2021 1 2 3 4 5 6 • • 7 8 • • 9 10 • • • • • • • 11 12 13 14 15 16 17 18 19 10 20 • • • • • 21 • • • • • • 22 23 24 • • • • 25 • • • • • • • 26 • • • 27 28 • • 29 ` 30 31 32 33 • • • • • 34 • • 35 36 • • • • 37 38 • • • 39 40 • • • 41 • • 42 43 44 45 RSM Australia Partners Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Experience Co Limited and controlled entities for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS C J Hume Partner Sydney, NSW Dated: 26 August 2021 46 RSM Australia Partners Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501 www.rsm.com.au INDEPENDENT AUDITOR’S REPORT To the Members of Experience Co Limited Opinion We have audited the financial report of Experience Co Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 47 Key Audit Matter Revenue Refer to the financial statements The recognition of revenue and the associated deferred revenue is significant to the audit and is considered to be a key audit matter due to the nature of the revenue, which is often paid in advance of the services being rendered. The group is therefore required to recognise such receipts as deferred revenue until such time as the services are rendered under AASB 15. There are potential risks in relation to the following: • Revenues may be deliberately overstated as a result of management override of internal controls. The management of the Group considers sales as a key performance measure which could create an incentive for sales to be recognised before the services have been provided. • consideration, In accordance with AASB 15, Experience Co Group is entitled to recognize revenue from variable the probabilities applied to gift card sales and advance of management’s assessment of the likelihood that the advance bookings and gift vouchers will result in a tandem jump occurring. bookings respect being in How our audit addressed this matter Our audit procedures in relation to revenue recognition, deferred revenue and breakage revenue included the following: • Obtaining a detailed understanding of each of the sources of revenue and the related systems processes for quantifying and recording revenue and deferred revenue. • Understanding the process and control over changeover of booking system from Respax to IBIS. Understanding the ITGC control on new booking system in IBIS and how it drives the revenue recognition. • Considered the adequacy of the Group’s revenue recognition policies and assessing for compliance with Australian Accounting Standards. them • Where applicable, effectiveness of key controls bookings and revenue recognition. testing the in relation operating to • Selecting a sample of entries in the sales ledger accounts and testing that the amounts recognised are consistent with cash banked. • Obtaining deferred revenue schedule from management as at year end, on a sample basis, testing the completeness and accuracy of the deferred revenue schedule by selecting a sample of payment received before year end from the risky cut-off period based on the nature of the activities and trace to evidence as to whether the services have been rendered before year end and confirmed. • Obtaining the breakage revenue calculated by management, auditing managements estimates utilised in the process to determine the redemption rate. Assessing the reasonability of managements estimations, in accordance with AASB 15. judgements, and calculations • Assessing the adequacy of the disclosures in the financial statements for the critical accounting estimates and judgements in the accounting policy notes and ensure the disclosures are consistent with the applied practices. 48 Property, Plant and Equipment Refer to the financial statements Experience Co Group currently owns aircraft and other operating equipment with a carrying value of $ 67,713,359 as of 30 June 2021. Our audit procedure in relation to property, plant and equipment included following: Residual Values and Asset Components The more significant classes of property, plant and equipment include aircraft and vessels. The accounting in respect of the property, plant and equipment for Experience Co Group is complex and non-routine due to the nature of the equipment specially aircraft and vessels and the judgement required in determining useful lives, residual values, and the valuation of the major components of the assets. Property, plant and equipment carrying at cost model subject to impairment review if there is an impairment indicator noted during the period of the review. Given the continuous impact of COVID-19 on the operation of Experience Co Group, the assessment of impairment indicators will be complex and involve from management. judgements significant • Obtaining the accounting memoranda of aircraft and vessel depreciation method to assess the reasonableness of evidence provided by management to support the residual value and component split of the assets by comparing it to external evidence and historical sales values. • financial statements Assessing the adequacy of the disclosures in the the critical accounting estimates and judgements in the accounting policy notes and ensure the disclosures are consistent with the applied practices. for Useful lives • Obtaining the accounting memorandum prepared for aircraft and vessel depreciation the reasonableness of method evidence provided by management to support the useful lives of the assets. to assess • Reviewing the depreciation method used in the fixed asset register to ensure it is in line with depreciation method prescribed in accounting memorandum. • For newly acquired aircraft and vessel, assessing the reasonableness of the useful lives by comparing to similar planes, vessels and engines in the Groups. Impairment • Obtaining and the accounting reviewing memorandum prepared by management regarding assessing impairment indicator as at 30 June 2021 and assess the appropriateness of management’s assessment. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. 49 Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2021 but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 11 to 15 of the directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Experience Co Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. RSM AUSTRALIA PARTNERS C J Hume Partner Sydney, 26 August 2021 50 51 52 53