held the applicable roles.

The relative proportions of remuneration that are fixed or linked to performance are as follows:

Fixed remuneration

At risk – STI

At risk – LTI

Name

2014 %

2013 %

2014 %

2013 %

2014 %

2013 %

Directors of Corporate Travel Management Limited

Tony Bellas

Stephen Lonie

Greg Moynihan

Jamie Pherous

Claire Gray

Admiral Robert J. Natter

100%

24%

Other key management personnel of the group

Laura Ruffles

Steve Fleming

Larry Lo

Romeo Cuter

70%

85%

100%

70%

81%

24%

13%

76%

28%

19%

Directors and other key management personnel of the Group are included in this disclosure
for the period they held the applicable roles.

Service agreements

There are no fixed-term service agreements with Directors or other 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.

Short term incentive bonus

For each short term incentive included in the tables on pages 37 and 38, the percentage
of the available bonus that was paid in the financial year, and the percentage that was forfeited,
is disclosed in the following section. No part of the bonus is payable in future years.

2014

2013

Name

Awarded
%

Forfeited
%

Awarded
%

Forfeited
%

Laura Ruffles

Steve Fleming

Claire Gray

CTM Annual Report 2014CTM Annual Report 2014Long-term incentives

(ii) Shares held by key management personnel:

In the prior year, the Company introduced a long term incentive scheme via a Share Appreciation Rights Plan (SARs).

The plan is designed to focus executives on delivering long-term shareholder returns. Under the plan, SARs will
only vest, if performance conditions pertaining to the earnings per share growth are met and the employee is still
employed at the end of the vesting period.

Participation in the plan is at the Board’s absolute discretion and no individual has a contractual right to participate
in the plan. Once vested, a participant will be deemed to have automatically exercised all vested SARs and CTM
will settle its obligation in line with the SARs Plan. There is no consideration payable by the participant upon
exercising of vested SARs. Upon vesting, the conversion of a SAR to an equity or cash based settlement, is
determined using a formula referencing the relevant share prices of CTM, the number of SARs exercised,
and is at the Board’s sole discretion.

Grants made during 2014 will vest on a scaled basis as follows:

■ 75% vest at 80% target achievement;
■ 100% at 100% target achievement.

Grants made to key management personnel that have not yet vested as at 30 June 2014 are as follows:

Name

Year of
grant

Years in
which
rights

may vest

Number
of rights
granted

Value per
right at
grant
date

Number of
rights vested
during the
year

Vested

Forfeited
%

Laura
Ruffles

Steve
Fleming

2014

2013

2014

2013

2017

75,000

$0.41

2016

75,000

$0.57

2017

50,000

$0.41

2016

Max
value
yet

to vest

30,075

43,050

20,050

No Directors or other key management personnel hold any share appreciation rights.

Loans to Directors and Executives

Information on loans to Directors and Executives, including amounts, interest rates and repayment
terms are set out in Note 26 to the financial statements.

Shares under option

There are currently no unissued ordinary shares of CTM under option.

Equity instruments held by key management personnel

(i) Share appreciation rights

During the financial year, share appreciation rights were issued to Ms Laura Ruffles and Mr Steve Fleming,
as listed in the Directors’ Report.

No share options were granted as equity compensation benefits during the financial year (2013: nil).

Purchased

Disposed

Balance
at
30 June
2013

Other
changes
during

the year

Balance
at
30 June
2014

Directors
Ordinary shares

Mr Jamie Pherous

24,000,000

500,000

(1,500,000)

5,424,999

(421,375)

Ms Claire Gray

Mr Tony Bellas

Mr Stephen Lonie

Mr Greg Moynihan

Admiral Robert J. Natter

200,000

35,000

Other key management personnel of the group
Ordinary shares

Ms Laura Ruffles

Mr Steve Fleming

Mr Larry Lo

Directors
Ordinary shares

Mr Jamie Pherous

Ms Claire Gray

Mr Tony Bellas

Mr Stephen Lonie

Mr Greg Moynihan

150,000

Balance
at
30 June
2012

26,599,728

5,424,999

200,000

Other key management personnel of the group
Ordinary shares

Ms Laura Ruffles

Mr Steve Fleming

150,000

25,000

23,000,000

5,003,624

229,630

92,000

153,956

43,955

25,000

25,000*

29,630

32,000

3,956

3,955

(110,000)

Purchased

Disposed

Other
changes
during

the year

Balance
at
30 June
2013

(2,599,728)

24,000,000

5,424,999

200,000

150,000

* A total of 25,000 shares were issued on 31 January 2014 to Mr Larry Lo to assist in his reward and retention.

CTM Annual Report 2014CTM Annual Report 2014

All equity transactions with key management
personnel, have been entered into under terms and
conditions no more favourable than those the Group
would have adopted if dealing at arm’s length.

Loans to key management personnel

During the year, CTM made an unsecured short term
bridging loan to Mr Jamie Pherous of $3,867,716
(2012: Nil) at an arm’s length interest rate of 6.66%,
based on a 100 day term. The loan was fully repaid
according to the terms of the loan agreement on 17
December 2013, including interest paid of $57,886
(2012: Nil). The loan balance represents the highest
amount of indebtedness during the year.

No write-downs or allowances for doubtful receivables
have been recognised in relation to any loans made to
key management personnel.

Other transactions and balances with key
management personnel

During the year, $359,324 (2013: $333,677) has been
paid to a party related to Mr Jamie Pherous for rent and
outgoings in relation to an office lease. The balance
payable at 30 June 2014 is $24,756 (2013: $nil).

On 12 September 2013, CTM issued 25,000
Ordinary shares to Admiral Robert J. Natter, in
consideration for consultancy services in relation
to CTM’s North American operations. On 5 February
2014, Admiral Natter, was appointed as
an independent Non-Executive Director of CTM.

Directors of the Group hold other directorships in
public corporations, 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.

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 key
executives. The liabilities covered by the insurance
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.

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.

NON-AUDIT SERVICES

The Company may decide to employ the auditor on
assignments in addition 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:

Amounts received or due and receivable by:

The auditor of the Group is PricewaterhouseCoopers

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 entities in the consolidated group:
▪ Tax compliance
▪ Tax services – acquisitions
▪ Other advisory services

Total remuneration of PricewaterhouseCoopers Australia

Other PricewaterhouseCoopers network firms:

▪ Other services in relation to the entity and
any other entity in the consolidated group:
▪ Audit and Review of the Financial Report
▪ Tax compliance
▪ Tax services – acquisitions

Total remuneration of PricewaterhouseCoopers network firms

2014
$

2013
$

361,000

285,000

160,984

140,146

88,904

39,619

23,600

9,552

655,507

458,298

269,059

52,594

98,566

420,219

26,736

27,163

53,899

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.

Mr Tony Bellas
Chairman

Mr Jamie Pherous
Managing Director

Brisbane, 28 August, 2014

CTM Annual Report 2014CTM Annual Report 2014Auditor’s Independence Declaration

Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Corporate Travel Management Limited for the year ended 30 June
As lead auditor for the audit of Corporate Travel Management Limited for the year ended 30 June
2014, I declare that to the best of my knowledge and belief, there have been:
As lead auditor for the audit of Corporate Travel Management Limited for the year ended 30 June
2014, I declare that to the best of my knowledge and belief, there have been:
2014, 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
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and
relation to the audit; and

relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

b) no contraventions of any applicable code of professional conduct in relation to the audit.
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.
This declaration is in respect of Corporate Travel Management Limited and the entities it controlled
during the period.

This declaration is in respect of Corporate Travel Management Limited and the entities it controlled
during the period.

Michael Shewan
Partner
Michael Shewan
PricewaterhouseCoopers
Partner
PricewaterhouseCoopers

Michael Shewan
Partner
PricewaterhouseCoopers

Brisbane
28 August 2014
Brisbane
28 August 2014

Brisbane
28 August 2014

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.

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 this Corporate
Governance Statement. All these practices, unless
otherwise stated, were in place for the entire year
and they comply with the Australian Stock Exchange
(ASX) Corporate Governance Principles and
Recommendations, including the 2010 Amendments.

The Board has a commitment to ongoing improvement
in the way it carries out its duties. During the year,
the Audit and Risk Committee was split to form two
separate committees, being the Audit Committee and
the Risk Management Committee. The Board is of
the view that our governance structure is enhanced
by a Committee that focuses on risk. As part of our
continuous improvement, the role and function of the
Risk Management Committee will be evaluated not
later than 12 months after its establishment.

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. Assess and monitor the Group’s corporate

culture and values;

d. Monitor performance against business

and financial targets;

e. Appoint and oversee the performance

of executive management; and

f. 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 2014 financial year.

CTM Annual Report 2014CTM Annual Report 2014PRINCIPLE 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. 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.

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.

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.

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. Been employed in an executive capacity by the

Company or another Group member; or

ii. 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
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.’

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 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 purposes.

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’. Following the
appointment of a new Board member in February
2014, the Board is currently comprised of 6
Directors (the Company’s constitution provides for
a minimum of 3 and a maximum of 12 Directors),
which the Board considers to be an appropriate size
to discharge its duties as well as be conducive to
effective discussion and efficient decision making.

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.

At the date of signing the Directors’ Report, the
Company has two executive Directors and four
non-executive Directors.

Commitment

Board meetings are normally held monthly, and are
expected to occur not less than ten times in any year.

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 Officer, 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.

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 number of meetings of the Company’s Board of
Directors and of each Board Committee held during
the year ended 30 June 2014, and the number of
meetings attended by each Director is disclosed on
page 29.

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 2014.

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.

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.

CTM Annual Report 2014CTM Annual Report 2014Non-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.

Conflict of interests

Where Directors are currently Directors of clients
of the Group, as detailed in Note 26 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. 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.

An external Board evaluation was performed
in both July 2013 and July 2014.

The Chair undertakes an annual assessment
of the performance of individual Directors and
meets privately with each Director to discuss this
assessment.

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,
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 the Board’s consideration.

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 29.

The Committee has responsibility to:

a. Review and recommend to the Board the size

and composition of the Board;

Notices of meetings for the election of Directors
comply with the ASX Corporate Governance Council’s
best practice recommendations.

PRINCIPLE 3: ACT ETHICALLY AND
RESPONSIBLY

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.

The Code of Conduct for transactions in securities
is as follows:

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. 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. 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;

ii. The evaluation of performance and independence

of the Board and individual Directors;

iii. 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. Succession planning for Directors, executives and

other senior managers; and

ii. 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.

CTM Annual Report 2014CTM Annual Report 2014b. The Transactions Code’s purpose is to

Diversity policy

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.

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”).

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.

The Company defines diversity to include, but not
be limited to, gender, age, ethnicity and cultural
background.

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 the role of the Remuneration
Committee includes reporting to the Board annually
on the proportion of men and women in the Group’s
workforce and their relative levels of remuneration.

The Board will assess and report annually to
Shareholders on the Group’s progress towards
achieving its diversity goals.

The Diversity Policy is available on the Company’s
website.

In accordance with this policy and ASX Corporate Governance Principles, the Board has established objectives
in relation to gender diversity. The position at 30 June 2014 is detailed as follows:

Item

Number of total employees

Percentage of total employees

Number of employees in senior executive positions

Percentage of employees in senior executive positions

Number of employees on the Board

Percentage of employees on the Board

Actual

Men

Women

323

24%

50%

83%

1,011

76%

50%

17%

The Group’s focus is predominately on maintaining gender diversity, and more importantly, CTM offers
flexible working arrangements to allow all employees and especially female employees, options to continue
to work or to return to work during periods where they traditionally leave the workforce, for example, following
parental leave.

In accordance with the ASX Recommendations, the Group’s policies provide the framework for measurable
objectives to be set out by the Board, and the progress towards achieving them, are as follows.

Measure

Base Camp – Frontline
Development Program

FY2014

FY2015

Objective

50% female gender participation.

Expand this program to staff in
international locations.

Progress

Female participation was 80%
for the program.

Pay Parity Review

Objective

A pay equity review and audit will
be undertaken.

Progress

Review and audit have been
completed.

Engagement of Female
Employees*

Objective

Equal to or greater than
CTM-wide engagement score,
with any negative differences not
statistically significant.

Progress

Objective was achieved.

* FY14 result does not include staff in Westminster Travel, as they did not participate

in the 2014 Employee Engagement Survey.

