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2021
ANNUAL
REPORT
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COMPANY VISION, PURPOSE AND PHILOSOPHIES
For our company to survive, grow and prosper for the next 100 years and beyond, we must clearly define and live
by our vision, purpose and philosophies. We must protect and further develop our company culture and
philosophies. Our culture must be robust and independent, with the ability to outlive our current and future leaders.
OUR VISION
OUR PURPOSE
‘To become the world’s most exciting and profitable
travel retailer, personally delivering amazing experiences
to our people, our customers and our partners.’
‘To open up the world for those who want to see.’
OUR VALUES
1 OUR PEOPLE
Our company is our people. We care for our
colleagues’ health and wellbeing, their personal
and professional development and their financial
security. We believe that work should be challenging
and fun for everyone and through work we contribute
to our community.
2 OUR CUSTOMER
We recognise that our customers always have a choice.
We care about personally delivering amazing travel
experiences. This is provided with honesty, integrity
and a great attitude. It is the key to our company’s
success. The key measure of whether we really are
personally providing our customers with an amazing
experience, an amazing product and a very caring
service is they will return again and again.
3 BRIGHTNESS OF FUTURE
We believe our people have the right to belong to
a Team (family), a Village, an Area (tribe) and Nation
(hierarchy) that will provide them with an exciting
future and a supportive working community. They
also have the right to see a clear pathway to achieving
their career goals. Promotion and transfers from
within will always be our first choice.
4
TAKING RESPONSIBILITY
We take full responsibility for our own successes or
failures. We do not externalise. We accept that we
have total ownership and responsibility, but not
always control. As a company we recognise and
celebrate our individual and collective successes.
5 EGALITARIANISM AND UNITY
In our company, we believe that each individual
should have equal privileges and rights. In all our
countries and all our businesses there should be
no ‘them and us’.
OUR BUSINESS MODEL
1 OWNERSHIP
We believe each individual in our company should have
the opportunity to share in the company’s success
through outcome-based incentives, profit share, BOS
(franchises) and Employee and Leadership Share
Schemes. It is important that business leaders and
business team members see the business they run as
their business.
2
INCENTIVES
Incentives are based on measurable and reliable
outcome-based KPIs. We believe that ‘what gets
rewarded, gets done’. A reward for producing the
needed outcome. If the right outcomes are rewarded,
our company and our people will prosper.
3 OUR STANDARD SYSTEMS – ONE BEST WAY
In our business there is always ‘one best way’ to
operate. These are standard systems employed
universally until a better way is shown. This improved
way becomes the ‘one best way system’. We value
common sense over conventional wisdom.
4
FAMILY, VILLAGE, TRIBE
Our structure is simple, lean, flat and transparent, with
accessible leaders. Our business model is being one of
the world’s best and biggest small business operators.
There is a maximum of 4 and sometimes
5 layers. The village is an unfunded, self-help support
group that forms an integral part of our structure.
• Family (Teams – min 3, max 7 members)
• Villages (min 3, max 7 teams).
• Tribe (Areas – min 10, max 20 teams).
• Nations/Brands (min 8, max 15 areas).
• Regions/States/Countries.
• Board and senior leadership team.
5 PROFIT
A fair margin resulting in a business profit is the
key measure of whether we really are providing our
customers with an amazing experience, an amazing
product and a very caring service – an experience
they genuinely value and will pay us for.
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CONTENTS
Corporate directory .......................................................................................................1
Chairman's message .......................................................................................................2
FY21 results & overview ..............................................................................................4
Strategic update ................................................................................................................7
Outlook ................................................................................................................................. 12
Directors' Report ........................................................................................................... 14
Auditor’s independence declaration to the
Directors of Flight Centre Travel Group Limited ................................... 41
Statement of profit or loss ...................................................................................... 42
Statement of other comprehensive income .............................................. 43
Statement of cash flows ............................................................................................44
Balance sheet ...................................................................................................................45
Statement of changes in equity ..........................................................................46
Notes to the financial statements ..................................................................... 47
Directors’ declaration .............................................................................................. 138
Independent Auditor's Report to the Members
of Flight Centre Travel Group Limited .........................................................139
Shareholder information ....................................................................................... 146
Tax Transparency Report (unaudited) ...........................................................147
FLIGHT CENTRE TRAVEL GROUP LIMITED (FLT)
CORPORATE DIRECTORY
Directors G.F. Turner
G.W. Smith
J.A. Eales
R.A. Baker
C.M. Garnsey
Secretary D.C. Smith
Principal registered office and place
of business in Australia
275 Grey Street, South Brisbane QLD 4101
+61 7 3083 0088
Share register
Computershare Investor Services Pty Ltd
200 Mary Street, Brisbane QLD 4000
+61 7 3237 2100
Auditor
Ernst & Young
111 Eagle Street Brisbane QLD 4000
Stock exchange
FLT shares are listed on the Australian
Securities Exchange.
Web address
www.fctgl.com
KEY DATES 2021/22
August 26, 2021
2020/21 full year results released
September 1, 2021
Director nomination deadline
October 20, 2021
Annual General Meeting
February 24*, 2022
2021/22 half year results released
* Dates are subject to change and the payment of any dividend is subject to
the Board’s discretion.
This financial report covers the consolidated financial
statements for the consolidated entity consisting of FLT
and its subsidiaries. The financial report is presented in
Australian currency.
FLT is a company limited by shares, incorporated and
domiciled in Australia.
A description of the nature of the consolidated entity’s
operations and its principal activities is included in the
review of operations and activities in the directors’ report.
The financial report was authorised for issue by the
directors on 26 August 2021. The directors have the
power to amend and reissue the financial report.
FLT endorses the ASX's Corporate Governance Principles
and Recommendations and complies in all areas,
apart from amalgamating the Remuneration and the
Nomination Committee. Further information on FLT's
compliance with the Corporate Governance Principles
and Recommendations, including FLT’s Corporate
Governance Statement, can be found on the company's
website, http://www.fctgl.com/investors/governance/
corporate-governance-statement-2/
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CHAIRMAN'S MESSAGE
GARY SMITH
Welcome to our 2021 fiscal year (FY21) annual report.
The 12 months to June 30 2021 was, of course, another
incredibly challenging period for people and businesses
globally as governments ramped up their efforts to
mitigate the health and economic impacts of COVID-19.
This saw most of the international travel restrictions that
were adopted late in FY20 extended throughout FY21,
along with curbs on other everyday activities.
In Australia, we also encountered a year of domestic travel
upheaval, as states responded to COVID outbreaks by
frequently closing and re-opening their borders –
thereby creating a constantly changing and highly
uncertain travel environment.
While this domestic and international border upheaval
continues, causing ongoing havoc for leisure and corporate
travellers early in FY22, we are also encouraged by:
• Improved trading conditions in the Americas, UK and
Europe, which are very important markets to us; and
• The vaccination programs’ early successes globally,
which potentially deliver a safe and sensible path to a
near-term return to some degree of normality and to
longer term recovery.
EARLY PROGRESS ON THE PATH TO RECOVERY
Our recovery trajectory to date has been broadly in line
with expectations, although we did not initially anticipate
the rolling shutdowns and border closures that we have
encountered in various parts of the world and particularly
in Australia. Our FY21 underlying loss finished at just over
$500million and was in line with the market guidance
that we provided in May 2021, before the latest round of
extensive lockdowns across Australia.
Sales revenue increased month-on-month throughout
FY21, with this revenue growth offsetting the JobKeeper
subsidy reduction in Australia at the end of the second
quarter (Q2) and the program’s removal at the end of Q3.
JobKeeper’s removal was premature in our view given the
heavy domestic travel restrictions that are still in place
some five months later and the fact that there is not yet a
definitive timeframe for international travel’s return.
This ability to maintain a global revenue growth trajectory
throughout FY21 – despite regular border disruptions in
Australia and other parts of the world – again underlines
our business’s diversity, which we consider to be one
of its great strengths. For example, our US businesses
performed strongly late in Q4 and into July 2021 to offset
the inevitable slowdown we experienced in Australia and
New Zealand when border restrictions were again applied
late in the year.
Our US leisure and wholesale businesses, Liberty and
GOGO, were profitable late in FY21 and into July 2021.
Our Mexico business was also profitable towards the end
of FY21, while the Americas-based Discova destination
management business has delivered record results recently.
This is in addition to businesses that have been
consistently profitable throughout the year like AVMIN
(our aircraft charter division) and our United Arab Emirates
corporate business.
Outside of the travel industry, the Pedal Group cycle
business, which FLT has a 46.6% ownership in, continues
to deliver record profits. The business, which expanded
into New Zealand during the year, achieved an underlying
$54million profit before tax for FY21, up from $18million
during FY20, with group sales increasing to $333million
(FY20: $199million).
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As you may recall, we started FY21 with an initial goal of
lowering our monthly operating cash outflows to $65million
per month by July 2020 in a worst-case, zero-revenue
environment. We successfully achieved this goal and made
further improvements as the year progressed as covered in
Adam Campbell’s column.
CONTINUED SIGNIFICANT INVESTMENT IN KEY
GROWTH DRIVERS
At a time when many competitors have been forced
to either hibernate or pare back their expenditure on
business-critical functions, we have continued to invest
in initiatives that will enhance our customer offerings and
drive future growth in shareholder value.
Strengthening our technology platforms has been a
priority during the pandemic and we have delivered game-
changing new platforms for customers of our extremely
successful FCM and Corporate Traveller brands, along with
other initiatives that have been outlined in Chris Galanty’s
and Melanie Waters-Ryan’s columns.
Within our in-destination area, the Cross Hotels & Resorts
hotel management business has expanded into Japan
through a master franchise agreement with Tokyo-
based AB Accommo Company Limited. The agreement
will eventually see seven properties – from Okinawa to
Hokkaido – trading under Cross’s Away and Cross Vibe
brands, with the inaugural property, Away Okinawa Kouri
Island Resort, opening last month (July).
We have also moved to enhance our ESG (environment,
social and governance) focus. This area is very important
to us, our people and other stakeholders and we are
committed to building on our ESG credentials
moving forward.
During FY21, we released our first sustainability report after
an internal audit of the programs we offered globally across
our various operations. Since then, we have formed an
internal ESG group – with senior leadership representation
– and it will soon report back to our global leadership team
and ultimately to our board with recommendations as to
how we can enhance our ESG focus from here in terms of
clearly setting our goals, targets and accountability by way
of reporting structure.
People are, of course, our most valuable asset and we
continue to work hard in very challenging conditions to
attract and retain a highly skilled team to guide us through
to the recovery phase.
As covered in detail in the Remuneration Report, we have
tailored two new programs – the Global Recovery Rights
and Post COVID Recovery Plan– to assist us in trying to
ensure that we achieve our strategic objective of retaining
these key people, at a critical juncture in our recovery
and through a period of heightened risk. Our people
– in front-end sales roles, within our support ranks and
at executive level – have skills that readily translate to
other industries and sectors that are less affected or are
recovering more rapidly.
These two programs are designed to try and improve our
ability to retain our workforce in the face of aggressive
targeting from other less impacted sectors. Another benefit
flowing directly from these programs, which are built on
share right grants, is that all of our people will potentially
be shareholders in our company, in line with our philosophy
of encouraging everyone to have genuine ownership of our
company and creating an even stronger alignment between
our people’s and our investors’ interests.
ACHIEVING STRATEGIC OBJECTIVES IN LEISURE
AND CORPORATE SECTORS
While the recovery trajectory within our businesses
globally is fundamentally linked to the prevailing travel
restrictions, we are generally achieving our corporate
and leisure strategic objectives within a constrained
trading environment.
In corporate travel, we are winning and implementing
large volumes of new business, while continuing to retain
almost 100% of our customers in the FCM business thanks
to our very compelling client offerings which fuel our
proven organic growth model. We have also taken steps
to transform our Corporate Traveller business through the
Melon platform launch.
In leisure, we are diversifying our offerings by investing in
a broader range of channels to support our smaller – but
still highly accessible – shop network and to give customers
additional options to access our services. At this relatively
early stage, the evidence suggests we are maintaining
or increasing market-share across these channels in key
locations like Australia and South Africa, despite the almost
complete absence of our core leisure product in those
markets – international travel.
There is strong pent-up demand for travel – particularly
among leisure customers, who are subject to the heavier
restrictions that typically apply to discretionary travel. We
are also working hard to attract new customers through
our multi-channel offerings and expect to see market share
gains as a result of industry consolidation.
We believe we are ready and well-placed to capitalise on
what shapes as a major rebound when international and
domestic borders reopen fully.
From a financial perspective, we have maintained a lengthy
liquidity runway, which should allow us to weather the
current challenges and to capitalise on opportunities
during the coming period of market recovery.
Our brand and geographic diversity will underpin our
resilience during FY22 and beyond.
While Australia-New Zealand remains our largest region by
sales, our profits are now significantly leveraged to larger
overseas markets like the Americas and Europe, Middle
East and Africa (EMEA) that are currently better placed
to lead the global travel recovery. Within these regions,
vaccinations are at relatively high levels and restrictions are
being relaxed, particularly for those who are vaccinated.
CONCLUSION
While FY22 will inevitably present its share of COVID-
related challenges, we are focused on matters that are
within our control and start the year with renewed optimism
that we are:
• Making solid early progress on the path to recovery; and
• Building strong platforms for the future by investing in
the assets, programs and initiatives that will fast-track our
rebound and drive future growth in shareholder value
We are generally achieving our leisure and corporate
strategic objectives in what remains a subdued trading
climate and are ready to capitalise on what shapes as a
major travel rebound when restrictions are lifted and as
travellers are cleared to again take off.
Thank you once again for your ongoing support of our
company and our people during what has been a very
challenging period for all of us during the past 12-18
months. We look forward to updating you on our continued
recovery as the year progresses and to once again fulfilling
our company purpose of “opening up the world for those
who want to see”.
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FY21 RESULTS &
OVERVIEW
ADAM CAMPBELL
CHIEF FINANCIAL OFFICER
THE Flight Centre Travel Group (FLT) recorded a
$507.1million underlying loss before tax during the 2021
fiscal year (FY21).
While this result was in line with our FY21 guidance, we
were disappointed to report a loss of this magnitude given
our long pre-pandemic record of profits and year-on-year
total transaction value (TTV) growth. Indeed, just
18 months ago, we would have considered a loss-making
year to be highly unlikely, given our record of trading
profitably in the face of a wide variety of market challenges.
That was, of course, before the COVID-19 crisis arose and
governments globally applied widespread restrictions
that have, at best, severely hampered and, in some cases,
completely removed our ability to sell our core products.
This short-term reversal in fortunes does not, however,
mean that the work that was undertaken and the
investments that were made prior to the pandemic have
been wasted.
Rather, we are playing the long game by pushing ahead
with our pre-COVID investments in business-critical
functions and future growth drivers to ensure we emerge
from this crisis with a leaner and more productive business
that delivers scalable profit growth. We expect to generate
a strong return on these COVID-period investments as
market conditions improve.
Already, some very familiar themes from our recent past are
re-emerging in the early stages of our recovery, specifically:
• Our corporate business is once again underlining its
reputation as a world leader in the sector by growing to
win during the pandemic and generating a larger share of
our total sales, while also laying very strong foundations
for further organic growth
• Our leisure business maintains its relevance to customers
and market-share is increasing in key locations through
a wider and stronger variety of channels operating
alongside a smaller shop network; and
• Our diversity remains an enduring strength, with the
Americas business underlining its potential as a near-
term earnings powerhouse for the group by again
delivering strong month-on-month growth
5 YEAR RESULTS SUMMARY
TTV
Revenue Margin
EBITDA
FY21
FY20
RESTATED1
FY19
FY18
FY17
$3,945m
$15,303m
$23,728m
$21,818m
$20,109m
10.0%
12.4%
12.9%
13.4%
13.8%
$(432.3m)
$(594.3m)
$427.3m
$442.2m
$402.1m
Profit/(loss) before income tax (statutory)
$(601.7m)
$(848.6m)
$343.5m
$364.3m
$325.4m
Profit/(loss) before income tax (underlying)2,3
$(507.1m)
$(509.2m)
$343.1m
$384.7m
$329.5m
Net profit/(loss) after income tax (statutory)
$(433.5m)
$(662.2m)
$264.2m
$264.8m
$230.8m
Earnings/(loss) per share
Dividends per share4
Special dividends per share4
ROE
(217.5c)
(552.2c)
-
-
-
-
(45.3%)
(48.7%)
224.2c
158.0c
149.0c
18.1%
261.6c
167.0c
-
228.5c
139.0c
-
17.0%
16.2%
1 Restated as required for changes introduced by IFRIC Agenda Decision - Configuration and Customisation Costs in Cloud Computing Arrangements. Refer to Note
I(b) for details.
2 Refer to note A1 segment information for reconciliation of statutory to underlying loss before tax.
3 Underlying PBT, TTV, Income margin, EBIT and EBITDA are non-IFRS measures and are unaudited.
4 Dividends per share exclude the special dividend paid during the 2019 period.
4
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LOSS OF JOBKEEPER SUBSIDY MASKS
SIGNIFICANT 2H TRADING IMPROVEMENT AND
MOMENTUM
Underlying FY21 and FY20 losses were fairly similar,
although some $660million in underlying losses were, of
course, incurred in rapidly deteriorating conditions during
the last four months of FY20 after a $150million underlying
profit before tax for the eight months of the year.
Although underlying losses were reasonably consistent
between the two halves of FY21, as we foreshadowed they
would be in May, we saw tangible signs of recovery as the
year progressed.
This recovery was built on consistent month-on-month
sales growth, escalating during the 2H and culminating
in a COVID-period record in June 2021, along with tight
ongoing cost discipline.
Sales revenue for the six months to June 30 2021 increased
48% – or $76.3million – compared to results for the six
months to December 31 2020 and we typically recorded
strong Q4 rebounds globally, despite constantly changing
conditions and travel restrictions as countries entered and
re-emerged from lockdown.
This solid 2H sales growth comfortably outweighed cost
growth, with expenses increasing modestly – up 8% or
$42million – compared to the first half.
Unfortunately, a $41million reduction in retained employee
government subsidies – mainly related to the JobKeeper
program in Australia – during the 2H masked the healthy
rebound in trading we experienced as the year progressed.
While other government support packages globally
extended throughout the year and beyond, the JobKeeper
subsidies decreased during the Q3 and the program
wound up ahead of the Q4.
Statutory (actual) losses before tax improved from
$848.6million during FY20 to $601.7million during FY21,
with the differences between underlying and statutory
losses again highlighted in the accompanying table. After
tax, the company recorded underlying and statutory losses
of $364.0million and $433.5million respectively (FY20:
$378.5million and $662.2million).
Total transaction value (TTV) for FY21 finished at $3.9b
(FY20: $15.3b), with revenue reaching $395.9million (FY20:
$1.9billion).
The global corporate businesses contributed 55% of the
company’s FY21 TTV and have generally led the recovery
in most countries to date.
The global leisure businesses were tracking at 14% of
historic TTV levels by the end of FY21 and have generally
been impacted more severely by cancellations and tighter
discretionary travel restrictions, given their much heavier
international travel weightings and the leisure division's
overally weighting towards the Southern Hemisphere
(Australia and New Zealand in particular).
In a promising sign for the future, Liberty and GOGO, the
US leisure and wholesale businesses respectively, have
started to lead the leisure recovery and were profitable
at times during the 2H, thanks partly to limited travel
restrictions in these brands' core Mexico and Caribbean
markets.
In both leisure and corporate travel, the US experienced a
strong recovery late in FY21.
US TTV during the 2H increased month-on-month at a
22.6% compounding rate.
Group-wide, revenue margin was 10.0%, in line with our
expectations but lower than our traditional levels as a
result of:
• Heavier than normal domestic travel weightings; and
• A relatively high proportion of low margin
government business
As travel patterns normalise and international travel
returns, we expect revenue margin to recover to pre-
COVID levels.
The consistent sales revenue growth achieved during FY21,
coupled with the significant US 2H rebound, have again
highlighted our diversity, as we were able to maintain
our recovery trajectory while other countries that would
normally make material contributions to group results,
particularly the United Kingdom and Australia, went in and
out of lockdown.
Our earnings leverage towards the Americas and EMEA,
which is highlighted in other columns, also potentially
provides a faster path to recovery, given that travel is now
re-opening in these regions.
ONGOING COST DISCIPLINE WHILE INVESTING IN
KEY GROWTH DRIVERS
As outlined in Gary Smith’s column and in previous market
announcements, we achieved our initial target of lowering
monthly operating cash outflows to less than $65million by
the end of July 2020 and held recurring monthly costs at
$70million to $75million for the remainder of the year.
At these levels, we have been able to appropriately balance
our short-term need to reduce costs to sustainable levels
in a low revenue environment against our ongoing
objective of preserving and enhancing our building blocks
for future growth.
We started FY21 with a keen cost and liquidity focus –
which were priorities during our initial response to the
pandemic – before shifting our attention to preparing for
growth as the year progressed by investing in platforms,
products and people.
There are tangible signs across all areas of the businesses
that this growth focus is already paying dividends with:
• The corporate business winning large and high-profile
new accounts that will trade this year and fuel future
growth, particularly in the Northern Hemisphere, in
addition to rolling out game changing new technology
for customers
• The leisure business deploying a new growth strategy,
built around new and emerging channels that are starting
to deliver a higher proportion of overall sales - thereby
decreasing our traditional reliance on the shop network
to drive growth; and
• In-destination business Discova securing new revenue
streams and trading at record levels in the Americas,
while competitors have been forced to either hibernate
or significantly scale back their operations. Our hotel
management company, Cross Hotels & Resorts, also
announced a major expansion into Japan, as mentioned
in Gary's column.
Part of our fixed cost growth as the year progressed can be
attributed to our decision to welcome back “stood-down”
staff in Australia after JobKeeper ended late in the Q3.
As expected and as mentioned previously, variable
costs also increased during the year, largely as a result
of increased incentive payments to sales staff as revenue
started to increase. These costs are currently tracking at
circa 15% of revenue and are expected to increase to circa
25% of revenue as our recovery gains momentum.
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GOVERNMENT SUPPORT INVALUABLE IN
CHALLENGING TRADING CLIMATE
Finally, I’d like to again acknowledge the various support
packages that governments throughout the world put
in place during these extraordinary times. During FY21,
we recognised $236.1million in government subsidies or
support packages as other income in our statement of
profit or loss.
A significant portion of this had a corresponding
expense against it, as it was paid through to stood-down
or furloughed employees under JobKeeper or other
programs. In all, about $224million related to personnel,
with some $117million being paid directly to employees and
the remaining $107million paid to FLT to partially offset the
wages of retained staff.
These types of programs and the access to government-
backed loans that we have secured overseas have delivered
critical short-term assistance and saved jobs while travel
has been grounded.
CONCLUSION
After a very challenging period, we believe we are on the
path to recovery, with:
• Sales increasing consistently, despite ongoing volatility in
relation to borders
• Vaccination levels reaching significant levels in most of
our key markets; and
• Governments overseas starting to remove or relax
the restrictions that have prevented or severely
inhibited travel
We are now a leaner and more efficient organisation
and are ready to capitalise on opportunities in the post-
pandemic world, given our success in maintaining a strict
cost discipline and lengthy liquidity runway, while also
investing significantly in initiatives and strategies that will
underpin our future growth.
Returning to profit in the short-term remains very much
front of mind, but we will also continue to play the long
game to deliver sustainable returns to you, our valued
shareholders.
One-off cash costs related directly to the company's
COVID-19 response were $200million during FY21, with
an additional $12million, largely related to lease exits,
expected to be incurred during FY22.
Cash burn during the 2H was between $30million and
$40million per month and, by year-end, was mainly being
incurred in Australia and in FLT's Global area, with the
Americas business approaching a neutral cash position
after its strong sales uplift late in the year. Prior to the
lockdowns in Australia late in FY21, the company was on
track to lower cash burn to below $30million in June 2021.
MAINTAINING A LENGTHY LIQUIDITY RUNWAY
We moved quickly as the crisis escalated late in FY20
to become a leaner and more efficient business with a
long liquidity runway, which has been crucial during this
challenging period.
At June 30 2021, FLT had total cash reserves of $1.36billion.
Total liquidity was $941million, after deducing client cash
and allowing for a complete unwind of working capital.
To date, client cash has exceeded $300million at all times
during the pandemic and had built up to $331million at
June 30 2021.
Liquidity was bolstered during FY21 through FLT’s
$62.2million Melbourne office sale in July 2020 and the
$400million convertible note issue, which was launched in
November 2020 and which also allowed the company to
restructure its debt facilities and covenants and to retire
$100million in short-term borrowings.
During the 2H, the company also extended the
GBP65million loan it secured under the Bank of England’s
COVID Corporate Finance Facility (CCFF) for 12 months
and accessed an additional GBP50million through to
March 2022.
We have maintained strong and positive relationships with
our banking partners and thank them for the continued
support. I would also like to take this opportunity to
thank our shareholders for their strong support of our
capital raising in FY20, as well as the participants in the
Convertible Note issue in FY21.
FY22 – CONTINUING TO TARGET A RETURN TO
PROFIT IN LEISURE AND CORPORATE
Predicting a timeframe for recovery remains very difficult,
given the lack of visibility and clarity around future
government strategies and the various vaccination
programs’ ongoing effectiveness against new strains.
We said last year that we were targeting a return to
breakeven on a month-to-month basis in both leisure
and corporate travel during the 2021 calendar year on
the basis that “domestic borders were likely to open
permanently, and some (low risk) international travel could
be permitted”.
This would require us to reach circa 50% of our historic
global TTV levels in corporate and about 40% in leisure,
in addition to requiring governments to re-open borders.
Further commentary on our outlook and FY22 expectations
have been included in Graham Turner’s column.
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CORPORATE UPDATE
CHRIS GALANTY
CEO OF CORPORATE
THE Flight Centre Travel Group’s global corporate travel
division starts the new fiscal year in a strong position after
again underlining its credentials as an innovative and
disruptive world leader in the sector during FY21.
Against a backdrop of industry turmoil brought about by
the global pandemic, our business laid the foundations for
solid future growth by:
• Continuing to develop two category-leading global
brands in FCM, which targets large market and enterprise
customers, and Corporate Traveller, which specialises in
SME and start-ups
• Securing new accounts with projected annual spends in
the order of $USD1.4billion, while retaining almost 100%
of its large market customers – thereby fuelling future
organic growth
• Investing in new products and platforms for the post-
COVID world to fortify an already strong technology
offering; and
• Enhancing global service capabilities to ensure
improved customer experience and greater synergies
across countries
Within the next few months, both FCM and Corporate
Traveller will bring to market new digital platforms that
will deliver meaningful new benefits to customers and, at
the same time, are likely to further disrupt legacy travel
management companies. Both the FCM Platform and
Corporate Traveller’s Melon platform have been “designed
with customers for the post-COVID world” and deliver a
proprietary end-to-end customer experience.
These platforms draw from FLT’s widest range of air
and hotel content and use Artificial Intelligence (AI),
robotics and data science to produce tangible benefits,
including faster onboarding, greater accuracy and better
understanding of customer behaviour to streamline the
buying process.
The FCM Platform will offer large-market customers
the dual benefits of global consistency and flexibility in
the form of bespoke user experiences and choice. This
unique mix underpins the FCM Platform offering which is
already available in China and provides the features global
customers need along with best-in-market experiences
tailored to the local Chinese market.
Through its proprietary Melon platform, Corporate
Traveller will provide customers with a simple, end-to-end,
mobile-first, consumer-grade experience, tailored for SME
customers and with the sophistication required in the new
world of travel in terms of duty of care, data and security.
GROWING TO WIN
Our investments in new platforms and products are part of
a broader “grow to win” strategy that is in place within our
business during the pandemic.
In simple terms, grow to win is about winning market-
share by retaining existing customers and winning new
customers.
To achieve this ongoing organic growth, which is a key
to our longstanding success as a business, we will keep
investing in:
• Winning and on-boarding new customers
• Our two key brands to ensure they become differentiated
category winners
• New products to ensure we address both the SME and
large market categories with best-in-class customer
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experience, which we are doing in an even stronger way
through Melon and the FCM Platform; and
• Productivity, data science and automation to give an
enhanced customer experience, improve margins and
lower our cost base
While we have reduced costs, we have not followed the
lead of some competitors who have cut costs back to the
bare minimum to hibernate through the crisis. This would
deliver a faster path back to short-term profitability, but
would also slow our medium and longer-term growth.
Instead, we choose to “invest to win” and this will see us
re-emerge with more customers, new differentiated brands
and two completely new products in both brands. This will
deliver a clear growth pathway in a market that is unlikely to
return to pre-COVID levels for several years and at a time
when significant consolidation is taking place.
FY21 – TRANSACTION VOLUME GROWTH
OUTPACING TTV GROWTH IN LOW FARE
ENVIRONMENT
Looking back to FY21 trading, we were naturally
disappointed to record a $122.0million underlying loss
before tax, generated from $2.2billion in TTV, in a very
challenging climate. We were, however, pleased with the
recovery, particularly late in the year when trading conditions
started to normalise in some of our larger markets.
Sales increased consistently throughout FY21, with
transaction volumes globally approaching 50% of pre-
COVID levels by the end of July 2021.
This was despite very tight travel restrictions remaining in
place and many companies maintaining “essential travel
only” policies, which meant they traded at much lower
levels than normal (in some cases less than 10% of pre-
COVID levels).
Given the very heavy restrictions on international travel,
customer activity was more heavily weighted towards
lower priced and shorter duration domestic travel.
Consequently, the TTV recovery – at circa 40% of normal
levels by year-end globally – was more subdued than the
50% volume recovery.
During FY21, we secured accounts globally with annual
spends in the order of $US1.4billion, with about $US900m
of new wins currently in the implementation stage (not fully
onboarded or in the solution design process). Included in
these wins are flagship accounts such as P&G and large
and high-profile government accounts in the United
Kingdom and France, which further diversify our global
customer base.
About 70% of this new business will trade in the Americas
and EMEA, regions that are major growth drivers and
that have solid short-term recovery prospects given that
vaccination programs are now at advanced levels.
Our ability to win large volumes of new business and to
retain existing customers – retention within FCM tracked
at 98.5% during FY21 – also highlights the strength of our
proven organic growth model.
While we have completed strategic acquisitions in the
corporate sector to complement this organic growth, our
rationale in making these acquisitions has typically been:
• To secure a small but scalable footprint in important new
markets; or
• To enhance our platforms and overall customer
offerings, as evidenced by the Whereto acquisition
during the pandemic. The Whereto technology has
been instrumental to Melon’s creation and will help
accelerate growth in the Americas in the short-term with
$US140million of business already committed to booking
via the platform
POSITIVE START TO FY22 – TARGETING RETURN
TO PROFITABILITY
Looking ahead to the current year, recovery has escalated
in some countries in July, despite the month typically being
seasonally softer than June.
A number of businesses are now either back in profit or
approaching break-even, including Corporate Traveller in
the United States and South Africa and FCM in the United
Arab Emirates, South Africa and Mexico. We have also seen
rapid recent recovery in Canada, with transaction volumes
now tracking above 50% of pre-COVID levels.
Overall, our corporate division can reach breakeven with
circa 50% of its traditional TTV, a target that is now within
reach. We may, however, make further investments
before reaching this point, which will push the breakeven
point higher.
We believe we will see further consistent growth in
customer activity during FY22, driven by a continuation
in essential travel and a gradual return of C-level travel,
meetings and general corporate travel for those who have
been vaccinated.
It will not, however, be business as usual.
During the pandemic, customers’ hierarchy of needs have
changed from:
• Cost to duty of care
• Offline to digital service
• 9-5 to 24/7; and
• Simple to need for advice
This ongoing market evolution, which also includes a
renewed focus on sustainability, will lead to increased
demand for Travel Management Companies’ services and a
shift away from unmanaged and supplier-direct bookings.
Both FCM and Corporate Traveller have proprietary
technology, backed by people, with the agility and
adaptability to meet these changing needs and to ensure
they benefit from market consolidation.
Within the enterprise (large market) segment, there has
already been considerable change with only three of the
traditional top-4 remaining. Other traditional competitors
are struggling to keep pace with changing customer needs
around agility, duty of care and digital investment, although
we are also seeing some new tech-first entrants, which we
are countering through our new platforms and products.
Overall, we believe the prospects for our corporate
businesses are bright and we look forward to updating you
on our progress during the year.
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LEISURE UPDATE
MELANIE WATERS-RYAN
CEO OF LEISURE
IT’S been an eventful year for the Flight Centre Travel
Group’s (FLT) global leisure travel division on its dual path
to near-term recovery and longer-term transformation.
While we take no comfort from reporting a significant loss
for the 2021 fiscal year (FY21), we are encouraged by:
• The progress being made towards the strategic
objectives we are focusing on as part of the
transformation program we initiated pre-COVID
• The enhancements we are making to our business
through our significant ongoing investments in our multi-
channel network and capabilities; and
• Our recovery prospects in what currently looms as an
improving – albeit still volatile – trading cycle
In essence, our structural changes have now been
completed after our transformation efforts were fast-
tracked early in the pandemic, we have positioned
ourselves for recovery by investing in and enhancing our
offerings and we are starting to see promising early signs
that our strategies are working.
The speed of recovery is, of course, predicated
on vaccinations continuing to prove effective and
governments continuing to lift travel restriction, which
we are not yet seeing in any meaningful way in our larger
Australia and New Zealand markets. We are, however,
already benefitting from a return to more normal
conditions in South Africa and the USA, which is bouncing
back strongly.
We also expect to benefit from the enhancements we are
fast-tracking during the pandemic.
These enhancements have included significant and
ongoing investments in:
• Our global shop footprint, which houses an experienced
and high-calibre workforce
• Irresistible and unique customer offers, created by our
product design teams
• Repositioning and modernising the flagship Flight Centre
brand for COVID-period and beyond customers; and
• Platforms, specifically online and digital capabilities,
productivity tools and new business models and channels
that will drive future growth and productivity
MOMENTUM BUILDING, WELL POSITIONED
FOR RECOVERY
Looking back to FY21, TTV reached $1.5billion and was
tracking at 14% of pre-COVID volumes by the end of the
year. Sales tended to gradually increase, despite some
markets continuing to be impacted by border closures
and lockdowns.
The Liberty business traded solidly in the USA late in
the year, exceeding pre-COVID productivity levels and
maintaining profitability. Similarly, the GOGO external
wholesale business has also led the recovery to date,
trading profitably late in FY21 and generating solid
forward bookings.
The US leisure business overall was capturing more than
40% of pre-COVID TTV by June 2021, with a significantly
reduced sales force (15% of pre-COVID levels) backed by
enhanced offerings across other channels.
In Australia – and in most markets – demand has been
fairly strong when borders have re-opened. Continuing
lockdowns have, however, damaged consumer confidence
in inter-state travel and in the Trans-Tasman bubble, which
has now been suspended.
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Historically, we relied heavily on advertising and growth in
shop and consultant numbers to drive sales growth. While
this model was delivering consistent TTV growth, it was
also starting to experience a steady decline in return
on investment.
To address this challenge, we have shifted to a new model
designed to unlock a new era of growth and to increase
market-share in a more cost-effective way by coupling:
• A smaller but strong and high accessible shop network
– in Australia, 95% of the customers who transacted with
us in the past two years have an open Flight Centre store
within 5kms of where they last transacted; with
• Enhanced offerings across other new and emerging
channels that are scalable and highly productive
The new model, which was designed pre-COVID as part of
our transformation plan, is aligned to changing customer
travel shopping needs, our B2B sales capabilities and
better economic business models to complement our core
agency model’s strengths.
Key focus areas within this model include:
• e-commerce, an area that we are performing very well in,
as outlined below
• The premium and luxury markets, which we
predominantly service through the Travel Associates and
Laurier Du Vallon brands; and
• A rapidly developing area that we refer to as “HOTTE” or
Home Of The Travel Entrepreneur, which is targeted at
independent agents and agencies
Globally, FLT now has about 1400 independent agents
attached to its HOTTE network, with about half currently
trading. Almost 300 of the independent agents currently
trading are located in North America, where the
independent contractor model is well established.
We have also developed an enhanced call centre model,
which should capture a higher percentage of our overall
bookings moving forward. This is a scalable and productive
service that provides customers with 24/7 access to
sales consultants and support worldwide, while also
providing the company with flexible infrastructure that
can shift from country to country and in line with seasonal
trading patterns.
E-COMMERCE SALES INCREASING AND POISED
FOR FURTHER GROWTH
In line with this new growth strategy, the e-commerce
channel has significantly increased its share of both FLT’s
business and the overall market in Australia, as we continue
to enhance our online offerings in terms of content,
capabilities, connections to other channels and pricing.
During FY21, online leisure gross TTV globally topped
$300million – roughly 20% of the group’s Leisure total –
with the flightcentre.com.au website generating 29% of the
brand’s Australian gross TTV.
On a very positive note, we are achieving our strategic
objective of capturing a larger share of both the on
and offline leisure markets in Australia, with industry
data showing:
• An increase in Australia online (intermediary) market-
share by 8% to 25%, with record online transaction
numbers on flightcentre.com.au in some months before
further lockdowns were implemented; and
• Continued dominance in the Australian Leisure Offline
Travel Intermediaries sector, where our market-share
now exceeds 40%, despite our core international
travel product not being available for sale. Industry
consolidation will undoubtedly lead to further growth
opportunities as international travel returns, given
international sales normally make up 80% of our shop
network turnover
The New Zealand business, which also had a heavy
international travel weighting pre-COVID, benefitted from
solid uplifts in bookings when the Trans-Tasman and Cook
Island bubbles opened late in the year.
The South Africa business has performed solidly, given the
country’s ongoing battles to bring COVID-19 under control.
Recovery was fairly modest in both Canada and the UK
until recently, although both countries have made strong
progress with their vaccination programs which has
improved the travel outlook. The UK recently reopened its
travel corridors after closing them in January 2021, while
Canada has just reopened its border to fully vaccinated
Americans for the first time in 16 months, although the US
has not yet reciprocated.
FORTIFYING A HIGH-PROFILE BUSINESS WITH A
LONG PROFIT HISTORY
The changes we are making are ultimately geared towards
ensuring our global leisure business, which has consistently
generated record TTV, remains both highly relevant to
customers and a key contributor to the group’s profit.
Immediately prior to the pandemic (FY19), the Australian
leisure business was far and away our most profitable
business globally, as well as being the largest contributor
to group sales in a year when the global leisure division
generated almost $14billion in TTV. In addition to Australia,
the leisure business was also the major profit contributor
in New Zealand and South Africa, the two other countries
where we have mass-market leisure offerings.
The leisure division’s overall contribution to group profit
was, however, being adversely impacted by loss-making,
break-even or low profit businesses in the United Kingdom,
the Americas and Asia. Some of these businesses have
now closed, while others have scaled back to a more
appropriate size.
On a promising note, we are seeing pleasing recovery in the
USA, with the scaled back Liberty and GOGO businesses
consistently profitable recently, as mentioned above.
NEW GROWTH MODEL IN PLACE AND
PROVING SUCCESSFUL
One of the other challenges that we are addressing is cost-
effective growth.
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Recent developments within this channel include:
• The Jetmax online travel agency (OTA) brands, BYOJet
and Aunt Betty, securing a global agreement that will
allow them to offer their discounted international airfares
to travellers in new markets globally via the Google
Flights platform; and
• StudentUniverse becoming part of Amazon’s Prime
Student offering, which means the online youth and
student travel marketplace can distribute exclusive flight
and hotel offers to Amazon Prime Student members in
the United States
By 2024, we expect more than 20% of our total leisure sales
globally will come from online channels, compared to circa
7% in FY19. Sales through our traditional shop network are
likely to represent some 65% of TTV by FY24, compared
to 93% during FY19, with the balance to come through the
new call centre model and the HOTTE offering.
CONCLUSION
In summary, we continue to weather the challenges posed
by COVID-19 and expect to emerge from this crisis in a
relatively strong position.
We continue to enhance our brands, deals, products,
platforms and offerings and are seeing positive
momentum, particularly when government policies change
and customers are permitted to travel either domestically
or internationally.
In our large leisure markets, we are generally increasing
market-share through our enhanced multi-channel
offerings, which points to successful execution of one of
our key strategies and creates further optimism about our
ability to contribute significant profits to the group as the
recovery gains momentum.
In finishing, I would like to make special mention of our
leisure consultants, who have worked tirelessly during the
pandemic to help customers secure refunds or change
their travel plans – in some instances many times over. In
Australia alone, our consultants have now secured in the
order of $1.4billion in refunds from suppliers.
I would also like to thank customers for their ongoing
support and for their patience, particularly in the early
stages of the pandemic when new systems and processes
were finetuned and implemented in the face of a
never-before seen and prolonged disruption to global
travel patterns.
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OUTLOOK
GRAHAM TURNER
CHIEF EXECUTIVE OFFICER
AFTER an incredibly challenging past 18 months, FLT has
started the new fiscal year with renewed confidence.
This might seem counter-intuitive, given the magnitude of
our FY21 losses and that large parts of Australia are again
in lockdown, but it is based on tangible evidence that:
• Our recovery gained momentum as the year progressed
• Market conditions appear to be improving in most
countries, particularly in the United States, Canada and
the United Kingdom, countries that are traditionally
material profit contributors to our company and that will
be the major beneficiaries of the new corporate accounts
we are winning
• We are bringing new products and technology platforms
to market to enhance the customer experience; and
• We are leaner and more productive and well placed
to benefit in both the corporate and leisure sectors as
the travel industry globally takes off again after being
grounded for a lengthy period
Of course, there cannot be any guarantees in the face of
a never-before-seen threat and given that our short-term
recovery trajectory is tied to factors that are beyond our
control – specifically government policies and COVID-19
vaccination programs continuing to prove effective.
TARGETING A RETURN TO MONTHLY LEISURE AND
CORPORATE TRAVEL PROFITABILITY DURING FY22
Amid this uncertain climate, we continue to target a return
to profitability in monthly trading in both our leisure and
corporate travel divisions during FY22. The exact timing
is uncertain and remains largely in government hands,
given it is intrinsically linked to border re-openings and the
removal of travel restrictions.
We are, not, therefore currently in a position to provide
specific FY22 guidance, given this uncertainty.
