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to open up the
to open up the
world for those
world for those
who want to see
who want to see
2023
ANNUAL REPORT
OUR PHILOSOPHIES
Our People
Our Customers
For FCTG to survive, grow, and prosper,
for generations, we must live by our
Company Purpose, Vision and our
Philosophies. Our culture must be
celebrated and protected, while
being robust and independent, with
the ability to outlive our current and
future leaders.
Our Values
Brightness
of future
We care for our people’s health and wellbeing,
their personal and professional development,
and their financial security.
We believe that work should be challenging and
fun for everyone.
Our customers always have a choice, and we
care about personally delivering amazing travel
experiences to them, whatever it takes.
Taking
responsibility
Egalitarianism
& Unity
Our supportive work community provides
an inspiring and challenging career path for
committed people. Promotion and transfers
from within will always be our first choice and will
give people the exciting opportunity to move
globally across our company.
We take full responsibility for our own success or
failures. We do not externalise. We accept that
we have total ownership and responsibility, but
not always control.
We believe that every individual is equally
important and has access to the same
opportunities and rights. We work as a
community with accessible leaders and we
embrace diverse cultures, backgrounds and
perspectives. We have an irreverent culture of
taking our business seriously but not ourselves.
Ownership
Reward &
Recognition
Our Vision: To become the world’s
most exciting and profitable travel
retailer, personally delivering amazing
experiences to our people, our
customers and our partners.
Our Purpose: To open up the world
for those who want to see.
Our Business Model
We treat the business as our own and have
the opportunity to share in our company’s
financial success with access to shares programs,
outcome based incentives and profit share.
We recognise and celebrate our individual
and collective successes with recognition
and rewards which are based on measurable
outcome based quantitative KPI’s. What gets
rewarded gets done is our basic principle and
we reward outcomes not behaviour.
One best way
Family, village, tribe
Profit we are
proud of
In each of our businesses there is ‘one best way’
to operate globally. We value common sense over
conventional wisdom in running our business. We
foster entrepreneurial thinking to continuously
find better ways to innovate and improve.
Our structure is simple, lean, flat and transparent,
with accessible leaders and minimal layers
between the customer and the CEO. Everyone
belongs to a family (team), which is the most
important group at FCTG, who are supported by
a ‘self-help’ village and a tribe.
A fair margin resulting in a business profit we
can be proud of, is the key measure of whether
we really are providing our customers with an
amazing experience, amazing product and a
caring and respectful service - an experience
customers genuinely value.
FLIGHT CENTRE TRAVEL GROUP LIMITED
(FLT) CORPORATE DIRECTORY
CONTENTS
Chairman's message ....................................................................
FY23 Results & Outlook ...............................................................
Directors' Report ...........................................................................
Auditor’s independence declaration to the Directors of
Flight Centre Travel Group Limited ...........................................
Statement of profit or loss ...........................................................
Statement of other comprehensive income .............................
Statement of cash flows ...............................................................
Balance sheet ................................................................................
Statement of changes in equity ..................................................
Notes to the financial statements ..............................................
Page
2
4
7
34
35
36
37
38
39
40
Directors’ declaration ...................................................................
124
Independent Auditor's Report to the Members of Flight
Centre Travel Group Limited ......................................................
Shareholder information ..............................................................
Tax Transparency Report (unaudited) ........................................
125
131
132
KEY DATES 2023/24
August 30, 2023
2022/23 full year results released
September 21, 2023
2022/23 final dividend record date
September 26, 2023 Director nomination deadline
October 19, 2023
2022/23 final dividend
payment date
November 15, 2023
Annual General Meeting
February 28, 2024*
2023/24 half year results released
March 28, 2024*
April 19, 2024*
2023/24 interim dividend record
date
2023/24 interim dividend payment
date
* Date is subject to change
Directors
Graham Turner
Gary Smith
John Eales
Robert Baker
Colette Garnsey
Kirsty Rankin
Secretary
David Smith
Principal registered office and
place of business in Australia
275 Grey St, South Brisbane QLD 4101
+61 7 3083 0088
ABN 25 003 377 188
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 listing
FLT shares are listed on the Australian Securities Exchange.
Website address
https://www.fctgl.com/
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 30 August 2023. 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,
https://www.fctgl.com/investors#governance-documents
1
CHAIRMAN’S MESSAGE
I am delighted to share our annual report for the 2023 fiscal
year (FY23) with you, our valued shareholders.
GARY SMITH
In this column 12 months ago, the dominant theme was
post-COVID recovery as our industry and our people – and
no doubt countless others – looked forward to the safe and
sensible removal of the last remaining border restrictions
and dared to dream of a return to normalcy. As a company,
we were preparing to take meaningful steps on our path to
recovery as societies started to live with the virus and as
travel reawakened, which allowed families and friends to
reconnect after a painful period of enforced hibernation.
Fast forward 12 months and the outlook is considerably
brighter.
The dark clouds of COVID that hung over our heads for
some two-and-half years have all but disappeared and travel
patterns have slowly but surely started to return to normal.
In a vastly improved trading environment in FY23, we
delivered material uplifts in total transaction value (TTV),
profit and other key financial metrics, as covered in detail in
Skroo’s column and elsewhere in this report. TTV more than
doubled year-on-year to $22billion – our second strongest
full year result – while underlying earnings before interest,
tax, depreciation and amortisation (EBITDA) reached
$301.6million – a circa $485million year-on-year turnaround.
While travel was being so heavily disrupted, we took the
opportunity to ensure the appropriate building blocks were
put in place within our business to create new TTV and profit
milestones and to deliver stronger returns to our
shareholders, while preserving our key assets.
As a result, our culture, beliefs and philosophies are
unchanged, but we are now a vastly different business with a
leaner cost base, streamlined systems and an even more
diverse stable of brands, businesses and channels in both
the leisure and corporate travel sectors.
Given these changes, we believe it is no longer relevant to
compare our business of today and its financial
achievements with our pre-COVID state. While these
comparisons served a useful purpose as a gauge of our
initial recovery, they have largely become irrelevant as our
rebound has gained momentum.
Our relentless focus during the pandemic was to ready the
business beyond recovery by putting in place the building
blocks which would position us to embark on a new era
of growth.
You will see references to pre-COVID or pre-pandemic
results in some areas of this report, but moving forward our
attention will focus very firmly on delivering sustainable year-
on-year growth across our key performance metrics, which
will in turn deliver stronger returns to our shareholders.
FOCUSING ON IMPROVING SHAREHOLDER
RETURNS - NEW CAPITAL MANAGEMENT POLICY
IN PLACE
Improving shareholder returns remains a priority and I am
very pleased to report that we are taking significant steps to
achieve this objective as we again start to generate strong
cash flows.
During FY23, the company recorded a $156million operating
cash inflow, a $257million improvement on FY22, and had a
$1.4billion global cash and investment portfolio at June 30,
2023, up $77million year-on-year.
Given this strong recovery and our improved outlook, our
Board of Directors declared a fully franked $0.18 per share
final dividend for FY23 – our first dividend payment for
four years.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
2
The dividend will be paid on October 19, 2023 to
shareholders registered on September 21, 2023 and
represents a $39.1million total return – which equates to
52% of underlying net profit after tax (NPAT).
Based on this dividend and the increase in our share price
from $17.36 to $19.05 during FY23, total shareholder returns
(TSR) for the year were a healthy 10.8%.
In addition to this one-off dividend related to FY23, we have
unveiled a broader new capital management policy that has
been designed to create shareholder value in the short and
long-term by using free cash flow to:
Thirdly, my fellow directors, who continue to provide
invaluable guidance and oversight – both individually and
collectively. Our board was bolstered early in FY23 with the
addition of Kirsty Rankin, already proving to be a
great contributor.
Finally, I would like to update you on our progress in another
very important area of focus - sustainability and ESG strategy
(environmental, social and governance).
Throughout FY23 we broadened our approach to ESG to
ensure engagement across our key focus areas including our
people, suppliers, industry partners and our customers.
• Re-invest in the business to drive longer term growth
through capital expenditure and, where appropriate,
mergers and acquisitions (M&A); and
• Deliver tangible benefits in both the short and long-
term through a combination of dividend payments and
strategic buy-backs of FLT’s issued capital or
convertible notes to reduce future dilution and
increase earnings per share
Under this policy, the intention is that 50-60% of FLT’s NPAT
will be allocated to dividends or capital management
initiatives from this year (FY24), subject of course to the
business’s anticipated needs at the time.
ONGOING INVESTMENT IN KEY GROWTH DRIVERS
Of course, we will also invest significantly in the business to
drive future growth.
Key areas of focus include:
• Our people
• Our diverse, global networks in both leisure and
corporate travel; and
• Technology and systems to enhance productivity and
the customer experience
Highlights and achievements included:
• Providing extensive training and development
opportunities to our people, taking care of their health
and well-being and developing and enhancing diverse
and inclusive workplaces in which they can thrive
• The recruitment of a First Nations Inclusion Leader to
help us achieve our commitments within our
Reconciliation Action Plan (RAP)
• Creation of a global environmental sustainability
champions group including some 50 employees across
11 countries
• Stronger engagement with our industry suppliers and
partners through initiatives like the travel consortium
that we have formed in conjunction with Intrepid to
help address modern slavery supply chain risks across
the travel industry; and
• Ongoing engagement with our customers with a
continued focus on preserving and enriching a world
worth seeing through initiatives like Flight Centre
brand’s "planting for the planet" program, which is
now part of the brand’s Captain’s Pack offerings. Under
this program, Flight Centre aims to work with
customers to plant one million trees globally
Cyber security risk management and data protection are
also at the forefront of our thinking and we continue to
prioritise and invest in these areas. We have built and
retained strong internal capabilities in these domains and
have augmented this with external expertise delivered by
market leading specialists, as we have developed and fine-
tuned our systems and our response plans.
While our business expansion focus will be on organic
growth, we will consider M&A activity if suitable
opportunities arise that are aligned with our culture and
with our strategic objectives.
In terms of reporting on our achievements, we have
mobilised an internal working group to understand and
evaluate future requirements in light of the upcoming
introduction of The International Sustainability Standards
Board’s (ISSB) new sustainability disclosure standards that
take effect from FY25.
The standards will form a comprehensive global baseline of
sustainability disclosures designed to meet capital market
stakeholder’s information needs and will also serve the
purpose of assisting us with our own reporting to internal
and external stakeholders.
Generally, our recent M&A activities have focused on
enhancing our technology platforms, expanding in new
areas of the travel industry or fast-tracking growth in
attractive sectors, an objective we achieved with our Scott
Dunn acquisition during FY23.
Under the Science Based Targets Initiative, we have
submitted plans to reduce our Scope 1 and 2 carbon
emissions. The validation process is currently underway, with
an outcome expected next month (September 2023). We
look forward to updating you on our progress.
Scott Dunn is proving to be a fantastic addition to our luxury
leisure collection and we thank shareholders for their very
strong support during the capital raising to fund the
acquisition early in the FY23 second half (2H).
I’d also like to take this opportunity to thank a number of
other people and groups for their invaluable contributions
to our recovery.
Firstly, our people – our expert travel advisors and support
teams continue to work tirelessly to create a compelling
customer offering and they are our most valuable asset.
Secondly, our senior leadership team or task-force, which is,
of course, headed by Graham “Skroo” Turner, our tireless
CEO and founder.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
3
FY23 RESULTS & OUTLOOK
BY GRAHAM TURNER
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
RESULT OVERVIEW
FLIGHT Centre Travel Group (FLT) recorded a strong profit
turnaround during FY23.
The diversified global travel company delivered
$301.6million in underlying earnings before interest, tax,
depreciation and amortisation (EBITDA) for the 12 months to
June 30, 2023 – an almost $485million turnaround from
FY22’s $183.1million underlying loss.
The result represented a 265% year-on-year (YOY)
improvement and was above the mid-point in FLT’s
upgraded, targeted profit range for FY23
($295million-$305million).
On a profit before tax (PBT) basis, the company achieved an
underlying $106million profit (FY22: $361million loss) and a
$70million statutory PBT (FY22: $378million loss).
FLT’s strong profit recovery was underpinned by:
• A 112% total transaction value (TTV) uplift to $22billion
(FY22: $10.3billion), FLT’s second strongest result
behind FY19 ($23.7billion), in an improved
trading climate
• Efficiency gains, highlighted by a 70 basis point (bps)
revenue margin improvement and a record-low 9.6%
underlying cost margin, which together led to
improved profit margin; and
• Solid cash generation and cash flow to fund business
re-investment and pave the way for an 18 cents per
share fully franked final dividend for shareholders. A
new capital management policy, effective from FY24,
has also been introduced
As foreshadowed during FY23, results were heavily 2H
weighted, with almost 70% of underlying EBITDA generated
during the six months to June 30, 2023.
Underlying PBT margin (underlying PBT as a percentage of
TTV) increased from 0% during the 1H to 0.9% during the
2H, leading to a 0.5% FY23 result and providing solid
momentum into FY24.
This 2H profit weighting reflects improved market conditions
after travel restrictions were removed globally, improved
industry dynamics, specifically airline capacity growth, and
normal seasonality (key booking periods are typically during
the six months to June 30).
In Australia, outbound capacity reached 85% of pre-COVID
levels at year-end, with near-term increases expected from
key airline partners including Emirates, Singapore Airlines,
Qantas, China Southern and Cathay Pacific. FLT also
strongly supports unapproved plans by other airlines,
including Qatar Airways and Turkish Airlines, to increase
traffic to Australia to boost tourism and to deliver cheaper
airfares to travellers.
During FY23, the company successfully executed its key
global strategies, which included:
• Maintaining a lower cost base – operating expenses
were at 75% of FY19 levels
• Productivity – average TTV per average full-time
employee increased by 52% compared to FY19
• Conversion – 38% of incremental revenue generated
during the year was converted to underlying EBITDA,
with the leisure and corporate businesses converting at
47% and 41% respectively, during a period of heavy
up-front investment that should translate to stronger
future earnings growth
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
4
• Grow to Win – a strategy that has been instrumental
to FLT outpacing broader industry recovery in the
$US1.4trillion global business travel sector through
high customer retention and large volumes of new
account wins. FLT’s corporate TTV exceeded pre-
COVID levels in June 2022, some two years ahead of
anticipated industry recovery (based on Global
Business Travel Association projections), and grew
strongly again during FY23; and
• Cost effectively capturing leisure TTV through a
transformed offering featuring a modernised Flight
Centre brand, with a stronger digital presence, and a
diverse range of channels and brands that are
delivering record TTV and scalable growth
As mentioned above, while FLT has permanently and
structurally lowered its cost base, it has continued to invest
in important growth drivers. These investments
have included:
• An additional 2,500 people during FY23 to right-size
FLT’s global sales force – the corporate business is
now fully staffed, while the leisure business will
continue to recruit to match future growth plans,
while maintaining productivity
• Network enhancements leading to increased scale,
brand and geographic diversity, and improved
customer access to businesses and services. Examples
included Scott Dunn acquisition, Luxperience event,
the reopening of Flight Centre shops that hibernated
during the pandemic, cruise brand Cruiseabout’s
upcoming reintroduction in Australia, broader
geographic rollout of Stage & Screen (USA) and FCM
Meetings and Events, Corporate Traveller’s return to
New York via the new Bryant Park hub and the
deployment of a new centralised global hub model for
multi-national corporate clients; and
• Technology – to increase productivity, reduce costs
and enhance the customer experience. Examples
include the proprietary Melon and FCM corporate
platforms, products that are driving Flight Centre
brand’s omni-channel evolution and Home, a portal
offering independent agents “single-door” access to
FLT’s suite of tools
In both leisure and corporate, FLT is driving innovation by
investing in new ways to deliver a better customer
experience and achieve its sales and savings objectives,
leveraging Artificial Intelligence (AI), machine learning and
robotic process automation (RPA).
The company also continues to strengthen its product
(content) aggregation capabilities to deliver leisure and
corporate customers the widest airfare range as airlines in
particular invest heavily in new distribution models,
including New Distribution Capability (NDC).
COMFORTABLY OUTPACING INDUSTRY RECOVERY
IN GLOBAL CORPORATE TRAVEL SECTOR
FLT’s corporate travel business continued to out-perform,
comfortably out-pacing broader industry recovery and
delivering record TTV during FY23.
The $11billion FY23 result represented 96% YOY growth
(FY22: $5.6billion) and an almost 25% increase on the
previous TTV record (FY19: $8.9billion).
New TTV milestones were established in all geographic
segments, with the Europe, Middle East and Africa (EMEA)
business topping its previous record by 59%, Asia by 24%,
the Americas by 15.6% and Australia-New Zealand (ANZ)
by 10.5%.
The Americas business was FLT’s largest corporate
operation, generating 31% of group corporate TTV, just
ahead of ANZ (30%), EMEA (28%) and Asia (11%).
Corporate transaction volumes also exceeded pre-COVID
levels – well ahead of the estimated industry-wide recovery
of 70-75% of FY19 transaction levels – with growth again
driven organically through high customer retention rates and
a large pipeline of global account wins for both FCM (large
market sector) and Corporate Traveller (SMEs/start-ups).
FCM secured new, contracted accounts with annual spends
in the order of $1.6billion, with wins typically coming from
competitors. More than half of Corporate Traveller’s wins
(uncontracted) were previously unmanaged accounts.
In terms of FY23 EBITDA, the business delivered a
$190million underlying profit, an almost 3,000% YOY
improvement (FY22: $6million).
Bottom-line results were, however, impacted by significant
upfront costs incurred in winning and onboarding the large
volume of accounts secured with some 1,000 new sales and
support staff added to the corporate workforce during FY23.
The business also invested in its leading tech platforms, with
Melon deployed in the United Kingdom (UK), following its
successful Americas introduction, and new features added
to the global FCM Platform.
While the business will continue to focus on the Grow To
Win strategy, a Productive Operations initiative is also
underway to identify savings, productivity gains and
customer benefits through automation and streamlined
systems following a period of rapid recovery.
LEISURE: TRANSFORMED BUSINESS
RECOVERING RAPIDLY
Global leisure TTV increased by 162% to $10billion during
FY23 (FY22: $3.8billion) at improved revenue and
cost margins.
This margin improvement – which saw 2H underlying profit
margin exceed FY19 2H levels – drove a 207% increase in
underlying EBITDA to $172million (FY22: $160million
underlying loss) as the leisure business’s four pillars (Mass
Market, Independent, Luxury and Complementary) all
delivered profits.
The mass market Flight Centre brand was again leisure’s
major profit contributor and has maintained high market-
share in its key markets of Australia, New Zealand and
South Africa.
In the Northern Hemisphere, where FLT historically had a
smaller presence and an inconsistent profit record, the
company has focused on establishing foundations for
profitable recovery. The UK business performed strongly,
but its profits were offset by North America’s losses
(predominantly incurred in Canada and in StudentUniverse).
Following a major transformation, which was initiated prior
to the pandemic and fast-tracked during the crisis, the
leisure business now has a leaner cost base and a scalable
brand and channel stable that has started to deliver
meaningful TTV at improved margins.
A number of these brands and channels contributed record
TTV during FY23 including:
• The online leisure businesses, which together
contributed circa $1.6billion in TTV – more than double
the $750million FY22 contribution – with growth driven
primarily by flightcentre.com
• The independent agent network – TTV tripled YOY to
$1.5billion; and
• The luxury collection, which was bolstered by Scott
Dunn’s contributions
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
5
FY23 air TAM reductions largely reflect front-end
commission changes in ANZ at the start of the year and
fewer strategic and volume-based incentive agreements
with airlines globally, while sales opportunities were limited
during the pandemic. Traditional back-end contract
structures are now returning in Australia and globally, as
competition and capacity increase.
In addition to pursuing leisure and corporate margin
improvement strategies, FLT is working with airlines to
increase TAM paid to its large and diverse stable of
businesses through NDC deals and content arrangements,
nett fares and mutually beneficial partnerships.
In leisure, TTV growth is expected to be driven by further
outbound travel recovery as airfares become more
affordable and as holidays and experiences are prioritised
over other areas of discretionary spending. This resilience
among holidaymakers is evidenced by the consistent YOY
outbound travel growth globally and in Australia in particular
pre-COVID.
While FLT will continue to monitor macro-economic
changes, current conditions do not appear to be
significantly impacting demand, with July-August profit and
sales well up YOY in both leisure and corporate.
Very low unemployment globally is aiding leisure sector
recovery, while FLT’s business is leveraged towards
demographics that are less affected by mortgage stress,
specifically the luxury sector and babyboomers, and who are
therefore more likely to continue to travel.
In corporate, FLT expects client spend to typically remain
below pre-COVID levels in the near-term, as customers
maintain their cost reduction focus. New account wins are,
however, expected to drive FLT’s TTV above its record FY23
result, with accounts with projected annual spends of circa
$750million already implemented during the FY23 2H and
set to trade for a full year during FY24.
Industry-wide, corporate travel spend is tipped to exceed
FY19 levels during CY24 (Source: GBTA) – some two years
after FLT’s corporate business first exceeded
pre-pandemic TTV.
The company expects to provide profit guidance and more
detailed commentary on its FY24 expectations at its Annual
General Meeting on November 15, 2023.
Ignite (MyHolidays) and Travel Money (foreign exchange),
which sit in the Complementary pillar with online travel
agencies Jetmax and StudentUniverse and US business
Liberty, also performed strongly, with Travel Money opening
42 outlets during FY23
Scott Dunn (acquisition announced in January 2023) is
trading in line with expectations and establishing a broader
growth platform in a resilient and attractive customer
demographic by:
• Developing a US east coast presence in New York; and
• Unlocking revenue synergies by wholesaling its unique,
curated products within FLT
CAPITAL REVIEW COMPLETE AND NEW
FRAMEWORK IN PLACE
After incurring almost $2billion in statutory losses (PBT),
raising capital and taking on $800million in convertible notes
during the pandemic, FLT is rebuilding its balance sheet and
reviewing its future capital needs, as it again starts to
generate strong cash flows.
Given its strong recovery and improved outlook, FLT today
unveiled a new capital management policy designed to
create shareholder value by using free cash flow to:
• Re-invest in the business to drive longer term growth
through capital expenditure and, where appropriate,
mergers and acquisitions; and
• Deliver tangible short and long-term benefits through
a combination of dividend payments and strategic buy-
backs of FLT’s issued capital or convertible notes to
reduce future dilution and increase earnings per share
Under this policy, 50-60% of FLT’s net profit after tax (NPAT)
will be allocated to dividends or buy-backs from this year
(FY24), subject to the business’s anticipated needs at
the time.
In addition to unveiling its new capital management policy,
the company today declared an $0.18 per share fully franked
final dividend for FY23. The dividend, FLT’s first since before
the pandemic, will be paid on October 19, 2023 to
shareholders registered on September 21, 2023 and
represents a 52% return of FY23 underlying NPAT to
shareholders.
OUTLOOK - TARGETING FURTHER RECOVERY
FLT has started FY24 in a solid financial position and
currently expects:
• More favourable industry dynamics for travellers as
competition on international routes increases and as
airfare prices gradually start to decrease more
significantly
• Further leisure and corporate TTV growth; and
• Gradual revenue margin increases and further cost
margin decreases, particularly in corporate, as the
company continues to target a 2% underlying PBT
margin for FY25
While revenue margin is now increasing, it is expected to
remain below historic levels, predominantly as a result of
planned and ongoing business mix changes brought about
by rapid growth in lower revenue and lower cost margin
businesses and sectors, including online leisure, foreign
exchange, large market corporate (FCM) and
independent agents.
In terms of supplier margin, total available margins (TAM)
and overall contract structures are generally in line with
those that were in place pre-COVID in the land, tour and
cruise sectors.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
6
DIRECTORS’ REPORT
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 2023.
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
There was no 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 FY23 Results & Outlook column on page 4.
DIVIDENDS – FLIGHT CENTRE TRAVEL GROUP LIMITED
There were no dividend payments to members during the current or prior year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
DIVIDENDS
On 30 August 2023, FLT’s directors declared a fully franked 18.0 cents per fully paid ordinary share final dividend for the year
ended 30 June 2023 (2022: nil). The total amount of the dividend is $39.1million and represents 52% of FLT’s
underlying NPAT.
No other material matters have arisen since 30 June 2023.
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 2023/24 are
included on pages 2 to 6 of this report.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
7
DIRECTORS’ REPORT CONTINUED
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
Gary Smith
BCom, FCA,
FAICD
Age: 63
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 Chartered Accountants Australia
and New Zealand. 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).
John Eales
BA, GAICD
Age: 53
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 Limited (from Jul-17), Executive Health Solutions (from
Jun-15) and FUJIFILM Data Management Solutions Pty Ltd (from
Jan-14).
Robert Baker
FCA, GAICD
BBus
(Accountancy)
Age: 65
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) and
Goodman Private Wealth Ltd (from Oct-14). Board member of Tourism
Holdings Limited (from Nov 22), Apollo Tourism & Leisure Limited (from
Jan-20 to Nov-22) and Ozcare (from Jan 22). 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).
