Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2016 Earnings Presentation
85 slides from Flight Centre Travel's earnings presentation, Feb 24, 2016
Slide 1: 2016 First Half Results Presentation
2016 FIRST HALF RESULTS PRESENTATION 24 FEBRUARY 2016 For personal use only
Slide 2: Presentation Overview
PRESENTATION OVERVIEW For personal use only • Introduction – by Haydn Long • Financial Highlights – by Adam Campbell • Global Overview – by Graham Turner • Strategic Update – by Melanie Waters-Ryan • Outlook – by Graham Turner • Questions • Appendices
Slide 3: Introduction
INTRODUCTION For personal use only • Improved results - Record global sales, margin recovery & stronger profits • Increased shareholder returns - Improved 1H EPS, record interim dividend • Continued investment in key areas - Network, systems, unique products, acquisitions, marketing & people • Strat
Slide 4: Investing for Growth
INVESTING FOR GROWTH For personal use only • Next generation shop roll-out Network enhancements • New brands - Aunt Betty • Acquisitions to fast-track growth in key sectors – online, student/youth & corporate • Exporting brands – Travel Money, FCBT, cievents, Stage & Screen, Campus Travel • Project
Slide 5: Financial Highlights
For personal use only FINANCIAL HIGHLIGHTS
Slide 6: Financial Highlights: Strong Sales
FINANCIAL HIGHLIGHTS: STRONG SALES For personal use only Record TTV of $9.2B 16.5% CAGR 12.8% TTV in turnover over 20 years growth 19th 1H $1b TTV increase in 20 Increase on years PCP Record TTV in AUD in all regions
Slide 7: Financial Highlights: Profit Growth
FINANCIAL HIGHLIGHTS: PROFIT GROWTH For personal use only Record statutory profits (including ACCC refund) 15.6% CAGR in PBT $156.9m PBT, up over 20 years 11.2% Underlying PBT & NPAT up 3.4% $116.7m NPAT, & 5.4% up16.3% (excluding ACCC refund)
Slide 8: Financial Highlights: Margin
FINANCIAL HIGHLIGHTS: MARGIN For personal use only • Revenue growth (up 15.1%) exceeded TTV growth • Leading to stronger income margin (13.8%) • 16 basis point recovery from PCP (excluding ACCC refund) • 1.6% net margin excluding ACCC refund (PCP: 1.7%) • Costs & investments leading to slower 1H pro
Slide 9: Cost Drivers
COST DRIVERS For personal use only • 6.2% sales staff • Increase reflects increase network growth • Front-end wage • Renting larger sites but increases in UK , NZ & at a lower cost per Canada square metre WAGES RENT SALES & GROWTH MARKETING • $58.2m in capex (PCP • Investing in PACE $39.5m) areas gl
Slide 10: Balance Sheet Strength
BALANCE SHEET STRENGTH For personal use only STRONG CASH POSITION $429.8m in general cash – up slightly $1.15b global cash & investment despite acquisitions portfolio MINIMAL DEBT Lower debt Down to $21.2m STRONGER POSITIVE NET CASH POSITION $408.6m positive net cash position Circa 10% of market cap
Slide 11: Cash Flow
CASH FLOW For personal use only • Seasonal operating cash outflow – $96.7m (PCP outflow: $68.1m) • Major swings in operating cash flow are typically brought about by timing of airline payment cycle (BSP) • Cash builds during peak 2H booking periods for payment to suppliers after peak travel seasons
Slide 12: Cost Effective Growth
COST EFFECTIVE GROWTH For personal use only 6.2% increase in sales staff globally 6 acquisitions 850 new sales to complement jobs created organic growth NETWORK GROWTH 6.7% increase in sales teams New brands & to 2,943 new geographies Will have 3,000 teams by June 30
Slide 13: Strategic Acquisitions
STRATEGIC ACQUISITIONS For personal use only StudentUniverse.com BYOjet.com AVMIN FCM Mexico FCM Malaysia cievents Hong Kong (completed Feb16)
Slide 14: StudentUniverse acquisition
