FY17 Results AUGUST 24, 2017
Today’s Agenda The FLT Story • Graham Turner (CEO) FY17 Financial Results • Adam Campbell (CFO) Strategy & Business Transformation • Melanie Waters-Ryan (COO) FY18 Outlook • Graham Turner (CEO)
FLT Today Three Core Pillars in Five Key Geographies: Leisure Australia/NZ TEN EMEA Asia Americas Global (in-destination) Corporate
Leisure Travel CONTACT FLAGSHIP INDEPENDENT OTA COMMUNITY SPECIALIST EVENTS CENTRES STORES CONTRACTOR • High volume, • 24/7 sales, • Hyperstores • Smaller • Affiliates • FCBT • Travel Expos, simple Chat & assist • Super regionals shopping • Mobile agents • First & Business Discover Europe centres, CBDs & transactions • Round the Discover America strip locations World Lower touch offerings Higher touch offerings • Omni channel network – customers can transact & interact when & how they want • Key distribution channel for suppliers & for FLT’s travel experiences businesses • Australian leisure business generates about 50% of group profit
Corporate Travel • Continued Sales Growth: • Brand Diversity: S pecialist $6.6b in FY17 TTV, SME, TMS, MICE, education, consolidating FLT’s position entertainment businesses as one of the world’s largest • System Enhancements: travel managers Ongoing upgrades to leading technology & product suite • Underlying Strength : • Going Global : Expansion Almost 9% year-on-year TTV into 8 new countries during growth on constant currency FY17 – 12 in past 3 years basis
Travel Experience Network Greater control over customer offering Tour Operators Ability to create unique products Distribution via FLT shop & corporate business network Destination Margin – vertical integration Hotel Management Management Companies New external revenue streams – B2B & B2C Sales (DMCs)
FY17: A Snapshot Key Targets Achieved Highlights Lowlights • $20b + TTV • Record global sales • Airfare deflation • $1b+ in online leisure • Accelerated 2H growth • Lower cost growth, but TTV increase outpaced • Balance sheet strength revenue growth • PBT within targeted • Acquisitions in key range (but below FY16) • FX affecting result countries & sectors translation • Successfully executing • Underperformance in key strategies – some countries & productivity, product businesses development, core sector growth, better • Political uncertainty cost control early in 1H
Financial Results Profit & Loss • Achieved $20b+ TTV target PCP Mov't AUD $m FY17 FY16 % • 21st year of growth in 22 years since listing Group TTV 20,109 19,305 4% • Reasonable cost control in low revenue growth Operating revenue 2,647 2,612 1% trading cycle Other revenue 30 30 0% Total revenue 2,677 2,642 1% • $9m increase in D&A expense – reflects higher capital expenditure in recent years Other income 4 14 (68%) Employee benefits (1,451) (1,433) 1% • 30bps decline in underlying revenue margin – Marketing expense (200) (199) 0% changing business mix (large corporate & online Finance costs (29) (29) (0%) growth) D&A (75) (66) 13% • Underlying PBT adjustments: Other expenses (601) (584) 3% PBT 325 345 (6%) • FY17: $4m for cost of exiting Employment Office Underlying PBT 330 352 (7%) • FY16: $25m impairment charges, $6m gain Basic EPS (cents) 228.5 242.4 (6%) on sale of NZ building and $11m gain from Margins ACCC fine refund Underlying Revenue Margin 13.3% 13.6% (30bps) Underlying PBT Margin 1.6% 1.8% (20bps) Marketing % TTV 1.0% 1.0% -
Financial Results Underlying Half Year Comparison 1H 1H PCP Mov't 2H 2H PCP Mov't Full Year Full Year PCP Mov't AUD $m Dec-16 Dec-15 % Jun-17 Jun-16 % 2017 2016 % Group TTV 9,343 9,182 1.8% 10,766 10,123 6.4% 20,109 19,305 4.2% Revenue 1,251 1,247 0.3% 1,426 1,384 3.1% 2,677 2,631 1.8% Underlying Income Margin % 13.4% 13.6% 13.2% 13.7% 13.3% 13.6% (20bps) (50bps) (30bps) Other Income 4 11 (64.7%) 1 (3) 117.1% 4 7 (42.2%) Total Costs (1,142) (1,112) 2.7% (1,210) (1,174) 3.1% (2,351) (2,286) 2.9% Underlying PBT 113 146 (22.4%) 216 207 4.7% 330 352 (6.5%) Underlying PBT Margin % 1.2% 1.6% 2.0% 2.0% 1.6% 1.8% (40bps) - (20bps) Accelerated 2H Growth • 6.4% 2H TTV growth, after 1.8% 1H growth • 4.7% underlying 2H PBT increase, after 22.4% 1H decrease • 2% underlying 2H PBT margin, after 1.2% 1H result