Colette Garnsey
OAM
Age: 63
FLT Director since Feb-18. Chairman of Laser Clinics Australia
(previously non-executive director from 2020) and non-executive
director of Seven West Media (from Dec-18) and Magellan Financial
Group Ltd (from Nov-20). 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.
Kirsty Rankin
Age: 63
Graham Turner
BVSc
Age: 74
FLT Director since Aug-22. Former CEO of Pinpoint Pty Ltd, an
organisation that specialised in cultivating customer loyalty and
engagement programs, prior to its sale to Mastercard in 2014.
Subsequently a global executive with Mastercard in the USA. Current
non-executive director of Azupay (privately-owned real-time payments
platform), Stone & Chalk (leading innovation start-up and scale-up hub)
and Skyfii Ltd, an ASX-listed omni-data intelligence company.
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
25,675
13,438
7,307
7,453
3,168
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
Independent non-
executive director
Remuneration &
nomination committee
member
Audit and risk
committee member
Managing director
16,641,081
No directors held interests in share rights, options or performance rights during the year (2022: nil).
Kirsty Rankin was appointed as a non-executive director on 25 August 2022.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
8
DIRECTORS’ REPORT CONTINUED
SKILLS AND EXPERIENCE
The current mix of skills and experience represented by the directors during the period, is as follows:
GARY
SMITH
ü
ü
ü
ü
ü
ü
ü
ü
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*
JOHN
EALES
ü
ü
ü
ü
ü
ROBERT
BAKER
COLETTE
GARNSEY
KIRSTY
RANKIN
GRAHAM
TURNER
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
* For expertise in areas not listed above, the directors seek expertise within FLT and externally where appropriate.
COMPANY SECRETARY
The company secretary, Mr David Smith (B.Com, LLB) joined FLT in 2002, and was appointed as company secretary in
February 2008. Mr Smith has over 24 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 2023 and the number of meetings attended by each director were:
Gary Smith
John Eales
Robert Baker
Colette Garnsey
Kirsty Rankin
Graham Turner
COMMITTEE MEETINGS
FULL MEETINGS OF
DIRECTORS
AUDIT & RISK
REMUNERATION &
NOMINATION
A
14
14
14
13
10
13
B
14
14
14
14
10
14
A
4
4
4
4
3
*
B
4
4
4
4
3
*
A
3
3
3
3
2
*
B
3
3
3
3
2
*
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
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
9
OVERVIEW
BY JOHN EALES, REMUNERATION AND
NOMINATION COMMITTEE CHAIRMAN
I am pleased to present your company’s FY23
Remuneration Report.
As covered elsewhere in this report, the year to June 30,
2023 was a period of strong recovery for our company as we
achieved a $485million underlying earnings turnaround.
Underlying EBITDA ultimately exceeded $300million, which
was above both our initial expectations for the full year
(outlined when we acquired Scott Dunn in January 2023) and
above the upgraded target we set in early May 2023.
Once again, credit for our achievements must go to our
people at all levels - from our in-store workforce through to
Skroo’s Taskforce, our senior global leadership team.
As longer term shareholders will recall, we worked very hard
to invest in and retain our people - and indeed our unique
company culture - amid a very challenging trading climate
during the pandemic.
We refined our remuneration structures to meet the short-
term challenges brought about by lockdowns that effectively
grounded travel and severely limited our peoples’ earning
capacity, while continuing to ensure these structures were
aligned with our short and longer-term strategic objectives.
We worked to retain critical IP within our shops, leadership
and support ranks while keeping tight controls over costs,
challenges which we proactively addressed within our
remuneration structures through initiatives like the extended
GRR and expanded LTRP programs.
Through these purpose-built programs, we achieved
another strategic objective - increasing employee ownership
to strengthen ties between the interests of our people and
our shareholders in both the short and long-term.
Clearly, we are now starting to see the benefits of this critical
investment as the travel sector continues its recovery and as
leisure and corporate travellers seek expert advice and
service from our people and brands.
Before highlighting the key areas that we have been
focusing on, along with our FY23 remuneration outcomes
and FY24 expectations, I’d like to remind shareholders of
our overall approach to remuneration.
REMUNERATION REPORT GLOSSARY
BOS: Business ownership scheme
CEO: Chief executive officer
CFO: Chief financial officer
EBITDA: Earnings before interest,tax, depreciation and
amortisation
EGM: Executive general manager
LTRP: Long Term Retention Plan
MDs: Managing directors
NEDs: Non-executive directors
PBT: Profit before tax
PCRP: Post-COVID-19 Retention Plan
EMEA: Europe, Middle East and Africa
RNC: FLT’s Remuneration and Nomination Committee
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
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
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
10
A COMMON-SENSE REMUNERATION 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. This means
that we adopt a common-sense approach to business that is
aligned to our strategic objectives and our core
philosophies, rather than simply follow a traditional path.
This is clearly evident in our remuneration structures which
are simple and purpose-built to suit our specific needs.
While our structures differ to conventional models, we
continue to focus on four key factors that commonly
underpin remuneration best-practice, namely:
• Attracting and retaining key people. Our success in this
area is outlined in Table 1, which shows the experience
and tenure of Graham Turner’s global leadership team,
and by the very strong returns we have seen on our
investments in the LTRP, PCRP and GRR
• Recognising and rewarding people appropriately for
their achievements in growing the business and
helping it achieve long-term strategic objectives that
should deliver sustainable growth to shareholders. This
is clearly reflected in increased executive earnings
during FY23 in a year when results significantly
exceeded expectations, which led to EPS growth and
contributed to an almost 10% increase in market
capitalisation
• Delivering simple, sensible and transparent incentive
structures; and
• Providing the opportunity for our people 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
In Table 2, we have highlighted four differences between
FLT’s tailor-made remuneration system and models that
companies have typically adopted.
Two key adjustments are, however, in place for FY24 and will
more closely align our model with common market practice.
These adjustments relate to executive STIs and will deliver a
simpler system that still rewards achievement and
contribution to shareholder wealth creation, but takes away
some earnings volatility that our people may experience by:
• Removing the 90% floor that was previously part of
executives’ targeted remuneration. Executives are now
guaranteed to receive at least their targeted packages,
which will also aid staff attraction; and
• Capping STIs at 30% of targeted remuneration
Given our unique system, we regularly engage with industry
bodies, special interest groups and other stakeholders to
ensure they understand our remuneration structures and the
alignment to our overarching business objectives.
Generally, shareholders have responded positively to our
remuneration system and the policies, beliefs and
governance structures which underpin it, as evidenced by
the strong support that this report has traditionally received
at our Annual General Meetings.
To date, the largest vote against our Remuneration Report
was 5.85% in 2007 and the average over the past three years
has been just under 1.9%.
ONGOING RETENTION AND ATTRACTION FOCUS
Within this column last year, I highlighted the emphasis we
placed on both retention and attraction in what was a highly
competitive labour market.
These strategic priorities have not changed.
We continue to refine our remuneration structures to ensure
they align with our philosophies and our overarching
strategic objectives in an evolving trading climate.
Our use of the GRR and PCRP as retention tools during the
pandemic are examples of our ability to develop solutions
that are tailored to our specific needs.
These programs, along with the longer-standing LTRP, have
proven highly effective in helping our company
retain people.
More than 7000 of our people accepted the initial GRR offer
in September 2021 and almost 85% met the continuous
employment vesting condition (at the first vesting date of
February 24, 2023)
In relation to the LTRP, which targets senior executives,
retention continues to track at a very high level, with only
seven voluntary resignations from participants during the
year (circa 95% retention rate).
We are also successfully rebuilding our workforce by:
• Attracting industry newcomers to our business; and,
where possible:
• Welcoming back former “Flighties” who were forced
to leave the business during the pandemic.
During FY23, we added more than 1,000 new people to both
our leisure and corporate businesses to meet current and
anticipated future demand, as articulated in Graham
Turner’s column. At June 30, we had regrown our global
workforce to over 13,000 full time employees, after cutting
back to circa 8,000 after borders closed and travel was
grounded.
TABLE 1: KMP TENURE - SUCCESSFULLY DEVELOPING AND RETAINING KEY PEOPLE
EXECUTIVE
Graham Turner
Adam Campbell
Chris Galanty
Melanie Waters-Ryan
James Kavanagh
Charlene Leiss
Steven Norris
74
48
49
56
45
53
46
42 years
16 years
26 years
36 years
19 years
27 years
21 years
AGE
TENURE
FIRST FLT ROLE
CEO, Founder
Risk & Audit
CURRENT FLT ROLE
CEO, Founder
CFO
Flight Centre Putney (UK)
CEO - Corporate
Flight Centre Queen Street (QLD)
CEO - Supply
Campus Travel account manager
CEO - Leisure
Sales administrator (Garber Travel)
MD - The Americas
Flight Centre Uxbridge (UK)
MD - EMEA
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
11
Where possible, we are offering greater flexibility to our`
people, while also recognising that a very high percentage
of our workforce has public-facing, in-store roles.
People are, of course, our most valuable asset, a fact
recognised in our number one philosophy.
The recent appointment of our new Chief Global People
and Culture Officer, Lincoln Turvey, will ensure we maintain
and build on this through a renewed focus on our employee
value proposition (EVP).
Globalising our People and Culture practices to create“one
best way” will allow us to:
• Create an improved and consistent end-to-end
employee journey; and
• Test and challenge our EVP, ensuring it is
contemporary and compelling
We will engage our people as we work through this process
and adjust our practices and offerings to ensure we are able
to attract and retain the best talent and that our people are
able to be at their best every day.
FY23 OUTCOMES AND FY24 EXPECTATIONS
As mentioned previously, our remuneration system is
designed in such a way that our executives and our people
overall benefit when shareholders benefit.
Accordingly, executive earnings increased during FY23,
given that our financial results exceeded expectations and
given that normal remuneration structures were back in
place, after the temporary measures applied during the
pandemic were removed.
All executives exceeded the KPIs required for them to
achieve their targeted remuneration packages, which meant
they earned stretch STIs for the first time since early in FY20.
These STIs were tied to profit improvement, which also
drove the almost 10% improvement in FLT’s market
capitalisation during the year.
This again underlines the ties between executive STIs and
shareholder value creation.
The overall remuneration paid to our executives in a year of
extraordinary growth also highlights the curbs that are in
place to prevent STIs reaching unacceptable levels.
During FY23, Skroo was paid almost $900,000, which meant
he earned significantly less than the average ASX 100-150
CEO (Source: CGL Glass Lewis 2022. - $3.097million). This
included about $690,000 in fixed pay, compared to the ASX
100-150 2022 average of $1.255million (Source: CGI Glass
Lewis).
As we outlined at the start of last year, we applied an
additional safeguard during FY23 to ensure that executive
STIs were appropriate in a year of rapid recovery that could
have potentially led to extraordinary earnings growth.
This change meant that executives initially worked towards
December 31 targets, which were then re-set to create
appropriate full year targets.
This game-of-two-halves approach ensured:
1. Targets for our key executives remained relevant
throughout the year; and
2. STI payments would not reach abnormally high levels
in FY23 if FLT delivered extraordinary year-on-year
profit growth in superior trading conditions compared
to FY22.
While not related to KMP, we also continued to refine our
STI model for front-end sales staff. Within Flight Centre
brand, sales staff are now incentivised to deliver a full service
offering to their customers by attaching additional
components to a booking, which should eventually lead to
higher revenue and profit margins.
Looking ahead to FY24, similar remuneration structures are
in place for executives, with the exception of the new STI
cap and the removal of the 90% floor in targeted
remuneration. Profit growth targets are in place for the full
year, as is traditionally the case, and are again the basis for
executive KPIs.
Generally, executives and NEDs will receive a modest
increase in targeted remuneration or fees reflecting changes
in superannuation payments in Australia and inflation,
although increases will typically be below CPI. Graham
Turner will receive a 5% increase in fixed pay, while Adam
Campbell’s package is unchanged, with the exception of the
superannuation increase.
TABLE 2: UNDERSTANDING THE DIFFERENCES: FLT’S TAILOR-MADE REMUNERATION MODEL V
TRADITIONAL OFFERINGS
STI component historically built into targeted
remuneration packages, not paid as an annual bonus
Prior to FY24, STIs were not annual bonuses that were only
payable to FLT’s executives in good years. The company’s
people were historically targeted to earn an STI component
as part of their normal (targeted) remuneration packages
and had the opportunity to earn additional stretch STIs
(above and beyond targeted packages) if they exceeded
their KPIs.
LTRP is primarily a retention tool, not a traditional LTI
The company’s main LTI for KMP and senior executives, 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. The company is currently evaluating
other LTI models with multiple performance hurdles
for FY25.
Profit-Based KPIs Tied to Sustainable, Ongoing Growth
STIs were historically uncapped
FLT uses profit – generally a combination of underlying PBT
and underlying EBITDA – as the basis of its executive STIs,
which is aligned to its goal of delivering sustainable,
earnings growth to benefit all stakeholders. To earn their
STIs, executives need to build businesses that deliver year-
on-year profit growth.
Fairness and reward for achievement are key components of
FLT’s remuneration system. The company did not historically
cap STIs for KMP and instead relied on governance
processes and natural curbs to ensure that rewards were
aligned to shareholders’ interests and to prevent salaries
from reaching unacceptable levels. While the company was
generally successful in achieving this objective, an STI cap
(30% of targeted earnings) has been introduced for FY24.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
12
TABLE 3: KEY EXECUTIVE TARGETED REMUNERATION FOR FY23
ACTUAL REMUNERATION
KMP
TARGETED
REMUNERATION
TARGETED
FIXED PAY
COMPONENT
TARGETED STI
COMPONENT
ESTIMATED STI
EARNED
PAID
REASON FOR STI
VARIATION
Graham Turner
A$768,748
A$691,874
A$76,874
A$204,057
A$895,931
Surpassed KPI
Melanie Waters-Ryan
A$1,383,750
A$1,245,375
A$138,375
A$363,182
A$1,608,557
Surpassed KPI
Adam Campbell
James Kavanagh
Chris Galanty
Steven Norris
Charlene Leiss
A$1,112,125
A$1,000,913
A$111,212
A$295,205
A$1,296,117
Surpassed KPI
A$900,000
A$810,000
A$90,000
A$386,669
A$1,203,510
Surpassed KPI
£362,250
£470,000
£326,025
£423,000
£36,225
£47,000
£69,468
£110,637
£395,493
£533,637
Surpassed KPI
Surpassed KPI
US$669,840
US$603,840
US$66,000
US$87,017
US$690,857
Surpassed KPI
CONCLUSION
Twelve months ago, we talked about our company being
well positioned for recovery given the very important
investments that were made during the pandemic. The
major investments in our people and culture were critical
and have already started to deliver very solid returns.
As we continue to rebuild, retention and attraction remain
ongoing focus areas.
Naturally, we will continue to innovate and refine our own
unique remuneration structures to help achieve these
company-wide objectives, while maintaining the strong
alignment with shareholder interests and delivering on the
objectives that typically underpin remuneration systems.
Once again, thank-you for your ongoing support of
our company.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
13
DIRECTORS’ REPORT CONTINUED
REMUNERATION REPORT – AUDITED
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.
1 PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
The following section outlines FLT’s remuneration policy and the philosophies that underpin it. Information is presented in a
Question and Answer (Q&A) format in five sub-sections:
i. Remuneration philosophies and structures
ii. Alignment with shareholder wealth creation
iii. Director remuneration
iv. Executive (KMP) remuneration; and
v. Remuneration governance
1 I) 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 remuneration framework is unique and is tailor-made to suit FLT’s specific goals, its objective is to align with
market practice by being:
• Competitive, which allows the company to attract and retain high calibre people. This is particularly important in the
current trading climate, given low unemployment rates in key markets and keen competition for talent as the travel
industry rebuilds after being grounded during the pandemic
• Aligned with participants’ interests, reflecting responsibilities and rewarding achievement in creating short and long-
term shareholder value
• Acceptable to shareholders and strongly aligned with 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, outcome-based KPIs underpin FLT’s STI programs and its 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 desired outcomes is articulated in the
company’s core philosophies, which are included in this Annual Report.
The company’s philosophies also underline FLT’s 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 at all
levels to behave as long-term stakeholders in the company and to adopt the strategies, disciplines and behaviours that
create longer term value.
WHAT ARE THE KEY COMPONENTS OF FLT’S REMUNERATION FRAMEWORK FOR EXECUTIVES?
In a normal year, all executives can earn a combination of fixed pay, variable STIs; and LTIs, which are predominantly share-
based compensation.
Pre-COVID, some executives also received returns on their investments in the BOS, a tailor-made program that rewarded
FLT's people for building businesses that delivered sustainable returns over the long-term. While the BOS program was
suspended during the pandemic and has not been re-introduced for senior executives, it has been outlined below in Table
1, along with other areas of KMP remuneration.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
14
DIRECTORS’ REPORT CONTINUED
TABLE 1: 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.
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.
STIs
For executives, FY24 STIs are capped at 30% of their targeted packages in additional STIs. These STIs are based on
measurable achievements (quantifiable) against KPIs or targets that are set annually and are not guaranteed - either in
part or in full.
Prior to FY24, FLT had an uncapped STI system which included:
1. A targeted STI component, which executives would earn if they achieved the KPIs that were in place; and
2. A stretch STI component, additional payments that executives would earn if the pre-determined targets or KPIs
were exceeded
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. In return for this
investment, BOS participants received a variable return that was tied to the individual business’s performance.
In basic terms, BOS participants who invested in a 10% interest in their businesses were entitled to 10% of the business’s
profit as a return on the investment. Each participating executive was exposed to the business's risks, as neither FLT nor
any of its group companies guaranteed 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. The BOS program was suspended during the
pandemic but has now been reintroduced in some businesses. It is not currently available to KMP.
BOS Multiplier Program
To 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 provisions can be positive or negative as the company adjusts accruals to meet the anticipated future obligation.
Share-based payments
In line with the company's strong belief in creating ownership opportunities for its people, SBP are available to KMP and
other employees (excluding directors). Programs include:
1. The ESP, which was offered to staff in 20 countries; and
2. The LTRP and the one-off PCRP, which have become critical retention tools and have been offered to various senior
executives globally (refer section 4).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
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DIRECTORS’ REPORT CONTINUED
HOW ARE EXECUTIVE SALARIES STRUCTURED?
Executives are offered an annual remuneration package which includes:
• A fixed or guaranteed component (an executive’s targeted package); and
• An additional variable STI component, which is not guaranteed (in part of in full) and is now capped at 30% of their
targeted package
STIs are tied to pre-determined KPIs. If the KPIs are not achieved in any given year, executives will not typically earn any STIs.
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 FY22 for executives.
WHAT WERE THE MOST RECENT BENCHMARKING EXERCISES’ FINDINGS?
Targeted FY21 earnings for FLT’s executives (Taskforce) were compared to both a Market Comparator Group (75 ASX 200
companies) and an Industry Comparator Group (23 companies). Based on these comparisons, all FLT executives earned
below the median and most were paid below the 25th percentile. LTRP earnings were factored into the benchmarking,
which was undertaken before the one-off PCRP was implemented.
1 II) 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. Executive STIs are tied to year-on-year
growth in FLT’s overall profit and, in some instances, within its key business or geographic divisions, which means that senior
executives’ interests are tied to the company’s success and are fully aligned with shareholders’ interests.
During FY24 if the company or the key business or geographic divisions’ results exceed expectations, KMP will earn up to
30% of their packages in additional STIs. Conversely, if the company or the key business or geographic divisions’ results are
below expectations, KMP will earn a fraction of their targeted STIs (and possibly zero). Table 2 below illustrates FLT’s
achievements in the areas that drive shareholder wealth during the past five years:
TABLE 2: KEY MEASURES
Profit / (loss) before income tax
Underlying profit / (loss) before income tax¹
Profit / (loss) after income tax
Interim dividend
Final dividend
Special dividend
Earnings / (loss) per share (basic)
Share price at 30 June²
Increase / (decrease) in share price %
FY23
$70.5m
$106.0m
$47.4m
—
18.0c
—
23.1c
$19.05
10 %
FY22
($377.8m)
($360.9m)
($287.2m)
—
—
—
(142.4c)
$17.36
17%
FY21
($601.7m)
($507.1m)
($433.5m)
—
—
—
(217.5c)
$14.85
34%
FY20
($848.6m)
($509.2m)
($662.2m)
—c
—c
—c
(552.2c)
$11.12
(73%)
FY19
$343.5m
$343.1m
$264.2m
60.0c
98.0c
149.0c
224.2c
$41.55
(35%)
1 Underlying profit / (loss) before tax is a non-IFRS measure and is unaudited. Refer to note A1 segment information for reconciliation of underlying to statutory profit / (loss)
before tax.
2 The share price at 30 June 2018 was $63.65.
During FY23, FLT’s executives earned stretch STIs, above their initial targets, given that the company and its key businesses
and geographic regions significantly exceeded their profit targets.
Conversely, during the two previous years, when results were heavily impacted by COVID-19 and the company recorded
significant losses, executives accepted temporary pay reductions and did not, therefore, earn their targeted packages.
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DIRECTORS’ REPORT CONTINUED
TABLE 3: IMPACT ON KMP EARNINGS
Executive STIs are tied to FLT's underlying PBT globally and/or the PBT generated by key business or geographic
divisions.
In simple terms, this means that executives’ STI earnings will typically be:
• Higher in years when profits within their areas of responsibility exceed expectations (when they exceed their KPIs)
• Lower in years when they meet, but do not exceed, expectations and do not reach the incentive cap (now 30% in
FY24); and
• Zero (unpaid) in years when results are below expectations and no KPIs are achieved
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
• Ownership is encouraged and structures are built into the remuneration model to deliver a high degree of employee
investment in the business
• 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 business or 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 clear alignment between employee interests and those of shareholders, given high levels of staff ownership
• A focus on sustained growth in shareholder wealth, as outlined above; and
• The ability to attract and retain high calibre executives
1 III) DIRECTOR REMUNERATION
HOW ARE NEDs REMUNERATED?
To preserve their independence, NEDs receive fixed fees that reflect the positions’ demands and responsibilities. They are
not eligible to participate in the ESP or BOS program, are not included in LTI programs and do not receive additional fees
for their membership of any relevant Board Committees, including the audit and risk committee or the RNC.
The fees, which the RNC reviews annually, 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.
An external benchmarking exercise for NEDs (including the chairman) was conducted during FY23 to ensure that fees paid
to individual directors were appropriate and competitive. Based on this benchmarking, the fees paid to FLT’s chairman
increased to $300,000 while the other NEDs were paid in the order of $175,000 in annual fees. Kirsty Rankin was appointed
during the year and, therefore, received a percentage of the annualised fees paid to the company’s other NEDs.
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.
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DIRECTORS’ REPORT CONTINUED
1 IV) KMP REMUNERATION STRUCTURES
WHAT ARE KMP STIs BASED ON?
After operating with modified pay structures during FY21 and FY22, traditional STI structures for executives were restored
during FY23.
This saw STIs:
• Tied exclusively to FLT’s global profit (EBITDA) for Graham Turner (CEO), Adam Campbell (CFO) and Melanie Waters-
Ryan (CEO - Supply); and
• Tied 70% to divisional profit (PBT) and 30% to FLT’s global profit (EBITDA) for other executives, specifically Chris
Galanty (CEO - Corporate), James Kavanagh (CEO - Leisure), Charlene Leiss (MD - The Americas) and Steven Norris
(MD - EMEA)
Given the difficulties in setting relevant and appropriate longer term growth targets in the post-COVID trading climate, KMP
KPIs were initially tied to 1H profits and then reset at the half year to ensure appropriate full year targets were in place in a
year when the company achieved an extra-ordinary turnaround of $466million in underlying profit before tax.
For FY24, executive STIs are tied to:
• Global PBT profit growth for Graham Turner and Adam Campbell; and
• A combination of global PBT profit growth, business PBT profit growth and regional (geographic) PBT profit growth for
other executives who are considered KMP. STIs are weighted towards the executive’s primary area of responsibility,
which is the relevant business division for the global leisure and corporate CEOs and the geographic region for MDs
FLT’s traditional STI structure is outlined in Table 4 below.
TABLE 4: STI SUMMARY – KMP
Participants:
All executives are eligible to earn performance-based STIs.
Award Type:
Cash payments 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/EBITDA or the PBT/EBITDA
achieved within its key geographic or business divisions.
Structure:
Limits:
If the KPIs are achieved, KMP receive a small percentage of the company's profit and, in some cases, the profit
achieved within its key geographic or business divisions.
Executive STIs are now capped at 30% of the executive’s targeted remuneration package (cap not in place during
FY23, in place from FY24).
Deferral:
Not applicable.
Clawback:
Adjustments can be made to withhold STIs, to claw-back over-payments or to top-up under-payments.
FY23 Outcomes:
The STI outcomes for KMP have been outlined in Table 4 in John Eales’ overview.
WHAT PERCENTAGE OF REMUNERATION IS FIXED FOR FLT EXECUTIVES?
During FY23, 90% of each executive’s targeted package was fixed, with an additional 10% subject to performance (described
as targeted STIs). Additional stretch STIs were also available and were earned, given that the business significantly exceeded
its profit expectations.
