CONFERENCE Graham Turner, CEO October 9, 2019 COMPANY OVERVIEW - - PowerPoint PPT Presentation

MORGANS QUEENSLAND CONFERENCE

Graham Turner, CEO October 9, 2019

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COMPANY OVERVIEW Our Business

Strong corporate culture built around 3 core values – egalitarianism, ownership & irreverence

TTG a longer term driver of group results & includes: DMCs in Asia & Mexico (Discova), hotel management in Thailand, Vietnam and Bali (Cross Hotels & Resorts) and tour

• perators (Topdeck, Back-Roads)

Leisure & corporate businesses in four major geographic regions – Australia/NZ, Americas, EMEA & Asia Operating in 3 key sectors – leisure, corporate & in-destination travel experiences (now known as The Travel Group or TTG)

20,000 people worldwide

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23rd year of growth in 24 years since listing

RECORD TTV OF $23.7b

In line with amended guidance but below PCP after challenging 2H

UNDERLYING PBT OF $343.1m

Strong results in key overseas markets – $100m+ profit fin the Americas

GLOBALISATION

Continued out-performance & strong future growth potential in business travel sector

CORPORATE

$3.07 per share in fully franked dividend payments, including $1.49 special dividend

$310.2m SHAREHOLDER RETURN

FY19 RESULT RECAP

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KEY FY19 THEMES: DIVERSITY & GLOBALISATION

Australia & NZ 53% Americas 24% EMEA 14% Asia 8% Other 1%

FY19 TTV Contribution

More than half of FLT’s TTV is now generated overseas 61% 38% 1%

FY19 TTV Contribution

Leisure Corporate TTG A market leader in both leisure & corporate travel TTV weighted towards leisure but mix likely to change given stronger growth trajectory & broader geographic footprint in corporate

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CORPORATE: GROWING & GAINING SCALE GLOBALLY

Australia/ New Zealand 33% Americas 33% EMEA 22% Asia 12%

Corporate TTV Contributions – FY19

1 2 3 4 5 6 7 8 9 10

Corporate TTV ($AUb)

Corporate TTV ($AUb)

15.2% corporate TTV growth to $8.9b during FY19 & further growth during FY20 Q1

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EUROPE: PLATFORM IN PLACE FOR RAPID GROWTH

Expanding Presence in Key Corporate Region

Significant continental Europe footprint – home to some of the world’s largest corporate travel markets Equity owned businesses in key countries – France, Germany, Switzerland, Netherlands, Sweden, Finland, Norway, Denmark Corporate focus – pure-play offerings in all countries Gaining scale & poised to become a key FY20 EMEA result driver Germany start-up winning business & targeting break-even during FY20

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LEISURE: ONGOING EVOLUTION – 3 PILLARS, 2 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

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Brands & models covering 100% of the leisure travel market

AUSTRALIA: LEISURE BRANDS & MODELS

BRAND OTA CONTACT CENTRE FLAGSHIP/HYPER COMMUNITY FCBT SPECLIALSIATION IC FRANCHISE ACCELERATED OWNERSHIP FLIGHT CENTRE

Y Y Y Y Y Y Y N Y

UNIVERSAL TRAVELLER

Y Y Y N N Y Y N Y

TRAVEL ASSOCIATES

N N N Y N Y Y Y Y

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STRONG GROWTH IN NEW/EMERGING LEISURE MODELS

Online – about $1.3b in online leisure TTV during FY19 Home-based/Independent contractor Specialist Flight Centre brand businesses Ready-made packages/flash sale

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FURTHER ONLINE GROWTH: TTV DOUBLING IN AUSTRALIA

0% 20% 40% 60% 80%

Year-on-Year TTV Growth (%)

Year-on-Year TTV Growth (%)