CTM Annual Report 2014CTM Annual Report 2014Monitoring and tracking performance against diversity
plans will continue to be undertaken as part of the
Group’s internal compliance requirements. Progress
against each year’s measurable objectives will
continue to be disclosed in the Annual Report along
with the proportion of women in the workforce, in
senior management and on the Board.

PRINCIPLE 4: SAFEGUARD INTEGRITY IN
FINANCIAL REPORTING

Audit 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 Company’s business. The
Committee consists of Senior Executives and is
chaired by a Non-Executive Director. Its current
members are Stephen Lonie (Chairman), Greg
Moynihan and Tony Bellas.

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. Compliance with relevant legislative and regulatory

requirements;

f. Review of financial statements and other financial

information distributed externally;

In fulfilling its responsibilities, the Audit 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 auditor at least twice a

year, or more frequently if necessary;

■ Meets separately with the external auditor at least
twice a year without the presence of management;
and

■ Provides the external auditor with a clear line of
direct communication at any time to either the
Chair of the Audit Committee or the Chair of the
Board.

The Audit 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 Committee meetings are set out in
the Directors’ report on page 29.

Corporate reporting

The CEO and CFO state in writing to the Board in
each reporting period that the Company’s financial
reports present a true and fair view, in all material
respects, of the Company’s financial position and
operational results and that they are in accordance
with relevant accounting standards.

g. Review of the effectiveness of the audit function;

External auditor

h. Review of the performance and independence of

the external auditor;

i. Review of the external audit function, to ensure

prompt remedial action by management, in relation
to any deficiency in or breakdown of controls;

j. Assessing the adequacy of external reporting for the

needs of Shareholders; and

k. Monitoring compliance with the Company’s Code of

Conduct.

The Company’s policy is to appoint an external auditor
which 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 was
introduced this year.

An analysis of fees paid to the external auditor,
including a break-down of fees for non-audit services,
is provided in the Directors’ Report and in Note 30 to
the financial statements. It is the policy of the external
auditor to provide an annual declaration of their
independence to the Audit 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.

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 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.

CTM Annual Report 2014CTM Annual Report 2014PRINCIPLE 7: RECOGNISE AND MANAGE RISK

Risk Management Committee

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 Risk Management
Committee and reviewed by the full Board.

The purpose of the Risk Management Committee
is to ensure 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 Risk Management 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 Risk Management
Committee on the effectiveness of:

■ The risk management and internal control

systems during the year; and

■ The Company’s management of its material

business risks.

Corporate reporting

In complying with recommendation 7.3, the CEO and
CFO have made the following certifications to the
board:

■ That the Group’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 the Group
and are in accordance with relevant accounting
standards.

■ That the above 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.

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. The committee consists of Non-
Executive Directors. Its current members are Greg
Moynihan (Chairman), Stephen Lonie, Tony Bellas
and Admiral Robert J. Natter.

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 29.

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’.

CTM Annual Report 2014CTM Annual Report 2014Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

FOR THE YEAR ENDED 30 JUNE 2014

AS AT 30 JUNE 2014

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

Total operating expenses

Finance costs

Profit before income tax

Income tax expense

Profit for the year

Profit attributable to:

Owners of Corporate Travel Management Limited

Non-controlling interests

Other comprehensive income

Items that may be reclassified to profit and loss

Exchange differences on translation of foreign operations

Other comprehensive income for the period, net of tax

Total comprehensive income for the year

Total comprehensive income for the year attributable to:

Owners of Corporate Travel Management Limited

Non-controlling interests

Earnings per share for profit from continuing operations attributable
to the ordinary equity holders of Corporate Travel Management Limited

- Basic (cents per share)

- Diluted (cents per share)

Note

2014
$’000

2013 restated*
$’000

110,014

463

110,477

77,557

(63,988)

(47,004)

(5,328)

(3,599)

(5,847)

(2,029)

(6,068)

(2,676)

(2,079)

(4,859)

(1,232)

(3,013)

(86,859)

(60,863)

(640)

22,978

(6,399)

16,579

15,845

734

16,579

(4,136)

12,443

12,275

168

12,443

19.0

18.8

(724)

15,970

(4,702)

11,268

1,533

12,801

14.9

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
* The comparative statement for the year ended 30 June 2013 has been restated to show the effect of the voluntary change in

accounting policy, refer Note 32.

Note

30 June 2014
$’000

30 June 2013
restated* $’000

1 July 2012
restated* $’000

13,535

22,847

688

12,213

22,019

396

37,088

34,644

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

Deferred tax assets

Total Non-current Assets

TOTAL ASSETS

Liabilities

Current Liabilities

Trade and other payables

Borrowings

Income tax payable

Provisions

TOTAL CURRENT LIABILITIES

Non-current Liabilities

Trade and other payables

Borrowings

Provisions

Deferred tax liabilities

Total Non-current Liabilities

TOTAL LIABILITIES

NET ASSETS

Equity

Contributed equity

Reserves

Retained earnings

Capital and reserves attributable to owners of
Corporate Travel Management Limited

Non-Controlling Interests – Equity

TOTAL EQUITY

20(a)

20(b)

20(c)

32,000

101,286

1,961

135,265

3,371

109,031

112,500

247,765

94,126

2,567

8,343

105,036

4,151

1,766

3,928

9,845

114,881

132,884

99,823

(1,944)

26,449

124,328

8,556

132,884

3,166

75,714

78,880

115,968

26,046

3,192

552

1,869

31,659

12,295

157

795

1,943

15,190

46,849

69,119

47,856

1,530

19,733

69,119

2,572

42,744

45,316

79,960

22,931

840

2,096

1,850

27,717

266

766

908

1,940

29,657

50,303

34,344

(3)

15,962

50,303

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
* The comparative statement for the year ended 30 June 2013 has been restated to show the effect of the voluntary
change in accounting policy, refer Note 32.

CTM Annual Report 2014CTM Annual Report 2014Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 30 JUNE 2014

Consolidated Statement of Cash Flows

FOR THE YEAR ENDED 30 JUNE 2014

Attributable to equity holders of the parent

Note

2014
$’000

2013 restated*
$’000

Note Contributed
equity

Retained
earnings

Other
reserves

Total

Balance at 1 July 2012

Effect of change in accounting policy*

Balance at 1 July 2012 (restated)

Profit for the period as reported in 2013
financial statements

Effect of change in accouting policy*

Other comprehensive income

Total comprehensive income for the year

$’000

34,344

Transactions with owners in their capacity as owners:

Shares issued

20(a)

13,512

Dividends declared or paid

Balance at 30 June 2013

Profit for the period as reported in 2014
financial statements

Other comprehensive income

Total comprehensive income for the year

13,512

47,856

Transactions with owners in their capacity as owners:

Shares issued

20(a)

51,967

Dividends declared or paid

Non-controlling interest on
acquisition of a subsidiary

Employee share scheme

Balance at 30 June 2014

51,967

99,823

$’000

18,668

(2,706)

15,962

12,394

(1,126)

11,268

(7,497)

19,733

15,845

(9,129)

Non-
controlling
interests
$’000

Total
equity

$’000

53,009

(2,706)

50,303

12,394

(1,160)

1,567

12,801

13,512

(7,497)

6,015

69,119

$,000

(3)

(34)

1,567

1,533

1,530

$‘000

53,009

(2,706)

50,303

12,394

(1,160)

1,567

12,801

13,512

(7,497)

6,015

69,119

15,845

734

16,579

(3,570)

12,275

(566)

168

(4,136)

12,443

51,967

(9,129)

42,934

51,967

(9,129)

8,388

8,556

51,322

132,884

26,449

(1,944)

124,328

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
* The comparative statement for the year ended 30 June 2013 has been restated to show the effect of the voluntary

change in accounting policy, refer Note 32.

Cash flows from operating activities

Receipts from customers (including GST)

Payments to suppliers and employees (including GST)

Transaction costs relating to acquisition of subsidiary

Dividends received

Interest received

Finance costs

Income tax (paid) / received

Net cash flows from operating activities

Cash flows from investing activities

Payment for plant and equipment

Payment for intangibles

Proceeds from sale of plant and equipment

Loans to related party

Repayment of loans by related party

Distributions received from joint ventures and associates

Proceeds from disposal of joint venture

Purchase of controlled entities, net of cash acquired

Net cash flows used in investing activities

Cash flows from financing activities

Proceeds from issue of new shares

Share issue transaction costs

Proceeds from borrowings

Repayments of borrowings

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

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

112,092

(94,737)

(792)

255

(235)

(4,750)

11,835

(797)

(1,285)

(21,140)

20,196

430

274

(27,354)

(29,672)

53,335

(2,326)

29,040

(32,856)

(9,129)

38,064

20,227

(1,762)

13,535

32,000

The above Consolidated Statement of Cash Flows should be read in conjunction with the
accompanying notes.
* The comparative statement for the year ended 30 June 2013 has been restated to show the effect of
the voluntary change in accounting policy, refer Note 32.

87,363

(64,806)

(1,014)

201

(553)

(5,189)

16,002

(2,144)

(1,367)

(15,918)

(19,373)

9,764

13,587

(11,154)

(7,497)

4,700

1,329

(7)

12,213

13,535

CTM Annual Report 2014CTM Annual Report 2014
Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2014

(b) New and amended standards

The group has applied the following standards and
amendments for first time for their annual reporting
period commencing 1 July 2013:

■ AASB 10 Consolidated Financial Statements,
AASB 11 Joint Arrangements and AASB 12
Disclosure of Interest and Other Entities
■ AASB 13 Fair Value Measurement and AASB
2011-8 Amendments to Australian Accounting
Standards arising from AASB 13

■ AASB 119 Employee Benefits (September 2011)
and AASB 2011-10 Amendments to Australian
Accounting Standards arising from AASB 119
(September 2011).

The adoption of these standards only affected the
disclosures in the notes to the financial statements.

Certain new accounting standards and interpretations
have been published that are not mandatory for the
reporting period ending 30 June 2014 and have
not been adopted early by the Group. The Group’s
assessment of the impact of these new standards and
interpretations is set out in the following table.

1. CORPORATE INFORMATION

The financial report of Corporate Travel Management
Limited and its controlled entities (the “Group”) for the
year ended 30 June 2014 was authorised for issue
in accordance with a resolution of Directors on 28
August 2014. The Directors have the power to amend
and reissue the financial statements.

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 financial assets and liabilities, fair value
through profit or loss.

Title of
standard

Nature of
change

Impact

The new hedging rules align
hedge accounting more
closely with the Group’s risk
management practices. As a
general rule, it will be easier
to apply hedge accounting in
the future. The new standard
also introduces expanded
disclosure requirements and
changes in presentation. The
Group is still considering the
full impact.

The Group has not yet
considered the impact of the
new rules on its revenue
recognition policies. It will
undertake a detailed
assessment in the near future.

AASB 9 Financial
instruments

AASB 9 sets out new
rules for hedge classification,
remeasurement and
de-recognition.

IFRS 15 Revenue
from contracts
with customers

The IASB has issued a new
standard for the recognition of
revenue to replace IAS 18.

The new standard is based
on the principle that revenue
is recognised when control of
a good or service transfers to
a customer – so the notion of
control replaces the existing
notion of risks and rewards.

While the AASB has not yet
issued an equivalent standard,
they are expected to do so in the
second half of 2014.

Mandatory application
date/ Date of adoption
by the Group

Mandatory for financial
years commencing on or
after 1 January 2017.

Expected date of
adoption
by the group: 1 July
2017.

Mandatory for financial
years commencing on or
after 1 January 2017.

Expected date of
adoption
by the group: 1 July
2017.

Accounting policies of subsidiaries have been
changed, where necessary, to ensure consistency
with policies adopted by the Group.

The consolidated financial statements comprise the
financial statements of Corporate Travel Management
Limited and its controlled entities (the “Group”).

Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has right to, variable returns from
its involvement with the entity and has ability to affect
those returns through its power to direct the activities
of the 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 transferred to the Group and
deconsolidated from the date that control ceases.

CTM Annual Report 2014CTM Annual Report 2014
(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, amount of any non-
controlling interest in the acquired entity, 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 value recognised in other income
or other expenses in the Consolidated Statement of
Comprehensive Income.

The Group recognises any non-controlling interest,
in the acquired entity on an acquisition-by-acquisition
basis either at fair value or at the non-controlling
interests’ proportionate share of the acquired entity’s
net identifiable assets.

Non-controlling interests in the results and equity of
subsidiaries are shown separately in the Consolidated
Statement of Comprehensive Income, Consolidated
Statement of Financial Position and Consolidated
Statement of Changes in Equity.