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DIRECTORS’ REPORT CONTINUED
HOW DO EXECUTIVES’ TARGETED SALARY PACKAGES 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?
While FLT does not currently and has not traditionally tied KMP incentives to non-financial KPIs, the company may consider
using them in future if they are measurable (quantifiable) and aligned to FLT’s strategic objectives and shareholder interests.
HOW DID FLT LIMIT EXECUTIVE STIs BEFORE THE 30% CAP WAS INTRODUCED?
While executive STI earnings were theoretically uncapped in the past, structures, governance processes and natural curbs
were in place to ensure that executive earnings were acceptable and aligned to shareholders’ interests.
For example, if executives significantly exceeded their KPIs and reached “stretch” targets, a decelerator mechanism kicked-
in to slow the executive’s earnings growth. During FY23, two decelerators applied to the global portion of STIs. The first
applied if an executive earned 130% of his or her targeted remuneration package and the second applied at 150%.
A number of other factors also limited earnings growth for KMP:
• Firstly, STIs were tied to results achieved by mature businesses and were, therefore, limited by the relevant business’s
earnings growth potential in any normal year. As outlined previously, an additional safeguard was in place for FY23 to
reflect both the uncertainty around trading conditions and the prospect of abnormally strong year-on-year growth
being achieved, with executive STIs based on a first half target and an additional second half target; and
• Secondly, the percentage of profit the executive earned under his or her KPIs was relatively small. In a year of normal
profit growth, executive STIs would not significantly increase, as illustrated in previous annual reports.
The RNC also reviews incentive payments and structures during the course of the year and has the discretion to adjust KPIs if
earnings are not aligned to the company’s and its shareholders’ interests, as outlined elsewhere in the report.
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DIRECTORS’ REPORT CONTINUED
EXECUTIVE LONG-TERM INCENTIVES (LTIs)
WHAT IS THE LTRP AND HOW IS IT STRUCTURED?
The LTRP (established in FY16) is an equity-based tool that is aligned with FLT’s longer term strategic objectives and aims to:
• Encourage retention of key executives and other senior leaders
• Enhance the level of ownership among these key people to strengthen the alignment to shareholder interests; and
• Balance the use of STIs
A summary is included below and further detail is provided in Section 4.
LTRP SUMMARY
Participants:
Key executives and other senior leaders globally, including KMP apart from Graham Turner and NEDs.
Award Type:
Annual equity grant of Base Rights that will vest in the future if the executive achieves the longevity-related service
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.
Service conditions: As the program is primarily a retention and alignment tool, the service condition is tied to longevity. No result-related
performance conditions or hurdles are in place.
Structure:
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.
Limits:
Participants receive a percentage of their targeted remuneration package (typically 20 or 30%) divided equally
between Base and Matched Rights under the plan
Voting and
dividend rights
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.
Other key terms
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.
Clawback:
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.
FY23 Outcomes:
The board invited 174 key executives globally to participate in the expanded LTRP program during FY23.
Approximately 95% 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 strategically designed to be an executive retention tool, no result-related
performance hurdles apply. Rights can be granted to participants annually while they remain part of the program.
While FLT met with various stakeholders and considered adding performance hurdles to the plan when it was reviewed
during FY18, the company elected to maintain the original structure, given the plan's success in achieving its primary
strategic objective of retaining key individuals.
FLT also believes that its program gives executives a stronger sense of ownership and alignment with shareholders than
other commonly used 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 as other shareholders
(excluding dividends and voting rights), while also being motivated as an owner to deliver longer term value.
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DIRECTORS’ REPORT CONTINUED
ARE OTHER LTIs IN PLACE FOR KMP?
FLT is currently reviewing LTI structures and is contemplating changes for FY25. While this review is ongoing, the company is
evaluating tailored LTI offerings with multiple performance hurdles that are aligned to the company’s overall strategies.
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 historically
offered an additional LTI that was aligned to the BOS and available to some KMP. Under this BOS Multiplier program, which
is outlined in section 3, participating executives became entitled to a one-off BOS return multiplier payment upon the BOS
note’s redemption if they remained in their role, or an equivalent or more senior position, for the relevant tenure period.
One current executive, Chris Galanty, continues to participate in the BOS Multiplier program, with Melanie Waters-Ryan due
to retire in early FY24.
During FY21, the company formally introduced the PCRP, which was available to all KMP apart from directors, to help it
achieve two of its key post-COVID strategic objectives:
1. 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; and
2. Maintaining tight cash controls while revenue generating opportunities were severely restrained
WHAT IS THE PCRP AND GRR?
Both the PCRP and the GRR (approved by shareholders at FLT’s 2021 AGM) were developed to ensure people who would
be crucial to FLT’s post-COVID recovery were retained while the business recovered and during the rebuilding phase.
The one-off PCRP program focused on key members of FLT’s global leadership team, whose skills easily translated to
industries and sectors that were not as heavily impacted by the pandemic and who were, therefore, at heightened risk of
being targeted by other companies.
Of FLT’s KMP, Chris Galanty, Melanie Waters-Ryan, Adam Campbell, Steve Norris, James Kavanagh and Charlene Leiss
were included in the PCRP, which was 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). It was initially intended to be a one-off program, but the company elected to extend it for a
second year as a strategic response to prevailing market conditions globally. Additional PCRP details 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 believed the PCRP participants were required to:
• Lead the company through an extraordinarily difficult time; and
• Rebuild FLT and create shareholder value as restrictions ease and as it emerges from the crisis
This program has helped lock in these key people while they have developed and deployed strategies designed to fast-
track recovery.
PCRP participants 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 simultaneous involvement in the ongoing LTRP.
The PCRP provided these critical employees with additional incentive to continue their careers with FLT in a tight labour
market and during what was likely to be a rebuilding phase with earnings likely to be lower than normal. It also aligned with
another strategic objective - minimising cash outflows - while the company’s recovery gained momentum.
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 was a strategic, one-off response to COVID-19 and was a short-term program focused specifically on retaining a
group of executives who were considered crucial to FLT’s recovery during the rebuilding phase and who were at heightened
risk of being targeted by other companies operating in less affected industries.
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DIRECTORS’ REPORT CONTINUED
1 V) 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 profit 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 to 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 or clawback 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 RNC 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 MD, CFO and HR (People & Culture) 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 FLT 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 (withheld, 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
require the business to achieve 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) are 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 the BOS.
As a direct response to COVID-19, FLT 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 https://www.fctgl.com/investors#governance-documents.
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DIRECTORS’ REPORT CONTINUED
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 2023. 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
Gary Smith – Chairman
John Eales
Robert Baker
Colette Garnsey
Kirsty Rankin
Executive Director
Graham Turner
PARENT ENTITY
OTHER GROUP KMP
Melanie Waters-Ryan – CEO - Supply (due to retire
31 August 2023)
Adam Campbell – CFO
Chris Galanty – CEO – Corporate
James Kavanagh – CEO – Leisure
Charlene Leiss – MD – The Americas
Steven Norris – MD – EMEA
With the exception of Chris Galanty, Charlene Leiss and Steven 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. 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.
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DIRECTORS’ REPORT CONTINUED
DETAILS OF REMUNERATION
The following table shows the remuneration paid and payable to KMP for the year ended 30 June 2023. Remuneration
amounts are determined in accordance with the Corporations Act 2001’s requirements and are set out in the table below
and in conjunction with the table on the following page of this report.
PAID AND PAYABLE REMUNERATION
SHORT-TERM
EMPLOYEE BENEFITS
POST EMPLOYMENT
BENEFITS¹
CASH SALARY
AND FEES²
SHORT TERM
INCENTIVE²
BOS INTEREST³
SUPERANNUATION
TOTAL PAID
AND PAYABLE
REMUNERATION
NAME
$
NON-EXECUTIVE DIRECTORS
Gary Smith
2023
2022
John Eales
2023
2022
Robert Baker
2023
2022
Colette Garnsey
2023
274,708
227,273
158,873
154,545
158,873
154,545
158,873
2022
Kirsty Rankin (appointed 25 August 2022)4
154,545
135,272
—
$
—
—
—
—
—
—
—
—
—
—
2023
2022
EXECUTIVE DIRECTORS
Graham Turner
2023
2022
OTHER GROUP KMP
Melanie Waters-Ryan
2023
2022
Adam Campbell
2023
2022
Chris Galanty
2023
2022
James Kavanagh
2023
2022
Charlene Leiss
2023
2022
Steven Norris
2023
666,582
651,432
204,057
9,375
1,220,083
1,191,432
975,620
952,932
582,500
1,165,156
791,549
703,280
882,091
751,028
363,182
16,875
295,205
13,563
124,116
16,183
386,669
10,095
129,220
—
755,762
197,673
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
815,246
—
—
—
—
—
—
—
$
$
25,292
22,727
16,682
15,455
16,682
15,455
16,682
15,455
14,204
—
25,292
23,568
25,292
23,568
25,292
23,568
—
—
25,292
23,568
14,612
—
—
—
300,000
250,000
175,555
170,000
175,555
170,000
175,555
170,000
149,476
—
895,931
684,375
1,608,557
1,231,875
1,296,117
990,063
1,521,862
1,181,339
1,203,510
736,943
1,025,923
751,028
953,435
733,753
815,246
—
205,322
163,364
9,481,476
7,069,376
2022
TOTAL KMP COMPENSATION (EXCLUDING LONG TERM BENEFITS)
2023
1,700,122
6,760,786
723,701
10,052
2022
6,829,869
76,143
1 No termination benefits (leave entitlements and redundancy payments owing to employees at the date of termination) were paid during the year (2022: nil).
2 For each executive who is classed as KMP, 90% of the targeted remuneration package was fixed for 2023.
3 BOS interest shown above does not take into account financial liabilities (principal repayments) that may relate to this investment.
4 For KMP who were appointed during the current year, the amounts disclosed reflect the relevant service period served.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
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DIRECTORS’ REPORT 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
TERMINATION
BENEFITS3
EQUITY
SETTLED
PLANS4,5
TOTAL
REMUNERATION
PERCENTAGE
PERFORMANCE
RELATED6
NAME
$
TOTAL NON EXECUTIVE DIRECTORS COMPENSATION
—
2023
976,141
—
$
$
2022
EXECUTIVE DIRECTORS
Graham Turner
760,000
2023
895,931
684,375
2022
OTHER GROUP KMP
Melanie Waters-Ryan
2023
—
—
56,763
48,513
—
—
2022
1,231,875
243,010
1,608,557
90,702
(2,619,811)
1,220,000
000
—
—
—
—
$
—
—
—
—
$
976,141
760,000
952,694
732,888
%
— %
— %
21 %
1 %
Adam Campbell
2023
2022
Chris Galanty
2023
2022
James Kavanagh
2023
2022
Charlene Leiss
2023
2022
Steven Norris
2023
1,296,117
990,063
51,102
57,208
1,521,862
1,181,339
—
—
1,203,510
736,943
51,870
108,364
1,025,923
751,028
953,435
—
—
—
—
733,753
2022
TOTAL KMP COMPENSATION
2023
2022
9,481,476
7,069,376
—
—
—
1,099,366
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(57,537)
759,377
241,911
2,234,262
(933) %
1 %
716,938
1,023,165
2,064,157
2,070,436
433,375
746,182
3,054,603
1,927,521
366,271
466,069
1,621,651
1,311,376
363,858
527,053
1,389,781
1,278,081
355,235
496,160
1,308,670
1,229,913
14 %
1 %
67 %
1 %
24 %
1 %
9 %
— %
15 %
1 %
250,437
457,095
(1,520,445)
—
1,220,000
—
2,178,140
4,018,006
11,609,608
11,544,477
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. Melanie Waters-Ryan’s negative BOS Multiplier amount reflects the decrease
in the BOS Multiplier provision due to her retirement and in accordance with the final redemption terms. Information on the BOS program is included in section 3.
3 Melanie Waters-Ryan will retire on 31 August 2023 with an agreed upon termination benefit to be received at the conclusion of the service period. The benefit relates to
services performed during FY23 and up until 31 August 2023.
4 Share-based payments represent amounts expensed in relation to rights granted under LTRP Grant 2019 (Grant 4b), LTRP Grant 2020 (Grant 5b), LTRP Grant 2021 (Grant 6
& Grant 6b), LTRP Grant 2022 (Grant 7), LTRP Grant 2023 (Grant 8) and PCRP (refer section 4). A. Campbell, J. Kavanagh, C. Leiss and S. Norris’ include matched rights
granted under the ESP (refer section 4).
5 Melanie Waters-Ryan will retire on 31 August 2023. Share-based payment expense previously recognised under AASB 2 in respect of the rights relating to LTRP Grant 7
and PCRP Match 2 rights has been reversed in the year ended 30 June 2023 resulting in a negative amount reported for share-based payment remuneration in 2023.
6 Performance related percentage calculated as the sum of the STI and BOS interest, and BOS Multiplier divided by total remuneration.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
25
DIRECTORS’ REPORT CONTINUED
DETAILS OF REMUNERATION PAID AND FORFEITED
OTHER GROUP KMP
Graham Turner
Melanie Waters-Ryan
Chris Galanty
Adam Campbell
James Kavanagh
Charlene Leiss
Steven Norris
INCENTIVES
PAID %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
FORFEITED %
0 %
0 %
0 %
0 %
0 %
0 %
0 %
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 performance criteria is set out above. No part of the bonus is
payable in future years.
3 LTIs: BOS RETURN MULTIPLES ON REDEMPTION
To encourage key executives to continue in their roles for the long-term and to drive growth in large and important
businesses, two KMPs had BOS notes in effect in FY23 – namely Melanie Waters-Ryan and Chris Galanty.
Ms. Waters-Ryan resigned from her role as Chief Executive Officer, Supply effective 31 August 2023. For the period 1
January 2020 to 31 December 2022 (MWR Hibernation Period) Ms. Waters-Ryan’s BOS (MWR BOS) was hibernated via a
series of amending documents. During the MWR Hibernation Period, the MWR BOS’ face value was repaid to Ms. Waters-
Ryan and all other entitlements under the MWR BOS to interest earnings and multipliers were suspended. In order to
reactivate the MWR BOS, Ms. Waters-Ryan was required to repay the face value of the MWR BOS to Flight Centre within
thirty (30) days of the end of the MWR Hibernation Period. Ms. Waters-Ryan elected not to repay the face value and
accordingly the MWR BOS was deemed to have been redeemed as at 31 December 2019 (Redemption Date). As at the
Redemption Date, in accordance with the terms of the MWR BOS (as amended and restated), Ms. Waters-Ryan was entitled
to a one-off multiplier payment equivalent to the MWR BOS’ interest earnings for FY2019 multiplied by five. This was paid to
Ms. Waters-Ryan in July 2023.
Mr. Galanty’s BOS (CG BOS) was also hibernated for the period 1 January 2020 to 30 June 2022 (CG Hibernation Period).
Mr. Galanty elected to repay the face value of the CG BOS at the end of the CG Hibernation Period to Flight Centre and the
CG BOS (including its relevant entitlements) recommenced in accordance with its amended and restated terms,
in particular:
• if the CG BOS is finally redeemed after its fifth anniversary but before its tenth anniversary, Mr. Galanty will be entitled
to a one-off payment equivalent to the CG BOS return for FY19 multiplied by five, being the applicable
redemption multiple;
• if the CG BOS is finally redeemed after its tenth anniversary but before its fifteenth anniversary, Mr. Galanty will be
entitled to a one-off payment equivalent to the CG BOS return for the last full financial year before the final
redemption date, multiplied by 10, being the applicable redemption multiple;
• if the CG BOS is not redeemed by the end of FY28 (when it must then be redeemed) a final redemption multiple of 15
multiplied by CG BOS return for the last full financial year will be payable; and
• if the CG BOS is finally redeemed after its fifth anniversary but before its fifteenth anniversary (FY28) as a result of Mr.
Galanty transferring into a comparable or more senior role within Flight Centre, an affiliate or a related body corporate
or as a result of the sale of any material and relevant part of the business (collectively the Relevant Actions), then the
redemption multiple payable to Mr. Galanty will be the number of full years the CG BOS note has been held as at the
date of the Relevant Action multiplied by the relevant interest earnings of the CG BOS for the last full financial year
before the redemption date.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
26
DIRECTORS’ REPORT CONTINUED
3 LTIs: BOS RETURN MULTIPLES ON REDEMPTION (CONTINUED)
The BOS’s Face Value, being the amount paid by the holder to purchase the BOS, is guaranteed – subject to the issue of a
designation notice, 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 %
Melanie Waters-Ryan 1 July 2012
Chris Galanty
1 July 2010
100 %
100 %
—
—
Total
FINANCIAL
YEARS IN
WHICH BOS
RETURN
MULTIPLE
MAY VEST
2018-2029
2016-2028
MINIMUM
TOTAL BOS
RETURN
MULTIPLE1
5 times
MAXIMUM
TOTAL BOS
RETURN
MULTIPLE1
BALANCE AT
30 JUNE
2023²
$
15 times
1,103,153
5 times
15 times
10,025,001
11,128,154
1 The BOS Holder will be entitled to be 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. This does not apply to the MWR BOS which was deemed to have been redeemed on 31 December 2019 (per the details set out above).
Otherwise, 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. The failure of Ms. Waters Ryan to repay the face value of the MWR BOS at the conclusion of the MWR Hibernation Period
triggered the redemption of the MWR BOS and the final calculation of amount payable (being FY19 MWR BOS earnings multiplied by five).
2 The balance held for C. Galanty as at 30 June 2023 incorporates both a recalculation of the estimated provision out to FY28 and revaluation for movement in foreign
exchange rates.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
27
DIRECTORS’ REPORT CONTINUED
4 SHARE-BASED COMPENSATION
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. Details of rights
provided as remuneration to KMP are set out below:
GRANT
NUMBER GRANT DATE
1 July 2018
BASE RIGHTS
MATCHING RIGHTS
DATE/YEAR
VESTED AND
EXERCISABLE1
August 2021
EXPIRY DATE
1 July 2030
VALUE PER
RIGHT AT
GRANT DATE2
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
$54.26 August 2023
1 July 2030
VALUE PER
RIGHT AT
GRANT DATE2
$51.58
1 July 2019
August 2022
1 July 2030
$42.06 August 2022
1 July 2030
1 July 2019
August 2021
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 Jul 2021
1 Jul 2022
August 2024
August 2025
1 Jul 2030
1 Jul 2030
$17.27 August 2024
1 July 2030
$17.02 August 2025
1 July 2030
$42.06
$38.84
$11.30
$11.30
$17.27
$17.02
4b
5
5b
6
6b
7
8
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
28
DIRECTORS’ REPORT CONTINUED
PCRP
The PCRP was introduced as a one-off strategic response to the profound impacts that COVID-19 restrictions had on the
business, with a focus on ensuring key executives who were likely to be crucial to FLT’s recovery were retained while the
business recovered and during the rebuilding phase.
General terms
Invited PCRP participants were 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 have been 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.
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
1
29 June 2020
DATE/YEAR
VESTED AND
EXERCISABLE1
August 2022
EXPIRY DATE
1 July 2031
VALUE PER
RIGHT AT
GRANT DATE2
DATE/YEAR
VESTED AND
EXERCISABLE1
EXPIRY DATE
$9.66 August 2023
1 July 2031
VALUE PER
RIGHT AT
GRANT DATE2
$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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
29
DIRECTORS’ REPORT 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 2022
BALANCE AT 30 JUNE
2023
UNVESTED
NUMBER
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
EXERCISED
NUMBER
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
—
—
—
—
—
—
—
—
—
—
—
1,923
1,923
VESTED AND
OTHER
EXERCISABLE
GROUP KMP
NUMBER
RIGHTS
MELANIE WATERS-RYAN¹
LTRP Grant 7
Base
Match
LTRP Grant 6
Base
Match
LTRP Grant 5
Base
Match
LTRP Grant 4
Base
Match
PCRP
Base
Match 1
Match 2
ADAM CAMPBELL
LTRP Grant 8
Base
Match
LTRP Grant 7
Base
Match
LTRP Grant 6
Base
Match
LTRP Grant 5
Base
Match
PCRP
Base
Match 1
Match 2
CHRIS GALANTY
LTRP Grant 8
Base
Match
LTRP Grant 7
Base
Match
LTRP Grant 6
Base
Match
LTRP Grant 5
Base
Match
PCRP
Base
Match 1
Match 2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,820
7,820
10,508
10,508
2,386
2,386
—
—
70,000
35,000
35,000
—
—
—
—
—
—
—
—
—
—
—
(7,820)
(7,820)
—
—
—
—
—
—
—
—
—
—
2,386
2,386
—
—
—
—
(35,000)
70,000
—
—
—
—
16,335
16,335
15,712
15,712
21,113
21,113
5,754
5,754
70,000
35,000
35,000
—
—
7,820
7,820
8,756
8,756
2,386
2,386
70,000
35,000
35,000
—
—
—
—
—
—
—
—
—
8,129
8,129
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
5,754
5,754
(5,754)
(5,754)
70,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,386
2,386
(2,386)
(2,386)
—
—
—
—
2,386
2,386
1,923
1,923
70,000
—
—
—
—
—
—
—
—
—
—
70,000
—
—
—
—
—
—
—
—
—
—
VALUE OF
RIGHTS
GRANTED
DURING
THE
YEAR $
—
—
10,508
10,508
—
—
—
—
—
35,000
—
—
—
—
—
—
—
—
—
—
—
—
16,335
16,335
278,063
278,063
15,712
15,712
21,113
21,113
—
—
—
35,000
35,000
—
—
—
—
—
—
—
—
—
8,129
8,129
138,375
138,375
7,820
7,820
8,756
8,756
—
—
—
—
—
—
—
—
—
—
—
70,000
—
—
—
—
—
70,000
—
—
—
35,000
35,000
1 Melanie Waters-Ryan retired on 31 August 2023 and forfeited her LTRP Grant 7 rights and PCRP Match 2 rights. Share-based payment expense previously recognised
under AASB 2 in respect of the rights has been reversed in the year ended 30 June 2023.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
30
DIRECTORS’ REPORT CONTINUED
BALANCE AT 1 JULY 2022
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
GRANTED
NUMBER
FORFEITED
NUMBER
VESTED
NUMBER
EXERCISED
NUMBER
BALANCE AT 30 JUNE
2023
VESTED AND
EXERCISABLE
NUMBER
UNVESTED
NUMBER
VALUE OF
RIGHTS
GRANTED
DURING
THE YEAR
$
OTHER
GROUP KMP
RIGHTS
JAMES KAVANAGH
LTRP Grant 8
Base
Match
LTRP Grant 7
Base
Match
LTRP Grant 6b
Base
Match
LTRP Grant 5b
Base
Match
LTRP Grant 4b
Base
Match
PCRP
Base
Match 1
Match 2
CHARLENE LEISS
LTRP Grant 8
Base
Match
LTRP Grant 7
Base
Match
LTRP Grant 6
Base
Match
LTRP Grant 5
Base
Match
PCRP
Base
Match 1
Match 2
STEVEN NORRIS
LTRP Grant 8
Base
Match
LTRP Grant 7
Base
Match
LTRP Grant 6
Base
Match
LTRP Grant 5
Base
Match
PCRP
Base
Match 1
Match 2
—
—
—
—
9,429
—
2,569
—
1,282
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,017
7,017
—
9,429
—
2,569
—
1,282
40,000
20,000
20,000
—
—
7,017
7,017
9,429
9,429
2,291
2,291
40,000
20,000
20,000
—
—
7,017
7,017
9,429
9,429
1,382
1,382
40,000
20,000
20,000
7,931
7,931
—
—
—
—
—
—
—
—
—
—
—
8,112
8,112
—
—
—
—
—
—
—
—
—
7,595
7,595
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
40,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,291
2,291
(2,291)
(2,291)
40,000
—
—
(40,000)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,382
1,382
(1,382)
(1,382)
—
—
—
—
9,429
—
2,569
—
1,282
—
40,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,931
7,931
135,000
135,000
7,017
7,017
—
9,429
—
2,569
—
1,282
—
20,000
20,000
—
—
—
—
—
—
—
—
—
—
—
8,112
8,112
138,082
138,082
7,017
7,017
9,429
9,429
—
—
—
20,000
20,000
—
—
—
—
—
—
—
—
—
7,595
7,595
129,287
129,287
7,017
7,017
9,429
9,429
—
—
—
—
—
—
—
—
—
—
—
40,000
—
—
—
—
—
40,000
—
—
—
20,000
20,000
The relevant portion of the expense relating to these rights was recognised during the year ended 30 June 2023. Refer to
note D3.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
31
DIRECTORS’ REPORT 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:
2023
FLT DIRECTORS
Gary Smith
John Eales
Robert Baker
Colette Garnsey
Kirsty Rankin
Graham Turner
OTHER GROUP KMP
Melanie Waters-Ryan
Adam Campbell¹
Chris Galanty
James Kavanagh¹
Charlene Leiss¹
Steven Norris¹
BALANCE AT
THE START OF
THE YEAR
RECEIVED ON
THE EXERCISE
OF RIGHTS
ESP
PURCHASED
SHARES
ESP MATCHED
SHARES
VESTED
OTHER
CHANGES
BALANCE AT
THE END OF
THE YEAR
23,621
11,875
6,457
7,136
—
16,639,027
55,622
11,005
15,589
3,778
13,960
3,982
—
—
—
—
—
—
—
11,508
4,772
—
44,582
2,764
—
—
—
—
—
—
—
875
—
1,751
2,039
1,526
—
—
—
—
—
—
—
446
—
1,015
878
640
2,054
1,563
850
317
3,168
2,054
—
(2,129)
(19,772)
—
(16,319)
—
25,675
13,438
7,307
7,453
3,168
16,641,081
55,622
21,705
589
6,544
45,140
8,912
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 632 (2022: 642), J. Kavanagh held 1,704 (2022: 1,843), C. Leiss held 1,433 (2022: 1,291) and S. Norris held 1,042 (2022: 920)
conditional matched rights that had been granted under the ESP but had not yet vested.