Assuming vaccination programs continue to prove
successful, we expect these restrictions will gradually and
selectively ease as the year progresses and as countries
open back up for business in safe and sensible ways –
initially through travel corridors or bubbles. We do not
need a full resumption of international travel to return to
profitability, although we do think a meaningful recovery is
possible in the short to medium-term.
As we said last year, when we initially outlined our recovery
expectations, profit projections were based on domestic
borders in Australia reopening and staying open and some
international travel resuming. While we have not yet seen
this in Australia, we have now started to see progress in
other countries, with a number of international borders
re-opening and potentially providing a material uplift in
the near-term. At the time of writing, travel had started
to resume on the USA-UK and USA-Canada routes (one-
way bubbles) and within Europe. Further re-openings are
happening, including Canada-UK (Sept 7) and Germany-
Singapore (Sept 8).
A full resumption of US-UK travel would deliver material
benefits to our company given that this route alone
represented circa 25% of FLTs air TTV from the UK and 6%
of overall US TTV pre-COVID.
Other government policy changes that have been
contemplated recently could also deliver significant
benefits. For example, fewer restrictions for vaccinated
travellers, including the ability to avoid lengthy and
expensive isolation or hotel quarantine requirements,
would remove one the major factors that has, to date,
hampered travel recovery.
To reach break-even, we need to generate some 50% of our
traditional TTV in corporate and circa 40% in leisure. This is
based on current spend, which means the percentages will
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increase if we decide to increase the investments we are
making in the business to generate stronger future returns.
Secondly, travel restrictions are being relaxed or removed
in various locations, as highlighted earlier in this column.
Before outlining the internal and external factors that give
us renewed confidence about our prospects for FY22, I
would like to thank you and other shareholders for your
support. We remain very focussed on improving returns
in the short-term, but also continue to build for the future
at a time when others are unable to invest significantly in
their offerings.
EXPECTING STRONG RETURNS ON PANDEMIC-
PERIOD INVESTMENTS
Looking within our own business, we are expecting
tangible returns on the pandemic-period investments
we have made in more favourable trading conditions
during FY22.
We are now a leaner and more efficient organisation with
a stable cost base and solid global revenue momentum,
despite many of our businesses still being impacted by
travel restrictions which means we are well placed to
benefit as the cycle improves.
In both the corporate and leisure travel sectors, we are
successfully executing our productivity strategies and
achieving our operational objectives.
We have continued to invest in our key growth drivers,
including our people, platforms and products – during the
pandemic, an immensely challenging period that has led
(and will inevitably lead) to further market consolidation.
While we too have changed to adjust to this never-before-
seen trading climate, we have focussed on protecting our
key assets and we should be well placed to benefit from
this consolidation in the months and years ahead.
Travel will inevitably be more complex in the post-COVID
world and customers will require more assistance as they
navigate new requirements and seek to understand any
restrictions that may still apply. In this type of environment,
our people’s knowledge and our enhanced systems will
prove invaluable at every step of the customer journey.
Our brand and geographic diversity have shielded our
company from some of the challenges others have faced,
while also potentially fast-tracking our recovery given our
earnings leverage to countries and regions with strong
recovery trajectories.
For example, about 54% of our pre-COVID group earnings
came from the Americas and EMEA – regions that have
well-advanced vaccination programs, fewer restrictions in
place and solid sales momentum. The Americas and EMEA
also stand to benefit significantly from the large pipeline
of corporate accounts won during FY21 (circa $US1.4billion),
with some 70% of this new business set to trade in the
two regions.
In addition, there is very significant potential upside
in markets like Australia and New Zealand, which are
particularly important to our leisure division and which
remain under very heavy restrictions perhaps until the
FY22 Q2.
TRAVEL INDUSTRY POISED FOR RAPID
TAKE-OFF AS MORE FAVOURABLE MARKET
CONDITIONS EMERGE
Several lead indicators point to the possibility of a fairly
rapid travel industry take-off.
Firstly, vaccination programs are gaining significant
momentum. By the middle of this month (August), almost
5billion doses had been administered globally – enough
to fully vaccinate more than 30% of the global population
– and more than 50% of the adult populations had been
vaccinated in several key FLT countries, including the USA,
Canada and the UK (Source: Bloomberg).
Thirdly, consumers are ready and able to travel as soon as
governments allow them to, with confidence recovering
rapidly, savings at or near all-time highs – Moody’s
Analytics recently released data showing that $US5.4trillion
in excess savings had been banked during the pandemic
globally – and significant pent-up demand evident.
According to a survey we conducted in mid-August, almost
a quarter of the respondents hoped to travel within a
month of COVID-19 being contained, while a global survey
conducted by the International Air Transport Association
(IATA) during the FY21 Q3 found that 57% of travellers
planned to take-off within two months of COVID-19 being
brought under control.
Fourthly, suppliers are looking to stimulate demand.
Airlines are rapidly ramping up capacity to capitalise
on opportunities when international borders open.
For example, US carrier JetBlue announced plans to
launch services between New York’s JFK Airport and
London’s Heathrow within days of the US-UK reopening
announcement, with the US allowing reciprocal travel rights
and with a lead-in one-way fare of just $US202.
AUSTRALIA STARTING TO PROGRESS ON THE
PATHWAY TO FREEDOM
While our near-term prospects look positive in many
markets, conditions in Australia are again challenging early
in FY22, with large parts of the country back in lockdown.
As lockdown frustration has intensified and as the costs
– financial, mental and emotional – have skyrocketed,
attention has turned to finding more sustainable ways to
safely and sensibly navigate our way out of the pandemic
and to return to a degree of normalcy in our everyday
lives, while protecting the vulnerable and minimising
hospitalisations.
This will help prevent us from being rapidly left behind
the rest of the western world in our freedoms through
random lockdowns, tight restrictions on normal activities
and widespread border restrictions at a time when other
countries are opening back up.
The near-term solution, as things currently stand, is
obviously the vaccination program and it is finally starting
to gain more meaningful momentum, which increases the
prospects of travel and other restrictions being lifted in the
not-too-distant future, as highlighted earlier in this column.
We are, of course, dealing with a never-before-seen
challenge that is evolving, so there can be no guarantees.
There is, however, cause for optimism that we can return to
a more normal life in the near-term assuming vaccinations
continue to prove successful in minimizing the virus’s
spread and reducing hospitalisations and fatalities.
CONCLUSION
After a very challenging 18 months, we start the new fiscal
year with solid foundations and recovery prospects in what
looks to be an improving global market for both leisure and
corporate travel.
We continue to target a return to profitability during the
year, based on:
• Our current recovery trajectory; and
• An expectation that international travel continues to
gradually return and Australian domestic borders reopen
and remain open
There are, of course, some uncertainties, including
the Delta strain and government reactions to it, given
it has predominantly impacted those who have not
been vaccinated.
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Your directors present their report on the consolidated entity (referred to hereafter as the group) consisting of Flight
Centre Travel Group Limited (FLT) and the entities it controlled at the end of, or during, the year ended 30 June 2021.
PRINCIPAL ACTIVITIES
The group’s principal continuing activities consisted of travel retailing in both the leisure and corporate travel sectors,
plus in-destination travel experience businesses including tour operations, hotel management, destination management
companies (DMCs) and wholesaling.
There were no significant changes in the nature of the group’s activities during the year.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Apart from the impact of COVID-19 and capital raisings outlined throughout the report, there was no other significant
change in the group’s state of affairs during the year.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Information on likely developments in the group’s operations and the expected results of operations has been included in
the Corporate Update column on pages 7 to 8, Leisure Update column on pages 9 to 11 and Outlook column on pages 12
to 13 of this report.
DIVIDENDS – FLIGHT CENTRE TRAVEL GROUP LIMITED
Dividends paid to members during the financial year were as follows:
Final ordinary dividend for the year ended 30 June 2019 of 98.0 cents (2018: 107.0
cents) per fully paid share
Interim ordinary dividend for the year ended 30 June 2020 of 0.0 cents (2019: 60.0
cents) per fully paid share
Special dividend for the year ended 30 June 2020 of 0.0 cents (2019: 149.0 cents)
per fully paid share
2021
$'000
-
-
-
-
2020
$'000
99,097
-
-
99,097
On 27 February 2020, FLT determined to pay an interim dividend for the period ended 31 December 2019. On
25 March 2020, the interim dividend was cancelled due to the significant financial impact of COVID-19 on the
company and the need to preserve cash.
The directors have determined it is not prudent to pay a final dividend for the year ended 30 June 2021 due to the
ongoing COVID-19 uncertainty.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No material matters have arisen since 30 June 2021.
ENVIRONMENTAL REGULATIONS
The group has determined that no particular or significant environmental regulations apply to it.
REVIEW OF OPERATIONS – OVERCOMING OPERATIONAL RISKS
A review of operations, operational risks, financial position, business strategies and details of FLT’s outlook for 2021/22 are
included on pages 2 to 13 of this report.
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DIRECTORS’ REPORT INFORMATION ON DIRECTORS
The following persons were FLT directors during the financial year and up to the date of this report:
DIRECTOR
EXPERIENCE AND DIRECTORSHIPS
G.W. Smith
BCom, FCA,
FAICD
Age: 61
J.A. Eales
BA, GAICD
Age: 51
R.A. Baker
FCA, GAICD
BBus
(Accountancy)
Age: 63
C.M. Garnsey
OAM
Age: 61
G.F. Turner
BVSc
Age: 72
FLT director since 2007. Gary has vast tourism
industry experience and has served on a diverse
range of boards and tourism industry related
bodies during the past 30 years. Gary is a Fellow
of the Australian Institute of Company Directors
and the Institute of Chartered Accountants. He is
also a director of Michael Hill International Limited
(from Feb-16) and National Roads and Motorists'
Association Limited (the NRMA) (from Feb-19).
FLT director since 2012. Chairman of Trajan
Group Holdings Ltd (from Mar-21) and De Motu
Cordis Pty Ltd (from Jan-20). Director of Magellan
Financial Group Ltd (from Jul-17), Executive
Health Solutions (from Jun-15) and FUJIFILM Data
Management Solutions Pty Ltd (from Jan-14).
FLT director since 2013. Former audit partner
of PricewaterhouseCoopers, with experience
in the retail, travel and hospitality sectors.
Chairman of Rightcrowd Limited (from Aug-17),
Goodman Private Wealth Ltd (from Oct-14), and
NeuroSensory Limited (from Dec-19). Board
member of Apollo Tourism & Leisure Limited
(from Jan-19). Pro bono roles include chairman
of the Archdiocesan Development Fund, Catholic
Archdiocese of Brisbane (from Jan-18), and
chairman of the audit and risk committee of
Australian Catholic University Limited
(from May-15).
FLT Director since Feb-18. Chairman and
independent director of Australian Wool
Innovation Limited and non-executive director
of Seven West Media, Magellan Financial
Group Ltd and Laser Clinics Australia. Extensive
experience in Australian retail industry, marketing
and distribution. Former advisory roles include
advisor to Federal Minister for Trade and
Investment, Australian Fashion Week, Melbourne
Fashion Festival and CSIRO. Former executive
director of Just Group Limited (2012-2017).
Founding FLT director with significant experience
in running retail travel businesses in Australia,
New Zealand, USA, UK, South Africa, Canada
and Asia. Director of the Australian Federation of
Travel Agents Limited (from Sept-05).
DIRECTORS' INTERESTS IN
SHARES OF FLT AS AT DATE
OF THIS REPORT
ORDINARY SHARES
23,621
11,875
6,457
5,168
SPECIAL
RESPONSIBILITIES
Independent
non-executive
chairman
Remuneration
& nomination
committee member
Audit and risk
committee member
Independent non-
executive director
Remuneration
& nomination
committee chairman
Audit and risk
committee member
Independent non-
executive director
Remuneration
& nomination
committee member
Audit and risk
committee chairman
Independent non-
executive director
Remuneration
& nomination
committee member
Audit and risk
committee member
Managing Director
16,639,027
No directors held interests in share rights, options or performance rights during the year (2020: nil).
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
15
SKILLS AND EXPERIENCE
The current mix of skills and experience represented by the directors during the period, is as follows:
Travel or retail industry
Senior executive
Finance/capital markets
Audit/accounting
Legal*
Regulatory/public policy
International markets
Strategy/risk management
Governance
Marketing/communications
Technology/IT*
G.W. SMITH
J.A. EALES
R.A. BAKER
C.M. GARNSEY
G.F. TURNER
* For expertise in areas not listed above, the directors seek expertise within FLT and externally where appropriate.
COMPANY SECRETARY
The company secretary, Mr D.C. Smith (B.Com, LLB) joined FLT in 2002, and was appointed as company secretary
in February 2008. Mr Smith has over 22 years legal experience. Mr Smith is also the general manager of mergers &
acquisitions with FLT. Prior to joining FLT, Mr Smith held positions with Wilson HTM, Blake Dawson (now Ashurst) and
Clayton Utz.
MEETINGS OF DIRECTORS
The number of meetings of the company’s board of directors and of each board committee held during the year ended 30
June 2021 and the number of meetings attended by each director were:
G.W. Smith
J.A. Eales
R.A. Baker
C.M. Garnsey
G.F. Turner
COMMITTEE MEETINGS
FULL MEETINGS OF
DIRECTORS
AUDIT & RISK
REMUNERATION &
NOMINATION
A
16
16
16
16
16
B
16
16
16
16
16
A
4
4
4
4
*
B
4
4
4
4
*
A
3
3
3
3
*
B
3
3
3
3
*
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
16
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DIRECTORS’ REPORT OVERVIEW
JOHN EALES
REMUNERATION AND NOMINATION
COMMITTEE CHAIRMAN
AS FLT’s RNC chairman, I present your company’s FY21
Remuneration Report.
For the second successive year, I find myself writing
this introduction at an extraordinary time, as the world
continues its efforts to bring the COVID-19 pandemic
under control.
Some 18 months have now passed since most countries
closed their borders and implemented a variety of other
never-been-seen measures to slow the virus’s spread and
to ultimately save lives, ahead of the development and
introduction of effective vaccinations.
While these vaccinations have now arrived, the widespread
international and, in some cases, domestic border closures
that were initially used as part of the attempts to ringfence
the virus have remained in place, along with curbs on other
activities that were traditionally part and parcel of our
everyday lives.
The effects have touched all areas of society and have
deeply impacted our company and its key stakeholders,
given that leisure and corporate travel plans have been
temporarily abandoned or significantly curtailed. Only now
is international travel threatening to take off again in any
meaningful way, as some governments start to explore safe
and sensible ways to reopen to the world.
The ensuing confusion and uncertain environment have
challenged all businesses in many ways, including how they
manage remuneration in a fit-for-purpose manner within
their organisations.
FOCUS ON RETAINING KEY PEOPLE WHO ARE
CRITICAL TO FLT’S RECOVERY
As reported last year, we moved swiftly and decisively
and made some incredibly tough decisions as the crisis
escalated to lower our cost base to a sustainable level in an
abnormally low revenue environment and with little visibility
around the recovery timeframe.
This cost focus was balanced against the need to maintain
key assets and critical intellectual property (IP) to ensure
that our ability to recover was not compromised. Our
key assets and IP are our people and thanks partly to
government support programs like JobKeeper in Australia,
which unfortunately ended before the recovery could
gain any real momentum, we were able to retain a very
significant part of this IP in the form of a high-quality
workforce.
Given that these people have skills that readily transfer
to other less affected sectors and industries, ensuring we
REMUNERATION REPORT GLOSSARY
• BOS: Business ownership scheme
• CEO: Chief executive officer
• CFO: Chief financial officer
• EBIT: Earnings before interest and tax
• EGM: Executive general manager
• EMEA: Europe, Middle East and Africa
• EPS: Earnings per share
• ESP: Employee Share Plan
• FLT: Flight Centre Travel Group Limited
• FY: The fiscal year
• GRR: Global Recovery Rights
• KMP: Key management personnel
• KPIs: Key performance indicators, the basis for FLT’s STIs
• LSL: Long Service Leave
• LTRP: Long Term Retention Plan
• MDs: Managing director
• NEDs: Non-executive directors
• PBT: Profit before tax
• PCRP: Post-COVID-19 Retention Plan
• RNC: FLT’s Remuneration and Nomination Committee
• SBP: Share based payments
• STIs/LTIs: Short-term incentives/long-term incentives
• Targeted Packages: The packages KMP are offered at
the beginning of each year and consisting of base pay,
superannuation and targeted STI earnings
• Taskforce: FLT’s global executive team, consisting
of Graham Turner, Adam Campbell, Chris Galanty,
Melanie Waters-Ryan, James Kavanagh, Charlene
Leiss, and Steven Norris
• TIP: Transformation Incentive Plan
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retain them now – at a critical junction in our recovery –
has become an ongoing strategic priority. Accordingly,
we have introduced two targeted programs – the GRR
and the PCRP – to encourage our people to continue their
careers with us during the recovery phase and to thank
them for their efforts in very trying conditions and while
their earning potential has been significantly hampered
during the past 18 months.
These one-off programs are aligned to our strategic
objectives of:
• Retaining employees at all levels who will be critical to
our recovery and the creation of future shareholder
value. The PCRP targets key executives globally, while
the GRR is available to all other employees (excluding
FLT directors); and
• Tightly controlling cash costs in what continues to be a
low revenue environment, given that both programs are
built around grants of share rights that will vest in the
future if the participant continues his or her career with
FLT, as outlined on page 28 of this report.
Before delving deeper into this year’s Remuneration
Report, I would like to acknowledge our people’s efforts
during what has been a very challenging period. This
includes the 8000 people who have continued with us and
those who departed during FY21.
We have sought to maintain close contact with those who
have moved on, through the alumni program that our
Peopleworks area has championed, with a view to keeping
them informed of developments and alerting them to
current and future opportunities that could arise should
they be interested in returning to our business. On another
positive note, approximately 40% of consultants in Australia
over the last few months of FY21 have come from alumni,
and a healthy number of former employees have elected to
remain in the industry by becoming part of our expanding
network of independent contractors globally.
TABLE 1: KMP TENURE - SUCCESSFULLY DEVELOPING AND RETAINING KEY PEOPLE
OVER-ARCHING REMUNERATION
OBJECTIVES RETAINED
Within this report, we have outlined our traditional model,
along with the temporary alterations we have made during
the pandemic, to help shareholders understand both the:
• Tailor-made structures and philosophies that we have
designed and implemented over the years to meet our
short and longer-term strategic objectives; and
• The modifications that we feel are necessary to
strengthen the alignment between executive and
shareholder interests within the current extraordinary
trading climate, given the volatility and the lack of
visibility around timeframes for restrictions to be lifted
Importantly, our over-arching objectives are unchanged
as we continue to focus on four factors that commonly
underpin most remuneration structures and best practice,
namely:
• Attracting and retaining key people. Our success in
this area is again highlighted in Table 1, which shows
the experience and tenure of Graham Turner’s global
leadership team
• Recognising and rewarding people appropriately for
their achievements in growing the business and helping
it achieve the long-term strategic objectives that have
consistently delivered sustainable growth to shareholders
• Delivering simple, sensible and transparent incentive
structures; and
• Providing people with the opportunity to invest in their
company through long-term share ownership, which in
turn ensures they adopt the behaviours and implement
the strategies that deliver long-term wealth creation for
shareholders, rather than over indexing on short-term
performance. With the introduction of the GRR and the
PCRP, all employees will become owners.
EXECUTIVE
AGE
TENURE
FIRST FLT ROLE
40 years
CEO, Founder
14 years
Risk & Audit
CURRENT FLT ROLE
CEO, Founder
CFO
Graham Turner
Adam Campbell
Chris Galanty
Melanie Waters-Ryan
James Kavanagh
Charlene Leiss
Steven Norris
72
46
47
54
43
51
44
24 years
Flight Centre Putney (UK)
CEO - Corporate
34 years
Flight Centre Queen Street (QLD)
CEO - Leisure
17 years
Campus Travel account manager
MD - Australia
25 years
Sales administrator (Garber Travel)
MD - The Americas
19 years
Flight Centre Uxbridge (UK)
MD - EMEA
A COMMON-SENSE SYSTEM THAT IS
PURPOSE-BUILT AND ALIGNED TO FLT’S
STRATEGIC OBJECTIVES
Those who follow our company closely will know that we
value common-sense over conventional wisdom, which
means that we take a common-sense approach to business
rather than adopting conventional, off-the-shelf policies
that are neither aligned to our strategic objectives nor our
core philosophies.
This applies to our remuneration structures which are
simple and purpose-built to suit our specific requirements.
As a result, they differ in various ways to the models that
other companies typically adopt.
The key differences between FLT’s tailor-made
remuneration system and traditional models have again
been summarised in Table 2 on page 19.
18
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
We regularly engage with industry bodies, special interest
groups and other stakeholders to ensure they understand
the remuneration structures and to ensure they remain
fit-for-purpose. Generally, shareholders have responded
positively to our remuneration system and the policies,
beliefs and governance structures which underpin it,
with the largest vote against our remuneration report
representing just 5.85% of our issued capital (2007).
We also regularly benchmark earnings to ensure
remuneration packages are competitive and appropriate.
A benchmarking exercise was conducted during FY21, as
detailed on page 22.
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FY21 OUTCOMES AND FY22 EXPECTATIONS
As outlined in last year’s Remuneration Report, various
changes were implemented within KMP pay structures
during FY21 as part of the company’s ongoing response to
the COVID-19 challenge.
These changes saw:
At this stage, executives have again elected to forgo all
STIs during FY22, which would see them earn the floor
in their targeted remuneration packages (set at 90%) for
the year. The RNC will, however, review this situation as
the year progresses and may re-introduce STIs if market
conditions improve significantly and if recovery is faster
than expected.
• KMP (excluding NEDs) paid at 75% of their targeted
salaries for the FY21 first quarter and at 90% for the
remainder of the year. During FY20, KMP also elected
to receive reduced pay as the crisis escalated and were
paid at 50% of normal levels during the fourth quarter,
meaning earnings typically increased slightly year-on-
year, but remained below targeted levels
• No executive STIs offered during the year (STIs were paid
to front-end sales staff)
CONCLUSION
In all areas of its business, FLT has continued to refine its
structures and offerings to meet the short-term challenges
brought about by the pandemic and to ensure it is well
placed to recover when conditions improve. This is clearly
evidenced by the changes the company has made to its
remuneration structures to ensure they align with FLT’s
short and longer-term strategic objectives.
• NEDs paid 90% of their normal directors’ fees for the first
quarter and 100% for the remainder of FY21; and
• The BOS and Founder BOS programs suspended,
reflecting a change that was made during FY20
Near-term priorities include retaining critical IP while
keeping tight controls over costs, challenges which we have
proactively addressed within our remuneration structures
through the new GRR and PCRP programs.
TABLE 2: UNDERSTANDING THE DIFFERENCES: FLT’S TAILOR-MADE REMUNERATION MODEL V TRADITIONAL OFFERINGS
STI component built into targeted remuneration
packages, not paid as an annual bonus
LTRP is primarily a retention tool, not a
traditional LTI
STIs are not annual bonuses that are only payable to FLT’s
executives in good years. The company’s people are
targeted to earn STIs as part of their normal (targeted)
remuneration packages in any given year and can earn
additional stretch STIs (above and beyond targeted
packages) if they exceed their KPIs.
Profit-Based KPIs Tied to Sustainable,
Ongoing Growth
FLT uses profit – generally underlying PBT – as the
basis of its executive STIs, which is aligned to its goal
of delivering sustainable, year on-year earnings growth
to benefit all stakeholders. To earn their targeted STIs,
executives need to deliver year-on-year profit growth.
The company’s main KMP LTI, the LTRP, does not have
results-related performance hurdles attached to it.
This is because the LTRP is a tailor-made retention
tool for key executives and its performance hurdle is
longevity-related.
STIs are uncapped
Fairness and reward for achievement are key components
of FLT’s remuneration system. Although the company
does not cap STIs for KMP, or indeed for its sales people,
formal structures, governance processes and natural
curbs are in place to ensure that rewards are aligned
to shareholders’ interests and to prevent salaries from
reaching unacceptable levels.
TABLE 3: KEY EXECUTIVE TARGETED REMUNERATION (AUDITED)
KMP
TARGETED
REMUNERATION
TARGETED
FIXED PAY
COMPONENT*
TARGETED STIS
COMPONENT
ESTIMATED
STI EARNED
ACTUAL REMUNERATION
PAID*
Graham Turner
$AU750,000
$AU675,000
$AU75,000
Melanie Waters-Ryan
$AU1,350,000
$AU1,215,000
$AU135,000
Adam Campbell
$AU1,085,000
$AU976,500
$AU108,500
James Kavanagh
$AU807,609
$AU726,848
Chris Galanty
Steven Norris
Charlene Leiss
£GB700,000
£GB630,000
£GB434,783
£GB391,305
$US609,000
$US549,000
$AU80,761
£GB70,000
£GB43,478
$US60,000
$nil
$nil
$nil
$nil
£nil
£nil
$AU646,875 (86.25%)
$AU1,164,375 (86.25%)
$AU935,813 (86.25%)
$AU696,563 (86.25%
£GB603,750 (86.25%)
£GB375,000 (86.25%)
$USnil
$US525,263 (86.25%)
* KMP elected to receive reduced fixed pay during FY21 and did not receive targeted or stretch STIs, which meant all were paid below the 90% floor in their targeted
remuneration packages. As illustrated in the last column above, KMP earned 86.25% of targeted remuneration during FY21.
Executives received 86.25% of their targeted remuneration
packages during FY21, below the 90% floor that they would
normally have been guaranteed, as illustrated in table 3.
Total paid and payable remuneration (TPPR) on page 31
effectively represents actual FY21 earnings, while total
remuneration in Table 3 reflects the statutory amounts paid
to KMP.
These programs are purpose built and will increase
employee ownership of our company, which is aligned with
our philosophies and strengthens the ties between the
interests of our people and our shareholders.
Thank you for your ongoing support of our company.
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
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DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT – AUDITED (CONTINUED)
The remuneration report outlines FLT’s KMP reward framework and is set out under the following headings:
1. Principles used to determine the nature and amount of remuneration
2. Details of remuneration, including service agreements
3. LTIs: BOS return multiples on redemption
4. Share-based compensation; and
5. Loans to KMP
Information in this remuneration report has been audited in accordance with section 308(3C) of the Corporations Act 2001.
PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
1
The following section outlines FLT’s remuneration policy and the philosophies that underpin it. Information is presented in
a Question and Answer format in five sub-sections:
i.
Remuneration philosophies and structures
ii. Alignment with shareholder wealth
iii. Director remuneration
iv. Executive (KMP) remuneration; and
v.
Remuneration governance
Within these five sub-sections, temporary changes that have been implemented in response to COVID-19 have been
outlined as part of the applicable Q&A sections.
1I) REMUNERATION PHILOSOPHIES AND STRUCTURES
WHAT IS FLT’S REMUNERATION PHILOSOPHY?
In line with its belief in common sense over conventional wisdom, FLT has a simple remuneration system that is tied to its
core philosophies and strategic objectives.
Although this reward framework is unique and is tailor-made to suit FLT’s specific goals, its ultimate objectives are in line
with market practice in that they aim to ensure overall reward is:
• Competitive, which allows the company to attract and retain high calibre people. This is particularly important in the
current trading climate, as the travel industry continues to deal with widespread restrictions that are impacting people’s
earnings.
• Aligned with participants’ interests, reflecting responsibilities and rewarding achievement and shareholder value
creation
• Acceptable to shareholders and strongly aligned to their interests
• Transparent – clear targets are set and achievements against these targets are measurable; and
• Tied to the company’s longer-term objectives, capital management strategies and structures
Remuneration structures for KMP (excluding NEDs) are also carefully tailored to ensure they include an appropriate mix of:
• Fixed and variable pay; and
• STIs and LTIs to ensure a strong short and long-term alignment between executive and shareholder interests
Measurable and reliable outcome-based KPIs underpin FLT’s STI programs and the company’s overall remuneration
systems globally. FLT believes that if the right outcomes are rewarded via its STIs, the company, its people, its customers
and its shareholders will benefit.
FLT’s belief in the value of using quantitative and outcome-based STIs to drive the desired outcomes is articulated in the
company’s core philosophies, which are included in this Annual Report.
The company’s philosophies also underline its belief in the importance of providing its people with ownership
opportunities and the chance “to share in the company’s success through outcome-based incentives, profit share, BOS
and Employee Share Plans”.
Accordingly, ownership opportunities are built into the company’s remuneration structures to encourage FLT’s people
to behave as long-term stakeholders in the company and to adopt the strategies, disciplines and behaviours that create
longer term value.
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REMUNERATION REPORT – AUDITED (CONTINUED)
1I) REMUNERATION PHILOSOPHIES AND STRUCTURES (CONTINUED)
WHAT ARE THE KEY COMPONENTS OF FLT’S REMUNERATION FRAMEWORK FOR EXECUTIVES?
All executives earn a combination of:
• Fixed pay
• Variable STIs; and
• LTIs, which may include share-based compensation
Historically, various KMP also received returns on their investments in the BOS tailor-made program that rewarded FLT’s
people for building businesses that delivered sustainable returns over the long-term. The BOS program and the BOS
Multiplier program, which are outlined below in Table 1, are not currently operating.
Additional detail on each of these components is included in Table 1.
TABLE 1: THE KEY COMPONENTS OF FLT’S REWARD FRAMEWORK
Fixed Pay
Fixed pay typically includes base pay (retainer), LSL
provisions and employer superannuation contributions.
FLT does not guarantee annual base pay increases for
executives or for its people at other levels.
Other fixed payments, including LSL accruals, are made
in accordance with relevant government regulations.
Superannuation contributions are paid to a defined
contribution superannuation fund.
FLT’s people are guaranteed to earn at least the
minimum amount payable to them under the applicable
awards or other regulations and agreements. KMP did,
however, elect to receive less than the floor during
FY20 and FY21 as part of the company’s COVID-19
response plan.
STIs
FLT's use of STIs differs from many other companies
in that its STI program is not an annual bonus scheme
for executives. Rather, all KMP earn STIs as part of their
remuneration packages.
These STIs can be categorised in two ways:
1. Targeted STIs, which are structured in a way that
will see an individual earn his or her targeted salary
package if he or she achieves the KPIs that are in
place; and
2. Stretch STIs, payments that the executive will earn if
his or her businesses exceed their pre-determined
targets or KPIs
All STIs (targeted and stretch) are based on measurable
achievements (quantifiable) against KPIs or targets
that are set annually. This transparency means each
employee knows what he or she needs to achieve to earn
all or part of his or her targeted STIs or the additional
stretch STIs that might become available.
FLT does not guarantee its executives will earn their
targeted STI earnings (in part or in full), which in turns
means that the company does not guarantee the annual
salary packages its executives will earn beyond the fixed
component of 90% of targeted remuneration (the floor).
BOS returns
In line with FLT's belief in the importance of leaders
taking ownership of the businesses they run, eligible
executives have historically been invited to invest in
unsecured notes in their individual businesses via
the BOS (currently in hibernation). In return for this
investment, BOS participants received a variable return
that was tied to the individual business’s performance.
In basic terms, a BOS participant who invested in a 10%
interest in his or her business was entitled to 10% of the
business’s profit as a return on his or her investment. The
executive was exposed to the business's risks, as neither
FLT nor any of its group companies guarantees returns
above face value.
In accordance with the BOS prospectus, the board,
via its RNC, could review and amend a BOS note if an
individual return exceeded 35% of the BOS note’s face
value in any 12-month period. In addition, FLT could
redeem the BOS note at face value at any point, as it
elected to do during the pandemic.
BOS Multiplier Program
To help ensure that the leaders of some key businesses
remained in their roles for the long-term, the company
offered a BOS Multiplier program (see section 3). Under
this program, invited senior executives became entitled
to multiples of 5, 10 and up to 15 times the BOS return
in the last full financial year before their BOS note was
redeemed, provided they achieved tenure-related
hurdles.
Provisions for these future payments are taken up
annually and the amounts are shown in the KMP salary
tables in section 2. These provision adjustments can be
positive or negative as the company adjusts accruals to
meet its anticipated future needs.
Share-based compensation
In line with the company's strong belief in creating
ownership opportunities for its people, share-based
compensation is available to KMP and other employees
(excluding directors).
Programs include:
1. The ESP, which was offered to staff in Australia, New
Zealand, Canada, the USA, South Africa and the UK;
and
2. The LTRP and PCRP, which have become critical
retention tools and were offered to various senior
executives globally (refer section 4) during FY21.
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HOW ARE EXECUTIVE SALARIES STRUCTURED?
Executives are normally offered a targeted annual remuneration package which includes:
• A fixed pay component representing 90% of the targeted remuneration package, which gives executives a degree of
certainty over their earnings and helps ensure they are retained during short-term downturns; and
• A targeted STI component representing 10% of the targeted remuneration package and tied to pre-determined KPIs
The targeted STI component is not guaranteed - either in part or in full. If the KPIs are not achieved, the executive will
not earn 100% of his or her targeted remuneration package and may only earn the 90% fixed component (the floor).
Conversely, additional STIs (stretch incentives) will be payable if the KPIs are exceeded and, in this scenario, the executive
will earn more than 100% of his or her targeted remuneration package.
Targeted remuneration packages are periodically compared to remuneration packages for equivalent positions externally
to ensure executives are remunerated at a market-equivalent level. A benchmarking exercise, conducted by external
consultants was undertaken late in FY20.
COVID-19 Update: During FY21, FLT’s executives (KMP) elected to receive 75% of their targeted salaries during the first
quarter and 90% for the remainder of the year. This one-off change meant they earned less than the floor in their targeted
salaries and did not earn any STIs for the year.
WHAT WERE THE BENCHMARKING EXERCISE’S FINDINGS?
Targeted FY21 earnings for FLT’s executives (Taskforce) were compared to a both a Market Comparator Group (75 ASX
200 companies) and an Industry Comparator Group (23 companies).
1II) ALIGNMENT WITH SHAREHOLDER WEALTH CREATION
HOW IS EXECUTIVE REMUNERATION ALIGNED WITH SHAREHOLDER WEALTH CREATION?
FLT has developed a simple and logical reward system that ties KMP earnings to financial results achieved and, at the
same time, rewards executives for creating longer term shareholder value. Pay-for-performance is integral to this system.
KMP are incentivised within the STI structure to improve key financial results year-on-year and are rewarded according to
their achievements against pre-determined, measurable and outcome-based KPIs. Historically, these KPIs were tied to
year-on-year growth in FLT’s overall profit and, in some instances, within its key geographic divisions, which meant that
senior executives’ interests were tied to the company’s success and were fully aligned with shareholders’ interests.
If the company or the key geographic divisions’ results exceeded expectations, KMP earned the full component of their
targeted STIs, plus additional stretch STIs. Conversely, if the company or the key geographic divisions’ results were below
expectations, KMP earned a fraction of their targeted STIs (and possibly zero), which meant they achieved their targeted
packages for the year, as illustrated in Table 3 and as outlined above.
As outlined in table 3 of John Eales’ overview, KMP did not earn their targeted packages during FY20 and FY21 because
global and regional results were below expectations.
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Table 2 below illustrates FLT’s achievements in the areas that drive shareholder wealth during the past five years:
FY20
FY21
RESTATED1
FY19
FY18
FY17
Profit / (loss) before income tax
$(601.7m)
$(848.6m)
$343.5m
$364.3m
$325.4m
Underlying profit / (loss) before
income tax2
$(507.1m)
$(509.2m)
$343.1m
$384.7m
$329.5m
Profit / (loss) after income tax
$(433.5m)
$(662.2m)
$264.2m
$264.8m
$230.8m
Interim dividend
Final dividend
Special dividend
Earnings per share (basic)
Share price at 30 June3
Increase / (decrease) in share price %
-
-
-
(217.5c)
$14.85
34%
-
-
-
(552.2c)
$11.12
(73%)
60.0c
98.0c
149.0c
224.2c
$41.55
(35%)
60.0c
107.0c
-
261.6c
$63.65
66%
45.0c
94.0c
-
228.5c
$38.30
21%
1 Restated as required for changes introduced by IFRIC Agenda Decision - Configuration and Customisation Costs in Cloud Computing Arrangements. Refer to Note
I(b) for details.
2 Underlying PBT is a non-IFRS measure and is unaudited. Refer to note A1 segment information for reconciliation of underlying to statutory loss before tax.
3 The share price at 30 June 2016 was $31.58.
FLT exceeded its targets during FY18 and finished below expectations in FY17, FY19, FY20 and FY21. The impact on KMP
earnings during each period is outlined in Table 3 below.
TABLE 3: IMPACT ON KMP EARNINGS
Historically, KMP STIs were tied to FLT's underlying
PBT globally and/or the PBT generated by key
geographic divisions.
In simple terms, this meant that STI earnings were
typically:
• Broadly in line with expectations (targeted STIs)
in years where profits within their areas of responsibility
were in line with expectations (when they met
their KPIs)
• Above expectations in years when KMP earned stretch
STIs because profits were above expectations and
shareholders benefited from higher than expected
dividends and EPS (when they exceeded their KPIs);
and
• Below expectations in years when KMP did not earn
their targeted STIs because profits and ultimately
shareholder returns were below expectations and the
executive did not achieve his or her KPIs
HOW DOES FLT’S REMUNERATION SYSTEM BENEFIT BOTH ITS EMPLOYEES AND ITS SHAREHOLDERS?
For executives and employees in general, benefits include:
• Clear and measurable targets and structures for achieving rewards are in place
• Achievement, capability and experience are recognised and rewarded; and
• Contribution to shareholder wealth creation is rewarded because STIs are tied to the company’s profit or the profit its
key geographic divisions achieve and additional LTIs are in place to reward executives for developing businesses that
deliver sustainable growth over a longer horizon
For shareholders, benefits include:
• A clear short and long-term performance improvement focus, as year-on-year profit growth is a core component of FLT’s
remuneration system. KMP must deliver reasonable year-on-year growth to maintain consistent earnings.
• A focus on sustained growth in shareholder wealth, as outlined above; and
• The ability to attract and retain high calibre executives
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1III) DIRECTOR REMUNERATION
HOW ARE NEDS REMUNERATED?
To preserve their independence, NEDs receive fixed fees. They are not eligible to participate in the ESP or BOS
program,and are not included in LTI programs.
The fees, which the RNC reviews and benchmarks annually, reflect the positions’ demands and responsibilities and are
determined within an aggregate directors’ fee pool, which is periodically recommended for shareholder approval. The
pool currently stands at $1.1million per annum, as approved by shareholders on 22 October 2018.
The fees paid to individual directors were initially intended to be in the order of $170,000 and $250,000 for directors and
the chairman respectively, below the median for ASX 50-100 companies, which CGI Glass Lewis listed as $188,417 and
$377,000 respectively during FY20. Directors are not paid additional fees for their membership on any relevant Board
Committees, including the audit and risk committee or the RNC.
COVID-19 Update: NEDs elected to received 90% of their individual Board fees during the first quarter of FY21.
HOW ARE CHAIRMAN’S FEES DETERMINED?
The chairman’s fees are determined independently and are benchmarked against comparable roles in other listed
entities. The chairman does not attend Board and RNC discussions relating to his remuneration.
1IV) EXECUTIVE KMP REMUNERATION STRUCTURES
WHAT ARE KMP STIS BASED ON?
No STI targets were set for FY21, given KMP elected to receive reduced salary packages for the year.
In prior years, STIs were based on either:
• FLT’s Underlying PBT (applied to the CEO, CFO and COO under FLT’s previous global leadership structure)
• A combination of divisional PBT/EBIT (70%) and FLT underlying PBT (30%) (applied to regional MDs under FLT’s previous
global leadership structure)
FLT’s broader STI structure, as it historically applied, is outlined in Table 4 below.
TABLE 4: STI SUMMARY – KMP
Participants:
Award Type:
All KMP (excluding NEDs) are targeted to earn performance-based STIs as part of their normal
remuneration packages
Cash payments that are made annually to the global CEO and CFO and monthly to other executives
who are classed as KMP.
Performance
conditions:
KMP STIs are not guaranteed – in part or in full – and are strictly tied to the company's PBT
(underlying) or the PBT/EBIT achieved within its key geographic divisions.
Structure:
Limits:
Deferral:
Clawback:
KMP receive a small percentage of the company's PBT and, in some cases, the PBT/EBIT achieved
within its key geographic divisions. For an executive to achieve 100% of his or her targeted STIs, the
company or the relevant division must achieve a predetermined target for the year. If the executive’s
business exceeds its targets, he or she will be entitled to additional stretch STIs. Conversely,
executives will earn less than 100% of his or her targeted STIs if the KPIs are not met.
While KMP STIs are theoretically uncapped, several factors will curb an executive's earning potential
in a normal year. Firstly, FLT's maturity means it is unlikely to achieve extraordinary year-on-year
underlying PBT growth. Secondly, decelerator mechanisms are in place to slow an executive's
salary growth if the company or his or her business exceeds pre-determined 'stretch profit' targets.
Where a business is acquired, profit targets are adjusted to reflect the acquired business’s expected
contribution. The RNC also reviews STI payments during the course of the year and can amend
targets if STIs exceed expectations
Not applicable.
Adjustments can be made to claw-back over-payments or to top-up under-payments.
FY21 Outcomes: KMP did not receive STIs during the year.
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WHAT PERCENTAGE OF OVERALL REMUNERATION IS FIXED FOR FLT EXECUTIVES?
For each executive who is classed as KMP, 90% of targeted remuneration is typically fixed and 10% is tied to STIs (variable).
As outlined in previous sections, an executive may, however, earn more or less than the targeted amount of 10% because
STIs are tied to actual results achieved.
When profit growth exceeds expectations, STIs will exceed the targeted levels (stretch STIs) and a larger portion of
earnings will have been at risk. Conversely, when profit growth is below expectations, STIs will be lower than the targeted
levels and a larger portion of earnings for the year will have been fixed.
COVID-19 Update: During FY21, key executives elected to receive 75% of their targeted salaries during the first quarter
and 90% for the remainder of the year. As outlined previously, this meant they were paid below the 90% floor in their
annual packages and did not receive any STIs for the year. Executives, including the global CEO, earned 86.25% of their
targeted remuneration for the year.
HOW DO THE TARGETED SALARY PACKAGES THAT KMP ARE OFFERED DIFFER FROM OVERALL EARNINGS DISCLOSED IN THIS REPORT?
The diagrams below illustrate the differences between the targeted remuneration packages that are offered to FLT’s
executives and statutory (reported) remuneration.
