22 AUGUST 2019 2 FY19 RESULT OVERVIEW TTV PBT GLOBALISATION - - PowerPoint PPT Presentation

22 AUGUST 2019

2

3

Another record year

TTV

In line with amended guidance

PBT

Strong results in key

• verseas markets –

particularly Americas

GLOBALISATION

Continued

• ut-performance in

sector with strong growth potential

CORPORATE

Disappointing overall results

AUSTRALIAN LEISURE

FY19 RESULT OVERVIEW

4

RECORD TTV

Exceeded record FY18 result by almost $2b & achieved 23rd year of TTV growth in 24 years since listing 8.8% year-on-year growth (up 6.4% in constant currency) with fewer sales staff – further productivity gains Organic growth predominantly with small contribution from businesses that were acquired during FY19 Average of $65m in TTV per day globally

$23.7b

result

5

ACHIEVING STRATEGIC OBJECTIVES: PRODUCTIVITY

$850,000 $900,000 $950,000 $1,000,000 $1,050,000 $1,100,000 $1,150,000 $1,200,000 FY15 FY16 FY17 FY18 FY19

19.9%

productivity increase since FY15

TTV/Person (AUD)

6

PBT

Within amended guidance range ($335m-$360m) but below initial target $29.8m impairment loss (Olympus) offset by $30.1m in non-recurring gains ($6.7m land over-ride revenue pull forward, $3.1m IFRS15 adjustment, $19.6m & $0.7m fair value gains (3Mundi and ETSC) Underlying result adjusted to exclude impacts of non-recurring gains & losses Actual PBT slightly higher at $343.5m (FY18: $364.3m)

$343.1m

underlying PBT

7

GLOBALISATION

Profit & TTV weighted towards international businesses for the first time Record TTV in all countries and regions, apart from Nordics Reflects strong growth overseas and soft Australian leisure results

Record profit (AUD) in USA, Canada, UK, UAE, South Africa, Netherlands, NZ and China/Hong Kong

Americas now a $100m-per-year profit engine

International businesses driving growth

8

AMERICAS: NOW AN EARNINGS POWERHOUSE

20 40 60 80 100 120 FY16 FY17 FY18 FY19 $ million AUD

Underlying earnings in the Americas have increased almost 5-fold since FY16

PBT

9

CORPORATE

15.2% TTV growth globally to record $8.9b Achieving scalable organic growth through Corporate Traveller (SME) & FCM (TMS) brands Corporate brands generated 37.7% of group TTV Investment in systems & products - Upside, Savi, Sam :] – to bolster world class offerings & create compelling customer offering Expansion in key global markets - Germany (start-up), France, Switzerland (3Mundi acquisition), USA West Coast (Casto) Significant presence across four key regions, delivering consistent growth & strong future prospects

Continued

• ut-performance

10

CORPORATE: GROWING & GAINING SCALE GLOBALLY

0.5 1 1.5 2 2.5 3 3.5 Australia/New Zealand Americas EMEA Asia

Corporate TTV By Region ($AUb)

FY19 Corporate TTV ($AUb) 1 2 3 4 5 6 7 8 9 10

Corporate TTV ($AUb)

Corporate TTV ($AUb)

11

RECORD ACCOUNT WINS

$1.3b+ globally for FCM alone during FY19 & circa $2b across corporate division

36% 33% 23% 8%

% of New FCM TTV Won by Region

Americas EMEA Asia ANZ

12

AUSTRALIAN LEISURE CHALLENGES

 Flat leisure TTV in subdued trading climate  TTV bolstered by solid growth in new & emerging models & brands (traditional leisure TTV down circa 2%)  Increased Flight Centre Brand same store sales but with smaller network following FY18 network consolidation  Internal and external factors impacting both TTV and margin  External: Continued macro uncertainty leading to soft market growth  Internal: Recent changes & enhancements – brand consolidation, EBA, GDS

Key business drivers:

• TTV Growth
• Revenue Margin
• Costs

 Revenue margin decrease in flagship Flight Centre brand (circa 50bps)  Decrease driven by product mix changes (lower attachment)  Stabilisation late in year, but below previous levels  Key contributor to reduced FCB profits  Reasonable success in containing costs, despite additional $14m in EBA costs  Modest overall growth – but exceeded revenue growth in challenging climate