5 LOANS TO KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
There were no loans provided to key management personnel and their related parties during the period (2022: $nil).
End of remuneration report.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
32
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 34.
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
30 August 2023
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
33
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 2023, 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;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene 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
Alison de Groot
Partner
30 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
STATEMENT OF PROFIT OR LOSS
Revenue
Fair value gain on change in control
Other income
Share of (loss) / profit of joint ventures and associates
Employee benefits
Sales and marketing
Tour, hotel & cruise operations - cost of sales
Depreciation and amortisation
Finance costs
Impairment reversal
Other expenses
Profit / (Loss) before income tax
Income tax (expense) / credit
Profit / (Loss) after income tax
Profit attributable to
Company owners
Non-controlling interests
NOTES
A2
A3
A3
E1
F1
B8 / F7
A4
F6 / F7
A4
F12
FOR THE YEAR ENDED 30 JUNE
2023
$'000
2022
$'000
2,280,782
1,007,485
—
43,389
(4,084)
(1,297,993)
(139,905)
(99,497)
(142,093)
(84,795)
328
(485,673)
70,459
4,245
57,386
11,679
(882,268)
(60,183)
(24,579)
(125,929)
(57,827)
8,953
(316,748)
(377,786)
(23,047)
47,412
90,604
(287,182)
47,461
(49)
(286,651)
(531)
47,412
(287,182)
CENTS
CENTS
23.1
22.5
RESTATED¹
(142.4)
(142.4)
Earnings per share for profit / (loss) attributable to the ordinary equity holders of the company:
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
F2
F2
1 Restated as required by AASB 133 Earnings Per Share, for discount on Institutional Placement and Share Purchase Plan completed during the current year to fund the
acquisition of Scott Dunn.
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
35
STATEMENT OF OTHER COMPREHENSIVE INCOME
Profit / (Loss) after income tax
OTHER COMPREHENSIVE INCOME
Items that have been reclassified to profit or loss:
Hedging gains reclassified to profit or loss
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
(Loss) / Gain on net investment hedges
Net exchange differences on translation of foreign operations
Income tax on items of other comprehensive income
Total other comprehensive income
NOTES
FOR THE YEAR ENDED 30 JUNE
2023
$'000
2022
$'000
47,412
(287,182)
F11
F11
F11
F11
F11
F12
(186)
—
966
(4,963)
43,317
1,255
40,389
—
(982)
—
2,501
19,513
(750)
20,282
Total other comprehensive income / (loss)
87,801
(266,900)
Attributable to
Company owners
Non-controlling interests
87,850
(49)
(266,369)
(531)
87,801
(266,900)
The above consolidated statement of other comprehensive income should be read in conjunction with the
accompanying notes.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
36
STATEMENT OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers¹
Payments to suppliers and employees¹
Royalties received
Interest received
Interest paid (non-leases)
Interest paid (leases)
Government subsidies received
Income taxes paid
Income taxes refunded
Net cash inflow / (outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, net of cash acquired
Acquisition of non-controlling interests in subsidiaries
Payments for property, plant and equipment
Payments for intangibles
Payments for the purchase of financial asset investments
Proceeds from financial asset investments
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
Payments for purchase of treasury shares
Dividends paid to non-controlling shareholders in subsidiaries
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
NOTES
F7
B1
A6
B8/F6
B8/A5
B4
B5
B4
F7
F7
D4
D4
FOR THE YEAR ENDED 30 JUNE
2023
$'000
2,117,217
(1,947,811)
424
29,504
(43,720)
(7,295)
2,482
(15,720)
21,089
2022
$'000
681,396
(842,057)
168
5,743
(22,462)
(8,917)
40,843
(2,100)
46,012
156,170
(101,374)
(172,716)
—
(21,379)
(70,652)
—
24,291
(240,456)
254,420
—
(253,286)
(99,973)
(661)
(6,539)
241,159
—
(1,009)
(40,180)
1,907
(11,150)
(29,221)
(192,261)
187,004
(83,901)
—
392,184
(207,426)
(93,563)
(2,480)
—
6,655
(2,437)
—
134,111
92,933
49,825
(92,342)
1,210,257
1,290,831
18,854
11,768
Cash and cash equivalents at end of the financial year
B1
1,278,936
1,210,257
1 Including consumption tax.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
37
BALANCE SHEET
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
Financial asset investments
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
Financial liabilities
Lease liabilities
Borrowings
Provisions
Current tax liabilities
Derivative financial instruments
Total current liabilities
Non-current liabilities
Trade and other payables
Contract liabilities
Financial liabilities
Lease liabilities
Borrowings
Convertible notes
Provisions
Deferred tax liabilities
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Treasury shares
Reserves
Retained profits / (accumulated losses)
Equity attributable to the Company owners
Non-controlling interests
Total equity
NOTES
B1
B2
F3
F4
F5
C3
C2
B2
F6
A5
F7
F5
C3
E1
F12
C2
F8
F9
A7
F7
B4
F10
C2
F9
A7
F7
B4
B5
F10
F12
C2
D4
D4
F11
AS AT 30 JUNE
2023
$'000
2022
$'000
1,328,438
1,226,904
20,227
834,765
317,578
82,488
25,452
14,602
6,490
—
669,325
130,301
44,487
9,200
31,007
1,282
2,630,040
2,112,506
14,656
66,653
1,054,489
196,531
21,608
3,103
45,599
403,748
—
58,977
73,089
782,293
198,530
32,290
19,497
49,678
403,536
1,691
1,806,387
1,619,581
4,436,427
3,732,087
1,684,600
1,402,378
71,997
3,908
81,869
57,477
55,334
2,295
9,809
55,064
3,683
92,424
20,238
43,805
615
7,760
1,967,289
1,625,967
2,930
27,077
10,573
177,554
352,893
688,940
27,335
9,979
35,360
19,810
30,736
10,386
193,627
354,000
655,985
27,671
4,227
32,216
1,332,641
1,328,658
3,299,930
2,954,625
1,136,497
777,462
1,374,592
1,105,711
(14,748)
193,068
(417,824)
1,135,088
1,409
1,136,497
(1,055)
136,460
(465,285)
775,831
1,631
777,462
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
38
STATEMENT OF CHANGES IN EQUITY
Balance at 1 July 2021
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Non-controlling interest recognised
Acquisition reserve
Other reserves
Employee share-based payments
Treasury shares
Equity component of convertible bond, net of tax
Balance at 30 June 2022
Profit / (loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Non-controlling interest reserve
Institutional placement and share purchase plan, net of
transaction costs & tax
Employee share-based payments
Treasury shares
Equity component of convertible bond, net of tax
Balance at 30 June 2023
FOR THE YEAR ENDED 30 JUNE
CONTRIBUTED
EQUITY
TREASURY
SHARES
NOTES
$'000
1,099,056
$'000
—
RESERVES
$'000
RETAINED
PROFITS
$'000
NON-
CONTROLLING
INTEREST
$'000
TOTAL
$'000
TOTAL
EQUITY
$'000
35,614
(178,634)
956,036
—
956,036
—
—
—
—
—
—
6,655
—
—
1,105,711
—
—
—
—
236,399
32,482
—
—
—
—
—
—
—
—
—
(1,055)
—
(1,055)
—
—
—
—
—
—
(13,693)
—
—
(286,651)
(286,651)
20,282
20,282
—
20,282
(286,651)
(266,369)
—
(5,311)
(424)
32,894
—
53,405
—
—
—
—
—
—
—
(5,311)
(424)
39,549
(1,055)
53,405
(531)
—
(531)
2,162
—
—
—
—
—
(287,182)
20,282
(266,900)
2,162
(5,311)
(424)
39,549
(1,055)
53,405
136,460
(465,285)
775,831
1,631
777,462
—
40,389
40,389
47,461
—
47,461
47,461
40,389
87,850
(49)
—
(49)
47,412
40,389
87,801
—
—
16,219
—
—
—
—
—
—
—
—
(173)
(173)
236,399
48,701
(13,693)
—
—
—
—
—
236,399
48,701
(13,693)
—
1,374,592
(14,748)
193,068
(417,824)
1,135,088
1,409
1,136,497
F11
F11
D4/F11
D4
B5/F12
D4
D4/F11
D4
B5/F12
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
39
NOTES TO THE FINANCIAL STATEMENTS
F
F1
F2
F3
F4
OTHER INFORMATION
Employee benefits expense
Earnings per share
Trade and other receivables
Contract assets
F5 Other assets
F6
F7
F8
F9
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
GROUP STRUCTURE
Subsidiaries
G2 Deed of cross guarantee
G3
Parent entity financial information
H
H1
H2
H3
UNRECOGNISED ITEMS
Commitments
Contingencies
Events occurring after the end of the reporting period
I
SUMMARY OF ACCOUNTING POLICIES
90
90
91
92
94
95
96
97
100
101
102
103
105
107
107
108
108
109
111
113
113
113
113
114
SIGNIFICANT MATTERS
A
A1
A2
FINANCIAL OVERVIEW
Segment information
Revenue
A3 Other income
A4
A5
A6
A7
B
B1
B2
B3
B4
B5
B6
B7
B8
C
C1
C2
Expenses
Intangible assets
Business combinations
Financial liabilities
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
C3 Other financial assets
D
D1
D2
D3
D4
E
E1
E2
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
Related party transactions
41
42
42
48
50
51
52
55
58
59
59
60
61
61
64
65
66
67
68
68
71
76
77
77
78
79
86
87
87
88
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
40
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SIGNIFICANT MATTERS
The following significant events and transactions occurred during or after the end of the reporting period:
EQUITY RAISING
On 1 February 2023, FLT announced the successful completion of its institutional placement of new fully paid ordinary shares
to raise $180,000,000 to part-fund its acquisition of United Kingdom-based luxury travel specialist Luxury Travel Holdings Ltd
(Scott Dunn). Approximately 12,300,000 new shares were issued under the placement at a fixed price of $A14.60 per new
share, which represented a 7.8% discount to the last traded price of A$15.83 on 30 January 2023.
After the institutional placement, on 9 February 2023, FLT opened its non-underwritten share purchase plan (SPP) to fund
the remainder of its acquisition of Scott Dunn. The SPP offer provided eligible shareholders the opportunity to buy shares at
an issue price of $A14.60, in line with the offer made to institutional investors. On 13 March 2023, FLT announced the
successful completion of the SPP and approximately 4,100,000 new fully paid ordinary shares were issued to SPP
participants.
Refer to note D4.
ACQUISITIONS
Scott Dunn acquisition
On 7 February 2023, FLT acquired 100% of Luxury Travel Holdings Ltd and its subsidiaries (Scott Dunn) for $203,916,000. The
business is now accounted for as a subsidiary of FLT.
Scott Dunn is a leading UK-based luxury travel brand specialising in tailor-made luxury holidays. Scott Dunn provides an
entry point into the UK and US luxury travel market through a well-regarded, scalable brand which will be supported by
FLT’s global platform.
The goodwill represents the synergies expected to be achieved through integrating Scott Dunn, entry into the UK and US
luxury travel market and employee talent.
For further details, refer to note A6.
MATTERS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
On 30 August 2023, FLT’s directors declared a final dividend for the year ended 30 June 2023. Refer to note B7 for details.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
41
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
Financial liabilities
A1
SEGMENT INFORMATION
IDENTIFICATION AND DESCRIPTION OF SEGMENTS
(A)
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
• Chief executive officer – Corporate; and
• Chief executive officer – Supply
The executive team, together with the below regional Managing Directors (MDs) form the global Taskforce:
• MD – The Americas; and
• MD – EMEA
While the MD’s play a key role in 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.
Supply is not considered a reportable segment and the reportable segments are consistent to the prior year - Leisure,
Corporate and Other. However, the new senior leadership roles have led to a realignment of brands across each of the
segments with the major change being the global experiences business, incorporating touring, ground-handling and hotels,
which has moved from Leisure to Other segment. Comparatives have been restated.
LEISURE
The Leisure segment combines the retail store front and online brands for retail customers, luxury travel brands Travel
Associates and Scott Dunn, Independent agents and complementary offerings.
CORPORATE
The Corporate segment includes the FCM brand, Corporate Traveller and other Corporate customer brands.
OTHER
Other segment includes Brisbane-based and other head office support businesses, including Supply, that support the global
network (including global head office teams), and the share of profit or loss relating to the investment in Pedal Group. Also
included is Travel Management Services which incorporates touring, ground-handling and hotels.
The group consolidation adjustments are also included in this segment.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
42
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
MAJOR CUSTOMERS
(B)
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.
UNDERSTANDING THE SEGMENT RESULT
(C)
Segment information is presented below in the manner in which it is presented to the CODMs and upon which they make
their decisions.
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 2022. Refer to note A2 for details of revenue policies.
Sales between segments are carried out at arm's length and are eliminated on consolidation.
ALTERNATIVE PROFIT MEASURES
In addition to using profit as a measure of the group and its segments’ financial performance, FLT uses EBITDA, underlying
EBITDA and underlying PBT as this information is presented and used by the CODMs. These unaudited measures are not
defined under IFRS and are, therefore, termed “non-IFRS” measures.
Within this note, Earnings before net interest, tax, depreciation and amortisation before royalty and intercompany service
fee (EBITDA), Underlying earnings before net interest, tax, depreciation and amortisation before royalty and intercompany
service fee (Underlying EBITDA), Underlying PBT¹, royalty and intercompany service fee (Underlying PBT) and Underlying
profit / (loss) after tax, royalty and intercompany service fee (Underlying 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.
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 unaudited, 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
43
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
2023 and 30 June 2022 is shown in the table below and on page 45.
30 JUNE 2023
Segment information
TTV¹
LEISURE³
CORPORATE
$'000
$'000
OTHER
$'000
TOTAL
$'000
10,005,615
11,005,893
927,086
21,938,594
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour, hotel & cruise operations
Revenue from other businesses
1,052,707
54,519
2,817
10,753
961,136
12,705
43
4,567
26,602
6,299
132,903
15,731
2,040,445
73,523
135,763
31,051
Total revenue from contracts with customers
1,120,796
978,451
181,535
2,280,782
EBITDA¹
Depreciation and amortisation
Interest income
Interest expense
Net profit / (loss) before tax, royalty and intercompany
service fee
Royalty
Intercompany service fee
Net profit / (loss) before tax
Reconciliation of EBITDA to Underlying EBITDA
EBITDA¹
Acquisition transaction costs - Scott Dunn²
COVID-19 ROUA impairment / (reversal)
Employee retention plans
156,917
176,758
(67,523)
(73,228)
19,241
(16,303)
86,627
—
—
(41,719)
15,826
(20,762)
(27,146)
(3,872)
(47,730)
130,103
(146,271)
—
—
—
—
266,152
(142,093)
31,195
(84,795)
70,459
—
—
86,627
130,103
(146,271)
70,459
156,917
176,758
(67,523)
266,152
—
1,369
13,324
—
(261)
13,756
6,065
(1,437)
2,677
6,065
(329)
29,757
Underlying EBITDA¹
171,610
190,253
(60,218)
301,645
Underlying PBT¹
101,320
143,598
(138,966)
105,952
1 TTV, EBITDA, underlying EBITDA and underlying PBT are unaudited, non-IFRS measures.
2 Acquisition transaction costs are considered head office support expenses and are therefore in the Other segment.
3 The results of the Scott Dunn acquisition made during the period are shown in the Leisure segment.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
44
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
RESTATED¹
30 JUNE 2022
Segment information
TTV²
LEISURE4
CORPORATE4
$'000
$'000
OTHER4
$'000
TOTAL
$'000
3,821,968
5,615,487
902,952
10,340,407
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour, hotel & cruise operations
Revenue from other businesses
392,844
14,620
—
5,223
513,414
5,818
—
7,817
21,760
4,451
32,159
9,379
928,018
24,889
32,159
22,419
Total revenue from contracts with customers
412,687
527,049
67,749
1,007,485
EBITDA²
Depreciation and amortisation
Interest income
Interest expense
(168,529)
(79,750)
5,922
(8,283)
3,244
(32,876)
914
(5,061)
Net (loss) before tax, royalty and intercompany service
fee
(250,640)
(33,779)
(34,746)
(13,303)
(835)
(44,483)
(93,367)
(200,031)
(125,929)
6,001
(57,827)
(377,786)
Royalty
Net (loss) before tax
—
(250,640)
(4,288)
(38,067)
4,288
—
(89,079)
(377,786)
Reconciliation of EBITDA to Underlying EBITDA
EBITDA²
COVID-19 one off costs and other non-cash items³
Fair value gain on TP Connects
Employee retention plans
Underlying EBITDA²
(168,529)
6,802
—
1,500
(160,227)
3,244
(1,279)
—
4,427
6,392
(34,746)
(200,031)
(6,291)
(4,245)
15,993
(768)
(4,245)
21,920
(29,289)
(183,124)
Underlying PBT¹
(242,338)
(30,631)
(87,910)
(360,879)
1 Restated due to new senior leadership roles which led to a realignment of brands across each of the segments with the major change being the global experiences
business, incorporating touring, ground-handling and hotels, which has moved from Leisure to Other segment.
2 TTV, EBITDA, underlying EBITDA and underlying PBT are unaudited, non-IFRS measures.
3 Relates to one-off non-cash items, including gain on disposal of right-of-use assets and systems decommissioning.
4 The results of the acquisitions made during the prior period are shown in the following segments: Compl.ai Inc in the Corporate pillar, TP Connects in Other pillar and
Grasshopper in the Leisure pillar.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
45
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
ADDITIONAL INFORMATION PRESENTED BY GEOGRAPHIC AREA
(E)
In addition to the segment information provided above, the below table presents geographic revenue disclosures and also
PBT information which has been included to aid user understanding:
30 JUNE 2023
Segment information
TTV¹
AUSTRALIA
& NZ AMERICAS³
$'000
$'000
EMEA³
$'000
ASIA³
$'000
OTHER
SEGMENT
$'000
TOTAL
$'000
11,482,128 4,777,287 3,811,044 1,621,511
246,624 21,938,594
Agency revenue from the provision of travel
1,079,965
467,501
398,272
84,137
10,570 2,040,445
Principal revenue from the provision of travel
55,658
8,806
3,230
1,823
4,006
73,523
Revenue from tour, hotel & cruise operations
2,817
—
—
43
132,903
135,763
Revenue from other businesses
14,296
4,665
2,254
2,106
7,730
31,051
Total revenue from contracts with customers
1,152,736
480,972
403,756
88,109
155,209 2,280,782
EBITDA¹
216,382
44,190
74,876
2,895
(72,191)
266,152
Depreciation and amortisation
(79,872)
(21,554)
(21,948)
(4,647)
(14,072)
(142,093)
Interest income
Interest expense
Net profit / (loss) before tax, royalty and
intercompany service fee
Royalty
Intercompany service fee
Net profit / (loss) before tax
7,535
16,846
20,858
1,218
(15,262)
31,195
(11,133)
(20,867)
(8,819)
(5,769)
(38,207)
(84,795)
132,912
18,615
64,967
(6,303)
(139,732)
70,459
6,426
2,948
62
995
(6,488)
(3,943)
—
—
—
—
—
—
142,286
19,672
54,536
(6,303)
(139,732)
70,459
Reconciliation of EBITDA to Underlying EBITDA
EBITDA¹
Acquisition transaction costs - Scott Dunn²
COVID-19 ROUA impairment / (reversal)
216,382
44,190
74,876
2,895
(72,191)
266,152
—
(861)
—
367
—
178
—
—
6,065
(13)
6,065
(329)
Employee retention plans
10,507
4,947
6,580
2,327
5,396
29,757
Underlying EBITDA¹
226,028
49,504
81,634
5,222
(60,743)
301,645
Underlying PBT¹
142,558
23,929
71,725
(3,976)
(128,284)
105,952
1 TTV, EBITDA, underlying EBITDA and underlying PBT are unaudited, non-IFRS measures.
2 Acquisition transaction costs are considered head office support expenses and are therefore in the Other segment.
3 The results of the Scott Dunn acquisition made during the period are shown in the Americas, EMEA and Asia segments.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
46
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A1
SEGMENT INFORMATION (CONTINUED)
RESTATED¹
30 JUNE 2022
Segment information
TTV²
AUSTRALIA
& NZ AMERICAS
$'000
$'000
EMEA
$'000
ASIA
$'000
OTHER
SEGMENT4
$'000
TOTAL
$'000
4,499,561 2,642,968 2,074,965 1,030,814
92,099 10,340,407
Agency revenue from the provision of travel
385,532
268,298
232,246
31,315
Principal revenue from the provision of travel
14,377
6,813
1,441
Revenue from tour, hotel & cruise operations
—
—
—
84
—
Revenue from other businesses
9,939
3,656
1,138
4,086
10,627
2,174
32,159
3,600
928,018
24,889
32,159
22,419
Total revenue from contracts with customers
409,848
278,767
234,825
35,485
48,560 1,007,485
EBITDA²
Depreciation and amortisation
Interest income
Interest expense
Net profit / (loss) before tax, royalty and
intercompany service fee
Royalty
Net profit / (loss) before tax
(144,138)
(22,013)
28,558
(18,586)
(67,542)
(18,075)
(20,026)
(3,205)
3,918
6,807
(7,209)
(12,117)
9,803
(2,874)
394
(1,431)
(43,852)
(17,081)
(14,921)
(34,196)
(200,031)
(125,929)
6,001
(57,827)
(214,971)
(45,398)
15,461
(22,828)
—
—
(4,288)
—
(110,050)
4,288
(377,786)
—
(214,971)
(45,398)
11,173
(22,828)
(105,762)
(377,786)
Reconciliation of EBITDA to Underlying EBITDA
EBITDA²
(144,138)
(22,013)
28,558
(18,586)
COVID-19 one off costs and other non-cash items³
(5,594)
5,246
—
—
(646)
—
25
—
7,897
3,173
4,362
1,791
(43,852)
201
(4,245)
4,697
(200,031)
(768)
(4,245)
21,920
(141,835)
(13,594)
32,274
(16,770)
(43,199)
(183,124)
Fair value gain on TP Connects
Employee retention plans
Underlying EBITDA²
Underlying PBT²
(212,668)
(36,979)
19,177
(21,012)
(109,397)
(360,879)
1 Restated due to new senior leadership roles which led to a realignment of brands across each of the segments with the major change to align wholesale in Australia to
Other Segment.
2 TTV, EBITDA, underlying EBITDA and underlying PBT are unaudited, non-IFRS measures.
3 Relates to one-off non-cash items, including gain on disposal of right-of-use assets and systems decommissioning.
4 The results of the acquisitions made during the prior period are shown in the following segments: Compl.ai Inc, TP Connects and Grasshopper in the Other Segment.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
47
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A2
REVENUE
Agency revenue from the provision of travel
Principal revenue from the provision of travel
Revenue from tour, hotel & cruise operations
Revenue from other businesses
Total revenue from contracts with customers
2023
$'000
2,040,445
73,523
135,763
31,051
2022
$'000
928,018
24,889
32,159
22,419
2,280,782
1,007,485
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 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.
• Volume revenue has been booked to the extent of flown / availed revenue at guaranteed rates or expected incentive
rates.
Except as noted above, the travel supplier, as principal, is responsible for refunds to the front end customer, not FLT
as agent.
FLT have applied practical expedient AASB 15(121) where revenue to be recognised in future periods, for unsatisfied or
partially satisfied performance obligations as at reporting date, is not disclosed as the performance obligation will be
completed within 12 months or less.
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
48
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A2
REVENUE (CONTINUED)
PRINCIPAL REVENUE FROM THE PROVISION OF TRAVEL
Revenue is generated when FLT, acting as principal, provides travel related products and services to customers. This
includes products and services provided by our currency exchange business Travel Money, advertising revenue, hotel
management revenue and conference revenue. 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 and it is recognised only
as performance obligations have been satisfied.
REVENUE FROM TOUR, HOTEL AND CRUISE OPERATIONS
FLT has a number of touring and ground-handling operations provided through the brands Top Deck, Back-Roads, Discova
Asia and Discova Americas. In addition FLT provides hotel operations through Away Camakila.