(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 (CODM). The
CODM has 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 judgements

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.

In the process of applying the Group’s accounting
policies management is required to exercise
judgement. Those judgements involving estimations,
may have an effect on the amounts recognised in the
financial statements.

■ Override Revenue

In addition to commission payments, the Group is
eligible for override payments from its suppliers.
These overrides are negotiated with individual
suppliers and will typically include a combination
of guaranteed payments and volume incentives.
The volume incentives are recognised at the
amount receivable when annual targets are likely
to be achieved. The override revenue accrual
process is inherently judgemental and is impacted
by factors which are not completely under Group’s
control. These factors include:

▪ Year-end differences

As supplier contract periods do not always
correspond to the Group’s financial year,
judgements and estimation techniques are
required to determine anticipated future flown
revenues over the remaining contract year and
the associated override rates applicable to
these forecast levels.

▪ Timing

Where contracts have not been finalised before
the start of the contract period, override and
commission earnings may have to be estimated
until agreement has been reached.

▪ Re-negotiations

Periodic re-negotiation of terms and contractual
arrangements with suppliers may result in
additional volume incentives, rebates or other
bonuses being received. These payments may
not be specified in existing contracts.

The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related
actual results. The judgements, 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 multi-period excess
earnings method. These calculations require the
use of assumptions including future customer
retention rates and cash flows.

■ 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.
■ Allowance for doubtful debts

The Group determines whether client and trade
receivables are collectable on an ongoing
basis. This assessment requires estimations of
the individual recoverability of each debt and,
if considered uncollectable, is subject to an
impairment provision. Refer to Note 2(l).

CTM Annual Report 2014CTM Annual Report 2014(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.

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

The Group has revised its revenue recognition policy
for Pay Direct Commissions (PDC’s) during the
period. For further details on the voluntary change in
accounting policy, refer to Note 32.

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 are met.

The amount of revenue is not considered to be
reliably measured 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.

(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, are included in the fair value reserve in other
comprehensive income.

(iii) Foreign operations

The results and financial position of all the foreign
operations that have functional currencies different
to the presentation currencies 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.

Revenue is recognised for the major business
activities as follows:

■ Revenue from sale of travel services

Revenue from sale of travel services represents
net revenue earned via commissions and
fees, and also includes any commission
payable by suppliers after completion of the
transaction. Commission and fees from the
sale of travel services is recognised when a
travel booking is received and travel documents
are issued. Commission payable by suppliers
includes PDC’s, which is recognised upon receipt,
the point at which it can be reliably measured, and
it is probable that future economic benefits will
flow to the entity.
Revenue relating to volume incentives is
recognised at the amount receivable when annual
targets are likely to be achieved.

■ 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.

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 Consolidated
Statement of Comprehensive Income on a
straight-line basis over 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,
with a maturity of three months or less.

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.

CTM Annual Report 2014CTM Annual Report 2014(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 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) Derivatives and hedging activities

Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and
are subsequently remeasured to their fair value at
the end of each reporting period. The accounting for
subsequent changes in fair value depends on whether
the derivative is designated as a hedging instrument,
and if so, the nature of the item being hedged. The
Group designates certain derivatives as either:

■ Hedges of the fair value of recognised assets
or liabilities or a firm commitment (fair value
hedges); or

■ Hedges of a particular risk associated with the

cash flows of recognised assets and liabilities and
highly probable forecast transactions (cash flow
hedges); or

■ Hedges of a net investment in a foreign operation

(net investment hedges).

At the inception of the hedging transaction, the
Group documents the relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
various hedge transactions. The Group also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions have been
and will continue to be highly effective in offsetting
changes in fair values or cash flows of hedged items.

The fair values of various derivative financial
instruments used for hedging purposes are disclosed
in Note 21. The full fair value of a hedging derivative
is classified as a non-current asset or liability when
the remaining maturity of the hedged item is more
than 12 months and it is classified as a current asset
or liability when the remaining maturity of the hedged
item is less than 12 months. Trading derivatives are
classified as a current asset or liability.

CTM Annual Report 2014CTM Annual Report 2014(i) Fair value hedge

Changes in the fair value of derivatives that are
designated and qualify as fair value hedges are
recorded in profit or loss, together with any changes
in the fair value of the hedged asset or liability that
are attributable to the hedged risk. The gain or loss
relating to the effective portion of interest rate swaps
hedging fixed rate borrowings is recognised in profit
or loss within finance costs, together with changes
in the fair value of the hedged fixed rate borrowings
attributable to interest rate risk. The gain or loss
relating to the ineffective portion is recognised in profit
or loss within other income or other expenses.

If the hedge no longer meets the criteria for hedge
accounting, the adjustment to the carrying amount of
a hedged item for which the effective interest method
is used, is amortised to profit or loss over the period to
maturity using a recalculated effective interest rate.

(ii) Cash flow hedge

The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive
income and accumulated in reserves in equity. The
gain or loss relating to the ineffective portion is
recognised immediately in profit or loss within other
income or other expense.

Amounts accumulated in equity are reclassified to
profit or loss in the periods when the hedged item
affects profit or loss (for instance when the forecast
sale that is hedged takes place). The gain or loss
relating to the effective portion of interest rate swaps
hedging variable rate borrowings is recognised
in profit or loss within ‘finance costs’. The gain
or loss relating to the effective portion of forward
foreign exchange contracts hedging export sales is
recognised in profit or loss within ‘sales’. However,
when the forecast transaction that is hedged results
in the recognition of a non-financial asset (for
example, inventory or fixed assets) the gains and
losses previously deferred in equity are reclassified
from equity and included in the initial measurement
of the cost of the asset. The deferred amounts are
ultimately recognised in profit or loss as cost of goods
sold in the case of inventory, or as depreciation or
impairment in the case of fixed assets.

When a hedging instrument expires or is sold or
terminated, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or
loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is
ultimately recognised in profit or loss. When a forecast
transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is
immediately reclassified to profit or loss.

(iii) Net investment hedges

Hedges of net investments in foreign operations are
accounted for similarly to cash flow hedges.

Any gain or loss on the hedging instrument relating
to the effective portion of the hedge is recognised
in other comprehensive income and accumulated
in reserves in equity. The gain or loss relating to the
ineffective portion is recognised immediately in profit
or loss within other income or other expenses.

Gains and losses accumulated in equity are
reclassified to profit or loss when the foreign operation
is partially disposed of or sold.

(iv) Derivatives that do not qualify for hedge

accounting

Certain derivative instruments do not qualify for hedge
accounting. Changes in the fair value of any derivative
instrument that does not qualify for hedge accounting
are recognised immediately in profit or loss and are
included in other income or other expenses.

(o) 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 using the following estimated useful lives and methods:

Item

Years

Method

Plant and equipment:

Leasehold improvements

Straight Line

Computer hardware

2.5 - 3

Straight Line

Furniture, fixture and equipment

4 - 5

Diminishing Value or Straight Line

The assets’ residual values, useful lives and
amortisation methods are reviewed, and adjusted, if
appropriate, at each financial year end.

Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses.

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.

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.

(p) 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.

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.

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.

(q) 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.

CTM Annual Report 2014CTM Annual Report 2014Software 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

Client contracts and relationships

Straight line - ranging between two
and seventeen years

Intellectual Property

5.00% - straight line

Software

40.00% - straight line

Internally generated/
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.

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.

(r) 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.

(s) 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.

(t) 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.

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.

CTM Annual Report 2014CTM Annual Report 2014Where 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.

(u) 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.

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.

(v) 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.

(w) Employee Benefits

(i) Short term obligations

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) Other long term obligations

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.

The obligations are presented as current liabilities
in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least
twelve months after the reporting period, regardless
of when the actual settlement is expected to occur.

(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.

(vi) Share-based payments

Share-based compensation benefits are provided
to employees by way of a Share Appreciation Rights
Plan (SARs). Information relating to the SARs Plan
is set out in Note 27.

The fair value of SARs granted is recognised as an
employee benefits expense, with a corresponding
increase in equity. The total amount to be expensed is
determined by reference to the fair value of the rights
granted, which includes any market performance
conditions and the impact of any non-vesting
conditions but excludes the impact of any service
and non-market performance vesting conditions.

Non-market vesting conditions are included in
assumptions about the number of SARs that are
expected to vest. The total expense is recognised
over the vesting period, which is the period over
which all of the specified vesting conditions are to be
satisfied. At the end of each period, the CTM revises
its estimates of the number of SARs that are expected
to vest based on the non-market vesting conditions.
It recognises the impact of the revision to original
estimates, if any, in profit or loss, with a corresponding
adjustment to equity.

(x) 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.

(y) 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.

CTM Annual Report 2014CTM Annual Report 2014(z) Earnings per share

Basic earnings per share are calculated as net profit
attributable to owners of the Company, 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.

(aa) Parent entity financial information

The financial information for the parent entity,
Corporate Travel Management Limited, disclosed in
Note 28, has been prepared on the same basis as the
consolidated financial statements, except as follows:

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.

(i) Investments in subsidiaries

Investments in subsidiaries are accounted for at
cost in the financial statements of Corporate Travel
Management Limited.

(ii) Tax consolidation legislation

Corporate Travel Management Limited and its
wholly-owned Australian controlled entities have
implemented 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 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
who assess performance and determine resource
allocation.

Following the acquisition of the Westminster Travel
(refer Note 23) and also the appointment of Romeo
Cuter as Chief Executive Officer of CTM North
America, the Chief Operating Decision Makers
(“CODM”) are considered to be Jamie Pherous (MD)
and Steve Fleming (CFO). Laura Ruffles continues in
her role as CEO of ANZ.

The CODM considers, organises and manages the
business from a geographic perspective. Since the
acquisition of Westminster Travel (refer Note 23), the
CODM has identified three reportable segments being
Travel Services Australia and New Zealand, Travel
Services North America, and Travel Services Asia.

There are currently no non-reportable segments.

(b) Segment information provided to the Chief

Operating Decision Makers

The CODM assesses the performance of the
operating segments based on a measure of adjusted
EBITDA. This measurement basis excludes the
effects of the costs of acquisitions and any acquisition
related adjustments during the year.

CTM Annual Report 2014CTM Annual Report 2014The segment information provided to the CODM for the reportable segments for the year ended
30 June 2014 is as follows:

Travel
Services

2014

Australia &
New Zealand
$’000

North
America
$’000

Revenue from the sale of travel services

Revenue from other sources

Revenue from external parties

Adjusted EBITDA

Interest revenue

Interest expense

Depreciation and amortisation

Income tax expense

Total segment assests

Total assests includes:

Non-current assests

- Plant and equipment

- Intangibles

Total segment liabilities

66,220

2,160

63,380

18,974

628

477

2,326

4,566

147,628

2,538

44,132

25,623

22,792

22,794

5,145

534

570

1,154

35,835

118

30,463

33,006

Asia

$’000

20,244

20,245

4,745

703

679

Unallocated/
Eliminated
$’000

Total

$’000

109,256

(1,405)

(374)

758

110,014

28,864

255

640

3,599

6,399

131,993

(67,691)

247,765

715

34,436

75,038

(18,786)

3,371

109,031

114,881

Travel
Services

2013

Australia &
New Zealand

$’000

66,602

574

67,176

17,900

201

510

1,819

4,409

86,054

3,083

43,886

17,830

Revenue from the sale of travel services

Revenue from other sources

Revenue from external parties

Adjusted EBITDA

Interest revenue

Interest expense

Depreciation and amortisation

Income tax expense

Total segment assests

Total assests includes:

Non-current assests

- Plant and equipment

- Intangibles

Total segment liabilities

North

America
$’000

Unallocated/
Eliminated
$’000

10,371

10,381

1,687

214

260

293

Total

$’000

76,973

584

77,557

19,587

201

724

2,079

4,702

36,200

(6,286)

115,968

31,828

29,019

3,166

75,714

46,849

(iii) Segment assets

(i) Segment Revenue

The revenue from external parties reported to the
CODM is measured in a manner consistent with that
in the Statement of Comprehensive Income.

The amounts provided to the CODM with respect to
total assets are measured in a manner consistent
with that of the financial statements. These assets are
allocated based on the operations of the segment and
the physical location of the asset.

The total of non-current assets, located in Australia
and other countries, is included in the following table.