13

INVESTMENT IN NEWER MODELS PAYING DIVIDENDS

Online Independent Contractor Network Flash Sale / Ready-made Packages Specialist Flight Centre Brand businesses

More than $2b in FY19 TTV

Circa $1.3b in TTV from online leisure brands flightcentre.com.au growing at 40%+ since booking fees were removed and with minimal cannibalisation – market-share growth Businesses in Australia, NZ, Canada, USA and South Africa Circa $380m in TTV during FY19 Partnership with Ignite in Australia TTV up 42% to $182m (FLT has 49% interest) Flight Centre Business Travel, Groups, RTW, First & Business Class, Cruise About $430million in TTV in Australia during FY19

14

PROFIT & LOSS

TTV & Revenue  Record TTV across all geographic segments, largely driven by corporate brands  55bps revenue margin decline brought about largely by ongoing business mix changes, as well as impact of revenue margin decline in FCB Australia Costs  Underlying cost growth in constant currency held to 3% (excluding touring cost

• f sales) with full-year

trends consistent with H1 and leading to a 32bps reduction in cost margin  EBA in Australia contributed $14m to employee benefits cost increase, along with the strong results in the Americas  Marketing and rent expense have been held flat  Increase in other expenses due to increased independent agent consulting fees as the independent agent network expands, ongoing tech investment and increased

• utsourcing costs

Difference between statutory PBT of $343.4m and underlying PBT of $343.1m due to Olympus impairment ($29.8m); AASB15 transition adjustment ($3.1m); and revenue alignment in global product businesses ($6.6m) as reported at the half-year, along with $20.3m fair value gain on change in control of 3Mundi and ETSC.

AUD $'m FY19 FY18 Mvmt %

Group TTV 23,728 21,818 8.8% Operating revenue 3,055 2,923 4.5% Total revenue 3,055 2,923 4.5% FV gain on change in control 20

• 100.0%

Other income 35 30 14.8% Share of JV/Associates 1 2 (48.8%) Employee benefits (1,592) (1,511) 5.4% Marketing expense (194) (197) (1.3%) Rent expense (166) (168) (1.4%) Tour & hotel operations (157) (128) 23.0% D&A (82) (78) 5.9% Finance costs (26) (26) 0.3% Impairment (30)

• 100.0%

Other expenses (522) (485) 7.6% PBT 343 364 (5.7%) Underlying PBT 343 385 (10.8%) EPS (cents) 261.6 261.1 0.2% Sales teams 2,832 2,882 (1.7%) Margins Underlying Revenue Margin 12.84% 13.39% (55 bps) Underlying Cost Margin

• 10.88%
• 11.19%

32 bps Underlying PBT Margin 1.45% 1.76% (32 bps) Marketing % TTV 0.82% 0.90% (8 bps)

15

SUCCESSFULLY SLOWING COST GROWTH

2 4 6 8 10 12 14 FY14 FY15 FY16 FY17 FY18 FY19

Underlying Cost Growth (% in constant currency)

16

BALANCE SHEET

AUD $'m As at June 19 As at June 18 Mvmt %

Cash & cash equivalents 1,172 1,273 (8%) Financial assets 115 204 (43%) Trade & other receivables 559 525 7% Contract assets 356 323 10% Other current assets 105 121 (13%) Current assets 2,308 2,446 (6%) PPE 240 248 (3%) Intangibles 769 586 31% Other non-current assets 177 120 48% Non-current assets 1,186 953 24% Total assets 3,493 3,399 3% Trade payables & other liabilities 1,547 1,541 0% Deferred revenue 69 75 (8%) Borrowings 85 35 143% Provisions 55 49 13% Current liabilities 1,755 1,699 3% Trade payables & other liabilities 79 88 (10%) Deferred revenue 48 56 (13%) Borrowings 100 1 15295% Provisions 48 41 18% Non-current liabilities 276 186 49% Total liabilities 2,031 1,884 8% Net assets 1,462 1,515

• 3%

General cash 337 445

• 24%

General investments 16 108 (85%) Client cash 836 828 1% Client investments 100 96 4% Total cash & investments 1,288 1,477