Revenue is generated from tour, hotel and cruise operations when FLT, acting as principal, provides tours, ground-handling
services and hotel accommodation, cruise cabins, 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, hotel
service or cruise cabin 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
49
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A3 OTHER INCOME
FAIR VALUE GAIN ON CHANGE IN CONTROL
Fair value gain on TP Connects
Total
OTHER INCOME
Interest
Rent and sub-lease rentals
Loss on financial liabilities
Investment distribution income
Gain on disposal of right-of-use asset - Southpoint head office lease
Net foreign exchange gains
Government subsidies
Total
NOTES
A6
F7
A7
2023
$'000
—
—
31,195
9,157
(412)
—
—
2,212
1,237
43,389
2022
$'000
4,245
4,245
6,001
7,210
(899)
1,324
5,277
4,110
34,363
57,386
GAIN ON DISPOSAL OF RIGHT-OF-USE ASSET - SOUTHPOINT HEAD OFFICE LEASE
In the prior year, FLT reached an agreement with the lessor for their Brisbane head office (Southpoint) to exit a number of
floors before the original lease termination date. This resulted in a reduction in the right-of-use asset and lease liability, with
the difference of $5,277,000 taken to the statement of profit or loss. The gain is presented within the prior year Australia &
New Zealand geographic area and the Other pillar segment.
GOVERNMENT SUBSIDIES
As at 30 June 2023, the majority of COVID-19 related subsidies have ended, however FLT continues to receive other types of
government subsidies related to education & training. Depending on the conditions of the grant, outstanding amounts are
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 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
50
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
Bad debts expense / (reversal)
Other expenses
Total other expenses
NOTES
F7
F10
F7
F3 / F4
2023
$'000
2,106
25,622
49,377
7,295
395
2022
$'000
123
8,875
39,673
8,917
239
84,795
57,827
40,854
5,192
75,349
78,563
203,088
4,154
78,473
34,641
4,264
50,326
29,912
148,670
(1,459)
50,394
485,673
316,748
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
51
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 and acquisitions.
Opening Balance at 1 July 2021
Cost
Accumulated amortisation (including accumulated
impairment losses)
BRAND NAMES,
LICENCES AND
CUSTOMER
RELATIONSHIPS¹
SOFTWARE²
$'000
$'000
GOODWILL
$'000
TOTAL
$'000
711,353
114,948
230,459
1,056,760
(162,274)
(99,171)
(107,803)
(369,248)
Net book amount at 1 July 2021
549,079
15,777
122,656
687,512
Additions
Acquisitions
Disposals & retirements³
Amortisation
Exchange differences
Net book amount at 30 June 2022
Opening Balance at 1 July 2022
Cost
Accumulated amortisation (including accumulated
impairment losses)
—
46,086
—
—
13,102
608,267
—
84
—
(4,304)
(198)
29,221
29,260
(377)
(23,702)
5,609
29,221
75,430
(377)
(28,006)
18,513
11,359
162,667
782,293
776,509
117,476
288,557
1,182,542
(168,242)
(106,117)
(125,890)
(400,249)
Net book amount at 1 July 2022
608,267
11,359
162,667
782,293
Additions
Acquisitions
Disposals & retirements³
Amortisation
Exchange differences
Net book amount at 30 June 2023
—
171,882
—
—
43,370
823,519
—
19,125
—
(6,373)
2,080
70,652
2,024
(221)
(32,516)
2,173
70,652
193,031
(221)
(38,889)
47,623
26,191
204,779
1,054,489
Cost
906,894
141,362
368,880
1,417,136
Accumulated amortisation (including accumulated
impairment losses)
(83,375)
(115,171)
(164,101)
(362,647)
Net book amount at 30 June 2023
823,519
26,191
204,779
1,054,489
1 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.
2 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.
3 Balances shown net of accumulated amortisation.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
52
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A5
(A)
INTANGIBLE ASSETS (CONTINUED)
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 or groups of CGUs are presented at the net book amount below:
Australia Leisure
Global Corporate
Discova¹
Student Universe
TP Connects²
Scott Dunn
Other³
Total
GOODWILL
INDEFINITE LIFE
BRAND NAMES & LICENCES
2023
$'000
199,757
337,239
33,840
19,075
—
185,135
48,473
2022
$'000
178,094
310,796
29,266
18,843
46,157
—
25,111
823,519
608,267
2023
$'000
—
—
—
2,111
—
5,594
198
7,903
2022
$'000
—
—
—
2,030
—
—
202
2,232
1 In the prior year, Discova Asia and Discova America were combined to more accurately reflect the way management is now monitoring and reporting activities.
2 TP Connects goodwill has been allocated during the current year to the CGUs which benefit from the acquisition.
3 Other includes CGUs which are not individually significant.
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
There has been no impairment of goodwill or indefinite life brand names & licences in the prior year.
(B)
KEY ASSUMPTIONS USED FOR VALUE-IN-USE / FAIR VALUE LESS COST TO SELL CALCULATIONS
The discount rates shown were applied to CGUs within each of the geographic areas. For the purposes of impairment
testing, value in use (Student Universe CGU) and fair value methodologies (all other CGUs) were applied and a long-term
growth rate of 2.0% - 2.5% (2022: 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 expected
long-term inflation.
GOODWILL & BRAND NAMES
CGU
Australia Leisure
Global Corporate
Discova
Student Universe
Other countries (excluding those listed above)
PRE-TAX DISCOUNT RATE
2023
%
16.2
14.6
17.4
18.2
16.2
2022
%
14.3
13.7
19.5
14.2
14.3
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
53
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A5
INTANGIBLE ASSETS (CONTINUED)
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
The Student Universe CGU is sensitive to changes in key assumptions. Increasing the pre-tax discount rate by 2% in
combination with reducing the long-term growth rate by 1% would result in the carrying value of the CGU to equal the
recoverable amount.
There are no other CGUs identified as being sensitive to changes in key assumptions.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
54
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A6
(A)
BUSINESS COMBINATIONS
CURRENT YEAR ACQUISITIONS
SUMMARY OF ACQUISITIONS
Scott Dunn
On 7 February 2023, FLT acquired 100% of Luxury Travel Holdings Ltd and its subsidiaries (Scott Dunn) for $203,916,000. The
business is now accounted for as a subsidiary of FLT.
Scott Dunn is a leading UK-based luxury travel brand specialising in tailor-made luxury holidays. Scott Dunn provides an
entry point into the UK and US luxury travel market through a well-regarded, scalable brand which will be supported by
FLT’s global platform.
The goodwill represents the synergies expected to be achieved through integrating Scott Dunn, entry into the UK and US
luxury travel market and employee talent.
The purchase price accounting for Scott Dunn is provisional at 30 June 2023.
Details of the purchase consideration, the net assets acquired and goodwill are set out in the table below:
Purchase consideration
Cash consideration
Total purchase consideration
Assets and liabilities acquired at fair value
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Right of use asset
Intangible assets
Trade and other payables
Deferred tax liability
Lease liability
Other financial liabilities
Net identifiable assets and liabilities acquired
Goodwill arising on acquisition1
Purchase consideration - cash outflow
Cash consideration
Less: balances acquired
Total cash outflow - investing activities
Revenue and profit contribution from the date of acquisition to year-end
Revenue
Profit before tax
1 Goodwill arising on Scott Dunn acquisition is provisional pending the final valuation of the acquired intangible assets.
NOTE
F6
A5
Scott Dunn
$'000
203,916
203,916
32,326
52,624
4,092
250
1,366
21,149
(75,311)
(1,790)
(1,504)
(1,168)
32,034
171,882
203,916
(32,326)
171,590
29,897
9,893
Had the acquisition occurred on 1 July 2022, revenue contribution would have been $64,197,000 and profit contribution
would have been $24,831,000 for the year.
Acquisition-related costs of $6,065,000 have been recognised in the statement of profit or loss and other comprehensive
income (other expenses) and in operating cash flows in the statement of cash flows (payments to suppliers and employees).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
55
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A6
BUSINESS COMBINATIONS (CONTINUED)
(B)
PRIOR YEAR ACQUISITIONS
SUMMARY OF ACQUISITIONS
During the prior year FLT announced the acquisitions as set out below.
Compl.ai Inc
On 22 December 2021, FLT acquired 100% of Compl.ai Inc., a Texas based business that has developed an industry first
browser extension, Shep, that will be integrated into FLT’s flagship FCM travel management business.
The acquisition price was USD $2,000,000 paid in five quarterly instalments of USD $400,000. The remaining instalments of
the acquisition price of USD $800,000 (AUD $1,126,000) were paid during the year and no amounts remain outstanding at
30 June 2023.
The accounting for the business combination was finalised prior to 30 June 2022 with no significant changes.
Details of the purchase consideration, net assets acquired and goodwill are set out in the table on the following page.
Travel Technology FZ LLC (TP Connects)
On 13 April 2022, FLT acquired an additional 47.5% of Travel Technology FZ LLC and its subsidiaries (TP Connects) for
$39,260,000, bringing FLT’s shareholding to 70%. FLT gained control of TP Connects and the business is now accounted for
as a subsidiary of FLT. As at 30 June 2021, TP Connects was accounted for as an investment in associate.
TP Connects is a Dubai-based, technology provider and travel aggregator, helping airlines and travel agencies to retail
travel through cloud-based software designed to streamline and personalise the distribution of travel products.
FLT have acquired significant software through the next generation New Distribution Capability (NDC), Global Distribution
Systems (GDS) and One Order based travel technology platform and software development resources.
The goodwill represents the synergies expected to be achieved through integrating TP Connects and the technical talent of
the employees.
Had the acquisition occurred on 1 July 2021, revenue contribution would have been $1,725,000 and loss contribution would
have been $5,040,000 for the prior year.
The business combination accounting for TP Connects was finalised prior to 30 June 2023 with no significant changes.
Details of the purchase consideration, net assets acquired and goodwill are set out in the table on the following page.
Grasshopper Adventures Ltd (Grasshopper)
On 7 February 2022, FLT acquired 100% of the assets and liabilities of Grasshopper Adventures, a boutique Asia-based
operator specialising in active travel.
The acquisition price was $623,000 (US$450,000) with $407,000 (US$300,000) paid in cash. $216,000 (US$150,000) is payable in
December 2023 subject to terms, this is currently recorded as contingent consideration. The purchase price accounting was
final at 30 June 2022.
Details of the purchase consideration, net assets acquired and goodwill are set out in the table on the following page.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
56
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A6
BUSINESS COMBINATIONS (CONTINUED)
(B)
PRIOR YEAR ACQUISITIONS (CONTINUED)
Compl.ai Inc
TP Connects
Grasshopper
NOTE
$'000
$'000
$'000
Purchase consideration
Cash consideration
Deferred consideration
Contingent consideration
Total purchase consideration
Assets and liabilities acquired at fair
Cash and cash equivalents
Trade and other receivables
Other assets
Property, plant and equipment
Intangible assets
Trade and other payables
Other financial liabilities
Financial liabilities
Contract liabilities
Net identifiable assets and liabilities
acquired
A7
F6
A5
1,654
1,102
—
2,756
63
81
52
2
2,687
(28)
—
—
(101)
39,260
—
—
39,260
1,078
285
180
83
26,573
(2,410)
(1,301)
(8,508)
(31)
407
—
216
623
—
—
—
557
84
(906)
—
—
—
Total
$'000
41,321
1,102
216
42,639
1,141
366
232
642
29,344
(3,344)
(1,301)
(8,508)
(132)
2,756
15,949
(265)
18,440
Equity accounted value of previous interest
Fair value gain on change in control¹
A3
Fair value of previous interest held
Non-controlling interest on change in control²
Goodwill arising on acquisition³
Purchase consideration - cash outflow
Cash consideration
Less: balances acquired
Total cash outflow - investing activities
—
—
—
—
—
1,654
(63)
1,591
Revenue and profit contribution from the date of acquisition to year-end
Revenue
23
Profit / (loss) before tax
(789)
(11,801)
(5,227)
(17,028)
(4,859)
—
—
—
—
(11,801)
(5,227)
(17,028)
(4,859)
45,198
888
46,086
39,260
(1,078)
38,182
494
(1,582)
407
—
407
168
(52)
41,321
(1,141)
40,180
685
(2,423)
1 Fair value gain on change in control for TP Connects of $4,245,000 in the statement of profit or loss is made up of the above $5,227,000 less $982,000 in reserves reversal.
Refer to note F11.
2 The non-controlling interest on change in control is measured at a proportionate share of the recognised amounts of TP Connects net identifiable assets and liabilities.
This has been de-recognised against the acquisition reserve. Refer to notes A7 and F11.
3 Goodwill arising on TP Connects acquisition is final and has been allocated during the current year to the CGUs which benefit from the acquisition.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
57
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
A7
FINANCIAL LIABILITIES
CURRENT
Contingent consideration
Total current financial liabilities
NON-CURRENT
Contingent consideration
Put option financial liability
Total non-current financial liabilities
2023
$'000
3,908
3,908
—
10,573
10,573
2022
$'000
3,683
3,683
216
10,170
10,386
Contingent consideration and the put option financial liability are recognised in relation to the acquisitions listed below. FLT
has determined that contingent consideration is classified as Level 3 (2022: 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 the contingent consideration are recorded through other income in the statement of profit
or loss.
AVMIN PTY LIMITED (AVMIN)
The financial liability related to the put option for AVMIN of $3,683,000 (2022: $3,683,000) 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 2021 and for the year ended 30 June 2022. This put option does not have
an expiry date.
TRAVEL TECHNOLOGY FZ LLC (TP CONNECTS)
Concurrent with the acquisition, FLT through its subsidiary Flight Centre Travel Group (UAE Holdings) Limited entered into a
call option over the non-controlling shareholders’ remaining 30% interest in TP Connects and the non-controlling
shareholders entered into a corresponding put option. The call option can be exercised after 1 July 2027 and the put option
can only be exercised by the non-controlling shareholders of TP Connects if the call option is not exercised by FLT.
The financial liability related to the expected put option exercise price has been recorded as a non-current financial liability
of $10,573,000 (2022: $10,170,000) with a corresponding amount recognised in the acquisition reserve (note F11). The
carrying value of the liability has been estimated by discounting the value of future expected cash flows for the settlement of
the put option at a discount rate of 4.2% (2022: 3.0%). The expected cash flows are based on the forecast EBITDA for FY24,
FY26 and FY27. Any change in value, together with the net present value interest unwind on the put option liability, is
recorded through the statement of profit or loss.
GRASSHOPPER ADVENTURES LTD (GRASSHOPPER)
The financial liability related to the Grasshopper acquisition has been recorded as part of current contingent consideration.
The potential undiscounted amount payable per the asset purchase agreement is $225,000 (2022: $216,000).
Reconciliation of financial liabilities for the period is set out below:
Opening balance at 1 July 2022
Other unrealised (gains) / losses including net foreign exchange movements
Closing balance at 30 June 2023
NOTES
A3
FINANCIAL
LIABILITIES
$'000
14,069
412
14,481
SIGNIFICANT ACCOUNTING ESTIMATE
The valuations used to determine the carrying amount of put option financial liabilities are based on forward looking key
assumptions that are, by nature, uncertain. This requires an estimation of future earnings which includes assumptions in
relation to revenue growth and the cost of business operations.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
58
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
CASH MANAGEMENT
B
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 caused a prolonged downturn of demand due to the unprecedented restrictions that governments globally
imposed on travel to slow the spread of COVID-19. The travel industry supply constraints have begun to normalise during
FY23, however a full industry recovery is expected in late FY24.
B1
B2
B3
B4
B5
B6
B7
B8
Cash and cash equivalents
Financial asset investments
Cash and financial asset investments - financial risk management
Borrowings
Convertible notes
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
2023
$'000
926,414
402,024
2022
$'000
866,153
360,751
1,328,438
1,226,904
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 where contractually
required. Restricted cash includes monies paid to the Group by end consumers for payment to local International Air Transport Association (IATA) for ticketed travel
arrangements, and refund monies received from IATA awaiting payment to end consumers.
RECONCILIATION TO STATEMENT OF CASH FLOWS
Cash and cash equivalents
Bank overdraft
Balance per Statement of Cash Flows
2023
$'000
2022
$'000
1,328,438
1,226,904
(49,502)
(16,647)
1,278,936
1,210,257
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
59
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B1
CASH AND CASH EQUIVALENTS (CONTINUED)
RECONCILIATION OF PROFIT / (LOSS) AFTER TAX TO NET CASH INFLOW / (OUTFLOW) FROM
OPERATING ACTIVITIES
Profit / (loss) after income tax for the year
Depreciation and amortisation
Net (gain) / loss on disposal of non-current assets
Net gain on sale of financial assets at fair value
Share of loss / (profits) of joint ventures & associates
Impairment reversals
Dividends paid to non-controlling shareholders in subsidiaries
Fair value gain on change in control
Fair value adjustment to contingent consideration
Non-cash employee benefits expense - share based payments
Non-cash employee benefits expense - other
Amortisation of convertible note
Lease surrender payments
Net exchange differences
Increase in trade and other receivables, contracts assets and other assets
Increase in trade creditors and other payables
Increase / (decrease) in net income taxes payable
Increase / (decrease) in other provisions
2023
$'000
2022
$'000
47,412
(287,182)
142,092
(306)
(138)
4,084
(328)
1,009
—
—
41,100
772
24,366
661
(7,968)
(349,768)
213,103
29,734
10,345
125,929
8,138
(47)
(11,679)
(8,953)
—
(4,245)
899
33,206
—
25,070
2,480
5,679
(464,102)
523,140
(47,719)
(1,988)
Net cash inflow / (outflow) from operating activities
156,170
(101,374)
B2
FINANCIAL ASSET INVESTMENTS
CURRENT
Debt securities - Fair value through other comprehensive income (FVOCI)
Total current financial asset investments
NON-CURRENT
Equity investments - Fair value through profit or loss (FVTPL)
Debt securities - Fair value through other comprehensive income (FVOCI)
Total non-current financial asset investments
2023
$'000
20,227
20,227
4,589
10,067
14,656
2022
$'000
—
—
4,509
54,468
58,977
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 (2022:
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 (2022: Level 3) under the AASB 13 Fair Value Measurement hierarchy, based on the valuation
technique as described above.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
60
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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.
AT 30 JUNE 2023
Cash and cash equivalents
Equity investments - FVTPL
Debt securities - FVOCI
AT 30 JUNE 2022
Cash and cash equivalents
Equity investments - FVTPL
Debt securities - FVOCI
AA AND
ABOVE
$'000
—
—
—
—
—
—
EQUIVALENT S&P RATING
AA-TO A-
BBB+ TO BBB-
NON
INVESTMENT
GRADE /
UNRATED
UNRATED - FX
BUSINESS
CURRENCY
HOLDINGS
$'000
1,157,068
—
30,294
1,086,241
—
50,451
$'000
53,264
—
—
76,573
—
4,017
$'000
76,992
4,589
—
37,871
4,509
—
TOTAL
$'000
$'000
41,114
1,328,438
—
—
4,589
30,294
26,219
1,226,904
—
—
4,509
54,468
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 policy 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.
The Group has no exposures to interbank offered rates (IBORs) on its non-derivative financial instruments that have been
replaced or reformed as part of the market-wide initiatives.
Refer to note C1 for sensitivity of interest rate risk and foreign currency risk.
B4
BORROWINGS
CURRENT
Bank loans (including bank overdraft)
Net unsecured notes principal¹
Total current borrowings
NON-CURRENT
Bank loans
Total non-current borrowings
NOTES
D2
2023
$'000
56,875
602
57,477
2022
$'000
19,779
459
20,238
352,893
352,893
354,000
354,000
1 Refer to note D2 for further information on the net unsecured notes that form part of the Business Ownership Scheme (BOS).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B4
BORROWINGS (CONTINUED)
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
BORROWINGS
Opening Balance at 1 July
Cashflow - Proceeds from borrowings¹
Cashflow - Repayment of borrowings¹
Proceeds from bank overdrafts
Repayment of bank overdrafts
Foreign exchange movement
Closing Balance at 30 June
2023
$'000
374,238
254,420
(253,286)
34,259
(1,404)
2,143
2022
$'000
567,851
—
(207,426)
16,647
—
(2,834)
410,370
374,238
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
On 18 April 2023, FLT refinanced the $350,000,000 secured syndicated debt facility with its existing bank lenders. This, inter
alia, extended the maturity date to 22 February 2025, converted the term debt facility into a revolving credit facility and
reduced the interest margin. 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.
At 30 June 2023 FLT complied with the operating leverage ratio, fixed charges ratio and shareholder funds ratio covenants
for the six month period from 1 January 2023 to 30 June 2023. This satisfied the requirements under the secured syndicated
debt facility meaning that from 30 June 2023 FLT is no longer required to maintain the cash to borrowings ratio of greater
than or equal to 1:1.
FLT’s next covenant compliance obligation is 31 December 2023, where FLT will be required to comply with the operating
leverage ratio, fixed charges ratio and shareholder funds ratio covenants for the twelve month period from 1 January 2023 to
31 December 2023, and thereafter every 30 June and 31 December.
MARKET RISK
A fundamental reform of major interest rate benchmarks was undertaken globally, including the replacement of some
interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’). The Group has no
exposures to IBORs on its borrowings that have been replaced or reformed as part of these market-wide initiatives.
CASH FLOW AND FAIR VALUE INTEREST RATE RISK
The group holds borrowings which are issued at both effective 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 secured syndicated debt facility) and are a mix of fixed and floating interest rates.
Non-current loan facilities have maturities between 1.5 - 3 years (2022: 1.5 - 4 years) and are at a mix of fixed and
floating rates.
The current interest rates on loan facilities range from 0.55% - 8.00% (2022: 0.55% - 4.20%).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
62
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B4
BORROWINGS (CONTINUED)
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.
BANK LOANS & LEASING
FACILITIES
CREDIT CARDS
BANK GUARANTEES
& LETTERS OF CREDIT
Unused
Used
2023
$'000
17,493
410,729
2022
$'000
19,541
374,798
2023
$'000
89,686
73,264
Total facilities
428,222
394,339
162,950
2022
$'000
35,589
41,982
77,571
2023
$'000
42,086
44,577
86,663
2022
$'000
51,205
35,275
86,480
Bank guarantees and letters of credit are provided as security on various facilities with vendors and in accordance with local
travel agency licensing and 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, $44,950,000 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B5
CONVERTIBLE NOTES
The Company issued convertible notes with an aggregate amount of $400m and strike price of $20.04, on 17 November
2020 and convertible notes with an aggregate amount of $400m and strike price of $27.30, on 1 November 2021 (total
aggregate amount of $800m). There has been no movement in the number of these convertible notes since issue date.
Note holders have an option to redeem the first bond issuance at the end of 4 years (November 2024) and the second bond
issuance at the end of 4.5 years (May 2026) at face value plus any accrued interest. Any convertible notes not converted will
be redeemed on 17 November 2027 and 1 November 2028 respectively, at the principal amount together with accrued but
unpaid interest thereon.
The 17 November 2020 bonds carry an interest 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 a four year redemption option), which is
payable semi-annually in arrears in May and November.
The 1 November 2021 bonds carry interest at a rate of 1.625% per annum (effective interest rate of 7.12% per annum based
on a four-and-a-half-year amortisation period on estimation of cashflow timing in line with four-and-a-half year redemption
option), which is payable semi-annually in arrears in May and November.
Interest expense for the period $49,377,000, comprised of $32,877,000 amortisation and $16,500,000 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.
The convertible notes issued during the prior periods have been split into the liability and equity components as follows:
Opening Balance at 1 July
Liability component of new issuance
Amortisation of borrowings at effective interest rate
Changes in fair value hedge during the period
Closing Balance at 30 June
(a) Liability component of issuance
Nominal value of convertible notes issued
Gross equity component of convertible note issued
Transaction costs attributable to issuance
Total liability component of new issuance
NOTES
(a)
C2
2023
$'000
2022
$'000
655,985
347,239
—
32,827
128
315,892
25,070
(32,216)
688,940
655,985
—
—
—
—
400,000
(76,292)
(7,816)
315,892
No convertible note was issued during the current year.
For the note issued during the year ended 30 June 2022, transaction costs relate to the equity component of $1,359,000 and
liability component of $6,457,000. The equity component of the convertible note after tax (refer note F12) of $22,887,000
is $53,405,000.
For the note issued during the year ended 30 June 2021, transaction costs relate to the equity component of $1,074,000 and
liability component of $6,698,000. The equity component of the convertible note after tax of $16,255,000 is $37,930,000.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
64
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B5
CONVERTIBLE NOTES (CONTINUED)
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Opening Balance at 1 July
Cashflow - proceeds from issuance of convertible note, net of transaction costs
Gross equity component of convertible note
Amortisation of borrowings at effective interest rate
Changes in fair value hedge during the period
Closing Balance at 30 June
NOTES
C2
2023
$'000
655,985
—
—
32,827
128
2022
$'000
347,239
392,184
(76,292)
25,070
(32,216)
688,940
655,985
ACCOUNTING POLICY
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.
