Investor Presentation by Adam Campbell (CFO) Macquarie Australia Conference
FY17: THE STORY SO FAR TTV expected to top $20b for 1 st time (circa 4% growth) – another record sales year On track to achieve FY17 targets but some $300m-$330m underlying PBT ongoing target uncertainty – FX fluctuations & airfare pricing Targeting $1b in online leisure TTV Nine of FLT’s 10 countries/regions delivered record 1H TTV in local currency Three – Europe, South Africa & Mainland China – delivered record 1H profit
FY17 HIGHLIGHTS (1H) Increased market- Enhanced share – productivity – TTV international ticket per person sales growth (up increasing in most 10% in Australia) countries (key outpacing global strategy) outbound travel Investment in growth transformation initiatives to ensure FLT is as successful over the next 20 years as it has been in the New revenue Continued balance past 20 streams delivered sheet strength – – new markets, strong positive net sectors & products debt position
MANUFACTURED PRODUCT SALES INCREASING Manufactured Includes Captain’s leisure products Packages, on track to deliver Journeys, more than $500m Escapes, Black in TTV in Australia Market Flights, alone during FY17 Get Luxe, Tailor- Made & others From Start-Ups to Multi Million Dollar Product Ranges Does not include constructed Unique offerings airfares, other for FLT customers wholesale packages, TTV from in-destination businesses
FY17 CHALLENGES Internal Factors Underperformance Cost growth in some brands & outpacing revenue businesses (Asia, growth in low fare North America environment leisure, Top Deck) External Factors Trading cycle – FX fluctuations challenging significantly conditions in affecting overseas some markets result translation Significant airfare deflation
AIRFARE PRICING Significant deflation Unprecedented & in some key prolonged Deflationary markets – including discounting from Environment Australia & USA – most carriers (not LCC-driven) since 2H FY16 7% decline in Stimulating demand Impacting but leading to average Revenue slower than normal international prices in Australia during revenue & TTV 1H growth Average fares in Opportunity for Australia now at more rapid TTV & Brighter similar levels to revenue growth as Outlook PCP, in line with 2H progresses FLT’s expectations
SHORT-TERM GROWTH DRIVERS (FY18) Better Operational Trading Improvement Normal airfare Cycle price shifts Ongoing between Productivity periods, Gains Globally exchange rate Benefits stability Flowing From Cost Control Initiatives Overall Market Growth Stronger Growth Contributions Top Deck Sensible & Small Europe Cost-Effective Contribution Australian Network From Recent Corporate Expansion Acquisitions Asia
MEDIUM-TERM GROWTH DRIVERS (FY18 – FY20 ) Creation of a new Business Transformation Team under Melanie Waters-Ryan (COO) Ongoing Growth Strategies
TRANSFORMATION TEAM PRIORITIES Identify & Grow digital deploy cost commerce reduction sales Recommend strategies additional Strategic review investment of requirements in underperforming growth models brands & & brands businesses Grow the Globalise Travel Technology Experience Network Aligned acquisition strategy More comprehensive details on this team’s progress & objectives will be provided at the full year in August
CHANGES ALREADY TAKING PLACE GOGO wholesale business (USA) downsized during Loss-making 1H New Asia Student Flights structure – NZ & RSA Singapore, offerings Malaysia & absorbed into Transformation Greater China FCB program in infancy but management- Slow down in driven changes Streamlined leisure travel already in place finance growth in some structures ahead countries in of Dynamics response to roll-out subdued market conditions Travel Money USA
CORE GROWTH OPPORTUNITIES Leisure Travel Retailing In-Destination 5 Key Travel EMEA Geographies Experiences Americas Australia & NZ Asia 3 Key Areas In-Destination (Global) Corporate Travel