ARE NON-FINANCIAL KPIS USED?
Non-financial KPIs were not used in KMP STIs during FY21 or FY20. The company may, however, consider using them in
future periods if they are measurable and aligned to FLT’s strategic objectives and shareholder interests.
HOW DOES FLT LIMIT EXECUTIVE STIS?
While KMP STI earnings are normally uncapped, structures, governance processes and natural curbs are in place to
ensure that executive earnings are aligned to shareholders’ interests and do not reach unacceptable levels.
Effectively, KMP earn a small percentage of global profit and, in some cases, a small percentage of their geographic
division’s profit. As outlined previously, this percentage is calculated in such a way that the executive will earn his or her
targeted STIs if FLT or the executive’s business achieves its pre-determined profit growth target.
For example, an executive who was targeted to earn $40,000 in targeted STIs if FLT achieved a $400million PBT could be
offered a 0.01% share of FLT’s audited profit result for the year.
If the company significantly exceeds its profit goal and an executive reaches “stretch” targets, decelerator mechanisms
will kick-in to slow the executive’s earnings growth. During FY20, when some STIs were expected to be paid during the
year, a decelerator would have applied to the global portion of STIs had an executive earned 150% of his or her targeted
salary package.
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A number of other factors will also limit earnings growth for KMP:
• Firstly, STIs are tied to results achieved by businesses that are now reasonably mature and are, therefore, limited by the
relevant business’s earnings growth potential in any normal year; and
• Secondly, the percentage of profit the executive earns under his or her KPIs is relatively small. In a year of normal profit
growth, executive STIs will not significantly increase, as highlighted in the graph below which shows the impact various
profit growth scenarios would have had on Graham Turner’s, and Adam Campbell’s FY20 targeted earnings. FY20 has
been used as an example in this case, given that no STIs were available during FY21.
GRAPH: FIXED PAY AND STIS
Targeted FY20 Rem
20% Profit growth
50% Profit growth
100% Profit growth
s
n
o
i
l
l
i
M
$4.0
$3.5
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
Graham Turner
Adam Campbell
As illustrated in the table above, had FLT doubled its PBT during FY20 Graham Turner would have earned in the order of
$1.8million in fixed pay and STIs, slightly above the median in fixed pay and STIs for an ASX 50-100 CEO (CGL Glass: circa
$1.65million).
The RNC also reviews incentive payments during the course of the year and has the discretion to adjust KPIs if earnings
exceed targeted salary packages and are not aligned to the company’s and its shareholders’ interests, as outlined in
greater detail elsewhere in the report.
EXECUTIVE LONG TERM INCENTIVES (LTIS)
WHAT IS THE LTRP AND HOW IS IT STRUCTURED?
The LTRP is an equity-based tool that is aligned with FLT’s longer term strategic objectives, and aims to:
• Encourage retention of key executives
• Enhance the level of ownership among these key people to strengthen the alignment to shareholder interests; and
• Balance the use of STIs
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A summary is included below and further detail is provided in Section 4.
LTRP SUMMARY
Participants:
Award Type:
Performance conditions:
Structure:
Limits:
Voting and
dividend rights:
Other key terms:
Clawback:
FY21 Outcomes:
Key executives globally, including KMP apart from Graham Turner and NEDs.
Annual equity grant of Base Rights that will vest in the future if the executive achieves
the longevity-related performance condition. An additional Matched Right is attached to
each Base Right and will also vest in the future if the executive achieves the performance
conditions. On vesting, the rights become exercisable by the participant. No amount is
payable on exercise.
As the program is primarily a retention and alignment tool, the performance condition is
tied to longevity. No result-related performance conditions or hurdles are in place.
The number of Base Rights issued is based on a fixed dollar amount of rights granted for
each participant divided by the company's share price (Volume Weighted Average Price)
over the 10 trading days following release of FLT's full year accounts.
Base Rights granted from FY19 onwards will vest three years after the applicable grant date
or three years after the applicable grant date of the first grant for new participants first
three years of grants, provided that the executive continues to be employed within FLT at
that time.
The Matched Rights are linked one-for-one to the granted Base Rights to further
encourage key executives to build longer term careers with the company (continuous
employment).
Matched Rights granted from FY19 onwards will vest three years after the applicable grant
date or five years after the applicable grant date of the first grant for new participants first
three years of grants, upon release of FLT’s audited full year accounts.
The vesting of Matched Rights is conditional on:
• The executive still holding the corresponding Base Rights previously issued under the
LTRP for the applicable grant, or the associated shares received on exercise of those
Base Rights (i.e. the executive has not sold the shares received from the Base Rights); and
• The executive remaining employed within FLT
In line with FLT's reporting requirements, the Base Rights and Matched Rights issued are
recorded at grant date fair value within the remuneration tables in this report.
Participants receive a percentage of their targeted remuneration package (typically 15%) in
Base Rights under the plan.
In return for each Base Right or Matched Right exercised, the executive will receive one
fully paid FLT ordinary share with attached voting and dividend rights
Participants can receive up to 12 annual share grants through to 2027.
Shares can be bought on-market or issued, as is the case for the ESP.
Provisions are in place for a change of control or other material changes in company
structure.
Not applicable, although the Board, via the RNC, has full discretion over the LTRP and can
“alter, modify, add to or repeal” any provisions of the LTRP’s rules.
The board invited 51 key executives globally to participate in the LTRP during FY21. Of
those invited, 98% (FY20: 88%) were retained.
WHY AREN’T RESULT-RELATED PERFORMANCE HURDLES IN PLACE FOR THE LTRP?
Given that the LTRP is not a traditional LTI and is primarily an executive retention tool, no result-related performance
hurdles apply. Rights can be granted to participants each year while they remain part of the program and while they
remain part of FLT.
While FLT met with various stakeholders and considered adding performance hurdles to the plan when it was reviewed
during FY18, the company elected to continue under the original structure, given the plan’s success in achieving its
primary strategic objective of retaining key individuals.
Fewer than 10 participants have elected to resign since the program was introduced during FY16.
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The company also believes that its program gives executives a stronger sense of ownership and alignment with
shareholders than other plans that are tied to longer term performance hurdles that may or may not be achieved. Like
other shareholders, LTRP participants gain an immediate sense of share ownership when they are invited to become
part of the program, rather than the possibility of a longer term reward, and see the same short-term benefits (excluding
dividends and voting rights), while also being motivated as an owner to deliver longer term value.
ARE OTHER LTIS IN PLACE FOR KMP?
FLT’s senior executives are integral to the success of its key businesses and the company overall.
To help retain these key people and to encourage them to build businesses that deliver sustainable profits into the
future, the company has tailored an additional LTI that is aligned to the BOS and available to some KMP. Under this BOS
Multiplier program, which is outlined in section 3, each participating executive becomes entitled to a one-off BOS return
multiplier payment upon the BOS note’s redemption if he or she remains in his or her role, or an equivalent or more senior
position, for between five and 15 years.
COVID-19 Update: FLT has temporarily suspended the BOS and BOS Multiplier programs.
During FY21, the company formally introduced the PCRP which is available to all KMP apart from Graham Turner and the
NEDs, to help it achieve one of its key strategic objectives in the post-COVID world – retaining key executives who are
crucial to FLT’s recovery, but who may also be at risk of leaving while the travel industry continues to be heavily impacted
by government restrictions.
WHAT IS THE PCRP AND GRR?
Both the PCRP and the GRR are a strategic response to the profound impacts that COVID-19 restrictions continue to have
on the business.
They are tailored, one-off programs developed during FY21 to ensure people who will be crucial to FLT’s recovery are
retained while the business recovers and during the rebuilding phase.
The PCRP program focuses on key members of FLT’s global leadership team (excluding Graham Turner and NEDs), whose
skills easily translate to industries and sectors that are not as heavily impacted by the pandemic and who are, therefore, at
heightened risk of being targeted by other companies.
Six KMP (Chris Galanty, Melanie Waters-Ryan, Adam Campbell, Steve Norris, James Kavanagh and Charlene Leiss) have
been included in the program, which has been built around a one-off grant of share rights (vesting after two years), plus
additional matched rights (vesting after years three and four).
The GRR has identical objectives to the PCRP but is a broader program targeted at FLT’s global workforce (excluding
PCRP participants and directors). Additional details of the PCRP are included in Section 4.
HOW IS THE PCRP ALIGNED TO SHAREHOLDER INTERESTS AND TO THE COMPANY’S SHORT AND LONG-TERM STRATEGIC OBJECTIVES?
FLT’s board believes the 22 PCRP participants are required to:
• Lead the company through an extraordinarily difficult time; and
• Rebuild FLT as restrictions ease and as it emerges from the crisis
This program will help lock in these key people, while they develop and deploy strategies that will fast-track recovery.
PCRP participants will have genuine ownership of the company, via their share rights, and will be rewarded for creating
value, meaning their interests are aligned with other shareholders in both the near-term, given that PCRP shares will vest
over a two-to-four-year period, and the long-term, given their involvement in the LTRP.
As outlined previously, one of the company’s main strategic objectives is attracting and retaining high calibre individuals.
FLT also continues to prioritise cash preservation, while heavy travel restrictions are in place and its revenue generation
opportunities are limited.
The PCRP provides critical employees with additional incentive to continue their careers with FLT during what is likely to
be a rebuilding phase and while their earnings are likely to be lower than normal, while at the same time minimising cash
outflows during a challenging trading period.
HOW DOES THE PCRP DIFFER, STRATEGICALLY, FROM THE LTRP?
The LTRP is an ongoing program that aims to retain a pool of key executives for an extended period.
The PCRP is a strategic, one-off response to COVID-19 and is a short-term program focused specifically on retaining a
smaller group of executives who are considered crucial to FLT’s recovery during the rebuilding phase and who are at
heightened risk of being targeted by other companies in the current climate.
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1V) REMUNERATION GOVERNANCE
HOW IS EXECUTIVE REMUNERATION MONITORED TO ENSURE FLT ACHIEVES ITS REWARD OBJECTIVES?
FLT’s RNC oversees and monitors executive remuneration and provides specific recommendations on remuneration and
incentive structures, policies and practices and other employment terms for directors and senior executives.
In making its recommendations, the RNC considers:
• External benchmarks against ASX-listed companies, other global travel companies and retailers in general
• Targeted earnings being aligned with targeted PBT growth; and
• Three-five years’ salary data for the position to ensure earnings are aligned with results over the longer term
During the course of the year, the RNC receives regular employee earnings updates, which allows it monitor executives’
potential earnings against their divisions’ performance and the targets that were set at the start of the year.
The RNC also has the discretion to withhold STI payments if deemed appropriate.
The RNC can adjust KPIs if actual earnings are likely to excessively exceed targeted packages or if a material change
occurs within the business. For example, the RNC can normalise earnings by excluding unforeseen items or including an
acquired business’s contributions for the purposes of calculating STIs.
The RNC can “alter, modify, add to or repeal any provisions of the LTRP’s rules in any way it believes is necessary or
desirable to better secure or protect the company’s rights”. Subject to some conditions, the committee can, at any time,
“amend, add to, revoke or substitute all or any of the provisions of the LTRP rules”.
Under the LTRP, amendments can be made if the company is subject to a takeover bid or if the company’s capital is
consolidated, subdivided, returned, reduced or cancelled.
The RNC is supported by local committees that operate within FLT’s key geographic divisions. These local committees
generally meet quarterly and include the local EGM, CFO and HR (Peopleworks) leader.
WITHIN ITS EXECUTIVE REMUNERATION STRUCTURES, HOW DOES THE COMPANY ENSURE THAT KMP ARE FOCUSED ON PROTECTING AND GROWING SHAREHOLDER VALUE
NOW AND INTO THE FUTURE?
Through the tailor-made programs that the company has developed and refined, it has created a remuneration
program that:
• Encourages executives to adopt a business owners’ mindset; and
• Rewards executives for surpassing the prior year’s achievement, but also for delivering results that can be sustained into
the future.
Executive STIs are tied to FLT’s underlying profits for the year, which are subject to rigorous internal and external checks
and reviews and can be adjusted (clawed back or topped up) if required.
Within this STI structure, executives are also rewarded for adopting strategies that deliver long-term growth, as future
STIs and BOS interest are dependent on the business achieving ongoing profit growth. This ongoing growth focus
promotes longer term thinking and sustainability, as an executive who took a short-term approach to profit growth and
earned higher STIs in any given year would be adversely affected in future years.
To further encourage long-term thinking and to ensure key people are focused on building businesses that can deliver
sustainable returns for the future, KMP (excluding directors) have been included in the LTRP. In addition to aiding
executive retention, this has delivered a stronger sense of ownership and a clear alignment with shareholders’ medium to
long-term interests. In prior years, various KMP have also taken ownership interests in the businesses they run, via their
participation in the BOS.
As a direct response to COVID-19, FLT has introduced the PCRP to ensure the key global executives who are critical to
FLT’s recovery are retained and are working to create shareholder value over the next few years.
FLT has a share trading policy which prohibits directors, senior executives and their closely connected persons from
entering into margin loans, hedging or any other arrangement that would have the effect of limiting their exposure to risk
in relation to an element of their remuneration that has not yet vested or has vested but remains subject to a holding lock.
The policy is available on FLT’s website at http://www.fctgl.com/investors/governance/share-trading-policy-2/.
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2 DETAILS OF REMUNERATION
The following tables outline KMP remuneration details for the company and consolidated entity consisting of FLT and
the entities it controlled for the year ended 30 June 2021. Board and KMP are as defined in AASB 124 Related Party
Disclosures and are responsible for planning, directing and controlling the entity’s activities.
BOARD OF DIRECTORS
Non-Executive Directors
G.W. Smith – Chairman
J.A. Eales
R.A. Baker
C.M. Garnsey
Executive Director
G.F. Turner
PARENT ENTITY
OTHER GROUP KMP
M. Waters-Ryan – CEO - Leisure
A. Campbell – CFO
C. Galanty – CEO - Corporate
D.W. Smith – MD - The Americas (retired 1 July 2020)
C. Leiss – MD – The Americas
J. Kavanagh – MD – Australia
S. Norris – MD – EMEA
With the exception of C. Galanty, C. Leiss and S. Norris, the executives listed above were also Parent Entity executives.
SERVICE AGREEMENTS
No fixed-term service agreements are in place with FLT’s directors or KMP. Senior executives are bound by independent
and open-ended employment contracts that are reviewed annually.
The company does not pay sign-on bonuses and requires KMP to provide at least 12 weeks written notice of their
intention to leave FLT. If FLT gives notice, it must also provide at least 12 weeks’ written notice. Termination payments
to executives and other employees who are displaced as a result of their roles becoming redundant are assessed on a
case-by-case basis and are capped by law. If the terminated senior executive has a BOS note (refer to note D2), FLT will
also be required to repay the BOS note’s face value and any applicable one-off BOS multiplier payment (refer to section
3), to the executive, in line with the BOS’s general redemption rules. FLT is not bound, under the terms of any executive’s
employment contract, to provide termination benefits beyond those that are required by law.
As is the case for all employees, KMP employment may be terminated immediately for serious misconduct.
KMP
The following table shows the remuneration paid and payable to KMP for the year ended 30 June 2021. Remuneration
amounts are determined in accordance with the Corporations Act 2001’s requirements and are set out in the tables on
page 31 and page 32 of this report.
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REMUNERATION REPORT - AUDITED (CONTINUED)
PAID AND PAYABLE REMUNERATION
SHORT-TERM
EMPLOYEE BENEFITS
SHORT TERM
INCENTIVE2
$
BOS INTEREST3
$
CASH SALARY
AND FEES2
$
POST EMPLOYMENT
BENEFITS1
SUPERANNUATION
$
TOTAL PAID
AND PAYABLE
REMUNERATION
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
151,370
131,963
155,251
151,370
131,963
155,251
151,370
131,963
155,251
238,870
197,233
229,469
625,181
578,997
654,469
NAME
NON-EXECUTIVE DIRECTORS
G.W. Smith
2021
2020
2019
J.A. Eales
2021
2020
2019
R.A. Baker
2021
2020
2019
C.M. Garnsey
2021
2020
2019
EXECUTIVE DIRECTORS
G.F. Turner
2021
2020
2019
OTHER GROUP KMP
M. Waters-Ryan
2021
2020
2019
A. Campbell
2021
2020
2019
D.W. Smith (retired 1 July 2020)4
2021
2020
2019
C. Galanty
2021
2020
2019
J. Kavanagh (appointed 1 January 2020)4
2021
2020
C. Leiss (appointed 1 January 2020)4
2021
2020
S. Norris (appointed 1 January 2020)4
2021
2020
TOTAL KMP COMPENSATION (EXCLUDING LONG TERM BENEFITS)
2021
2020
2019
6,523,256
5,097,577
4,428,626
1,086,272
586,530
569,912
1,142,681
696,747
672,469
-
894,723
880,585
914,119
846,997
955,969
-
-
245,772
-
-
276,614
-
-
30,842
674,703
298,025
712,451
330,274
674,869
272,162
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
301,064
497,748
-
-
-
-
-
782,335
-
684,178
969,722
-
-
-
-
-
-
-
985,242
2,249,805
4,880
15,392
20,531
14,380
12,537
14,749
14,380
12,537
14,749
14,380
12,537
14,749
21,694
21,003
20,531
21,694
21,003
20,531
21,694
21,003
20,531
-
-
-
-
-
21,694
10,501
-
-
-
-
134,796
126,513
126,371
243,750
212,625
250,000
165,750
144,500
170,000
165,750
144,500
170,000
165,750
144,500
170,000
646,875
600,000
675,000
1,164,375
1,018,814
1,190,748
935,813
868,000
976,500
-
894,723
1,908,692
1,086,272
1,270,708
1,570,476
696,563
282,663
712,451
330,274
674,703
298,025
6,658,052
6,209,332
7,081,416
1 No termination benefits (leave entitlements and redundancy payments owing to employees at the date of termination) were paid during the year (2020: nil).
2 For each executive who is classed as KMP, 90% of targeted remuneration package is fixed for 2021, 2020 and 2019.
3 BOS interest shown above does not take into account financial liabilities (principal repayments) that may relate to this investment.
4 For KMP who retired during the current period and KMP who were appointed during the prior period the amounts disclosed reflect the relevant service period served.
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DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT - AUDITED (CONTINUED)
NEDs receive fixed fees, do not receive STIs or LTIs and do not participate in the BOS or BOS Multiplier program. No
components of their remuneration are at risk.
LONG-TERM
EMPLOYEE BENEFITS
SHARE- BASED
PAYMENTS
TOTAL PAID
AND PAYABLE
REMUNERATION
$
LONG
SERVICE
LEAVE1
$
BOS MULTIPLIER
PROVISION2
$
NAME
TOTAL NON EXECUTIVE DIRECTORS COMPENSATION
2021
2020
2019
741,000
646,125
760,000
-
-
-
EQUITY SETTLED
PLANS3
$
TOTAL
REMUNERATION
$
PERCENTAGE
PERFORMANCE
RELATED4
%
-
-
-
-
-
-
738,945
211,609
144,692
1,023,954
420,523
254,940
725,750
211,609
144,692
-
(1,036)
149,611
562,074
54,234
497,100
78,559
449,859
60,552
741,000
646,125
760,000
650,985
498,442
516,885
1,907,619
1,172,541
2,155,220
1,999,853
1,314,706
1,274,920
1,812,022
1,482,317
3,559,949
-
477,874
3,164,181
1,270,716
358,483
1,209,551
408,833
1,124,562
358,577
-
-
-
-
-
-
-
26
63
-
-
-
-
46
80
-
(87)
67
-
-
-
-
-
-
-
-
-
-
-
-
-
-
852,000
-
-
-
-
-
1,844,781
-
(415,813)
1,105,878
-
-
-
-
-
-
EXECUTIVE DIRECTORS
G.F. Turner
2021
2020
2019
OTHER GROUP KMP
646,875
600,000
675,000
M. Waters-Ryan
2021
2020
2019
A. Campbell
2021
2020
2019
C. Galanty
2021
2020
2019
1,164,375
1,018,814
1,190,748
935,813
868,000
976,500
1,086,272
1,270,708
1,570,476
D.W. Smith (retired 1 July 2020)5
2021
2020
2019
-
894,723
1,908,692
4,110
(101,558)
(158,115)
4,299
(57,882)
(32,220)
40,086
26,183
43,480
-
-
-
-
-
-
J.Kavanagh (appointed 1 January 2020)5
2021
2020
696,563
282,663
12,079
21,586
C.Leiss (appointed 1 January 2020)5
2021
2020
712,451
330,274
674,703
298,025
S. Norris (appointed 1 January 2020)5
2021
2020
TOTAL KMP COMPENSATION
2021
2020
2019
6,658,052
6,209,332
7,081,416
-
-
-
-
60,574
(111,671)
(146,855)
-
(415,813)
3,802,659
3,997,683
1,036,050
693,935
10,716,309
6,717,898
11,431,155
1 Long Service Leave (LSL) includes amounts accrued and taken during the year. LSL provisions are linked to overall executive remuneration (which consists of the short-
term benefits noted above) and, therefore, vary from year to year. Movements are based on total salary which is dependent on performance during the year. Negative
amounts are sometimes recognised, as provisions naturally adjust in periods where incentives are not earned and the rate used for LSL calculation reduces compared to
prior periods.
2 BOS Multiplier program provisions are linked to profit and, therefore, vary from year to year. Information on the BOS program including the hibernation of the BOS
Multiplier Program is included in section 3.
3 Share-based payments represent amounts expensed in relation to rights granted under LTRP Grant 2019 (Grant 4), LTRP Grant 2020 (Grant 5), LTRP Grant 2021 (Grant 6)
and PCRP (refer section 4). D.W. Smith, A. Campbell, J. Kavanagh, C. Leiss and S. Norris’ include matched rights granted under the ESP (refer section 4).
4 Performance related percentage calculated as the sum of the STI and BOS interest, and BOS Multiplier divided by total remuneration.
5 For KMP who retired during the current period and KMP who were appointed during the prior period the amounts disclosed reflect the relevant service period served.
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REMUNERATION REPORT - AUDITED (CONTINUED)
DETAILS OF REMUNERATION PAID AND FORFEITED
OTHER GROUP KMP
PAID %
FORFEITED %
INCENTIVES
G.F. Turner
M. Waters-Ryan
A. Campbell
C. Galanty
D.W. Smith1
J. Kavanagh
C. Leiss
S. Norris
0%
0%
0%
0%
-
0%
0%
0%
100%
100%
100%
100%
-
100%
100%
100%
1 D.W. Smith retired effective 1 July 2020.
For each STI, the percentage of the available bonus that was paid, or that vested, in the financial year and the percentage
that was forfeited because the person did not meet the service and performance criteria is set out below. No part of the
bonus is payable in future years.
LTIS: BOS RETURN MULTIPLES ON REDEMPTION
3
To encourage key executives to continue in their roles for the long-term and to drive growth in large and important
businesses, two current KMP with BOS notes – namely Melanie Waters-Ryan and Chris Galanty – are in line to earn
multipliers on their BOS returns (upon redemption).
Under the program’s terms as they relate to Mr Galanty and Ms Waters-Ryan, if the BOS note is redeemed between its
fifth and tenth anniversary, the BOS holder will be entitled to a one-off payment equivalent to the BOS return for the last
full financial year before the redemption date, multiplied by five, being the applicable redemption multiple.
If the BOS note is redeemed between its tenth and fifteenth anniversary, the holder will be entitled to a one-off payment
equivalent to the BOS return for the last full financial year before the redemption date, multiplied by 10, being the
applicable redemption multiple.
Minor changes implemented through an amending deed (effective 30 June 2020) were made to Ms Waters-Ryan’s
BOS note. Ms Waters-Ryan’s BOS note matures in 2027 and it must then be finally redeemed. In this instance, the final
redemption multiple will be 15, but the multiple will remain at 10 if the BOS note is redeemed between 2023 to 2026.
Mr Galanty’s BOS note matures in 2026 and it must then be redeemed. At that point, the final redemption multiple will
be 15.
Dean Smith, a member of FLT’s KMP until his retirement on 1 July 2020, was also part of the BOS Multiplier program.
Mr Smith’s unsecured BOS note was redeemed, effective May 2020. The payment represented a five-times multiple
payment of BOS interest on America’s 30 June 2019 profits.
By execution of amending deeds effective 30 June 2020, both Ms. Waters-Ryan and Mr Galanty’s BOS notes are
in temporary hibernation commencing 1 January 2020 through to 31 December 2021. The result of this temporary
redemption has been a temporary pay back of the invested Face Value to the note holders with no entitlements to any
interest earnings, payments entirely suspended and unable to be redeemed. At the end of the hibernation period, the
BOS noteholders are required to return to FLT the Face Value either through a payment or issue of a funds designation
notice. The required provision for remaining Founder BOS multiple earning periods out to 2027 has been recognised.
If the BOS note is redeemed outside of the temporary hibernation period and between five years and its maturity date, as
a result of the holder transferring into a comparable or more senior role within the company, an affiliate or a related body
corporate, the redemption multiple will be the number of full years the BOS note has been held. This redemption multiple
will then be applied to the holder’s BOS returns for the last full financial year before the redemption date. The same
calculation will apply if a material part of the holder’s business unit is sold.
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DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT - AUDITED (CONTINUED)
The BOS’s Face Value, being the amount paid by the holder to purchase the BOS, is guaranteed – it cannot decrease in
value – and will always be deducted from the final redemption multiple payment.
BOS MULTIPLIER PROGRAM
OTHER GROUP
KMP
GRANT
DATE
VESTED
%
FORFEITED
%
FINANCIAL
YEARS IN WHICH
BOS RETURN
MULTIPLE
MAY VEST
MINIMUM
TOTAL BOS
RETURN
MULTIPLE1
MAXIMUM
TOTAL BOS
RETURN
MULTIPLE1
BALANCE AT
30 JUNE
20212
$
M. Waters-Ryan
1 July 2012
C. Galanty
1 July 2010
100%
100%
-
-
2018-2027
2016-2026
5 times
5 times
15 times
15 times
Total
3,722,964
8,548,307
12,271,271
1 The BOS Holder will be entitled to and paid an amount equivalent to his or her BOS return for the last full financial year before the redemption date, multiplied by
the applicable redemption multiple. As the BOS return multiple is dependent on profit during the last full financial year before the date of redemption, neither the
minimum nor maximum amount can be reliably estimated until redeemed.
2 The balance held for C. Galanty as at 30 June 2021 has been revalued for movement in foreign exchange rates.
SHARE-BASED COMPENSATION
4
In line with FLT’s philosophies, share-based plans are in place to allow KMP (excluding directors) and employees in general
to take an equity interest in the company. These plans include the LTRP and the ESP.
LTRP
The LTRP was introduced to provide equity-based compensation with a focus on balancing FLTs use of STIs, long-term
shareholder alignment and retention of key executives.
General terms
Invited participants are granted base rights, for no consideration, in annual tranches over a 12-year period with
vesting conditions based upon continued service. When these base rights are granted, participants are also granted a
corresponding number of matched rights for no consideration (one matched right for each base right granted).
Rights granted under the plan carry no dividend or voting rights. When exercisable, each right is convertible into one
ordinary FLT share.
The plan’s rules stipulate that the number of shares resulting from exercising all unexercised rights cannot exceed 5% of
the company’s issued capital (currently less than 1%).
Vesting requirements
Base rights granted to participants for each tranche will vest on the base rights’ vesting dates as noted in the table below,
subject to the service condition being satisfied (participants remain employed by the company at the vesting date).
Matched rights granted to participants for each tranche will vest on the matched rights’ vesting dates as noted in the
table below, subject to the service condition being satisfied (participants remain employed by the company at the vesting
date) and the base rights (or shares) in respect of the respective grant continue to be held.
Method of settlement
The base rights and matched rights may be issued by FLT, purchased on-market or allocated from treasury shares.
Valuation
The fair value of base and matched rights under the plan is estimated at the date of grant using a fixed dollar amount of
rights granted for each participant and the Black-Scholes option pricing model. The fair value is allocated equally over the
period from grant date to vesting date and is included in the remuneration report compensation tables.
34
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REMUNERATION REPORT - AUDITED (CONTINUED)
Details of rights provided as remuneration to KMP are set out below:
GRANT
NUMBER GRANT DATE
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE2
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE2
BASE RIGHTS
MATCHING RIGHTS
1
2
3
4
4b
5
5b
6
6b
1 Jan 2016
1 July 2018
1 July 2030
$31.93 6 April 2020
1 July 2030
1 July 2016
1 July 2018
1 July 2030
$32.99 6 April 2020
1 July 2030
1 July 2017
1 July 2018
1 July 2030
$46.63 6 April 2020
1 July 2030
1 July 2018
August 2021
1 July 2030
$54.26 August 2021
1 July 2030
1 July 2018
August 2021
1 July 2030
$54.26 August 2023
1 July 2030
1 July 2019
August 2022
1 July 2030
$42.06 August 2022
1 July 2030
1 July 2019
August 2022
1 July 2030
$42.06 August 2024
1 July 2030
1 July 2020
August 2023
1 July 2030
$11.30 August 2023
1 July 2030
1 July 2020
August 2021
1 July 2030
$11.30 August 2023
1 July 2030
$28.91
$29.58
$42.46
$54.26
$51.58
$42.06
$38.84
$11.30
$11.30
1 The vesting date is the day the Company releases full year financial results to the ASX in the year of vesting.
2 The maximum value of each grant can be calculated by multiplying the fair value of the rights on the grant date by the number of rights granted during the relevant
year. This amount represents the maximum value which will be expensed over the performance period. The minimum value is nil if the service conditions are not met.
PCRP
The PCRP, which will operate alongside the broader GRR program, was introduced as a strategic response to the profound
impacts that COVID-19 restrictions continue to have on the business, with a focus on ensuring key executives who will be
crucial to FLT’s recovery are retained while the business recovers and during the rebuilding phase.
General terms
Invited PCRP participants are granted one-off base rights, for no consideration, that will vest if they achieve the program’s
continued service condition, which extends through what the company believes will be a recovery period. Additional
matched rights are attached to each base right held and will vest in two equal tranches after the attached base rights vest
(subject to conditions outlined below).
Rights granted under the plan carry no dividend or voting rights. When exercisable, each right is convertible into one
ordinary FLT share.
The plan’s rules stipulate that the number of shares resulting from exercising all unexercised rights cannot exceed 5% of
the company’s issued capital (currently less than 1%).
Vesting requirements
Base rights granted to participants will vest on the base rights’ vesting date as noted in the table below, subject to the
service condition being satisfied (participants remain employed by the company at the vesting date).
Matched rights granted to participants for each tranche will vest on the matched rights’ vesting dates as noted in the
table below, subject to the service condition being satisfied (participants remain employed by the company at the vesting
date) and for Tranche 1 matched rights that the base rights (or shares) in respect of the respective grant continue to be
held, and for Tranche 2 matched rights’ that the Tranche 1 matched rights (or shares) continue to be held.
Method of settlement
The base rights and matched rights may be issued by FLT, purchased on-market or allocated from treasury shares.
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DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT - AUDITED (CONTINUED)
Valuation
The fair value of base and matched rights under the plan is estimated at the date of grant using the Black-Scholes option
pricing model. The fair value is allocated equally over the period from grant date to vesting date, and is included in the
remuneration report compensation tables.
Details of rights provided as remuneration to KMP are set out below:
BASE RIGHTS
MATCHING RIGHTS - TRANCHE 1
GRANT
NUMBER GRANT DATE
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE2
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE2
1
29 Jun 2020 August 2022
1 July 2031
$9.66 August 2023
1 July 2031
$9.25
MATCHING RIGHTS - TRANCHE 2
August 2024
1 July 2031
$8.83
1 The vesting date is the day the Company releases full year financial results to the ASX in the year of vesting.
2 The maximum value of the grant can be calculated by multiplying the fair value of the rights on the grant date by the number of rights granted during the relevant year.
This amount represents the maximum value which will be expensed over the performance period. The minimum value is nil if the service conditions are not met.
36
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REMUNERATION REPORT - AUDITED (CONTINUED)
RIGHTS HOLDINGS
The number of rights over ordinary FLT shares held during the financial year by FLT’s group KMP, including the number
granted, vested, exercised and forfeited is set out below:
BALANCE AT 1 JULY 2020
BALANCE AT 30 JUNE 2021
OTHER
GROUP
KMP
RIGHTS
M. WATERS-RYAN
LTRP Grant 4
VESTED AND
EXERCISABLE UNVESTED
GRANTED
FORFEITED VESTED EXERCISED
VESTED AND
EXERCISABLE UNVESTED
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 6
Base
Match
PCRP
Base
Match 1
Match 2
A. CAMPBELL
LTRP Grant 4
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 6
Base
Match
PCRP
Base
Match 1
Match 2
C. GALANTY
LTRP Grant 4
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 6
Base
Match
PCRP
Base
Match 1
Match 2
D.W. SMITH
LTRP Grant 4
Base
Match
LTRP Grant 5
Base
Match
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,923
1,923
2,386
2,386
-
-
-
-
-
4,637
4,637
5,754
5,754
-
-
-
-
-
1,923
1,923
2,386
2,386
-
-
-
-
-
-
-
-
-
-
-
-
-
10,508
10,508
70,000
35,000
35,000
-
-
-
-
21,113
21,113
70,000
35,000
35,000
-
-
-
-
8,756
8,756
70,000
35,000
35,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,923
1,923
2,386
2,386
10,508
10,508
70,000
35,000
35,000
4,637
4,637
5,754
5,754
21,113
21,113
70,000
35,000
35,000
1,923
1,923
2,386
2,386
8,756
8,756
70,000
35,000
35,000
-
-
-
-
VALUE OF
RIGHTS
GRANTED
DURING THE
YEAR $
-
-
-
-
118,753
118,753
676,282
323,597
309,142
-
-
-
-
238,606
238,606
676,282
323,597
309,142
-
-
-
-
98,961
98,961
676,282
323,597
309,142
-
-
-
-
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
37
DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT - AUDITED (CONTINUED)
RIGHTS HOLDINGS (CONTINUED)
BALANCE AT
1 JULY 2020
BALANCE AT
30 JUNE 2021
VESTED AND
EXERCISABLE UNVESTED
GRANTED
FORFEITED
VESTED
EXERCISED
VESTED AND
EXERCISABLE UNVESTED
OTHER
GROUP
KMP
RIGHTS
J. KAVANAGH
LTRP Grant 4b
Base
Match
LTRP Grant 5b
Base
Match
LTRP Grant 6b
Base
Match
PCRP
Base
Match 1
Match 2
C. LEISS
LTRP Grant 4
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 6
Base
Match
PCRP
Base
Match 1
Match 2
S. NORRIS
LTRP Grant 4
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 6
Base
Match
PCRP
Base
Match 1
Match 2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,282
1,282
2,569
2,569
-
-
-
-
-
-
-
-
-
9,429
9,429
40,000
20,000
20,000
1,488
1,488
2,291
2,291
-
-
-
-
-
-
-
-
-
9,429
9,429
40,000
20,000
20,000
1,069
1,069
1,382
1,382
-
-
-
-
-
-
-
-
-
9,429
9,429
40,000
20,000
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,282
1,282
2,569
2,569
9,429
9,429
40,000
20,000
20,000
1,488
1,488
2,291
2,291
9,429
9,429
40,000
20,000
20,000
1,069
1,069
1,382
1,382
9,429
9,429
40,000
20,000
20,000
VALUE OF
RIGHTS
GRANTED
DURING
THE YEAR
$
-
-
-
-
106,502
106,563
386,447
184,912
176,653
-
-
-
-
106,563
106,563
386,447
184,912
176,653
-
-
-
-
106,563
106,563
386,447
184,912
176,653
The relevant portion of the expense relating to these rights was recognised during the year ended 30 June 2021. Refer to
note D3.
38
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DIRECTORS’ REPORT REMUNERATION REPORT - AUDITED (CONTINUED)
ESP
General terms
Under the ESP, eligible employees are granted a conditional right to one matched share for every two shares purchased
(for cash consideration), subject to vesting conditions.
To receive the matched shares, participants must hold the acquired shares for a period of two years and one month
and still be employed with FLT at the end of that time. If acquired shares are sold before the end of the vesting period,
conditional rights to the matched shares are forfeited.
The matched shares may be issued by FLT, purchased on-market or allocated from treasury shares.
SHAREHOLDINGS
The number of ordinary shares held during the financial year by FLT’s directors and KMP is set out below:
2021
FLT DIRECTORS
G.W. Smith
J.A. Eales
R.A. Baker
C.M. Garnsey
G.F. Turner
OTHER GROUP KMP
M. Waters-Ryan
A. Campbell1
C. Galanty
D.W. Smith2
J. Kavanagh1
C. Leiss1
S. Norris1
BALANCE AT
THE START
OF THE YEAR
RECEIVED ON
THE EXERCISE
OF RIGHTS
ESP
PURCHASED
SHARES1
ESP MATCHED
SHARES VESTED1
OTHER
CHANGES
23,621
11,875
6,457
5,168
16,639,027
80,622
21,577
32,497
20,953
89
8,444
17,213
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,015
-
-
2,031
1,102
647
-
-
-
-
-
-
-
-
-
-
-
(20,000)
115
(16,500)
-
-
-
81
-
(6,908)
(20,953)
-
-
(17,213)
BALANCE AT
THE END OF
THE YEAR
23,621
11,875
6,457
5,168
16,639,027
60,622
6,207
25,589
-
2,120
9,627
647
1 A. Campbell, J. Kavanagh, C. Leiss and S. Norris participated in the ESP and were issued with ordinary shares under the same terms and conditions as all other ESP
participants. At period end A. Campbell held 795 (2020: 403), J. Kavanagh held 1,015 (2020: nil), C. Leiss held 701 (2020: 232) and S. Norris held 323 (2020: nil) conditional
matched rights that had been granted under the ESP but had not yet vested.
2 D.W. Smith retired effective 1 July 2020.
LOANS TO KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
5
There were no loans provided to key management personnel and their related parties during the period.
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
39
DIRECTORS’ REPORT CONTINUED
INDEMNIFICATION AND INSURANCE OF OFFICERS
An Officers' Deed of Indemnity, Access and Insurance is in place for directors, KMP, the company secretary and some
other executives. FLT has agreed to provide indemnification to the fullest extent permitted by law. Liabilities covered
include legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the
officers in their capacity as officers of the company or its controlled entities. Disclosure of premiums paid is prohibited
under the insurance contract. No payment has been made to indemnify a director, KMP, the company secretary or other
executives during or since the financial year.
INDEMNIFICATION OF AUDITOR
To the extent permitted by law, FLT has agreed to indemnify its auditor, Ernst & Young, as part of the terms of its audit
engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has
been made to indemnify Ernst & Young during or since the financial year.
PROCEEDINGS ON BEHALF OF THE COMPANY
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 additional to its statutory audit duties where the
auditor’s expertise and experience with the company and/or the group are important.
Details of the amounts paid or payable to the auditor (Ernst & Young) for audit and non-audit services provided to the
consolidated group during the year are set out in note F13.
The board has considered the position and, in accordance with the advice received from the audit and risk 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 auditor’s provision of non-audit services did
not compromise the Act’s independence requirements because none of the services undermine the general principles
relating to auditor independence as set out in APES110 Code of Ethics for Professional Accountants.
The audit and risk committee reviewed all non-audit services to ensure they did not impact the auditor’s impartiality and
objectivity.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration, as required under section 307C of the Corporations Act 2001, is set out
on page 41.
ROUNDING OF AMOUNTS
The company is of a kind referred to in Instrument 2016/191, 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 Instrument to the nearest thousand dollars or, in certain cases, to the nearest dollar.
This report is made in accordance with a directors’ resolution.
G.F. Turner
Director
BRISBANE
26 August 2021
40
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AUDITOR’S INDEPENDENCE DECLARATION
FLIGHT CENTRE TRAVEL GROUP LIMITED
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s Independence Declaration to the Directors of Flight Centre
Travel Group Limited
As lead auditor for the audit of the financial report of Flight Centre Travel Group Limited for the
financial year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Flight Centre Travel Group Limited and the entities it controlled during
the financial year.
Ernst & Young
Ric Roach
Partner
26 August 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
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STATEMENT OF PROFIT OR LOSS
Revenue
Fair value gain/(loss) on change in control
Other income
Share of profit/(loss) of joint ventures and associates
Employee benefits
Sales and marketing
Tour & hotel operations - cost of sales
Amortisation and depreciation
Finance costs
Impairment charge
Other expenses
(Loss) / Profit before income tax
Income tax credit / (expense)
(Loss) / Profit after income tax
(Loss) / Profit attributable to
Company owners
Non-controlling interests
FOR THE YEAR ENDED 30 JUNE
2021
$’000
2020
$’000
RESTATED1
395,907
1,897,272
-
280,009
17,471
(3,138)
196,944
(5,047)
(810,210)
(1,491,455)
(24,983)
(2,331)
(137,973)
(37,110)
(35,709)
(246,781)
(601,710)
(170,451)
(129,856)
(230,612)
(38,253)
(217,117)
(656,873)
(848,586)
NOTES
A2
A3
A3
E1
F1
B8 / F7
A4
A5 / F7
A4
F12
168,254
186,358
(433,456)
(662,228)
(433,129)
(662,285)
(327)
57
(433,456)
(662,228)
Earnings per share for (loss) / profit attributable to the ordinary equity holders of the company:
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
CENTS
(217.5)
(217.5)
CENTS
RESTATED1
(552.2)
(552.2)
F2
F2
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
42
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STATEMENT OF OTHER COMPREHENSIVE INCOME
(Loss) / Profit after income tax
OTHER COMPREHENSIVE INCOME
Items that have been reclassified to profit or loss:
Hedging gains reclassified to profit or loss
Changes in the fair value of financial assets at FVOCI
Net exchange differences on disposal of foreign operations
Items that may be reclassified to profit or loss:
Changes in the fair value of cash flow hedges
Gain/(loss) on net investment hedges
Net exchange differences on translation of foreign operations
Income tax on items of other comprehensive income
Total other comprehensive income
FOR THE YEAR ENDED 30 JUNE
2021
$’000
2020
$’000
RESTATED1
(433,456)
(662,228)
NOTES
F11
F11
F11
F11
F11
F11
F12
(109)
-
(152)
336
3,204
(28,863)
(1,029)
(26,613)
(29,553)
(321)
-
29,569
(1,456)
1,223
489
(49)
Total comprehensive income
(460,069)
(662,277)
Attributable to
Company owners
Non-controlling interests
(459,740)
(662,346)
(329)
69
(460,069)
(662,277)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying
notes.
