Growth opportunities
The company’s growth plans are outlined on page 5 of the concise report. In addition, the company sees significant growth opportunities in corporate travel through the FCm Travel Solutions network and expects this business to account for at least half of Flight Centre Limited’s overall profit within five years. Franchising is another growth opportunity in Australia.
Board composition and nomination
Flight Centre Limited’s Board comprises:
As outlined in the company’s Annual Report, Geoff Harris is an alternate director for the directors listed above. As an alternate director, Mr Harris is not required to attend all meetings and does not receive remuneration for the role.
Flight Centre Limited’s full Board deliberates selection, appointment and performance matters.
Board appointments are ratified by shareholders.
Candidates with the ability to add value will be considered for future appointments.
Board shareholdings
Various factors are considered when appointing directors. Considerations include:
The size of an individual’s shareholding is not a consideration, as outlined in the company’s constitution.
The most recent Board appointment, Bruce Brown, has proven operational experience and an outstanding corporate record.
Mr Brown retired as CEO of Campbell Brothers in 2005 after 30 years with the company. He served as company secretary and c
hief financial officer, before becoming CEO in 1990.Concise report - “Likely developments and expected results of operations”
The wording for this section of the concise report was drawn from a standard concise report template. It is a general statement that should be read in conjunction with the previous section headed “Matters subsequent to the end of the financial year”. It does not relate to specific issues or concerns.
Progress in cost reduction
Details on the company’s progress in reducing costs are outlined on page 4 of the concise report and also in the company’s full year result announcement of August 31.
Shares on issue
Flight Centre Limited has 94,471,035 ordinary shares on issue. Details are included on page 42 of the financial report.
Diversification – acquisitions and property
Flight Centre Limited is a retail travel business with comprehensive leisure, corporate, wholesale and online operations.
While the company will always look at good opportunities, acquisitions are predominantly likely to be small, profitable travel businesses with niche product or services.
Recent acquisitions have included:
Early in 2006/07, the company also banked a significant gain from its earlier investment in a Brisbane CBD property. The property at 316 Adelaide Street sold for $35.5million, a gain on sale before tax of $23.3million.
The company would consider similar investments if good opportunities arose.
AGM date clashes with other listed companies
Flight Centre Limited’s AGM schedule has been constant since the company listed on the Australian Stock Exchange. Unfortunately, with a relatively tight reporting timeframe and a large number of listed companies, clashes are inevitable.
RewardPass program
The RewardPass program was disbanded during 2005/06. Since then, the company’s Price Beat policy has been expanded to give customers greater opportunity to save on a broader range of products. At the announcement of its half year results in February 2006, Flight Centre Limited advised the market that the RewardPass program would cost $15million for the year (2005/06).
Share price
Flight Centre Limited’s share price is inevitably linked to the company’s performance. Historically, when the company exceeded expectations its share price increased. In the last two years, when profits were below expectations, the company’s share price was affected. This was clearly illustrated at the first quarter last year when profit before tax – at $23million – was disappointing. To improve share price, the company needs to consistently improve results.
Dividend Reinvestment
The company is investigating a dividend reinvestment program and will advise shareholders of its progress.
India and China
The Indian acquisition was one of the company’s star performers in 2005/06 and exceeded expectations. Further growth and improved profits are expected in this emerging market in the short term and beyond.
The China joint venture has always been regarded as a longer term investment in a key strategic market for future corporate travel. Sales continue to grow and the company aims to generate profit in the Greater China region (China and Hong Kong) by 2008.
Additional details are included on page 7 of the concise report.
Managing Director’s Salary and Executive Remuneration
Flight Centre Limited’s managing director, Graham Turner, did not draw a salary in 2005/06. Mr Turner made the decision because he felt the company’s profit results were below expectations.
Generally, executive remuneration increased during 2006. Comparisons based on the total amounts disclosed in the annual report are, however, slightly misleading because fewer executives were included in the total in 2005 and some were only in their executive positions for part of the year.
Some salary increases in 2006 followed vastly improved results within the individual executive’s operation, in line with the company’s incentive program.