Australia

North America

Hong Kong

New Zealand

2014
$’000

113,545

30,581

35,248

817

Unallocated/Eliminated

(67,691)

2013
$’000

46,215

31,910

755

Non-current assets

112,500

78,880

4. REVENUE

Revenue from the sale
of travel services

Revenue from other
sources

Rental income

Interest

Other revenue

2014
$’000

2013
$’000

109,256

76,973

148

255

355

758

201

316

584

Total revenue

110,014

77,557

The entity is domiciled in Australia. The amount of
its revenue from external customers in Australia
and other countries is included in the following
table. Segment revenues are allocated based on
the location of the CTM offices rather than by client
location or travel destination. No clients are deemed
to be major clients for the purpose of disclosing any
reliance on major customers.

Australia

North America

Hong Kong

Singapore

New Zealand

Other

2014
$’000

67,003

22,794

17,669

1,673

1,377

903

Unallocated/Eliminated

(1,405)

2013
$’000

66,032

10,380

1,145

Revenue from external
customers

110,014

77,557

(ii) Adjusted EBITDA

The reconciliation of adjusted EBITDA to operating
profit before income tax is provided as follows:

2014
$’000

2013
$’000

Adjusted EBITDA

28,864

19,587

Interest revenue

Finance costs

Depreciation

Amortisation

Acquisition /
Non-recurring costs

Profit before income tax
from continuing opera-
tions

255

(640)

(1,492)

(2,107)

201

(724)

(1,137)

(943)

(1,902)

(1,014)

22,978

15,970

CTM Annual Report 2014CTM Annual Report 20145. OTHER INCOME

7. INCOME TAX

Research and Development Tax Incentive (i)

Acquisition consideration adjustment

Total Other Income

2014
$’000

300

163

463

2013
$’000

(i) Government grants are required to be recognised at their fair value, where there is a reasonable assurance that the grant

will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and
recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate.
There are no unfulfilled conditions or other contingencies attaching to the Research and Development Tax Incentive
Government grant. The Group did not benefit directly from any other forms of Government assistance.

6. EXPENSES

Profit before income tax includes the following specific expenses:

Depreciation and amortisation

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 expense disclosures

Defined contribution superannuation expense

Rental expense relating to operating leases

Minimum lease payments – operating leases

Net loss on the disposal of plant and equipment and intangible assets

2014
$’000

2013
$’000

1,492

2,107

3,599

235

(45)

450

640

1,136

943

2,079

332

390

724

2,862

2,808

4,211

(4)

2,157

Income tax expense

Current income tax

Current income tax charge

Adjustment in respect of current income tax of previous years

Deferred income tax

Relating to origination and reversal of temporary differences

Income tax expense reported in the Consolidated
Statement of Comprehensive Income

(Increase) decrease in deferred tax assets

Increase (Decrease) in deferred tax liabilities

Numerical reconciliation of income tax expense
to prima facie tax payable

Accounting profit before income tax

Tax at the Australian tax rate of 30% (2013: 30%)

Tax effect of amounts which are not deductible/(assessable) in calculating taxable income:

Non-deductible amounts

Other amounts

Recognition of temporary differences previously not brought to account

Difference in overseas tax rates

Adjustments for current tax of prior periods

Research and development tax credit

Unrecognised tax losses

Income tax expense

2014

$’000

2013
restated
$’000

6,503

(177)

6,399

(100)

(77)

(177)

4,250

(582)

1,034

4,702

110

924

1,034

22,978

6,893

15,970

4,791

192

(24)

168

(347)

(341)

(90)

(662)

6,399

372

(582)

(118)

4,702

CTM Annual Report 2014CTM Annual Report 2014Deferred income tax

Deferred tax assets

Provisions and expenses not yet deductible

2,205

1,992

2014

$’000

2013
restated
$’000

Tax losses carried forward

Other

Set-off against deferred tax liabilities

Net deferred tax assets

Deferred tax liabilities

Difference tax to accounting depreciation/amortisation

Accrued income assessable in year of receipt

Other

Set-off against deferred tax assets

Net deferred tax liabilities

Deferred tax assets expected to be recovered within 12 months

Deferred tax assets expected to be recovered after more than 12 months

Deferred tax liabilities expected to be settled within 12 months

Deferred tax liabilities expected to be settled after more than 12 months

2,235

(2,137)

2,842

3,264

(41)

6,065

(2,137)

3,928

1,801

434

2,235

3,590

2,475

6,065

2,050

(2,050)

191

3,802

3,993

(2,050)

1,943

1,651

399

2,050

1,765

178

1,943

At 1
July

$’000

Transfer
from
income
tax
receivable
$’000

(Charged)/

credited
in year
via P&L

credited
in year
via equity

Acquisi-
tion of
subsi-
diaries

Change
in FX
Rates

At
30 June

$’000

1,992

2,050

1,726

393

2,160

130

(26)

(4)

100

165

(367)

(9)

(211)

101

(9)

(7)

2,205

2,235

1,992

2,050

At 1
July

$’000

Transfer
from
income
tax
receivable
$’000

(Charged)/

credited
in year
via P&L

credited
in year
via equity

Acquisi-
tion of
subsi-
diaries

Change
in FX
Rates

At
30 June

$’000

192

3,802

3,994

3,037

3,069

188

183

314

(537)

(42)

(265)

(24)

765

741

2,215

(67)

2,842

2,215

(1)

(67)

3,264

(41)

6,065

191

3,802

3,993

Deferred tax assets

2014

Provisions and expenses
not yet deductible

Tax losses carried forward

Other

2013 (restated)

Provisions and expenses
not yet deductible

Tax losses carried forward

Other

Deferred tax liabilities

2014

Difference tax to accounting
depreciation /amortisation

Accrued income assessable
in year of receipt

Other

2013 (restated)

Difference tax to accounting
depreciation /amortisation

Accrued income assessable
in year of receipt

CTM Annual Report 2014CTM Annual Report 2014Tax consolidation

9. DIVIDENDS PAID AND PROPOSED

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.

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 Corporate Travel Management Limited

15,845

11,268

2014

$’000

2013
restated
$’000

Weighted average number of ordinary shares used as
the denominator in calculating basic earnings per share

Adjustments for calculation of diluted earnings per share:

Share appreciation rights

Deferred shares on acquisitions

Weighted average number of ordinary shares and potential ordinary
shares used as the denominator in calculating diluted earnings per share

2014
Shares

2013
Shares

83,467,543

75,869,113

132,850

566,448

84,166,841

75,869,113

Ordinary shares

Final franked dividend declared or paid for the year ended 30 June 2013 of
6.5 cents (2012: 6 cents) per fully paid share.

Interim franked dividend for the year ended 30 June 2014 of
4.5 cents (2013: 4 cents) per fully paid share.

Approved by the Board of Directors on 28 August 2014
(not recognised as a liability as at 30 June 2014)

Final franked dividend for the year ended 30 June 2014 of
7.5 cents (2013: 6.5 cents) per fully paid share.

2014
$‘000

2013
$‘000

5,084

4,498

4,045

9,129

2.999

7,497

6,745*

5,075*

* This dividend does not include shares issued post balance date as part of the R&A Travel and Travelcorp contingent

consideration payments, refer Note 23.

2014

$‘000

2013
*restated
$‘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% (2013: 30%)

5,493

6,289

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

Equals:

1,863

663

The amount of franking credits available for future reporting periods

7,356

6,952

Less:

The 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

Balance of franking credits available for subsequent years

(2,891)

(2,175)

4,465

4,777

CTM Annual Report 2014CTM Annual Report 201410. CASH AND CASH EQUIVALENTS

11. TRADE AND OTHER RECEIVABLES

Current Assets

Cash at bank and on hand

Client accounts (Note 2(k))

2014
$’000

2013
$’000

14,416

17,584

32,000

1,265

12,270

13,535

Cash at bank earns interest at floating rates based on daily bank deposit rates:
2014: 0.00%-2.95% (2013: 0.00%-3.20%).

The client accounts earn interest at floating rates based on daily bank deposit rates:
2014: 0.00%-1.40% (2013: 0.00%-1.65%).

The weighted average interest rate for the year was 1.49% (2013: 1.64%).

A bank overdraft facility of $1,000,000 (2013: $1,000,000) was in place but unused at 30 June 2014.
The overdraft incurs interest at floating rates based on daily bank overdraft rates: 2014: 3.42% (2013: 3.56%).

Trade receivables (i)

Client receivables (i)

Allowance for doubtful debts

Deposits (ii)

Other receivables (iii)

2014
$’000

17,823

69,169

(591)

86,401

12,129

2,756

2013
$’000

12,727

9,959

(323)

22,363

442

101,286

22,847

(i) Trade and client receivables are non-interest bearing and are generally on terms ranging from 1 to 30 days.

(ii) Deposits relate to advance deposits to suppliers within the Westminster Travel business, which is the
business practise in Hong Kong, and pertains to securing access during high sales periods.

(iii) Other receivables includes amounts due from related party, refer Note 26.

Security for the bank overdrafts is detailed in Note 18.

Allowance for doubtful debts

Reconciliation of profit after income tax to net cash flows from operating activities

Profit for the year

Adjustments for:

Depreciation and amortisation

Appreciation in value of investments

Make-good provision accretion

Non-cash interest

Net exchange differences

Net loss on disposal of non-current assets

Changes in operating assets and liabilities

(Increase) in trade and other receivables

(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.

2014

$’000

2013
restated
$’000

16,579

11,268

3,599

2,079

334

(4)

(13,625)

363

(178)

1,366

3,303

11,835

(2)

168

(106)

784

(261)

1,035

(1,544)

2,546

16,002

As at 30 June 2014, trade receivables of the Group with a nominal value of $591,000 (2013: $323,000) were
impaired and provided for in the profit and loss. 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.

The ageing of these trade and client receivables is as follows:

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

Change due to change in FX Exchange Rates

Balance at 30 June

2014
$’000

2013
$’000

446

591

323

333

(322)

271

(14)

591

323

203

(210)

303

323

CTM Annual Report 2014CTM Annual Report 2014As of 30 June 2014, trade and client receivables of $19,394,000 (2013: $3,039,000) 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.

14. PLANT AND EQUIPMENT

The ageing analysis of these trade and client receivables is as follows:

0-30 days

31-60 days

60+ days

Balance at 30 June 2014

2014
$’000

14,637

3,931

826

19,394

2013
$’000

2,181

417

441

3,039

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

During the period, the Group entered the Asian travel market through its 75.1% acquisition of Westminster
Travel. It is more common for trading terms to be offered by its Hong Kong operations. Westminster Travel
has a history of minimal losses, resulting from bad debts or non-payment by customers.

Interest rate risk

Detail regarding interest rate risk exposure is disclosed in Note 21.

12. FINANCIAL ASSETS AT FAIR VALUE

2014
$’000

2013
$’000

2014
$’000

1,961

2013
$’000

688

Current Assets

Shares in unlisted companies

Shares in listed companies

13. OTHER CURRENT ASSETS

Prepayments

Furniture,
Fixture
and

Computer
Equip-
ment

Leasehold
Improve-
ments

Other

Total

Equip-
ment
$’000

$’000

3,572

2,635

3,980

689

10,876

2014

Cost

Accumulated depreciation

(2,979)

(2,008)

(2,037)

(481)

(7,505)

At 1 July, net of accumulated depreciation

Additions

Additions through the acquisition of entities/
businesses (Note 23)

Disposals

593

626

215

627

543

370

226

1,943

1,868

332

385

208

129

133

3,371

3,166

797

959

Depreciation charge for the year

(299)

(493)

(621)

(79)

(1,492)

Change due to changes in foreign currency
exchange rates

At 30 June, net of accumulated depreciation

2013

Cost

Accumulated depreciation

At 1 July, net of accumulated depreciation

Additions

Additions through the acquisition of entities/businesses
(Note 23)

Transfers to intangibles (Note 14)

Disposals

Depreciation charge for the year

Change due to changes in foreign currency exchange
rates

At 30 June, net of accumulated depreciation

(13)

593

1,946

(1,320)

626

386

522

(49)

(238)

(13)

626

(19)

627

1,339

(796)

543

1,042

335

(466)

(1)

(392)

(21)

1,943

2,589

(721)

1,868

946

1,373

(483)

543

1,868

(6)

208

180

(51)

129

199

(59)

3,371

6,054

(2,888)

3,166

2,573

2,302

(61)

(54)

(23)

(4)

129

(527)

(104)

(1,136)

3,166

No additions during the year (2013: $nil) were financed under finance lease agreements.

