Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — Merger or Acquisition (January 2023)
61 slides from Flight Centre Travel's merger presentation, Jan 31, 2023
Slide 1: Acquisition of Scott Dunn and equity raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition of Scott Dunn and equity raising 31 January 2023
Slide 2: Important information and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important information and disclaimer SUMMARY INFORMATION This presentation has been prepared by Flight Centre Travel Group Limited (ABN 25 003 377 188) ('Issuer' or ‘Flight Centre’). It is a presentation of general background information in summar
Slide 3: Important information and disclaimer (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important information and disclaimer (cont.) Certain financial measures included in this presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ and also ‘non-GAAP financial me
Slide 4: Important information and disclaimer (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important information and disclaimer (cont.) PAST PERFORMANCE Past performance and pro forma historical financial information is given for illustrative purposes only. It should not be relied on and is not indicative of future performance, includin
Slide 5: Important information and disclaimer (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important information and disclaimer (cont.) DISCLAIMER To the maximum extent permitted by law, the Issuer, the lead managers and their respective affiliates and related bodies corporate and each of their respective directors, officers, partners,
Slide 6: Contents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Contents Acquisition overview 9 Transaction highlights and strategic rationale 15 Flight Centre 1H23 expected result, trading update and 24 outlook Transaction funding 29 APPENDICES A: Pro-forma balance sheet 33 B: Key risks 35 C: International of
Slide 7: Transaction overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction overview Acquisition of Scott ● Flight Centre has entered into a binding agreement to acquire 100% of Luxury Travel Holdings Limited (Scott Dunn), a leading UK-based luxury travel Dunn business (Acquisition) ● Acquisition Enterprise Va
Slide 8: Transaction overview (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction overview (cont.) Flight Centre 1H23 ● On the basis of management accounts which are preliminary and unaudited1, Flight Centre’s 1H23 results are expected to be: results – Group TTV of A$9.9 billion – Group revenue of A$1.0 billion – Gr
Slide 9: Acquisition overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition overview
Slide 10: Overview of Scott Dunn
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Scott Dunn Scott Dunn is a multi-award winning, guest-centric brand specialising in tailor-made, luxury holiday packages Overview Scott Dunn market position ● Established in 1986 as a luxury ski operator ● Today operates as a leading p
Slide 11: Geographic and product focus
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Geographic and product focus Scott Dunn has an established UK business and is focussed on growing in the large and attractive US market Geographic focus Product offering ● Scott Dunn has an established business in the UK, growing business in the U
Slide 12: Scott Dunn financial summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Scott Dunn financial summary Scott Dunn has achieved strong recovery in TTV and earnings post-COVID TTV (A$m) Revenue (A$m) and margin (%) EBITDA (A$m) and margin (%)1 199 25 60.0% 200 187 188 52 51 30.0% 180 29.0% 20 20 50.0% 50 160 18 28.0% 140
Slide 13: Recent trading momentum
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Recent trading momentum Scott Dunn’s post-COVID trajectory continues, with TTV above pre-COVID levels from October 2022 onwards Historical trading momentum 250 7,000 6,000 200 5,000 Number of bookings (#) 150 TTV (A$m) 4,000 3,000 100 2,000 50 1,0
Slide 14: Recent investment has repositioned platform
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Recent investment has repositioned platform Scott Dunn’s Transformation Program has driven operational improvement and has established a scalable platform to support further growth FY19A: Strategic review FY19A-21A: Transformation program Today ●
Slide 15: Transaction highlights and strategic rationale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction highlights and strategic rationale
Slide 16: Transaction highlights
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction highlights P Entry point into the UK and US luxury market to complement the existing global Leisure offering in a segment of the market where Flight Centre is underrepresented P High margin market segment with resilient characteristics
Slide 17: Complements existing Leisure brand portfolio
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Complements existing Leisure brand portfolio The acquisition of Scott Dunn is aligned with Flight Centre’s strategy to grow the current luxury offering globally B2C B2B Mass market / generalist Luxury Complementary Independent Specialist product b
Slide 18: Entry point into the UK and US luxury market
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Entry point into the UK and US luxury market The acquisition of Scott Dunn provides an attractive opportunity for Flight Centre to establish a presence in the UK and US luxury markets Diversifies and extends existing Leisure business Increases exp
Slide 19: High margin market with resilient characteristics
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES High margin market with resilient characteristics Increases Flight Centre’s exposure to high growth luxury travel market with Scott Dunn and Travel Associates recovering faster than mass market post COVID Estimated market growth by luxury holiday