Rapid growth on flightcentre.com.au since online booking fees were removed

*Jetmax includes BYOjet & Aunt Betty

Q1 TTV Growth

Jetmax* up 140% to $135m flightcentre.com.au up 65% to $120m

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flightcentre.com.au

Customer Profile

Domestic Weighted: Predominantly travellling within Australia – more than 80% of bookings (circa 60% of TTV) New Customers: Only 8% crossover with retail network – pointing to market-share growth Age & Gender: 54% under-45, 64% female Average Booking Size: $1823 international, $474 domestic (average booking size is 2-2.5 times higher in-store) Short Window: 40% of domestic bookings for departure within 7 days

18-24 6% 25-34 28% 35-44 20% 45-54 19% 55-64 16% 65+ 11% Percentage of Bookings By Age Group

54% of online bookings are made by under-45s

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HOME-BASED/INDEPENDENT CONTRACTOR

Developing a Global Footprint

Networks in place in Australia, NZ, Canada, USA & South Africa – delivered circa $380m in TTV during FY19 Circa 10% TTV growth in early FY20 trading Small acquisition recently in Canada (Ixtapa Travel) – entry to a new province (Saskatchewan) Referral & host agency models Lower cost model offering greater flexibility for agents & convenience for customers

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SPECIALIST FLIGHT CENTRE BRAND BUSINESSES

Dedicated Offerings for Key Sectors

Flight Centre Business Travel (FCBT), Groups, Round-The-World, First & Business Class, Groups About $430m in TTV in Australia during FY19 Additional $340m from FCBT in UK during FY19

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IGNITE: READY-MADE PACKAGE SECTOR TAKING OFF

Now 100% owned by FLT (previously 49%) Highly productive models – opportunity to export to other FLT geographies 3 key divisions – My holidays, Flight Centre Exclusives & Rewards Making complex packages simple for customers & consultants My holidays (14 destination & cruise businesses) growing strongly Circa 55% TTV growth across the business YTD

Business Overview

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Customer Journey

1.Customer inspired by advertising across a range of channels 2.Majority of enquiries submitted via form on website 3.All bookings completed by ITG’s

• nsite call centre

Bookings

100% Ignite Call Centre

Enquiries

Phone (30%) Online (70%)

Inspiration (Advertising)

Press Digital Database

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Customer Journey

1.Customer inspired by advertising across a range of channels 2.Majority of enquiries in stores 3.All bookings recorded within centralised system

Bookings

Store Ignite Call Centre Online / Direct

Enquiries

Store Phone Online

(Inspiration)Advertising

Press Digital Store Database (limited)

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FY20: GUIDANCE TO BE PROVIDED AT AGM (Nov 7)

Q1: Challenging Comparative

• Ongoing TTV growth but underlying profit below

prior year & initial expectations for the period

• Tracking against the PCP’s strongest trading

period

• Continuation of subdued trading in Australia –

most evident in leisure sector

• Unrest/macro uncertainty in some key

geographies, including the UK (Brexit)

• Downturn in travel to Dominican Republic (safety

concerns) impacted US leisure business

• Minimal impact from Thomas Cook collapse but

circa $7m in costs likely to be incurred in re- accommodating Bentours/Tempo customers

• Lower interest earnings during Q1, given interest

rate cuts in Australia during past 12 months

• Underperformance - soft Q1 operating results

from touring & DMC businesses Q2: Stabilisation

• Expecting results to stabilise in near-term – like-

for-like trading conditions from now on in Australia

• EBA costs also like-for-like from October 2019

($4million headwind during Q1)

• Gross margin recovery
• November-December expected to provide a more

meaningful comparison of current year trading but underlying FY20 1H profit likely to be below $140.4m FY19 !H result 2H: Recovery

• Opportunity to achieve stronger growth in
• verseas earnings as conditions improve/concerns

abate

• Like-for-like cost comparisons as year progresses:
• Additional consultancy fees incurred early in FY20

(IT & other reviews)

• Upside – corporate SME technology investment
• Interest expense (debt facilities taken on during

PCP to fund acquisitions)

• Possible benefits from recent interest rates cuts &

tax refunds in Australia during peak booking periods for bigger ticket international holidays

• Leisure network enhancements – people & shop

networks rightsized

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QUESTIONS?