Overall market growth in FCTG acquired a high value segment StudentUniverse in Dec ’15 For personal use only Combined with FCTG’s Leading student offline expertise brand and expertise Growing and underserved Industry leading online student population in Europe booking platform
Slide 15: Highly Coveted Youth Travellers
highly coveted YOUTH TRAVELLERS For personal use only 18 – 25 years-old Educational, leisure & altruistic travel purposes High yield Multiple long-haul Long term trips per year customer base Flexible dates Explore new destinations Future business travelers Global explorers
Slide 16: Student Universe at a Glance
STUDENT UNIVERSE AT A GLANCE For personal use only
Slide 17: Shareholder Returns
SHAREHOLDER RETURNS For personal use only 140 120 116 100 • Fully franked interim dividend of 60c per 100 share (PCP: 55c) • 57.3% of “underlying” NPAT returned to 80 shareholders (excluding ACCC) 60 60 55 • FLT paid a dividend on the $11m ACCC fine during FY14 40 • $1.34b returned in dividends sinc
Slide 18: 2016 Half Year Results Summary
2016 HALF YEAR RESULTS SUMMARY For personal use only $’ million DECEMBER 2015 DECEMBER 2014 % TTV $9.2b $8.1b 12.8% Revenue $1.3b $1.1b 15.1% Income margin 13.83% 13.55% 28bps Net margin (excluding ACCC) 1.6% 1.7% (10bps) Profit Before Tax (excluding ACCC) $145.9m $141.0m 3.4% Refund of ACCC Fine $1
Slide 19: FLT's 20-Year Growth Story
FLT’s 20-YEAR GROWTH STORY For personal use only Celebrating 20 Years as a Public Company 20b 10,000 TTV Businesses 15b 7,500 TTV $billion Businesses 10b 5,000 5b 2,500 - - 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H Student Universe Co
Slide 20: Global Overview
For personal use only GLOBAL OVERVIEW
Slide 21: Segmented Results: Australia
SEGMENTED RESULTS: AUSTRALIA For personal use only Improved profit results during 7% TTV increase Recovery in leisure period of significant SOLID Above growth in STABLE gross margins PROFIT investment SALES outbound travel MARGINS following decline GROWTH New products, new (3.9% per ABS) during PCP
Slide 22: Segmented Results: Australia
SEGMENTED RESULTS: AUSTRALIA For personal use only LEISURE •Record overall sales, despite ongoing slowdown in short-term resident departures •More rapid growth in several key sectors - cruise, youth touring, complex airfares, FCBT, Travel Money •Increased LCC sales •Agreements with Scoot, Air Asia &
Slide 23: Corporate Value Propositions
CORPORATE VALUE PROPOSITIONS For personal use only • Delivered locally by dedicated teams - no off-shoring or call centres Industry-leading service proposition • FCM judged World's Leading TMC for five consecutive years & Best National Travel Management Company at the 2015 National Travel Industry A
Slide 24: Segmented Results: UK & Ireland
SEGMENTED RESULTS: UK & IRELAND For personal use only RECORD CONTRIBUTION EBIT up solidly in AUD but flat in local currency after period of strong 1H TTV topped GBP500m for 1st time growth (18% CAGR in EBIT since 2009 recession) INVESTING FOR THE FUTURE Pay-rise for front-end sales staff & team lead
Slide 25: Segmented Results: USA & Mexico
SEGMENTED RESULTS: USA & MEXICO For personal use only Record sales • Modest TTV increase in local currency (including Mexico) after rapid growth last year Losses ahead of peak months • Bottom-line results not yet tracking at last year's record levels during seasonally softer trading period for leisu
Slide 26: Segmented Results: USA & Mexico
SEGMENTED RESULTS: USA & MEXICO For personal use only Corporate Liberty (leisure) GOGO (wholesale) • Continued strong performance • Losses during seasonally softer 1H • Losses during seasonally softer trading • Record 1H profit • Breaks, Journeys & Escapes ranges in period • 31% growth in BDM number