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
43
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
NOTES
Receipts from customers2
Payments to suppliers and employees2
Royalties received
Interest received
Interest paid (non-leases)
Interest paid (leases)
Government subsidies received
Income taxes refunded/(paid)
Net cash (outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, net of cash acquired
Proceeds from disposal of non-controlling interests in subsidiaries
Proceeds from disposal/(acquisition) of joint ventures and associates
Payments of contingent consideration
Proceeds from sale of property, plant and equipment
Payments for property, plant and equipment
Payments for intangibles
Payments for the purchase of financial asset investments
Proceeds from sale of financial asset investments
Dividends received from joint ventures and associates
Loans repaid by related parties
Net cash (outflow) from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Net proceeds from issue of convertible notes
Repayment of borrowings
Payment of principal on lease liabilities
Lease surrender payments
Payments for purchase of shares on market
Proceeds from issue of shares, net of transaction costs
Proceeds from allocation of treasury shares
Dividends paid to company owners
Dividends paid to non-controlling interests
Net cash inflow from financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
F7
B1
A6
E1
A7
A3/F6
B8/F6
B8/A5
B2
B2
E2
B4
B5
B4
F7
F7
D4
D4
B7
B7
FOR THE YEAR ENDED 30 JUNE
2021
$’000
483,776
(1,683,491)
-
10,199
(16,009)
(12,507)
277,644
28,155
(912,233)
(145)
157
169
(1,634)
62,150
(3,376)
(33,978)
(57,073)
-
1,555
-
2020
$’000
RESTATED1
2,797,481
(2,858,163)
360
15,422
(24,252)
(17,134)
98,009
(22,366)
(10,643)
(19,607)
-
(13,792)
(11,170)
-
(42,663)
(51,569)
(4,635)
111,244
-
380
(32,175)
(31,812)
326,445
392,228
(222,408)
(91,031)
(54,285)
(180)
5,111
-
-
-
355,880
(588,528)
1,865,797
13,562
413,905
-
(137,873)
(113,820)
-
-
691,027
3,207
(99,097)
(145)
757,204
714,749
1,172,252
(21,204)
Cash and cash equivalents at end of the financial year
B1
1,290,831
1,865,797
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 Including consumption tax.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
44
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NOTES TO THE FINANCIAL STATEMENTS
BALANCE SHEET
ASSETS
Current assets
Cash and cash equivalents
Financial asset investments
Trade receivables
Contract assets
Other assets
Assets held for sale
Other financial assets
Current tax receivables
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of use asset
Other assets
Other financial assets
Investments in joint ventures and associates
Deferred tax assets
Derivative financial instruments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Contingent consideration
Lease liability
Borrowings
Provisions
Current tax liabilities
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Contract liabilities
Contingent consideration
Lease liability
Borrowings
Convertible note
Provisions
Deferred tax liabilities
Derivative financial liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Equity attributable to the Company owners
Non-controlling interests
Total equity
NOTES
B1
B2
F3
F4
F5
F5
C3
C2
F6
A5
F7
F5
C3
E1
F12
C2
F8
F9
A7
F7
B4
F10
C2
F9
A7
F7
B4
B5
F10
F12
C2
D4
F11
AS AT 30 JUNE
2021
$’000
1,290,831
65,142
279,299
50,373
43,478
-
5,642
83,567
5,015
1,823,347
89,979
687,512
243,690
8,557
29,465
49,046
331,091
2,189
1,441,529
3,264,876
843,182
54,536
2,784
100,783
212,167
43,273
2,546
1,659
1,260,930
2,041
34,945
-
267,670
355,684
347,239
29,862
10,469
-
1,047,910
2,308,840
956,036
1,099,056
35,614
(178,634)
956,036
-
956,036
2020
$’000
RESTATED1
1,867,307
8,078
319,596
96,515
39,243
20,850
22,811
58,685
5,432
2,438,517
153,392
709,866
371,391
11,582
3,847
34,760
242,215
278
1,527,331
3,965,848
1,203,010
235,762
3,278
134,219
211,668
65,456
1,244
2,185
1,856,822
-
40,597
297
392,442
250,514
-
43,720
20,032
1,456
749,058
2,605,880
1,359,968
1,094,095
11,176
254,495
1,359,766
202
1,359,968
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
45
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STATEMENT OF CHANGES IN EQUITY
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
0
0
0
’
$
L
A
T
O
T
I
Y
T
U
Q
E
0
0
0
’
$
T
S
E
R
E
T
N
I
-
N
O
N
G
N
I
L
L
O
R
T
N
O
C
0
0
0
’
$
L
A
T
O
T
0
0
0
’
$
S
T
I
F
O
R
P
I
D
E
N
A
T
E
R
0
0
0
’
$
0
0
0
’
$
S
E
V
R
E
S
E
R
S
E
R
A
H
S
0
0
0
’
$
I
Y
T
U
Q
E
S
E
T
O
N
Y
R
U
S
A
E
R
T
I
D
E
T
U
B
R
T
N
O
C
8
1
3
,
2
6
4
1
,
8
7
2
0
4
0
,
2
6
4
1
,
0
1
0
,
3
5
0
,
1
7
9
3
,
5
1
)
3
9
9
,
1
1
(
6
2
6
,
5
0
4
9
1
0
2
l
y
u
J
1
t
a
e
c
n
a
l
a
B
)
0
3
0
,
4
(
)
9
9
0
,
3
3
(
,
9
8
1
5
2
4
1
,
)
9
4
(
)
8
2
2
,
2
6
6
(
)
7
7
2
,
2
6
6
(
3
4
5
,
5
8
6
8
4
5
,
7
7
0
2
,
3
)
2
4
2
,
9
9
(
,
8
6
9
9
5
3
1
,
)
3
1
6
,
6
2
(
)
6
5
4
,
3
3
4
(
-
-
7
5
2
1
9
6
8
7
2
-
-
-
)
5
4
1
(
2
0
2
)
2
(
)
7
2
3
(
)
9
6
0
,
0
6
4
(
)
9
2
3
(
7
2
1
0
8
0
,
8
1
0
3
9
,
7
3
-
6
3
0
,
6
5
9
-
-
-
-
7
2
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
0
3
0
,
4
(
)
9
9
0
,
3
3
(
)
0
3
0
,
4
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46
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
FCTG Financial Report 2021 for print.indd 46
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7/9/21 3:21 pm
NOTES TO THE FINANCIAL STATEMENTS
F
F1
F2
F3
F4
F5
F6
F7
F8
F9
OTHER INFORMATION
Other expenses
Earnings per share
Trade and other receivables
Contract assets
Other assets
Property, plant and equipment
Leases
Trade and other payables
Contract liabilities
F10
Provisions
F11
Reserves
F12
Tax
F13
Auditor's remuneration
F14
Seasonality
G
G1
G2
G3
H
H1
H2
H3
I
GROUP STRUCTURE
Subsidiaries
Deed of cross guarantee
Parent entity financial information
UNRECOGNISED ITEMS
Commitments
Contingencies
Events occurring after the end of
the reporting period
SUMMARY OF ACCOUNTING
POLICIES
99
99
100
101
103
105
106
107
110
111
112
113
115
118
118
119
119
119
122
124
124
124
124
125
SIGNIFICANT MATTERS
A
A1
A2
A3
A4
A5
A6
A7
B
B1
B2
B3
B4
B5
B6
B7
B8
C
C1
C2
C3
D
D1
D2
D3
D4
E
E1
FINANCIAL OVERVIEW
Segment information
Revenue
Other income
Expenses
Intangible assets
Business combinations
Contingent consideration
CASH MANAGEMENT
Cash and cash equivalents
Financial asset investments
Cash and financial asset investments
– financial risk management
Borrowings
Convertible notes
Ratios
Dividends
Capital expenditure
FINANCIAL RISK MANAGEMENT
Financial risk management
Derivative financial instruments
Other financial assets
REWARD AND RECOGNITION
Key management personnel
Business ownership scheme (BOS)
Share-based payments
Contributed equity and treasury shares
RELATED PARTIES
Investments accounted for using the
equity method
E2
Related party transactions
48
49
49
55
57
58
59
62
63
64
64
66
66
68
70
71
72
73
74
74
78
83
84
84
85
87
93
95
95
97
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
47
SIGNIFICANT MATTERS
The following significant events and transactions occurred during or after the end of the reporting period:
UNDERLYING ADJUSTMENTS
GAIN ON SALE OF ST KILDA BUILDING
On 10 July 2020 the sale of the St Kilda Melbourne head office property was completed for cash proceeds of $62,150,000,
and a gain of $32,982,000 was recognised in other income within the statement of profit or loss. Refer to note A3.
COVID-19 COST BASE AND DISPOSAL OF STORE/HEAD OFFICE ASSETS
• FLT incurred $103,884,000 costs during the period to achieve COVID-19 hibernation cost base reduction ($102,813,000
for the year ended 30 June 2020) including redundancies, lease break fees and IT contract early exit costs. Refer to
note A1.
• FLT incurred $19,063,000 non-cash loss on disposal of head office and store assets during the period due to closures
associated with COVID-19. Refer to note A1.
LIQUIDITY
FLT closely manages and monitors liquidity at a group level through rolling 18-month operating cashflow forecasts and
comparing actual cashflows to this forecast, which is supported by Global Treasury review of cashflow forecasts prepared
weekly at a detailed level by business and country.
On 17 November 2020, the Company issued convertible notes with an aggregate principal amount of $400,000,000. On
22nd February 2021, FLT entered into a $350,000,000 three year secured syndicated debt facility with its existing bank
lenders. The facility refinanced FLT’s bilateral debt facility agreements which totalled $450,000,000, with $100,000,000
repaid in March 2021 from the proceeds of the convertible note issue. FLT will not be required to comply with its existing
operating leverage ratio, fixed charges ratio and shareholder funds ratio covenants until 31 December 2022, at which point
covenants will be calculated based on the six month period from 1 July 2022 to 31 December 2022. Until that time FLT will
be required to maintain a cash to total borrowings ratio of greater than or equal to 1:1 (with total borrowings to exclude
the convertible notes). The facility is guaranteed by certain members of the group and is secured. The total amount drawn
down at the reporting date was $350,000,000.
On 3 July 2020, Flight Centre (UK) Limited (FCUK) issued GBP 65,000,000 of notes under the Bank of England (BoE)
COVID-19 Corporate Financing Facility (CCFF notes) which matured in March 2021 and were repaid. On 16 March 2021
FCUK issued a further GBP 65,000,000 of CCFF notes to refinance the original July 2020 issuance, and these notes mature
in March 2022. On 19 March 2021 FCUK issued a further GBP 50,000,000 of CCFF notes which mature in March 2022. In
total, FCUK has issued GBP 115,000,000 (A$211,747,000) of CCFF notes which mature in March 2022.
COVID-19 continues to impact FLT and has given rise to the loss in FY21. Whilst there is uncertainty in the timing of
the travel rebound and FLT’s revenues, given the cost reduction initiatives executed to date, together with the cash in
bank and long term financing arrangements in place, the Directors are satisfied the company has the ability to meet its
debts as and when due for the next 12 months, and for the financial report to be prepared on a going concern basis. No
adjustments have been made in the financial report in relation to the company's ability to realise its assets and discharge
its liabilities in the normal course of business.
DIVIDENDS
The directors have determined it is not prudent to declare a dividend for the period ended 30 June 2021 due to the
ongoing COVID-19 uncertainty.
48
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
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NOTES TO THE FINANCIAL STATEMENTS A
FINANCIAL OVERVIEW
This section provides information that is most relevant to explaining the group’s performance during the year, and
where relevant, the accounting policies that have been applied and significant estimates and judgements made.
A1
A2
A3
A4
A5
A6
A7
Segment information
Revenue
Other income
Expenses
Intangible assets
Business combinations
Contingent consideration
A1
SEGMENT INFORMATION
(A) IDENTIFICATION AND DESCRIPTION OF SEGMENTS
FLT has identified its operating segments based on the internal reports that are reviewed and used by the board and
global task force (chief operating decision makers – CODM) in assessing performance and in determining resource
allocation.
The company’s executive team currently consists of the following members:
• Managing director
• Chief financial officer
• Chief executive officer – Leisure; and
• Chief executive officer – Corporate.
The executive team, together with the below regional Managing Directors (MDs) form the global taskforce:
• MD – Australia
• MD – The Americas
• MD – EMEA
While the MD’s play a key role in the setting the strategy, they report to the CEOs who then allocate resources and assess
performance. Therefore the MDs are not considered as part of the CODM.
LEISURE
The Leisure segment combines the retail store front and on-line brands for retail customers. It also includes the global
experiences business which incorporates touring, ground-handling and hotels.
CORPORATE
The Corporate segment includes the FCM brand, Corporate Traveller and other Corporate customer brands.
OTHER
Other segment includes Brisbane-based support and wholesale procurement businesses that support the global network
(including Global Procurement Network and India Forex business). It also includes individual businesses that report
directly to head office.
The group consolidation adjustments are also included in this segment.
(B) MAJOR CUSTOMERS
FLT provides services to and derives revenue from a number of customers. The company does not derive more than 10%
of total consolidated revenue from any one customer.
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
49
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
(C) UNDERSTANDING THE SEGMENT RESULT
Segment information is presented below in the manner in which it is presented to the CODMs and upon which they make
their decisions. AASB16 Leases applied from 1 July 2019 however due to the budgeting & forecasting cycle the reporting
to the CODMs was presented on pre AASB16 Leases basis. Therefore profit before tax for both Leisure and Corporate
segments for the year ended 30 June 2020 included the pre AASB16 “rent expense” and the impact of AASB16 is included
within the “other” segment. For the year ended 30 June 2021, leasing has been allocated in the segments as per AASB16.
Underlying information is shown as this is information presented and used by the CODMs.
SEGMENT REVENUE
The measurement of segment revenue has not changed since 30 June 2020. Refer to note A2 for details of
revenue policies.
Sales between segments are carried out at arm’s length and are eliminated on consolidation.
SEGMENT ASSETS AND LIABILITIES
The amounts provided to the board and global task force in respect of total assets and total liabilities are measured in a
manner consistent with that of the financial statements. These reports do not allocate total assets or total liabilities based
on the operations of each segment.
FLT has not disclosed non-current assets by segment as this information is not provided to or reviewed by the chief
operating decision makers nor produced for other reasons and, as such, the cost of developing and providing this
information exceeds the attributable benefits.
TOTAL TRANSACTION VALUE (TTV)
TTV is un-audited, non-IFRS financial information and does not represent revenue in accordance with Australian
Accounting Standards. TTV represents the price at which travel products and services have been sold across the group’s
various operations, both as agent for various airlines and other service providers and as principal, plus revenue from other
sources. TTV has been reduced by refunds. FLT’s revenue is, therefore, derived from TTV.
50
FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
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A1
SEGMENT INFORMATION (CONTINUED)
SEGMENT INFORMATION PRESENTED TO THE BOARD OF DIRECTORS AND GLOBAL TASK FORCE
(D)
The segment information provided to the board and task force for the reportable segments for the years ended 30 June
2021 and 30 June 2020 is shown in the tables on the following pages.
30 JUNE 2021
Segment information
TTV 1
LEISURE
$’000
CORPORATE
$’000
OTHER
$’000
TOTAL
$’000
1,391,190
2,169,089
384,905
3,945,184
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour & hotel operations
Revenue from other businesses
Total revenue from contracts with customers
Net (loss) / profit before tax and royalty
141,594
9,178
2,897
2,731
156,400
(461,615)
211,451
3,265
-
1,820
216,536
(141,390)
Royalty
-
(1,027)
Net (loss) / profit before tax and after royalty
(461,615)
(142,417)
Reconciliation of Statutory PBT to Underlying PBT
Net (loss) / profit before tax and royalty
(461,615)
(141,390)
Gain on sale of St Kilda building
Loss on disposal of head office and store assets
Costs incurred due to COVID-19 cost base transition
Employee benefits
Lease related2
Communications & IT
Employee retention plans
-
15,933
50,023
27,485
1,370
334
-
2,973
11,637
4,231
32
545
13,064
366,109
682
2
9,223
22,971
1,295
1,027
2,322
1,295
(32,982)
157
10,322
2,556
(3,772)
3,734
13,125
2,899
13,774
395,907
(601,710)
-
(601,710)
(601,710)
(32,982)
19,063
71,982
34,272
(2,370)
4,613
Underlying (loss) / profit before tax and royalty
(366,470)
(121,972)
(18,690)
(507,132)
1 TTV is an un-audited, non-IFRS measure.
2 Includes right-of-use asset impairment, gain/loss on disposal of right-of-use assets and other occupancy costs.
FCTG Financial Report 2021 for print.indd 51
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
51
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
30 JUNE 2020 - RESTATED1
Segment information
TTV3
LEISURE2
$’000
CORPORATE2
$’000
OTHER2
$’000
TOTAL
$’000
7,422,193
6,911,108
969,750
15,303,051
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour & hotel operations
Revenue from other businesses
856,770
83,912
169,817
15,014
708,314
14,505
-
3,777
Total revenue from contracts with customers
1,125,513
726,596
29,919
3,365
-
11,879
45,163
1,595,003
101,782
169,817
30,670
1,897,272
Net (loss) / profit before tax and royalty
Royalty
(761,708)
-
Net (loss) / profit before tax and after royalty
(761,708)
(14,002)
(2,736)
(16,738)
(72,876)
(848,586)
2,736
-
(70,140)
(848,586)
Reconciliation of Statutory PBT to Underlying PBT
Net (loss) / profit before tax and royalty
(761,708)
(14,002)
(72,876)
(848,586)
Global Touring impairment
Supplier exposure
Fair value loss on Ignite
Upside investment share of losses
Upside impairment
Hotel impairment
Other impairment
Loss on disposal of store assets
Costs incurred due to COVID-19 cost base
transition
Employee benefits
Lease related4
Communications & IT
Impact of AASB 16 transition
63,475
19,720
3,138
-
-
29,778
6,859
27,348
15,027
67,704
208
-
-
8,904
-
10,454
47,126
-
10,702
811
6,942
1,368
43
-
-
-
-
-
-
-
650
1,040
2,243
1,216
8,062
6,572
63,475
28,624
3,138
10,454
47,126
29,778
18,211
29,199
24,212
70,288
8,313
6,572
Underlying (loss) / profit before tax and royalty
(528,451)
72,348
(53,093)
(509,196)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 The results of the new acquisitions and investments are shown in the following segments: Ignite & Ixtapa in the Leisure segment, Where to in the Corporate segment
and TP Connects in Other segment.
3 TTV is an un-audited, non-IFRS measure.
4 Includes right-of-use asset impairment, gain/loss on disposal of right-of-use assets and other occupancy costs.
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A1
SEGMENT INFORMATION (CONTINUED)
(E) ADDITIONAL INFORMATION PRESENTED BY GEOGRAPHIC AREA
In addition to the pillar segment information provided above, the below table presents geographic revenue disclosures
and also PBT information which has been included to aid user understanding:
ALTERNATIVE PROFIT MEASURES
Underlying information is shown as this is information presented and used by the CODMs.
Underlying (loss) / profit before tax and royalty (PBT) and underlying (loss) / profit after tax (NPAT) are non-IFRS measures.
A reconciliation of these non-IFRS measures and specific items to the nearest measure prepared in accordance with IFRS is
included in the tables on the following pages.
30 JUNE 2021
Segment information
TTV1
Agency revenue from the provision
of travel
Principal revenue from the provision
of travel
Revenue from tour & hotel operations
Revenue from other businesses
Total revenue from contracts
with customers
AUSTRALIA
& NZ
$’000
AMERICAS
$’000
EMEA
$’000
ASIA
$’000
OTHER
SEGMENT
$’000
TOTAL
$’000
2,066,991
802,829
568,169
473,304
33,891
3,945,184
164,681
103,582
78,632
13,593
5,621
366,109
8,118
3,591
-
-
3,897
3,720
447
-
364
76
-
1,312
893
13,125
2,899
4,481
2,899
13,774
176,696
110,893
79,443
14,981
13,894
395,907
Net (loss) / profit before tax and royalty
(250,447)
(152,029)
(71,026)
(23,560)
(104,648)
(601,710)
Royalty
-
-
(1,211)
-
1,211
-
Net (loss) / profit before tax and
after royalty
Reconciliation of Statutory PBT to Underlying PBT
(250,447)
(152,029)
(72,237)
(23,560)
(103,437)
(601,710)
Net (loss) / profit before tax and royalty
(250,447)
(152,029)
(71,026)
(23,560)
(104,648)
(601,710)
Gain on sale of St Kilda building
(32,982)
-
-
Loss on disposal of head office and
store assets
8,315
10,276
134
-
45
-
(32,982)
293
19,063
Costs incurred due to COVID-19 cost base transition
Employee benefits
Lease related2
Communications & IT
Employee retention plans
Underlying (loss) / profit before
tax and royalty
1 TTV is an un-audited, non-IFRS measure.
53,155
16,982
(3,524)
428
12,270
20,136
1,135
191
695
1,057
4,805
(2,850)
-
342
26
-
96
(22)
19
3,556
71,982
34,272
(2,370)
4,613
(208,073)
(108,021)
(72,705)
(22,336)
(95,997)
(507,132)
2 Includes right-of-use asset impairment, gain/loss on disposal of right-of-use assets and other occupancy costs.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
30 JUNE 2020 - RESTATED1
Segment information
TTV3
Agency revenue from the provision
of travel
Principal revenue from the provision
of travel
AUSTRALIA
& NZ2
$’000
AMERICAS2
$’000
EMEA
$’000
ASIA
$’000
OTHER
SEGMENT2
$’000
TOTAL
$’000
7,343,602
3,646,402
2,454,748
1,666,911
191,388
15,303,051
774,867
431,553
324,525
63,273
785
1,595,003
81,293
9,938
4,595
450
5,506
101,782
Revenue from tour & hotel operations
-
-
-
-
169,817
Revenue from other businesses
14,008
4,150
2,864
3,288
6,360
169,817
30,670
Total revenue from contracts
with customers
870,168
445,641
331,984
67,011
182,468
1,897,272
Net (loss) / profit before tax and royalty
(423,743)
(101,682)
(66,356)
(16,533)
(240,272)
(848,586)
Royalty
2,774
-
(2,774)
-
-
-
Net (loss) / profit before tax and
after royalty
(420,969)
(101,682)
(69,130)
(16,533)
(240,272)
(848,586)
Reconciliation of Statutory PBT to Underlying PBT
Net (loss) / profit before tax and royalty
(423,743)
(101,682)
(66,356)
(16,533)
(240,272)
(848,586)
Global Touring impairment
Supplier exposure
Fair value loss on Ignite
Upside investment share of losses
Upside impairment
Hotel impairment
Other impairment
Loss / (gain) on disposal of store assets
Costs incurred due to COVID-19
cost base transition
Employee benefits
Lease related4
Communications & IT
Impact of AASB 16 transition
Underlying (loss) / profit before
tax and royalty
-
28,624
3,138
-
-
-
8,951
13,241
-
-
-
-
-
-
-
6,676
-
-
-
-
-
-
-
-
-
-
-
-
6,282
8,375
819
1,183
63,475
-
-
10,454
47,126
29,778
2,159
(276)
3,803
3,552
13,092
1,483
2,282
36,069
13,809
20,074
7,001
536
1,312
(281)
-
5,314
267
-
920
69
-
83
63,475
28,624
3,138
10,454
47,126
29,778
18,211
29,199
24,212
70,288
8,313
6,572
(322,380)
(76,614)
(13,219)
(11,861)
(85,122)
(509,196)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 The results of the new acquisitions and investments are shown in the following geography groups: Ignite and TP Connects in Australia & NZ, Ixtapa in Americas and
Whereto in Other.
3 TTV is an un-audited, non-IFRS measure.
4 Includes right-of-use asset impairment, gain/loss on disposal of right-of-use assets and other occupancy costs.
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A2
REVENUE
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour & hotel operations
Revenue from other businesses
Total revenue from contracts with customers
2021
$’000
2020
$’000
RESTATED1
366,109
1,595,003
13,125
2,899
13,774
101,782
169,817
30,670
395,907
1,897,272
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
Refer below for details of revenue constraint due to potential cancellation of travel related to COVID-19. Refer to note F9
for contract liability raised.
Additional disaggregation of revenue by geographic region is presented in note A1 Segment Information.
ACCOUNTING POLICY
REVENUE FROM CONTRACTS WITH CUSTOMERS
Agency revenue from the provision of travel
Revenue is generated when FLT, acting as an agent, arrange and book travel and travel related products to be provided
by suppliers to retail and corporate consumers. The supplier of the travel products is the principal in the wider travel sales
transaction. From FLT’s perspective (under AASB 15), the supplier of the travel products is the customer in the agency
relationship.
The service is paid for in a variety of ways, including guaranteed base payments, commissions, mark-ups, transaction fees,
other ancillary fees and in the case of cancelled travel, cancellation fees. Rebates are received for using travel consolidator
systems known as Global Distribution Systems (GDS) to access and book travel supplier products. In addition, volume
incentives are received from suppliers for achieving annual targets.
Guaranteed base payments, commission, mark-ups, transaction fees are paid for and received at the time of booking.
Rebates and volume incentive payments received will vary depending on the terms of the contract. Receipt of payment can
vary between upfront to post contract completion once availed data is known.
Revenue is recognised over time as the supplier of the travel products (the customer in the agency relationship under
AASB 15) simultaneously receives and consumes the benefit of the travel agency services. Practically revenue is recognised
when the booking is finalised as this is when the performance obligation is satisfied.
The revenue is variable, however it is not subject to material constraints, except for:
1) COVID-19 cancellation
FLT’s agency revenue from the provision of travel is variable and in an ordinary operating environment is not subject to
material constraints, hence is recognised at the time of ticketing when the performance obligation is satisfied.
In the current COVID-19 environment, there is a constraint attached to this revenue, namely that the booking may be
cancelled prior to travel (either by the supplier, end-consumer or due to government restrictions) requiring a refund of the
agency revenue earned by FLT.
Whilst FLT has terms & conditions in place to allow the retention of cancellation fees on cancellation of bookings, a
decision has been made that these will not be applied in all circumstances.
Therefore FLT has recognised a contract liability which recognises the uncertainty that the travel may be cancelled prior to
departure requiring a refund of the agency revenue earned by FLT. This is calculated using booking volumes and margins,
known or anticipated travel restrictions and cancellation probability rate based on COVID-19 trading patterns.
This constraint of revenue will unwind when the uncertainty is removed. Either the end consumer will travel, in which case
FLT will recognise the revenue in the statement of profit or loss. Or if the travel does not proceed, this contract liability will
be settled via payment to the end-consumer.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A2
REVENUE (CONTINUED)
2) Volume incentives which are recorded by applying the following:
• Year-end differences – judgements and estimation techniques are required to determine revenue from consumers
anticipated to travel over the remaining contract year and the associated incentive rate applicable to these forecast
levels. A combination of historical data and actual ticketed data from external sources is used to predict the anticipated
travel revenue and associated incentive rate.
• Utilisation rates – the likelihood of the consumer cancelling the travel prior to departure.
• Constraints – in the current COVID-19 environment all volume incentives have been constrained due to future
cancellations and the uncertainty of predicting future bookings. Volume revenue has been booked to the extent of
flown / availed revenue at guaranteed rates.
Except as noted above, the travel supplier, as principal, is responsible for refunds to the front end customer,
not FLT as agent.
SUPPLIER INCENTIVES AND LUMP-SUM REVENUE
From time-to-time, incentives or lump sum amounts are received from suppliers. The supplier of the travel products is the
customer in the agency relationship under AASB 15. The recognition pattern is dependent on the specific terms of each
contract. The revenue is only recognised upfront where there has been a distinct service transferred upfront, otherwise
it is recognised over the term of the contract in line with the delivery of the performance obligation. The revenue can be
either fixed or variable and is constrained where contract terms require the supplier to be refunded in part or full upon
termination of the contract.
Associated contract costs may be eligible for capitalisation as fulfilment assets and amortised over the same period.
Lump sum deferred revenue is recognised over the contract terms which typically range between 1 – 10 years.
Principal revenue from the provision of travel
Revenue is generated when FLT, acting as principal, provides other services to the customer such as hotel management
through the Cross Hotels (previously BHMA) brand, events and production management, conferences, marketing
campaigns, Travel Money currency sales and franchise programs. In addition, from time-to-time FLT will develop and offer
products in its retail and corporate agency business’ for which FLT is principal.
Revenue is recognised when the performance obligation has been satisfied. The revenue may be variable or fixed and is
typically recognised over time as the service is provided. The most likely method is used for variable revenue recognition.
The revenue is not subject to material constraints as revenue recognition is over time as service is provided.
As principal, FLT is responsible for refunds to the customer.
Revenue from tour and hotel operations
FLT has a number of touring and ground-handling operations provided through the brands Top Deck, Back-Roads,
Discova Asia (previously Buffalo Tours) and Discova Americas (previously Olympus Tours). In addition FLT provides hotel
operations through Away Camakila.
Revenue is generated from tour and hotel operations when FLT, acting as principal, provides tours, ground-handling
services and hotel accommodation and other hotel services (eg restaurant, spa). Revenue is variable and includes the
gross amount sold less any cancellations/refunds.
Revenue is recognised over the duration of the tour/accommodation period or when the ground-handling service or hotel
service is provided. The costs associated with fulfilling these services such as transport, accommodation costs, wages
and food and beverage are expensed over the same duration and disclosed as cost of tour and hotel operations in the
statement of profit or loss.
As principal, FLT is responsible for refunds to the customer, with an allowance for refunds taken into consideration in the
recognition of revenue.
REVENUE FROM OTHER BUSINESSES
Revenue is generated when FLT, typically acting as principal, provides other services to customers. This includes services
provided by the brands Healthwise, Moneywise, and FC Business School. Revenue is recognised when the performance
obligation has been satisfied. The revenue may be variable or fixed and is typically recognised over time as the service
is provided. The most likely method is used for variable revenue recognition. The revenue is not subject to material
constraints as it is recognised only when all performance obligations have been satisfied.
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A3
OTHER INCOME
FAIR VALUE GAIN ON CHANGE IN CONTROL
NOTES
Fair value loss on Ignite Travel Group
Total
OTHER INCOME
Interest
Rent and sub-lease rentals
Gain on sale of St Kilda building
Net foreign exchange gains
(Loss) / Gain on contingent consideration
Government subsidies
Total
F7
A7
2021
$’000
-
-
5,709
6,012
32,982
-
(840)
236,146
280,009
2020
$’000
(3,138)
(3,138)
14,599
4,250
-
28,139
4,735
145,221
196,944
GAIN ON SALE OF ST KILDA BUILDING
On 10 July 2020 the sale of the St Kilda Melbourne head office property was completed for cash proceeds of $62,150,000.
Immediately prior to the sale, the building had been recognised in the balance sheet as held for sale at the carrying
amount of $20,850,000.
FLT continue to occupy a portion of the premises, therefore as part of the sale and leaseback, a net liability amount of
$8,318,000 has been recognised in the balance sheet.
A gain of $32,982,000 was recognised in other income within the statement of profit or loss and is presented within the
Australia & New Zealand geographic area and the Other pillar segment.
GOVERNMENT SUBSIDIES
Due to the financial impact of COVID-19, FLT applied for and received wage subsidy and property related grants from
various governments.
The conditions of the wage subsidy grants vary globally but are broadly based on employer, employee and payment
conditions, which FLT has met. The length of time these grants are available varies between nations.
As at 30 June 2021, the time frame to access wage subsidies globally is until December 2021. Depending on the
conditions of the grant, it is recognised as a trade receivable (refer note F3) until the payment is received, which is typically
within 7-14 days of submission, or where payment has been received in advance, recognised in deferred revenue (refer
note F9) and released to the statement of profit or loss over the term of the grant.
ACCOUNTING POLICY
Grant income is generated and can be recognised when there is reasonable assurance that the conditions attached to the
grant income will be met and that the grant will be received.
The income is recognised in the statement of profit or loss over the periods in which FLT incurs expenses for which the
grants are intended to compensate.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A4
EXPENSES
Profit/(loss) before income tax includes the following expenses:
FINANCE COSTS
BOS interest expense
Interest and finance charges
Amortisation of convertible note at effective interest rate
Lease interest expense
Unwind of make good provision discount
Total finance costs
OTHER EXPENSES
Other occupancy costs
Rent expense
Consulting and outsourcing fees
Independent agent consulting fees
Communication and IT
Net foreign exchange losses
Supplier exposure2
Bad debts expense
Other expenses
Total other expenses
NOTES
F7
F10
F7
F3 / F4
2021
$’000
27
9,000
15,360
12,507
216
37,110
30,568
6,028
45,345
9,536
109,641
3,351
-
(1,033)
43,345
246,781
2020
$’000
RESTATED1
14,568
3,738
-
17,134
2,813
38,253
68,900
29,863
88,276
32,467
184,085
-
28,624
43,138
181,520
656,873
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 Supplier exposure relates to one-off items of $7,056,000 relating to Tempo supplier collapse and $21,568,000 relating to Virgin Australia voluntary administration in the
prior year.
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A5
INTANGIBLE ASSETS
OVERVIEW
FLT continues to focus on enhancing productivity, reducing costs and making it easier for customers to interact and
transact with its brands and people across all channels. Growing digital capabilities has also been a priority. These
strategies are reflected in the growth in intangibles through additions.
OPENING BALANCE AT 1 JULY 2019
Cost
Accumulated amortisation (including accumulated
impairment losses)
Net book amount at 1 July 20191
Additions
Acquisitions
Customer relationships recognised on acquisition
Transfers
Disposals & retirements4
Amortisation
Impairment charge
Exchange differences
Net book amount at 30 June 20201
OPENING BALANCE AT 1 JULY 2020
Cost
Accumulated amortisation (including accumulated
impairment losses)
Net book amount at 1 July 20201
Additions
Acquisitions
Customer relationships recognised on acquisition
Transfers
Disposals & retirements4
Amortisation
Impairment charge
Exchange differences
Net book amount at 30 June 2021
Cost
Accumulated amortisation (including accumulated
impairment losses)
Net book amount at 30 June 2021
GOODWILL
$’000
707,426
(108,787)
598,639
-
50,840
(22,945)
-
-
-
(58,741)
3,220
571,013
739,448
(168,435)
571,013
-
-
-
-
-
-
-
(21,934)
549,079
711,353
(162,274)
549,079
BRAND NAMES,
LICENCES
AND CUSTOMER
RELATIONSHIPS2
$’000
SOFTWARE3
$’000
TOTAL
$’000
96,861
190,339
994,626
(78,058)
(92,352)
(279,197)
18,803
97,987
715,429
-
14
22,945
(739)
-
(6,680)
(13,398)
372
21,317
51,569
14,600
-
739
(6,317)
(22,380)
(19,335)
673
51,569
65,454
-
-
(6,317)
(29,060)
(91,474)
4,265
117,536
709,866
119,324
223,814
1,082,586
(98,007)
(106,278)
(372,720)
21,317
117,536
709,866
36
-
-
-
-
(4,951)
-
(625)
15,777
114,948
(99,171)
15,777
33,942
33,978
-
-
-
(2,014)
(20,556)
-
(6,252)
122,656
-
-
-
(2,014)
(25,507)
-
(28,811)
687,512
230,459
1,056,760
(107,803)
(369,248)
122,656
687,512
1 Software balances restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements.
Refer to Note I(b) for details.
2 Definite life brand names are amortised over their expected useful life, not exceeding 15 years. Customer relationships are amortised over their expected useful life,
not exceeding seven years.
3 Relates predominately to software which is amortised using the straight-line method over the project’s period of expected future benefits, which varies from 2.5 to 5
years, with some core software products amortised over periods 10 to 15 years.
4 Balances shown net of accumulated amortisation.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A5
INTANGIBLE ASSETS (CONTINUED)
(A) IMPAIRMENT TESTS
Critical accounting estimates, assumptions and judgements – impairment of goodwill and indefinite life intangibles
The group tests goodwill and indefinite life intangibles (mainly brand names) annually for impairment, in accordance with
the accounting policy stated in note I(g). For all cash-generating units (CGUs) which contain goodwill or indefinite life
intangibles and all other CGUs which show an indicator of impairment, the recoverable amounts have been determined
based on the higher of fair value less costs of disposal or value-in-use calculations. These calculations use cash flow
projections based on management’s financial forecasts, the expected rebound timeline to pre-COVID-19 operating results
with reference to external market view of future travel prospects and cover a five-year period. Refer below for details of
these assumptions and the potential impacts of reasonable changes to the assumptions.
Goodwill and indefinite life intangibles are allocated to the CGUs, identified according to relevant business and country of
operation.
Each segment includes a number of separately identifiable CGUs. Goodwill and indefinite life intangibles allocated to
individually significant CGUs are presented at the net book amount below:
Australia Leisure
Global Corporate2
Discova3
Student Universe
Other1
Total
GOODWILL
INDEFINITE LIFE
BRAND NAMES & LICENCES
2021
$’000
167,773
311,818
26,875
17,270
25,343
549,079
2020
$’000
178,150
314,278
28,379
18,884
31,322
571,013
2021
$’000
-
-
-
-
193
193
2020
$’000
-
-
-
-
205
205
1 Other includes CGUS which are not individually significant.
2 In the prior year, Europe Corporate, USA Corporate, UK Corporate, Australia FCM, Canada and certain other countries were disclosed separately. These CGU’s,
including a portion of Canada, were reallocated to the Global Corporate CGU during the year to more accurately reflect the way management is now monitoring and
reporting activities. Prior year comparatives have also been restated.
3 Discova Asia and Discova America were combined during the year to more accurately reflect the way management is now monitoring and reporting activities.
FLT owns these brands and licences and intends to continue to use them indefinitely.
Current year
There has been no impairment of goodwill or indefinite life brand names & licences in the current year.
Prior year
In the prior year the Global Touring CGU was impaired $63,475,000 (including total goodwill impairment of $36,215,000).
Post impairment, there was no remaining goodwill, intangible assets, or property, plant and equipment in the Global
Touring CGU.
FLT also recorded a non-cash impairment in the prior year to goodwill, intangible assets, and property, plant and
equipment of $29,778,000 in Cross Hotels and Camakila which form the Global Hotels CGU. Post impairment there was no
remaining goodwill, intangible assets, or property, plant and equipment in the Hotels CGU.
In the prior year a non-cash impairment of $7,238,000 of goodwill for other immaterial CGUs due to changes in growth
expectations caused by COVID-19 was recorded.
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A5
INTANGIBLE ASSETS (CONTINUED)
IMPAIRMENT (CONTINUED)
(B) KEY ASSUMPTIONS USED FOR VALUE-IN-USE / FAIR VALUE LESS COST TO SELL CALCULATIONS
GOODWILL & BRAND NAMES
CGU
Australia Leisure
Global Corporate1
Discova
Student Universe
Other countries (excluding those listed above)
1 Global Corporate is a new aggregated CGU in FY21.
PRE-TAX DISCOUNT RATE
2021
%
12.8
12.2
18.7
13.5
12.8
2020
%
11.2
-
16.9
11.8
12.9
The discount rates shown were applied to CGUs within each of the geographic areas. For the purposes of impairment
testing, value in use and fair value methodologies were applied and a terminal rate of 2.0% - 2.5% (2020: 2.0% - 2.5%) was
used to extrapolate cash flows beyond the budget period and calculate a terminal value.
These assumptions have been used for the analysis of each CGU within the business segment, in line with local long-term
inflation.
The basis of estimation of the five-year cash flows uses the following key operating assumptions:
• Five-year budgeted EBITDA is based on management’s forecasts of revenue from travel services, taking into account
the timelines for expected rebound of domestic and international travel
• Revenue forecasts take into account historical revenue and consider external factors such as market sector and
geography
• Costs are calculated taking into account historical margins, forecast increases and estimated inflation rates over the
period, consistent with the locations in which the CGUs operate
• Revenue and cost forecasts have taken into consideration the impacts of COVID-19 within an estimated potential date of
travel returning to pre-COVID levels benchmarked to industry forecasts
• Where fair value less cost to sell methodology has been appropriately applied, the costs to sell are estimated at 2% of
enterprise value
Management has calculated the discount rates based on available market data and data from comparable listed
companies within the travel sector.
(C) IMPACT OF POSSIBLE CHANGES IN KEY ASSUMPTIONS
COVID-19 has had an impact on the business. Assumptions around border restrictions lifting and travel returning
(international and domestic) are key assumptions in the impairment models, any delay to externally benchmarked
forecasts could have a further impact on the business. There are no CGUs identified as being sensitive to changes in other
key assumptions.
Goodwill is recorded based on the fair value of the business acquired on the acquisition date. Should this value fall,
impairment of assets (including goodwill) may arise in future periods.
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61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A6
BUSINESS COMBINATIONS
(A) CURRENT YEAR ACQUISITIONS
There were no acquisitions in the current period.
(B) PRIOR YEAR ACQUISITIONS
Summary of acquisitions
WHERE TO
During the period, escrow payments recognised at 30 June 2020 of $145,000 were paid in relation to the WhereTo Inc
acquisition. The accounting for the business combination is now finalised.
IGNITE
The accounting for the business combination was finalised prior to 30 June 2020 with no significant changes.
IXTAPA
The accounting for the business combination was finalised prior to 30 June 2020 with no significant changes.
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A7
CONTINGENT CONSIDERATION
CURRENT
Contingent consideration
Total current contingent consideration
NON-CURRENT
Contingent consideration
Total non-current contingent consideration
2021
$’000
2,784
2,784
-
-
2020
$’000
3,278
3,278
297
297
Contingent consideration is recognised in relation to the acquisitions listed below. FLT has determined that it is classified
as Level 3 (2020: Level 3) under the AASB 13 Fair value measurement hierarchy as the main valuation inputs outlined below
are unobservable.
Any changes in the fair value of these liabilities are recorded through other income, finance costs or other expenses in the
statement of profit or loss.
The put option liabilities that exist, outlined for each company below, have been recognised as a financial liability and in
the acquisition reserve of the parent entity.