Financial Results Underlying TTV Growth (constant currency) Leisure Corporate Total PCP Mov't PCP Mov't PCP Mov't % % % Australia & New Zealand 5.8% 3.8% 5.4% Americas 9.1% 5.4% 5.6% EMEA 8.9% 16.8% 11.7% Asia 81.6% 18.2% 25.3% Other n/a n/a 1.0% Total 7.4% 8.7% 7.1% • $804m year-on-year increase in TTV during FY17, despite deflation & FX impacts • 7.1% growth on constant currency basis • Growth within all major regions • Strong growth in online leisure TTV • Solid corporate growth globally & in all major geographies • Ticket volume growth in Australia well above TTV growth as a result of international fare deflation
Sales Growth Outpacing Industry Growth FY17 Growth (%) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Australian Outbound Departures FLT Australian Leisure TTV FLT International Tickets (ex Australia)
Productivity Gains Productivity Growth in Local Currency PCP Driving Productivity Growth Mov't • Tech & system changes in thousands FY17 FY16 % • The right product & margin India INR 24,904 17,966 38.6% • Person-to-person China CNY 6,299 5,295 19.0% Hong Kong HKD 5,534 5,448 1.6% • Enquiry & conversion South Africa ZAR 5,046 4,778 5.6% • Online & blended sales UAE AED 2,618 2,621 (0.1%) Malaysia MYR 1,278 908 40.7% Australia AUD 1,145 1,114 2.8% United States USD 1,143 1,052 8.6% Singapore SGD 1,120 856 30.9% New Zealand NZD 1,048 973 7.7% Canada CAD 807 748 7.9% United Kingdom GBP 575 542 6.1% FLT’s Key Productivity Metric is TTV Per Person
Strategic Acquisitions Strategic Rational Date Completed Segment Ownership Leisure Ignite Voucher-based model selling unique product offers direct & via shop Sep-16 Aust & NZ 49% network Sunny Provides FCTG the required licence to sell outbound travel to Chinese Oct-16 Asia 100% nationals Travel Partners Expansion of Australia leisure business into independent contractor & n/a Aust & NZ 100% affiliate models Travel Managers Expansion of New Zealand leisure into brokers & franchisee models n/a Aust & NZ 100% Travel Tours Expansion of India's leisure business Feb-17 Asia 100% Corporate Nordics & Germany Further expansion of corporate business into Europe and access to in- Dec-16 EMEA 100% house developed OBT technology 3Mundi (France) Further geographical expansion into Europe through acquisition of high Jun-17 EMEA 25% performing FCM Licensee Bibam Access to new technology, potential low cost base for future IT Apr-17 Americas 24.1% development and geographical expansion Les Voyages Laurier du Vallon Increased market share within Quebec region and synergies with existing Aug-17 Americas 75% operations Executive Travel Increased corporate market share within New Zealand n/a Aust & NZ 100% Travel Experiences Buffalo (Vietnam) Expansion of existing DMC network to include Vietnam providing a Apr-17 Other 58.5% dominate DMC presence across Asia Olympus Geographical DMC presence in Central America and the Caribbean Aug-17 Other 100% BHMA Expansion of Travel Experience Network offerings through the acquisition of Jul-17 Other 100% hotel management operating platform and specialist IP
FY17: Challenges Airfare Deflation • Impacted top & bottom-line results Cost Growth • Modest cost increase during FY17 but growth exceeded revenue growth in low-fare environment • Cost increases inevitable, but strategies in place to slow future growth FX Adversely Affected Result Translation • 7% TTV increase at constant currency • $8m impact on PBT • UK profit up 9% in LC but down 10% in AUD Underperformance in Some Countries & Businesses • Asia, touring businesses Political Uncertainty Early in 1H • Election s, Brexit
Financial Results Australia/NZ Result Overview Australia & New Zealand Segment • Record TTV in both countries but profits down 7% PCP Mov't AUD $m FY17 FY16 % • Corporate growth in relatively flat market – driven TTV 11,707 11,080 6% largely by account wins, successful focus on client External Revenue 1,472 1,442 2% retention • $2.6b in corporate TTV in Australia & NZ Underlying PBT 261 280 (7%) • Leisure profits down slightly in Australia, despite Sales Teams 1,752 1,760 (0%) record TTV & strong ticket volume growth Margins • All brands profitable in Australia, apart from MAT Revenue Margin 12.6% 13.0% (40bps) Underlying PBT Margin 2.2% 2.5% (30bps) (close to break-even) & emerging OTAs Note: Underlying Profit Before Tax and Royalty FY16 adjusted by $6m gain on sale of NZ building • Income margin contraction brought about by changing business mix (large corporate & rapid OTA growth)
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