• 13%

Positive net debt 167 517

• 68%

Assets



Reduction in cash balance represents timing of wage payments throughout the year and the payment of special dividend ($150m)



Investments in short-term financial assets will increase and decrease depending on working capital requirements



Intangibles increase linked to acquisitions of 3Mundi, Casto and Umapped, as well as ongoing investment in IT projects



Movement in Other Non- Current Assets represents investment in Upside ($56m) Liabilities



Trade payables remain flat year-on-year due to the timing of supplier payments



Increase in Borrowings relates to debt facilities

• btained to fund

acquisitions

17

CASH FLOW STATEMENT

AUD $'m FY19 FY18 Mvmt %

Operating activities Operating activities before interest and tax 371 404 (8%) Net interest and tax paid (92) (90) 3% Cash inflow from operating activities 279 314 (11%) Investing activities Acquisitions (211) (61) 245% Purchases of PPE and intangibles (101) (87) 16% Net proceeds from sale of financial assets 93 (1) (8359%) Other investing cash flows 1 3 (72%) Cash flow from investing activities (218) (146) 49% Financing activities Financing activities before dividends 145 (31) (574%) Dividends paid (320) (156) 105% Cash flow from financing activities (175) (186) (6%) Increase/(decrease) in cash held (114) (18) 525% FX impact 14 10 42% Cash and cash equivalents 1,172 1,273 (8%) As at June 19 As at June 18 General cash (excl. Investments) 337 445 (24%) Client cash 836 828 1% Total cash 1,172 1,273 (8%)

 Cash flow from operating activities down on prior year due to additional wage payments (EBA in Australia and move to weekly pays for Australian retail consultants), as well as timing

• f general supplier payments

 $211m outflow for acquisitions includes 3Mundi, Umapped and Casto; along with payments for the remaining share of Buffalo, Backroads, Topdeck, Travel Tours, Executive Travel and the 25% investment in Upside  Financing activities represent the draw-down on debt facilities taken to fund acquisitions following FY19 balance sheet review & special dividend payment

18

RECORD DIVIDENDS

$3.07

per share in fully franked dividends returned to shareholders

0.98 0.60 1.49

$310.2

million

in funds returned to shareholders

$ per share final dividend (declared today) $ per share interim dividend (declared Feb 19) $ per share special dividend (declared Feb 2019)

19

76% 24%

ANZ by Pillar - TTV

Leisure & Online Corporate

AUD $'m FY19 FY18 Mvmt %

TTV 12,506 12,319 2% External Revenue 1,568 1,607 (2%) Other Income 2 6 (57%) Costs (1,390) (1,367) 2% PBT 181 246 (27%) PBT (underlying)1 179 254 (30%) Sales staff 8,157 8,162 (0%) Sales teams 1,682 1,694 (1%) TTV / total staff ($'000) 1,258 1,244 1% Margins Revenue Margin 12.54% 13.05% (51 bps) Cost Margin (11.12%) (11.09%) (2 bps) PBT Margin 1.44% 2.00% (56 bps)

SEGMENT RESULTS: AUSTRALIA-NEW ZEALAND (ANZ)

89% 11%

ANZ by Nation - TTV

Australia New Zealand

20

TRADING OVERVIEW: ANZ

 Small increase in TTV to record $12.5b but offset by decline in revenue margin  Signs of stabilisation in the Australian leisure revenue margin late in FY19, but in softening macro conditions which are slowing TTV growth  Cost control has been effective with cost margin flat with only small TTV growth and additional costs from EBA and ongoing technology spend  Corporate business in Australia performing well at top and bottom line despite collapse of major client ($2m impact during 1H)  Record profit contribution in New Zealand driven by strong leisure results

21

54% 46%

Americas by Pillar - TTV

Corporate Leisure & Online

AUD $'m FY19 FY18 Mvmt %

TTV 5,537 4,755 16% External Revenue 650 566 15% Share of Associate (1) (2) (53%) Costs (546) (493) 11% PBT 102 71 44% Sales staff 2,629 2,592 1% Sales teams 461 461

• TTV / total staff ($'000)