AVMIN PTY LIMITED (AVMIN)
The financial liability related to the put option for AVMIN of $2,784,000 (2020: $1,683,000) has been recorded as part of
current contingent consideration. The potential undiscounted amount of this liability has been estimated as the value
of future expected cash flows for the settlement of the put option for AVMIN. The expected cash flows are based on a
multiple of the average NPAT for the year ended 30 June 2020 and for the year ended 30 June 2021.
BESPOKE HOSPITALITY MANAGEMENT ASIA (BHMA)
The final payments for BHMA of $55,000 were settled in July 2020. No financial liability was recognised in respect of this at
30 June 2020, therefore, a $55,000 loss on fair value has been recognised during the period.
BLC VENTURES LTD (IXTAPA)
There is no financial liability as at 30 June 2021 (30 June 2020: $297,000).
The potential amount of this liability was based on a multiple of expected EBITDA for two subsequent 12 month periods
post acquisition. The expected EBITDA for the second 12 month period post acquisition has been reassessed at 30
June 2021 and this assessment indicates that it is unlikely that EBITDA will be greater than nil. As such, the contingent
consideration recorded in respect of this has been released and recognised as a fair value gain on contingent
consideration during the year ended 30 June 2021.
UMAPPED INC (UMAPPED)
The final holdback payment for Umapped of $1,579,000 was settled on 24 September 2020. No financial liability remains in
respect of this acquisition as at 30 June 2021.
Reconciliation of Level 3 contingent consideration for the period is set out below:
Opening balance at 1 July 2020
New business combinations
Payments
Unrealised (gains) / losses recognised in the statement of profit or loss
and other comprehensive income
Other unrealised (gains) / losses including net foreign exchange movements
Closing balance at 30 June 2021
CONTINGENT
CONSIDERATION
$’000
NOTES
A6
A3
3,575
-
(1,634)
840
3
2,784
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63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B
CASH MANAGEMENT
FLT has traditionally focused on maintaining a strong balance sheet through increasing cash and investments and
keeping low levels of debt. The strategy also considers the group's expenditure, growth and acquisition requirements,
and the desire to return dividends to shareholders.
COVID-19 has caused a prolonged downturn of demand due to the unprecedented restrictions that governments
globally have imposed on travel to slow the spread of COVID-19.
This has required FLT to implement a comprehensive package of initiatives during the period to preserve cash and
strengthen its balance sheet to position it for future growth when travel rebounds.
B1
B2
B3
B4
B5
B6
B7
Cash and cash equivalents
Financial asset investments
Cash and financial asset investments - financial risk management
Borrowings
Ratios
• Net debt
• Gearing ratio
Dividends
Capital expenditure
B1
CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Restricted cash1
Total cash and cash equivalents
2021
$’000
1,172,115
118,716
2020
$’000
1,779,550
87,757
1,290,831
1,867,307
1 Restricted cash relates to cash held within legal entities of the Group for payment to product and service suppliers or cash held for supplier guarantees. Restricted
cash includes monies paid to the Group by customers for payment to local International Air Transport Association (IATA) for ticketed travel arrangements.
RECONCILIATION TO STATEMENT OF CASH FLOWS
Cash and cash equivalents
Bank overdraft
Balance per Statement of Cash Flows
2021
$’000
2020
$’000
1,290,831
1,867,307
-
(1,510)
1,290,831
1,865,797
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B1
CASH AND CASH EQUIVALENTS (CONTINUED)
RECONCILIATION OF LOSS AFTER TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
(Loss) / Profit after income tax for the year
Depreciation and amortisation
Net (gain) / loss on disposal of non-current assets
Net (gain) / loss on sale of financial assets at fair value
Share of loss / (profits) of joint ventures & associates
Impairment charges
Net (gain) on financial assets
Fair value (loss) / gain on change in control
Fair value adjustment to contingent consideration
Non-cash employee benefits expense - share based payments
Amortisation of convertible note
Lease surrender payments
Net exchange differences
2021
$’000
2020
$’000
RESTATED1
(433,456)
(662,228)
137,973
(31,028)
(2,942)
(17,471)
35,709
-
-
840
13,323
9,196
54,285
230,612
18,365
282
5,047
217,117
(156)
3,138
(4,735)
5,385
-
-
(49,836)
(16,030)
(Increase) /decrease in trade and other receivables, contracts assets and other assets
96,514
612,909
(Increase) /decrease in deferred tax assets and liabilities
(Increase) / decrease in inventories
Increase / (decrease) in trade creditors and other payables
Increase / (decrease) in net income taxes payable
Increase / (decrease) in other provisions
Net cash (outflow) / inflow from operating activities
-
-
(551,315)
(139,463)
(34,562)
(912,233)
817
(3)
(220,611)
(207,046)
6,494
(10,643)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B2
FINANCIAL ASSET INVESTMENTS
Equity investments - Fair value through profit or loss (FVTPL)
Debt securities - Fair value through profit or loss (FVTPL)
Debt securities - Fair value through other comprehensive income (FVOCI)
Total financial asset investments
2021
$’000
4,320
5,916
54,906
65,142
2020
$’000
4,081
3,997
-
8,078
Debt securities measured at FVTPL do not have contractual cash flow characteristics.
Debt securities measured at FVOCI have contractual cash flow characteristics that are solely payment of principal and
interest and are held in a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets.
Debt securities and repurchase receivables are measured at amortised cost only if both the following conditions are met:
• it is held within a business model whose objective is to hold assets in order to collect contractual cash flows
• the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and
interest
Debt securities at FVOCI (corporate bonds) and debt securities at FVTPL are measured at fair value, which is determined
by reference to price quotations in a market for identical assets. FLT has determined that they are classified as Level 2
(2020: Level 2) under the AASB 13 Fair Value Measurement hierarchy.
Equity investments at FVTPL are measured at fair value, which is determined by an independent qualified valuer in
accordance with Australian Accounting Standards (AASB’s) and International Private Equity and Venture Capital Valuation
Guidelines as adopted by Australian Private Equity and Venture Capital Association Limited. FLT has determined that
they are classified as Level 3 (2020: Level 3) under the AASB 13 Fair Value Measurement hierarchy, based on the valuation
technique as described above.
B3
CASH AND FINANCIAL ASSET INVESTMENTS - FINANCIAL
RISK MANAGEMENT
CREDIT RISK
Credit risk arising from cash and cash equivalents and financial asset investments is managed in accordance with group
treasury policy. Limits are set on credit rating, type of security, counterparty exposure and maturity.
Credit quality has been assessed by reference to external credit ratings (if available) or to historical information about
counterparty default rates. There has been no significant increase to credit risk for cash and cash equivalents and
financial assets.
EQUIVALENT S&P RATING
AT 30 JUNE 2021
Cash and cash equivalents
Equity investments - FVTPL
Debt securities - FVTPL
Debt securities - FVOCI
AT 30 JUNE 2020
Cash and cash equivalents
Equity investments - FVTPL
Debt securities - FVTPL
AA
AND
ABOVE
$’000
-
-
-
-
-
-
-
AA-
TO A-
$’000
BBB+
TO BBB-
$’000
1,137,036
112,838
-
-
-
-
50,857
4,049
1,744,102
21,642
-
-
-
-
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
NON
INVESTMENT
GRADE /
UNRATED
$’000
UNRATED -
FX BUSINESS
CURRENCY
HOLDINGS
$’000
TOTAL
$’000
1,290,831
4,320
5,916
54,906
-
-
-
-
57,924
1,867,307
-
-
4,081
3,997
40,957
4,320
5,916
-
43,639
4,081
3,997
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B3
CASH AND FINANCIAL ASSET INVESTMENTS - FINANCIAL
RISK MANAGEMENT (CONTINUED)
ACCOUNTING POLICY
FLT has applied the simplified approach for provisioning for expected credit losses prescribed by AASB 9 for financial
assets held at amortised cost. Additional information on trade and other receivables accounting policies is included in note
I(m).
The maximum exposure to credit risk is the carrying amount of financial assets and the carrying amount of cash and cash
equivalents as disclosed above. Rated assets falling outside the AAA and BBB- range are considered non-investment
grade/ unrated. These include term deposits in overseas banks held by the subsidiaries, mainly in South Africa. Unrated
FX business currency holdings consists of cash on hand for trading purposes as part of the Travel Money foreign exchange
business.
MARKET RISK
INTEREST RATE AND FOREIGN CURRENCY RISK
The group holds investments at variable rates. FLT’s profit and operating cash flows are, therefore, exposed to changes in
market interest rates. The group constantly analyses its interest rate exposure.
Refer to note C1 for sensitivity of interest rate risk and foreign currency risk.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B4
BORROWINGS
CURRENT
Bank loans
Net unsecured notes principal1
Total current borrowings
NON-CURRENT
Bank loans
Total non-current borrowings
NOTES
D2
1 Refer to note D2 for further information on the net unsecured notes that form part of the Business Ownership Scheme (BOS).
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
BORROWINGS
Opening balance at 1 July
Cashflow - Proceeds from borrowings1
Cashflow - Repayment of borrowings1
Cashflow - Repayment of bank overdrafts
Foreign exchange movement
Amortisation of borrowing at effective interest rate
Closing balance at 30 June
2021
$’000
212,126
41
212,167
2020
$’000
210,323
1,345
211,668
355,684
355,684
250,514
250,514
2021
$’000
462,182
326,445
(222,408)
(1,510)
3,142
-
2020
$’000
185,085
412,395
(137,873)
1,510
167
898
567,851
462,182
1 This includes the bank debt facilities, the periodic use of the repurchase facility and operation of the Business Ownership Scheme (BOS) during the year. Further
details of BOS are included in note D2.
The Group classifies interest paid within cash flows from operating activities.
FINANCIAL RISK MANAGEMENT
CAPITAL MANAGEMENT
In November 2020, FLT entered into commitment letters with its existing bank lenders for a $350,000,000 three year
secured syndicated debt facility with financial close on 22 February 2021. The facility refinanced FLT’s bilateral debt facility
agreements totalling $450,000,000 with $100,000,000 repaid from the proceeds of the successful convertible note issue in
November 2020.
FLT is not required to comply with its existing operating leverage ratio, fixed charges ratio or shareholder funds ratio
covenants until 31 December 2022, at which point covenants will be calculated based on the six month period from 1 July
2022 to 31 December 2022. Until that time, FLT is required to maintain a cash to total borrowings ratio of greater than or
equal to 1:1 (with total borrowings to exclude the convertible notes).
The facility is guaranteed by certain members of the group and is secured. The total amount drawn down at the reporting
date was $350,000,000.
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B4
BORROWINGS (CONTINUED)
FINANCIAL RISK MANAGEMENT (CONTINUED)
CASH FLOW AND FAIR VALUE INTEREST RATE RISK
The group holds borrowings which are issued at both fixed and variable rates. FLT’s profit and operating cash flows are,
therefore, exposed to changes in market interest rates.
The group constantly analyses its interest rate exposure, taking into consideration refinancing, renewal of existing
positions and alternative financing. The group calculates the impact a defined interest rate shift will have on profit or loss.
For each analysis, the same interest rate shift is used for all currencies.
Under group policy, the maximum percentage of outstanding external group debt that may be maintained at a fixed
interest rate is 50%, unless the group’s Global CFO and Global Treasurer approve otherwise. Current bank loan facilities
are subject to annual review (except the three-year syndicated debt facility) and are a mix of fixed and floating interest
rates.
Non-current loan facilities have maturities between 2-3 years (2020: 1-2 years) and are at a mix of fixed and floating rates.
The current interest rates on loan facilities range from 0.55% - 6.84% (2020: 0.25% - 6.84%).
LIQUIDITY RISK
The group has access to additional financing via unused bank loan facilities, repurchase agreements, credit card facilities,
bank guarantees and letter of credit facilities.
Unused
Used
Total facilities
BANK LOANS
& LEASING FACILITIES
CREDIT CARDS
BANK GUARANTEES
& LETTERS OF CREDIT
2021
$’000
4,558
2020
$’000
4,159
570,373
460,837
574,931
464,996
2021
$’000
32,419
12,795
45,214
2020
$’000
90,570
2,774
93,344
2021
$’000
42,982
48,978
91,960
2020
$’000
65,578
64,856
130,434
Bank guarantees and letters of credit are provided as security on various facilities with vendors and in accordance with
local travel agency licensing and International Air Transport Association (IATA) regulations.
Refer to note C1 for a sensitivity analysis of borrowings’ interest rate risk and details of borrowings’ maturity profiles and
associated liquidity risks.
There have been no defaults during the period.
FAIR VALUE
The carrying amount of the group’s borrowings approximates their fair values, as commercial rates of interest are paid and
the impact of discounting is not significant.
ASSETS PLEDGED AS SECURITY
The $350,000,000 syndicated debt facility is secured against the assets of Flight Centre Travel Group Limited and certain
subsidiaries of the group who are also guarantors. In addition, $41,500,000 of FLT's cash is invested with the providers
of certain bank guarantees and letter of credit facilities and used as collateral for bank guarantees and letters of credit
issued under those facilities.
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69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B5
CONVERTIBLE NOTES
SIGNIFICANT MATTERS
On 17 November 2020, the Company issued convertible notes with an aggregate principal amount of $400,000,000. There
was no movement in the number of these convertible notes since the issue date.
The bonds are convertible at the option of the bondholders into ordinary shares with the initial conversion price of $20.04
per share (convertible into 19,960,080 shares) at any time on or after 41 business days after issuance and up to the close of
business on the maturity date.
Note holders have an option to redeem the bond at the end of 4 years at face value plus any accrued interest. Any
convertible notes not converted will be redeemed on 17 November 2027 at the principal amount together with accrued
but unpaid interest thereon. The bonds carry interest at a rate of 2.50% per annum (effective interest rate of 7.00% per
annum based on a four year amortisation period on estimation of cashflow timing in line with four year redemption
option), which is payable semi-annually in arrears in May and November. Interest expense for the period is $15,360,000,
comprised of $9,196,000 amortisation and $6,164,000 coupon paid or payable at the end of the period. The interest
expense is recognised in finance costs in the statement of profit or loss.
The fair value of the liability component was estimated at the issuance date using an equivalent market interest rate for
a similar bond without a conversion option. The residual amount is assigned as the equity component and is included in
reserves. FLT applies significant judgment in determining the amortisation period.
In November 2020, Gainsdale Pty Ltd, CEO Graham Turner’s shareholding company entered into a stock borrow
agreement with Goldman Sachs placing 5,400,000 shares in a twelve month stock borrow facility to support the FLT
convertible note issue.
The convertible notes issued during the period have been split into the liability and equity components as follows:
Opening balance at 1 July 2020
Nominal value of convertible notes issued on 17 November 2020
Gross equity component of convertible note
Direct transaction costs attributable to the convertible note
Liability component at 17 November 2020
Amortisation of borrowings at effective interest rate
Liability component at 30 June 2021
Transaction costs relate to the equity component of $1,074,000 and liability component of $6,698,000.
Equity component of convertible note after tax of $16,255,000 (refer note F12) is $37,930,000 (refer note F11).
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Opening balance at 1 July 2020
Cashflow - proceeds from issuance of convertible note, net of transaction costs
Gross equity component of convertible note
Amortisation of borrowings at effective interest rate
Closing balance at 30 June 2021
ACCOUNTING POLICY
2021
$’000
-
400,000
(54,185)
(7,772)
338,043
9,196
347,239
$’000
-
392,228
(54,185)
9,196
347,239
The component of convertible notes that exhibits characteristics of a liability is recognised as a liability in the balance
sheet, net of transaction costs. On issuance of convertible notes, the fair value of the liability component is determined
using a market rate for an equivalent non-convertible note; and this amount is carried as a non-current liability on the
amortised cost basis until extinguished on conversion or redemption. The increase in liability due to passage of time is
recognised as finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and
included in shareholders’ equity, net of transaction costs. The carrying amount of the conversion option is not remeasured
in subsequent periods. Transaction costs are apportioned between the liability and equity components of the convertible
notes based on the allocation of proceeds to the liability and equity components when the instruments are
first recognised.
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B6
RATIOS
CAPITAL MANAGEMENT
FLT maintains a funding structure that allows it to meet its operational and regulatory requirements, while providing
sufficient flexibility to fund growth, working capital requirements and future strategic opportunities. The group’s capital
structure includes a mix of debt, general cash and equity attributable to the parent’s equity holders.
NET DEBT
Cash at bank and on hand
Financial investments
Less:
Borrowings - current
Borrowings - non-current
Positive net debt1
NOTES
B1
B2
B4
B4
2021
$’000
1,172,115
65,142
2020
$’000
1,779,550
8,078
1,237,257
1,787,628
212,167
355,684
567,851
211,668
250,514
462,182
669,406
1,325,446
FLT continues to be in a positive net debt position.
1 Net debt = (Cash+ financial investments) – (current and non-current borrowings). The calculation excludes restricted cash (refer note B1) and convertible notes. The
calculation also excludes the impact of AASB 16 Leases in respect of the current and non-current lease liabilities.
GEARING RATIO
Total borrowings
Total equity
Gearing ratio2
NOTES
B4
2021
$’000
567,851
956,036
59.4%
2020
$’000
RESTATED1
462,182
1,359,968
34.0%
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 Gearing ratio = Total borrowings / Total equity. The calculation excludes the convertible notes and impact of AASB 16 Leases in respect of the current and non-current
lease liabilities and the convertible note.
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71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B7
DIVIDENDS
OVERVIEW
When determining dividend returns to shareholders, FLT’s board considers a number of factors, including the company’s
anticipated cash requirements to fund its growth and operational plans and current and future economic conditions.
While payments may vary from time to time, according to these anticipated needs, FLT aims to return to shareholders
approximately 50 – 60% of net profit after income tax (NPAT).
The prior year interim dividend of 40 cents per fully paid ordinary share that was declared on release of the FY20 interim
financial statements was cancelled on 23 March 2020, and a final dividend was not declared for 30 June 2020.
An interim dividend was not declared on release of the FY21 interim financial statements.
Since year-end the directors have determined not to pay a final dividend for 30 June 2021 after taking into account the
need to preserve cash and protect long-term shareholder value.
ORDINARY SHARES
Final ordinary dividend for the year ended 30 June 2019 of 98.0 cents
(2018: 107.0 cents) per fully paid share
Interim ordinary dividend for the year ended 30 June 2020 of 0.0 cents
(2019: 60.0 cents) per fully paid share
Special dividend for the year ended 30 June 2020 of 0.0 cents (2019: 149.0 cents) per
fully paid share
Final dividend
Final dividend
FRANKING CREDITS
2021
$’000
-
-
-
-
2020
$’000
99,097
-
-
99,097
AMOUNT PER
SECURITY
CENTS
AMOUNT PER
SECURITY
CENTS
-
$’000
-
-
$’000
-
Franking credits available for subsequent financial years based on a tax rate of 30%
157,250
159,831
The above amounts represent the balance of the franking account at the end of the financial year, adjusted for:
i.
Franking credits that will arise from the current tax liability’s payment
Franking debits that will arise from the dividend payments recognised as a liability for the reporting period’s end;
ii.
and
iii. Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting period’s end.
There is no further reduction to the franking account due to dividends as no dividends have been declared since year-end
(2020: $nil.)
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
DIVIDENDS PAYABLE
Opening balance at 1 July
Dividends declared - parent entity
Dividends declared - attributable to non-controlling interest
Cashflow - Dividend payment
Closing balance at 30 June
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FINANCIAL REPORT 2021 FLIGHT CENTRE TRAVEL GROUP
2021
$’000
-
-
-
-
-
2020
$’000
-
99,097
145
(99,242)
-
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B8
CAPITAL EXPENDITURE
OVERVIEW
FLT continues to focus on its technological offering through acquisitions in recent years of technology companies
including TP Connect and Whereto and the development of a number of IT projects to support FLT’s future strategy.
DEPRECIATION
Buildings
Plant and equipment
Total depreciation
AMORTISATION
Brand names, licences and customer relationships
Software
Total amortisation
Total depreciation and amortisation
ADDITIONS
Plant and equipment
Intangibles
Total additions
NOTES
F6
F6
A5
A5
F6
A5
2021
$’000
129
37,118
37,247
4,951
20,556
25,507
2020
$’000
RESTATED1
859
66,182
67,041
6,680
22,380
29,060
62,754
96,101
3,376
33,978
37,354
42,663
51,569
94,232
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
Refer to note F7 for depreciation and amortisation relating to right of use asset under AASB16.
In addition to the depreciation & amortisation disclosed above, ‘Tour & hotel operations - Cost of sales’ in the income
statement includes $662,000 (2020: $952,000) relating to depreciation & amortisation directly attributable to the delivery
of tour and hotel services.
CONTRACTUAL COMMITMENTS
Neither the parent entity, nor the group, have any material contractual obligations to purchase plant and equipment or
intangible assets at balance date (2020: $nil).
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C
FINANCIAL RISK MANAGEMENT
This section provides information relating to FLT group’s exposure to financial risks, how they affect the group’s
financial position and performance and how the risks are managed.
C1
C2
C3
Financial risk management
Derivative financial instruments
Other financial assets
C1
FINANCIAL RISK MANAGEMENT
OVERVIEW
FLT continues to ensure it retains a robust balance sheet and liquidity position to manage through the current COVID-19
crisis.
The group’s activities expose it to a variety of financial risks: ongoing unprecedented COVID-19 impacts on the travel
industry, market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk.
A central treasury department oversees financial risk under board-approved policies that cover specific areas, such as
foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial
instruments and investments. Treasury identifies, evaluates and hedges financial risks in co-operation with the group’s
operating units. The board provides written principles for overall risk management, as well as policies covering the
specific areas noted above.
Market risk and credit risk are analysed within the relevant balance sheet note disclosures with the exception of the effects
of hedge accounting, which is set out below. Liquidity risk and sensitivities are also set out below.
LIQUIDITY RISK
FLT closely manages and monitors liquidity at a group level through rolling 18-month operating cashflow forecasts and
comparing actual cashflows to this forecast, which is supported by Global Treasury review of cashflow forecasts prepared
weekly at a detailed level by business and country.
On 17 November 2020, the Company issued convertible notes with an aggregate principal amount of $400,000,000. On
22nd February 2021, FLT entered into a $350,000,000 three year secured syndicated debt facility with its existing bank
lenders. The facility refinanced FLT’s bilateral debt facility agreements which totalled $450,000,000, with $100,000,000
repaid in March 2021 from the proceeds of the convertible note issue. FLT will not be required to comply with its existing
operating leverage ratio, fixed charges ratio and shareholder funds ratio covenants until 31 December 2022, at which point
covenants will be calculated based on the six month period from 1 July 2022 to 31 December 2022. Until that time FLT will
be required to maintain a cash to total borrowings ratio of greater than or equal to 1:1 (with total borrowings to exclude
the convertible notes). The facility is guaranteed by certain members of the group and is secured. The total amount drawn
down at the reporting date was $350,000,000.
On 3 July 2020, Flight Centre (UK) Limited (FCUK) issued GBP 65,000,000 of notes under the Bank of England (BoE)
COVID-19 Corporate Financing Facility (CCFF notes) which matured in March 2021 and were repaid. On 16 March 2021
FCUK issued a further GBP 65,000,000 of CCFF notes to refinance the original July 2020 issuance, and these notes mature
in March 2022. On 19 March 2021 FCUK issued a further GBP 50,000,000 of CCFF notes which mature in March 2022. In
total, FCUK has issued GBP 115,000,000 (A$211,747,000) of CCFF notes which mature in March 2022.
COVID-19 continues to impact FLT and has given rise to the loss in FY21. Whilst there is uncertainty in the timing of
the travel rebound and FLT’s revenues, given the cost reduction initiatives executed to date, together with the cash in
bank and long term financing arrangements in place, the Directors are satisfied the company has the ability to meet its
debts as and when due for the next 12 months, and for the financial report to be prepared on a going concern basis. No
adjustments have been made in the financial report in relation to the company's ability to realise its assets and discharge
its liabilities in the normal course of business.
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FINANCIAL RISK MANAGEMENT (CONTINUED)
LIQUIDITY RISK (CONTINUED)
MATURITIES OF FINANCIAL LIABILITIES
The tables below analyse the group’s financial liabilities and net and gross settled derivative financial instruments into
relevant maturity groupings. Groupings are based on the remaining period to the contractual maturity date at the
reporting period’s end. The amounts disclosed in the table are the contractual undiscounted cash flows.
LESS THAN
12 MONTHS
$’000
BETWEEN
1 AND 2
YEARS
$’000
BETWEEN
2 AND 5
YEARS
$’000
MORE
THAN
5 YEARS
$’000
TOTAL
CONTRACTUAL
CASH FLOWS
$’000
CARRYING
AMOUNT
(ASSETS)/
LIABILITIES
$’000
2021
Non-derivatives
Trade and other payables
Contingent consideration
Borrowings
Convertible note
Lease liabilities
800,415
2,784
223,858
10,000
103,024
-
-
10,679
10,000
85,399
-
-
362,091
415,000
158,092
Total non-derivatives
1,140,081
106,078
935,183
Derivatives
Derivatives - net settled
1,659
1,659
2020
Non-derivatives
Trade and other payables
1,152,870
-
-
-
Contingent consideration
Borrowings
Lease liabilities
3,278
219,709
137,693
316
253,217
99,335
-
-
-
-
51,487
51,487
-
-
-
-
-
-
-
-
-
-
216,072
107,354
800,415
800,415
2,784
596,628
435,000
398,002
2,784
567,851
347,239
368,453
2,232,829
2,086,742
1,659
1,659
1,659
1,659
1,152,870
1,152,870
3,594
472,926
560,454
3,575
462,182
526,661
Total non-derivatives
1,513,550
352,868
216,072
107,354
2,189,844
2,145,288
Derivatives
Derivatives - net settled
2,185
2,185
1,456
1,456
-
-
3,641
3,641
3,641
3,641
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C1
FINANCIAL RISK MANAGEMENT (CONTINUED)
SUMMARISED SENSITIVITY ANALYSIS
The following table summarises the sensitivity of the group’s financial assets and financial liabilities to interest rate risk and
foreign exchange risk.
The foreign exchange sensitivities are based on the Group’s exposures existing at balance date taking into account the
Group’s designated cash flow hedges.
Interest rate sensitivities are based on reasonable changes in interest rates on that portion of cash, investments and
borrowings affected.
Foreign currency risks, as defined by AASB 7 Financial Instruments: Disclosures, arise on account of financial instruments
being denominated in a currency that is not the functional currency in which the financial instrument is measured.
Differences from the translation of financial statements into the Group’s presentation currency are not taken into
consideration in the sensitivity analysis. Foreign exchange sensitivities are based on reasonably possible changes in
foreign exchanges rates.
For interest rate and foreign exchange rate sensitivities, all other variables are held constant. Sensitivity figures are pre
tax. The movement in equity excludes movements in retained earnings.
2021
Financial assets
Cash and cash equivalents
Equity securities - FVTPL
Debt securities - FVTPL
Debt securities - FVOCI
Trade & other receivables
Contract assets
Other financial assets
Derivative financial instruments
Financial liabilities
Trade and other payables
Contingent consideration
Borrowings - current
Borrowings - non-current
Convertible note - non-current
Derivative financial instruments
Total increase / (decrease)
CARRYING
AMOUNT
$’000
-1%
PROFIT
1,290,831
(12,908)
INTEREST RATE RISK FOREIGN EXCHANGE RISK
+1%
PROFIT
12,908
-
-
540
-
-
-
-
-
-
-
-
-
(540)
-
-
-
-
-
-
-
3,557
(3,557)
-
-
-
-
(9,891)
9,891
-10%
PROFIT
17,313
+10%
PROFIT
(14,165)
-
-
-
2,179
2,169
-
-
-
-
(1,783)
(1,774)
-
18,989
(15,536)
(11,521)
9,426
-
-
-
-
-
-
-
-
(6,822)
22,307
5,582
(18,250)
4,320
5,916
54,906
314,048
80,934
35,107
5,015
800,415
2,784
212,167
355,684
347,239
1,659
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FINANCIAL RISK MANAGEMENT (CONTINUED)
SUMMARISED SENSITIVITY ANALYSIS (CONTINUED)
2020
Financial assets
Cash and cash equivalents
Equity securities - FVTPL
Debt securities - FVTPL
Trade & other receivables
Contract assets
Other financial assets
Derivative financial instruments
Financial liabilities
Trade and other payables
Contingent consideration
Borrowings - current
Borrowings - non-current
Derivative financial instruments
Total increase / (decrease)
2021
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
-
2020
Financial assets
Derivative financial instruments
Financial liabilities
CARRYING
AMOUNT
$’000
841
Derivative financial instruments
2,463
INTEREST RATE RISK FOREIGN EXCHANGE RISK
CARRYING
AMOUNT
$’000
-1%
PROFIT
1,867,307
(18,673)
4,081
3,997
362,395
129,261
26,658
4,869
1,152,870
3,575
211,668
250,514
1,178
CARRYING
AMOUNT
$’000
2,189
+1%
PROFIT
18,673
.
-
-
-
-
-
-
-
2,117
2,505
-10%
PROFIT
9,172
-
-
703
3,892
-
+10%
PROFIT
(7,504)
-
-
(575)
(3,185)
-
(17,915)
14,681
(446)
(210)
-
-
365
210
-
-
5,465
9,457
-
-
-
-
-
-
-
-
(2,117)
(2,505)
-
-
(6,931)
(23,295)
23,295
(11,735)
INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1%
PROFIT
83
-
83
+1%
PROFIT
(83)
-10%
PROFIT
(9,554)
+10%
PROFIT
9,554
-
(83)
-
-
(9,554)
9,554
INTEREST RATE RISK FOREIGN EXCHANGE RISK
-1%
PROFIT
(94)
-
(94)
+1%
PROFIT
94
-
94
-10%
PROFIT
(1,369)
+10%
PROFIT
1,116
(12,709)
(14,078)
12,205
13,321
Other than disclosed in the table above, there are no other equity impacts as a result of movements in interest rates and
foreign exchange rates.
There is no profit or equity impact as a result of other price risk.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2
DERIVATIVE FINANCIAL INSTRUMENTS
CURRENT ASSETS
Forward foreign exchange contracts - designated in a cash flow hedge
Forward foreign exchange contracts - FVTPL
Total current derivative financial instrument assets
NON-CURRENT ASSETS
Cross currency interest rate swaps - designated in a cash flow hedge1
Cross currency interest rate swaps - designated in a net investment hedge1
Total current derivative financial instrument assets
CURRENT LIABILITIES
Forward foreign exchange contracts - designated in a cash flow hedge
Forward foreign exchange contracts - FVTPL
Total current derivative financial instrument liabilities
NON-CURRENT LIABILITIES
Cross currency interest rate swaps - designated in a net investment hedge1
Total non-current derivative financial instrument liabilities
2021
$’000
-
5,015
5,015
441
1,748
2,189
-
1,659
1,659
-
-
2020
$’000
563
4,869
5,432
278
-
278
1,007
1,178
2,185
1,456
1,456
1 FLT entered into a cross currency interest rate swap in 2019 which has been designated in a hedge relationship using split approach. The non-current asset represents
the interest component designated in a cash flow hedge and the non-current liability represents the foreign exchange component designated in a net investment
hedge. Refer further details below.
FINANCIAL RISK MANAGEMENT
FAIR VALUE
Forward foreign exchange contracts are measured at fair value, which is based on observable forward foreign exchange
rates and the respective currencies’ yield curves, as well as the currency basis spreads between the respective currencies.
Cross currency interest rate swaps are measured at fair value, which is calculated as the present value of the estimated
future cash flows. Estimate of future cash flows are based on quoted swap rates, interbank borrowing rates and forward
exchange rates.
The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging
instrument. See hedge accounting set out below for derivatives designated as part of a hedging relationship to which
hedge accounting is applied. Changes in fair value for derivative instruments that do not qualify for hedge accounting are
recognised immediately in the statement of profit or loss.
The forward foreign exchange contracts and cross currency interest rate swaps are classified as Level 2 (2020: Level 2)
under the AASB 13 Fair value Measurement hierarchy, based on the valuation technique described above.
CREDIT RISK
The maximum exposure to credit risk at the reporting period’s end is the fair value of all forward foreign exchange
contracts and cross currency interest rate swaps as disclosed above. Credit quality can be assessed by reference to
external credit ratings (if available) or to historical information about counterparty default rates. All counterparties have an
equivalent S&P rating of AA- to A-.
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DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
HEDGE ACCOUNTING
ACCOUNTING POLICY
All derivatives are recognised in the balance sheet at fair value and are classified as FVTPL except where they are
designated as part of an effective hedge relationship and classified as hedging derivatives. The carrying value of a
derivative is remeasured at fair value throughout the life of the contract. Derivatives are carried as assets when the fair value
is positive and as liabilities when the fair value is negative.
The method of recognising the resulting fair value gain or loss on a derivative depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the item being hedged.
The group designates its derivatives as cash flow hedges when hedging the exposure to variability in cash flows that is
either attributable to a foreign currency risk or interest rate risk associated with a recognised asset or liability or a highly
probable foreign currency forecast transaction.
The group designates its derivatives as net investment hedges when hedging foreign currency risk attributable to a net
investment in a foreign operation.
FLT documents at the inception of the transaction the relationship between hedging instruments and hedged items, the
risk being hedged and the group’s risk management objective and strategy for undertaking these hedge transactions. The
effectiveness of the hedges is measured throughout the life of the hedging relationship. Ineffectiveness arises in the event
of over hedging, whereby the notional amount of the designated hedge instrument exceeds the notional amount of the
hedged item attributable to the hedged risk, or timing mismatches. Where ineffectiveness is identified, any revaluation
gains or losses on the ineffective portion of the hedging instrument are immediately recognised in the statement of profit
or loss in foreign exchange gains or foreign exchange losses or interest expense.
The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges are recognised
in the cash flow hedge reserve within equity. The effective portion of changes in the fair value of derivatives that are
designated as net investment hedges are recognised in the foreign currency translation reserve within equity. Amounts
accumulated in equity are transferred to the statement of profit or loss in the period(s) in which the hedged item affects the
statement of profit or loss.
RISK MANAGEMENT STRATEGY
The fundamental objective is to minimise risk. This is achieved by minimising the volatility in the statement of profit or
loss and variations in cash flows. The objective is not to maximise revenue or minimise costs, however in certain situations
hedging may deliver value to FLT by minimising downside risk. There is no speculation allowed and all treasury activities
and transactions must be linked to underlying business requirements.
Hedge accounting has been applied in FLT’s Global Procurement (“GPN”) business and its UK based Global Touring
business. GPN seeks to reduce variability by entering into forward foreign exchange contracts upon collection of
customer deposits. Global Touring seeks to reduce variability on forecast payments to suppliers by entering into forward
foreign exchange contracts upon publication of its brochures. Global Touring also enter into GBP forward exchange
contracts to minimise variability in its London based head office costs. The first $1 of notional amount of the hedging
instrument is designated against the first $1 of forecast payments or forecast receipts. Hedges are entered into in the
same currency as the underlying exposures as such ineffectiveness may arise in the event of over hedging or timing
mismatches, therefore the hedging ratio is 1:1.
FLT entered into a cross currency interest rate swap in 2019 which has been designated in a hedge relationship using split
approach. Under this approach the benchmark interest rate risk and foreign exchange risk on principal components of the
swap are accounted for respectively as cash flow hedge and net investment hedge.
Net investment hedge is used to hedge FLT’s exposure to the EUR foreign exchange risk on 3mundi investment. There
is an economic relationship between the hedged item and the hedging instrument as the net investment creates a
translation risk that will match the foreign exchange risk on the EUR swap. The Group has established a hedge ratio of 1:1
as the underlying risk of the hedging instrument is identical to the hedged risk component. The effective portion of the
hedge is recognised in the foreign currency translation reserve net of tax. The hedge ineffectiveness may arise when the
amount of the investment in the foreign subsidiary becomes lower than the amount of the fixed rate borrowing. This is
recognised in the statement of profit or loss and other comprehensive income in FX.
Cashflow hedges are used to hedge FLT’s exposure to variability of cash flows on borrowings due to movement in interest
rates. There is an economic relationship between the hedged item and the hedging instrument based on assessment of
benchmark rate, tenor, repricing, maturity and notional amount. The Group has established a hedge ratio of 1:1 as the
underlying risk of the hedging instrument is identical to the hedged risk component. The hedge ineffectiveness may arise
when there are mismatches in terms of the hedged item and the hedging instrument.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
HEDGE ACCOUNTING (CONTINUED)
THE EFFECTS OF HEDGE ACCOUNTING
At 30 June 2021, FLT holds the following forward foreign exchange contracts to hedge its exposure on forecast foreign
currency receipts and forecast foreign currency payments. The impact of hedging instruments designated in hedging
relationships at 30 June 2021 on the balance sheet of the group is as follows. Note these are all shown in the consolidated
balance sheet in current assets and liabilities as derivative financial instruments.
CASH FLOW HEDGES - 2021
Nil
NOTIONAL AMOUNT
IN LOCAL CURRENCY
‘000
CARRYING
AMOUNT
$’000
-
-
-
AVERAGE
FORWARD
PRICE
-
CASH FLOW HEDGES - 2020
South African Rand
US Dollar
Euro
Singapore Dollar
New Zealand Dollar
Fiji Dollar
Other1
NOTIONAL AMOUNT
IN LOCAL CURRENCY
‘000
CARRYING
AMOUNT
$’000
AVERAGE
FORWARD
PRICE
12,000
16,000
8,000
900
5,000
2,700
11.746
0.656
0.599
0.940
1.072
1.491
20
(398)
(70)
(19)
(3)
(21)
47
(444)
1 Other includes various other insignificant currencies to which hedge accounting is applied.
CHANGE IN FAIR
VALUE USED
FOR MEASURING
INEFFECTIVENESS
FOR THE PERIOD
$’000
-
-
CHANGE IN FAIR
VALUE USED
FOR MEASURING
INEFFECTIVENESS
FOR THE PERIOD
$’000
20
(398)
(70)
(19)
(3)
(21)
47
(444)
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DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The impact of hedged items designated in hedging relationships as at 30 June 2021 on the balance sheet of the group is
as follows:
CASH FLOW HEDGES - 2021
Foreign currency receipts
Foreign currency payments
Nil
Nil
CASH FLOW HEDGES - 2020
Foreign currency receipts
Foreign currency payments
US Dollar
British Pound
South African Rand
New Zealand Dollar
Other1
US Dollar
British Pound
Fiji Dollar
Other1
1 Other includes various other insignificant currencies to which hedge accounting is applied.
CHANGE IN
VALUE USED
FOR MEASURING
INEFFECTIVENESS
$’000
CASH FLOW HEDGE
RESERVE
$’000
-
-
-
-
-
CHANGE IN
VALUE USED
FOR MEASURING
INEFFECTIVENESS
$’000
CASH FLOW HEDGE
RESERVE
$’000
(1,903)
(231)
(153)
(113)
(97)
2,255
131
101
391
-
4
13
2
-
(54)
-
-
(10)
(45)
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
At 30 June 2021, FLT holds the following cross currency interest rate swaps to hedge its exposure on borrowings and net
investments in foreign operations. The impact of hedging instruments designated in hedging relationships at 30 June
2021 on the balance sheet of the group is as follows. Note these are all shown in the consolidated balance sheet in current
assets and liabilities as derivative financial instruments.
CASH FLOW HEDGES - 2021
Cross currency interest rate swap
CASH FLOW HEDGES - 2020
NOTIONAL
AMOUNT
S‘000
96,696
CARRYING
AMOUNT
$’000
441
Cross currency interest rate swap
96,696
278
CHANGE IN VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$’000
163
163
278
278
CASH FLOW HEDGES - 2021
Borrowings
CARRYING
AMOUNT
S‘000
96,696
CASH FLOW HEDGES - 2020
Borrowings
96,696
ACCUMULATED
FAIR VALUE
ADJUSTMENTS
$’000
CHANGE IN VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$’000
CASH FLOW
HEDGE RESERVE
$’000
441
278
163
163
278
278
309
309
195
195
NET INVESTMENT HEDGES - 2021
Cross currency interest rate swap
(Euro)
NET INVESTMENT HEDGES - 2020
Cross currency interest rate swap
(Euro)
NOTIONAL
AMOUNT IN
LOCAL CURRENCY
'000
CHANGE IN VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$’000
CARRYING
AMOUNT
$’000
60,000
1,748
60,000
(1,456)
3,204
3,204
(1,456)
(1,456)
NET INVESTMENT HEDGES - 2021
Investment in subsidiaries
NET INVESTMENT HEDGES - 2020
Investment in subsidiaries
CHANGE IN VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$’000
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$'000
3,204
3,204
(1,456)
(1,456)
1,224
1,224
(1,019)
(1,019)
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DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The impact of hedging instruments designated in hedging relationships at 30 June 2021 on the consolidated statement
of profit or loss of the group is as follows. Note these are all shown in the consolidated statement of profit or loss in other
expenses as net foreign exchange losses or finance costs in interest and finance charges paid/payable.
CASH FLOW HEDGES
Hedges of forecast foreign currency transactions
INEFFECTIVENESS
RECOGNISED IN THE
INCOME STATEMENT
$’000
HEDGING
GAIN /(LOSS)
RECOGNISED
IN OCI
$’000
AMOUNT
RECLASSIFIED FROM
OCI TO THE INCOME
STATEMENT
2021
2020
Hedges of borrowings
2021
2020
Net investment hedges
2021
2020
C3 OTHER FINANCIAL ASSETS
Accrued Interest
Security deposits
Total current other financial assets
Loans to external parties
Security deposits
Total non-current other financial assets
ACCOUNTING POLICY
-
257
-
-
-
-
173
29,291
163
278
3,204
(1,456)
2021
$’000
247
5,395
5,642
140
29,325
29,465
(109)
(29,553)
-
-
-
-
2020
$’000
839
21,972
22,811
155
3,692
3,847
Loans to related parties, external parties and security deposits are measured at amortised cost, as they are held in order to
collect contractual cash flows which are solely principal and interest.
FINANCIAL RISK MANAGEMENT
FAIR VALUE
Due to their short-term nature, the carrying amounts of current other financial assets are assumed to approximate their
fair values.
The carrying amounts of non-current other financial assets equals their fair values, due to the commercial rates of interest
earned and paid respectively, and the impact of discounting is not significant.