Slide 27: R.O.W Segment: Canada
R.O.W SEGMENT: CANADA For personal use only Solid sales growth achieved under new Continued corporate Lower 1H losses & leadership team profits & reduced more positive outlook leisure losses - some New products – IAPs heading into peak 2H loss making brands Brand expansion – trading period closed ci
Slide 28: R.O.W Segment: South Africa
R.O.W SEGMENT: SOUTH AFRICA For personal use only Strong profit & sales Targeting FLT’s 3rd online most expansion profitable (BYOjet) country Record 1H results Developing leaders All brands through top profitable 34 program Unique product ranges proving popular
Slide 29: R.O.W Segment: New Zealand
R.O.W SEGMENT: NEW ZEALAND For personal use only • Solid sales growth 1H TTV topped NZD500m for 1st time New TTV milestone established Mixed profit results Record corporate account wins, Travel Money, Travel Lower overall profit but some positive signs heading into 2H Associates & Cruiseabout perfor
Slide 30: R.O.W Segment: InduAsia
R.O.W SEGMENT: INDUASIA For personal use only India United Singapore Arab INDUASIA & Emirates Malaysia Greater China
Slide 31: R.O.W Segment: InduAsia
R.O.W SEGMENT: INDUASIA For personal use only Accelerated sales • Good 1H performance • Region could now deliver AUD1b in TTV during FY16 growth • Subdued trading conditions in some countries – airfare price war in India, oil & gas industry pressure impacting Singapore Corporate travel results • Goo
Slide 32: Other Businesses
OTHER BUSINESSES For personal use only • Record results highlighted by 27% sales growth to $37.2m & 41% EBIT growth to $2.4m • New 99 Bikes shops in Blackburn, Bentleigh (both Victoria) & Brisbane CBD • Expanded Advance Traders’ wholesale range – exclusive distribution rights for BMC brand • Good pr
Slide 33: Other Businesses
OTHER BUSINESSES For personal use only • Buffalo Tours DMC joint venture profitable during 1H • Providing ground handling services to FLT customers in 11 Asian countries • Operating Top Deck’s Asia range • Unique ranges deployed – Masterclass & Essence products • Good performance • 1300 students hav
Slide 34: Results by Country
RESULTS BY COUNTRY For personal use only CANADA UK & IRELAND INDIA GREATER CHINA TTV: $596m, up 8% in TTV: $1.1b, up 28% in TTV: $204m, up 14% in TTV: $134m, up 22% in AUD (up 4% in lc) AUD (10% in lc) AUD (down 1% in lc) AUD (down 1% in lc) EBIT: ($2.0m) EBIT: $24.3m EBIT: ($0.6m) EBIT: $0.2m BUSIN
Slide 35: Strategic Update
For personal use only UPDATE STRATEGIC
Slide 36: Growth Paths
GROWTH PATHS For personal use only Travel retailing Travel Non-travel experiences FLT Travel Corporate incubation travel Youth & student
Slide 37: Strategic Evolution
For personal use only STRATEGIC EVOLUTION
Slide 38: Strategic Journeys
STRATEGIC JOURNEYS For personal use only Product Journey Digital Journey Physical Journey People Journey Sales Journey Business Journey
Slide 39: Product Journey
For personal use only PRODUCT JOURNEY
Slide 40: Product Journey: LCCs
PRODUCT JOURNEY: LCCs For personal use only New agreements in place Fares & ancillary Scoot products being added to FLT WORKING Air Asia X Tigerair websites CLOSELY WITH LCCs Gives LCCs access to wider Supports widest customer base choice of airfares (increased load proposition factors)
Slide 41: Unique Products: IAPs
UNIQUE PRODUCTS: IAPs For personal use only
Slide 42: Shop Journey: Then and ...
SHOP JOURNEY: THEN AND ... For personal use only
Slide 43: ... Flight Centre Now
For personal use only … FLIGHT CENTRE NOW
Slide 44: George St Hyperstore
For personal use only GEORGE ST HYPERSTORE
Slide 45: George St Hyperstore
For personal use only GEORGE ST HYPERSTORE
Slide 46: Escape Travel Then and ...