1,570 1,393 13% Margins Revenue Margin 11.74% 11.91% (17 bps) Cost Margin (9.87%) (10.36%) 50 bps PBT Margin 1.85% 1.50% 35 bps 64% 28% 7% 1%

Americas by Nation - TTV

United States Canada Student Universe LATAM

SEGMENT RESULTS: AMERICAS

22

TRADING OVERVIEW: AMERICAS

 Americas profit contribution in excess of $100m AUD for the first time  TTV up 16% to circa $5.5b (23% of group total)  Growth predominantly driven by corporate brands – $3b in corporate TTV  Americas corporate business now FLT’s largest – strong future growth potential given success & relatively small market-share  Strong West Coast corporate footprint – acquisition of Silicon Valley based Casto Travel  Economies of scale now being seen, as evidenced by improvement in both productivity (TTV/total staff) and cost margin  Highest profit contribution from Liberty since acquisition (2008)  Expansion in premium model in USA – 11 Travel Associates shops now trading (includes 3 rebranded Liberty shops)  IC model in place and referral model being trialled with positive results  Canada continuing to perform well, particularly corporate and Laurier du Vallon

23

100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 700,000,000 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

STRONG & SUSTAINABLE TRAJECTORY IN US SME SECTOR

Corporate Traveller USA TTV ($US)

TTV ($US)

24

SEGMENT RESULTS: EMEA

67% 19% 10% 4%

EMEA by Nation - TTV

United Kingdom South Africa Europe UAE 57% 43%

EMEA by Pillar - TTV

Corporate Leisure & Online

AUD $'m FY19 FY18 Mvmt %

TTV 3,412 3,097 10% External Revenue 441 420 5% Other Income 20 100% Share of Associate 2 1 100% Costs (355) (342) 4% PBT 108 80 34% PBT (underlying)1 87 80 9% Sales staff 2,233 2,393 (7%) Sales teams 485 486 (0%) TTV / total staff ($'000) 1,160 969 20% Margins Revenue Margin 12.91% 13.58% (67 bps) Cost Margin (10.42%) (11.03%) 61 bps PBT Margin 3.15% 2.59% 56 bps

25

TRADING OVERVIEW: EMEA

 10% TTV growth to $3.4b – circa 14% of group TTV  UK business has responded well to Brexit with TTV increasing 4% and costs held flat, although uncertainty remains  Investment in Germany start-up and 30 June acquisition of remaining 75% share in 3Mundi (France & Switzerland) adding to the existing European footprint  Significant improvements in both productivity and cost margin  Strong TTV contribution from both corporate and leisure businesses in South Africa and overall costs held below inflation  UAE business continuing solid growth in the corporate market  Difference between statutory PBT and underlying PBT due to fair value gain on acquisition of remaining 75% of 3Mundi

26

SEGMENT RESULTS: ASIA

AUD $'m FY19 FY18 Mvmt %

TTV 1,946 1,386 40% External Revenue 99 94 5% Costs (87) (89) (2%) PBT 12 5 124% Sales staff 1,327 1,475 (10%) Sales teams 194 194

• TTV / total staff ($'000)

1,056 673 57% Margins Revenue Margin 5.08% 6.80% (173 bps) Cost Margin (4.48%) (6.43%) 195 bps PBT Margin 0.60% 0.37% 22 bps

68% 16% 16%

Asia by Nation - TTV

India Greater China SE Asia 52% 5% 43%

Asia by Pillar - TTV

Corporate Leisure & Online Other/Support & Wholesale

27

TRADING OVERVIEW: ASIA

 Fundamentals remained strong in FY19, leading to profit growth for the second year (a record $12m PBT)  TTV growth of 40% being driven across all countries  TTV across the region poised to top $2b during FY20  Revenue margin decline due to leisure rationalisation in FY18 and growth of low- margin businesses – FCM and Indian FX  Reduction in revenue margin more than offset by reduced cost margin  Indian TTV topped $1b for the first time with FX, SME and packaged holidays all growing rapidly

28

SEGMENT RESULTS: OTHER

AUD $'m FY19 FY18 Mvmt %

TTV 327 261 25% External Revenue 298 235 27% Other Income 4 (1) (497%) Share of JV 3 (96%) Costs (360) (276) 31% PBT (59) (39) 52% PBT (underlying)1 (37) (26) 41% Margins Revenue Margin 91% 90% 116 bps Cost Margin (110%) (106%) (457 bps) PBT Margin (18%) (15%) (312 bps)

