TODAY’S PRESENTERS ADAM DEAN GRAHAM MELANIE CAMPBELL SMITH TURNER WATERS-RYAN Chief Financial Officer President – The Americas Chief Executive Officer Chief Operating Officer 2
TODAY’S AGENDA RESULTS & HIGHLIGHTS 1 Adam Campbell, Dean Smith SEGMENT RESULTS 2 Graham Turner, Melanie Waters-Ryan, Dean Smith STRATEGY & TRANSFORMATION 3 Melanie Waters-Ryan OUTLOOK 4 Graham Turner 3
RESULTS & HIGHLIGHTS Adam Campbell Dean Smith 4
RESULT OVERVIEW: DIVERSITY A STRENGTH Strong corporate results globally Australian company is now truly global Record contributions from overseas USA and Canada continuing and sustainable performances Disappointing leisure results in Australia 5
RESULT OVERVIEW: FINANCIAL PERFORMANCE Record TTV Exceeded previous sales milestone (FY18 1H) by circa $1b of $11.16b 10% year on year growth Underlying Within the targeted 1H range ($140m-$150m) profit of 1% growth on underlying FY18 result $140.4m Record 60 cents per share fully franked interim dividend shareholder Additional $1.49 per share fully franked special dividend announced today returns 6
RESULTS DRIVERS: CORPORATE TRAVEL Strong growth in Australia and overseas TTV by business type FLT consolidating its position as a top 4 player globally Executing key strategies – FCM “Truly Global”, Corporate Traveller SME domination Ongoing investment in systems and tech platform – 37% Claire, Sam, Savi, CT.GO High retention rates, complemented by new account wins – circa $600m in business won for FCM globally during 1H 63% 1H corporate TTV up 16% globally to $4.2b = 37% of group TTV during the period Leisure & Other Corporate 7
GAINING MOMENTUM IN WORLD’S LARGEST MARKETS 1H TTV: C orporate now FLT’s Corporate TTV Strong TTV growth major business sector in Contributions trajectory most key markets 4.5 Billions 100% 4.0 90% 21% 3.5 80% 31% 70% 3.0 60% 2.5 50% 40% 2.0 30% 1.5 20% 12% 36% 10% 1.0 0% Americas Asia Australia/NZ EMEA 0.5 0.0 Americas 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Asia Australia & NZ Corporate TTV TTV EMEA Leisure/Other TTV 8
A COMPELLING CORPORATE GROWTH STORY An organic Tailored for Global growth model customers success Investing in sales and marketing Distinct brands with distinct A proven model that has been and delivering value to offerings designed specifically deployed in 20+ countries customers for different customer types throughout the world Growing through winning and SME – Corporate Traveller All countries profitable retaining customers – no large (excluding FCM Germany start- TMS (National, Multi National) - scale acquisitions up) and with strong future FCM growth prospects Some small acquisitions SSME – Flight Centre Business historically to complement Highly productive and highly Travel (included in leisure organic growth and gain a scalable results) footprint in key markets – Nordics, Casto 9
RESULTS DRIVERS: MATERIAL CONTRIBUTION FROM INTERNATIONAL BUSINESSES Globalisation - Businesses Record breaking 1H contribution – 71% increase in Outside Australia Generated 52% combined profits from overseas leisure and of 1H TTV corporate businesses Strong growth in the Americas and Asia – profits have almost quadrupled year-on-year 6% 14% Solid profit growth in EMEA Record TTV in all geographic segments – 52% of TTV generated outside Australia 22% 48% 8% 2% EMEA segment Americas Segment Asia Segment Other Segment Australia New Zealand 10
AMERICAS NOW AN EARNINGS & TTV POWERHOUSE Americas businesses generated 23% of FLT’s underlying 1H PBT (PCP: 6 %) and 22% of FLT‘s 1H TTV $’m $’b 80 3 70 2.5 60 50 2 40 30 1.5 2.46 20 2.09 1.93 1 1.86 10 1.53 0 0.5 -10 -20 0 FY15 FY16 FY17 FY18 FY19 FY15 1H FY16 1H FY17 1H FY18 1H FY19 1H Underlying PBT - 1H Underlying PBT - Full Year TTV - Americas ($b) 11