Additions of $31,306 (2013: $66,000) relate to a lease make-good asset recognised under AASB 137
Provisions, Contingent Liabilities and Contingent Assets.

CTM Annual Report 2014CTM Annual Report 201415. INTANGIBLE ASSETS

16. IMPAIRMENT TESTING OF GOODWILL

Client
contracts
and rela-
tionships

Intell-
ectual
property

Software

Goodwill

Total

$’000

17,114

(4,636)

12,478

759

13,587

(1,011)

(857)

12,478

1,762

(1,003)

759

145

897

(365)

759

219

4,147

94,474

115,954

(120)

(1,953)

(214)

(6,923)

(9)

189

(110)

(9)

2,194

94,260

109,031

2,000

1,278

(22)

(1,079)

72,876

75,714

1,285

23,605

37,206

(366)

(8)

(2,107)

(1,847)

(2,701)

2,194

94,260

109,031

2,691

(691)

2,000

73,092

77,734

(216)

72,876

(2,020)

75,714

759

41,752

42,744

1,282

28,104

29,001

526

(569)

526

(943)

3,020

3,104

2,000

72,876

75,714

2014

Cost

Accumulated amortisation

At 1 July, net of accumulated amortisation

Additions

Additions through the acquisition of entities/
businesses (Note 23)

Transfers/reallocations

Disposals

Amortisation charge for the year

Change due to changes in foreign currency
exchange rates

At 30 June, net of accumulated amortisation

2013

Cost

Accumulated amortisation

At 1 July, net of accumulated amortisation

Additions

Additions through the acquisition of entities/businesses
(Note 23)

Transfers to intangibles (Note 14)

Amortisation charge for the year

Change due to changes in foreign
currency exchange rates

At 30 June, net of accumulated amortisation

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 – Australia & New Zealand (ANZ)

Travel Services – North America

Travel Services – Asia

2014
$’000

2013
$’000

41,879

30,247

22,134

94,260

41,803

31,073

72,876

The recoverable amount of the cash generating unit has been determined based on financial budgets set for the
next financial year and management’s cash flow projections for subsequent years.

Travel

Services ANZ

Travel Services
North America

Travel Services
Asia

2014

Pre-tax discount rate applied to the cash flow projection

18.12%

17.05%

14.62%

Cash flows beyond the next financial year, up to year 5,
are extrapolated using a growth rate of:

Revenue

Operating expenses

3.5%

5.0%

3.5%

3.0%-4.0%

4.0%-5.0%

3.0%-4.0%

Terminal multiple of EBITDA in year 5

6.03 times

6.49 times

7.22 times

2013

Pre-tax discount rate applied to the cash flow projection

15.35%

12.75%

Cash flows beyond the next financial year, up to year 5,
are extrapolated using a growth rate of:

Revenue

Operating expenses

3.5%

3.0%-4.0%

Terminal multiple of EBITDA in year 5

6 times

n/a

Key assumptions used in value in use calculations for the years ended 30 June 2014 and 30 June 2013

The following key assumptions were applied to the cash flow projections when determining the value in use:

■ Budgeted revenue – the basis used to determine the amount 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 amount 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 multiple – calculated based on a multiple of estimated Year 5 earnings before interest, tax,

depreciation and amortisation.

CTM Annual Report 2014CTM Annual Report 2014Sensitivity to changes in assumptions

17. TRADE AND OTHER PAYABLES

Management recognises that there are various reasons 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 changes 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

Growth rates – Travel Services ANZ:

Revenue

Operating expenses

Growth rates – Travel Services North America:

Revenue

Operating expenses

Growth rates – Travel Services Asia:

Revenue

Operating expenses

Possible change
considered

Change required
to indicate an
impairment

Reduction in yield rates,

client retention

Decrease to (3.8%)

Higher labour and/or
other support costs

Increase to 11.3% - 12.3%

Reduction in yield rates,

client retention

Decrease to 0.3%

Higher labour and/or
other support costs

Increase to 10.0% - 11.0%

Reduction in yield rates,

client retention

Decrease to (0.5%)

Higher labour and/or
other support costs

Increase to 7.0% - 8.0%

Current

Trade payables (i)

Client creditors (i)

Other payables and accruals (ii)

Contingent consideration payable (ii)

Non-current

Other payables and accruals (ii)

Contingent consideration payable (ii)

2014
$’000

2013
$’000

984

72,370

20,734

94,126

4,130

4,149

1,462

16,671

4,965

2,948

26,046

450

11,845

12,295

(i) Trade payables and client creditors are non-interest bearing and are normally settled on terms ranging from 7
to 30 days.

(ii) During the period, $11,466,000 was transferred from contingent consideration payable to other payables.
Refer Note 22 and 23. Other payables and accruals includes amounts due to related parties ($302,000), refer
Note 26.

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.

CTM Annual Report 2014CTM Annual Report 201418. BORROWINGS

19. PROVISIONS

2014
$’000

2013
$’000

3,192

157

Current

Bank loans

Non-current

Bank loans

Financial facilities
Australia and New Zealand

On 23 December 2013, the Group renegotiated its facility with the ANZ Bank. The facility now includes
accessible lines of credit totalling $31.7m. In addition, there are facilities for overdraft, merchant facilities and
bank guarantees. The total facility is $40.3m and has terms ranging from 5 months to 3 years. The amount of
this facility used, which relates mainly to bank guarantees, as at 30 June 2014, was $1.5m. The facility is fully
secured by a fixed and floating charge over all existing and future assets and undertakings of Corporate Travel
Management Group Pty Ltd.

The interest rates applicable to these facilities are 3.12%-4.72% (2013: 3.86%-5.16%). Line fees in addition to
interest are 1.00%-1.75% (2013: 1.50%-1.75%). The weighted average interest rate for all borrowings, including
line fees, was 4.76% (2013: 5.78%).

Fair values

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 3.12%-4.72% (2013: 3.86%-5.16%), depending on the type of borrowing.

Interest rate and liquidity risk

Details regarding interest rate and liquidity risk are disclosed in Note 21.

Asia

In addition to facilities with the ANZ Bank, there are two available bank loan facilities totalling $4,793,669
consisting of $684,809 from HSBC and $4,108,857 Standard Chartered Bank. The amount of these facilities
used as at 30 June 2014 was $nil. Interest rates applicable to these facilities range from 3.21%-4.66%.

Additional facilities are held for bank guarantees totalling $25,193,760 consisting of $13,246,518 from HSBC,
$11,097,201 Standard Chartered Bank and First Bank, $850,040. The amount of these facilities used as at
30 June 2014 was $17,478,646. Interest rates applicable to these facilities range from 3.21%-4.66%.
Refer Note 24.

Employee
entitlements

Make-good
provision

$’000

2,478

3,721

494

(3,645)

(33)

3,015

1,933

1,082

3,015

1,847

631

2,478

$’000

186

525

(32)

712

684

712

164

186

Provision
for other
liabilities
and charges

$’000

8,515

6,788

Total

$’000

2,664

12,269

7,807

(7,542)

(11,187)

(973)

(406)

6,382

(973)

(471)

10,109

8,343

1,766

10,109

1,869

795

2,664

At 1 July 2013

Arising during the year

Acquisition of subsidiary

Utilised

Write back of provision

Changes due to change in foreign currency

At 30 June 2014

Current 2014

Non-current 2014

Current 2013

Non-current 2013

Make- good provision

In accordance with the Group’s contractual obligations under tenancy lease agreements, the Group 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 1.1% to 2.4%
(2013: 2.2% to 2.7%).

Amounts not expected to be settled within the next 12 months

The current provision for employee benefits includes accrued annual leave, vesting sick leave and long service
leave. For long service leave, it covers all unconditional entitlements where employees have completed
the required period of service and also those where employees are entitled to pro-rata payments in certain
circumstances. The entire amount of the provision of $1,933,000 (2013 - $1,847,000) is presented as a current
liability, since the Group does not have an unconditional right to defer settlement for any of these obligations.
However, the Group does not expect all employees to take the full amount of accrued leave or require payment
within the next 12 months. The following amounts reflect leave that may not to be expected to be taken or paid
within the next 12 months:

2014
$’000

2013
$’000

Current leave obligations expected to be settled after 12 months

CTM Annual Report 2014CTM Annual Report 201420. CONTRIBUTED EQUITY, RESERVES AND RETAINED EARNINGS

(a) Contributed equity

Ordinary shares

Issued and fully paid

2014
$’000

2013
$’000

99,823

47,856

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.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

Opening balance as at 1 July 2012

Share split (i)

Shares issued (ii)

Shares issued (iii)

Total shares issued

At 30 June 2013

Shares issued (iv)

Shares issued (v)

Shares issued (vi)

Shares issued (vii)

Shares issued (viii)

Total shares issued

At 30 June 2014

Number of shares

74,701,600

269,420

2,439,024

671,140

3,379,584

78,081,184

140,061

25,000

11,366,052

228,466

50,000

11,809,579

89,890,763

$’000

34,344

526

9,765

3,221

13,512

47,856

613

116

49,957

1,051

230

51,967

99,823

(i) A total of 269,420 shares were issued on 2 July 2012, as part of the initial consideration for the R&A Travel Inc. business
combination - refer Note 23.

(ii) A total of 2,439,024 shares were issued on 5 March 2013, as part of a share placement.

(iii) A total of 671,140 shares were issued on 2 May 2013, as part of the consideration for the TravelCorp LLC business
combination - refer Note 23.

(iv) A total of 140,061 shares were issued on 2 September 2013, as part of the contingent consideration payment for the R&A
Travel Inc. business combination - refer Note 23.

(v) A total of 25,000 shares were issued on 12 September 2013, as part of a contract for the provision of consultancy service to
Admiral Robert J. Natter, as set out in the Remuneration Report.

(vi) A total of 11,366,052 shares were issued on 24 January 2014, as part of a renounceable rights issue, to fund the
Westminster Travel business combination – refer Note 23. This was net of transaction costs of $2,326,355.

(vii) A total of 228,466 shares were issued on 29 January 2014, as part of a renounceable rights issue, to fund the Westminster
Travel business combination – refer Note 23.

(viii) A total of 50,000 shares were issued on 31 January 2014 to two senior management executives of Westminster Travel, to
assist in the reward and retention of these key individuals.

Capital management

The Group maintains a conservative funding structure that allows it 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 the Board considers a number of factors, including the
Group’s anticipated cash requirements to fund its growth, operational plans, and current and future economic
conditions. The Group is not bound by externally imposed capital requirements.

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.

2014
$’000

132,884

2013

Restated

$’000

3,349

69,155

4.84%

Total borrowings

Total equity

Gearing ratio

(b) Reserves

The following table shows a breakdown of the ‘Reserves’ line item, per the Consolidated Statement of Financial
Positon, and the movements in these reserves during the year. A description of the nature and purpose of each
reserve is provided below the table.

At 30 June 2013

Currency translation differences – current period

Other comprehensive income

Transactions with owners in their capacity as owners:

Share-based payment expenses

At 30 June 2014

At 30 June 2012

Currency translation differences – current period

Other comprehensive income

At 30 June 2013

translation

Share based
payment

1,530

(3,570)

(2,040)

translation

Share based
payment

(3)

1,533

1,530

Total

1,530

(3,570)

(1,944)

Total

(3)

1,533

1,530

CTM Annual Report 2014CTM Annual Report 2014Nature and purpose of other reserves

Foreign currency translation

Exchange differences arising on translation of the
foreign controlled entity are recognised in Other
Comprehensive Income as described in Note 2(g)
and accumulated in a separate reserve within equity.
The cumulative amount is reclassified to profit or loss
when the net investment is sold.

Share-based payments

The share-based payments reserve is used to
recognise the grant date fair value of deferred shares
granted to employees but not yet vested.

2014
$’000

Movements in retained earnings were as follows:

Balance 1 July

Net profit for the year

Dividends

Balance 30 June

19,733

15,845

(9,129)

26,449

2013
$’000

15,962

11,268

(7,497)

19,733

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 interest rate risk, liquidity risk, credit
risk and foreign exchange 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 commodity trading risks.

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

As at 30 June 2014, the Group had no interest
bearing borrowings, therefore the Group’s income and
operating cash flows are substantially independent
of changes in market interest rates. The Group has
interest bearing assets (cash and cash equivalents)
with a short turnover period. The interest earned from
these assets is not considered material to the Group.
The Group considers there to be an immaterial risk
exposure as a result of interest rate returns on these
assets.