CREDIT RISK
The maximum exposure to credit risk at the reporting period’s end is the carrying amount of other financial assets as
disclosed above, however FLT has categorised these as having an insignificant amount of credit risk and therefore no
expected credit loss has been recognised.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D
D
REWARD AND RECOGNITION
REWARD AND RECOGNITION
This section provides a breakdown of the various programs FLT uses to reward and recognise employees and key
This section provides a breakdown of the various programs FLT uses to reward and recognise employees and key
executives, including Key Management Personnel (KMP).
executives, including Key Management Personnel (KMP).
FLT believes that these programs reinforce the value of ownership and incentives, both of which are key parts of the
FLT believes that these programs reinforce the value of ownership and incentives, both of which are key parts of the
company's philosophies and culture, and drive performance both individually and collectively to deliver better returns
company's philosophies and culture, and drive performance both individually and collectively to deliver better returns
to shareholders.
to shareholders.
These programs also result in changes to the group's contributed equity.
These programs also result in changes to the group's contributed equity.
During COVID-19 a number of these programs have been put on hold, however new programs (the PCRP and GRR)
During COVID-19 a number of these programs have been put on hold, however new programs (the PCRP and GRR)
have been introduced as a strategic response to the profound impacts that COVID-19 restrictions continue to have
have been introduced as a strategic response to the profound impacts that COVID-19 restrictions continue to have
on the business, with a focus on ensuring key executives who will be crucial to FLT's recovery are retained while the
on the business, with a focus on ensuring key executives who will be crucial to FLT's recovery are retained while the
business recovers and during the rebuilding phase.
business recovers and during the rebuilding phase.
D1
D1
D2
D2
D3
Key management personnel
Key management personnel
Business Ownership Scheme (BOS)
Business Ownership Scheme (BOS)
Share-based payments
Long term retention plan (LTRP)
Post-COVID-19 retention plan (PCRP)
Global Recovery Rights (GRR)
Employee Share Plan (ESP)
Transformation incentive plan (TIP)
D4
D4
Contributed equity and treasury shares
Contributed equity and treasury shares
D1
KEY MANAGEMENT PERSONNEL
KMP COMPENSATION
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Total KMP compensation
2021
$
2020
$
6,523,256
6,082,819
134,796
60,574
3,997,683
10,716,309
126,513
(527,484)
1,036,050
6,717,898
Detailed remuneration disclosures are provided in section 2 of the remuneration report. Supporting information on
director and KMP remuneration is included in the remuneration report in sections 3 and 4.
EQUITY INSTRUMENT DISCLOSURES RELATING TO KMP
Details of LTRP, PCRP and ESP provided as remuneration to KMP and shares issued on the exercise of such, together with
terms and conditions, can be found in section 4 of the remuneration report.
OTHER TRANSACTIONS WITH KMP
Directors and specified executives and their related companies receive travel services from FLT and its related companies
on normal terms and conditions to employees and customers.
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D2
BUSINESS OWNERSHIP SCHEME (BOS)
OVERVIEW
FLT believes it is important that its leaders see the businesses they run as their own and, under the BOS, eligible
employees (front-line team leaders) have historically been invited to invest in unsecured notes in their businesses as
an incentive to improve short and long-term performance. Trading conditions under COVID-19 have resulted in the
programme being unsuitable for its intended purpose. As a result, programmes globally were put on hold until further
notice.
In Australia, in line with the scheme requirements, any outstanding unsecured notes were redeemed with a 30 day notice
period given on or about 1 May 2020. The unsecured notes in overseas nations were similarly either put on hold or
redeemed in line with local scheme requirements.
ACCOUNTING POLICY
BUSINESS OWNERSHIP SCHEME
Both the unsecured notes and loans are recorded at amortised cost.
Unsecured notes principal
Loans held for unsecured notes
Net unsecured notes principal
2021
$’000
5,263
(5,222)
41
2020
$’000
8,360
(7,015)
1,345
The unsecured note holders earn a variable, non-guaranteed return, based on their business’s performance.
In the current COVID-19 environment, the unsecured notes have largely been redeemed and associated loans held for
unsecured notes repaid in full.
Unless approved by the board, via its remuneration and nomination committee, the distribution payable in respect of any
unsecured note will not exceed 35% of the face value of the unsecured note in any 12 month period.
Further information on BOS interest expense for KMP is included in section 2 and BOS return multiplier in section 3 of the
remuneration report.
FINANCIAL RISK MANAGEMENT
Credit risk
There is no credit risk arising for BOS loans held for unsecured notes, as there is a legally enforceable right to set-off
against FLT’s unsecured note liability.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D2
BUSINESS OWNERSHIP SCHEME (BOS) (CONTINUED)
BOS MULTIPLIER PROGRAMME
As noted in the Remuneration Report, key executives that have a Founder BOS note are Melanie Waters-Ryan and Chris
Galanty.
Dean Smith’s unsecured BOS note was redeemed, effective May 2020. The payment represented a five times multiple
payment of BOS interest on America’s 30 June 2019 profits.
Founder BOS note for Melanie Waters-Ryan and Chris Galanty are in a temporary hibernation commencing 1 January 2020
through to 31 December 2021. The result of this temporary redemption has been a pay back of the invested Face Value to
the note-holders. Once the BOS notes come out of hibernation, Ms Waters-Ryan and Mr Galanty will be required to repay
or designate replacement funds. The required provision for a five times multiple payment of BOS interest on 30 June 2019
profits and for remaining Founder BOS multiple earning periods out to 2027 have been recognised.
ACCOUNTING POLICY
A liability for the employee benefit of the potential BOS return multiple has been recognised as a provision (refer to
note F10) when there is a contractual obligation or valid expectation that payment will be made. Refer to section 3 of the
remuneration report for further information on BOS return multiplier.
CURRENT
Employee benefits
NOTES
F10
2021
$’000
15,455
2020
$’000
15,047
The BOS multiplier is recognised as current as it has vested for the KMP. While KMP are employed they cannot redeem
the multiplier during hibernation period (before January 2022) however if they cease employment during the hibernation
period total interest earnings for the last full financial year preceding the hibernation, multiplied by five, will be paid out.
Refer to remuneration report for further details.
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D3
SHARE-BASED PAYMENTS
OVERVIEW
FLT has a number of plans which issue shares to employees and key executives, including:
• Long Term Retention Plan (LTRP)
• Post-COVID-19 Retention Plan (PCRP)
• Global Recovery Rights (GRR)
• Employee Share Plan (ESP)
• Transformation Incentive Plan (TIP)
EXPENSES ARISING FROM SHARE-BASED PAYMENT TRANSACTIONS
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefit
expense were as follows:
Long term retention plan
Post Covid-19 Retention plan
Employee share plan
Global recovery rights plan
Transformation incentive plan
Total expenses arising from share-based payment transactions
Directors are not eligible to participate in the LTRP, PCRP, GRR, ESP or TIP.
ACCOUNTING POLICY AND VALUATION
2021
$’000
5,650
4,413
3,038
222
-
13,323
2020
$’000
5,614
-
1,786
-
(2,015)
5,385
The fair value of performance rights granted are recognised as an employee benefit expense with a corresponding
increase in reserves. The fair value is measured at grant date and recognised over the period during which employees
become unconditionally entitled to the rights.
The fair value at grant date is determined using the Black-Scholes option pricing model.
The fair value of the rights granted excludes the impact of any non-market vesting conditions (for example, continued
employment). Non-market vesting conditions are included in assumptions about the number of rights that are expected
to become exercisable and the length of the vesting period. At the reporting period’s end, the entity revises its estimate
of the number of rights that are expected to become exercisable and the most likely vesting period. The employee benefit
expense recognised each period takes into account the most recent estimate.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN
GENERAL TERMS
Invited participants are granted base rights, for no consideration, in annual tranches over a 12 year period with vesting
conditions based upon continued service. At the time base rights are granted, participants are granted a corresponding
number of matched rights for no consideration (one matched right for each base right granted).
Rights granted under the plan carry no dividend or voting rights. When exercisable, each right is convertible into one
ordinary FLT share.
The plan’s rules stipulate that the number of shares resulting from exercising all unexercised rights cannot exceed 5% of
the company’s issued capital (currently less than 1%).
VESTING REQUIREMENTS
Base rights granted to participants for each tranche will vest on the base rights vesting dates as noted in the table below,
subject to the service condition being satisfied (participants remain employed by the company at the vesting date).
Matched rights granted to participants for each tranche will vest on the matched rights vesting dates as noted in the table
below, subject to the service condition being satisfied (participants remain employed by the company at the vesting date)
and the base rights (or shares) in respect of the respective grant continue to be held.
METHOD OF SETTLEMENT
The base rights and matched rights may be newly issued by FLT, purchased on-market or allocated from treasury shares.
VALUATION
The fair value of base and matched rights under the plan is estimated at the date of grant using a fixed dollar amount
of rights granted for each participant and the Black-Scholes option pricing model which takes into account the rights’
term, the rights’ non-tradeable nature, the expected dividend yield and risk-free rate for the rights’ term. The fair value
is recognised in the balance sheet as part of reserves over the period that the right vests with a corresponding expense
recognised in the employee benefits costs.
GRANT
NUMBER GRANT DATE
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
VALUE PER
RIGHT AT
GRANT DATE
BASE RIGHTS
MATCHING RIGHTS
4
4b
5
5b
6
6b
6c
6d
1 July 2018
August 2021
1 July 2030
$54.26 August 2021
1 July 2030
1 July 2018
August 2021
1 July 2030
$54.26 August 2023
1 July 2030
1 July 2019
August 2022
1 July 2030
$42.06 August 2022
1 July 2030
1 July 2019
August 2022
1 July 2030
$42.06 August 2024
1 July 2030
1 July 2020
August 2023
1 July 2030
$11.30 August 2023
1 July 2030
1 July 2020
August 2021
1 July 2030
$11.30 August 2023
1 July 2030
1 July 2020
August 2022
1 July 2030
$11.30 August 2024
1 July 2030
1 July 2020
August 2023
1 July 2030
$11.30 August 2025
1 July 2030
$54.26
$51.58
$42.06
$38.84
$11.30
$11.30
$10.79
$10.28
1 The vesting date is the day the Company releases full year financial results to the ASX in the year of vesting.
The weighted average contractual remaining life (until expiry date) is 9 years.
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D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN (CONTINUED)
The LTRP rights held by executives, including those KMP separately disclosed in the remuneration report, is set out below:
BALANCE AT
START OF THE YEAR
DURING THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
EXERCISED
NUMBER
BALANCE AT
END OF THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,691
1,691
2,341
2,341
2,498
2,498
-
-
-
-
-
-
-
-
197,319
197,319
23,417
23,417
13,953
13,953
47,804
47,804
67,840
67,840
4,289
4,289
56,580
47,843
5,481
3,993
-
-
-
-
-
-
-
-
1,400
1,400
-
-
1,128
1,128
-
-
-
-
-
-
-
-
-
-
-
-
(2,597)
(2,597)
(5,984)
(5,984)
(1,334)
(1,334)
(4,676)
(4,676)
(1,091)
(1,091)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,498)
(2,498)
-
-
-
-
-
-
-
-
-
-
-
-
10,225
-
-
-
1,691
1,691
2,341
2,341
-
-
197,319
197,319
23,417
23,417
13,953
13,953
45,207
45,207
61,856
61,856
4,355
4,355
41,679
43,167
5,518
4,030
-
-
-
-
-
-
2021
Grant 6
Base
Match
Grant 6b
Base
Match
Grant 6c
Base
Match
Grant 6d
Base
Match
Grant 5
Base
Match
Grant 5b
Base1
Match1
Grant 4
Base
Match
Grant 4b
Base1
Match1
Grant 3
Base
Match
Grant 2
Base
Match
Grant 1
Base
Match
1 During the period, an administrative error was identified where an LTRP participant had been offered rights in Grant 4b and Grant 5b however the rights had not been
issued. The rights were issued during the period as disclosed in the granted column.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN (CONTINUED)
BALANCE AT
START OF THE YEAR
DURING THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
EXERCISED
NUMBER
BALANCE AT
END OF THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
-
-
-
-
-
-
-
-
63,183
51,676
5,481
5,481
49,024
-
-
57,161
67,153
-
6,135
73,602
56,178
-
-
64,417
-
-
-
-
74,754
74,754
4,289
4,289
(6,914)
(6,914)
-
-
(5,321)
(3,833)
-
(1,488)
-
-
-
-
-
-
-
-
-
1,282
(1,282)
-
-
-
-
-
-
-
(47,333)
(53,372)
(2,098)
55,063
-
6,135
(70,947)
(2,574)
71,028
(68,687)
-
-
(53,680)
(2,203)
62,214
(59,716)
-
-
-
-
-
-
-
-
1,691
1,691
2,341
2,341
2,498
2,498
67,840
67,840
4,289
4,289
56,580
47,843
5,481
3,993
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2020
Grant 5
Base
Match
Grant 5b
Base
Match
Grant 4
Base
Match
Grant 4b
Base
Match
Grant 3
Base
Match
Grant 2
Base
Match
Grant 1
Base
Match
POST-COVID-19 RETENTION PLAN
GENERAL TERMS
Invited participants are granted one-off base rights, for no consideration, with vesting conditions based upon continued
service. When these base rights are granted, participants are also granted a corresponding number of one-off matched
rights in two separate tranches for no consideration (one matched right for each base right granted).
Rights granted under the plan carry no dividend or voting rights. When exercisable, each right is convertible into one
ordinary FLT share.
The plan’s rules stipulate that the number of shares resulting from exercising all unexercised rights cannot exceed 5% of
the company’s issued capital (currently less than 1%).
VESTING REQUIREMENTS
Base rights granted to participants will vest on the base rights’ vesting date as noted in the table below, subject to the
service condition being satisfied (participants remain employed by the company at the vesting date).
Matched rights granted to participants for each tranche will vest on the matched rights’ vesting dates as noted in the
table below, subject to the service condition being satisfied (participants remain employed by the company at the vesting
date) and for Tranche 1 matched rights that the base rights (or shares) in respect of the respective grant continue to be
held, and for Tranche 2 matched rights’ that the Tranche 1 matched rights (or shares) continue to be held.
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D3
SHARE-BASED PAYMENTS (CONTINUED)
POST-COVID-19 RETENTION PLAN (CONTINUED)
METHOD OF SETTLEMENT
The base rights and matched rights may be issued by FLT, purchased on-market or allocated from treasury shares.
VALUATION
The fair value of base and matched rights under the plan is estimated at the date of grant using the Black-Scholes option
pricing model. The fair value is allocated equally over the period from grant date to vesting date, and is included in the
remuneration report compensation tables.
GRANT NUMBER
GRANT DATE
BASE RIGHTS
DATE/YEAR VESTED
AND EXERCISABLE1
August 2022
EXPIRY DATE
1 July 2031
Grant 1
29 June 2020
August 2023
DATE/YEAR VESTED
AND EXERCISABLE1
MATCHING RIGHTS - TRANCHE 1
EXPIRY DATE
1 July 2031
MATCHING RIGHTS - TRANCHE 2
DATE/YEAR VESTED
AND EXERCISABLE1
August 2024
EXPIRY DATE
1 July 2031
VALUE PER RIGHT AT
GRANT DATE
$9.66
VALUE PER RIGHT AT
GRANT DATE
$9.25
VALUE PER RIGHT AT
GRANT DATE
$8.83
1 The vesting date is the day the Company releases full year financial results to the ASX in the year of vesting.
The weighted average contractual remaining life (until expiry date) is 10 years.
The PCRP rights held by executives, including those KMP separately disclosed in the remuneration report, is set out
below:
BALANCE AT
START OF THE YEAR
DURING THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
EXERCISED
NUMBER
BALANCE AT
END OF THE YEAR
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
-
-
-
-
-
-
-
-
-
-
-
-
590,338
295,169
295,169
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
590,338
295,169
295,169
-
-
-
2021
Grant 1
Base
Match 1
Match 2
2020
Grant 1
Base
Match 1
Match 2
GLOBAL RECOVERY RIGHTS (GRR)
The GRR has identical objectives to the PCRP but is a broader program targeted at FLT’s global workforce (excluding
PCRP participants and directors).
The GRR was granted on 25 June 2021, however the program is still in the acceptance process with offers closing on 27
August 2021.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
EMPLOYEE SHARE PLAN
GENERAL TERMS
Eligible employees are granted a conditional right to one matched share for every two shares purchased (for cash
consideration), subject to vesting conditions.
Employees are eligible to participate if they have been employed full time or permanent part-time for at least three
months.
VESTING REQUIREMENTS
A participant must hold the acquired shares for a period of two years and one month and still be employed with FLT at the
end of that time. If acquired shares are sold before the end of the vesting period, conditional rights to the matched shares
are forfeited.
METHOD OF SETTLEMENT
A participant who satisfies the vesting conditions will become entitled to the matched shares on the last day of the vesting
period.
The matched shares may be newly issued by FLT, purchased on-market or allocated from treasury shares.
VALUATION – ACQUIRED SHARES
The market value of shares issued under the plan, measured as the weighted average price at which FLT’s shares are
traded on the ASX during the five days following the date on which the contributions are paid, is recognised in the
balance sheet as an issue of shares in the period the shares are acquired by the employee.
VALUATION – MATCHED SHARES
The fair value of matched shares allocated (but not issued) under the plan is estimated at the date of grant using the
Black-Scholes option pricing model which takes into account the rights’ term, the rights’ non-tradeable nature, the
expected divided yield and risk-free rate over the rights’ term and is recognised in the balance sheet as part of reserves
over the period that the matched share vests with a corresponding expense recognised in the employee benefits costs.
NUMBER OF MATCHED SHARES:
Issued under the plan to participating employees
Allocated from the share trust to participating employees
Purchased on-market under the plan to participating employees
Weighted average market price of matched shares:
Issued
Allocated from share trust
Purchased on-market
NOTES
D4
D4
D4
D4
2021
31,840
-
11,370
43,210
$0.00
-
$12.63
2020
3,977
27,350
9,305
40,632
$0.00
$35.72
$35.57
TRANSFORMATION INCENTIVE PLAN
In March 2018, a long term incentive plan was approved by the Board. The TIP was designed to drive sustainable growth
across the Group and remunerate key talent based on the Group’s five year growth targets, with performance hurdles
aligned to the group transformation targets of 7% TTV cumulative annual growth rate (CAGR) and return to net margin of
2% by 2020-2022.
With the exception of the new KMP J. Kavanagh, C. Leiss and S. Norris who were participants of the TIP from its inception,
the KMP and directors did not participate in the TIP.
During the period it was determined that there was a low probability that the performance conditions would be satisfied
due to the current environment. As such, the value of the TIP previously expensed was written back and the associated
reserve reversed. No TIP rights were exercised during the period and no TIP rights were vested or exercisable at the end
of the year.
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D3
SHARE-BASED PAYMENTS (CONTINUED)
TRANSFORMATION INCENTIVE PLAN (CONTINUED)
MOVEMENTS DURING THE YEAR
BALANCE
AT START
OF THE
YEAR
UNVESTED
BALANCE
NUMBER
DURING THE YEAR
BALANCE
AT END OF
THE YEAR
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
UNVESTED
NUMBER
VALUE
PER RIGHT
AT GRANT
DATE
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE
EXPIRY
DATE
GRANT
DATE
2021
Grant 1
31/03/2018
30/06/2022
307,500
2020
Grant 1
31/03/2018
30/06/2022
307,500
-
-
(30,000)
-
-
-
277,500
$46.70
1 year
307,500
$46.70
2 years
D4
CONTRIBUTED EQUITY AND TREASURY SHARES
OVERVIEW
During the prior period, FLT announced a fully underwritten equity capital raising, comprising a Placement and an
Entitlement Offer to strengthen its balance sheet and liquidity position as part of its response to the financial impacts
brought about by COVID-19. The Placement and Entitlement offer resulted in the issue of 97.4 million new fully paid
ordinary shares ($701,400,000) in FLT representing 49% of existing FLT shares on issue.
Historically, movements in contributed equity have related to shares issued under the ESP, which reinforced the
importance that FLT places on ownership to drive business improvement and overall results. Where shares in FLT have
been acquired by on-market purchases of shares prior to settling the vested entitlement, the cost of the acquired shares is
carried as treasury shares and deducted from equity.
RECONCILIATION OF ORDINARY SHARE CAPITAL:
The following reconciliation summarises the movements in authorised and issued capital during the year.
Issues of a similar nature have been grouped and the issue price shown is the weighted average. Detailed information on
each issue of shares is publicly available via the ASX.
DETAILS
Opening Balance 1 July 2019
ESP
ESP matched shares
Entitlement Offer
Equity raising transaction costs
NOTES
Deferred tax on equity raising transaction costs
F12
NUMBER OF
SHARES
101,108,842
436,764
3,977
97,418,973
-
-
WEIGHTED
AVERAGE
ISSUE PRICE
$’000
-
405,626
$6.70
$0.00
$7.20
-
-
2,926
-
701,417
(22,678)
6,804
Closing Balance 30 June 2020
198,968,556
1,094,095
ESP
ESP matched shares
LTRP
342,101
31,840
4,996
$14.50
4,961
-
-
-
-
Closing Balance 30 June 2021
199,347,493
1,099,056
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D4
CONTRIBUTED EQUITY AND TREASURY SHARES (CONTINUED)
RECONCILIATION OF TREASURY SHARES:
To preserve Company cash, there were no purchases of shares by the share trust during the period, and all shares in the
share trust were allocated to the ESP and LTRP during the prior period. There are no shares held in the share trust for
future allocation to the ESP and LTRP at the end of the year.
The following reconciliation summarises the movements in treasury shares during the period.
Items of a similar nature have been grouped and the price shown is the weighted average.
DETAILS
Opening Balance 1 July 2019
Purchase of shares by share trust
Allocation of shares to ESP matched shares
Allocation of shares to LTRP
Gain/(loss) in equity on allocation of shares
Closing Balance 30 June 2020
Allocation of shares to ESP
Allocation of shares to ESP matched shares
Allocation of shares to LTRP
Gain/(loss) in equity on allocation of shares
Closing Balance 30 June 2021
NUMBER OF
SHARES
(215,079)
74,050
27,350
113,679
WEIGHTED
AVERAGE
PRICE
$43.31
$35.72
$13.41
-
-
-
-
-
-
-
-
$’000
(11,993)
3,207
977
1,525
6,284
-
-
-
-
-
-
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E
RELATED PARTIES
This section provides information relating to the FLT group related parties and the extent of related party transactions
within the group and the impact they had on the group’s financial performance and position.
E1
E2
Investments accounted for using the equity method
Related party transactions
E1
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
OVERVIEW
ASSOCIATES
On 23 April 2021, FLT divested its investment in Biblos America LLC for nil consideration bringing FLT's ownership to nil.
FLT continues to hold its investments in associates as follows:
• A 25% investment in The Upside Travel Company (Upside). Upside is a Washington DC -based, technology-driven
business. FLT is Upside’s largest individual shareholder. The investment gave FLT access to a travel technology
platform and software development resources to enhance its already strong small to medium-sized (SME) corporate
sector offering. The investment in Upside has been fully impaired ($47,126,000 in the year ended 30 June 2020) due to
COVID-19 impacts on this start-up travel technology development company.
• A 21.7% interest in TP Connects Technologies LLC (TP Connects), a Dubai based, technology-driven business. The
investment gave FLT access to next generation New Distribution Capability (NDC), Global Distribution System (GDS)
and One Order based travel technology platform and software development resources.
The contractual arrangements in place do not provide FLT with control nor joint control over the operating and financing
decisions of the entities.
JOINT VENTURES
On 10 July 2020, FLT divested its investment in Go Vacation Vietnam Company Limited for $169,000 bringing FLT’s
ownership to nil.
FLT holds investments in joint ventures as follows:
• A 46.6% shareholding in Pedal Group Pty Ltd (2020: 48.8%). During the period, Pedal Group issued additional shares to
its employees, diluting FLT’s and other joint venture partners’ holdings. FLT continues to have joint control. Significant
shareholdings in Pedal Group include a 100% shareholding in 99 Bikes Pty Ltd and 99 Bikes NZ Limited, a Brisbane
and Auckland based national chain of retail bike stores, and a 100% shareholding in Advance Traders (Australia) Pty
Ltd and Advance Traders (New Zealand) Limited, Brisbane and Auckland based wholesale bike companies and a 100%
shareholding in PGP Co Pty Ltd, a Brisbane based property purchasing company for 99 Bikes leases.
Contractual arrangements are in place to establish joint control over each entity’s economic activities, including financial
and operating decisions.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
E1
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONTINUED)
SHARE OF JOINT VENTURE AND ASSOCIATES CARRYING VALUE AND RESULTS
Joint venture and associates information is presented in accordance with the accounting policy described in note I(c)(ii)
and is set out below.
Interest in joint ventures
Interest in associates
Total
SHARE OF RESULTS
Profit from joint ventures
(Loss) / profit from associates
Total comprehensive income / (loss)
2021
$’000
37,542
11,504
49,046
2021
$’000
17,773
(302)
17,471
2020
$’000
21,853
12,907
34,760
2020
$’000
6,211
(11,258)
(5,047)
Joint venture results include share of profit from Pedal Group of $17,840,000 (2020: $6,326,000). In addition, during
the period FLT received a dividend of $3,110,000 of which 50% ($1,555,000) was received as shares as part of the Pedal
dividend reinvestment plan. During the period, Pedal Group issued additional shares to its employees, diluting FLT's and
the other joint venture partners' holdings.
On 10 July 2020, FLT sold Go Vacation Vietnam Company Limited, an immaterial joint venture entity that formed part of
the Discova Asia business for cash proceeds of $169,000 bringing FLT's ownership to nil.
CONTRACTUAL COMMITMENTS
FLT has no commitments in relation to its joint venture and associate entities at 30 June 2021 (2020: nil) except as outlined
below:
TP CONNECTS
• FLT subscribed for $9,196,000 of convertible bonds in TP Connects on 29 February 2020.
• The total subscription amount is to be paid over three tranches and is recognised in debt securities at fair value through
profit or loss in the balance sheet:
– Tranche one of $3,065,000 was paid on 29 February 2020.
– Tranches two and three of $2,395,000 each are due upon completion of future technology milestones. Tranches two
and three have been reduced by $1,341,000 in total to reflect amounts prepaid to TP Connects. Payment of tranches
two and three are dependent upon reaching future technology milestones. Payment of tranche two occurred in
August 2020.
• Additionally, FLT has entered into three Call Options and one Put Option with TP Connects:
– The three Call Options can be exercised between 31 March 2022 and 31 March 2024
– The Put Option can only be exercised by TP Connects if Call Options one and two are exercised by FLT.
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E2
RELATED PARTY TRANSACTIONS
PARENT ENTITY
FLT is the ultimate parent entity within the group.
SUBSIDIARIES AND JOINT VENTURES
Interests in subsidiaries are set out in note G1 and interests in joint ventures and associate are set out in note E1.
Transactions between FLT and Ignite in the prior year are disclosed as related party transactions up until 18 September
2019, after which it became a subsidiary, and as such is no longer included in the below disclosures as all transactions
eliminate on consolidation.
FLT is a joint venture (JV) partner in Pedal Group Pty Ltd. The other JV partners are related parties, namely Graham
Turner’s family company, Gainsdale Pty Ltd 21.73% (2020: 21.97%), and Graham Turner’s son, Matthew Turner’s family
company Hootie Blowfish Pty Ltd 15.44% (2020: 15.48%) and his direct employee share plan holdings of 0.41% (2020:
0.20%). The remaining 15.82% (2020: 13.54%) is held by other minor parties including Pedal Group employees who are not
considered related parties.
KMP COMPENSATION AND OTHER TRANSACTIONS
KMP disclosures are set out in note D1.
TRANSACTIONS WITH RELATED PARTIES
Income from joint venture & associate-related parties
Management fees
Travel and conference
Override income
Consulting fees
Other
Expenses to joint venture & associate-related parties
Overrides
Income from director-related entities
Travel and conference
Expenses to director-related entities
Conference expense
Membership expense
2021
$
8,475
38,714
-
-
511,346
2020
$
7,260
100,726
629,221
1,220,745
86,748
-
190,061
1,347,180
961,481
35,093
250,140
94,146
-
From time to time, related entities may enter into transactions with FLT. These transactions are on the same terms and
conditions as those entered into by other FLT subsidiaries or customers.
Joint venture and associate related parties can choose to use FLT group purchasing ability and any costs incurred are
passed directly through. These transactions are included in the disclosure above.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
E2
RELATED PARTY TRANSACTIONS (CONTINUED)
OUTSTANDING BALANCES
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Joint ventures & associates
Current receivables
Director-related entities
Current receivables
2021
$
4,592
2020
$
550
1,210,818
171,276
No provisions for doubtful debts have been raised in relation to any outstanding balances and no expenses have been
recognised in respect of bad or doubtful debts due from related parties.
LOANS TO RELATED PARTIES
There were no loans provided to KMP, joint venture and associate related parties during the current year.
In the prior year, a loan was provided to C. Galanty, a KMP, at UK commercial interest rate of 1.2%. The loan was repaid
during the prior year.
Loans to key management personnel
Beginning of the year
Loans advanced
Loans repaid
Interest charged
Foreign exchange movement
End-of-year
2021
$
-
-
-
-
-
-
2020
$
361,646
-
(379,767)
3,733
14,388
-
No amounts were provided for or written off during the period.
GUARANTEES
FLT has provided company guarantees to the suppliers of Pedal Group joint venture for $7,973,000 (2020: $13,078,000).
The JV partners, Gainsdale Pty Ltd and Hootie Blowfish Pty Ltd provide full indemnity to FLT up to their respective Pedal
Group shareholding percentages. No liability was recognised as the guarantee’s fair values are immaterial.
TERMS AND CONDITIONS
All other transactions were made on normal commercial terms and conditions and at market rates. Outstanding balances
are unsecured and are repayable in cash.
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F
OTHER INFORMATION
This section provides the remaining information relating to the FLT financial report that must be disclosed to comply
with the accounting standards and other pronouncements.
F1
F2
F3
F4
F5
F6
F7
F8
F9
F10
F11
F12
F13
F14
Employee benefits expense
Earnings per share
Trade and other receivables
Contract assets
Other assets
Property, plant and equipment
Leases
Trade and other payables
Contract liabilities
Provisions
Reserves
Tax
Auditor's remuneration
Seasonality
F1
EMPLOYEE BENEFITS EXPENSE
EMPLOYEE BENEFITS EXPENSE
Defined contribution superannuation expense
Other employee benefits expense
Total employee benefits expense
2021
$’000
29,369
780,841
810,210
2020
$’000
68,294
1,423,161
1,491,455
Staff numbers (full-time equivalents)
8,947
10,615
In addition to the employee benefits expense disclosed above, ‘Tour & hotel operations - Cost of sales’ in the income
statement includes $nil (2020: $2,978,000) relating to employee costs directly attributable to the delivery of tour and
hotel services.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F2
EARNINGS PER SHARE
OVERVIEW
Statutory earnings per share (EPS) was a loss of 217.5 cents (20201 loss 552.2 cents), an improvement of 60.6% on the prior
comparative period. At an underlying level3, EPS increased 42.1% to a loss of 182.8 cents (20201 loss 315.5 cents).
Basic earnings / (loss) per share
(Loss) / profit attributable to the company’s ordinary equity holders
Diluted earnings / (loss) per share
2021
CENTS
(217.5)
2020
CENTS
RESTATED1
(552.2)
(Loss)/ profit attributable to the company’s ordinary equity holders2
(217.5)
(552.2)
Reconciliations of earnings used in calculating EPS
(Loss) / profit attributable to the company’s ordinary equity holders used
in calculating basic and diluted earnings per share
$’000
$’000
(433,129)
(662,285)
Weighted average number of shares used as the denominator
NUMBER
NUMBER
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share4
199,168,073
119,937,925
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
2 Diluted earnings per share is the same as basic earnings per share at 30 June 2021 given the Group has recorded a loss for the period.
3 Underlying EPS are un-audited, non-IFRS measures. Refer to note A1 for breakdown of underlying NPAT used in the calculation of underlying EPS.
4 The basic EPS denominator is the aggregate of the weighted average number of ordinary shares.
INFORMATION CONCERNING THE CLASSIFICATION OF SECURITIES
LTRP, PCRP, ESP & TIP
Rights granted under the LTRP and PCRP and entitlements to matched shares under the ESP are considered contingently
issuable ordinary shares as at 30 June 2021. They are included in the determination of diluted earnings per share to the
extent to which they are dilutive, based on the number of shares that would be issuable if the end of the period were the
end of the contingency period.
Rights granted under the TIP are considered contingently issuable ordinary shares if the performance condition is satisfied
at the balance sheet date. They are included in the determination of diluted earnings per share to the extent to which
they are dilutive. At 30 June 2021, the performance conditions are not satisfied and as such are not included as part of the
weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted
earnings per share.
The rights are not included in the determination of basic earnings per share. Details of the incentive plans are set out in
note D3.
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F3
TRADE AND OTHER RECEIVABLES
Trade receivables
Government grant receivables
Less: Provision for impairment of receivables
Total trade and other receivables
ACCOUNTING POLICY
2021
$’000
305,329
8,719
(34,749)
279,299
2020
$’000
312,045
50,350
(42,799)
319,596
FLT has applied the simplified approach for provisioning for expected credit losses prescribed by AASB 9. Additional
information on trade and other receivables accounting policies is included in note I(a) and I(m).
FINANCIAL RISK MANAGEMENT
MARKET RISK
Interest rate risk
Receivables are generally non-interest bearing and are not, therefore, subject to interest rate risk. The exception is
other receivables, which generally arise from transactions outside the group’s usual operating activities. Interest may be
charged at commercial rates where the repayment terms exceed six months. Collateral is not normally obtained.
Foreign exchange risk
The group operates internationally and is subject to foreign exchange risk arising from exposure to foreign currencies.
In addition to identifying foreign exchange risk likely to arise from future commercial transactions, group treasury
recognises assets and liabilities in foreign currencies and, where appropriate, uses forward exchange contracts to reduce
foreign currency risk. All contracts expire within 12 months.
The group’s exposure to foreign currency risk at the end of the reporting period is set out below in Australian dollars:
TRADE RECEIVABLES
Euro
South African Rand
NZ Dollars
US Dollars
Great Britain Pounds
Other
2021
$’000
6,112
4,426
3,821
2,967
2,286
1,683
2020
$’000
986
69
231
4,370
670
2,773
Foreign exchange risk on trade payables is set out in note F8.
FAIR VALUE
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.
CREDIT RISK
Credit risk arises from exposure to corporate, leisure and other customers as an agent, including outstanding receivables
and committed transactions. The maximum exposure to credit risk at the reporting period’s end is the receivables
carrying amount. The group does not hold collateral as security. Credit risk exposure is monitored regularly as per below:
Corporate
1. Corporate clients’ credit quality is assessed by analysing external credit ratings and financial position where
appropriate. Individual risk limits are established for all corporate customers, in accordance with corporate credit
policy, with regular monitoring and reporting to management.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F3
TRADE AND OTHER RECEIVABLES (CONTINUED)
Leisure
2. Agency and principal sales to end-consumers are typically settled in cash or via major credit cards at time of booking,
reducing trade receivables balances and mitigating credit risk.
Product suppliers
3. Receivables are due from suppliers in relation to commissions, refunds and other revenue streams.
4. Suppliers’ credit quality is assessed and the provisions increased based on assumptions around the deterioration
in ageing, known or expected financial difficulty of customers and individual customer credit risk assessment with
reference to external rating agencies and industry.
Other
5. Exposure to credit risk for receivables from government agencies is considered low.
6. The concentration of risk in respect to the remaining receivables is considered low, with customers located in many
locations, industries and markets.
PROVISION FOR IMPAIRMENT OF RECEIVABLES
Movements in the provision for impairment of receivables are as follows:
NOTES
At 1 July 2020
Bad debts expense1
A4
Changes due to foreign exchange translation
Receivables written off during the year as uncollectible or reversed
due to collectability
At 30 June 2021
2021
$’000
42,799
(1,033)
(256)
(6,761)
34,749
2020
$’000
13,520
36,213
514
(7,448)
42,799
1 The creation and release of the provision for impairment of receivables is included in other expenses (refer note A4) in the statement of profit or loss.
Impact of COVID-19
The duration of the COVID-19 pandemic is uncertain and difficult to predict. The pandemic continues to impede global
economic activity with border closures and travel restrictions continuing to be in place in many countries and easing
in others, resulting in suppliers scaling back operations for unknown periods of time. Whilst the industry is entering
a recovery phase, it is difficult to predict the long-term effects on economic factors such as disposable income,
unemployment, or consumer confidence, all of which could significantly reduce discretionary spending by consumers and
businesses on travel.
In addition to the standard credit risk assessment as noted above, FLT has performed additional analysis and changed
provisions based on assumptions around the deterioration in ageing, known or expected financial difficulty of customers
and individual customer credit risk assessment with reference to external rating agencies and industry.
The judgments and assumptions used to estimate the allowance for expected credit losses on trade receivables may
change in future periods as the pandemic continues to unfold and impact the business prospects and financial condition
of customers and FLT’s ability to collect the trade receivables.
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F4
CONTRACT ASSETS
Volume incentive receivables
Accrued revenue
Loss allowance
Total contract assets
ACCOUNTING POLICY
2021
$’000
63,011
17,923
(30,561)
50,373
2020
$’000
95,246
34,015
(32,746)
96,515
A contract asset is the right to consideration in relation to volume incentive payments received from suppliers for achieving
annual targets and other services transferred to the customer (under AASB 15) in advance of payment. If services are
transferred to a customer before the customer pays consideration or before payment is due, a contract asset is recognised
for the earned consideration that is conditional.
Refer to note A2 for accounting policy on recognition of volume incentive receivables.
SIGNIFICANT CHANGES IN CONTRACT ASSETS
The movement in contract assets each period is dependent on the contract period, volume, tier levels, rebate rates and
payment terms as negotiated with each individual supplier.
Refer below for impact of COVID-19 on credit risk.
FINANCIAL RISK MANAGEMENT
MARKET RISK
Interest rate risk
Contract assets are generally non-interest bearing and are not, therefore, subject to interest rate risk. Collateral is not
normally obtained.
Foreign exchange risk
The group operates internationally and is subject to foreign exchange risk arising from exposure to foreign currencies.
In addition to identifying foreign exchange risk likely to arise from future commercial transactions, group treasury
recognises assets and liabilities in foreign currencies and, where appropriate, uses forward exchange contracts to reduce
foreign currency risk. All contracts expire within 12 months.
The group’s exposure to foreign currency risk at the end of the reporting period is set out below in Australian dollars:
CONTRACT ASSETS
US Dollars
Swiss Franc
Euro
Great Britain Pounds
Other
FAIR VALUE
2021
$’000
16,363
2020
$’000
32,254
1,724
-
1,271
162
63
1,036
600
1,526
Due to the short-term nature of these assets, their carrying amount is assumed to approximate their fair value.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F4
CONTRACT ASSETS (CONTINUED)
CREDIT RISK
Credit risk arises from exposure to suppliers, corporate and retail customers, including outstanding receivables and
committed transactions.
Credit risk management assesses supplier and corporate clients’ credit quality by analysing external credit ratings and
financial position where appropriate. Individual risk limits are established for all supplier and corporate customers, in
accordance with corporate credit policy, with regular monitoring and reporting to management. Sales to retail customers
are settled in cash or via major credit cards, mitigating credit risk.
The maximum exposure to credit risk at the reporting period’s end is the contract assets carrying amount. The group
does not hold collateral as security.
IMPACT OF COVID-19
The duration of the COVID-19 pandemic is uncertain and difficult to predict. The pandemic continues to impede global
economic activity with border closures and travel restrictions continuing to be in place in many countries and easing
in others, resulting in suppliers scaling back operations for unknown periods of time. Whilst the industry is entering
a recovery phase, it is difficult to predict the long-term effects on economic factors such as disposable income,
unemployment, or consumer confidence, all of which could significantly reduce discretionary spending by consumers and
businesses on travel.
In addition to the standard credit risk assessment as noted above, FLT has performed additional analysis and changed
provisions based on assumptions around the deterioration in ageing, known or expected financial difficulty of customers,
individual customer credit risk assessment with reference to external rating agencies and industry. The judgments and
assumptions used to estimate the allowance for expected credit losses on contract assets may change in future periods
as the pandemic continues to unfold and impact the business prospects and financial condition of customers and FLT’s
ability to collect the contract asset.
LOSS ALLOWANCE OF CONTRACT ASSETS
Movements in the loss allowance of contract assets are as follows:
NOTES
At 1 July
Loss allowance expense
Changes due to foreign exchange translation
Contract assets written off during the year as uncollectible or
reversed due to collectability
At 30 June
A4
2021
$’000
32,746
-
57
(2,242)
30,561
2020
$’000
4,636
27,979
131
-
32,746
FLT has reduced the loss allowance provision for FY21 based on supplier payments being received. At risk suppliers were
provided for in FY20 and continue to be provided for in FY21 unless payments have been received. During FY20 FLT
recorded a significant increase in the loss allowance provision which included $21,568,000 related to the Virgin Australia
voluntary administration. This was recognised as a bad debts expense and disclosed separately in the supplier exposure
expense line (note A4).
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F5
OTHER ASSETS
GST / service tax receivable
Inventories
Prepayments
Fulfilment assets
Total current other assets
Assets held for sale
Total assets held for sale
Fulfilment assets
Total non-current other assets
NOTES
F6
2021
$’000
6,067
11,837
21,332
4,242
43,478
-
-
8,557
8,557
2020
$’000
RESTATED1
-
12,127
23,414
3,702
39,243
20,850
20,850
11,582
11,582
FULFILMENT ASSETS
Contract costs may be eligible for capitalisation as fulfilment assets and are amortised over the contract period, refer note
A2.
ACCOUNTING POLICY
FLT classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale
transaction rather than continuing use. These are measured at the lower of carrying amount and fair value less cost to sell.
Costs to sell are the incremental costs directly attributable to the disposal of an asset, excluding finance costs and income
tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset is available
for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that
significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed
to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.
Plant & equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Assets and liability classified as held for sale are presented as current items in the statement of financial position.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F6
PROPERTY, PLANT AND EQUIPMENT
ACCOUNTING POLICY
USEFUL LIVES
Land is not depreciated. For other assets, depreciation is calculated using the straight-line method to allocate their cost or
revalued amounts, net of their residual values, over their estimated useful lives, as follows:
• Buildings
• Plant and equipment
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each reporting period’s end.
