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FLT ANNUAL 2018REPORT ANNUAL REPORT ANNUAL 2018 COMPANY VISION, PURPOSE AND PHILOSOPHIES For our company to survive, grow and prosper for the next 100 years and beyond, we must clearly define and live by our vision, purpose and philosophies. We must protect and further develop our company culture and philosophies. Our culture must be robust and independent, with the ability to outlive our current and future leaders. OUR VISION ‘To become the world’s most exciting and OUR PURPOSE profitable travel retailer, personally delivering ‘To open up the world for those amazing experiences to our people, our who want to see.’ customers and our partners.’ OUR VALUES OUR BUSINESS MODEL 1 OUR PEOPLE 1 OWNERSHIP Our company is our people. We care for our We believe each individual in our company should colleagues’ health and wellbeing, their personal have the opportunity to share in the company’s and professional development and their financial success through outcome-based incentives, profit security. We believe that work should be challenging share, BOS (franchises) and Employee and Leadership and fun for everyone and through work we contribute Share Schemes. It is important that business leaders to our community. and business team members see the business they run as their business. 2 OUR CUSTOMER We recognise that our customers always have a choice. 2 INCENTIVES We care about personally delivering amazing travel Incentives are based on measurable and reliable experiences. This is provided with honesty, integrity outcome-based KPIs. We believe that ‘what gets and a great attitude. It is the key to our company’s rewarded, gets done’. A reward for producing the success. The key measure of whether we really are needed outcome. If the right outcomes are rewarded, personally providing our customers with an amazing our company and our people will prosper. experience, an amazing product and a very caring service is they will return again and again. 3 OUR STANDARD SYSTEMS – ONE BEST WAY In our business there is always ‘one best way’ to 3 BRIGHTNESS OF FUTURE operate. These are standard systems employed We believe our people have the right to belong to universally until a better way is shown. This improved a Team (family), a Village, an Area (tribe) and Nation way becomes the ‘one best way system’. We value (hierarchy) that will provide them with an exciting common sense over conventional wisdom. future and a supportive working community. They also have the right to see a clear pathway to achieving their 4 FAMILY, VILLAGE, TRIBE career goals. Promotion and transfers from within will always be our first choice. Our structure is simple, lean, flat and transparent, with accessible leaders. Our business model is being one of the world’s best and biggest small business 4 TAKING RESPONSIBILITY operators. There is a maximum of 4 and sometimes We take full responsibility for our own successes or 5 layers. The village is an unfunded, self-help support failures. We do not externalise. We accept that we group that forms an integral part of our structure. have total ownership and responsibility, but not always control. As a company we recognise and celebrate our • Family (Teams – min 3, max 7 members) individual and collective successes. Villages (min 3, max 7 Teams). • Tribe (Areas – min 10, max 20 Teams). 5 EGALITARIANISM AND UNITY • Nations/Brands (min 8, max 15 Areas). • Regions/States/Countries. In our company, we believe that each individual • Board and senior leadership team. should have equal privileges and rights. In all our countries and all our businesses there should be 5 PROFIT no ‘them and us’. A fair margin resulting in a business profit is the key measure of whether we really are providing our customers with an amazing experience, an amazing product and a very caring service – an experience they genuinely value and will pay us for. FLIGHT CENTRE TRAVEL GROUP LIMITED (FLT) CORPORATE DIRECTORY CONTENTS Directors G.F. Turner Corporate directory 1 G.W. Smith Chairman’s message 2 J.A. Eales FY18 results & overview 6 R.A. Baker Strategic update 10 C.M. Garnsey (appointed 7 Feb 2018) Outlook 12 Directors’ report 14 Secretary D.C. Smith Auditor’s independence declaration 39 Principal registered office and place Statement of profit or loss 40 of business in Australia Statement of other comprehensive income 41 275 Grey Street, South Brisbane QLD 4101 Statement of cash flows 42 +61 7 3082 0088 Balance sheet 43 ABN 25 003 377 188 Statement of changes in equity 44 Share register Notes to the financial statements 45 Computershare Investor Services Pty Ltd A Financial overview 48 200 Mary Street, Brisbane QLD 4000 A1 Segment information 48 Auditor A2 Revenue 52 Ernst & Young A3 Other income 53 111 Eagle Street Brisbane QLD 4000 A4 Expenses 53 A5 Business combinations 54 Stock exchange A6 Contingent consideration 58 FLT shares are listed on the Australian B Cash management 60 Securities