Slide 20: High value and loyal customer base
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES High value and loyal customer base Scott Dunn's earnings are supported by repeat spend from high value customers that are attracted to Scott Dunn’s full-service offering Affluent, high quality customer base reflected by average Scott Dunn’s effect
Slide 21: Scalable brand to accelerate growth utilising Flight Centre capability
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Scalable brand to accelerate growth utilising Flight Centre capability Scott Dunn operates in an attractive segment of the luxury market which is expected to continue to grow Scott Dunn to accelerate the growth of the global Leisure business Fligh
Slide 22: Expected financial outcomes through combination
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Expected financial outcomes through combination Scott Dunn offers exposure to a higher margin leisure model operating in an appealing category Expected financial outcomes 1H23 revenue margin2 ● Scott Dunn is a high revenue and EBITDA margin travel
Slide 23: High quality management team
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES High quality management team Scott Dunn’s highly experienced management team will be retained and transitioned to an incentive plan to support the ongoing growth of the Scott Dunn business Management team and integration plan Scott Dunn Senior Man
Slide 24: Flight Centre 1H23 expected result, trading update and outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Flight Centre 1H23 expected result, trading update and outlook
Slide 25: 1H23 expected result
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1H23 expected result Underlying EBITDA of A$95 million outperforming initial guidance range of A$70 million – A$90 million, driven by core trading performance that is expected to continue to deliver strong growth in 2H23 1H23 expected result based
Slide 26: 1H23 expected result (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1H23 expected result (cont.) Flight Centre reported a strong cash position, with A$1,128 million in cash and investments as at 31 December 2022 1H23 expected result based on preliminary, unaudited management accounts Commentary (cont.) A$m 1H23 1H
Slide 27: Flight Centre FY23E: Opportunities in a recovering market
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Flight Centre FY23E: Opportunities in a recovering market Considerable pent-up demand yet to flow through ● Resilience of global travel market – Consistent year-on-year growth in outbound travel delivered pre-COVID – Travel is a discretionary prod
Slide 28: FY23E: Flight Centre outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES FY23E: Flight Centre outlook Prospect of stronger profit growth in months ahead, given ongoing solid demand and margin improvement trajectory ● Targeting A$250 – 280 million underlying EBITDA for FY23 prior to the benefits of the Acquisition – The
Slide 29: Transaction funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction funding
Slide 30: Details of the Offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Details of the Offer Institutional placement ● Underwritten institutional placement to raise A$180 million (Placement)1 ● Approximately 12.3 million new shares to be issued under the Placement, representing approximately 6.2% of existing ordinary
Slide 31: Use of proceeds
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Use of proceeds Sources and uses of the Transaction Balance sheet position and cash ● Acquisition consideration of £120 million (A$210 million1), to be funded via a ● As at 31 December 2022, adjusted to include the impact of the Transaction, A$180
Slide 32: Offer timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Offer timetable Event Date Institutional Placement Trading halt and announcement of Offer Tuesday, 31 January 2023 Trading halt lifted and announcement of completion of Placement Wednesday, 1 February 2023 Settlement of new shares to be issued und
Slide 33: Appendix A: Pro-forma balance sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix A Pro-forma balance sheet
Slide 34: Pro-forma balance sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pro-forma balance sheet Flight Centre 31 Dec Scott Dunn 31 December 2022 A$m 2022 unaudited Placement2 acquisition3 unaudited pro-forma Assets and liabilities Total cash and cash equivalents1 1,069 170 (186) 1,053 Other current and non current ass
Slide 35: Appendix B: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix B Key risks
Slide 36: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks This section describes the key business risks of investing in Flight Centre, the risks relating to participation in the Offer and the risks relating to the proposed acquisition of Scott Dunn, all or any of which may affect the value of F
Slide 37: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.2 General economic conditions The Company’s operating and financial performance is influenced by a variety of general economic and business conditions in Australia and overseas. A prolonged deterioration in general economic con
Slide 38: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.3 Geopolitical and economic conditions Flight Centre has company-owned leisure and / or corporate travel businesses in more than 25 countries. In addition, the FCM licensee network extends to more than 90 countries. Global geop
Slide 39: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.4 Safety The travel industry is sensitive to safety concerns. The Group’s business could be adversely affected by the occurrence of travel-related accidents, such as aeroplane crashes or near misses (whether caused by human or