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.

Credit risk

The Group trades only with, 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. For some client receivables,
the Group may also obtain security in the form of
deposits.

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’s cash (refer Note 10), is held at financial
institutions with the following credit ratings:

Region

Australia and New Zealand

North America

Asia

Total

2014
$’000

Moody’s Investor
Service Rating

10,282

3,215

18,503

32,000

Aa2

Aa1-Ba2

Client and Trade receivables are held with
predominantly un-rated entities.

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
repayments and interest resulting from recognised
financial liabilities as at 30 June 2014.

The Groups Financial Liabilities comprise of Trade
and Other Payables only, no derivative financial
instruments are held. The respective undiscounted
cash flows for the respective upcoming fiscal years
are included in the following table. Cash flows for
financial liabilities without fixed amount or timing are
based on the conditions existing at 30 June 2014.

The remaining non-derivative contractual maturities of
the Group’s financial liabilities are:

1 year or less

1-5 years

Over 5 years

Total Trade and Other Payables

Contractual Cashflows

Carrying amount

2014
$’000

94,126

4,270

103,584

2013
$’000

28,372

9,375

37,747

2014
$’000

94,126

4,149

98,275

2013
$’000

28,372

9,091

37,463

CTM Annual Report 2014CTM Annual Report 2014
Foreign exchange risk

The Group operates internationally and is subject to
foreign exchange risk arising from exposure to foreign
currencies.

Forward exchange contracts are used to reduce
foreign currency risk. Additionally, the Group has a

multi-currency debt facility which allows for borrowings
in the relevant entity’s functional currency.

The Group’s exposure to foreign exchange risk at the
end of the reporting period, expressed in Australian
dollars, was as follows:

2014

$’000

USD

HKD

NZD

SGD

NTD

CNY

MOP

Others

Total

Cash and Cash
Equivalents

Trade and Other
Receivables

2,116

507

362

393

1,217

2,434

3,686

1,324

1,032

1,095

- Related Party Loans

402

Trade and Other
Payables

(12,950)

1,308

(2,973)

(478)

(1,837)

(125)

4,710

9,571

1,710

(18,363)

Total

(10,039)

1,308

2,829

1,353

(443)

1,363

1,217

(2,372)

2013

$’000

USD

NZD

Total

Cash and Cash
Equivalents

Trade and Other
Receivables

- Related Party Loans

269

1,086

1,355

Trade and Other
Payables

- Related Party Loans

Total

269

1,086

1,355

Based on the 2014 balances, a 10% stronger / (weaker)
Australian dollar against the currencies held, would result
in movement of $326,275 / ($398,780).

22. FAIR VALUE MEASUREMENT

The Group measures and recognises the following
assets and liabilities at fair value on a recurring basis:

There were no changes made to any of the valuation
techniques applied as of 30 June 2014.

■ Contingent consideration.

Fair value hierarchy

Valuation inputs and relationships to fair value
quantitative information about the significant
unobservable inputs used in level 3 fair value
measurements is summarised as follows:
13 requires disclosure of fair value measurem

AASB 13 requires disclosure of fair value
measurements by level according to the following
hierarchy:

Description:

Contingent Consideration

Fair Value at 30 June 2014:

$57,000

a) Quoted prices (unadjusted) in active markets for

Valuation technique used:

Discounted cash flows

identical assets or liabilities (level 1);

Unobservable inputs:

Forecast EBITDA

b) Inputs other than quoted prices included within

Discount rate:

3.65%

level 1 that are observable for the asset or liability,
either directly or indirectly (level 2); and

c) Inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
(level 3).

The following information represents the Group’s
assets and liabilities measured and recognised at fair
value at 30 June 2014:

Liabilities: Level 3 – Contingent Consideration
$58,000 (30 June 2013: $14,793,000).

Fair value measurements using significant
unobservable inputs (level 3)

Fair values of other financial instruments

The Group also has a number of financial instruments
which are not measured at fair value in the balance
sheet. For these instruments, their carrying value was
considered to be a reasonable approximation of their
fair value.

Due to their short-term nature, the carrying amounts
of the current receivables, current payables and
current borrowings are assumed to approximate their
fair value.

The following table presents the changes in level 3
instruments for the year ended 30 June 2014:

Valuation processes

The finance department of the Group performs the
valuations of assets required for financial reporting
purposes, including level 3 fair values. This team
reports directly to the Chief Financial Officer (CFO)
and the Audit Committee (AC). Discussions of
valuation processes and results are held between the
CFO, AC, and the finance team at least once every six
months, in line with the Group’s reporting dates.

Opening balance 1 July 2013

Paid out (cash and shares)

Transfer to Other Payables

Release to Goodwill

Movements recognised in other
comprehensive income and finance costs

Closing balance 30 June 2014

Contingent
Consideration
$’000

14,793

(2,873)

(11,466)

(366)

(31)

CTM Annual Report 2014CTM Annual Report 201423. BUSINESS COMBINATIONS

Wealthy Aim Investments Limited

(“Westminster Travel”)

The acquisition of 75.1% of the shares in Wealthy
Aim Investments Limited (“Westminster Travel”),
an Asian based travel management company, was
completed on 29 January 2014. Consideration paid to
the vendors totalled $48,905,128 (HK$354,146,490)
and was paid in cash. There is no further
consideration payable.

Purchase consideration:

Initial cash

Total acquisition date fair value
consideration

$’000

48,905

The provisional fair values of the assets and liabilities
of the Westminster Travel business, acquired as at the
date of acquisition, are as follows:

Item

Cash and cash equivalents

Accounts receivable

Other assets

Fixed assets

Intangible assets: Software

Intangible assets:
Client contracts and relationships

Investment in equity accounted
joint venture*

Trade payables

Accruals and other payables

Provisions and other liabilities

Deferred tax liability

Short term loan/bank overdraft

Net identifiable assets/(liabilities)
acquired

Less: non-controlling interest

Goodwill on acquisition

Net assets acquired

Fair value

$’000

23,754

57,182

12,031

959

13,587

1,421

(57,383)

(6,413)

(7,835)

(2,166)

(1,463)

33,688

(8,388)

23,605

48,905

*On 14 February 2014, this investment was sold for
an amount equal to its carrying value at that date.

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 $23,604,893 (HKD
$161,368,701)

Acquisition related costs of $791,947 are included in
Administrative and General Expenses classification in
the Statement of Comprehensive Income. The amount
of issue costs not recognised against the Statement of
Comprehensive Income was $2,326,355, which were
directly recognised in equity.

Acquired Receivables

The fair value of acquired trade receivables is
$57,181,459. The gross contractual amount for trade
receivables due is $57,452,447, of which $270,988,
is expected to be uncollectable.

100

Accounting policy choice for non-controlling
interests

August 2014, as set out in this Note.

The Group recognises non-controlling interests
in an acquired entity at either fair value or at the
non-controlling interests’ proportionate share of
the acquired entity’s net identifiable assets. The
decision is made on an acquisition-by-acquisition
basis. For the non-controlling interest in Wealthy Aim
Investments Limited, the Group elected to recognise
the non-controlling interests at its proportionate share
of the acquired net identifiable assets. See Note
2(d) for the Group’s accounting policies for business
combinations.

Revenue and profit contribution

The acquired business contributed revenues of
$20,244,542 and net profit after tax of $3,539,810 to
the Group for the period 30 January 2014 to 30 June
2014. If the acquisition had occurred on 1 July 2013,
consolidated revenue and profit for the year ended
30 June 2014 would have been $138,451,000, and
$20,651,000 respectively.

Purchase consideration – cash outflow:

Outflow of cash to acquire subsidiary, net of cash
acquired:

$’000

Purchase consideration:

Cash consideration:

48,905

Less: Balances acquired:

Cash

Outflow of cash – investing activities

23,754

25,151

R&A Travel Inc. (prior period)

On 2 July 2012, the Group acquired 100% of the
issued shares in R&A Travel Inc. (R&A), a US based
travel management company. The initial cost of
the acquisition was $5,448,000 (US$5,390,000),
paid in cash and shares, with further contingent
consideration, payable as at 31 August 2013 and 31

The potential undiscounted amounts of future
payments that the Group could be required to make,
in cash and shares, based on the financial criteria
relating to the earn-out periods 1 July 2012 to 30 June
2013 and 1 July 2013 to 30 June 2014, are as follows:

■ A multiple of EBITDA for the period, 1 July 2012
to 30 June 2013, reduced by the initial payments
made, ranging from $1(US$1), capped to a value
of $3,814,000 (US$3,960,000).

■ A multiple of EBITDA for the period, 1 July 2013
to 30 June 2014, reduced by the initial payments
made and the value of the first year clause above,
ranging from $1(US$1), capped to a value, over
the two years to 30 June 2014, of $3,814,000
(US$3,960,000).

At the acquisition date, the projected results for
the earn-out periods, 1 July 2012 to 30 June 2013
and 1 July 2013 to 30 June 2014, were assessed
to determine the acquisition date fair value of this
contingent consideration, as set out in the following
table. Any subsequent adjustment to the final
contingent consideration, based on actual results as
at 30 June 2013 and 30 June 2014, will be reflected in
the Statement of Comprehensive Income.

Purchase consideration:

Initial cash and shares paid/payable*

Acquisition date fair value contingent
consideration - earn-out **
Total acquisition date fair value
consideration

$’000

5,448

3,823

9,271

* $244,000 (US$250,000) deposit paid prior to 30
June 2012 and $4,677,000 (US$4,614,000) in cash
and $526,000 (US$526,000) in shares, paid on 2 July
2012.

** The contingent consideration has been accrued in

the balance sheet within Trade and Other Payables
classification. This amount has subsequently been
reduced by the earn-out payment, made by CTM on
3 September 2013, of $2,744,831 ($US2,479,406) in
cash and shares.

101

CTM Annual Report 2014CTM Annual Report 2014The final fair values of the assets and liabilities of the
R&A business, acquired as at the date of acquisition,
are as follows:

The potential undiscounted amounts of future
payments that the Group could be required to make,
in cash and shares, based on the financial criteria
relating to the earn-out periods, 1 July 2013 to 30
June 2014 and 1 July 2014 to 30 June 2015, are as
follows:

Fair value

$’000

■ A multiple of EBITDA for the periods 1 July 2013

Acquiree’s
carrying
amount
$’000

717

(858)

(115)

(147)

Item

Cash and cash equivalents

Accounts receivable

Other assets

Fixed assets

Client intangibles

Trade and other payables

Provisions

Net identifiable assets/
(liabilities) acquired

Goodwill on acquisition

Net assets acquired

717

186

(858)

(115)

9,232

9,271

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 $9,232,000 (US$9,441,000).
The full value of the goodwill and client intangibles is
deductible for US tax purposes.

Acquisition related costs of $nil (June 13: $22,016)
are included in Administrative and General Expenses
classification in the Statement of Comprehensive
Income. The acquired business contributed revenues
of $11,220,000 and net profit after tax of $1,128,000
to the Group for the year ended 30 June 2014.

TravelCorp (prior period)

On 1 May 2013, the Group acquired 100% of the
issued shares in TravelCorp LLC (TravelCorp),
a North American based travel management
company. The initial cost of the acquisition was
$10,275,000 (US$10,652,000), paid in cash
$7,054,000 (US$7,312,500) and shares $3,221,000
(US$3,340,000), with further contingent consideration
payable as at 31 August 2014 and 31 August 2015,
as set out in this Note.

to 30 June 2014 and 1 July 2014 to 30 June 2015,
reduced by the payment made relating to the first
earn-out period, with the maximum payment being
a capped value of $3,581,000 (US$3,712,500).
■ A multiple of EBITDA for the periods, 1 July 2013
to 30 June 2014 and 1 July 2014 to 30 June 2015,
reduced by the payment made relating to the first
earn-out period, with the maximum payment being
a capped value of $5,570,560 (US$5,775,000).

At the acquisition date, the projected results for
the earn-out periods, 1 July 2013 to 30 June 2014
and 1 July 2014 to 30 June 2015, were assessed
to determine the acquisition date fair value of this
contingent consideration, as set out in the following
table. Any subsequent adjustment to the final
contingent consideration, based on actual results, as
at 30 June 2014 and 30 June 2015, will be reflected in
the Statement of Comprehensive Income.

