Annual General Meeting Flight Centre Travel Group ASX: FLT | - - PowerPoint PPT Presentation

Annual General Meeting Flight Centre Travel Group

ASX: FLT | October 22, 2018

AGENDA

Today’s Schedule

Chairman’s Address MD’s Address Resolutions General Questions Polling Refreshments

Results & Highlights: New Milestones Established

Record TTV of $21.8b Up 8.5% & $1.7b higher than previous record (FY17) Represents almost $60m in TTV on average every day Record Profit $384.7m (underlying) Near top of upgraded guidance & $55m above FY17 result 16.8% year-on-year growth & 2% above previous record (FY14) Record Shareholder Returns $1.67 in fully franked dividends per share 14% EPS growth

FY18 Result Drivers: Margins

Income Margin

25bps decrease – decrease was expected & driven largely by ongoing business mix changes Reflects rapid growth in lower revenue margin businesses – multi-national corporate (FCM), FX (Travel Money), leisure OTAs

Cost Margin

50bps improvement to 11.2%* during FY18 – best result since FY07 More than offsetting the income margin decrease

Net Margin

12 bps improvement Driven by turnaround in loss-making businesses, growth from businesses that were historically modestly profitable & lower cost growth

*Excludes touring cost of sales

FY18: Building For The Future

Stronger IT Backbone

• New in-store

systems (GDS) now fully deployed after Australia & NZ FY18 roll-out

• PCI, GDPR
• New finance

platform being deployed – Americas roll-out underway, Australia roll-out set to begin late in FY19 Leisure Network

• Rebrand & Grow

plan completed in Australia – 1200 sales people across 250 shops redeployed during 2H

• Stronger digital

platforms, lead management technology, new websites, mobile apps and services Corporate Network

• FCM technology

suite consolidated & relaunched as FCM Connect

• New products –

Sam (AI app), Your CT (SME portal), Lumo (predicts flight delays for customers) New Business Verticals

• Hotel management

business acquired (BHMA), Americas- based DMC (Olympus)

• FC Exclusives

(voucher model) just launched in Australia

FY18: Rebrand & Grow Strategy

Mass Market Premium Youth

Focus on our No.1 travel brand – Flight Centre dominating the flight, holiday, cruise + small business travel markets across a range of models across the P2P Index Growing a network of premium agents & businesses (including franchises) under the Travel Associates brand & Travel Partners home-based & affiliates models Smaller but better network of Student Flights shops & bringing StudentUniverse to the Australian market to create an online-led youth travel brand

Brand mergers in Australia to create stronger networks targeting 3 key sectors

FY18: Business Transformation Program

Dealing with problem areas Loss-making businesses removed, downsized or pivoted USA & Canada leisure profits for 1st time since FY12 & FY11 respectively Globalisation Profit growth driven by overseas businesses – particularly EMEA & Americas Investigating further global synergies in air, land & IT areas Costs & Efficiency Slowing overall cost growth & lowering cost margins, improving productivity All BT costs recorded as business as usual Successfully Executing Key Strategies

FY18: Solid Progress Towards Transformation Targets

Goal: 7% per annum TTV growth on average in constant currency through to FY22 FY18 Outcome: Tracking above target - circa 8.5% growth achieved Goal: Return to 2% full year net margin by FY22 (subject to mix) FY18 Outcome: Solid progress – 12bps improvement to 1.76% Goal: <$100m in underlying* cost growth during FY18 FY18 Outcome: Target achieved – circa $90m growth

Medium-term transformation goals are subject to review as FLT fine tunes strategies & as business mix changes. FLT will continue to provide separate annual guidance.

*Excludes touring costs, which were previously netted against revenue

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FY18: New Revenue Streams

Leisure

Home-based businesses acquired in Australia & NZ US start-up,(Independent by Liberty Travel) proving popular

Corporate

Businesses acquired in Canada & NZ Investment in Germany start-up

TEN

Global DMC network starting to take shape – Olympus (Americas) acquired & ownership of Buffalo Tours (Asia) increased to 100% Emerging Asia-based hotel management business BHMA acquired

BHMA

• Thailand-based hotel management company
• FLT’s first acquisition in the hotel sector
• Small, but sensible strategic investment
• Portfolio centred on Thailand at acquisition, but now diversifying
• Expansion into Bali and Vietnam
• Targeting additional properties in destinations where FLT has

strong market-share

FY18: Investing in Our People

New Australian leisure wage model on the way –

• verwhelming support from staff

Workplace Flexibility & Diversity Programs Paid Parental Leave in Australia Mentoring UK Apprenticeship Program FCM Leave, Student Flights Unlimited Leave

FY18: Developing our CSR Platform

Making A Difference

Now a signatory to UN Global Compact Work underway on inaugural Sustainability Report Brighter Futures Program initiated Four key areas:

FC Foundation FCTG Worldwise FCTG People FCTG Environmental Sustainability

Our Structure: Now a Major Global Presence

TEN Leisure Corporate

AU/NZ EMEA Asia/India Americas Global (TEN)

