Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2015 Earnings Presentation
62 slides from Flight Centre Travel's earnings presentation, Aug 27, 2015
Slide 1: 2015 Full Year Results Presentation
For personal use only 2015 FULL YEAR RESULTS PRESENTATION 27 AUGUST 2015
Slide 2: Presentation Overview
PRESENTATION OVERVIEW For personal use only • Introduction by Haydn Long • Financial Highlights and Result Drivers by Andrew Flannery • 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 • Record Sales - New TTV milestones achieved in all 10 countries • Dip in Underlying Profits - Statutory profits at record levels, but underlying results down about 3% • Offshore Earnings Growth - Combined overseas EBIT topped $100million for first time • Building
Slide 4: Financial Highlights
For personal use only FINANCIAL HIGHLIGHTS
Slide 5: Result Overview
RESULT OVERVIEW For personal use only • 9.7% TTV growth to $17.6b = $1.55b annual growth • 19th year-on-year TTV increase in 20 years since ASX listing • 6.8% revenue growth to $2.4b • Record statutory profits – PBT up 13.1% and NPAT up 24% • Underlying profits slightly below FY14 records
Slide 6: Impact of Adjusted Items
IMPACT OF ADJUSTED ITEMS For personal use only $’ million JUNE 2015 JUNE 2014 % Statutory Profit Before Tax $366.3m $323.8m 13.1% Topdeck Tours ($2.6m) - - Write-downs to goodwill & brand names - $61.3m - ACCC Fine - $11.0m - One-off gain within FCGP business - ($19.6m) - Underlying Profit Before Ta
Slide 7: Margin and Costs
MARGIN AND COSTS For personal use only • 13.6% income margin – lower than prior year but above longer term average • 2.07% underlying net margin (PCP: 2.35%) • Invested about 1% of TTV in sales & marketing • Rent costs up as expected given network growth • Increased wage costs – new front-end wage s
Slide 8: Cash and Cashflow
CASH AND CASHFLOW For personal use only • General cash up 18.6% to record $564.7m – 23% CAGR since GFC • $1.45b global cash and investment portfolio • Only $32.8m in debt – down from $178.1m in 2010 • $531.9m positive net debt position at year-end (equates to 15% of FLT’s current market cap) • $362.
Slide 9: FLT's Cash Generation Trajectory
FLT’S CASH GENERATION TRAJECTORY For personal use only 600m Historical General Cash / Gross Debt General Cash Gross Debt Net Debt 400m 200m 160.5m 160.9m 322.3m 376.8m 400.8m 433.8m 476.0m 564.7m - (160.6m) (127.6m) (178.1m) (167.8m) (107.2m) (46.2m) (44.9m) (32.8m) (200m) FY08 FY09 FY10 FY11 FY12 F
Slide 10: Growth and Capex
GROWTH AND CAPEX For personal use only • 6.3% increase in sales staff globally • 5.5% shop and business growth to 2,825 • More rapid expansion in emerging regions and high growth sectors – FX, cruise • $80m investment in capex during FY15 • Will increase to circa $120m during FY16 – increase reflect
Slide 11: FY16 Capex Breakdown
FY16 CAPEX BREAKDOWN For personal use only • Shops - Up to $70m on shop refurbishments and new store fit-outs - Roll out of new shop design across network • Head office moves - $20m spend on upcoming head office moves and fit-outs in Australia, the USA and Singapore. • IT hardware and software - $30
Slide 12: Shareholder Returns
SHAREHOLDER RETURNS For personal use only • Underlying EPS of $2.54 (FY14: $2.62) • Fully franked $0.97 per share final dividend declared • Brings total dividends for FY15 to $1.52 per share – in line with FY14 • $153m return to shareholders – 60% of underlying NPAT • 4.9% dividend yield (fully fran