 Segment result includes FLT’s Global areas, along with The Travel Group (TTG) businesses (formerly Travel Experience Network)  Difference between statutory PBT and underlying PBT represents Olympus impairment offset by product revenue recognition change and AASB15 transition change  Primary drivers of the underlying PBT movement include an increase in global technology and digital spend, investments in Upside development costs, increased M&A costs, reduced DMC profitability and an increase in net interest expense (special dividend paid & new debt facilities taken on)

29

30

OUR VISION

31

CORE VALUES

EGALITARIANISM

In our company, we believe that each individual should have equal privileges and rights. In all our countries and all

• ur businesses there should be no

‘them and us’.

OWNERSHIP

We take full responsibility for our business and treat it as our own. Our people have the

• pportunity to share in our company’s success

through outcome-based incentives and profit share.

IRREVERENCE

We take our business seriously but not ourselves. We respect

• ur customers, our partners and

each other.

32

OUR 2025 VISION

In 2025 FCTG will be a thriving global travel company with a distinctive, entrepreneurial culture, famous brands and winning models. We will amaze our customers across three core segments – corporate, leisure and at destination.

33

The elements

• f our vision –

shared across all divisions

ENTREPRENEURIAL CULTURE

Our distinctive culture of

• wnership, accountability

and egalitarianism define us and is our biggest asset.

FAMOUS BRANDS

We obsess about having brands that reflect their DNA, are visually distinctive, well known, relevant, trusted and customer obsessed.

WINNING MODELS

Models that are: Growing, Productive, Material and replicable.

34

COMPANY & TRANSFORMATION GOALS (FY22)

7

7% compounding annual TTV growth

10

An underlying* cost margin

• f less than 10%

2

Return to a 2% net profit margin

* Excludes touring cost of sales

35

TRANSFORMATION PHASES

YEAR

1

YEAR

2-3

YEAR

4-5

Focus

Clean up our brands and

• ur businesses

Invest

Business engineering across

• ur three core divisions

Dominate

Market leading business models and brands

36

LEISURE DIVISION – THREE PILLARS, TWO PATHS

MASS PREMIUM

AU NZ RSA UK USA CAN ASIA

• Market leader and Specialist
• Growth in new models
• Vertical expansion
• Digitisation
• Specialist
• Unmanaged small business FCBT
• Vertical specialist
• Digitisation

YOUTH

37

LEISURE STRATEGIES

Customer systems & centricity

01

Digitisation (online/offline)

02

Product and pricing

03

Famous brands & modern marketing

04

Network

05

Model shift

06

38

Customer systems & centricity

01

Digitisation (online/offline)

02

• Reviews & NPS
• Reward systems
• Remuneration models
• Lead management systems – RedConnect
• Websites & Native apps
• Consultant & customer collaboration tools eg. Trips (Umapped acquisition)
• Payments & easy to buy from

LEISURE STRATEGY

39

Product & Pricing

03

Branding & Marketing

04

• Product design – House of irresistible deals
• FC Exclusives & Flash Sale
• Full content – forefront of NDC
• Service products – Price Drop Protection, Captain’s Packages
• Channel pricing
• Membership & loyalty
• Brand DNA workshops
• Advertising uplift
• Universal Traveller (was Student Flights)
• StudentUniverse Australian launch

LEISURE STRATEGY

FCB Product Journey

3 Tiered Pricing and Product Approach

40

Network

05

Model shift

06

• Ongoing evolution of shop models → hyper/flagship/community/satellite
• Relocations and optimal positioning
• Staffing & mix of staffing
• Legacy cost base reduction
• Accelerated growth of emerging, winning models
• Independent agent/ home based
• Host → referral model
• Social entrepreneur
• Global premium leisure networks
• Online

LEISURE STRATEGY

Perth Hyperstore

Now Open for Business

41

FLIGHT CENTRE BRAND: CHANGING SALES MIX

10 20 30 40 50 60 70 Contact Centre & Online Community Store Flagships & Hyperstores Specialist Businesses