Three Key Sectors in Five Key Geographies

Our Structure: Changing Geographic Mix

Half of our company’s sales are now being generated outside

• f Australia

Our Structure: Changing Geographic Mix

50 100 150 200 FY14 FY15 FY16 FY17 FY18

$151m FY18 Profit Contribution

EMEA & Americas Profit Contribution ($m)

EMEA & Americas businesses now capable of driving

• verall profit growth

FY19: Trading Update 1st Quarter Growth

TTV tracking slightly above longer term target of 7% per year in constant currency Increased PBT but modest growth on PCP Growth driven by overseas businesses as expected Further strong results in the Americas NZ, South Africa, UAE & Asia-India segment also performing well Positive start for EMEA businesses, although results impacted by investment in Germany start-up & UK credit-card regulation change (2HFY18)

FY19: Trading Update Australia

Corporate business again performing well Client wins & up-trading driving growth Some ongoing disruption in leisure, as expected Leisure improvement expected during 2H EBA now accepted by staff (but yet to be ratified) Network planning & enhancements taking place

Right-Sizing the Australian Leisure Business

350 fewer consultants in place at June 30 than one year earlier Largest ever recruitment drive completed during Q1FY19 Consultant numbers now in line with PCP

TTV benefits expected later in year

FY19: Market Guidance

First Half

Targeting an underlying PBT between $140m & 150m for 6 months to Dec 31, 2018 Represents 0-7% growth on PCP

Full Year

Targeting $390m-$420m underlying PBT Circa 1-9% growth on record FY18 result

FY19: Growth Drivers

Ongoing market growth globally 3.6% compounding growth expected from 2017-2036 – means industry will double Reasonable trading conditions in Australia International airfare prices remain highly affordable but threat of increases – fuelled by

• il

Further benefits expected from Business Transformation Program New BT focus & projects underway with 3 key pillars

Business Transformation (BT) Program

The “Clean-up” stage – businesses & brands

Year 1

Investment & Business Engineering across

• ur 3 divisions

Launched April 2017 Years 2 & 3

Business Transformation: Updated Targets in Place

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TTV Growth 7% per annum TTV growth on average in constant currency through to FY22 Cost Margin 10% cost margin (underlying*costs as a percentage of TTV) by FY22 Net Margin 2% full year net margin by FY22 (subject to mix) Unchanged New Target Unchanged

*Excludes touring cost of sales

BT: TEN & Product

Key Projects

Globalisation – product procurement & distribution Yield & pricing Vertical integration, structuring & growth of in-destination businesses Content & connectivity – key partner in Sabre’s Beyond NDC & Amadeus’s NDCX programs

BT: Corporate

Key Projects FCM Truly Global – leveraging global capabilities to improve customer

• fferings & reduce costs

Lower cost offerings – self service models Continued investment in tech & product suite, which includes Sam :] (AI app) & Your CT (new SME portal) Savi – next generation solution being developed exclusively with Serko

Your CT: New Portal for SME customers

BOOKING TRAVELLER TRACKING TRAVEL POLICY REPORTS APPROVE & REQUEST TRAVEL ALERTS INVOICE DATA PROFILE MANAGEMENT

BT: Leisure

Key Projects

FCB 2.0 – using robotics, AI & other initiatives to reduce customer pain points, bureaucracy & improve performance Premium focus – expanding our independent contractor, affiliate & franchise models Global view to youth sector – online-led model utilising Student Flights & StudentUniverse Digital transformation to grow online sales, deliver quality leads to our people, introduce new & enhanced native apps + new digital solutions (eg Umapped)

New Initiatives: FC Exclusives

Outlook: Emerging Businesses Gaining Scale

$31m FY18 Profit Contribution FLT Asia Stage & Screen ci events Travel Money Jetmax 99 Bikes

Not expected to be major profit drivers in the near-term, but

• ngoing growth expected

FY19: New EBA Almost in Place Key Points

Overwhelming support (85%+) from staff in Australia (Flight Centre brand & Student Flights) Four-year agreement must now be formally ratified before it can be introduced Positive development for the company & its people but has caused some disruption during FY19 Simpler pay & conditions structure Includes non-monetary benefits – for example, additional leisure leave – & initiatives aimed at improving retention Costs factored into FY19 guidance & longer term BT program targets

Resolution 1: Election of Colette Garnsey

The number of proxies received for the resolution … is: For: 81,463,461 (98.81%) Against: 81,339 (0.10%) Open: 898,464 (1.09%) Abstain: 110,423

Resolution 2: Re-election of Rob Baker

The number of proxies received for the resolution … is: For: 80,457,514 (97.59%) Against: 1,085,052 (1.32%) Open: 898,902 (1.09%) Abstain: 112,219

Resolution 3: Adoption of the Remuneration Report

The number of proxies received for the resolution … is: For: 64,457,398 (95.94%) Against: 1,828,918 (2.72%) Open: 897,637 (1.34%) Abstain: 169,734

Resolution 4: Directors’ Fee Pool Increase

The number of proxies received for the resolution … is: For: 65,738,930 (97.86%) Against: 538,097 (0.8%) Open: 895,280 (1.34%) Abstain: 181,380

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