Exchange. B1 Cash and cash equivalents 60 Web address B2 Financial asset investments 61 www.fctgl.com B3 Cash and financial asset investments – financial risk management 62 KEY DATES 2018/19 B4 Borrowings 63 B5 Ratios 65 August 23, 2018 B6 Dividends 66 2017/18 full year results released B7 Capital expenditure 67 September 14, 2018 C Financial risk management 68 2017/18 final dividend record date C1 Financial risk management 68 October 12, 2018 C2 Derivative financial instruments 72 2017/18 final dividend payment date C3 Other financial assets 75 D Reward and recognition 76 October 22, 2018 D1 Key management personnel 76 Annual General Meeting D2 Business ownership scheme (BOS) 77 February 21*, 2019 D3 Share-based payments 78 2018/19 half year results released D4 Contributed equity and treasury shares 82 E Related parties 83 March 22*, 2019 E1 Investments accounted for using the equity method 83 2018/19 interim dividend record date E2 Related party transactions 85 April 12*, 2019 F Other information 87 2018/19 interim dividend payment date F1 Other expenses 87 *Dates are subject to change F2 Earnings per share 88 F3 Trade and other receivables and other assets 89 This financial report covers the consolidated financial F4 Property, plant and equipment 91 statements for the consolidated entity consisting of FLT F5 Intangible assets 92 and its subsidiaries. The financial report is presented in F6 Trade and other payables 95 Australian currency. F7 Provisions 96 FLT is a company limited by shares, incorporated and F8 Reserves 97 domiciled in Australia. F9 Tax 99 A description of the nature of the consolidated entity’s F10 Auditor’s remuneration 101 operations and its principal activities is included in the F11 Seasonality 101 review of operations and activities in the directors’ report. G Group structure 102 The financial report was authorised for issue by the G1 Subsidiaries 102 directors on 23 August 2018. The directors have the G2 Deed of cross guarantee 103 power to amend and reissue the financial report. G3 Parent entity financial information 105 H Unrecognised items 107 FLT endorses the ASX’s Corporate Governance Principles H1 Commitments 107 and Recommendations and complies in all areas, apart from amalgamating the Remuneration and the H2 Contingencies 107 Nomination Committee. Further information on FLT’s H3 Events occurring after the end of the reporting period 108 compliance with the Corporate Governance Principles I Summary of accounting policies 109 and Recommendations, including FLT's Corporate Directors’ declaration 122 Governance Statement, can be found on the company’s Independent Auditor’s Report 123 website, www.fctgl.com/investor/governance/corporate- Shareholder information 128 governance-statement-2/ Tax transparency report (unaudited) 129 DEAR SHAREHOLDERS Welcome to your company’s Annual Report for the 2018 fiscal year. The 12 months to June 30 2018 was always going to be an important period for FLT as it aimed to return to its traditional growth trajectory after three years of reasonably flat or declining profit results and at a time when significant change was planned. Pleasingly, the company delivered record financial results – establishing new profit and TTV milestones – during what was surely the most substantial year of change in FLT’s history. Collectively, these changes have strengthened our foundations and we believe they will help pave the way for further future growth. In Australia, we completed our largest system migration when we switched our sales consultants’ core CHAIRMAN'S MESSAGE technology platform to a new Global Distribution System (GDS) provider. GARY SMITH While the migration process was expertly managed by our in-house trainers, a degree of disruption was inevitable as our entire Australian and New Zealand sales force was temporarily taken out of shops to be trained on the new system. This significant event also contributed to a temporary decrease in retail sales staff numbers in Australia, as we focussed on achieving a successful system deployment, rather than sales force expansion, during this critical period. Moving forward, we expect the new system will help us achieve our primary strategic objective of enhancing in-store productivity. Shortly after the new GDS was fully deployed within the leisure business, the company initiated its Rebrand and Grow (R&G) strategy. Under this strategy, six leisure brands were merged to create three stronger and higher profile super networks. While no sales roles were lost as a result of these mergers, the short-term impact should not be under-estimated, with some 1200 sales consultants from 250 shops – more than 15% of our Australian retail workforce – moving to new brands. The business transformation program, which was initiated late in FY17 under Melanie Waters-Ryan’s stewardship, also started to gain momentum during FY18 and delivered tangible benefits, as outlined in Skroo’s column.

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