LEISURE TRAVEL RETAILING Brands that are easy to transact & All leisure interact with Delivering brands likely specialised to be expertise & profitable in unique Australia products during FY17 FLT’s Largest Business Sector Targeted & cost effective Omni-channel growth & blended planned along offerings Proactively the P2P Index targeting high growth sectors - adventure, youth, river cruise
LEISURE TRAVEL: THE P2P INDEX Dominating The Leisure Travel Landscape OTA Contact Centres Flagship Stores Community Home Based Events • High volume, low • 24/7 telephone touch sales & assist • Shopping centres • Hyper stores • Model expanding • FLT’s 13 th Month • Flightcentre, • Teams currently • CBD and strip globally • Megastores StudentUniverse, based in Brisbane & locations BYOJet, Aunt Betty. Sydney Growing network of specialist “direct” businesses – FCBT, Cruise, Groups, First & Business
LEISURE TRAVEL: PUSHING TO THE EDGES Strong growth potential (from small base) in channels at the fringes of the P2P Index Home-Based Contact Centres Expos & Events Agents Sales & service Cost-effective model Nationwide program businesses in head that is growing in place office locations strongly globally 24/7 Customer Discover the FLT turning over Assistance, Web Americas, World circa $160m in Chat, After Hours Travel & Cruise, Australia alone Sales Travel Expo Attracted almost Flexible staffing 1% of Australian requirements population during FY17
LEISURE TRAVEL: DIGITAL COMMERCE ✓ Transaction volume growing fast ONLINE ✓ Leisure targets $1B in FY17 ✓ Corporate adoption of online 40%+ COMPLETION FLT ✓ Sign of healthy value proposition ONLINE ✓ Already multi-billion dollar entities ✓ Complex purchases are more valuable ORIGINATION
LEISURE TRAVEL: ENHANCED DIGITAL PRESENCE StudentUniverse seeing strong YoY growth in mobile bookings NATIVE APPS New apps deployed for FC Australia and FC USA
LEISURE: FLT’S SHOP NETWORK Generating 85- 90% of leisure Significantly TTV in Australia higher Strong conversion & network of transaction community & values than flagship shops other channels The Heart of The P2P Index Opportunity to ”pivot” leisure “ Billboard model in Effect” at high some profile sites – countries to cost effective improve advertising & performance High levels of promotion profitability in Australia
LEISURE: GROWTH OUTLOOK Ongoing Differing Network Growth Profiles Enhancements Modest growth planned for more mature Flight Centre Brand in Australia Tailored growth Up-staffing in some plans for each brands & locations brand in Australia & without increasing overseas footprint FCB growth focused on Some pivoting or flagships in major & rationalisation in super-regional loss-making shopping centres overseas Emerging brands Relocation program businesses typically growing – shifting shops to more rapidly, but better sites generating less No plans for TTV/team widespread shop closures in Australia, given high levels of profitability
CORPORATE TRAVEL Now generating about one- third of FLT’s global TTV Award Entering winning & important new innovative geographies Recent offerings acquisitions in the Americas, Asia and Continental Consolidating Ongoing Europe position as enhancements one of the to already world’s largest strong travel product suite Investments managers in platforms & Artificial Intelligence Tools (Sam & Claire)
IN-DESTINATION TRAVEL EXPERIENCES Future Expansion FLT’s 3 rd Key Opportunities – Business Pillar hotel management, global DMC Includes Buffalo network Destination Management Company & tour operators (Top Deck & Back- Greater share of Roads) wallet, greater control over product offering, unique customer offers
RECENT ACQUISITIONS (FY16 & FY17) Generally targeting & investing in smaller businesses with solid growth potential New Corporate Online & E- In-destination Other Markets commerce • Nordics & • StudentUniverse • Buffalo Tours • Avmin Germany • BYOjet • Ignite* • Mexico • Bibam* • Sunny (China) • Netherlands (Argentina) • Travel Tours (India) # • Malaysia • Maya (cievents HK) *FLT has minority interests in both Bibam & Ignite # Part of the Travel Tours acquisition is also yet-to-complete
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