ESCAPE TRAVEL THEN AND ... For personal use only
Slide 47: Cruise & rail holidays
Cruise & rail holidays ruise & rail holidays a 5 9 4 co} ba S q Pe =
Slide 48: For personal use only
FOr persorial = / TRAVEL GROUP
Slide 49: Shop Journey: Multi-Team Shops
SHOP JOURNEY : MULTI-TEAM SHOPS For personal use only • 10% of existing shops are either hyper or mega stores • Multi-team stores are more productive, have higher morale and deliver a vastly improved customer experience % Shops % TTV % Prof it 100% 75% 50% 25% 0% Stand Alone Multi-Team
Slide 50: Sales Journey
SALES JOURNEY For personal use only P2P MOBILE CRM
Slide 51: Sales Journey: Corporate TVC
SALES JOURNEY: CORPORATE TVC For personal use only
Slide 52: You Are Never On Your Own When You Book With Us
YOU ARE NEVER ON For personal use only YOUR OWN WHEN YOU BOOK WITH US
Slide 53: The Business Journey
THE BUSINESS JOURNEY For personal use only Ownership Replicable One Best Way Simple The world’s best small business
Slide 54: The People Journey
THE PEOPLE JOURNEY For personal use only Flexible rosters - compressed weeks Reduced hours - Work from casuals, home temps, part- BUILDING A timers MORE FLEXIBLE WORKPLACE Life balance Job-sharing programs
Slide 55: Digital Journey
DIGITAL JOURNEY For personal use only Longer term goal to create Enhanced Digital digital tools for Centres of FLT’s Excellence corporate Broader & brands faster adoption of digital capabilities within P2P Accelerated brands development of online brands
Slide 56: Book With Me
For personal use only BOOK WITH ME
Slide 57: Office Heroes Campaign
OFFICE HEROES CAMPAIGN For personal use only • 7.2 million impressions • 634 new businesses acquired • $31.7m new business opportunities • Top 3 trending posts on LinkedIn across leisure, travel and tourism industry for week beginning 11/10/2015
Slide 58: FCM Responsive Websites
FCM RESPONSIVE WEBSITES For personal use only • Rollout of 94 responsive (mobile friendly) websites globally
Slide 59: Person Person Index
PERSON 2 PERSON INDEX For personal use only CORE LEISURE VOLUME Call Multi-Team Home OTA Community Events Centre Stores Based • High volume, low • 24/7 telephone • Hyperstores • Shopping centres • Travel Associates • Travel Expos, touch, low margin sales and assist Discover Europe, • Megastores • CB
Slide 60: P2P & Digital
P2P & DIGITAL For personal use only CORE LEISURE VOLUME Call Multi-Team Home OTA Community Events Centre Stores Based EMBRACING DIGITAL ACROSS ENTIRE P2P INDEX Book With Ez Book Me
Slide 61: BYOjet
BYOJET For personal use only • Growth opportunities – FLT's products, improved contracting, new markets, stronger marketing • FLT’s marketing investment already generating 2.5x more TTV per day 700,000 Average TTV per day FY15 FY16 600,000 500,000 400,000 300,000 200,000 100,000 - July August Septem
Slide 62: Travel Expos
TRAVEL EXPOS For personal use only • Record attendances at FY16 events – up 10% • Expected to generate $300m+ in TTV in Australia this year • Attracting new customers – 64% of total attendees are first-time FLT customers • 1% of population in each location attends a travel expo • Concept successfull
Slide 63: Outlook
For personal use only OUTLOOK
Slide 64: 2015/16 Guidance
2015/16 GUIDANCE For personal use only • Solid 1H results given trading conditions & investments made • Will continue to target $380m-$395m underlying PBT • Targeted range represents 4-8% growth on PCP & exceeds FY14 record • Guidance excludes ACCC refund, possible impairment (India & USA) & major u
Slide 65: 2015/16 Trading Conditions
2015/16 TRADING CONDITIONS For personal use only Some ongoing volatility Slower than normal outbound growth in Downturn in resouces sector affecting Australia some markets Corporate sector Good pipeline of accounts won Record multi-national wins Leisure sector Strong Expo results in Australia Aiming
Slide 66: For personal use only
For personal use only
Slide 67: Golden Era of Travel