Community shops continue to generate the majority of FCB’s sales but TTV is migrating towards emerging/winning channels & models

% of FY17 TTV Targeted % of FY20 TTV

42

Marketing Data Product Engineering

GROWTH

Membership Product & Pricing Self Service Sales Tech Modern Marketing

Our consultants, sites and apps recognise our users. We deliver personal

• services. It allows

us to offer closed user group rates. We have RRP and a clear strategy pricing by channel, user, product, etc. Pricing is centralised and data-driven We offer numerous post-booking self service capabilities: Change, cancel, interruption messages, etc. Invest in improved tech and processes for sales operations, lead generation and lead management Move to a healthier mix of advertising and efforts targeted at our existing customer base. Mine our customer base with tech.

FC 2.0 PROGRAM – STRATEGIC ROAD MAP

43

CORPORATE STRATEGY – OUR BRANDS

BRANDS PROFILE

• 7 equity countries (Australia, New Zealand, USA, Canada, UK, South

Africa, India)

• 3 regions (APAC, EMEA, Americas)
• 21 equity countries
• 75+ partner countries
• 6 countries/regions for cievents

(Australia, New Zealand, UK, USA, Canada, Asia)

• 3 countries for Stage and Screen

(Australia, New Zealand, USA)

SME TMS NICHE

44

BUSINESS STRATEGY STATEMENTS

To grow our SME travel business … in markets where the FCTG culture will thrive. We will blend our simple personalised service with the design and control of our digital platform, to provide our people, customers and suppliers a unique experience and access to all content. To grow FCM to be the number one global alternative to the mega TMCs by 2025… FCM

• ffers globally consistent services focussing on

mid to large market customers. We design and control the customer experience by blending

• ur people and technology. We offer the widest

choice of content and services. Our people are empowered to always find a way.

45

CORPORATE STRATEGIES

FOCUS AREAS

PRIMARY SECONDARY

Hyper investment in sales and marketing

01

Investment in technology

02

Our people

03

A continued focus on cost reduction and efficiency gains

04

The continued development

• f market leading and

unique products

05

Further geographic expansion

06

46

01 HYPER INVESTMENT IN SALES AND MARKETING

Record year in new business wins with $2b plus in new customer wins across

• ur corporate travel brands/businesses

Increased investment in business development managers, with 500 plus BDMs world wide Brand review underway for FCM Travel to better differentiate from the other TMCs and better represent its customer value proposition and DNA Supported by strong client retention (98% MNC retention in FCM in FY19)

47

Record year of tech investment Investment and/or acquisition in SAM :], Claire, and Upside Corporate technology priorities

02 INVESTMENT IN TECHNOLOGY

• SME digital platform and on-line booking tool powered by

Upside technology in Northern Hemisphere and Serko technology in ANZ

• Deployment of globally consistent automation and quality

control suite of products

• Enhanced customer data and reporting solution
• Deployment of salesforce CRM platform to front line FCM

travel consultants

• Development of new customer portal and digital platform

for FCM Travel

• Accommodation platform

48

03 OUR PEOPLE

A core part of our offering and customer value proposition Proactively blended with systems and technology

49

SECONDARY STRATEGIES

A continued focus on cost reduction and efficiency gains

04

The continued development of market leading and unique products

05

Further geographic expansion

06

50

THE TRAVEL GROUP (TTG) STRUCTURE

51

TTG – OUR BRANDS

BRANDS PROFILE KEY FOCUS AREAS

Global Bedbanks / Travelbank

• Small group touring
• Youth of tomorrow focussed
• Back-Roads Touring market is the 55+
• Topdeck targets 18 – 30s

Global Hotels

• Global B2B boutique brand
• Curated / specialised geographic product

range

• Full range of product - hotels
• Service / customer orientated focus

Global DMC

• Cross – 5 Star luxury brand
• Lumen – 3.5 - 4 star brand
• Away – 3.5 – 4.4 star resort brand
• Cross: Luxury, experience seeker
• Lumen: Reflag hotels
• Away: Value sun seekers

Global Touring

• Global B2B experiences brand
• Transfers, in country experiences
• On ground support
• The brand behind our partner’s brands
• Target the B2B tour & FIT operators
• Value extension via in-destination sales