Slide 13: 2014/2015 Results Summary
2014/2015 RESULTS SUMMARY For personal use only $’ million JUNE 2015 JUNE 2014 % TTV $17.6b $16.0b 9.7% Revenue $2.4b $2.2b 6.8% Income margin 13.6% 14.0% 40bps Net margin (underlying) 2.07% 2.35% (28bps) Underlying Profit Before Tax $363.7m $376.5m (3.4%) Adjusted Items $2.6m ($52.7m) - Statutory P
Slide 14: Global Overview
For personal use only GLOBAL OVERVIEW
Slide 15: Operational Highlights
OPERATIONAL HIGHLIGHTS For personal use only • Record TTV in all 10 countries/regions and every month during FY15 • Combined overseas EBIT reached a record $103.2m • EBIT milestones in UK, USA, South Africa and Singapore • Strong corporate travel growth – turnover up 16.3% globally to $5.7b without
Slide 16: International Earnings Growth
INTERNATIONAL EARNINGS GROWTH For personal use only 120.0m 35.0% Overseas EBIT Growth - Last 5 Years Overseas EBIT Overseas EBIT Weighting 100.0m 30.0% 80.0m 60.0m 25.0% 103.6m 90.2m 40.0m 74.8m 63.1m 20.0% 49.0m 20.0m 0.0m 15.0% FY11 FY12 FY13 FY14 FY15
Slide 17: Australia
AUSTRALIA For personal use only • Record TTV of $9.6b, despite soft trading conditions • Diversity – 10 individual brands turned over more than $100m • EBIT exceeded $250m for third consecutive year - down compared to FY14 but broadly in line with FY13 • Affected by cost growth (front-end wage chang
Slide 18: Australia (Leisure)
AUSTRALIA (Leisure) For personal use only • Record TTV but modest growth on FY14 • Lower gross margins linked to consultant discounting to stimulate demand among cautious customers during 1H • Has now stabilised in most brands – Flight Centre brand has returned to historic levels • Travel Money perf
Slide 19: Australia (FCB)
AUSTRALIA (FCB) For personal use only • Generally performing well in key sectors – ocean and river cruising, complex and premium air, packages, touring • Opportunity to grow in some low or no margin areas that haven’t been priorities – LCCs, domestic point-to-point flights etc • Next generation shop
Slide 20: Australia (Corporate)
AUSTRALIA (Corporate) For personal use only • Record turnover of $2.3b from corporate brands (excludes FCBT) • Record wins in FCm – high profile new additions to customer base • System and product enhancements – RapidBook (sector’s fastest OBT) • Expansion of Corporate Traveller “Smart Suite” • Stag
Slide 21: UK & Ireland
UK & IRELAND For personal use only • Record EBIT of $AUD49.5m • TTV topped GBP1b for 1st time • Strong corporate performance – highlighted by account wins • New leisure product ranges launched – Journeys, Escapes • Travel Concierges and Travel Butlers to enhance the holiday experience • New hypersto
Slide 22: USA
USA For personal use only • Record EBIT of $21.4m • TTV topped $AUD2.5b, up 18% • Continued strong corporate performance in world’s largest business travel market • Corporate turnover increased 30% in AUD to $1.2b • New offices opened in Austin and Silicon Valley – Raleigh and Minneapolis planned fo
Slide 23: USA (continued)
USA (continued) For personal use only • New hyperstores opened in LA and Philadelphia • Chicago hyperstore and Manhattan megastore planned for FY16 • Travel Money FX business to be launched • Aiming to grow European sales – EuroGURU, EURObreaks, Escapes, Journeys • GOGO Travel Agents First and GOGO
Slide 24: Canada & Mexico