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 CASH / (DEBT)
Cash at bank and on hand (excluding restricted cash)
Financial investments - current
Financial investments - non-current
Less:
Borrowings - current
Borrowings - non-current
NOTES
B1
B2
B2
B4
B4
2023
$'000
926,414
20,227
14,656
961,297
57,477
352,893
410,370
2022
$'000
866,153
—
58,977
925,130
20,238
354,000
374,238
Net cash / (debt)¹
550,927
550,892
FLT continues to be in a net cash position (30 June 2022: net cash position).
1 Net cash / (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 ratio¹
NOTES
B4
2023
$'000
410,370
1,136,497
2022
$'000
374,238
777,462
36.1 %
48.1 %
1 Gearing ratio = Total borrowings / Total equity. The calculation excludes the convertible note and lease liabilities from total borrowings.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
65
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.
A final dividend has been declared taking into account traditional seasonal cashflows, anticipated cash outflows and one-off
profit items. The final dividend represents a $39,110,000 (2022: nil) return to shareholders, 82% (2022: nil) of FLT’s statutory
NPAT. The dividend represents 52% (2022: nil) of FLT’s underlying NPAT1.
An interim dividend was not declared on release of the FY23 interim financial statements.
There were no dividend payments to members during the current or prior year.
The final dividend is per fully paid ordinary share fully franked based on tax paid at 30%. The aggregate amount of the
proposed dividends expected to be paid on 19 October 2023 out of retained profits at 30 June 2023, but not recognised as
a liability at the end of the year are as follows:
Final dividend
Final dividend
2023
2022
AMOUNT PER
SECURITY
CENTS
AMOUNT PER
SECURITY
CENTS
18
$'000
39,110
—
$'000
—
FRANKING CREDITS
Franking credits available for subsequent financial years based on a tax rate of 30%
$'000
127,604
$'000
125,467
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
ii. Franking debits that will arise from the dividend payments recognised as a liability for the reporting period’s end; and
iii. Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting period’s end.
The dividend recommended by the directors since year-end, but not recognised as a year-end liability will reduce the
franking account by $16,761,000 (2022: $nil.)
1 Underlying NPAT is an unaudited, non-IFRS measure.
Current year underlying PBT of $105,952,000 excludes $6,065,000 of acquisition transaction costs relating to the Scott Dunn acquisition, $29,757,000 of employee retention
plan costs relating to the PCRP and GRR share rights plans, and $329,000 of one-off costs relating to right-of-use asset and impairment reversals. Underlying NPAT of
$75,728,000 excludes the related tax impact of $30,224,000.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
66
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
B8
CAPITAL EXPENDITURE
OVERVIEW
FLT continues to focus on its technological offering through acquisitions in recent years of technology companies including
TP Connects 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
2023
$'000
140
26,217
26,357
6,373
32,516
38,889
2022
$'000
152
28,381
28,533
4,304
23,702
28,006
65,246
56,539
21,379
70,652
92,031
11,150
29,221
40,371
Refer to note F7 for depreciation and amortisation relating to right of use assets under AASB16.
In addition to the depreciation and amortisation disclosed above, ‘Tour, hotel & cruise operations - Cost of sales’ in the
income statement includes $692,606 (2022: $531,000) relating to depreciation and 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 (2022: $nil).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
67
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 during its recovery phase.
The group’s activities expose it to a variety of financial risks: 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 short-term,13-week cashflow
forecasts prepared weekly at a detailed level by business and country.
At 30 June 2023, FLT complied with the operating leverage ratio, fixed charges ratio and shareholder funds ratio covenants
for the six month period from 1 January 2023 to 30 June 2023. This satisfied the requirements under the secured syndicated
debt facility meaning that from 30 June 2023 FLT is no longer required to maintain the cash to borrowings ratio of greater
than or equal to 1:1.
FLT’s next covenant compliance obligation is 31 December 2023, where FLT will be required to comply with the operating
leverage ratio, fixed charges ratio and shareholder funds ratio covenants for the twelve month period from 1 January 2023 to
31 December 2023, and thereafter every 30 June and 31 December.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
68
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C1
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
BETWEEN
1 AND 2
YEARS
BETWEEN
2 AND 5
YEARS
MORE
THAN
5 YEARS
TOTAL
CONTRACTUAL
CASH FLOWS
CARRYING
AMOUNT
(ASSETS)/
LIABILITIES
2023
Non-derivatives
$'000
$'000
Trade and other payables
1,637,299
Financial liabilities
Borrowings
Convertible note
Lease liabilities
3,908
77,242
16,500
85,486
—
—
365,081
411,500
63,228
$'000
—
11,464
1,950
406,500
97,549
$'000
$'000
$'000
—
—
—
—
38,187
1,637,299
1,637,299
15,372
444,273
834,500
284,450
14,481
410,370
688,940
259,423
Total non-derivatives
1,820,435
839,809
517,463
38,187
3,215,894
3,010,513
Derivatives
Derivatives - net settled
21,034
21,034
12,454
12,454
13,650
13,650
—
—
47,138
47,138
45,169
45,169
2022
Non-derivatives
Trade and other payables
Financial liabilities
Borrowings
Convertible notes
(including derivatives)
Lease liabilities
1,358,699
3,683
31,208
—
216
—
—
359,097
3,099
16,500
16,500
818,000
—
1,358,699
1,358,699
11,813
—
—
15,712
393,404
14,069
374,238
851,000
655,985
92,424
67,472
105,964
43,338
309,198
286,051
Total non-derivatives
1,502,514
443,285
927,063
55,151
2,928,013
2,689,042
Derivatives
Derivatives - net settled
17,356
17,356
9,646
9,646
15,674
15,674
—
—
42,676
42,676
39,976
39,976
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C1
FINANCIAL RISK MANAGEMENT (CONTINUED)
SUMMARISED SENSITIVITY ANALYSIS (CONTINUED)
2023
Financial assets
Cash and cash equivalents
Equity securities - FVTPL
Debt securities - FVOCI
Trade & other receivables
Contract assets
Other financial assets
Derivative financial instruments
Financial liabilities
Trade and other payables
Financial liabilities
Borrowings - current
Borrowings - non-current
Convertible notes
(including derivatives)
Derivative financial instruments
Total increase / (decrease)
2022
Financial assets
Cash and cash equivalents
Equity securities - FVTPL
Debt securities - FVOCI
Trade & other receivables
Contract assets
Other financial assets
Derivative financial instruments
Financial liabilities
Trade and other payables
Financial liabilities
Borrowings - current
Borrowings - non-current
Convertible note (including derivatives)
Derivative financial instruments
Total increase / (decrease)
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
-1%
PROFIT
(13,284)
—
(300)
—
—
—
—
—
—
496
3,500
4,000
—
(5,588)
+1%
PROFIT
13,284
—
300
—
—
—
—
—
—
(496)
(3,500)
(4,000)
—
5,588
-10%
PROFIT
13,360
—
—
10,266
14,328
—
(2,634)
(23,688)
(1,130)
—
—
—
(6,232)
4,270
+10%
PROFIT
(10,931)
—
—
(8,399)
(11,723)
—
2,207
19,381
925
—
—
—
7,030
(1,510)
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
CARRYING
AMOUNT
$'000
1,328,438
4,589
30,294
866,591
320,931
28,555
3,460
1,637,299
14,481
57,477
352,893
688,940
40,464
CARRYING
AMOUNT
$'000
-1%
PROFIT
+1%
PROFIT
-10%
PROFIT
1,226,904
(12,206)
12,206
21,346
4,509
54,468
697,325
139,504
28,697
1,282
1,358,699
14,069
20,238
354,000
655,985
39,976
—
—
—
—
—
—
—
—
202
3,540
4,000
—
(4,464)
—
—
—
—
—
—
—
—
(202)
(3,540)
(4,000)
—
4,464
+10%
PROFIT
(21,346)
—
—
(6,725)
(842)
—
(856)
—
—
8,219
1,029
—
968
(9,596)
7,851
(24)
—
—
—
19
—
—
—
(16,556)
5,386
13,577
(8,322)
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
70
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C1
FINANCIAL RISK MANAGEMENT (CONTINUED)
SUMMARISED SENSITIVITY ANALYSIS (CONTINUED)
2023
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
2022
Financial assets
Derivative financial instruments
Financial liabilities
Derivative financial instruments
CARRYING
AMOUNT
$'000
3,030
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
-1%
EQUITY
+1%
EQUITY
-10%
EQUITY
—
—
6,706
+10%
EQUITY
(5,487)
4,705
(1,405)
(1,405)
1,382
1,382
(5,671)
1,035
6,452
965
CARRYING
AMOUNT
$'000
1,691
INTEREST RATE RISK
FOREIGN EXCHANGE RISK
-1%
EQUITY
+1%
EQUITY
-10%
EQUITY
(2,331)
2,267
(9,513)
+10%
EQUITY
9,513
—
—
(2,331)
—
2,267
—
(9,513)
—
9,513
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.
C2 DERIVATIVE FINANCIAL INSTRUMENTS
CURRENT ASSETS
Forward foreign exchange contracts - designated in a cash flow hedge
NOTES
Forward foreign exchange contracts - FVTPL
Total current derivative financial instrument assets
NON-CURRENT ASSETS
Cross currency interest rate swaps - designated in a net investment hedge
Total non-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
2023
$'000
3,030
3,460
6,490
—
—
1,433
8,376
9,809
2022
$'000
—
1,282
1,282
1,691
1,691
—
7,760
7,760
NON-CURRENT LIABILITIES
Cross currency interest rate swaps - designated in a net investment hedge
Interest rate swaps - designated in a fair value hedge
B5
Total non-current derivative financial instrument liabilities
3,272
32,088
35,360
—
32,216
32,216
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
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 and 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, as appropriate, 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, cross currency interest rate swaps and interest rate swaps are classified as Level 2
(2022: Level 2) under the AASB 13 Fair value measurement hierarchy, based on the valuation technique described above.
MARKET RISK
The Group has no exposures to IBORs on its derivative financial instruments that have been replaced or reformed as part of
these market-wide initiatives.
CREDIT RISK
The maximum exposure to credit risk in relation to derivatives at the reporting period's end is the fair value of all forward
foreign exchange contracts, cross currency interest rate swaps and 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 unrated - AA-.
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 fair value hedges when hedging fair value of recognised assets or liabilities or a
firm commitment.
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. Changes in the fair value of derivatives that are designated as fair value hedges are recorded in
profit or loss, together with any changes in the fair value of the hedged items that are attributable to the hedged risk. If the
fair value hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item
for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated
effective interest rate.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
72
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
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.
FLT currently holds a cross currency interest rate swap which has been designated in a net investment hedge relationship.
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 notional amount of the swap. This is recognised in the statement of profit
or loss and other comprehensive income in net foreign exchange gains or net foreign exchange losses.
FLT currently holds an interest rate swap which has been designated in a fair value hedge relationship. The swap is being
used to hedge the exposure to changes in the fair value of its fixed rate 1.625% convertible note. There is an economic
relationship between the hedged item and the hedging instrument as the terms of the interest rate swap match the terms of
the convertible note (i.e., notional amount, maturity, and payment). The Group has established a hedge ratio of 1:1 for the
hedging relationships as the underlying risk of the interest rate swap is identical to the hedged risk component. To test the
hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the
hedging instrument against the changes in fair value of the hedged item attributable to the hedged risk.
THE EFFECTS OF HEDGE ACCOUNTING
At 30 June 2023, FLT holds the following forward foreign exchange contracts (FECs) to hedge its exposure on forecast
foreign currency receipts and forecast foreign currency payments. During the year FECs were used to hedge exposure on
foreign currency payment, settlement of these FECs resulted in a loss of $2,949,000 which was allocated to the purchase
price consideration of Scott Dunn.
CASH FLOW HEDGES – 2023
EUR
USD
FJD
GBP
THB
Others
CASH FLOW HEDGES – 2023
Foreign currency receipts
Foreign currency payments
NOTIONAL
AMOUNT
IN LOCAL
CURRENCY
000
55,350
80,010
32,100
23,400
155,000
CARRYING
AMOUNT
AVERAGE
FORWARD
PRICE
CHANGE IN FAIR
VALUE USED
FOR MEASURING
INEFFECTIVENESS
FOR THE PERIOD
$'000
1,067
981
(358)
241
(167)
(167)
1,597
—
—
—
—
—
$'000
1,067
981
(358)
241
(167)
(167)
1,597
CHANGE IN
VALUE USED
FOR MEASURING
INEFFECTIVENESS
CURRENCY
CASH FLOW
HEDGE
RESERVE
USD
ZAR
SGD
NZD
CAD
EUR
EUR
FJD
GBP
THB
JPY
Others
$'000
1,028
(53)
(43)
(37)
(15)
12
1,054
(358)
241
(167)
(90)
24
$'000
1,028
(53)
(43)
(37)
(15)
12
1,054
(358)
241
(167)
(90)
25
1,597
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
At 30 June 2023, FLT holds the following cross currency interest rate swaps and interest rate swaps to hedge its exposure on
net investments in foreign operations and convertible notes. The impact of hedging instruments designated in hedging
relationships at 30 June 2023 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.
FAIR VALUE HEDGES - 2023
Interest rate swap
FAIR VALUE HEDGES - 2022
Interest rate swap
FAIR VALUE HEDGES - 2023
Convertible note
FAIR VALUE HEDGES - 2022
Convertible note
NET INVESTMENT HEDGES - 2023
Cross currency interest rate swap (i) - Euro
Cross currency interest rate swap (ii) - Euro
NET INVESTMENT HEDGES - 2022
Cross currency interest rate swap (i) - Euro
Cross currency interest rate swap (ii) - Euro
NOTIONAL
AMOUNT
CARRYING
AMOUNT
$'000
400,000
$'000
32,088
400,000
32,216
CARRYING
AMOUNT
ACCUMULATED
FAIR VALUE
ADJUSTMENTS
$'000
311,578
$'000
(32,088)
326,394
(32,216)
CHANGE IN
VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$'000
(128)
(128)
32,216
32,216
CHANGE IN
VALUE
USED FOR
MEASURING
INEFFECTIVENESS
$'000
128
128
(32,216)
(32,216)
NOTIONAL
AMOUNT IN
LOCAL
CURRENCY
000
—
63,925
CHANGE IN
VALUE
USED FOR
MEASURING
INEFFECTIVENESS
CARRYING
AMOUNT
$'000
—
(3,272)
60,000
63,925
—
1,691
$'000
—
(4,963)
(4,963)
810
1,691
2,501
Cross currency interest rate swap (i) was terminated during the year ended 30 June 2022 and replaced with cross currency
interest rate swap (ii). The change in fair value accumulated in equity has not been reclassified to profit or loss.
NET INVESTMENT HEDGES - 2023
Investment in subsidiaries
NET INVESTMENT HEDGES - 2022
Investment in subsidiaries
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
74
CHANGE IN
VALUE
USED FOR
MEASURING
INEFFECTIVENESS
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$'000
(4,963)
(4,963)
$'000
(2,290)
(2,290)
2,501
2,501
2,974
2,974
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
C2 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
The impact of hedging instruments designated in hedging relationships at 30 June 2023 on the consolidated statement of
profit or loss of the group is as follows. 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
2023
2022
NET INVESTMENT HEDGES
2023
2022
INEFFECTIVENESS
RECOGNISED IN
THE
INCOME
STATEMENT
HEDGING
GAIN /(LOSS)
RECOGNISED
IN OCI
AMOUNT
RECLASSIFIED
FROM OCI TO
THE INCOME
STATEMENT
$'000
$'000
$'000
—
—
—
—
966
—
(4,963)
2,501
(186)
—
—
—
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
2023
$'000
2,396
23,056
25,452
147
2,956
3,103
2022
$'000
716
8,484
9,200
147
19,350
19,497
ACCOUNTING POLICY
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
76
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D
REWARD AND RECOGNITION
This section provides a breakdown of the various programs FLT uses to reward and recognise employees and key
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
company's philosophies and culture, and drive performance both individually and collectively to deliver better returns to
shareholders.
These programs also result in changes to the group's contributed equity.
During COVID-19 a number of these programs were put on hold, however new programs (the PCRP and GRR) were
introduced as a strategic response to the profound impacts that COVID-19 restrictions had on the business, with a focus
on ensuring key executives who would be crucial to FLT’s recovery were retained while the business recovers and during
the rebuilding phase.
D1
D2
D3
Key management personnel
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)
D4
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
2023
$
2022
$
9,276,154
6,906,012
205,322
(50,008)
163,364
457,095
2,178,140
4,018,006
11,609,608
11,544,477
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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) invest in unsecured notes in their businesses as an incentive to improve short and long-term
performance. Trading conditions under COVID-19 resulted in the programme being unsuitable for its intended purpose and
programmes globally were put on hold. The program commenced again during the prior year.
ACCOUNTING POLICY
The Australian BOS program is an ASIC-registered unsecured notes scheme. In Australia, the scheme re-commenced in
April 2022 in the Travel Associates business and is gradually being re-introduced in other businesses of FLT.
The employees receive a variable interest return on investment based on the individual businesses performance and is,
therefore, exposed to the risks of his or her business, as neither FLT nor any of its group companies guarantees returns.
The unsecured notes are repayable within 30 days notice by either party, upon termination of the note holder’s employment
or on the 10th anniversary of the date of issue of the unsecured note. Interest is generally payable in arrears, one month
in arrears.
FLT has arrangements through its subsidiary, P4 Finance Pty Ltd (P4), to provide loans on an arm's length, commercial basis
to fund eligible business leaders’ acquisition of unsecured notes. Under the terms of these loans, unsecured note holders
agree that FLT will hold the Unsecured Note Certificate in escrow and note holders must assign the payment of funds owing
on an unsecured note to P4.
Accordingly, the group has, at a consolidated level, offset FLT's unsecured note liability and P4's loan receivable in the
group balance sheet and has also netted the interest income earned on loans provided by P4 against interest paid by FLT
on the unsecured notes.
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
2023
$'000
6,240
(5,638)
602
2022
$'000
2,668
(2,209)
459
The unsecured note holders earn a variable, non-guaranteed return, based on their business's performance.
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
78
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.
The Founder BOS notes were temporarily redeemed and placed into hibernation on 30 June 2020 (effective from 1 January
2020) and (as detailed in the Remuneration Report) reactivated on 1 July 2022 (for Mr Galanty) and 1 January 2023 (for Ms
Waters-Ryan). Once the BOS notes came out of hibernation, Ms Waters-Ryan and Mr Galanty were required to repay the
face value or designate funds to the value of the face value.
Ms. Waters-Ryan elected not to repay the face value and accordingly the MWR BOS was deemed to have been redeemed
as at 31 December 2019 (Redemption Date).
Mr. Galanty elected to repay the face value of the CG BOS at the end of the CG Hibernation Period to Flight Centre and the
CG BOS (including its relevant entitlements) recommenced in accordance with its amended and restated terms.
Mr Galanty continues to participate in the BOS Multiplier program, with Melanie Waters-Ryan due to retire in early FY24.
Refer to section 3 of the remuneration report for further information on BOS return multiplier.
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.
CURRENT
Employee benefits¹
NOTE
F10
2023
$'000
12,944
2022
$'000
11,896
1 Includes termination benefit relating to Melanie Waters-Ryan who will retire on 31 August 2023. The benefit relates to services performed during FY23 and up until 31
August 2023.
The BOS multiplier is recognised as current as it has vested for the KMP.
D3
SHARE-BASED PAYMENTS
OVERVIEW
FLT has a number of plans which issue share rights 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)
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
Total expenses arising from share-based payment transactions
Directors are not eligible to participate in the LTRP, PCRP, GRR or ESP.
2023
$'000
10,226
1,269
1,525
28,080
41,100
2022
$'000
7,784
4,409
2,341
17,511
32,045
ACCOUNTING POLICY AND VALUATION
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN (LTRP)
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
7²
7c
7e²
8
1 July 2018
August 2021
1 July 2018
August 2021
1 July 2019
August 2022
1 July 2019
August 2021
1 July 2020
August 2023
1 July 2020
August 2021
1 July 2020
August 2022
1 July 2020
August 2023
1 July 2021
August 2024
1 July 2021
August 2022
1 July 2021
August 2023
1 July 2022
August 2025
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
$54.26
August 2021
$54.26
August 2023
$42.06
August 2022
$42.06
August 2024
$11.30
August 2023
$11.30
August 2023
$11.30
August 2024
$11.30
August 2023
$17.27
August 2024
$17.27
August 2024
$17.26
August 2023
$17.02
August 2025
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
1 July 2030
$54.26
$51.58
$42.06
$38.84
$11.30
$11.30
$10.79
$11.30
$17.27
$17.27
$17.26²
$17.02
1 The vesting date is the day the Company releases full year financial results to the ASX in the year of vesting.
2 During the period, an administrative error was identified where new LTRP participants has been offered rights on 1 July 2021 to Grant 7 and Grant 7e , however the rights
had not been issued. The rights were issued during the period.
The weighted average contractual remaining life (until expiry date) is 7 years.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
80
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN (LTRP) (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
2023
Grant 8
Base
Match
Grant 7¹
Base
Match
Grant 7c
Base
Match
Grant 7e¹
Base
Match
Grant 6
Base
Match
Grant 6b
Base
Match
Grant 6c
Base
Match
Grant 6d
Base
Match
Grant 5
Base
Match
Grant 5b
Base
Match
Grant 4
Base
Match
Grant 4b
Base
Match
Grant 3
Base
Match
Grant 2
Base
Match
—
—
—
—
—
—
—
—
—
—
23,417
—
—
—
—
—
—
—
4,355
—
13,305
14,793
5,498
—
1,691
1,691
2,341
2,341
—
—
422,927
422,927
347,576
347,576
10,369
10,369
—
—
197,319
197,319
—
23,417
13,953
13,953
45,207
45,207
60,828
60,828
—
4,355
—
—
—
4,030
—
—
—
—
4,691
4,691
—
—
4,691
4,691
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,273)
(4,273)
(12,591)
(12,591)
—
—
—
—
—
—
—
—
—
—
(2,309)
(2,309)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,369
2,291
—
—
—
—
—
—
13,953
—
—
—
—
—
—
—
—
60,828
60,828
(35,333)
(34,030)
—
—
—
—
—
—
—
—
—
—
—
—
(3,273)
(2,410)
—
—
(1,691)
(1,691)
(2,341)
(2,341)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,369
2,291
—
—
—
—
418,654
418,654
339,676
339,676
—
8,078
4,691
4,691
197,319
197,319
(4,905)
18,512
—
—
23,417
13,953
—
—
—
25,495
26,798
4,355
—
10,032
12,383
5,498
—
—
—
—
—
—
13,953
42,898
42,898
—
—
—
4,355
—
—
—
4,030
—
—
—
—
1 During the period, an administrative error was identified where new LTRP participants has been offered rights on 1 July 2021 to Grant 7 and Grant 7e , however the rights
had not been issued. The rights were issued during the period.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
LONG TERM RETENTION PLAN (LTRP) (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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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
—
—
—
—
347,576
347,576
10,369
10,369
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,028)
(1,028)
—
—
(797)
(797)
—
—
—
—
—
—
—
—
—
—
—
—
23,417
—
—
—
—
—
—
—
4,355
—
40,882
42,370
5,518
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(37,802)
(27,577)
(20)
—
—
—
—
—
—
—
—
—
—
—
23,417
—
—
—
—
—
—
—
4,355
—
13,305
14,793
5,498
—
1,691
1,691
2,341
2,341
347,576
347,576
10,369
10,369
197,319
197,319
—
23,417
13,953
13,953
45,207
45,207
60,828
60,828
—
4,355
—
—
—
4,030
—
—
—
—
2022
Grant 7
Base
Match
Grant 7c
Base
Match
Grant 6
Base
Match
Grant 6b
Base
Match
Grant 6c
Base
Match
Grant 6d
Base
Match
Grant 5
Base
Match
Grant 5b
Base
Match
Grant 4
Base
Match
Grant 4b
Base
Match
Grant 3
Base
Match
Grant 2
Base
Match
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
82
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
POST-COVID-19 RETENTION PLAN (PCRP)
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.
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 1
Base Rights
Matching Rights - Tranche 1
Matching Rights - Tranche 2
GRANT DATE
29 June 2020
DATE/YEAR VESTED
AND EXERCISABLE¹
EXPIRY DATE
VALUE PER RIGHT AT
GRANT DATE
August 2022
August 2023
August 2024
1 July 2031
1 July 2031
1 July 2031
$9.66
$9.25
$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 8 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
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
—
—
—
—
—
—
—
—
(45,000)
—
—
—
590,338
(130,439)
459,899
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
295,169
250,169
590,338
295,169
295,169
2023
Grant 1
Base
Match 1
Match 2
2022
Grant 1
Base
Match 1
Match 2
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
GLOBAL RECOVERY RIGHTS (GRR)
The GRR has identical objectives to the PCRP but is a broader program targeted at FLT’s global workforce.
GENERAL TERMS
Invited participants (all employees globally excluding board members and senior executives) are granted one-off rights, for
no consideration.
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
Rights granted to participants will vest on the 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).