52

TTG STRATEGIES

One business DMC strategy – brand, platform, standard

• perating procedures

01

New branding for hotels

02

Global platform for distribution businesses

03

The Travel Junction – external sales via a Travel Bank

04

Topdeck repositioning, product development & sales

05

53

TTG STRATEGIES

One Global DMC

01

Hotels

02

• New Discova brand launched early in FY20
• New platform implementation underway for enhanced distribution capability & efficiency
• One business with one set of SOPs from 2 disparate businesses (Olympus & Buffalo)
• Expansion – geographic & B2B sales model
• New brand architecture – Cross Hotels & Resorts
• Ongoing prudent expansion within region
• Model expansion

54

TTG STRATEGIES

Copernicus and Helio

03

The Travel Junction

04

• New platform pilot in UK in Dec 2019 to commence global roll-out
• Delivering next generation procurement & enhanced distribution capability
• Aggregated and curated content for faster quoting and sales delivery for travel consultants
• Enhanced product and packaging capability
• External sales to industry (B2B)
• Differentiated model to existing bedbanks
• Build model to then grow

55

Global Touring – Topdeck and Back-Roads Touring

TTG STRATEGIES

05

• The world’s leading socially inclusive youth brand with social experiences for 18-30s
• Small group touring expansion and growth
• Global GSA sales strategy to develop new markets and grow channels
• Back-Roads expansion to USA (Blue-Roads)

56

GLOBAL TECHNOLOGY TRANSFORMATION PROGRAM (IT & DIGITAL)

Total visibility into all current projects, spends & outcomes

01

A rationalised roadmap in line with business priorities

02

Identification of further required investment to match future strategy

03

Implement a new, revised IT organisation & processes

04

M&A strategy for technology & digital capability if required

05

Working with US-based travel tech consultancy Hudson Crossing Company-wide 5-phase IT review to deliver meaningful change

PROGRAM OBJECTIVES

57

GLOBAL COST AND EFFICIENCY PROGRAM

Outsourcing

• Process roles
• Ticketing

Head Office Real Estate Efficiency

• Optimising space

utilisation

• Sub-leasing excess real

estate

Support Costs

• Continuing focus on all

support costs

• Head count freeze

Robotics & Automation

• Finance processes
• Some call centre

functions

• Booking admin
• Ticketing

58

59

Detailed targets to be released at AGM (Nov)

Some ongoing uncertainty in key markets – Brexit in UK, soft market growth in Australia, Hong Kong unrest, US-China trade war In line with normal practice & will allow FLT to monitor Q1 trading conditions & results Longer term TTV growth target in place (7%+)

FY20 OUTLOOK

60

Corporate and international businesses

FY20 GROWTH DRIVERS:

GLOBALISATION & DIVERSITY

Again likely to be key contributors to group results Solid growth trajectory & relatively small share of large markets Strong & consistent growth in Americas with significant future potential Expanding EMEA footprint Asia now contributing meaningfully to overall results

61

Expecting stabilisation

FY20 GROWTH DRIVERS:

AUSTRALIA

Strategies in place to address issues that impacted FY19 performance Ongoing focus on costs & sales discipline in FCB and Universal Traveller Margins stabilising, but some ongoing macro uncertainty Network planning Targeting higher growth channels & businesses to drive TTV – online, specialist, FCBT, flagships & hyperstores

62

NETWORK JOURNEY OUR APPROACH

NETWORK PLAN

Relocation Opportunities New Growth Opportunities (Right Brand, Right Location) Model Pivots - (Satellite, Franchise Lite, Rebrand) Closure Market Review & Growth / Performance Benchmarking Consultant Performance & Optimal Staffing Smarts Customer Demographics & Buying Patterns (Specialisation)

63

Expected

• utcomes

FY20:

NETWORK REVIEW ALMOST COMPLETE

Right shops in right locations with appropriate staffing levels About 30 Flight Centre shops likely to close (8-step filter process in place) About 30 FCB shops to be rebranded to Travel Associates or Universal Traveller About 200 new roles to be created to take sales force to optimum levels (circa 5200 people) 30-40 leisure shops to be relocated to better sites (mainly FCB) Closures partially offset by 20 openings – specialist, Flight Centre Business Travel, flagships

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FY20:

RECENT DEVELOPMENTS

LEISURE

• More aggressive push into Aussie youth

sector with StudentUniverse and Universal Traveller launched

• Satellite model now

in place in Australia & NZ

• New hyperstores opened in WA and Victoria

CORPORATE

• Further global network development –
• wnership interest increased to 100%

in both LDV (Canada)

• Upside technology integration underway

TEN / TTG

• New global brands created in DMC (Discova)

and hotels sectors

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QUESTIONS?