GOLDEN ERA OF TRAVEL For personal use only ROUTE ADVERTISED ADVERTISED % PRICE FARE - Jan 2016 FARE - Jan 2015 MOVEMENT Sydney-Auckland $235 $276 DOWN 14.9% Sydney-Bali $391 $539 DOWN 27.5% Sydney-Fiji $440 $594 DOWN 25.9% Sydney-Singapore $456 $456 FLAT Sydney-Phuket $471 $625 DOWN 24.6% Sydney-Haw
Slide 68: Golden Era of Travel
GOLDEN ERA OF TRAVEL For personal use only DESTINATION ADVERTISED FARE 2016 ADJ. FARE* 2016 ACTUAL FARE February 17, 2006 February 19, 2016 Auckland $575 $721 $389 Singapore $855 $1071 $396 Bangkok $919 $1152 $436 Hong Kong $985 $1234 $516 Manila $1035 $1297 $729 Tokyo $1215 $1523 $787 Paris $1575 $
Slide 69: The Turner Index
THE TURNER INDEX For personal use only $140,000 $131,000 $120,000 $100,000 Actual fare to London $80,000 $76,000 Adjusted fare (inflation) $60,000 Adjusted fare (based on today's average wage) $40,000 $20,000 $1,170 $1,170 $0 1947 2016
Slide 70: 2015/16 Acquisition Strategy
2015/16 ACQUISITION STRATEGY For personal use only Further acquisitions likely to complement organic growth Possible expansion in Mainland China - likely to target high-end customers Expansion into Continental Europe - extension of UK business Vertical (adding to margin) & horizontal (adding to TTV
Slide 71: Coming Soon: Key To The World
COMING SOON: KEY TO THE WORLD For personal use only • Innovative new digital travel wallet developed by Travel Money • Brings together: – Customer itineraries – Prepaid currency card with 10 currencies – Travel insurance; & – Travel phone & data SIM cards • Can be used via mobile app (iphone & andro
Slide 72: Key To The World
For personal use only KEY TO THE WORLD
Slide 73: Key To The World
For personal use only KEY TO THE WORLD
Slide 74: For personal use only
For personal use only
Slide 75: Coming Soon: Microsoft Dynamics
COMING SOON: MICROSOFT DYNAMICS For personal use only New mid-office system Simple solution - Three-year roll-out FLT can retire 10- program underway 15 systems Operational efficiencies - Scalable finance removes, platform automates and reduces admin Strategically aligned - supports blended travel
Slide 76: Questions
For personal use only QUESTIONS
Slide 77: Appendices
For personal use only APPENDICES
Slide 78: 5-Year Growth Trajectory
5-YEAR GROWTH TRAJECTORY For personal use only DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER 2015 2014 2013 2012 2011 TTV $9,182m $8,138m $7,480m $6,593m $6,181m Income margin 13.8% 13.6% 14.1% 13.9% 13.9% EBITDA $188.0m $164.0m $179.3m $148.9m $137.5m PBT $156.9m $141.0m $155.0m $129.5m $119.7m NPAT
Slide 79: Recent Acquisitions
RECENT ACQUISITIONS For personal use only • Low cost airfare specialist operating in Australia and New Zealand • Range includes flights operated by scheduled carriers & fares sourced from LCCs, via BYOjet.com API connections • Offers JETMAX booking system as white-label technology product • Strong T
Slide 80: FY16 Capex Breakdown
FY16 CAPEX BREAKDOWN For personal use only FY16 CAPEX • Up to $70m on store network – Refurbs, new shop roll-out Shop openings & • $30m on IT software & hardware refurbs – Includes Dynamics roll-out Head office relocations • $20m on head office moves IT software & hardware – Australia, USA & Singapo
Slide 81: New Global Head Office: FY17
NEW GLOBAL HEAD OFFICE: FY17 For personal use only
Slide 82: New Global Head Office: FY17
NEW GLOBAL HEAD OFFICE: FY17 For personal use only
Slide 83: Effect of Lower AUD
For personal use only EFFECT OF LOWER AUD
Slide 84: Australian Departures to the US Are Increasing While the AUD Falls
AUSTRALIAN DEPARTURES TO THE US ARE INCREASING WHILE THE AUD FALLS For personal use only Australian departure numbers to the US continue to increase despite falling AUD 1,100,000 $1.20 Departure numbers Avg. AUD/USD 1.03 1.03 1,000,000 0.99 0.92 $1.00 981m 0.88 900,000 907m 935m 0.84 $0.80 0.75 800,
Slide 85: Disclaimer
Disclaimer For personal use only Disclaimer and important notice for presentation This presentation has been prepared by Flight Centre Travel Group Limited ABN 25 003 377 188 (FCTG). This presentation contains general background information about FCTG and its subsidiaries and their activities curren
Flight Centre Travel Group — H1 FY2016 Earnings Presentation on 6ix