METHOD OF SETTLEMENT
The rights may be issued by FLT, purchased on-market or allocated from treasury shares.
VALUATION
The fair value of rights 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. The fair value is allocated equally over the period from grant date to vesting date.
GRANT NUMBER
Grant 1
Grant 2
GRANT DATE
25 June 2021
15 June 2022
DATE/YEAR VESTED
AND EXERCISABLE¹
February 2023
February 2024
RIGHTS
EXPIRY DATE
February 2028
February 2029
VALUE PER RIGHT AT
GRANT DATE
$15.06
$17.02
1 The vesting date is the day the Company releases half year financial results to the ASX in the year of vesting
The weighted average contractual remaining life (until expiry date) for Grant 1 is 5 years, and for Grant 2, 6 years.
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
—
—
—
—
1,829,841
(48,032)
—
—
—
1,781,809
1,647,288
—
(155,614)
1,491,674
(753,686)
737,988
—
—
1,772,534
(125,246)
—
—
—
1,647,288
2023
Grant 2
Grant 1
2022
Grant 1
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
84
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D3
SHARE-BASED PAYMENTS (CONTINUED)
EMPLOYEE SHARE PLAN (ESP)
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
2023
42,467
52,290
25,787
120,544
$0.00
$18.60
$17.60
2022
72,003
—
44,659
116,662
$0.00
$0.00
$18.33
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
D4 CONTRIBUTED EQUITY AND TREASURY SHARES
OVERVIEW
On 1 February 2023, FLT announced the successful completion of its institutional placement of new fully paid ordinary shares
to raise $180,000,000 to part-fund its acquisition of Scott Dunn. Approximately 12,300,000 new shares were issued under the
placement at a fixed price of $A14.60 per new share, which represented a 7.8% discount to the last traded price of A$15.83
on 30 January 2023.
After the institutional placement, FLT opened its non-underwritten share purchase plan (SPP) to fund the remainder of its
acquisition of Scott Dunn. The SPP offer provided eligible shareholders the opportunity to buy shares at an issue price of
$A14.60, in line with the offer made to institutional investors. On 13 March 2023, FLT announced the successful completion
of the SPP and approximately 4,100,000 new fully paid ordinary shares were issued to SPP participants.
Historically, movements in contributed equity have related to shares issued under the ESP and LTRP, 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 at 1 July 2021
ESP
ESP matched shares
LTRP
Treasury shares
Closing balance at 30 June 2022
ESP
ESP matched shares
Treasury shares
Institutional placement and share purchase plan
Equity raising transaction costs
Deferred tax on equity raising transaction costs
Closing balance at 30 June 2023
NOTES
D3
D3
F12
NUMBER OF
SHARES
199,347,493
278,430
72,003
15,258
100,000
WEIGHTED
AVERAGE ISSUE
PRICE
$18.09
—
—
$16.18
$'000
1,099,056
5,037
—
—
1,618
199,813,184
1,105,711
365,258
42,467
1,416,799
16,437,951
$17.25
—
$18.48
$14.60
6,302
—
26,180
239,994
(5,137)
1,542
218,075,659
1,374,592
RECONCILIATION OF TREASURY SHARES:
The following reconciliation summarises the movements in treasury shares held in a share trust for future allocation to
employee share plans. Items of a similar nature have been grouped and the price shown is the weighted average.
DETAILS
Opening balance at 1 July 2021
Purchase of shares by share trust
Allocation of shares to ESP matched shares
Allocation of shares to LTRP
Gain in equity on allocation of shares
Closing balance at 30 June 2022
Purchase of shares by share trust
Allocation of shares to ESP matched shares
Allocation of shares to LTRP
Allocation of shares to PCRP
Allocation of shares to GRR
Gain in equity on allocation of shares
Closing balance at 30 June 2023
NOTES
NUMBER OF
SHARES
D3
D3
—
(144,659)
44,659
34,824
(65,176)
(1,782,254)
78,077
142,051
77,137
753,686
(796,479)
WEIGHTED
AVERAGE
PRICE
—
$16.32
$18.33
$19.28
$18.36
$18.25
$16.90
$16.94
$18.67
$'000
—
(2,437)
819
672
(109)
(1,055)
(32,720)
1,425
2,401
1,307
14,069
(175)
(14,748)
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
86
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
RELATED PARTIES
E
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
The Upside Travel Company (Upside) was dissolved during the period. FLT had previously fully impaired its 25% investment
in the year ended 30 June 2020.
On 8 December 2022, FLT acquired a 50% shareholding in Evolve Travel Limited (ETL), a New Zealand based entity for
$5,000. The investment in ETL will create stronger preferred supplier agreements with an independent travel group for the
mutual benefit of both parties. The contractual arrangements in place do not establish control or joint control over the
entity’s economic activities including financial and operating decisions, therefore the investment in ETL is accounted for as
an investment in associate. Related party transactions represent FLT distributing to ETL, for disbursement to the
independent agents, a share of the override revenue as generated through the supply agreement.
JOINT VENTURES
FLT holds a 46.9% shareholding in Pedal Group Pty Ltd (2022: 46.5%). 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.
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 interest in joint ventures and associates
SHARE OF RESULTS
(Loss) / profit from joint ventures
(Loss) from associates
Total comprehensive (loss) / profit
2023
$'000
45,594
5
2022
$'000
49,678
—
45,599
49,678
2023
$'000
(4,084)
—
(4,084)
2022
$'000
12,136
(457)
11,679
Joint venture results include share of loss from Pedal Group of $4,083,713 (2022: share of profit $12,136,000). In addition,
during the period FLT received a dividend of $3,937,131 (2022: $8,873,000) of which 100% (2022: 100%) was received as
shares as part of the Pedal dividend reinvestment plan.
CONTRACTUAL COMMITMENTS
FLT has no commitments in relation to its joint venture and associate entities at 30 June 2023 (2022: nil).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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.
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 21.88% (2022: 21.71%), and Graham Turner's son, Matthew Turner’s family companies
Hootie Blowfish Pty Ltd 14.14% (2022: 14.77%), Counting Crows Pty Ltd 0.24% (2022: nil) and his direct employee share plan
holdings of 0.40% (2022: 0.41%). The remaining 16.43% (2022: 16.57%) 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
Other
Expenses to joint venture & associate-related parties
Override distributions
Income from director-related entities
Travel and conference
Expenses to director-related entities
Conference expense
Membership expense¹
2023
$
17,435
111,624
397,733
2022
$
14,355
163,823
149,411
2,393,059
—
1,310,539
1,379,468
111,574
355,800
96,303
151,941
1 Graham Turner as Director on Industry Body, Australian Federation of Travel Agents Limited (AFTA), now known as Australian Travel Industry Association (ATIA)
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.
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
Current payables
Director-related entities
Current receivables
Current payables
2023
$
994
130,789
2022
$
—
—
2,442,592
—
970,047
9,533
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
88
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
E2
RELATED PARTY TRANSACTIONS (CONTINUED)
LOANS TO RELATED PARTIES
Loans to KMP, joint venture and associate related parties were nil during the current year and prior year.
GUARANTEES
FLT has provided company guarantees to the suppliers of Pedal Group joint venture of $9,046,000 (2022: $nil). 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
OTHER INFORMATION
F
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
Share based payments expense
Other employee benefits expense
Total employee benefits expense
NOTES
D3
2023
$'000
63,430
41,100
1,193,463
1,297,993
2022
$'000
40,776
32,045
809,447
882,268
Staff numbers (full-time equivalents)
13,065
10,257
In addition to the employee benefits expense disclosed above, ‘Tour, hotel & cruise operations - Cost of sales’ in the
statement of profit or loss includes $3,914,000 (2022: $2,430,000) relating to employee costs directly attributable to the
delivery of tour and hotel services.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
90
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F2
EARNINGS PER SHARE
OVERVIEW
Statutory earnings per share (EPS) was 23.1 cents (2022: loss 142.4 cents²), an improvement of 116.2% on the prior
comparative period. At an underlying level1, EPS increased 127.3% to 36.9 cents (2022: loss 135.2 cents²).
2023
CENTS
2022
CENTS
RESTATED²
Basic earnings / (loss) per share
Profit / (loss) attributable to the company’s ordinary equity holders
23.1
(142.4)
Diluted earnings / (loss) per share
Profit / (loss) attributable to the company’s ordinary equity holders
22.5
(142.4)
Reconciliation of earnings used in calculating EPS
Profit / (loss) attributable to the company’s ordinary equity holders used in calculating basic and
diluted earnings per share
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share³
Adjustments for calculation of diluted earnings per share:
Share rights
$'000
$'000
47,461
(286,651)
NUMBER
NUMBER
RESTATED²
205,165,141
201,236,779
6,095,311
—
Weighted average number of ordinary shares used in calculating diluted earnings per share
211,260,452
201,236,779
1 Underlying EPS are unaudited, non-IFRS measures. Refer to note A1 for breakdown of underlying PBT used in the calculation of underlying EPS. Underlying NPAT includes
the tax impact of underlying adjustments of ($7,177,000) (2022: ($2,355,000)).
2 Restated as required by AASB 133 Earnings Per Share, for discount on Institutional Placement and Share Purchase Plan completed during the current year to fund the
acquisition of Scott Dunn.
3 The basic EPS denominator is the aggregate of the weighted average number of ordinary shares.
INFORMATION CONCERNING THE CLASSIFICATION OF SECURITIES
LTRP, PCRP, GRR, & ESP
Rights granted under the LTRP, PCRP, GRR and entitlements to matched shares under the ESP are considered contingently
issuable ordinary shares as at 30 June 2023. 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.
The rights are not included in the determination of basic earnings per share. Details of the incentive plans are set out in
note D3.
CONVERTIBLE NOTES
Convertible notes issued during prior years and which are convertible into 34,612,000 shares were excluded from the diluted
weighted average number of ordinary shares calculation at 30 June 2023. If the notes were converted into shares, favourable
profit adjustments relating to interest expense and valuation of derivatives used to hedge interest exposure would result in
an anti-dilutive effect on earnings per share. Details relating to the convertible notes are set out in note B5.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
91
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F3
TRADE AND OTHER RECEIVABLES
Trade receivables
Government grant receivables
Less: Provision for impairment of receivables
Total trade and other receivables
2023
$'000
865,276
1,315
(31,826)
2022
$'000
694,782
2,543
(28,000)
834,765
669,325
ACCOUNTING POLICY
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 (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
US Dollars
NZ Dollars
Great Britain Pounds
South African Rand
Euro
Other
2023
$'000
59,731
13,867
6,301
3,156
1,586
7,763
2022
$'000
57,172
10,392
3,086
2,761
559
2,981
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, 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
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.
Leisure
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. Independent agents' credit quality is assessed by analysing
external credit ratings and financial position where appropriate. Independent agents’ debtors are subject to weekly payment
sweeps and are generally settled before payment is required to the supplier therefore mitigating credit risk.
Product suppliers
Receivables are due from suppliers in relation to overrrides, commissions, refunds and other revenue streams.
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
92
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F3
TRADE AND OTHER RECEIVABLES (CONTINUED)
Other
Exposure to credit risk for receivables from government agencies is considered low.
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
Balance at 1 July 2022
Bad debts expense¹
Changes due to foreign exchange translation
Receivables written off during the year as uncollectible
or reversed due to collectability
Balance at 30 June 2023
A4
2023
$'000
2022
$'000
28,000
34,749
2,400
1,426
—
(1,478)
(143)
(5,128)
31,826
28,000
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
93
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F4
CONTRACT ASSETS
Volume incentive receivables
Accrued revenue
Loss allowance
Total contract assets
2023
$'000
259,681
61,250
(3,353)
2022
$'000
102,567
36,937
(9,203)
317,578
130,301
ACCOUNTING POLICY
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.
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
Canadian Dollars
Swiss Franc
Singapore Dollars
Other
FAIR VALUE
2023
$'000
94,128
21,589
6,031
4,077
3,202
2022
$'000
28,494
—
2,888
3,285
5,697
Due to the short-term nature of these assets, their carrying amount is assumed to approximate their fair value.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
94
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F4
CONTRACT ASSETS (CONTINUED)
CREDIT RISK
Credit risk arises from exposure to suppliers, 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. Regular monitoring and reporting to management is performed.
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.
LOSS ALLOWANCE OF CONTRACT ASSETS
Movements in the loss allowance of contract assets are as follows:
NOTES
Balance at 1 July
Loss allowance expense
A4
Changes due to foreign exchange translation
Contract assets written off during the year as uncollectible or reversed due to
collectability
Balance at 30 June
2023
$'000
9,203
1,754
—
(7,604)
3,353
2022
$'000
30,561
19
59
(21,436)
9,203
FLT has reduced the loss allowance provision for FY23 based on supplier payments being received and removing supplier
balances where recoverability is highly unlikely. At risk suppliers were provided for in FY22 and continue to be provided for
in FY23 unless payments have been received.
F5 OTHER ASSETS
GST / service tax receivable
Inventories
Prepayments
Fulfilment assets
Total current other assets
Inventories
Prepayments
Fulfilment assets
Total non-current other assets
2023
$'000
7,772
15,718
51,371
7,627
82,488
11,808
1,220
8,580
21,608
2022
$'000
5,108
7,030
27,428
4,921
44,487
20,853
2,967
8,470
32,290
FULFILMENT ASSETS
Contract costs may be eligible for capitalisation as fulfilment assets and are amortised over the contract period, refer
note A2.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
95
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 30 years
• Plant and equipment 2 - 8 years
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each reporting period’s end.
Additional information on property, plant and equipment accounting policies is included in note I (n).
OPENING BALANCE AT 1 JULY 2021
Cost
Accumulated depreciation
Net book amount at 1 July 2021
Additions
Acquisitions
Disposals¹
Depreciation expense
Impairment charge
Exchange differences
Net book amount at 30 June 2022
OPENING BALANCE AT 1 JULY 2022
Cost
Accumulated depreciation
Net book amount at 1 July 2022
Additions
Acquisitions
Disposals¹
Depreciation expense
Impairment charge
Exchange differences
Net book amount at 30 June 2023
AT 30 JUNE 2023
Cost
Accumulated depreciation
Net book amount at 30 June 2023
1 Balances shown net of accumulated depreciation.
NOTES
B8
A6
B8
B8
A6
B8
FREEHOLD
LAND &
BUILDINGS
PLANT &
EQUIPMENT
$'000
5,584
(2,156)
3,428
17
—
—
(152)
—
(125)
$'000
315,789
(229,238)
86,551
11,133
642
(2,091)
(28,381)
705
1,362
TOTAL
$'000
321,373
(231,394)
89,979
11,150
642
(2,091)
(28,533)
705
1,237
3,168
69,921
73,089
5,751
(2,583)
3,168
22
—
—
(140)
—
(309)
2,741
5,483
(2,742)
2,741
309,629
(239,708)
69,921
315,380
(242,291)
73,089
21,357
21,379
250
(281)
(26,217)
—
(1,118)
63,912
250
(281)
(26,357)
—
(1,427)
66,653
325,522
(261,610)
63,912
331,005
(264,352)
66,653
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
96
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F7
LEASES
This note provides information for leases where the group is a lessee.
AMOUNTS RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS
Rent income from sub-leasing of right-of-use assets
Interest expense on lease liabilities
Rental expense relating to short-term and low-value leases
Depreciation/amortisation expense of right-of-use assets
AMOUNTS RECOGNISED IN THE BALANCE SHEET
NOTES
A3
A4
A4
2023
$'000
9,157
(7,295)
(5,192)
(76,847)
(80,177)
2022
$'000
7,210
(8,917)
(4,264)
(69,390)
(75,361)
RIGHT OF USE ASSETS
LEASE
LIABILITIES
PROPERTY
VEHICLES
OFFICE
EQUIPMENT
SOFTWARE
$'000
$'000
$'000
$'000
TOTAL
$'000
TOTAL
$'000
63
383
—
(136)
—
—
—
—
(10)
300
300
—
—
(154)
—
—
—
—
3
1,231
243,690
368,453
—
—
6,183
6,168
(3,078)
(11,153)
(894)
(69,390)
8,248
—
—
12,162
10,565
—
—
8,917
(102,480)
715
5,581
337
198,530
286,051
337
198,530
286,051
—
—
24,103
23,838
(2,522)
(4,423)
(260)
(76,847)
328
—
—
50,503
49,257
—
—
7,295
(107,268)
2,436
4,673
—
—
—
—
—
—
—
—
—
1
149
78
196,531
259,423
Balance as at 1 July 2021
Additions
Disposals
Depreciation and amortisation expense
Impairment reversal
Lease modifications
Interest expense
Lease liability repayment
Exchange differences
242,449
5,800
(3,078)
(68,286)
8,248
12,162
—
—
595
Balance as at 30 June 2022
197,890
Balance as at 1 July 2022
Additions
Disposals
Depreciation and amortisation expense
Impairment reversal
Lease modifications
Interest expense
Lease liability repayment
Exchange differences
Balance as at 30 June 2023
197,890
23,740
(2,522)
(76,325)
328
50,503
—
—
2,526
196,140
(53)
—
—
(74)
—
—
—
—
130
3
3
363
—
(108)
—
—
—
—
(94)
164
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
97
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
2023
$'000
81,869
177,554
259,423
2022
$'000
92,424
193,627
286,051
2023
$'000
(7,295)
(99,973)
(661)
2022
$'000
(8,917)
(93,563)
(2,480)
(107,929)
(104,960)
ACCOUNTING POLICY
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
98
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 2021-3 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions
beyond 30 June 2021, which extends the practical expedient originally provided by 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 typically exercised.
IMPAIRMENT
CURRENT YEAR
The impairment reversal of $328,000 in the current period relates to the reversal of impairment on right-of-use asset
property that were originally not being utilised by FLT but have subsequently been sub-leased to external parties.
PRIOR YEAR
The impairment reversal of $8,248,000 in the prior period related to the reversal of impairment on right-of-use asset property
that were originally not being utilised by FLT but have subsequently been sub-leased to external parties.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
99
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F8
TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Client creditors
Other trade creditors
GST / service tax payable
Accrued unsecured note interest
Annual leave
2023
$'000
668,883
722,624
245,792
4,813
251
42,237
2022
$'000
513,153
704,435
141,111
5,510
122
38,047
Total current trade and other payables
1,684,600
1,402,378
FINANCIAL RISK MANAGEMENT
MARKET RISK
Foreign exchange risk
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
Fijian Dollars
Euro
NZ Dollars
Great Britain Pounds
Singapore Dollars
Thai Baht
Canadian Dollars
Hong Kong Dollars
Other
2023
$'000
84,432
43,938
36,566
19,683
12,425
5,847
5,178
5,002
161
6,352
2022
$'000
19,420
26,853
14,609
14,230
6,329
1,502
1,013
14
14,230
2,116
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
100
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F9
CONTRACT LIABILITIES
CURRENT
Deferred revenue
Revenue constraint
Total contract liabilities
NON-CURRENT
Deferred revenue
Total non-current contract liabilities
ACCOUNTING POLICY
DEFERRED REVENUE
2023
$'000
68,246
3,751
71,997
2022
$'000
42,309
12,755
55,064
27,077
27,077
30,736
30,736
Deferred revenue is a contract liability that typically relates to revenue received in advance for tours and cruise cabins 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 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 trading patterns.
SIGNIFICANT CHANGES IN CONTRACT LIABILITIES
The movement in deferred revenue is dependent on timing and volume of tours and cruises 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 $38,178,000 (2022:
$26,675,000).
The revenue constraint liability was raised in response to COVID-19. The amount has reduced in the current year as refunds
have been paid to the end consumers, decreasing cancellation rates and less travel uncertainty.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
101
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
2023
$'000
37,908
12,944
4,482
55,334
14,847
—
12,488
27,335
2022
$'000
28,236
11,896
3,673
43,805
12,803
2,284
12,584
27,671
MOVEMENTS IN PROVISIONS
Movements in each class of provision, other than employee benefits, for the financial year are set out below:
Carrying amount at 1 July 2022
Additional provisions recognised
(Decrease) / increase in discounted amount arising from passage of time and discount rate adjustments
A4
NOTES
Utilised
Other changes
Carrying amount at 30 June 2023
LONG SERVICE LEAVE (LSL)
MAKE GOOD
PROVISION
$'000
16,257
1,350
395
(1,098)
67
16,971
AMOUNTS NOT EXPECTED TO BE SETTLED WITHIN 12 MONTHS
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
2023
$'000
31,392
2022
$'000
21,435
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
102
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F11 RESERVES
Reserves
Cash flow hedge reserve
Share-based payments reserve
Acquisition Reserve
Foreign currency translation reserve
Equity component of convertible note
Other reserves
Total reserves
MOVEMENTS IN RESERVES:
(A)
CASH FLOW HEDGE RESERVE
Balance 1 July
Gains on FEC cash flow hedges
Reclassified to profit or loss
Deferred tax
Balance 30 June
NOTES
B5
F12
2023
$'000
855
83,600
(44,602)
62,304
91,335
(424)
2022
$'000
309
67,381
(44,602)
22,461
91,335
(424)
193,068
136,460
309
966
(186)
(234)
855
309
—
—
—
309
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 (2022: $nil) has been recognised in the statement of profit or loss.
(B)
SHARE-BASED PAYMENTS RESERVE
Balance 1 July
Share-based payments expense
Treasury share transactions
Deferred tax
Balance 30 June
67,381
31,368
(12,486)
(2,663)
83,600
34,487
29,396
(563)
4,061
67,381
F12
The share-based payments reserve is used to recognise the fair value of rights issued under the LTRP, PCRP, ESP, and GRR
as they vest over the vesting period.
(C)
ACQUISITION RESERVE
Balance 1 July
Put / call options entered into as a result of business combinations
De-recognition of NCI on acquisition
Balance 30 June
A7
A6
(44,602)
—
—
(44,602)
(39,291)
(10,170)
4,859
(44,602)
The acquisition reserve is used to record the initial put / call options that occur through business combinations in relation to
non-controlling interests (NCI). Gains / (losses) on change in interest ownership of NCI must be recognised in equity, FLT has
elected to recognise this in the acquisition reserve.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
103
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F11 RESERVES (CONTINUED)
(D)
FOREIGN CURRENCY TRANSLATION RESERVE
Balance 1 July
(Losses) / gains on net investment hedge
Deferred tax
Reclassified to profit or loss
Net exchange differences on translation of foreign operations
Balance 30 June
NOTES
F12
2023
$'000
22,461
(4,963)
1,489
—
43,317
62,304
2022
$'000
2,179
2,501
(750)
(982)
19,513
22,461
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.
(E)
OTHER RESERVES
Balance 1 July
Non-reciprocal capital contributions
Balance 30 June
Other reserves includes immaterial reserves recognised by the group.
(424)
—
(424)
—
(424)
(424)
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
104
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F12 TAX
(A)
(I)
INCOME TAX EXPENSE
INCOME TAX EXPENSE / (CREDIT)
Current tax
Deferred tax
Adjustments for current tax of prior periods
Income tax expense / (credit)
Deferred income tax (benefit) / expense included in income tax comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Numerical reconciliation of income tax to prima facie tax (receivable) / payable
Profit / (Loss) before Income tax expense / (credit)
Tax at the Australian tax rate of 30% (2022 - 30%)
Tax effect of amounts in calculating taxable income:
Non-deductible amounts
Deductible amounts
Interest denial
Legal costs
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 provision of prior year’s income tax
Income tax expense / (credit)
2023
$'000
10,781
7,136
5,130
23,047
(2,945)
10,081
7,136
2022
$'000
4,370
(97,321)
2,347
(90,604)
(125,492)
28,171
(97,321)
70,459
21,138
(377,786)
(113,336)
1,977
(12)
5,829
1,093
(243)
(479)
4,532
(1,418)
—
(4,449)
27,968
1,340
(11,101)
(290)
5,130
(4,921)
23,047
11,589
(10,656)
—
—
8,479
(912)
(274)
(213)
1,156
3,712
(100,455)
4,563
(1,570)
4,511
2,347
9,851
(90,604)
(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
Share-based payments reserve
Equity component of convertible note
Equity raising
NOTES
F11
B5
D4
2023
$'000
2,663
—
(1,542)
(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
F11
F11
234
(1,489)
(1,255)
2022
$'000
(4,061)
22,887
—
—
750
750
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
105
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
F12 TAX (CONTINUED)
(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
2023
$'000
60,112
52,178
4,875
2,367
6,738
2022
$'000
98,592
54,359
4,875
4,932
6,566
126,270
31,401
169,324
50,797
KEY ESTIMATES & JUDGEMENTS - UTILISATION OF TAX LOSSES
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 unused tax losses in 2023 were incurred by the group across numerous jurisdictions. These losses have various
expiry dates from 2024 through to indefinite carry forward.
(B)
DEFERRED TAX ASSETS (DTA)
The balance comprises temporary differences attributable to:
Employee benefits
Property, plant and equipment
Lease & decommissioning
Accruals
Tax losses
Share-based payments
Intangibles
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2023
$'000
25,936
20,149
63,935
696
347,626
28,839
4,412
10,128
501,721
(97,973)
403,748
2022
$'000
22,565
29,672
75,427
1,757
341,119
27,686
6,391
31,081
535,698
(132,162)
403,536
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 F11, and F12 (a)(ii).