CANADA & MEXICO For personal use only • Now part of broader “Americas” business • Koch Overseas acquisition (Mexico City) formally completed July 2015 • Provides FLT with platform for further corporate growth throughout the Americas • Losses in Canada during FY15 • New leadership team in place and s
Slide 25: New Zealand & South Africa
NEW ZEALAND & SOUTH AFRICA For personal use only • Record results achieved in South Africa • Unique product ranges launched in leisure travel • Corporate now generating about 30% of turnover • Record TTV in NZ • Blended model enhanced – local 24/7 service, new booking engine, responsive websites, co
Slide 26: Induasia
INDUASIA For personal use only • Region includes India, Dubai (UAE), Greater China and Singapore • Generated $AUD870m of TTV during FY15 • Record Singapore results – FLT’s fastest growing country by TTV • Greater China business expanding – new brands, shops and websites plus landmark domestic ticket
Slide 27: Induasia (continued)
INDUASIA (continued) For personal use only • India expansion – new corporate businesses in Noida and Vadodora • FX business launched • Promising results from new leisure hyperstores in Mumbai and New Delhi • Sixth consecutive full year profit in UAE – new leisure shops in Yas Mall (Abu Dhabi) and Du
Slide 28: Diversity of Revenue Streams
DIVERSITY OF REVENUE STREAMS For personal use only • Corporate: Generated 33.6% of group turnover during 2014/15 • Accommodation: 4.5million room nights sold by Australian business alone during FY15 • Tour operations: Back-Roads, Top Deck and Buffalo will go close to $200m in turnover this year • Bi
Slide 29: 2014/2015 Results by Country
2014/2015 RESULTS BY COUNTRY For personal use only CANADA UK & IRELAND INDIA GREATER CHINA TTV: $1.2b, up 10% in TTV: $1.9b, up 24% in TTV: $386m, up 15% TTV: $232m, up 18% AUD (up 9% in lc) AUD (17% in lc) in AUD (up 6% in lc) in AUD (up 9% in lc) EBIT: ($3.9m) EBIT: $49.5m EBIT: $3.5m EBIT: $2.3m
Slide 30: Strategic Update
For personal use only STRATEGIC UPDATE
Slide 31: Strategic Update: Destination Journey, Where We Are At
STRATEGIC UPDATE For personal use only DESTINATION JOURNEY WHERE WE ARE AT
Slide 32: Our Journey from Travel Agent to World's Best Retailer
OUR JOURNEY FROM TRAVEL AGENT TO For personal use only WORLD’S BEST RETAILER
Slide 33: Our Journey from Travel Agent to World's Best Retailer
OUR JOURNEY FROM TRAVEL AGENT TO For personal use only
Slide 34: Golden Era of Travel
For personal use only GOLDEN ERA OF TRAVEL
Slide 35: Brand and Specialisation
BRAND AND SPECIALISATION For personal use only CORPORATE LEISURE / BRANDS WHOLESALE
Slide 36: Famous Specialised Brands
FAMOUS SPECIALISED BRANDS For personal use only CLEAR THOUGHT CVP LEADERS IN THE INNOVATIVE SPECIALISED DIFFERENT SEGMENT MIND SHARE
Slide 37: Manufactured Product
MANUFACTURED PRODUCT For personal use only TRAVEL RED LABEL SERVICE WATERTIGHT TECHNICAL DEALS PACK N RELAX
Slide 38: The Captain's Airfare Package
THE CAPTAIN’S AIRFARE PACKAGE For personal use only
Slide 39: Brand Product Ranges
For personal use only BRAND PRODUCT RANGES
Slide 40: Escapes Range
For personal use only ESCAPES RANGE
Slide 41: Experts Not Agents
EXPERTS NOT AGENTS For personal use only RECOGNISED BRAND EXPERTS ACCREDITED TRAINING
Slide 42: Branded Business
BRANDED BUSINESS For personal use only A CUSTOMER SPACE NEW FCB SHOP OF THE FUTURE A TRAVEL EXPERIENCE SPACE ESCAPE TRAVEL LIBRARY A SALES SPACE CORPORATE HUBS
Slide 43: For personal use only
/ A\UO|saMeUOSiod 10S}
Slide 44: For personal use only
For personal use only
Slide 45: Travel Group