Purchase consideration:

Initial cash and shares paid/payable*

Acquisition date fair value contingent
consideration - earn-out **
Total acquisition date fair value
consideration

$’000

10,275

8,883

19,158

* $7,054,000 (US$7,312,500) in cash and $3,221,000

(US$3,340,000) of shares paid on 1 May 2013.

** The contingent consideration has been accrued in
the balance sheet within the Trade and Other Paya-
bles classification. This amount has subsequently
been reduced by a working capital adjustment
payment, made by CTM on 27 September 2013,
of $56,786 ($US 53,146).

The final fair values of the assets and liabilities
of the TravelCorp business, acquired as at the
date of acquisition, are as follows:

the acquisition date fair value of this contingent
consideration, as set out in the following table.
Any subsequent adjustment to the final contingent
consideration, based on the actual results, has
been reflected as an expense in the Statement
of Comprehensive Income.

Purchase consideration:

Initial cash payable

Acquisition date fair value contingent
consideration - cash earn-out *
Total acquisition date fair value
purchase consideration

$’000

432

437

*The remaining unpaid contingent consideration has been

accrued in the balance sheet within the Trade and Other
Payables classification. This amount has subsequently
been reduced during the year by a reversal of contingent
consideration no longer payable, of $366,067 ($US
327,557) (refer Note 22), and payments totalling $72,269
($US 68,078).

Acquiree’s
carrying
amount
$’000

Fair value

$’000

389

437

Item

Client intangibles

Net identifiable assets/
(liabilities) acquired

Goodwill on acquisition

Net assets acquired

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 $389,000 (US$405,000).
The full value of goodwill and client intangibles is
deductible for US tax purposes.

Acquisition related costs of $Nil (2013: $25,671) are
included in administrative and general expenses in
the Statement of Comprehensive Income.

Acquiree’s
carrying
amount
$’000

639

(621)

(80)

Fair value

$’000

639

663

(621)

(80)

675

18,483

19,158

Item

Cash and cash equivalents

Accounts receivable

Client intangibles

Trade and other payables

Provisions

Net identifiable assets/
(liabilities) acquired

Goodwill on acquisition

Net assets acquired

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 $18,483,000 (US$19,162,000).
The full value of the goodwill and client intangibles is
deductible for US tax purposes.

Acquisition related costs of $nil (2013: $966,279) are
included in Administrative and General Expenses
classification in the Statement of Comprehensive
Income. The acquired business contributed revenues
of $11,312,000 and net profit after tax of $1,814,000
to the Group for the year ended 30 June 2014.

Boulder (prior period)

On 1 December 2012, the Group acquired part of the
business of Tzell Boulder, LLC (Boulder), a US based
travel management company. The initial cost of the
acquisition was $5,000 (US$5,000) paid in cash, with
further contingent consideration payable monthly over
the first three years, as set out in this Note.

The potential undiscounted amounts of future cash
payments that the Group could be required to make
are based on financial criteria relating to percentages
of collected revenues over the three earn-out years
and range from $1 with no capped maximum value.

At the acquisition date, the projected results for the
three earn-out years were assessed to determine

102

103

CTM Annual Report 2014CTM Annual Report 201424. COMMITMENTS AND CONTINGENCIES

Operating lease commitments – Group as lessee

Contingencies

The Group has entered into commercial leases for
the rental of premises. These leases have an average
life of between one and three 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:

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:

Within one year

After one year but not
more than five years

More than five years

Total

2014
$’000

5,818

7,095

12,941

2013
$’000

2,290

6,381

8,746

Capital commitments

There were no capital commitments
as at reporting date (2013: $167,000).

Various vendors

Total

2014
$

19,278

2013
$

2,738

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 for Australia and New Zealand. There are no
assets pledged as security for the facilities held in
Asia. Refer Note 18.

There were no other contingencies as at reporting
date (2013: $nil)

104

105

CTM Annual Report 2014CTM Annual Report 201425. INTERESTS IN OTHER ENTITIES

(a) Material subsidiaries

The Group’s principal subsidiaries at 30 June 2014 are set out in the following table. Unless otherwise stated,
each entity has share capital consisting solely of ordinary shares that are held directly by the Group, and the
proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation
or registration is also their principal place of business.

Name
of Entity

Place of
business/
country of
incorporation

Ownership
interest
held by The
Group

Principal
Activities

Ownership
interest held
by non-
controlling
interest

2014

2013

2014

2013

Corporate Travel Management Group
Pty Ltd*

Australia

Sainten Pty Ltd*

Australia

Floron Nominees Pty Ltd*

Australia

WA Travel Management Pty Ltd*

Australia

Travelogic Pty Ltd*

Corporate Travel Management
(New Zealand) Limited*

Australia

Travelcorp Holdings Pty Ltd*

Australia

Travelcorp (Aust) Pty Ltd*

Australia

ETM Travel Pty Ltd*

Australia

Corporate Travel Management
North America Limited*

R&A Travel Inc.*

Travelcorp LLC*

United States
of America

Corporate Travel Management (UK)
Limited

United Kingdom

Wealthy Aim Investments Limited

British Virgin
Islands

Westminster Travel Limited

Hong Kong

Jecking Tours & Travel Limited

Hong Kong

100

75.1

100

24.9

Travel Services

Investment Holding

Travel Services

Investment Holding

Travel Services

Name
of Entity

Place of
business/
country of
incorporation

Ownership
interest
held by The
Group

Principal
Activities

Ownership
interest held
by non-
controlling
interest

2014

2013

2014

2013

Westminster Travel (China) Limited

Hong Kong

Westminster Travel (Guangzhou)
Limited

People’s Republic
of China

Westminster Travel Consultancy
(Guangzhou) Limited

People’s Republic
of China

Beijing Westminster Air Service
Company Limited

People’s Republic
of China

Westminster Travel Limited

Macau

Wincastle Travel (HK) Limited

Hong Kong

Westminster Travel Limited

Taiwan

Far Extent Investments Limited

Hong Kong

Westminster Travel (S) Pte. Ltd

Singapore

S Travel Holdings Limited

S Travel Limited

Profit Shine Holdings Limited

British Virgin
Islands

Hong Kong

British Virgin
Islands

TLX Travel Limited

Hong Kong

TLX Overseas Education
Centre Limited

Hong Kong

MIATravel International Limited

Hong Kong

100

Investment Holding

Travel Services

Travel Services/
Sale of air tickets

Travel Services

Leasing of
properties

Travel Services

Investment Holding

Travel Services

Investment Holding

Travel Services

Overseas educational
consultancy service

Travel Services

*These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order
98/14 issued by the Australian Securities and Investments Commission. For further information refer to Note 2(a).

106

107

CTM Annual Report 2014CTM Annual Report 2014

(b) Non-controlling interests (NCI)

During the period, the Group acquired 75.1% of
Wealthy Aim Investments Limited (“Westminster
Travel”) (refer Note 23).

The following table summarises the financial
information for Westminster Travel, which has a
non-controlling interest which is material to the Group.
The Westminster Travel Group, includes
non-controlling interests which are not material to
the Group. The amounts disclosed are before
inter-company eliminations.

Summarised cash flows

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

Net increase/ (decrease) in cash
and cash equivalents

For the five
months to
30 June 14
$’000

(3,049)

630

(1,412)

(3,831)

Summarised balance sheet

Current assets

Current liabilities

Current net assets

Non-current assets

Non-current liabilities

Non-current net assets

Net Assets

Accumulated NCI

As at
30 June 14
$’000

96,746

(72,112)

24,634

15,747

(1,368)

14,361

38,995

8,556

26. RELATED PARTY DISCLOSURES

a) Parent Entities
The ultimate parent entity within the group is
Corporate Travel Management Limited.

b) Subsidiaries
Interests in subsidiaries are set out in Note 25.

c) Key management personnel compensation

2014
$

2013
$

For the five
months to
30 June 14
$’000

Short-term

1,722,002

1,455,272

Post-employment

121,818

105,893

Long-term benefits

Share-based payments

13,643

30,997

7,104

9,317

1,888,460

1,577,586

Summarised Statement of comprehensive income

Revenue

Profit for the period

Other comprehensive income

Total comprehensive income

Profit/(loss) allocated to NCI

20,245

3,540

(107)

3,433

734

Detailed remuneration disclosures are provided in the
Remuneration Report on pages 26-41.

(d) Transactions with other related parties

(f) Loans to/from related parties

The following transactions occurred with related
parties:

2014
$’000

2013
$’000

Loans to key management personnel

2014
$’000

2013
$’000

Beginning of the year

Loans advanced

Loan repayments received

Interest charged

359

334

Interest received

End of year

Expenses

Payment for rent and outgoings
in relation to an office lease paid
to a party related to Mr Jamie
Pherous.

Dividend Revenue

3,868

(3,868)

(58)

2014
$’000

2013
$’000

Other related parties

1,098

Subscription for new ordinary shares by key management
personnel as a result of:

Consideration for consultancy
services

Reward and retention

116

115

(e) Outstanding balances arising from other
related parties

The following balances are outstanding at the end of
the reporting period in relation to transactions with
related parties:

Other Receivables

Other related parties

Other Payables

Parties related to key
management personnel

Other related parties

2014
$’000

2013
$’000

825

277

Loans to other related parties

Beginning of the year

Loans advanced

17,272

Loan repayments received

(17,272)

Interest charged

Interest received

End of year

(46)

There is no allowance account for impaired
receivables in relation to any outstanding balances,
and no expense has been recognised in respect of
impaired receivables due from related parties.

(g) Terms and conditions

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.

All transactions were made on normal commercial
terms and conditions and at market rates.

Outstanding balances are unsecured and are
repayable in cash.

108

109

CTM Annual Report 2014CTM Annual Report 201427. SHARE-BASED PAYMENTS

Share appreciation rights

The establishment of the CTM Share Appreciation
Rights (SARs) Plan was approved by the Board on
19 October 2012. The SARs Plan is designed to
provide long-term incentives for senior executives to
deliver long-term shareholder returns. Under the plan,
participants are granted Share Appreciation Rights
which only vest if certain performance standards
are met, and the employee remains in service.
Participation in the plan is at the Board’s discretion
and no individual has a contractual right to participate
in the plan or to receive any guaranteed benefits.

Once vested, a participant will be deemed to have
automatically exercised all vested SARs and CTM
will settle its obligation in line with the SARs Plan.
There is no consideration payable by the participant
upon exercising of vested SARs. When exercised,
the conversion of a SAR to an equity or cash based
settlement, is determined using a formula referencing
the relevant share prices of CTM, the number of SARs
exercised, and is at the Board’s sole discretion.

Grants made during 2014 will vest on a scaled basis
as follows:

■ 75% vest at 80% target achievement; and
■ 100% at 100% target achievement.

For equity based settlements, the calculation is as
follows:

Equity Settlement Amount = ((SMV – BP) / SMV)
x PQSR

For cash based settlements, the calculation is as
follows:

Cash Settlement Amount = (SMV – BP) x PQSAR

Where:

■ Equity Settlement Amount - is the number of

shares to be issued or transferred to the relevant
participant in equity settlement of the performance
qualified SAR at exercise;

■ Cash Settlement Amount – is the amount paid to
a participant in cash settlement of a performance
qualified SAR at exercise;

■ SMV – the Subsequent Market Value is the
market value of a CTM Ltd share as at the
performance qualification date in connection with
that SAR;

■ BP – the Base Price of the SAR as determined by

the Board; and

■ PQSAR – is the total number of performance

qualified SARs with the same Base Price held by
the relevant participant.

SARs granted under the plan carry no dividend or
voting rights.

The following table are summarises the SARs granted under the plan:

2014

2013

Average
Exercise Price

per Share Right

Number
of SARs

Average Exercise
Price per

Number
of SARs

Share Right

As at 1 July

Granted during the year

Exercised during the year

Forfeited during the year

As at 30 June

Vested and exercisable at 30 June

$0.00

150,000

345,000

495,000

$0.00

No SARs expired during the periods covered by this table.

SARs outstanding at the end of the year have the following expiry date and share base prices:

Grant date

Expiry Date

Base Price

5 November 2012

5 November 2015

1 July 2013

1 July 2016

$4.00

$5.00

SARS
30 June
2014

150,000

345,000

495,000

150,000

SARS
30 June
2013

150,000

■ Expiry Date: 1 July 2016 (2013 – 5 November

2015).

■ Share Price at Grant Date: $4.05 (2013 - $3.75).
■ Expected price volatility of the Company’s shares:

25% (2013 – 25%).