(C)
DEFERRED TAX LIABILITIES (DTL)
The balance comprises temporary differences attributable to:
Property, plant and equipment
Intangibles
Lease & decommissioning
Financial instruments
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2023
$'000
2,099
29,826
47,531
20,981
7,515
107,952
(97,973)
9,979
2022
$'000
18,440
22,472
57,937
30,166
7,374
136,389
(132,162)
4,227
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).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
106
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
1,987,580
1,736,309
2023
$
2022
$
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
FEES TO OTHER OVERSEAS MEMBER FIRMS OF ERNST & YOUNG (AUSTRALIA)
Fees for auditing the financial report of any controlled entities
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
FEES TO NON LEAD AUDITOR AUDIT FIRMS FOR:
Fees for auditing the financial report of any controlled entities
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
F14 SEASONALITY
48,500
178,000
243,036
398,171
9,000
40,000
2,288,116
2,352,480
1,835,330
1,637,511
212,797
52,079
249,487
505,017
2,297,614
2,194,607
4,585,730
4,547,087
268,496
56,969
106,595
—
384,420
664,446
175,719
935,230
137,556
858,971
As FLT recovers after COVID-19 it is expected that due to the seasonal nature of a number of key segments, higher
revenues, operating profits and operating cash flows are expected in the second half of the year compared with the first half
of the year. This is impacted by:
• higher leisure sales in the lead up to the northern hemisphere summer holiday period
• lower sales in the corporate travel agency businesses over the Christmas holiday period
This is partially offset by the seasonality of the touring businesses which earn the majority of their profits in the northern
hemisphere summer holiday period, which falls in the first half of the year.
For further details on FLT’s outlook, please refer to the FY23 Results & Outlook column on page 4.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
107
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
GROUP STRUCTURE
G
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
Travel Partner Holdings Pty Ltd¹
Flight Centre (UK) Limited
Scott Dunn Ltd
3Mundi SAS
Flight Centre Travel Group (USA) Inc
FCTG Corporate (PTY) LTD
COUNTRY OF
INCORPORATION
Australia
Australia
United Kingdom
United Kingdom
France
USA
USA
CLASS OF
SHARES/
OWNERSHIP
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
EQUITY HOLDING
2023
2022
%
100
100
100
100
100
100
100
%
100
100
100
—
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
FCM TRAVEL STANDARDS FOR JAPAN CO., LTD (FCM JAPAN)
FCM Japan is controlled by FLT with a 66% (2022: 66%) interest. The remaining 34% (2022: 34%) interest is held by NSF
Engagement Corporation (a joint venture of Sony Corporation and NTT Facilities, Inc.) and is recognised as a non-
controlling interest.
LINK TRAVEL GROUP PTY LTD (LINK TRAVEL GROUP)
Link Travel Group Pty Ltd (Link Travel Group) is controlled by FLT with a 60% (2022: 60%) interest. The remaining 40% (2022:
40%) is held by Goldman Travel Corporation Pty. Limited and Spencer Group of Companies Pty Ltd and is recognised as a
non-controlling interest.
There are no other material non-controlling interests.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
108
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G2 DEED OF CROSS GUARANTEE
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 (Instrument) certain 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 the relief, the Instrument requires FLT and each of its relevant wholly owned subsidiaries to enter into a Deed of
Cross Guarantee in a prescribed 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 (Current Deed). The parties to the Current Deed
as at 30 June 2023 are Flight Centre Travel Group Limited (as 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, Ignite Travel Pty Ltd, Travel Money Currency Exchange Pty Ltd, Travel Partner Holdings Pty Ltd and Flight
Centre (China) Pty Ltd (as a group entity and alternative trustee). Travel Money Currency Exchange Pty Ltd and Travel
Partner Holdings Pty Ltd acceded to the Current Deed via a Deed of Assumption dated 8 June 2023.
These parties collectively represent the Closed Group for the purposes of the Instrument and, as there are no other parties
to the Current Deed (that are controlled by FLT or otherwise), they also represent the Extended Closed Group.
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
in note G1:
FOR THE YEAR ENDED 30 JUNE
2023
$'000
2022
$'000
RESTATED¹
1,037,872
379,799
103,742
(4,084)
30,798
12,136
(581,944)
(87,078)
(2,509)
(74,304)
(106,862)
(322,921)
(38,088)
(16,037)
(54,125)
(186)
966
(234)
546
(383,495)
(34,118)
—
(70,347)
(41,736)
(179,128)
(286,091)
81,799
(204,292)
—
—
—
—
(53,579)
(204,292)
STATEMENT OF PROFIT OR LOSS
Revenue
Other income
Share of (loss) / profit of joint ventures and associates
EXPENSES
Employee benefits
Sales and marketing
Tour, hotel & cruise operations - cost of sales
Amortisation and depreciation
Finance costs
Other expenses
Loss before income tax expense
Income tax expense
Loss after income tax expense
STATEMENT OF COMPREHENSIVE INCOME
Items that have been reclassified to profit or loss:
Hedging gain reclassified to profit or loss
Items that may be reclassified to profit or loss:
Changes in the fair value of cash flow hedges
Income tax credit / (expense) on items of other comprehensive income
Total other comprehensive income
Total comprehensive loss for the year
1 Restated to include new parties to the Deed.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
109
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G2 DEED OF CROSS GUARANTEE (CONTINUED)
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
Financial asset investments
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
Financial liabilities
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
Treasury shares
Reserves
Retained profits
Total equity
1 Restated to include new parties to the Deed.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
110
AS AT 30 JUNE
2023
$'000
2022
$'000
RESTATED¹
874,981
20,227
556,334
258,181
55,804
6,043
2,785
9,260
796,005
—
407,053
102,181
24,902
3,430
1,795
1,521
1,783,615
1,336,887
14,656
27,593
134,082
100,118
15,086
828,930
1,109,623
291,451
—
2,521,539
4,305,154
58,977
36,695
110,168
108,562
26,323
468,774
930,659
302,920
1,691
2,044,769
3,381,656
1,143,158
873,605
21,912
3,683
48,162
610
43,238
10,006
17,951
3,683
58,310
2,405
33,918
7,766
1,270,769
997,638
745,733
19,670
78,616
349,112
688,940
19,530
35,359
332,230
21,537
90,694
347,177
655,985
20,098
32,216
1,936,960
3,207,729
1,499,937
2,497,575
1,097,425
884,081
1,378,929
1,105,711
(14,748)
163,449
(430,205)
1,097,425
(1,055)
155,503
(376,078)
884,081
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G2 DEED OF CROSS GUARANTEE (CONTINUED)
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED PROFITS
Retained profits at the beginning of the financial year
Loss from ordinary activities after income tax
Retained (loss) / profit at the end of the financial year
1 Restated to include new parties to the Deed.
G3
PARENT ENTITY FINANCIAL INFORMATION
2023
$'000
(376,080)
(54,125)
2022
$'000
RESTATED¹
(171,788)
(204,292)
(430,205)
(376,080)
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
Treasury shares
Reserves
Cash-flow hedge reserve
Compound instrument - equity component
Share-based payments reserve
Share premium reserve
Acquisition reserve
Retained profits
Foreign exchange reserve
Total shareholders’ equity
Loss after tax for the year
Total comprehensive loss
PARENT
2023
$'000
2022
$'000
2,089,572
1,643,820
4,594,734
3,661,969
909,276
742,965
3,651,097
2,930,776
1,378,929
1,105,711
(14,748)
(1,055)
598
91,335
83,600
(2,810)
(8,976)
(580,253)
(4,038)
943,637
(55,009)
(54,463)
309
91,335
67,381
543
(9,520)
(525,244)
1,733
731,193
(163,136)
(163,136)
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
111
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
G3
PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
United Kingdom
India
China
Ireland
Hong Kong
Canada
New Zealand
USA
Japan
Australia
Singapore
United Arab Emirates
Other
Total
PARENT
2023
$'000
112,641
27,823
9,148
7,604
5,292
3,562
3,676
4,223
1,485
9,046
2,302
—
279
2022
$'000
64,505
27,954
9,613
6,895
5,143
—
3,612
3,647
—
—
2,898
41
5,039
187,081
129,347
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 2023 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
112
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
UNRECOGNISED ITEMS
H
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
TP CONNECTS
FLT has entered into a call option and a put option with TP Connects. The call option can be exercised after 1 July 2027 and
the put option can only be exercised by TP Connects if the call option is not exercised by FLT. Refer to note A7 for
further details.
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 $4,589,000 which have been recognised as Equity instruments – Fair value through
profit or loss (refer note B2), leaving $411,000 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
DIVIDENDS
On 30 August 2023, FLT’s directors declared a final dividend for the year ended 30 June 2023. Refer to note B7 for details.
No other material matters have arisen since 30 June 2023.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
113
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
SUMMARY OF ACCOUNTING POLICIES
I
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
FLT’s remaining 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 2022.
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
No new standards or amendments became effective in the current reporting period that have a material impact on FLT.
(C) PRINCIPLES OF CONSOLIDATION
(I) SUBSIDIARIES
The consolidated financial statements incorporate the assets and liabilities of all FLT subsidiaries at 30 June 2023 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP 114
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(C) PRINCIPLES OF CONSOLIDATION (CONTINUED)
(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.
(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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
115
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(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.
(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 straight-line 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.
(V) INTERCOMPANY SERVICE FEES
Remuneration for services provided between FLT group entities. These fees are eliminated on consolidation.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
116
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(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.
(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.
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 the present value of the redemption amount under the
arrangement is recorded for the NCI Put. The difference between the liability recorded 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 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 associate’s 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(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.
(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 re-evaluates this classification each reporting date, except
for FVOCI where the classification is irrevocable.
(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 debt 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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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(K) FINANCIAL ASSETS (CONTINUED)
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 receivables and contract assets.
(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.
(O) INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Cost primarily represents average costs.
Where inventories relate to cruise cabins that are pre-purchased as part of our principal business, with sail dates greater
than 12 months, they are classified as non-current.
(P) TRADE AND OTHER PAYABLES
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(Q) PROVISIONS
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 expected to be settled within 12 months and the portion that 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.
(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.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(S) BORROWINGS
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 except for transactions that, on initial
recognition, give rise to equal taxable and deductible temporary differences such as recognition of a right of use asset and
lease liability. 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.
(II) 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.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(T) TAX (CONTINUED)
(III) 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.
(IV) 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.
(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 assets 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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
I
SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
(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 2023
reporting period. FLT is in the process of determining the impact of these new standards and amendments.
AASB 17 INSURANCE CONTRACTS
In July 2017, the AASB issued AASB 17 Insurance Contracts, a comprehensive new standard for insurance contracts covering
recognition, measurement, presentation and disclosure.
AASB 17 replaces AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance
Contracts for for-profit entities. AASB 17 applies to all types of insurance contracts, regardless of the entity that issues them,
as well as to certain guarantees and financial instruments with discretionary participation features.
The new standard is effective for reporting periods beginning on or after 1 January 2023, and must be applied
retrospectively. This means that it will be applied in the reporting period ending 30 June 2024. FLT does not intend to adopt
the standard before its operative date.
The group has made an initial assessment of the effect of AASB 17 and does not expect it to have a material financial impact
on its consolidated financial statements.
AASB 2023-2 AMENDMENTS TO AASB 112 - INTERNATIONAL TAX REFORM PILLAR TWO MODEL RULES
The AASB has endorsed the adoption of the AASB 112 Income Taxes amendments relating to the global minimum top-up
tax (Pillar Two Global anti-Base Erosion Rules) previously released by the IASB and has issued AASB 2023-2. The amendment
to AASB 112 introduces a mandatory temporary exception from recognising and disclosing deferred tax assets and liabilities
related to Pillar Two income taxes, and disclosure requirements for affected entities.
The amendments are intended to provide temporary relief, avoid diverse interpretations of AASB 112 developing in practice
and improve the information provided to users of financial statements before and after Pillar Two legislation comes into
effect. The group applied the temporary exception at 30 June 2023.
The AASB 112 disclosure requirements are effective for annual reporting periods beginning on or after 1 January 2023. The
group is currently assessing the impact.
AASB 2020-1 AMENDMENTS TO AASs- CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT AND
AASB 2022-6 AMENDMENTS TO AASs - NON-CURRENT LIABILITIES WITH COVENANTS
In January 2020, the AASB issued amendments to paragraphs 69 to 76 of AASB 101 to specify the requirements for
classifying liabilities as current or non-current. The amendments clarify:
• what is meant by a right to defer settlement
• that a right to defer settlement must exist at the end of the reporting period
• that classification is unaffected by the likelihood that an entity will exercise its deferral right
• that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability
not impact its classification
The amendments were originally effective for annual reporting periods beginning on or after 1 January 2023, however the
AASB has now issued AASB 2022-6 Amendments to AASs - Non-Current Liabilities with Covenants which has changed the
effective date of AASB 2020-1 to annual reporting periods beginning on or after 1 January 2024 and must be applied
retrospectively. This means that it will be applied in the reporting period ending 30 June 2025. FLT does not intend to adopt
the standard before its operative date.
The amendments in AASB 2022-6 clarify:
• that only covenants with which an entity must comply on or before the reporting date will affect a liability’s
classification as current or non-current
• specific situations in which an entity does not have a right to defer settlement for at least 12 months after the reporting
date
The amendments in AASB 2022-6 also add presentation and disclosure requirements for non-current liabilities subject to
compliance with future covenants within the next 12 months.
The group does not expect the application of the standard to have a material financial impact on its consolidated financial
statements.
There are no other standards that have been issued but are not yet effective and that are expected to have a material
financial impact on the entity in the current or future reporting periods and on foreseeable future transactions.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
123
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 2023 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 2023 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
2. Note I (a) to the financial statements contains a statement of compliance with International Financial Reporting Standards
3. 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.
4. 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 2023.
On behalf of the board
G.F. Turner
Director
BRISBANE
30 August 2023
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
124
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 report
Opinion
We have audited the financial report of Flight Centre Travel Group Limited (the Company) and its
subsidiaries (collectively the Group), which comprises the balance sheet as at 30 June 2023, 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 report of the Group is in accordance with the Corporations
Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023
and of its consolidated financial performance for the year ended on that date; and
b. 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 report 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 report of the current year. These matters were addressed in the context of
our audit of the financial report 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.
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 report. 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 report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Recognition and measurement of volume incentive contract assets and revenue
Why significant
How our audit addressed the key audit matter
The Group generates volume incentive revenue from travel
providers for achieving annual targets
We evaluated the Group’s judgements in determining the
volume incentive revenue recognised.
The volume incentive revenue process is inherently
judgemental and includes various assumptions including:
Contract periods do not correspond to the Group’s
financial year end. Judgement is required to
determine expected future volumes and the tiered
commission rates to be applied in the
circumstances.
Contracts are renegotiated periodically. Updates
to terms and contractual agreements may result in
variations being received which may relate to past
performance.
Impairment Testing of Intangible Assets
Why significant
As at 30 June 2023 goodwill and other indefinite life
intangible assets of $831.4m as disclosed in Note A5, are
allocated to each of the Group’s individually significant cash
generating units (CGUs) or group of CGUs.
The Group performs an annual impairment assessment, or
more frequently if there is an indicator that goodwill or
indefinite life intangibles may be impaired. This assessment
involves a comparison of the carrying value of each CGU
with its recoverable amount.
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.
Our audit procedures included the following
► Evaluated the Group’s accounting for volume
incentives was in accordance with AASB 15
Revenues from Contracts with Customers.
► Obtained a sample of the volume incentive
agreements and reconciled the agreed rates to
incentive volume revenue calculations.
► Agreed the underlying travel data used in the
volume incentive calculations to independent
third-party booking information and supplier
confirmed data (where available).
► Evaluated renegotiations are supported by
adequate documentation.
► Agreed volume incentive revenue to cash receipts
on a sample basis.
► Assessed the adequacy of the disclosures included
in Notes A2 and F4 to the financial statements.
How our audit addressed the key audit matter
Our audit assessed the requirements of Australian
Accounting Standard AASB136 Impairment of Assets.
Our procedures included the following:
► Assessed the Group’s definition of its CGUs for
consistency with Australian Accounting Standards,
assessing any changes in CGUs including for
acquisitions in the period, and considering
impairment for each of the Group’s individually
significant CGUs.
► Assessed whether the allocation of assets,
including goodwill, to CGUs, was consistent with
our knowledge of the Group’s operations.
► Developed 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.
► Evaluated the reasonability of the Group’s
cashflow forecast models used to estimate
recoverable amount by:
o
o
Testing the mathematical accuracy of the
cash flow models
Assessing the historical accuracy of the
Group’s cashflow forecasts
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Why significant
How our audit addressed the key audit matter
o
o
Assessing the application of key assumptions
used in the cashflow models
Assessing whether the CGUs included a
reasonable allocation of corporate
overheads
► Evaluated the Group’s forecast recovery path
projections, by comparison to external economic
and industry forecasts.
► Involved our valuation specialists to evaluate the
reasonability of the discount rates and terminal
growth rates assumptions used by the Group.
► Assessed the sensitivities of the impairment model
to reasonably possible changes in assumptions
relating to cash flow forecasts, growth rates and
discount rates applied.
► Assessed the adequacy of impairment and related
disclosure in Note A5 to the financial statements.
Business Acquisition of Scott Dunn
Why significant
How our audit addressed the key audit matter
On 7 February 2023 the Group acquired 100% of Luxury
Travel Holdings Ltd and its subsidiaries (Scott Dunn) for an
amount of $203.9m as disclosed in Note A6.
This was a key audit matter due to the financial significance
of the value of the transaction, and the resulting goodwill
arising on the acquisition as well as the level of judgement
involved in the valuation of acquired intangible assets.
Our audit procedures included:
► Assessed whether the transaction was accounted
for in accordance with the requirements of AASB3
Business Combinations.
► Inspected the Sale and Purchase Agreement
between the relevant parties to assess the basis
and composition of the purchase consideration
were consistent with the Group’s accounting for
the acquisition.
► Obtained supporting documentation for the
consideration and selected net assets balances of
the acquiree at the acquisition date.
► Involved our valuation specialists to evaluate the
reasonability of the fair value of identifiable
acquired intangible assets.
► Assessed the alignment of accounting policies,
particularly revenue recognition in accordance
with the Group’s policies.
► Assessed the adequacy of financial report
disclosures included in Note A6 of the financial
statements.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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 2023 annual report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the 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 report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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 report, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
► 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 report 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 report, including the
disclosures, and whether the financial report represents 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 report. 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 report 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.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 32 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Flight Centre Travel Group Limited for the year ended 30
June 2023, complies with section 300A of the Corporations Act 2001.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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
Alison de Groot
Partner
Brisbane
30 August 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable at 26 July 2023.
(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 1,604 holders of less than a marketable parcel of ordinary shares.
(B)
EQUITY SECURITY HOLDERS
TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
NAME
Bennelong Australian Equity Partners Pty. Ltd
Gainsdale Pty Ltd ¹
Gehar Pty Ltd ¹
James Management Services Pty Ltd ¹
Fidelity Institutional Asset Management
State Street Global Advisors Australia Ltd.
Fidelity Management & Research Company LLC
Yarra Funds Management Limited
Ubique Asset Management Pty Ltd
The Vanguard Group, Inc
BlackRock Institutional Trust Company, N.A.
Vinva Investment Management Limited
Macquarie Investment Management Global Ltd.
FLT Share Plan
Vanguard Investment Australia Ltd.
Selector Fund Management Limited
FIL Investment Management (Australia) Limited
BlackRock Investment Management (Australia) Ltd.
Wilson Asset Management (International) Pty. Ltd.
Lennox Capital Partners Pty Ltd.
1 Substantial holder (including associate holdings) in the company.
DEED OF PRE-EMPTION
NUMBER OF
SHAREHOLDERS
77,408
12,823
1,397
751
49
92,428
NUMBER HELD
PERCENTAGE
OF
ISSUED SHARES
16,352,805
15,489,791
12,332,868
10,740,445
7,877,270
5,992,559
5,265,056
4,740,068
4,659,699
4,444,680
4,052,396
3,581,026
3,146,524
2,826,085
2,795,034
2,390,514
2,067,127
1,957,558
1,839,769
1,556,995
7.5 %
7.1 %
5.7 %
4.9 %
3.6 %
2.7 %
2.4 %
2.2 %
2.1 %
2.0 %
1.9 %
1.6 %
1.4 %
1.3 %
1.3 %
1.1 %
0.9 %
0.9 %
0.8 %
0.7 %
114,108,269
52.1 %
On 19 May 2023, FLT announced that the Shareholders’ Deed of Pre-Emption between the three founding entities
Gainsdale Pty Ltd, Gehar Pty Ltd and James Management Services Pty Ltd had been terminated.
The Deed of Pre-Emption bound each of the parties to give first right of refusal on the purchase of shares in the company.
Following termination of the deed, the founders ceased to have a relevant interest in the other founders’ FLT shares.
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
131
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 are
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).
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
132
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 expense / (credit)
Deferred income tax (benefit) / expense included in income tax comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Numerical reconciliation of income tax to prima facie tax (receivable) /
Profit / (Loss) before Income tax expense / (credit)
Tax at the Australian tax rate of 30% (2022 - 30%)
Tax effect of amounts in calculating taxable income:
Non-deductible amounts
Deductible 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 provision of prior year’s income tax
Income tax expense / (credit)
2023
$'000
10,781
7,136
5,130
23,047
(2,945)
10,081
7,136
2022
$'000
4,370
(97,321)
2,347
(90,604)
(125,492)
28,171
(97,321)
70,459
21,138
(377,786)
(113,336)
1,977
(12)
(243)
(479)
4,532
(1,418)
—
(4,449)
27,968
1,340
(11,101)
(290)
5,130
(4,921)
23,047
11,589
(10,656)
8,479
(912)
(274)
(213)
1,156
3,712
(100,455)
4,563
(1,570)
4,511
2,347
9,851
(90,604)
(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
Share-based payments reserve
Equity component of convertible note
Equity raising
NOTES
F11
B5
D4
2023
$'000
2,663
—
(1,542)
2022
$'000
(4,061)
22,887
—
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
F11
F11
234
(1,489)
(1,255)
—
750
750
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
133
TAX TRANSPARENCY REPORT (UNAUDITED) CONTINUED
INCOME TAX PAID AND INCOME TAX PAYABLE (CONTINUED)
(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
2023
$'000
60,112
52,178
4,875
2,367
6,738
2022
$'000
98,592
54,359
4,875
4,932
6,566
126,270
31,401
169,324
50,797
KEY ESTIMATES & JUDGEMENTS - UTILISATION OF TAX LOSSES
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 unused tax losses in 2023 were incurred by the group across numerous jurisdictions. These losses have various
expiry dates from 2024 through to indefinite carry forward.
(V)
CALCULATION OF CURRENT TAX EXPENSE
Current income tax expense of current period
Prior period adjustments to current tax receivable
Effect of currency translation
Current income tax expense
NOTES
F12
2023
$'000
10,781
2,497
(562)
12,716
2022
$'000
4,370
2,347
—
6,717
(VI)
RECONCILIATION OF INCOME TAX EXPENSE TO INCOME TAX PAID AND PAYABLE
Net current tax receivable at the beginning of the period
Less income tax received
Current income tax expense
Net current tax receivable at the end of the period
EFFECTIVE COMPANY TAX RATES
Effective company tax rate
Effective tax rate - Global
(i)
(30,392)
5,369
12,716
(81,021)
43,912
6,717
(12,307)
(30,392)
2023
%
32.71 %
2022
%
23.98 %
Primarily, the difference between the Australian corporate tax rate of 30% and FLT's effective tax rate is being driven by the
effect of global tax rate differences and tax loss recognition.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
134
TAX TRANSPARENCY REPORT (UNAUDITED) CONTINUED
TAX CONTRIBUTION SUMMARY
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)
2023
OTHER
COUNTRIES
$'000
(11,016)
33,838
2,530
6,156
AUSTRALIA
$'000
2,251
27,901
866
—
33,380
(41,751)
69,585
(49,618)
PAYG/PAYE/salary withholding
136,323
136,161
TOTAL
AUSTRALIA
2022
OTHER
COUNTRIES
$'000
(8,765)
61,739
3,396
6,156
102,965
(91,369)
272,484
$'000
(36,058)
20,637
702
—
15,410
(26,797)
78,607
$'000
(12,299)
22,462
3,743
(1,800)
29,313
(22,269)
89,351
TOTAL
$'000
(48,357)
43,099
4,445
(1,800)
44,723
(49,066)
167,958
Total Tax Contribution
158,970
187,636
346,606
52,501
108,501
161,002
TOTAL TAX CONTRIBUTION BY COUNTRY
2023
2022
TOTAL TAX CONTRIBUTION BY TAX TYPE
2023
2022
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
135
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.
FINANCIAL REPORT 2023 FLIGHT CENTRE TRAVEL GROUP
136
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