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FIVE YEAR RESULT SUMMARY

June 2019 June 2018 June 2017 June 2016 June 2015

TTV $23,728m $21,818m $20,109m $19,305m $17,598m Income margin 12.9% 13.4% 13.8% 13.7% 13.6% EBITDA $427.3m $442.2m $402.1m $413.9m $417.0m PBT $343.5m $364.3m $325.4m $345.0m $366.3m PBT (underlying) $343.1m $384.7m $329.5m $352.4m $366.3m NPAT $264.2m $264.8m $230.8m $244.6m $256.6m EPS 261.6c 261.1c 228.5c 242.4c 254.7c DPS 158.0c 167.0c 139.0c 152.0c 152.0c ROE 18.1% 17.0% 16.2% 18.2% 20.2% Capex $101.0m $87.3m $104.1m $121.0m $82.9m Selling staff 14,346 14,622 15,118 14,760 14,433 General cash $336.5m $444.5m $425.9m $506.7m $564.7m Client cash $835.7m $828.5m $855.8m $809.3m $813.3m Cash and cash equivalents $1,172.3m $1,273.0m $1,281.6m $1,316.0m $1,378.0m Financial Asset Investments $115.4m $204.1m $200.0m $204.5m $75.7m Cash and investments $1,287.7m $1,477.1m $1,481.6m $1,520.5m $1,453.7m

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OVERSEAS BUSINESSES DRIVING TTV GROWTH

Americas 42% Asia 29% EMEA 16% ANZ 9% Other 4%

91% of FLT’s FY19 TTV growth came from

• utside ANZ

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RESULTS BY COUNTRY / REGION

TTV: $67m, up 7% in AUD (up 3% in lc) AUD EBIT: $1.1m loss BUSINESSES: 4 LATIN AMERICA1 TTV: $1.6b, up 8% in AUD (up 4% in lc) AUD EBIT: $24.0m BUSINESSES: 195 CANADA TTV: $3.9b, up 21% in AUD (up 11% in lc) AUD EBIT: $75.7m BUSINESSES: 233 USA2 TTV: $2.3b, up 8% in AUD (up 4% in lc) AUD EBIT: $56.7m BUSINESSES: 259 UK TTV: $148m, up 23% in AUD (up 14% in lc) AUD EBIT: $6.1m BUSINESSES: 7 UAE TTV: $659m, up 8% in AUD (up 10% in lc) AUD EBIT: $16.5m BUSINESSES: 190 SOUTH AFRICA TTV: $340m, up 24% in AUD AUD EBIT: $2.1m BUSINESSES: 22 REST OF EUROPE1 TTV: $11.2b, up 1% AUD EBIT: $173.1m BUSINESSES: 1,443 AUSTRALIA1 TTV: $317m, up 4% in AUD AUD EBIT: $5.3m BUSINESSES: 39 GREATER CHINA TTV: $1.3bm, up 64% in AUD (up 64% in lc) AUD EBIT: $4.3m BUSINESSES: 164 INDIA TTV: $308m, up 14% in AUD AUD EBIT: $4.7m BUSINESSES: 21 SOUTH EAST ASIA TTV: $1.4b, up 8% in AUD (up 6% in lc) AUD EBIT: $22.3m BUSINESSES: 188 NEW ZEALAND

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Seven strategic acquisitions completed to:

Strengthen FLT’s global corporate travel footprint and capabilities Enhance the customer offering Deliver new revenue streams

OTHER FY19 HIGHLIGHTS:

M&A

LEISURE

Umapped

CORPORATE

Sam :] (ETSC) Claire Casto Upside 3Mundi

TEN / TTG

Camakila (hotel lease)