Slide 40: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.6 Customer risk The developments in international and domestic travel restrictions since 2020 as a result of COVID-19 resulted in a significant disruption to customer bookings and travel plans. As a result of the unprecedented
Slide 41: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.9 Cost discipline As it has since March 2020, the Group continues to maintain appropriate cost discipline measures to mitigate the financial impact of the COVID-19 pandemic and broader changes that have occurred across the trav
Slide 42: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.11 Human resources risk The Company is dependent upon the experience of its Directors, key senior management and staff generally. The loss of any key personnel (i.e. by death, total or permanent disablement or resignation), as
Slide 43: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.14 Regulatory risk Regulatory action against the Group under legislation and government policy may adversely affect the Group. For example, as a retailer of travel and travel-related products, the Group engages in extensive pro
Slide 44: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.15 Risk of litigation, regulatory investigations, claims and disputes The Group may be subject to litigation, class actions (including consumer / customer class actions, securities / shareholder class actions, and employee clas
Slide 45: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.17 Business systems and cyber security risk The Company relies on the performance, reliability and availability of its information technology, communication and other business systems. Any damage to, or failure of, the Company’
Slide 46: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.19 Financial risk Access to capital is a fundamental requirement to achieve the Company’s business objectives and to meet its financial obligations when they fall due. The inability to maintain a strong balance sheet or to secu
Slide 47: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 1.23 Insurance Flight Centre maintains insurance cover that is consistent with standard industry practice, including workers compensation, business interruption, property damage, public liability and product liability, cyber, dir
Slide 48: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 2 OFFER AND GENERAL RISKS 2.1 Investment in equity capital and COVID-19 There are general risks associated with investments in equity capital. The trading price of Flight Centre's ordinary shares on ASX may fluctuate with movemen
Slide 49: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 2.2 Underwriting risk Macquarie Capital (Australia) Limited (ABN 79 123 199 548) (“MCAL”) and UBS Securities Australia Limited (ABN 62 008 586 481) (“UBS”, together with MCAL, the “Underwriters”) will be acting as underwriters, j
Slide 50: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) ● a change in the directors or key management personnel of Flight Centre is announced or occurs, except as disclosed to ASX prior to the date of the Underwriting Agreement; ● in relation to the debt facilities: − Flight Centre br
Slide 51: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 2.3 Risks of dilution Shareholders who do not participate in the Placement or the SPP will have their percentage security holding in Flight Centre diluted. Depending on the size of a shareholder’s existing holding and the number
Slide 52: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 3 RISKS RELATING TO THE PROPOSED ACQUISITION OF SCOTT DUNN In addition to the key business risks and the offer and general risks referred to above, there are additional risks that investors should consider given the Scott Dunn Ac
Slide 53: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 3.4 Completion conditions and completion risk The Scott Dunn Acquisition is intended to expand FLT's presence in the luxury travel sector and gives the Company a footprint for further organic growth in a sector in which it has pr
Slide 54: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 3.6 Funding Risk The Scott Dunn Acquisition will be funded out of the proceeds of the Placement and the SPP. Whilst the Placement (but not the SPP) is underwritten, the underwriting agreement is subject to customary conditions pr
Slide 55: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 3.10 Foreign Exchange Risk While the Placement and SPP is in Australian dollars, the majority of the Acquisition payments are denominated in GBP. The Group has entered into hedging arrangements which help protect against changes
Slide 56: Key risks (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key risks (cont.) 3.15 Privacy risks From a privacy/compliance risk perspective, Scott Dunn’s operations in the United Kingdom and California (USA), are markets where: the national privacy laws are constantly evolving; privacy compliance obligatio
Slide 57: Appendix C: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix C International offer restrictions
Slide 58: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may n
Slide 59: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions Cayman Islands No offer or invitation to subscribe for New Shares may be made to the public in the Cayman Islands or in any manner that would constitute carrying on business in the Cayman Islands. European Union Th
Slide 60: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007 no. 75. Accordingly, this document shall not be deeme
Slide 61: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of se
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