AUSTRALIAN LEISURE Modest TTV increase – growth driven by OTAs, specialist businesses, home-based (Travel Partners) and Travel Money Results Increased same store sales but with smaller network following circa 90 closures during FY18 2H snapshot Disappointing overall profit result – accounts for most of the PBT decline in Australia/NZ segment during 1H Flight Centre brand store network under performing Significant change/disruption during past 2 years – investment in systems, security, network and people New wage model (circa $5m 1H impact) and rapid upstaffing adding to costs during the period Contributing Network changes – shop closures, Rebrand and Grow strategy impacting TTV growth and product mix factors Decreased gross margin – lower attachment rates, consultant discounting Slower growth in outbound travel, low consumer confidence, soft retail sales overall at end of 1H Strategies Long-term transformation program underway in place to Short-term initiatives now in place to stabilise Flight Centre brand results during 2H – cost reduction, revenue growth, network planning – amid ongoing volatility improve Outlined in Strategy & Transformation and Outlook sections results 12
PROFIT & LOSS AUD $'m 1H FY19 1H FY18 Mvmt % TTV Profit (restated AASB15) Record TTV across all Circa $13m difference between geographic segments – largely actual and underlying PBT Group TTV 11,155 10,154 9.9% corporate-driven Olympus impairment ($23.8m) Revenue 1,462 1,360 7.4% 22 years of TTV growth in 23 partially offset by positive $3m years since listing AASB 15 transition adjustment Other income 20 13 50.4% plus positive $8m revenue Costs Share of JV/Associates 2 1 27.6% alignment in global product business Circa $60m increase ($32m in Employee benefits (758) (718) 5.7% constant currency) in Margins underlying costs globally Marketing expense (95) (101) (6.5%) (excluding touring cost of Decreased revenue margin, as Rent expense (81) (81) 0.2% sales) expected given ongoing Tour operations (93) (58) 60.4% business mix changes (strong D&A (41) (39) 6.1% EBA in Australia, upstaffing growth in lower margin Finance costs (11) (11) (4.2%) and strong Americas results sectors) and lower gross Impairment (24) - (100.0%) contributing to employee margins in Australian leisure Other expenses (253) (228) 11.1% benefits expense increase PBT 127 139 (8.6%) Continued reduction in Decreased marketing spend underlying cost margin with higher ROI, predominantly Underlying PBT 140 139 0.7% (excluding touring cost of in the Americas sales) as a result of cost EPS (cents) 84.1 101.3 (17.0%) containment initiatives and Tour operating spend increase Underlying EPS (cents) 100.1 101.2 (1.0%) improved productivity reflects consolidation of Buffalo Tours DMC 11bps decrease in underlying Sales teams 2,821 2,911 (3.1%) net margin during business engineering phase of Margins transformation Underlying Revenue Margin 12.98% 13.38% (40 bps) Underlying Net Margin 1.26% 1.37% (11 bps) Underlying Cost Margin (11.08%) (11.58%) 50 bps 13
BALANCE SHEET AUD $'m 1H FY19 1H FY18 Mvmt % 1H Analysis (restated AASB15) Cash & cash equivalents 906 1,011 (10%) Assets Liabilities Financial assets 186 203 (8%) Trade & other receivables 460 442 4% Lower cash balance – reflects Trade payables decreased Contract assets 332 287 16% softer than usual Australian mainly due to timing of Other current assets 124 105 18% leisure results and timing Corporate BSP payments Current assets 2,008 2,047 (2%) factors (BSP payment cycle to Lower borrowings – maturity PPE 247 250 (1%) airlines) of repurchase agreements that Intangibles 625 561 11% Cash balance also impacted were held at December 17 Other non-current assets 123 142 (13%) Non-current assets 995 953 4% by higher tax instalments paid Cash Position as a result of record Americas Total assets 3,002 3,000 0% profits $394m in company cash and company investments at Dec Trade payables & other liabilities 1,172 1,196 (2%) Contract assets largely Deferred revenue 64 62 3% 18 and $35m in borrowings represented by volume Borrowings 35 91 (62%) incentive receivables - FLT Provisions 52 45 16% Leading to $358m positive net Current liabilities 1,323 1,394 (5%) currently tracking well against debt position targets Trade payables & other liabilities 77 87 (11%) Deferred revenue 52 62 (16%) Goodwill/Intangible asset Provisions 44 37 20% increase driven by FLT’s Non-current liabilities 173 186 (7%) control of the Buffalo DMC ($26m), Umapped acquisition Total liabilities 1,496 1,580 (5%) ($7m) and FX revaluation of US Net assets 1,506 1,420 6% goodwill balance ($22m) as well as ongoing investment in General cash 284 361 (22%) key IT projects General investments 110 107 3% Client cash 623 649 (4%) Client investments 76 96 (21%) Total cash & investments 1,092 1,213 (10%) Positive net debt 358 377 (5%) 14
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