30 years
2 - 8 years
Additional information on property, plant and equipment accounting policies is included in note I(n).
SIGNIFICANT MATTERS
• Due to COVID-19 there has been an increased level of disposal relating to furniture & fittings due to store closures.
OPENING BALANCE AT 1 JULY 2019
NOTES
Cost
Accumulated depreciation
Net book amount at 1 July 2019
Additions
Acquisitions
Disposals1
Assets classified as held for sale
Depreciation expense
Impairment
Exchange differences
Net book amount at 30 June 2020
OPENING BALANCE AT 1 JULY 2020
Cost
Accumulated depreciation
Net book amount at 1 July 2020
Additions
Acquisitions
Disposals1
Assets classified as held for sale
Depreciation expense
Impairment
Exchange differences
Net book amount at 30 June 2021
AT 30 JUNE 2021
Cost
Accumulated depreciation
Net book amount at 30 June 2021
1 Balances shown net of accumulated depreciation.
B8
F5
B8
B8
F5
B8
FREEHOLD
LAND &
BUILDINGS
$’000
33,611
(9,765)
23,846
313
-
(334)
(18,770)
(859)
(301)
(645)
3,250
5,671
(2,421)
3,250
-
-
(34)
-
(129)
-
341
3,428
5,584
(2,156)
3,428
PLANT &
EQUIPMENT
$’000
592,360
(376,338)
216,022
42,350
449
(36,488)
(2,080)
(66,182)
(3,175)
(754)
TOTAL
$’000
625,971
(386,103)
239,868
42,663
449
(36,822)
(20,850)
(67,041)
(3,476)
(1,399)
150,142
153,392
451,969
(301,827)
150,142
3,376
-
457,640
(304,248)
153,392
3,376
-
(24,630)
(24,664)
-
(37,118)
(2,727)
(2,492)
86,551
315,789
(229,238)
86,551
-
(37,247)
(2,727)
(2,151)
89,979
321,373
(231,394)
89,979
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F7
LEASES
This note provides information for leases where the group is a lessee.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS
The statement of profit or loss shows the following amounts relating to leases:
Rent income from sub-leasing of right-of-use asset
Interest expense on lease liabilities
Rental expense relating to short-term and low-value leases
Depreciation/amortisation expense of right-of-use assets
Total
NOTES
A3
A4
A4
2021
$’000
6,012
(12,507)
(6,028)
(75,219)
(87,742)
2020
$’000
4,250
(17,134)
(29,863)
(134,511)
(177,258)
AMOUNTS RECOGNISED IN THE STATEMENT OF FINANCIAL POSITION
The balance sheet shows the following amounts relating to leases:
RIGHT OF USE ASSETS
LEASE
LIABILITIES
PROPERTY
$’000
VEHICLES
$’000
OFFICE
EQUIPMENT
$’000
SOFTWARE
$’000
TOTAL
$’000
TOTAL
$’000
Balance at 1 July 2019 (transition)
530,884
Additions
Acquired through business
combination
Disposals
Depreciation and amortisation
expense
Impairment
COVID-19 practical expedient
Lease modifications
Interest expense
Lease liability repayment
Exchange differences
Balance as at 30 June 2020
Balance at 1 July 2020
Additions
Acquired through business
combination
Disposals
Depreciation and amortisation
expense
Impairment
COVID-19 practical expedient
Lease modifications
Interest expense
Lease liability repayment
Exchange differences
Balance as at 30 June 2021
64,739
2,558
(25,012)
(133,267)
(74,901)
(7,745)
9,675
-
-
1,469
368,400
368,400
33,905
-
(44,242)
(73,963)
(35,709)
(1,964)
(1,302)
-
-
(2,676)
242,449
-
1,109
-
-
(106)
(125)
-
-
-
-
-
878
878
-
-
(581)
(296)
-
-
-
-
-
(54)
(53)
122
250
-
-
(128)
(15)
-
-
-
-
(14)
215
215
62
-
(120)
(32)
-
-
-
-
-
(62)
63
1,934
532,940
594,884
974
67,072
67,072
-
-
2,558
2,558
(25,012)
(26,567)
(1,010)
(134,511)
-
-
(7,745)
9,675
17,134
(130,954)
(75,041)
(7,745)
9,675
-
-
-
-
-
-
-
-
1,455
604
1,898
371,391
526,661
1,898
371,391
526,661
-
-
-
33,967
42,045
-
-
(44,943)
(100,303)
(928)
(75,219)
-
(35,709)
-
-
(207)
-
-
-
(2,171)
(1,302)
-
-
(2,171)
(1,668)
12,507
(103,538)
468
(2,324)
(5,080)
1,231
243,690
368,453
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F7
LEASES (CONTINUED)
CURRENT AND NON-CURRENT CLASSIFICATIONS
Current
Non-current
Total lease liabilities
Refer to note C1 for contractual undiscounted cashflows and maturity analysis.
AMOUNTS RECOGNISED IN THE STATEMENT OF CASHFLOW
Operating - payments of interest
Financing - payments of principal
Financing - lease surrender payments
Total cash (outflow) relating to leases
ACCOUNTING POLICY
2021
$’000
100,783
267,670
368,453
2020
$’000
134,219
392,442
526,661
2021
$’000
(12,507)
(91,031)
(54,285)
2020
$’000
(17,134)
(113,820)
-
(157,823)
(130,954)
FLT leases various offices, retail stores, equipment, vehicles and software. Rental contracts are typically made for fixed
periods of 1 year to 6 years.
Contracts may contain both lease and non-lease components. For leases of real estate for which the group is a lessee, it
has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
• amounts expected to be payable by the group under residual value guarantees
• the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by FLT, which does
not have recent third party financing, and
• makes adjustments specific to the lease, eg term, country, currency and security.
FLT is exposed to potential future increases in variable lease payments based on an index or rate, which are not included
in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the
lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
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F7
LEASES (CONTINUED)
ACCOUNTING POLICY (CONTINUED)
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on
a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise IT equipment and small items of office furniture with a value less than US$5,000 (AUD $7,500).
FLT has also adopted AASB issued AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent
Concessions. The amendment allowed for the lessee to remeasure its lease liabilities from renegotiated leases as a direct
consequence of COVID-19, with the corresponding adjustment to the right-of-use asset.
A sale and leaseback is one where FLT sells an asset and immediately reacquires the use of the asset or a portion of the
asset by entering into a lease with the buyer. The gain is recognised immediately in other income in the statement of
profit or loss. The right-of-use asset is measured as a proportion of the previous carrying amount of the underlying asset,
reflecting the rights retained under the leaseback.
SIGNIFICANT JUDGEMENT IN DETERMINING THE LEASE TERM OF CONTRACTS WITH RENEWAL OPTIONS
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised. Majority of FLT’s leases are renegotiated, therefore the renewal
options are not exercised.
IMPAIRMENT
The impairment expense of $35,709,000 in the current period relates to the impairment of right-of-use assets due to
the decision to exit an additional number of retail stores and due to reductions in required head office space in response
to COVID-19.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F8
TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Client creditors
Other trade creditors
GST / service tax payable
Annual leave
Total current trade payables
FINANCIAL RISK MANAGEMENT
MARKET RISK
Foreign exchange risk
2021
$’000
322,754
415,699
61,962
5,237
37,530
2020
$’000
444,524
639,138
69,208
7,111
43,029
843,182
1,203,010
The group’s exposure to foreign currency risk on trade and other payables at the end of the reporting period is set out
below:
US Dollars
Hong Kong Dollars
NZ Dollars
Euro
Great Britain Pounds
Singapore Dollars
Canadian Dollars
French Polynesian Franc
Thai Baht
Fijian Dollars
UAE Dirham
Japanese Yen
Other
2021
$’000
70,021
21,091
5,561
2,230
1,692
1,652
728
368
196
139
8
-
1,533
2020
$’000
61,179
16,275
4,115
262
2,476
1,563
1,282
823
1,479
5,451
71
29
1,787
Refer to note F3 for the group’s approach to foreign exchange risk and the group’s exposure to foreign currency risk on
trade and other receivables.
FAIR VALUE
The trade and other payables’ carrying amounts are assumed to approximate their fair values given their short
term nature.
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F9
CONTRACT LIABILITIES
CURRENT
Deferred revenue
Revenue constraint
Total contract liabilities
NON-CURRENT
Deferred revenue
Total contract liabilities
ACCOUNTING POLICY
DEFERRED REVENUE
2021
$’000
38,983
15,553
54,536
34,945
34,945
2020
$’000
66,174
169,588
235,762
40,597
40,597
Deferred revenue is a contract liability that typically relates to revenue for tours and lump sum payments from suppliers.
It represents revenue received in advance of the completion of the performance obligation under the contract. It is
recognised when the consideration is received or is due (whichever is earlier).
Deferred revenue is released to the statement of profit or loss over time as the performance obligation is met.
REVENUE CONSTRAINT
FLT has recognised a contract liability which recognises the uncertainty that the travel may be cancelled prior to departure.
This is calculated using booking volumes and margins, known or anticipated travel restrictions and cancellation probability
rate based on COVID-19 trading patterns.
This constraint of revenue will unwind when the uncertainty is removed. Either the end consumer will travel, in which case
FLT will recognise the revenue in the statement of profit or loss. Or if the travel does not proceed, this contract liability will
be settled via payment to the end-consumer.
Refer to note A2 for further details.
SIGNIFICANT CHANGES IN CONTRACT LIABILITIES
The movement in deferred revenue is dependent on timing and volume of tours at each reporting period and any
significant lump sum payments received within a contract period.
Revenue released from opening deferred revenue to the statement of profit or loss during the year was $23,053,000 (2020:
$93,390,000).
The revenue constraint liability was raised in the prior year in response to COVID-19. The amount has reduced in the
current year as refunds have been paid to the end consumer during the year.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F10
PROVISIONS
CURRENT
Employee benefits - long service leave
Employee benefits - BOS Multiplier
Make good provision
Total current provisions
NON-CURRENT
Employee benefits - long service leave
Employee benefits
Make good provision
Total non-current provisions
NOTES
D2
2021
$’000
27,047
15,455
771
43,273
11,580
1,719
16,563
29,862
2020
$’000
45,025
15,047
5,384
65,456
20,822
1,087
21,811
43,720
MOVEMENTS IN PROVISIONS
Movements in each class of provision, other than employee benefits, for the financial year are set out below:
MAKE GOOD
PROVISION
$’000
NOTES
Carrying amount at 1 July 2020
Additional provisions recognised
(Decrease) / increase in discounted amount arising from passage of time and
discount rate adjustments
A4
Utilised
Other changes
Carrying amount at 30 June 2021
LONG SERVICE LEAVE (LSL)
AMOUNTS NOT EXPECTED TO BE SETTLED WITHIN 12 MONTHS
27,195
497
216
(10,537)
(37)
17,334
The current portion of the LSL provision represents the amount where the group does not have an unconditional right to
defer settlement for at least 12 months after the reporting date, as the employees have completed the required service
period and also certain circumstances where employees are entitled to pro-rata payments. However, based on past
experience, the group does not expect all employees to take the full amount of accrued long service leave or require
payment within the next 12 months.
The following amounts reflect this leave that is not expected to be taken or paid within the next 12 months:
Long service leave obligations expected to be settled after 12 months
2021
$’000
21,225
2020
$’000
32,466
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F11
RESERVES
Cashflow hedge reserve
Financial assets at FVOCI reserve
Share-based payments reserve
Acquisition Reserve
Foreign currency translation reserve
Equity component of convertible note
Total reserves
NOTES
B5
2021
$’000
309
-
34,487
(39,291)
2,179
37,930
35,614
2020
$’000
RESTATED1
150
-
21,368
(39,291)
29,016
-
11,243
Total reserves in the prior year includes $67,000 attributable to non-controlling interests as outlined in the statement of
comprehensive income and statement of contributed equity.
MOVEMENTS IN RESERVES:
A.
CASH FLOW HEDGE RESERVE
Balance 1 July
Gains/(losses) on FEC cash flow hedges
Reclassified to profit or loss
Deferred tax
Gains/(losses) on CCIRS cash flow hedges
Deferred tax
Balance 30 June
150
173
(109)
(19)
163
(49)
309
82
29,291
(29,553)
135
278
(83)
150
F12
F12
FLT apply hedge accounting under AASB 9 Financial Instruments. See note C2 for further details.
The cash flow hedge reserve is used to record gains or losses on hedging instruments on a cash flow hedge that are
recorded as other comprehensive income. Amounts are reclassified to the statement of profit or loss in accordance with
our hedging policy as described in note C2.
Ineffectiveness of $Nil (2020: $126,000) has been recognised in the statement of profit or loss.
B.
FINANCIAL ASSETS AT FVOCI REVALUATION RESERVE
Balance 1 July
Revaluation gross
Reclassified to profit or loss
Deferred tax
Balance 30 June
F12
-
-
-
-
-
321
-
(321)
-
-
Changes in the fair value and exchange differences arising on translation of investments that are classified as financial
assets at FVOCI are recognised in other comprehensive income, as described in note I(k), and accumulated in a separate
reserve within equity. Amounts are reclassified to profit or loss when the associated assets are sold or impaired.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F11
RESERVES (CONTINUED)
C. SHARE-BASED PAYMENTS RESERVE
Balance 1 July
Share-based payments expense
Treasury share transactions
Deferred tax
Balance 30 June
NOTES
F12
2021
$’000
21,368
13,119
-
-
2020
$’000
25,532
4,622
(8,786)
-
34,487
21,368
The share-based payments reserve is used to recognise the fair value of rights issued under the LTRP, PCRP, ESP and TIP
as they vest over the vesting period.
D.
ACQUISITION RESERVE
Balance 1 July
Pull/Call options entered into as a result of business combinations
Gain on change in interest ownership of NCI
Derecognition of NCI on acquisition
Balance 30 June
(39,291)
(39,291)
-
-
-
-
-
-
(39,291)
(39,291)
The acquisition reserve is used to record the initial Put/Call Options that occur through business combinations in relation
to non-controlling interests. Gains/(losses) on change in interest ownership of NCI must be recognised in equity, FLT has
elected to recognise this in the acquisition reserve.
E.
FOREIGN CURRENCY TRANSLATION RESERVE
Balance 1 July
(Losses) /gains on net investment hedge
Deferred tax
Non-controlling interest disposal of subsidiary
Reclassified to profit or loss
Net exchange differences on translation of foreign operations
Balance 30 June
NOTES
F12
2021
$’000
29,016
3,204
(961)
(65)
(152)
(28,863)
2,179
2020
$’000
RESTATED1
28,812
(1,456)
437
-
-
1,223
29,016
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive
income, as described in note I(d), and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed.
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F12
TAX
(A) INCOME TAX EXPENSE
I.
INCOME TAX (CREDIT) / EXPENSE
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax (credit) / expense
Deferred income tax (benefit) / expense included in income tax comprises:
(Increase) / decrease in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Numerical reconciliation of income tax to prima facie tax (receivable) / payable
(Loss) / Profit before income tax (credit) / expense
Tax at the Australian tax rate of 30% (2020 - 30%)
Tax effect of amounts in calculating taxable income:
Non-deductible / (assessable) amounts
Deductible / non-assessable amounts
Intangibles
Investments
Share based payments
Property, plant and equipment
Changes in tax rate
Other amounts
Tax losses not recognised
Tax losses recognised
Effect of different tax rates on overseas income
Under / (over) provision of prior year’s income tax
2021
$’000
(50,088)
(116,519)
(1,647)
2020
$’000
RESTATED1
(35,839)
(152,966)
2,447
(168,254)
(186,358)
(89,499)
(27,020)
(156,630)
3,664
(116,519)
(152,966)
(601,710)
(180,513)
(848,586)
(254,576)
60,766
(67,774)
(113)
985
(4,401)
5,146
314
(7,303)
12,051
(2,508)
19,433
13,385
3,252
201
136
(6,653)
(192,893)
(215,279)
9,477
(2,438)
19,247
(1,647)
24,639
10,549
-
15,925
2,447
28,921
Income tax (credit) / expense
(168,254)
(186,358)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F12
TAX (CONTINUED)
II. AMOUNTS RECOGNISED DIRECTLY IN EQUITY
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss and other
comprehensive income is directly debited or credited to equity.
Net deferred tax - (credited) / debited directly to equity
NOTES
Capital raising
Equity component of convertible note
III. TAX EXPENSE / (INCOME) RELATING TO ITEMS OF OTHER COMPREHENSIVE INCOME
Cash flow hedges
Net investment hedge
Total tax (credit) / expense relating to items of other
comprehensive income
D4
B5
F11
F11
IV. UNRECOGNISED POTENTIAL DEFERRED TAX ASSETS
Unused tax losses for which no deferred tax asset has been recognised
(non-capital)
Temporary differences relating to brand name impairment (capital) and
other intangibles
Investments
Lease & decommissioning
Other
Potential tax benefit at 30% (2020 - 30%)
2021
$’000
-
16,255
68
961
1,029
2020
$’000
RESTATED1
(6,804)
-
(52)
(437)
(489)
80,006
46,183
41,919
46,590
605
3,556
172,676
51,803
48,871
48,512
8,926
4,958
157,450
47,235
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
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F12
TAX (CONTINUED)
KEY ESTIMATES & JUDGEMENTS - IMPACT OF COVID-19
The duration of the COVID-19 pandemic is uncertain and difficult to predict. The pandemic continues to impede global
economic activity with border closures and travel restrictions continuing to be in place in many countries and easing
in others, resulting in suppliers scaling back operations for unknown periods of time. Whilst the industry is entering
a recovery phase, it is difficult to predict the long-term effects on economic factors such as disposable income,
unemployment, or consumer confidence, all of which could significantly reduce discretionary spending by consumers and
businesses on travel.
In most cases, the unused tax losses have no expiry date. Therefore while there is uncertainty in the market assumptions
have been made to support carrying the tax losses. Where the tax losses could not be supported by future operating
profits in the near term or losses were incurred in jurisdictions with restrictions on their use, FLT have not recognised the
tax losses.
Unrecognised tax losses in 2021 were incurred by entities in Australia, Canada, Costa Rica, Denmark, Dominican Republic,
Finland, Germany, Hong Kong, Indonesia, Malaysia, Mexico, Norway, Singapore, Sweden, Thailand, USA and Vietnam
(2020: Indonesia, Sweden, Germany, Thailand, Mexico, Dominican Republic, Vietnam, Costa Rica and Norway). These
losses have varying expiry dates from 2022 through to indefinite carry forward.
The judgements and assumptions used to support the recoverability of the tax losses may change in future periods as the
pandemic continues to unfold and the impact on the utilisation of tax losses is known.
(B) DEFERRED TAX ASSETS (DTA)
The balance comprises temporary differences attributable to:
Employee benefits
Property, plant and equipment and intangibles
Lease & decommissioning
Accruals
Tax losses
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2021
$’000
21,349
36,652
92,701
7,646
228,580
42,376
429,304
(98,213)
331,091
2020
$’000
RESTATED1
30,232
24,044
128,068
54,618
84,202
60,751
381,915
(139,700)
242,215
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
All movements in DTA were recognised in the statement of profit or loss and other comprehensive income, with the
exception of items stated in note A6, F11, F12 (a)(ii) and (iii).
(C) DEFERRED TAX LIABILITIES (DTL)
The balance comprises temporary differences attributable to:
Trade and other receivables
Property, plant and equipment and intangibles
Intangibles
Lease & decommissioning
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2021
$’000
13,968
17,958
10,576
65,053
1,127
108,682
(98,213)
10,469
2020
$’000
25,776
10,886
22,839
94,692
5,539
159,732
(139,700)
20,032
All movements in DTL were recognised in the statement of profit or loss and other comprehensive income, with the
exception of items stated in note F12 (a)(ii) and (iii).
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F13
AUDITOR'S REMUNERATION
During the year, the following fees were paid or payable for services provided by the Lead Auditor of the consolidated
entity, its related practices and non-related audit firms:
FEES TO ERNST & YOUNG (AUSTRALIA)
Fees for auditing the statutory financial report of the parent covering the group
and auditing the statutory financial reports of any controlled entities
Fees for assurance services that are required by legislation to be provided
by the auditor
Fees for other assurance and agreed-upon-procedures services under other
legislation or contractual arrangements where there is discretion as to whether
the service is provided by the auditor or another firm
Fees for other services
- Tax compliance
- Others
2021
$
2020
$
RESTATED1
1,778,308
1,748,389
-
75,920
228,000
517,310
151,917
649,291
-
69,691
2,158,225
3,060,601
FEES TO OTHER OVERSEAS MEMBER FIRMS OF ERNST & YOUNG (AUSTRALIA)
Fees for auditing the financial report of any controlled entities
1,529,026
1,391,830
Fees for assurance services that are required by legislation to be provided by the
auditor
Fees for other assurance and agreed-upon-procedures services under other
legislation or contractual arrangements where there is discretion as to whether the
service is provided by the auditor or another firm
Fees for other services
- Tax compliance
- Others
-
6,897
50,938
-
394,343
378,757
14,509
1,988,816
4,147,041
40,530
1,818,014
4,878,615
FEES TO NON LEAD AUDITOR AUDIT FIRMS FOR:
Fees for auditing the financial report of any controlled entities
98,545
159,991
Fees for other assurance and agreed-upon-procedures services under other
legislation or contractual arrangements where there is discretion as to whether the
service is provided by the auditor or another firm
Fees for other services
- Tax compliance
- Others
1 Restated to conform with current year presentation.
F14
SEASONALITY
18,617
-
206,844
158,388
84,749
408,755
172,036
490,415
Due to the financial impacts of COVID-19, the seasonal nature of the FLT business where higher revenues and operating
profits are expected in the second half of the year compared with the first six months has not specifically been observed
this year.
For further details on FLT’s outlook, please refer to the Outlook column on pages 12 to 13.
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G
GROUP STRUCTURE
This section explains significant aspects of the FLT group structure and how changes have affected the group.
G1
G2
G3
Subsidiaries
Deed of cross guarantee
Parent entity financial information
G1
SUBSIDIARIES
MATERIAL SUBSIDIARIES
The group’s principal subsidiaries are set out below. They have share capital consisting solely of ordinary shares that
the group holds directly and the proportion of ownership interests held equals the group’s voting rights. The country of
incorporation or registration is also their place of business.
Subsidiaries that sell travel or travel related services and contribute to more than 10% of the group’s underlying net profit
or loss before tax or 10% of the group’s net assets are considered material to the group.
NAME OF ENTITY
Australian OpCo Pty Ltd1
Flight Centre (UK) Limited
COUNTRY OF
INCORPORATION
Australia
United Kingdom
Flight Centre Travel Group (USA) Inc
USA
CLASS OF
SHARES/
OWNERSHIP
Ordinary
Ordinary
Ordinary
EQUITY HOLDING
2021
%
100
100
100
2020
%
100
100
100
1 This controlled entity has been granted relief from the requirement to prepare financial reports in accordance with ASIC Corporations (Wholly-owned Companies)
Instrument 2016/785 issued by the Australian Securities and Investments Commission. For further information refer to note G2.
There are no significant restrictions on the entities’ ability to access or use the assets and settle the liabilities of the group.
NON-CONTROLLING INTERESTS
During the period, FLT sold Thien Minh Transportation Company Limited, an immaterial subsidiary in Vietnam that formed
part of the Discova Asia business.
Prior to the sale FLT held a 49% interest and had control over the entity’s economic activities, hence it was recognised as a
subsidiary. The remaining 51% holding was recognised as a non-controlling interest.
Since the disposal of this subsidiary, the group has no other material non-controlling interests.
G2
DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Instrument), which came into effect on
17 December 2016, the wholly owned subsidiaries listed below are relieved from the Corporations Act 2001 requirements
for preparation, audit and lodgement of financial reports and directors' reports.
To obtain relief, the Instrument requires FLT and each of its relevant wholly owned subsidiaries to enter into a Deed of
Cross Guarantee in a proscribed form. The effect of the Current Deed (described below) is that FLT guarantees each
creditor payment in full of any debt if any of the relevant wholly owned subsidiaries (that are party to the Current Deed
described below) are wound up under certain provisions of the Corporations Act 2001. If a winding up occurs under other
provisions of the Corporations Act 2001, FLT will only be liable in the event that after six months any creditor has not been
paid in full. The relevant wholly owned subsidiaries (that are a party to the Current Deed described below) have also given
similar guarantees in the event that FLT is wound up.
There is one Deed of Cross Guarantee currently in effect dated 8 June 2021. The group entities to the deed are Flight
Centre Travel Group Limited (holding entity and trustee), Australian OpCo Pty Ltd, P4 Finance Pty Ltd, Travel Services
Corporation Pty Ltd, Flight Centre Technology Pty Ltd, Ignite Travel Group Pty Ltd, Ignite Holidays Pty Ltd, and Flight
Centre (China) Pty Ltd (as a group entity and alternative trustee) (Current Deed).
An earlier deed of cross guarantee dated 28 June 2002 (which preceded the Current Deed) as between Flight Centre
Travel Group Limited (holding entity and trustee), Flight Centre (China) Pty Ltd (as alternative trustee), Australian OpCo
Pty Ltd, P4 Finance Pty Ltd, Travel Services Corporation Pty Ltd, Flight Centre Technology Pty Ltd, Ignite Travel Group Ltd
and Ignite Holidays Pty Ltd was revoked by Deed of Revocation dated 7 June 2021 and replaced with the
Current Deed.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G2
DEED OF CROSS GUARANTEE (CONTINUED)
The parties to the Current Deed represent a Closed Group for the purposes of the Instrument and, as there are no other
parties to the Current Deed that are controlled by FLT, they also represent the Extended Closed Group.
In order to disclose consistent and comparable information, FY20 has been restated to include Ignite Travel Group Pty
Ltd, Ignite Holidays Pty Ltd and Flight Centre (China) Pty Ltd, the new group entities to the Current Deed.
Set out below is the consolidated statement of profit or loss and statement of other comprehensive income, consolidated
balance sheet and a summary of movements in consolidated retained earnings for the company and the subsidiaries listed
on page 119.
Revenue
Fair value gain/(loss) on change in control
Other income
Share of profit/(loss) of joint ventures and associates
EXPENSES
Employee benefits
Sales and marketing
Amortisation and depreciation
Finance costs
Impairment charge
Other expenses
(Loss) / Profit before income tax expense
Income tax expense
(Loss) / Profit after income tax expense
STATEMENT OF COMPREHENSIVE INCOME
Items that have been reclassified to profit or loss:
Hedging gains reclassified to profit or loss
Items that may be reclassified to profit or loss:
Changes in the fair value of financial assets at FVOCI
Changes in the fair value of cash flow hedges
Income tax credit /(expense) on items of other comprehensive income
Total other comprehensive income
FOR THE YEAR ENDED 30 JUNE
2021
$’000
2020
$’000
RESTATED1
236,962
792,376
-
155,076
17,841
(402,800)
(13,580)
(69,361)
(25,656)
(5,703)
(184,006)
(291,227)
104,022
(187,205)
(3,138)
123,411
6,510
(693,625)
(110,823)
(108,869)
(18,251)
(223,400)
(292,217)
(528,026)
119,583
(408,443)
35,502
11,293
-
64
45
35,611
(321)
(647)
(102)
10,223
Total comprehensive income for the year
(151,594)
(398,220)
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED PROFITS
Retained profits at the beginning of the financial year
Accounting policy change - AASB16
Accounting policy change - cloud computing
(Loss) / Profit from ordinary activities after income tax
Dividends provided for and paid
Retained profits at the end of the financial year
6,782
-
-
(187,205)
-
(180,423)
544,178
(1,415)
(28,441)
(408,443)
(99,097)
6,782
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details. Also restated to include the new parties to the Deed.
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G2
DEED OF CROSS GUARANTEE (CONTINUED)
AS AT 30 JUNE
ASSETS
Current assets
Cash and cash equivalents
Financial asset investments
Trade receivables
Contract assets
Other assets
Other financial assets
Current tax receivables
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of use asset
Other assets
Other financial assets
Investments in subsidiaries, joint ventures and associates
Deferred tax assets
Derivative financial instruments
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Contingent consideration
Lease liability
Borrowings
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Contract liabilities
Lease liability
Borrowings
Convertible note
Provisions
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained profits
Total equity
2021
$’000
836,064
59,182
178,955
48,460
21,097
358
47,592
5,015
1,196,723
46,617
106,836
143,756
5,059
256,803
851,686
235,225
2,189
1,648,171
2,844,894
437,161
21,748
2,784
62,245
-
30,658
1,659
556,255
420,002
23,813
140,310
348,429
347,239
22,740
-
1,302,533
1,858,788
2020
$’000
RESTATED1
1,267,882
3,502
170,130
75,614
24,504
7,686
25,148
3,288
1,577,754
72,005
60,086
189,107
6,061
261,565
893,328
183,045
278
1,665,475
3,243,229
727,888
135,972
1,683
84,210
199,976
53,243
2,185
1,205,157
411,441
28,692
194,398
250,000
-
34,990
1,456
920,977
2,126,134
986,106
1,117,095
1,099,056
67,473
(180,423)
986,106
1,094,095
14,467
8,533
1,117,095
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details. Also restated to include the new parties to the Deed.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G3
PARENT ENTITY FINANCIAL INFORMATION
SUMMARY FINANCIAL INFORMATION
The financial information for the parent entity, FLT, has been prepared on the same basis as the consolidated financial
statements, except for the investments which are carried at cost.
The individual financial statements for the parent entity show the following aggregate amounts:
Current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Reserves
Cash-flow hedge reserve
Compound instrument - equity component
Share-based payments reserve
Acquisition Reserve
Retained profits
Total shareholders’ equity
(Loss) / Profit after tax for the year
Total comprehensive (loss) / income
PARENT
2021
$’000
1,573,452
3,207,936
2020
$’000
RESTATED1
1,938,819
3,580,061
409,993
2,407,238
1,060,950
2,716,024
1,099,056
1,094,095
309
37,930
34,487
(8,976)
(362,108)
800,698
(119,508)
(83,897)
150
-
21,368
(8,976)
(242,600)
864,037
(342,465)
(332,242)
1 Restated as required for changes introduced by IFRIC Agenda Decision – Configuration or Customisation Costs in Cloud Computing Arrangements. Refer to Note I(b)
for details.
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G3
PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
United Kingdom
India
China
Ireland
Hong Kong
France
New Zealand
USA
Sweden
Singapore
United Arab Emirates
Other
Total
PARENT
2021
$’000
64,518
27,101
11,363
7,341
6,093
4,436
4,421
3,350
3,567
2,267
760
4,828
2020
$’000
70,520
29,123
11,350
7,577
10,235
4,579
4,434
-
3,316
4,550
237
3,520
140,045
149,441
FLT, as parent entity, has provided both parent company guarantees and issued letters of credit to beneficiaries. The
parent entity is liable to pay any claim, subject to the terms of the parent company guarantee or letter of credit, in the
event that obligations are not met.
FLT has also entered into a deed of cross guarantee. Refer to note G2 for terms and parties to the deed.
No liability was recognised by the parent entity or consolidated entity, as the guarantee’s fair values are immaterial.
CONTINGENT LIABILITIES OF THE PARENT ENTITY
Contingent liabilities of the parent entity at 30 June 2021 have been disclosed in note H2.
CONTRACTUAL COMMITMENTS
Except as noted in note E1, there are no other material contractual commitments of the parent entity.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
H
UNRECOGNISED ITEMS
This section provides information about items that are not recognised in the financial statements but could potentially
have a significant impact on the group’s financial position and performance.
H1
H2
H3
Commitments
Contingencies
Events occurring after the end of the reporting period
H1
COMMITMENTS
FLT has commitments in relation to TP connects (refer to note E1).
AIRTREE
FLT has an agreement with AirTree Ventures 2 Partnership LP to invest $5,000,000 into the venture capital fund. To date
FLT has received capital calls to the value of $4,320,000 which have been recognised as Equity instruments – Fair value
through profit or loss (refer note B2), leaving $680,000 to be called in the future. The amount to be called has not been
recognised as a liability at period end as FLT does not have a present obligation. The obligation only arises upon receipt
of the capital call notices.
FLT has no control or managerial involvement in the running of the venture capital fund and the total contribution of
$5,000,000 is less than 4% of the total capital in the fund.
H2
CONTINGENCIES
GENERAL CONTINGENCIES
FLT is a global business and from time to time in the ordinary course of business it receives enquiries from various
regulators and government bodies. FLT cooperates fully with all enquiries and these enquiries do not require disclosure in
their initial state, however should the company become aware that an enquiry is developing further or if any regulatory or
government action is taken against the group, appropriate disclosure is made in accordance with the relevant accounting
standards.
As a global business, from time to time FLT is also subject to various claims and litigation from third parties during the
ordinary course of its business. The directors of FLT have given consideration to such matters which are or may be subject
to claims or litigation at year end and, unless specific provisions have been made, are of the opinion that no material
contingent liability for such claims of litigation exists.
The group had no other material contingent assets or liabilities.
H3
EVENTS OCCURRING AFTER THE END OF THE REPORTING PERIOD
No material matters have arisen since 30 June 2021.
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I
SUMMARY OF ACCOUNTING POLICIES
This section details FLT's accounting policies. Significant accounting policies are contained with the financial statement
notes to which they relate and are not detailed in this section.
I
SUMMARY OF ACCOUNTING POLICIES
The principal accounting policies adopted in the consolidated financial report’s preparation are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. The financial report is for the
consolidated entity consisting of FLT and its subsidiaries.
(A) BASIS OF PREPARATION
This general purpose financial report has been prepared on a going concern basis (refer note C1) and in accordance
with Australian Accounting Standards and interpretations issued by the Australian Accounting Standard Board and the
Corporations Act 2001. FLT is a for-profit entity for the purpose of preparing the financial statements.
COMPLIANCE WITH IFRS
The group’s consolidated financial statements also comply with International Financial Reporting Standards (IFRS), as
issued by the International Accounting Standards Board (IASB).
EARLY ADOPTIONS OF STANDARDS
The group has not elected to apply any pronouncements before their operative date in the annual reporting period
beginning 1 July 2020.
In the prior period, FLT early adopted AASB issued AASB 2020-4 Amendments to Australian Accounting Standards
– Covid-19-Related Rent Concessions and AASB 2021-43 Amendments to Australian Accounting Standards - Covid-19-
Related Rent Concessions beyond 30 June 2021. The amendment provides a practical expedient that allows for the lessee
to remeasure its lease liabilities from renegotiated leases as a direct consequence of COVID-19 with the corresponding
adjustment to the right-of-use asset.
FLT elected to use the practical expedient.
In applying the practical expedient, FLT remeasured it lease liabilities for qualifying leases, with the corresponding
adjustment to right-of-use assets. In this approach, the discount rate is not updated to remeasure the lease liability and
there is no impact to the statement of profit or loss.
HISTORICAL COST CONVENTION
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of
FVOCI financial assets, revaluation of FVTPL financial assets, derivative financial instruments and contingent consideration.
ROUNDING OF AMOUNTS
Amounts in the financial statements have been rounded off to the nearest thousand dollars or, in certain cases, the
nearest dollar, in accordance with the Australian Securities and Investments Commission’s Instrument 2016/191.
(B) CHANGES IN ACCOUNTING POLICY
IFRIC AGENDA DECISION – CONFIGURATION OR CUSTOMISATION COSTS IN A CLOUD COMPUTING ARRANGEMENT
In April 2021, the IFRS Interpretations Committee (IFRIC) published an agenda decision for configuration and
customisation costs incurred related to a Software-as-a-Service (SaaS) arrangement. FLT has changed its accounting
policy in relation to configuration and customisation costs incurred in implementing SaaS arrangements. The nature and
effect of the changes as a result of changing this policy is described below.
Accounting Policy – Software-as-a-Service (SaaS) arrangements
SaaS arrangements are arrangements in which the Group does not currently control the underlying software used in
the arrangement.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Where costs incurred to configure or customise SaaS arrangements result in the creation of a resource which is
identifiable, and where the Group has the power to obtain the future economic benefits flowing from the underlying
resource and to restrict the access of others to those benefits, such costs are recognised as a separate intangible software
asset and amortised over the useful life of the software on a straight-line basis. The amortisation is reviewed at least at the
end of each reporting period and any changes are treated as changes in accounting estimates.
Where costs incurred to configure or customise do not result in the recognition of an intangible software asset, then
those costs that provide the Group with a distinct service (in addition to the SaaS access) are now recognised as expenses
when the supplier provides the services. When such costs incurred do not provide a distinct service, the costs are now
recognised as expenses over the duration of the SaaS contract. Previously some costs had been capitalised and amortised
over its useful life.
A fulfilment asset is recognised for costs which are eligible for capitalisation under AASB 15 Revenue from Contracts with
Customers.
The following tables show the adjustments recognised for each individual line item. Line items that were not affected
by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the
amounts provided.
CONSOLIDATED BALANCE SHEET
Assets
Intangible assets
Deferred tax assets
Fulfilment assets
Total assets
Reserves
Retained profits
Total equity
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Agency revenue from the provision of travel
Communication & IT
Amortisation and depreciation
Other expenses
(Loss) before income tax expense
Income tax expense
(Loss) after income tax expense
Profit after tax attributable to:
Company owners
Non-controlling interests
CONSOLIDATED STATEMENT OF CASH FLOWS
Payments to suppliers and employees
Net cash inflow from operating activities
Payments for intangibles
Net cash outflow from investing activities
30 JUNE 2020
AS ORIGINALLY
PRESENTED
$’000
IMPACT OF
CHANGE
IN ACCOUNTING
POLICY
$’000
30 JUNE 2020
$’000
RESTATED
761,864
229,499
9,224
(51,998)
12,716
6,060
709,866
242,215
15,284
3,999,066
(33,222)
3,965,844
11,172
287,717
1,393,186
1,595,816
(167,257)
(237,027)
(193,444)
(849,284)
187,175
(662,109)
(662,166)
57
(662,109)
(2,841,866)
5,654
(67,866)
(48,109)
4
(33,222)
(33,218)
(813)
(16,828)
6,415
11,924
698
(817)
(119)
(119)
-
(119)
11,176
254,495
1,359,968
1,595,003
(184,085)
(230,612)
(181,520)
(848,586)
186,358
(662,228)
(662,285)
57
(662,228)
(16,297)
(16,297)
16,297
16,297
(2,858,163)
(10,643)
(51,569)
(31,812)
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Earnings per share for profit attributable to the ordinary equity holders of the company:
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
CENTS
(552.1)
(552.1)
CENTS
(0.1)
(0.1)
CENTS
RESTATED
(552.2)
(552.2)
Opening retained profits 1 July as originally presented
Impact on:
Intangible assets
Deferred tax assets
Fulfilment assets
Opening retained profits 1 July - restated
Critical accounting estimates, assumptions and judgements
2020
$’000
RESTATED
2019
$’000
RESTATED
287,717
1,048,980
(51,998)
12,716
6,060
(53,206)
13,525
6,578
254,495
1,015,877
In the process of applying the above policy, management has made the following judgements which have the most
significant effect on the amounts recognised in the consolidated financial statements.
• Determining whether cloud computing arrangements contain a software licence intangible asset
The Group evaluates a cloud computing arrangement to determine if it provides a resource that the Group can control.
The Group determines that a software licence intangible asset exists in a cloud computing arrangement when both of
the following are met at the inception of the arrangement:
–
–
The Group has the contractual right to take possession of the software during the hosting period without
significant penalty.
I t is feasible for the Group to run the software on its own hardware or contract with another party unrelated to
the supplier to host the software.
• Determination whether configuration and customisation costs provide a distinct service to access to the SaaS
The Group applies judgement in determining whether costs incurred provide a distinct service, aside from access to the
SaaS. Where it is determined that no distinct service is identifiable, the related costs are recognised as expenses over
the duration of the service contract.
No other new standards or amendments became effective in the current reporting period that have a material impact
on FLT.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(C) PRINCIPLES OF CONSOLIDATION
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all FLT subsidiaries at 30 June 2021 and the
subsidiaries’ results for the year then ended. FLT and its subsidiaries together are referred to in this financial report as the
group or the consolidated entity.
Subsidiaries are all entities (including structured entities) over which the group has control. FLT controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the entity’s activities. Subsidiaries are fully consolidated from the date on which control
is transferred to the group. They are deconsolidated from the date control ceases.
The acquisition method of accounting is used to account for business combinations by the group (refer to note I(h)
Business Combinations).
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the transferred asset’s impairment.
Subsidiaries’ accounting policies have been changed, where necessary, to ensure consistency with the group’s policies.
Investments in subsidiaries are accounted for at cost in FLT’s individual financial statements.
(ii) Joint arrangements & Associates
Investments in joint arrangements are classified as either joint operations or joint ventures (JVs). The classification
depends on each investor’s contractual rights and obligations, rather than the legal structure of the joint arrangement.
FLT only has JVs, which are accounted for in the consolidated financial statements using the equity method. Under the
equity method, they are initially recognised at cost by the parent entity and subsequently the share of the JV entity’s profit
or loss is recognised in the statement of profit or loss and other comprehensive income. The share of post-acquisition
movements in reserves is recognised in other comprehensive income. JV details are set out in note E1.
FLT reassesses its interests in joint arrangements and associates for changes in control at least annually or where there has
been changes in circumstances including but not limited to changes to shareholdings and shareholder agreements.
Upon gaining control, FLT re-measures its existing investment to fair value with any difference between the carrying
amount and its fair value recognised in the profit or loss. The transaction is then accounted for in accordance with the
acquisition method of accounting, refer note I(h) Business Combinations.
Upon loss of joint control, FLT measures and recognises its remaining investment at its fair value. The difference between
the investment’s carrying amount upon loss of joint control and the remaining investment’s fair value and proceeds from
disposal is recognised in profit or loss.
When the remaining investment constitutes significant influence, it is accounted for as an investment in associate.
Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not
control or joint control over those policies. Investments in Associates are also accounted for using the equity method.
(iii) Changes in ownership interests
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 Profit or Loss, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position and
Consolidated Statement of Changes in Equity.
The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with
group equity owners. An ownership change will result in an adjustment between the carrying amounts of the controlling
and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the
adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within
equity attributable to FLT owners.