TRAVEL GROUP 4d « = 4 | ¥ 4 oo ] ad | he
Slide 46: For personal use only
For personal use only
Slide 47: Blended Travel
For personal use only BLENDED TRAVEL
Slide 48: 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 49: Information Is Power
For personal use only INFORMATION IS POWER
Slide 50: Sales and Marketing Machine
SALES AND MARKETING MACHINE For personal use only
Slide 51: Sales and Marketing Machine
SALES AND MARKETING MACHINE For personal use only
Slide 52: Our Journey
OUR JOURNEY For personal use only OUR OUR OUR PRODUCT SHOP SALES JOURNEY JOURNEY JOURNEY OUR OUR BUSINESS PEOPLE JOURNEY JOURNEY
Slide 53: Winning the Mind Share Battle
WINNING THE MIND SHARE BATTLE For personal use only 25.0% 23.6% Top 15 travel agents/tour operators people would consider using for next holiday or leisure trip Source: Roy Morgan Holiday Tracking Survey (Australia), April 2014 – March 2015 20.0% 15.0% 10.9% 10.0% 10.0% 9.4% 7.2% 6.7% 6.4% 5.8% 5.5%
Slide 54: ... And Please Come Again
... AND PLEASE COME AGAIN 78.0% For personal use only Travellers who’d consider using the same travel agent for their next trip that they have used in the last 12 months 76.0% Source: Roy Morgan Single Source (Australia), July 2013-June 2014 76.0% 75.0% 75.0% 74.0% 74.0% 74.0% 73.0% 72.0% 70.0% 69.0
Slide 55: Outlook
For personal use only OUTLOOK
Slide 56: 2015/16 Guidance
2015/16 GUIDANCE For personal use only • Solid global growth prospects • $380m - $395m underlying PBT target • Excludes significant unforseen items and $11m gain (ACCC test case) • Targeted range represents 4%- 8% growth on statutory FY15 result • Currently tracking in line with this range
Slide 57: Market Conditions
MARKET CONDITIONS For personal use only • Reasonable conditions globally • Subdued consumer confidence in Australia but positive momentum in leisure travel – good enquiry, margin recovery, sales growth • No step change in costs in Australia this year following last year’s wage change • Corporate bus
Slide 58: Growth Drivers
GROWTH DRIVERS For personal use only • Australian profit and sales growth • Greater contributions from off-shore as businesses gain scale • Market growth – “Golden Era of Travel” • Full year contribution from Top Deck (acquired after peak profit period in FY15) and Koch • Network expansion – targeti
Slide 59: FLT's Expansion Blueprint
FLT’S EXPANSION BLUEPRINT For personal use only • 6%-8% growth will see more than 1000 new jobs created globally • Brands in emerging countries and in sectors that are growing rapidly will exceed this growth rate • New hyperstores to open in Australia, UK, USA and Asia • Exporting brands to new geog
Slide 60: Acquisition & Online Opportunities
ACQUISITION & ONLINE OPPORTUNITIES For personal use only • Pursuing further M&A opportunities • Targeting businesses that operate in new sectors, enhance scale or offer low cost models in growth areas • Opportunity to grow online presence – blended travel and standalone businesses (where financially
Slide 61: Questions?
For personal use only QUESTIONS?
Slide 62: Five-Year Growth Trajectory
Five-Year Growth Trajectory JUNE 2015 JUNE 2014 JUNE 2013 JUNE 2012 JUNE 2011 For personal use only TTV $17,598m $16,049m $14,259m $13,238m $12,200m Income margin 13.6% 14.0% 13.9% 13.8% 13.8% EBITDA $417.0m $378.4m $395.2m $330.7m $256.9m PBT $366.3m $323.8m $349.2m $290.4m $213.1m NPAT $256.6m $20
Flight Centre Travel Group — FY2015 Earnings Presentation on 6ix