■ Expected dividend yield: 2.7% (2013 – 2.7%).
■ Risk-free interest rate: 4.0% (2013 – 4.5%).

The expected price volatility is based on the historic
volatility, based on the remaining life of the SARS,
adjusted for any expected changes to future volatility
due to publicly available information.

Fair value of SARs granted

The assessed fair value at grant date of the SARs
granted during the year ended 30 June 2014 was
$0.40 per SAR (2013 - $0.57). The fair value at grant
date has been determined using a Black-Scholes
pricing model that takes into account the share price
at the time of the grant, the exercise price, the term of
the SAR, the expected dividend yield, the expected
price volatility of the underlying share and the risk free
interest rate for the term of the SAR.

The fair value model inputs for SARs granted during
the year ended 30 June 2014 included:

■ SARs are granted for no consideration and vest

based on Corporate Travel Management Limited’s
Earnings per Share growth over a 3 year vesting
period.

■ Base price: $5.00 (2013 - $4.00).
■ Grant Date: 1 July 2013 (2013 - 5 November

2012).

110

111

CTM Annual Report 2014CTM Annual Report 2014

28. PARENT ENTITY FINANCIAL INFORMATION

29. DEED OF CROSS GUARANTEE

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),
Corporate Travel Management North America
Limited, R&A Travel Inc. and Travelcorp LLC 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.

a) Consolidated Income Statement, Statement
of Comprehensive Income and summary of
movements in Consolidated Retained Earnings.

These companies represent a ‘Closed Group’ for the
purposes of the Class Order and, as there are no
other parties to the deed of cross guarantee that are
controlled by Corporate Travel Management Limited,
they also represent the ‘extended closed group’.

(a) Summary financial information

The individual financial statements of the parent
entity show the following aggregate amounts:

2014
$’000

2013
*restated
$’000

Statement of Financial Position

Current assets

Total assets

Current liabilities

Total liabilities

Net assets

Shareholders’ equity

6,601

131,017

1,840

129,177

19,834

83,045

5,448

77,597

Issued capital

120,227

68,259

Reserves

Retained earnings

Profit for the year

Total comprehensive
income

1,158

7,792

129,177

7,339

9,353

77,612

10,081

7,339

(10,081)

(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.

The parent entity did not have any contingent liabilities
as at 30 June 2014 or 30 June 2013.

(d) Contractual commitments

The parent entity did not have any contractual
commitments at 30 June 2014 or 30 June 2013.

The following table presents a Consolidated Income Statement, a Consolidated Statement of Comprehensive
Income and a summary of movements in Consolidated Retained Earnings for the year ended 30 June 2014 of
the Closed Group.

Revenue

Other revenue

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

Total operating expenses

Finance costs

Profit before income tax

Income tax expense

Profit for the year

Other comprehensive income

Items that may be reclassified to profit and loss

Exchange differences on translation of foreign operations

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

Summary of movements in consolidated retained earnings

Retained earnings at the beginning of the financial year

Profit for the period

Dividends provided for or paid

Retained earnings at the end of the financial year

2014
$’000

89,770

163

89,933

2013
restated*
$’000

77,557

(52,204)

(47,004)

(3,390)

(2,896)

(5,659)

(1,844)

(4,664)

(2,676)

(2,079)

(4,859)

(1,232)

(3,013)

(70,657)

(60,863)

(637)

18,639

(5,720)

12,919

(724)

15,970

(4,702)

11,268

(3,551)

1,533

9,368

12,801

2014
$’000

19,733

12,919

(9,129)

23,532

2013
*restated
$’000

15,962

11,268

(7,497)

19,733

112

113

CTM Annual Report 2014CTM Annual Report 2014b) Consolidated Balance Sheet

The following table sets out the Consolidated Balance Sheet as at 30 June 2014 of the Closed Group.

30. AUDITORS’ REMUNERATION

The auditor of the Group is PricewaterhouseCoopers

Amounts received or due and receivable by:

PricewaterhouseCoopers Australia:
▪ Audits and review of the financial reports of the entity

and any other entityin the consolidated group

▪ Other services in relation to the entity and
any other entity in theconsolidated group:

- Tax compliance

- Tax services – acquisitions

- Other advisory services

Total remuneration of PricewaterhouseCoopers Australia

Other PricewaterhouseCoopers network firms:
▪ Other services in relation to the entity and any other entity in the

consolidated group:

- Audit and Review of the Financial Report

- Tax compliance

- Tax services – acquisitions

Total remuneration of PricewaterhouseCoopers network firms

2014
$

2013
$

361,000

285,000

165,984

88,904

39,619

655,507

269,059

52,594

98,566

420,219

140,146

23,600

9,552

458,298

26,736

27,163

53,899

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

Income tax payable

Provisions

Total Current Liabilities

Non-current Liabilities

Trade and other payables

Interest bearing borrowings

Provisions

Deferred tax liabilities

Total Non-current Liabilities

Total Liabilities

Net Assets

Equity

Contributed equity

Reserves

Retained earnings

Total Equity

30 June
2014

$’000

30 June
2013
*restated
$’000

13,496

24,365

641

13,535

22,847

688

38,520

37,088

2,657

74,593

77,250

3,166

75,714

78,880

115,770

115,968

29,915

1,205

1,803

32,923

26,046

3,192

552

1,869

31,659

4,149

12,295

954

1,813

6,916

39,839

75,931

54,033

(1,625)

23,523

75,931

157

795

1,943

15,190

46,849

69,119

47,856

1,530

19,733

69,119

114

115

CTM Annual Report 2014CTM Annual Report 201431. EVENTS OCCURRING AFTER THE
REPORTING PERIOD

32. VOLUNTARY CHANGE IN ACCOUNTING
POLICY

USTravel

The acquisition of 100% of the shares of USTravel
Inc. (“UST”), a North American based travel
management company, was completed on 1
July 2014. As part of this transaction, an initial
consideration of $5,561,441 (US $5,250,000) was
paid via a mixture of cash and CTM Limited shares.
Further cash contingent consideration of up to
$2,919,320 (US $2,750,000) may also be payable
on 31 August 2015, based on UST achieving annual
profit before tax earnings of $US1,600,00 by 30 June
2015. Should actual profit before tax earnings not
reach this level by 30 June 2015, the amount of the
earn-out will be reduced.

Avia International Travel

Due to the recent timing of the acquisitions, CTM
has not yet made a provisional calculation of the
net identifiable assets or purchased goodwill. The
financial effects of the transaction have not been
brought to account at 30 June 2014.

The Financial Report has been prepared on the basis
of a retrospective application of a voluntary change
in accounting policy relating to the recognition of
revenue from Pay Direct Commissions (PDC). PDC is
revenue derived from travel operators, mainly hotels
and car rental companies, and determined using
factors including lengths of stays and rental, and
vendor’s selling rates.

The new accounting policy is to recognise
PDC revenue in the Consolidated Statement of
Comprehensive Income upon the commission being
receipted by CTM. It was adopted on 1 July 2013 and
has been applied retrospectively.

The previous accounting policy was to recognise PDC
revenue based on an accrual basis, when a travel
booking was received and processed by CTM.

AASB 118 Revenue allows revenue to be recognised
once it can be reliably estimated and it is probable
that economic benefits will flow to CTM. In assessing
the revenue recognition policy, CTM’s management
noted several factors, including a deteriorating rate
of PDC recoveries and the uncertainty that surrounds
PDCs at the time of travel booking. These factors
made it increasingly difficult to reliably estimate PDC
revenue at time of booking. CTM’s management
concluded that it was not probable that revenue would
flow to CTM until the point of receipt.

As such, CTM’s management consider that this
voluntary change in accounting policy will result in the
financial report providing more relevant and reliable
information.

CTM’s recent corporate acquisitions recognise
their PDC revenue consistent with the new policy.
Given the significance of CTM’s growing overseas
operations, it was also considered appropriate
for consistency across the Group, to undertake a
voluntary change to the accounting policy during the
period.

116

30 June
2014
$’000

30 June
2013
$’000

Revenue

Revenue before change in accounting policy

Adjustment due to change in accounting policy

Revenue after change in accounting policy

Profit Before Income Taxes

Profit before income tax before change in accounting policy

Adjustment due to change in accounting policy

Profit before income tax after change in accounting policy

Earnings Per Share (Basic)

As reported before change in accounting policy

Adjustment due to change in accounting policy

Restated after change in accounting policy

Earnings Per Share (Diluted)

As reported before change in accounting policy

Adjustment due to change in accounting policy

Restated after change in accounting policy

106,850

3,164

110,014

19,817

3,161

22,978

16.3

2.7

19.0

16.2

2.6

18.8

30 June
2014
$’000

30 June
2013
$’000

Trade And Other Receivables

Trade receivables before change in accounting policy

Adjustment due to change in accounting policy

Consolidated Shareholders Equity

102,726

(1,440)

101,286

Consolidated shareholders equity before change in accounting policy

134,516

Adjustment due to change in accounting policy

Cumulative effect from prior years

2,234

(3,866)

132,884

27,975

(5,128)

22,847

72,985

(1,160)

(2,706)

69,119

78,964

(1,407)

77,557

17,382

(1,412)

15,970

16.3

(1.4)

14.9

16.3

(1.4)

14.9

1 July
2012
$’000

25,676

(3,657)

22,019

53,009

(2,706)

50,303

117

CTM Annual Report 2014CTM Annual Report 2014Directors’ Declaration

In the Director’s opinion:

a. The financial statements and notes set out
on pages 25 to 117 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 2014
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 25 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 25.

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 Tony Bellas
Chairman

Mr Jamie Pherous
Managing Director

Brisbane, 28 August, 2014

118

119

CTM Annual Report 2014CTM Annual Report 2014Shareholder Information

The shareholder information set out below was
applicable at 12 August 2014.

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 – 50,000

50,001 - 100,000

100,001 and over

Number of
Shareholders

2,223

2,742

666

426

6,126

120

121

CTM Annual Report 2014CTM Annual Report 2014c) Substantial holders

Substantial holders (including associate holdings) in the Company are set as follows:

Ordinary shares

Pherous Holdings Pty Limited

HSBC Custody Nominees (Australia) Limited

Claire Lesley Gray

Citicorp Nominees Pty Limited

Ordinary shares voting rights

Number held

Percentage of
issued shares

23,000,000

25.58%

6,365,832

5,003,624

4,875,319

7.08%

5.56%

5.42%

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.

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 Ltd

HSBC Custody Nominees (Australia) Ltd

Claire Lesley Gray

Citicorp Nominees Pty Ltd

J P Morgan Nominees Australia Limited

Steven Craig Smith

Matthew Michael Cantelo

National Nominees Limited

RBC Investor Services, Australia Nominees Pty Limited

BNP Paribas Noms Pty Ltd

Mr Matthew Dalling

Ms Helen Logas

Matimo Pty Ltd

Doobie Investments Pty Limited

UBS Nominees Pty Ltd

Lyndall Mccabe

Murdoch Investments Pty Ltd

Mr Michael Pherous & Mrs Diane Pherous

AMJJAS Pty Ltd

Dr David John Ritchie & Dr Gillian Joan Ritchie

Ordinary shares

Number held

Percentage of
issued shares

23,000,000

25.58%

6,365,832

5,003,624

4,875,319

4,206,537

3,166,408

2,460,032

2,432,483

2,430,701

1,962,637

1,720,282

1,235,178

1,155,186

882,893

700,421

610,000

511,051

493,704

464,423

344,445

7.08%

5.56%

5.42%

4.68%

3.52%

2.74%

2.70%

2.18%

1.91%

1.37%

1.28%

0.98%

0.78%

0.68%

0.57%

0.55%

0.52%

0.38%

64,021,156

71.19%

122

123

CTM Annual Report 2014CTM Annual Report 2014CORPORATE
DIRECTORY

Directors

Mr Tony Bellas.

Mr Stephen Lonie.

Mr Greg Moynihan.

Mr Jamie Pherous.

Ms Claire Gray.

Admiral Robert J. Natter

Joint Company Secretaries

Mrs Lyndall McCabe.

Mr Steve 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.

Auditor

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.
(ASX Code CTD)

Website address
www.travelctm.com

124

125

CTM Annual Report 2014CTM Annual Report 2014126

127

CTM Annual Report 2014CTM Annual Report 20142014

Annual Report 2013

1994

Corporate Travel Management

ABN 17 131 207 611
Registered office:
27A/52 Charlotte Street
Brisbane Queensland 4000

128

CTM Annual Report 2014