When the group ceases to have control, joint control or significant influence, any retained interest in the entity is
remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled
entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of
that entity are accounted for as if the group has directly disposed of the related assets or liabilities. This may mean that
amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a JV or an associate is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss
where appropriate.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(C) PRINCIPLES OF CONSOLIDATION (CONTINUED)
(iv) Share trusts
FLT has set up a share trust to administer the various employee share schemes it initiates to incentivise and reward
employees. The trust holds shares which have been purchased by employees or are fully vested, and from time-to-time
treasury shares. The trust is consolidated.
(D) 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 FLT’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency at the prevailing exchange rates 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 profit or loss. Exceptions arise if the gains and losses are deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss and other
comprehensive income within finance costs. All other foreign exchange gains and losses are presented in the statement of
profit or loss and other comprehensive income on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated at the exchange rates when the
fair value is determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair
value gain or loss.
(iii) Group companies
For foreign operations with different functional currencies to the presentation currency, results and financial position are
translated into the presentation currency as follows:
• Assets and liabilities for each balance sheet presented are translated at the closing rate of that balance sheet’s date
• Income and expenses for each statement of profit or loss and other comprehensive income are translated at average
exchange rates; and
• All resulting exchange differences are recognised in other comprehensive income
On consolidation, exchange differences arising from the translation of any net investment in foreign entities 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 difference is reclassified to profit or loss, as part of the gain or loss on sale where
applicable.
Goodwill and fair value adjustments arising on foreign operations’ acquisitions are treated as the foreign operations’
assets and liabilities and are translated at the closing rate.
(E) REVENUE
For accounting policies on revenue, refer to note A2.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(F) OTHER INCOME
Specific accounting policies for other income are set out below:
(I) LEASE INCOME
Lease income from operating leases is recognised as income on a straightline basis over the lease term.
(II) INTEREST INCOME
Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is
impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow
discounted at the instrument’s original effective interest rate, and continues unwinding the discount as interest income.
Interest income on impaired loans is recognised using the original effective interest rate.
(III) DIVIDENDS
Dividends are recognised when the right to receive payment is established. This applies even if they are paid out of pre-
acquisition profits. However, the investment may need to be tested for impairment as a consequence.
(IV) ROYALTIES
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement.
(G) IMPAIRMENT OF ASSETS
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation but are impairment tested
annually or more frequently if events or changes in circumstances indicate they might be impaired. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell, or value-in-use. To assess impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash inflows which are independent of the cash inflows from other
assets or asset groups (cash-generating units).
Impaired non-financial assets, other than goodwill, are reviewed for the impairment’s possible reversal at each reporting
date.
Financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. For financial assets, a significant or prolonged decline in the security’s fair value below its
cost is considered an indicator that the assets are impaired. Impairment is recorded and losses are incurred only if there is
objective evidence of impairment as a result of one or more events that occurred after the asset’s initial recognition (a loss
event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated.
(H) BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for a subsidiary’s acquisition comprises the
transferred assets’ fair values, the liabilities incurred and the equity interest issued by the group. The consideration
transferred also includes any contingent consideration arrangement’s fair value and the fair value of any pre-existing
equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at
their fair values at acquisition date. Where equity instruments are issued in an acquisition, the instruments’ fair values are
their published market prices at the exchange date. Transaction costs arising on equity instruments’ issue are recognised
directly in equity.
The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded
as goodwill. If those amounts are less than the fair value of the acquired subsidiary’s net identifiable assets and the
measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, future amounts payable are discounted to their present
value at the exchange date. 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.
Where there are NCIs, these are measured at either the acquisition date fair value or the proportionate share of the net
identifiable assets acquired.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(H) BUSINESS COMBINATIONS (CONTINUED)
For some acquisitions, Put and Call options over NCIs are entered into simultaneously when business combinations
are initially recorded. For these acquisitions, it has been determined that the option does not provide the parent with
a present ownership interest in the shares subject to the Put. The NCI is treated as having been acquired when the Put
option is granted (i.e. it is de-recognised) and a financial liability at fair value is recorded for the NCI Put. The difference
between the liability recorded at fair value and the NCI de-recognised is recorded in the acquisition reserve in equity
in accordance with AASB 10. After the initial recognition of the acquisition reserve it is not subsequently re-measured.
The financial liability relating to the Put and Call options over NCI is subsequently accounted for under AASB 9 with all
changes in the carrying amount recognised in profit or loss until exercise.
(I)
INTANGIBLE ASSETS
(I) GOODWILL
Goodwill represents the excess of the acquisition’s cost over the fair value of the group’s interest in the fair value of the
acquired subsidiary or associates net identifiable assets at the acquisition date.
Goodwill on subsidiaries’ acquisitions is included in intangible assets. Goodwill is not amortised but is impairment tested
annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost
less accumulated impairment losses. Gains and losses on the entity’s disposal include the sold entity’s carrying amount of
goodwill.
Goodwill is allocated to CGUs for impairment testing. The allocation is made to those CGUs or groups of CGUs that are
expected to benefit from the business combination in which the goodwill arose.
(II) BRAND NAMES, LICENCES AND CUSTOMER RELATIONSHIPS
Other intangible assets, such as brand names, licences and customer relationships, are acquired as part of business
combinations and are recognised initially at fair value. Where they have an indefinite useful life, such as brand names,
they are not subject to amortisation but are tested annually for impairment or more frequently if events or changes in
circumstances indicate they may be impaired. Key factors taken into account in assessing the useful life of brands are:
• The brands are well established and protected by trademarks across the globe. The trademarks are generally subject to
an indefinite number of renewals upon appropriate application; and
• There are currently no legal, technical or commercial obsolescence factors applying to the brands which indicate that
the life should be considered limited
(III) OTHER INTANGIBLE ASSETS - SOFTWARE
Research costs associated with software development are expensed as incurred. Development expenditure incurred
on an individual project is capitalised if the project is technically and commercially feasible and adequate resources are
available to complete development. The expenditure capitalised includes all directly attributable costs, including costs of
materials, services, direct labour and an appropriate proportion of overheads.
(J) CASH AND CASH EQUIVALENTS
For statement of cash flows presentation purposes, cash and cash equivalents include cash on hand, deposits held at
call with financial institutions, other short-term, highly liquid investments that are readily convertible to known amounts
of cash and are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(K) FINANCIAL ASSETS
(I) CLASSIFICATION
Financial assets are classified in the following categories: financial assets at amortised cost, FVTPL and FVOCI. The
classification depends on the purpose for which the assets were acquired.
• Amortised cost - Applies to instruments which are held within a business model whose objective is to hold assets in
order to collect contractual cash flows and the contractual terms of the financial asset represent contractual cash flows
that are solely payments of principal and interest
• Fair value through profit and loss (FVTPL) - Applies to instruments which are within a business model where the
objective is neither to hold to collect contractual cash flows nor hold to sell.
• Fair value through other comprehensive income (FVOCI) - Applies to instruments which satisfy the requirements of the
business model test and contractual cashflow test.
Management classifies its investments at initial recognition and reevaluates this classification each reporting date.
(II) RECOGNITION AND DERECOGNITION
Regular purchases and sales of financial assets are recognised on trade-date (the date on which the group commits to
purchase or sell the asset). Investments are initially recognised at fair value plus transaction costs for all financial assets not
carried at FVTPL. Financial assets carried at FVTPL are initially recognised at fair value and transaction costs are expensed
in the statement of profit or loss and other comprehensive income. Financial assets are derecognised when the rights to
receive cash flows from them have expired or have been transferred and the group has transferred substantially all the
risks and rewards of ownership.
(III) SUBSEQUENT MEASUREMENT
Financial assets at amortised cost are carried at amortised cost using the effective interest method.
Financial assets at FVTPL are subsequently carried at fair value. Gains or losses arising from changes in the fair value are
presented in the statement of profit or loss and other comprehensive income within other income or other expenses in the
period in which they arise. Income such as interest and dividends from financial assets at FVTPL is recognised separately
to gains or losses in the statement of profit or loss and other comprehensive income as part of other income when the
group’s right to receive payments is established.
Financial assets classified as FVOCI are subsequently carried at fair value. Gains or losses arising from changes in
the fair value are presented in other comprehensive income with the exception of impairment which is recognised in
the statement of profit or loss immediately. When securities classified as FVOCI are sold, the accumulated fair value
adjustments recognised in other comprehensive income are reclassified in the statement of profit or loss and other
comprehensive income as gains and losses from investment securities.
(IV) IMPAIRMENT – EXPECTED CREDIT LOSSES
FLT applies both the general and simplified approach to the measurement of expected credit losses (ECLs).
Under the general approach FLT applies a three stage model for measuring ECLs based on changes in credit quality since
initial recognition including
• Stage 1: 12 month ECL - Recognised on “good” exposures where there has not been a significant increase in credit risk
since initial recognition, the loss represents the probability of default from events that are possible over the next 12
months and not the cash flows FLT expects to lose over that period.
• Stage 2: Lifetime ECL - Where there has been a significant increase in credit risk since initial recognition however default
has not yet occurred, the loss represents the credit losses expected over the remaining life of the asset.
• Stage 3: Lifetime ECL (credit impaired) - Financial asset becomes credit impaired as a result of an event which has had a
detrimental impact on future cash flows.
FLT assesses the credit risk and probability of default of financial assets by reference to external rating agencies where
available on an asset by asset basis. FLT has determined a financial asset has low credit risk when it is equivalent to an
investment grade quality. Where forward looking information is not available, FLT applies the rebuttable presumption
that credit risk has increased significantly when contractual payments are more than 30 days past due (entry into stage 2:
Lifetime ECL) and, when contractual payments are greater than 90 days past due, the asset is credit impaired (entry into
stage 3: Lifetime ECL).
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(K) FINANCIAL ASSETS
For trade receivables, contract assets and lease receivables which do not contain a significant financing component,
AASB 9 offers a policy choice between the application of the general model, as detailed above, or a simplified approach.
Under the simplified approach, the tracking of changes in credit risk is not required, but instead requires the recognition
of lifetime ECLs at all times and allows the use of a provision matrix, incorporating the probability of default, as a practical
expedient. FLT has elected the simplified approach for trade and override receivables.
(L) FAIR VALUE MEASUREMENT
FLT measures certain financial instruments at fair value at each reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability; or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the group.
An asset or liability’s fair value is measured using the assumptions that market participants use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to
measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the
fair value hierarchy, as described in notes A7, B2 and C2.
(M) TRADE AND OTHER RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less provision for impairment in accordance with the simplified approach see note I (k)(iv) above.
The impairment allowance is the difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial. The impairment amount is recognised in the statement of profit or
loss and other comprehensive income in other expenses. When a trade receivable for which an impairment allowance
has 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 other expenses in the statement of profit or
loss and other comprehensive income.
(N) PROPERTY, PLANT AND EQUIPMENT
Buildings and other property, plant and equipment are stated at historical cost less depreciation. Land is held at historical
cost. Historical cost includes expenditure directly attributable to the item’s acquisition.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, when
it is probable that future economic benefits associated with the item will flow to the group and the item’s cost can be
measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in
which they are incurred.
An asset’s carrying amount is impaired immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note I(g)). A previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was
recognised.
The reversal is limited so that the asset’s carrying amount does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
(O)
Inventories are valued at the lower of cost and net realisable value. Cost primarily represents average costs.
TRADE AND OTHER PAYABLES
(P)
These amounts are liabilities for goods and services provided to the group prior to the financial year’s end, but not
yet paid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months of the reporting date. They are recognised
initially at fair value and subsequently measured at amortised cost using the effective interest method.
PROVISIONS
(Q)
Provisions for legal claims and make good obligations are recognised when the group has a present legal or constructive
obligation as a result of past events and it is more likely than not that an outflow of resources will be required to settle the
obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow relating to any item included in the same class of obligations is small.
To measure provisions at present value at the reporting period’s end, management estimates the expenditure required to
settle the present obligation. The discount rate used to determine the present value reflects current market assessments
of the time value of money and the risks specific to the liability. Provision increases brought about by the passage of time
are recognised as interest expenses.
(I) MAKE GOOD PROVISION
The group is required to restore leased premises to their original condition at the end of the respective lease terms.
A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements and restore the leased premises. These costs have been capitalised as part of the cost of leasehold
improvements and are amortised over the shorter of the lease term or the asset’s useful life.
(R)
EMPLOYEE BENEFITS
(I) WAGES AND SALARIES, ANNUAL LEAVE AND SICK LEAVE
Liabilities for employees’ wages and salaries, including non-monetary benefits and annual leave are classified as current
and recognised in trade and other payables up to the reporting period’s end and represent the amounts expected to be
paid when the liabilities are settled. Sick leave is recognised as an expense when the leave is taken and measured at the
rates paid or payable. All other short-term employee benefit obligations are presented as trade and other payables.
(II) PROFIT-SHARING AND BONUS PLANS
A liability for employee benefits in the form of profit-sharing and bonus plans is recognised as payable when there is a
contractual obligation or valid expectation that payment will be made. Employee profit-sharing and bonus payments are
recognised and paid monthly.
(III) LONG SERVICE LEAVE
The liability for long service leave which is not expected to be settled within 12 months after the end of the period in
which the employees render the related service is recognised in provisions. The liability represents the present value
of expected future payments to be made for the services employees provided up to the reporting period’s end. The
company considers expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments at the reporting period’s end are discounted using market yields on national corporate bonds
with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
(IV) RETIREMENT BENEFIT OBLIGATIONS
The group provides retirement benefits to employees through a defined contribution superannuation fund. Contributions
are recognised as expenses as they become payable.
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SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(R) EMPLOYEE BENEFITS (CONTINUED)
(V) TERMINATION BENEFITS
Termination benefits may be 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 commits to either terminating a current employee’s employment according to a detailed formal plan without the
possibility of withdrawal or providing termination benefits following an offer made to encourage voluntary redundancy.
BORROWINGS
(S)
Borrowings are initially recognised at fair value, net of transaction costs incurred, and are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method. Fees paid on loan facilities’
establishment are recognised as loan transaction costs to the extent that it is probable that some or all of the facility will
be drawn down. In this case, the fee is deferred until the draw down occurs. If there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowing costs are recognised as expenses in the period in which they are incurred and include:
• Interest on bank overdrafts and short and long-term borrowings; and
• Unwinding of discount on deferred payables
Borrowings are classified as current liabilities unless the group has an unconditional right to defer the liability’s settlement
for at least 12 months after the reporting period’s end.
Borrowings are removed from the balance sheet 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
other income or other expenses.
(T)
TAX
(I) INCOME TAX
The income tax expense or benefit for the period is the tax payable or receivable on the current period’s taxable income
based on each jurisdiction’s applicable income tax rate. Adjustments are made for changes in deferred tax assets and
liabilities attributable to temporary differences and for unused tax losses.
The current income tax charge is based on 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 in respect of situations in which applicable tax regulations are subject
to interpretation and establishes provisions where appropriate.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the assets’
and liabilities’ tax bases and their carrying amounts in the consolidated financial statements. However, the deferred
income tax is not accounted for if it arises from an asset or liability’s initial recognition in a transaction other than a
business combination that at the time of the transaction does not affect accounting or taxable profit or loss. Deferred
income tax is determined using rates (and laws) that have been enacted or substantively 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 to the extent that 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 controls the timing of the temporary differences’
reversals 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 tax authority. Current tax assets and tax liabilities are
offset when the entity has a legally enforceable right to offset and intends to either 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 when it relates to items recognised in other comprehensive
income or directly in equity. In these cases, the tax is also recognised in other comprehensive income or directly in equity.
Companies within the group may be entitled to claim tax incentives (eg. the Research and Development Tax Incentive
regime in Australia). The effect of this is a reduction to the income tax payable and current tax expense.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(T)
TAX (CONTINUED)
(I) TAX CONSOLIDATION LEGISLATION
FLT and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2003.
The head entity, FLT, and the tax consolidated group’s controlled entities continue to account for their current and
deferred tax amounts. These tax amounts are measured as if each entity continues to be a standalone taxpayer.
In addition to its current and deferred tax amounts, FLT also recognises the current tax liabilities (or assets) and the
deferred tax assets arising from unused tax losses and unused tax credits assumed from the tax consolidated group’s
controlled entities.
(II) NATURE OF THE TAX SHARING ARRANGEMENT
Members of the tax consolidated group have entered into a tax sharing agreement that provides for the allocation of
income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this agreement on the basis that the possibility of default is
remote.
(III) NATURE OF THE TAX FUNDING AGREEMENT
Members of the tax consolidated group have entered into a tax funding agreement. Under the tax funding agreement,
the wholly-owned entities fully compensate FLT for any current tax payable assumed and are compensated by FLT for any
current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to
FLT under the tax consolidation legislation.
The funding amounts are the amounts recognised in the wholly-owned entities’ financial statements. Amounts receivable
or payable under the tax funding agreement are due when the head entity’s funding advice is received. This advice is
issued as soon as practicable after each financial year’s end. The head entity may also require payment of interim funding
amounts to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.
Any differences between the amounts assumed and amounts receivable or payable under the tax funding agreements are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
(U)
EARNINGS PER SHARE
(I) BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to the company’s equity holders, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(II) DILUTED EARNINGS PER SHARE
Diluted earnings per share adjusts basic earnings per share to take into account the after income tax effect of interest
and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares
assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(V) CONTRIBUTED EQUITY
Ordinary shares are classified as equity (note D4) and entitle the holder to participate in dividends and the proceeds of
the company’s wind up in proportion to the number of and amount paid on the shares held.
On a show of hands, every holder of an ordinary share present at a meeting, either in person or by proxy, is entitled to one
vote. Upon a poll, each share is entitled to one vote.
Ordinary shares have no par value and there are no partly paid shares currently on issue.
Incremental costs directly attributable to new share or option issues are shown in equity as a deduction, net of tax,
from the proceeds. Incremental costs directly attributable to shares or options issued for a business acquisition are not
included in the acquisition’s cost as part of the purchase consideration.
If the entity reacquires its own equity instruments, as the result of a share buy-back for example, those instruments are
deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the
consideration paid, including any directly attributable incremental costs (net of income taxes), is recognised directly
in equity.
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I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(W) DIVIDENDS
Provision is made by the parent entity for any dividend declared, being appropriately authorised and no longer at the
entity’s discretion on or before the end of the financial year but not distributed at balance date.
(X) GST / CONSUMPTION TAX
Revenues, expenses, assets and liabilities are recognised net of the amount of associated consumption tax, unless the
consumption tax incurred is not recoverable from the taxation authority. In this case, it is recognised as part of the asset
acquisition’s cost or as part of the expense.
Receivables and payables include consumption taxes receivable or payable. The net amount of consumption tax
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The consumption tax components of cash flows arising from investing or
financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash
flows.
(Y) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2021
reporting period. The standards are not expected to have a material financial impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
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DIRECTORS’ DECLARATION
The board declared the following in accordance with a resolution of the directors of Flight Centre Travel Group Limited:
1. In the opinion of the directors:
(a)
the financial statements and notes of Flight Centre Travel Group Limited for the financial year ended 30 June
2021 are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its
performance for the year ended on that date; and
ii. complying with Accounting Standards and the Corporations Regulations 2001;
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable
3. Note I(a) to the financial statements contains a statement of compliance with International Financial Reporting
Standards
4. At the date of this declaration, there are reasonable grounds to believe that the members of the extended closed
group identified in note G2 will be able to meet any obligations or liabilities to which they are, or may become, subject
to by virtue of the deed of cross guarantee described in note G2.
5. This declaration has been made after receiving the declarations required to be made to the directors by the chief
executive officer and the chief financial officer in accordance with section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2021.
On behalf of the board
G.F. Turner
Director
BRISBANE
26 August 2021
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Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent Auditor's Report to the Members of Flight Centre Travel
Group Limited
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Flight Centre Travel Group Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the balance sheet as at 30 June 2021, the
statement of profit or loss, statement of other comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended, notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial statements of the Group is in accordance with the
Corporations Act 2001, including:
a)
b)
giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
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 (including Independence Standards) (the Code) that are relevant to our audit of the
financial statements in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current year. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, but we do not
provide a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
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We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial statements.
Liquidity risk and going concern basis of preparation of the financial statements
Why significant
How our audit addressed the key audit matter
The cashflows and financial performance of the Group
have been impacted by COVID-19 and there remains
uncertainty around the impact that this event will have
on the Group and the broader travel industry.
The Group has outlined its management of the
liquidity risk as disclosed in Note C1. In doing so, the
directors have considered existing cash and working
capital balances, borrowing terms including covenants
and covenant relief, financing facilities available and
due to mature during the next 12 months, and
forecast of future cash flows for a period of at least 12
months from the audit report date (forecast
cashflows).
As described in Note I(A) to the financial report, the
financial statements have been prepared on a going
concern basis.
Assessing the appropriateness of the Group’s basis of
preparation for the financial statements was a key
audit matter due to the importance to the financial
statements and the level of judgement required in the
assessing the Group’s forecast cashflows (for a period
of at least 12 months from the audit report date).
Our audit procedures included, but were not limited to:
► Ensuring the period covered by the Group’s going
concern assessment is at least 12 months from the
date of our auditor’s report and all relevant
information based on our knowledge of the Group as a
result of the audit has been included in the assessment
► Enquiring of management and the Board of Directors
as to their knowledge of events or conditions that may
cast significant doubt on the Group’s ability to
continue as a going concern
► Assessing the forecast cashflow assumptions based on
historical results, cashflow expenditure initiatives
undertaken, growth rates and relevant external
forecast information for the range of possible
scenarios resulting from the ongoing uncertainty
associated with COVID-19, consistent with the
scenarios considered as part of the Group’s
impairment testing analysis
► Reading the terms associated with the Group’s
financing arrangements, including covenant relief
obtained by the Group in relation to its financing
facility, and assessing the amount of the facilities
available for drawdown over the forecast period
► Obtaining written representation from management
and the Board of Directors regarding their plans for
future action and the feasibility of these plans
► Assessing the adequacy of the Group’s going concern
basis of preparation disclosures for the financial
statements for consistency with Australian Accounting
Standards
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Impairment Testing of Cash Generating Units (CGU)
Why significant
How our audit addressed the key audit matter
Note A5 discloses the goodwill and other intangible
assets allocated to each of the Group’s individually
significant cash generating units (CGUs).
The annual impairment assessment of the CGUs,
including associated intangible assets, performed by
the Group was a key audit matter due to the value of
intangible assets relative to total assets and the
degree of estimation and assumptions involved in the
assessment, specifically concerning forecast cash
flows given the market downturn experienced as a
result of COVID-19.
The key assumptions used in the impairment
assessment referred to above are inherently
subjective and in times of economic uncertainty the
degree of subjectivity is higher than it might otherwise
be. At 30 June 2021, reasonably possible changes in
certain key assumptions can result in significant
changes to the Group’s estimate of the recoverable
amount.
In this situation, the disclosures in the financial report
about the assumptions used in impairment testing and
sensitivity of recoverable amount to those
assumptions is of heightened importance. As such, we
consider the impairment assessment and the related
disclosures in the financial report to be a key audit
matter.
For the same reasons, we draw attention to the
information in Note A5.
Our audit considered the requirements of Australian
Accounting Standard AASB136 Impairment of Assets. Our
procedures in relation to the impairment assessment
included, amongst others:
► Assessing the Group’s definition of its CGUs for
consistency with Australian Accounting Standards,
assessing any changes in CGUs, and considering
impairment for each of the Group’s individually
significant CGUs
► Assessing whether the allocation of assets, including
goodwill, to CGUs, was consistent with our knowledge
of the Group’s operations
► Developing an understanding of the process
undertaken by the Group in the preparation of its
discounted cash flow models used to assess the
recoverable amount of the Group’s CGUs, including
how key assumptions used in the cash flow forecasts
(summarised in Note A5 to the financial statements),
are determined by management
► Evaluating the reasonability of the Group’s cashflow
forecast models used to estimate recoverable amount
by:
o Assessing the mathematical accuracy of the cash
flow models
o Considering the historical reliability of the Group’s
cash flow forecasts
o Assessing whether the CGUs included a reasonable
allocation of corporate overheads
► Evaluating the Group’s forecast recovery path
projections through to FY26, by comparison to
external economic and industry forecasts
►
Involving our valuation specialists to evaluate the
reasonability of the discount rate and terminal growth
rates assumptions used by the Group
► Assessing the sensitivities of the impairment model to
reasonably possible changes in assumptions relating to
cash flow forecasts, terminal growth rates and
discount rates applied
► Comparing the market capitalisation of the Group to
the Group’s net assets
► Assessing the adequacy of impairment and related
disclosure in Note A5 to the financial statements
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Revenue Constraint – Travel Cancellations
Why significant
How our audit addressed the key audit matter
Global travel restrictions imposed as a result of
COVID-19 have impacted consumers’ ability to
continue with their future travel arrangements. The
Group has recognised a contract liability at the 30
June 2021 in accordance with AASB15 Revenue from
Contracts with Customers to constrain revenue
recognised where it is highly probable that a
significant reversal will occur in a future period due to
cancellation of travel.
We considered the recognition of revenue and variable
constraint to be a key audit matter due to its financial
significance to the Group’s revenue, the judgmental
nature of forecasting the level of constraint, based on
estimates of the volume of current bookings that may
be cancelled in a future period, and the associated
disclosure requirements of Australian Accounting
Standards.
The significant judgement and estimates associated
with the constraint of revenue is disclosed in note A2
of the financial report.
Capitalisation of software intangible assets
Our audit procedures included, but were not limited to:
► Developing an understanding of the process
undertaken by the Group to identify revenue streams
which are subject to material constraint due to COVID-
19 travel cancellations
► Testing underlying data generated to prepare the
revenue constraint calculation and determining
whether there was adequate support for the
assumptions underlying the calculation
► Assessing the Group’s consideration of the sensitivity
to a change in key assumptions that either individually
or collectively would be required for a material change
in the constraint recognised
► Assessing the completeness of revenue constraint
recorded as at 30 June 2021 and for the year then
ended and disclosure in Note A2 and F9 to the financial
statements
Why significant
How our audit addressed the key audit matter
Note A5 discloses the capitalised software intangible
assets for the Group.
Our audit procedures for capitalised software intangible
assets included:
The Group has had a number of significant IT projects
with material costs capitalised in the current and prior
years. Many of these projects include elements of
cloud computing or software as a service (SaaS)
arrangements which interface with various IT
applications in the Flight Centre IT network.
► Assessing the appropriateness of the accounting
policies, as set out in notes A5 and I(b) for compliance
with the requirements of Australian Accounting
Standards and the IFRIC agenda decision Configuration
or customisation costs in a cloud computing
arrangement
In April 2021, the IFRS Interpretations Committee
(IFRIC) issued an agenda decision for Configuration
and Customisation Costs in a Cloud Computing
Arrangement. Note I(b) discloses the Group’s
consideration of the impact of IFRIC agenda decision
and the retrospective change required to its
accounting policy for configuration and customisation
costs incurred in implementing SaaS arrangements.
Due to the financial significance of the costs
capitalised for the configuration or customisation of
SaaS arrangements and the associated impact of the
change in accounting policy on the Group’s financial
statements, as disclosed in Note I(b) of the financial
report, we consider this a key audit matter.
► Evaluating management’s application of the IFRIC
agenda decision on cloud computing arrangements
including inquiring of IT and legal personnel and review
of a sample of the Group’s SaaS contractual
agreements to determine whether the Group has
control over the underlying software and intellectual
property
► Testing a sample of software additions to assess the
appropriateness of capitalisation under the
requirements of Australian Accounting Standards
► Assessing the retrospective application of the change
in accounting policy in accordance with Australian
Accounting Standards and adequacy of disclosure in
note I(b) of the financial statements
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Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 Financial Report, other than the financial statements and
our auditor’s report thereon. We obtained the Directors’ report and Tax transparency report
(unaudited) that are to be included in the Annual Report, prior to the date of this auditor’s report, and
we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial statements does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements 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.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial statements 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 statements, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial statements 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 statements.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
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•
•
•
•
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial statements of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in directors' report for the year ended 30 June
2021.
In our opinion, the Remuneration Report of Flight Centre Travel Group 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.
Ernst & Young
Ric Roach
Partner
Brisbane
26 August 2021
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SHAREHOLDER INFORMATION
The shareholder information set out below was applicable at 2 August 2021.
(A) DISTRIBUTION OF EQUITY SECURITIES
NUMBER OF SHARES
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 and over
There were 45 holders of less than a marketable parcel of ordinary shares.
(B) EQUITY SECURITY HOLDERS
TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
NAME
Gainsdale Pty Ltd1
Gehar Pty Ltd1
James Management Services Pty Ltd1
State Street Global Advisors
Paradice Investment Mgt
Vanguard Group
Lazard Asset Mgt
Spheria Asset Mgt
Fidelity Institutional Asset Mgt
Vanguard Investments Australia
Yarra Capital Mgt
Goldman Sachs Asia
Dimensional Fund Advisors
Selector Funds Mgt
BlackRock Investment Mgt (Australia) - Index
Private Clients of LGT Bank in Liechtenstein AG
Macquarie Asset Mgt
BlackRock Investment Mgt - Index
Optar Capital
Fidelity Investments
1 Substantial holder (including associate holdings) in the company
DEED OF PRE-EMPTION
NUMBER OF
SHAREHOLDERS
87,049
16,095
1,810
936
51
105,941
PERCENTAGE OF
ISSUED SHARES
8.3%
7.7%
6.5%
2.4%
2.1%
2.0%
1.9%
1.7%
1.6%
1.5%
1.2%
1.0%
1.0%
0.8%
0.8%
0.7%
0.7%
0.7%
0.7%
0.7%
44.0%
NUMBER HELD
16,588,889
15,259,740
12,884,195
4,848,096
4,245,576
3,966,401
3,813,477
3,381,109
3,140,694
3,066,005
2,352,049
1,945,873
1,911,915
1,670,613
1,558,357
1,492,121
1,440,902
1,415,210
1,385,193
1,374,065
87,740,480
Gainsdale Pty Ltd, Gehar Pty Ltd and James Management Services Pty Ltd are party to a “deed of pre-emption” initially
issued 5 October 1995, amended 19 June 2018 and amended 15 May 2020, which binds each of the parties to give first
right of refusal on the purchase of shares in the company. The deed automatically terminates if the parties collectively
hold less than 15% (2020: 15%) of the total issued share capital of FLT at any time.
ORDINARY SHARES VOTING RIGHTS
On a show of hands, every member present at a meeting in person or by proxy shall have one vote. Upon a poll, each
share shall have one vote. Options and performance rights have no voting rights.
ON-MARKET BUY-BACKS
FLT does not currently have an on-market buy-back scheme in operation.
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TAX TRANSPARENCY REPORT (UNAUDITED)
As one of the world’s largest travel agency groups FLT is committed to being a responsible corporate taxpayer. The Board
has therefore chosen to provide additional disclosure of tax information as recommended by the Board of Taxation’s
Voluntary Tax Transparency Code. FLT is classified as a ‘large business’ for the purposes of the Tax Transparency Code
and has therefore chosen to disclose the following information in this annual report:
• Tax policy, strategy and governance summary
• Reconciliation of accounting profit to tax expense
• Reconciliation of income tax expense and income tax payable
• Identification of material temporary and non-temporary differences
• Accounting effective company tax rates for Australian and global operations
• Tax contribution summary for corporate taxes paid
• Information about international related party dealings
TAX POLICY, STRATEGY AND GOVERNANCE STATEMENT
APPROACH TO RISK MANAGEMENT AND GOVERNANCE ARRANGEMENTS
FLT operates under a Tax Risk Management and Governance Policy, which is approved by the Board Audit committee and
sets out FLT’s commitment to managing its global tax obligations. It is consistent with the Australian Taxation Office (ATO)
and the Organisation for Economic Co-operation and Development (OECD)’s recommendations for tax risk management
and governance, as well as being consistent with FLT’s overarching Risk Management Policy.
FLT’s Tax Risk Management and Governance Policy includes formal tax policies and procedures that are reviewed and
updated at least annually. FLT has appropriate systems, processes and controls in place to identify, evaluate, mitigate,
monitor and report on tax risks.
ATTITUDE TOWARDS TAX PLANNING AND ACCEPTED LEVEL OF RISK IN RELATION TO TAXATION
FLT takes a conservative approach to tax risk, and the management of tax risk will be balanced with FLT’s objective
to create and safeguard shareholder value. Where there is a choice between an aggressive tax position and a more
conservative position, FLT will take the more conservative approach. That is, FLT aims for certainty on tax positions
it adopts but where tax law is unclear or subject to interpretation, written advice or confirmation will be sought as
appropriate.
As a global travel business, FLT has entities in many jurisdictions around the world, including some considered low, or no
tax according to the OECD. These businesses are purely established to support the ordinary business operations of FLT in
those countries.
APPROACH TO ENGAGEMENT WITH THE ATO AND OTHER REVENUE AUTHORITIES
FLT’s tax philosophy is based on an open, co-operative and transparent relationship with the Revenue Authorities.
FLT maintains good relationships with the ATO and other revenue authorities. Openness, honesty and transparency
is paramount in all dealings with the tax authorities and other relevant bodies, with the aim of minimising the risk of
challenge, dispute or damage to FLT’s credibility.
FLT is aware of and, where appropriate, effectively uses the services and compliance products offered by the revenue
authorities to reduce its tax risks and compliance costs (e.g. private ruling process, electronic lodgement, tax portal
etc).
The ATO recently completed a Streamlined Assurance Review of FLT, to obtain confidence that the right amount of tax is
being paid by FLT. The ATO’s final report was recently issued, confirming that following an open and wholesome review
process, no material risks were identified and no further actions will be taken by the ATO. Further, the ATO commended
FLT on its voluntary registration as a signatory to the Board of Taxation’s voluntary Tax Transparency Code.
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TAX TRANSPARENCY REPORT (UNAUDITED) CONTINUED
INCOME TAX EXPENSE
I.
INCOME TAX (CREDIT) / EXPENSE
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax (credit) / expense
Deferred income tax (benefit) / expense included in income tax comprises:
(Increase) / decrease in deferred tax assets
Increase / (decrease) in deferred tax liabilities
Numerical reconciliation of income tax to prima facie tax (receivable) / payable
(Loss) / Profit before income tax (credit) / expense
Tax at the Australian tax rate of 30% (2020 - 30%)
Tax effect of amounts in calculating taxable income:
Non-deductible / (assessable) amounts
Deductible / non-assessable amounts
Intangibles
Investments
Share based payments
Property, plant and equipment
Changes in tax rate
Other amounts
Tax losses not recognised
Tax losses recognised
Effect of different tax rates on overseas income
Under / (over) provision of prior year’s income tax
2021
$’000
(50,088)
(116,519)
(1,647)
2020
$’000
RESTATED1
(35,839)
(152,966)
2,447
(168,254)
(186,358)
(89,499)
(27,020)
(156,630)
3,664
(116,519)
(152,966)
(601,710)
(180,513)
(848,586)
(254,576)
60,766
(67,774)
(113)
985
(4,401)
5,146
314
(7,303)
12,051
(2,508)
19,433
13,385
3,252
201
136
(6,653)
(192,893)
(215,279)
9,477
(2,438)
19,247
(1,647)
24,639
10,549
-
15,925
2,447
28,921
Income tax (credit) / expense
(168,254)
(186,358)
II. AMOUNTS RECOGNISED DIRECTLY IN EQUITY
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss and other
comprehensive income is directly debited or credited to equity.
Net deferred tax - (credited) / debited directly to equity
Capital raising
Equity component of convertible note
NOTE
D4
B5
2021
$’000
-
16,255
2020
$’000
(6,804)
-
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INCOME TAX PAID AND INCOME TAX PAYABLE
III. TAX EXPENSE / (INCOME) RELATING TO ITEMS OF OTHER COMPREHENSIVE INCOME
Cash flow hedges
Net investment hedge
Total tax (credit) / expense relating to items of other
comprehensive income
NOTES
F11
F11
IV. UNRECOGNISED POTENTIAL DEFERRED TAX ASSETS
Unused tax losses for which no deferred tax asset has been recognised
(non-capital)
Temporary differences relating to brand name impairment (capital) and
other intangibles
Investments
Lease & decommissioning
Other
Potential tax benefit at 30% (2020 - 30%)
2021
$’000
68
961
1,029
2020
$’000
RESTATED1
(52)
(437)
(489)
80,006
46,183
41,919
46,590
605
3,556
172,676
51,803
48,871
48,512
8,926
4,958
157,450
47,235
Unrecognised tax losses in 2021 were incurred by entities in Australia, Canada, Costa Rica, Denmark, Dominican Republic,
Finland, Germany, Hong Kong, Indonesia, Malaysia, Mexico, Norway, Singapore, Sweden, Thailand, USA and Vietnam
(2020: Indonesia, Sweden, Germany, Thailand, Mexico, Dominican Republic, Vietnam, Costa Rica and Norway). These
losses have varying expiry dates from 2022 through to indefinite carry forward.
I.
CALCULATION OF CURRENT TAX EXPENSE
Current income tax (credit) / expense of current period
Adjustments for current tax of prior periods
Current income tax (credit) / expense
II. RECONCILIATION OF INCOME TAX EXPENSE TO INCOME TAX PAID AND PAYABLE
Net current tax liability/(receivable) at the beginning of the period
Less income tax received / (paid)
Current income tax (credit) / expense
Net current tax liability/(receivable) at the end of the period
NOTES
F12
F12
(i)
2021
$’000
(50,088)
(1,647)
(51,735)
(57,441)
28,155
(51,735)
(81,021)
2020
$’000
(35,839)
2,447
(33,392)
(1,683)
(22,366)
(33,392)
(57,441)
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EFFECTIVE COMPANY TAX RATES
Effective tax rate - Australia
Effective tax rate - Global
2021
%
37.67%
27.96%
2020
%
24.88%
22.04%
Primarily, the difference between the Australian corporate tax rate of 30% and FLT’s effective tax rate is being driven by
impairments of investments in subsidiaries and associates, goodwill, software and intangibles. Other main contributors
are the effect of global tax rate differences.
TAX CONTRIBUTION SUMMARY
2021
AUSTRALIA
OTHER
COUNTRIES
TOTAL AUSTRALIA
Taxes paid by/on behalf of FLT
Corporate income tax
Employment taxes (payroll tax, FBT)
Withholding taxes
Other taxes
Taxes collected on behalf of others
GST/VAT (collected and remitted)
GST/VAT (paid but reclaimed)
PAYG/PAYE/salary withholding
Total Tax Contribution
$‘000
(2,600)
8,889
876
-
12,706
(24,482)
77,719
73,108
15,645
1,206
(5,087)
14,880
(16,821)
80,027
62,213
$‘000
$‘000
(27,637)
(30,237)
$‘000
1,000
32,270
1,896
-
24,534
2,082
(5,087)
27,586
(41,303)
157,746
36,112
(52,672)
142,070
135,321
160,676
2020
OTHER
COUNTRIES
$‘000
17,565
52,590
1,905
2,438
61,870
(54,445)
129,529
211,452
TOTAL
$‘000
18,565
84,860
3,801
2,438
97,982
(107,117)
271,599
372,128
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TAX CONTRIBUTION SUMMARY (CONTINUED)
TOTAL TAX CONTRIBUTION BY COUNTRY
2021
2020
2020
South Africa
2%
France
2%
India 3%
United Kingdom
7%
2021
United States
14%
Canada 9%
South Africa
2%
France
2%
India 3%
Canada 9%
United Kingdom
7%
United States
14%
Mexico
1%
Other 7%
Mexico
1%
United Kingdom
14%
2020
South Africa
1%
France
United Kingdom
2%
14%
India 3%
South Africa
1%
France
2%
Canada 10%
United States
19%
United Kingdom
14%
2020
South Africa
1%
Mexico
1%
France
2%
United States
19%
United Kingdom
14%
Other 8%
India 3%
South Africa
1%
Canada 10%
France
2%
Mexico
1%
Other 8%
United States
19%
United States
19%
Other 7%
India 3%
India 3%
Australia
54%
Canada 10%
Canada 10%
Australia
43%
Australia
43%
2021
Australia
54%
Employment taxes
(payroll tax, FBT)13%
TOTAL TAX CONTRIBUTION BY TAX TYPE
Withholding taxes
1%
2021
Employment taxes
(payroll tax, FBT)13%
Withholding taxes
1%
Australia
43%
2020
2020
Australia
43%
Corporate
income tax
19%
2020
Employment
2020
taxes (payroll
tax, FBT)14%
Corporate
income tax
19%
Employment
taxes (payroll
tax, FBT)14%
Withholding taxes
1%
PAYG/PAYE
salary withholding
86%
PAYG/PAYE
salary withholding
86%
PAYG/PAYE
salary withholding
66%
PAYG/PAYE
salary withholding
66%
Withholding taxes
1%
PAYG/PAYE
salary withholding
66%
PAYG/PAYE
salary withholding
66%
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TAX TRANSPARENCY REPORT (UNAUDITED) CONTINUED
RELATED PARTY TRANSACTIONS
FLT has international related party dealings with its subsidiaries when it is in the best interests of FLT to do so, these
dealings are conducted following the arm’s length principle as required by Australian taxation law and international
taxation norms. FLT maintains contemporaneous transfer pricing documentation supporting the pricing of related party
dealings in accordance with Australian tax legislation and the OECD Transfer Pricing Guidelines.
The key international related party dealings which have a material impact on FLT’s Australian taxable income are listed
below.
KEY INTERNATIONAL
RELATED PARTY DEALINGS
DESCRIPTION
Royalties
Services
Loans
Dividends
FLT licences its brand names, trademarks and other intellectual property to its
overseas subsidiaries. FLT subsidiaries may own other brand names, trademarks and
intellectual property.
FLT’s head office is located in Brisbane, Australia as the company was founded in
Australia and its largest operations are in Australia. Accordingly, there are a number
of specialist teams located at the FLT headquarters which provide services to the
overseas subsidiaries. In addition overseas subsidiaries also provide services to FLT.
FLT has loans to and from its overseas subsidiaries.
FLT receives dividends from overseas subsidiaries.
Group Cost and Income
Allocations
FLT and its overseas subsidiaries may enter into global contracts with suppliers
and / or customers for which income and / or expenses may be allocated amongst
the group.
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F
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OUR PURPOSE:
TO OPEN UP THE WORLD
FOR THOSE WHO WANT TO SEE
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