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Operator: Thank you for standing by and welcome to the Flight Centre Travel Group Limited Half-Year Result Presentation. [Operator Instructions] I would now like to hand the conference call over to Mr. Haydn Long, Investor Relations. Please go ahead.
Haydn Long: Good morning, everyone. Thank you for dialing in today for our half-year result announcement. I'm joined by the usual suspects, and you'll hear from them in the usual order. First up will be Adam, Adam Campbell, our CFO and the GBS CEO; Chris Galanty, the Head of the Corporate Business, calling in from the U.K.; JK, the Leisure CEO; and also Skroo, the Global MD. We'll also be joined by Greg Parker, the Head of Supply; and Mel Elf, the Head of Productive Operations, for the Q&A session after this. I'll now hand over to Adam.
Adam Campbell: Thank you, Haydn. And welcome, everyone. I want to start this morning by briefly talking about what we see as being the key elements of our ongoing competitive advantage, which we would summarize under 5 broad headings that you see on Page 4 of the pack. Firstly, the enduring strength of our leading leisure and corporate brands, which is demonstrated by the ongoing resilient demand and record TTV being seen across both divisions through the half. Secondly, our ongoing innovation and proven ability to adapt to changing market conditions. This has been the case for many years as the industry has evolved, and more recently has been seen with the use of AI as an enabler of increased consultant productivity, reduced cost to serve, and the delivery of a more personalized and consistent customer experience. Our diversified leisure offerings are also a competitive advantage with recent examples being seen through the strong specialist brands growth, scaling digital channels and accelerating momentum in the cruise and luxury segments. Our corporate growth engine with its TTV and profit growth over recent years, and new revenue streams in payments, meetings and events, and consulting services, also serve as an advantage to the group. And finally, our ongoing improvements in efficiency and productivity, with cost margins now well below pre-pandemic levels and a productivity uplift across the group highlighted by a 13% improvement in our corporate businesses. These competitive advantages have combined to deliver what I believe to be a pretty strong result for the first half, and importantly, sets us up for a solid full-year result in line with our current expectations. Some of the financial highlights for the first half are shown on Slide 5, including TTV growth of 7% to $12.5 billion, revenue increasing 6% to $1.4 billion, underlying EBITDA increasing 9% to $213 million, and underlying PBT increasing 4% to $125 million. The difference between EBITDA and PBT growth was primarily due to much lower interest income being generated during the period as official interest rates were reduced and our cash reserves were lower during the period due to our ongoing share buyback. As a result of this strong first half, we've seen an increase in today's declared interim dividend to $0.12 per share and an increase in EPS for the period to just over $0.28 per share. It is worth noting that trading conditions in the first half weren't all smooth sailing, with the volatility that we saw in the last quarter of 2025 continuing into the first quarter of this year, which makes the TTV and profit growth for the half stronger than they may look at face value. As Skroo will discuss later on the call, pleasingly, we've also seen this momentum continue through the early stages of the second half. During the period, we've also continued to invest in network enhancements, digital capabilities and AI, high-growth sectors and new revenue streams. So whilst our focus has been very much centered on the current year results, we've also continued to keep a strong eye on the evolution of our business for future years' success. Moving to Slide 7. Chris and JK are going to discuss their respective divisional results shortly, so I won't spend a lot of time duplicating those comments. As you can see though, Corporate's top-line growth of 6% converted to profit growth for the half of 20%, as the investments made over recent years in productivity and efficiency now start to flow through to operating leverage, and the Asia business returns to profitability. Leisure's profit for the half was down on prior year, as we had expected, but their TTV grew at a faster rate in the second quarter than it did in the first quarter, and second-quarter profits were also above the prior periods for that quarter. This momentum continued into early trading for the second half, and at the end of January, the division's profits on a year-to-date basis were also once again above the prior year comparative. We've rebranded the old "Other" segment to now be called our "HQ" segment. There's been no changes to what gets reported in this segment, it's just a name change to more accurately reflect the nature of the businesses and group services reported in there. That segment has increased reported losses this half, predominantly due to the lower interest income that I mentioned earlier, and that gets reported through that segment. As can be seen on Slide 9, the business that we now operate is very different to that from 6 or 7 years ago and continues to evolve. Our corporate TTV has moved from less than 40% of the group's total to now be the major contributor. Flight Centre brand contributed nearly a 1/3 of the group's TTV and is now around a quarter. And back then, we only had around 6% of Flight Centre's TTV transacted online, which is now approaching 20%. In the same time period, we've also reduced our underlying cost base and increased our productivity by over 60%, with TTV per FTE exceeding $1 million for the first time ever during the first half of this year. Throughout this period of evolution and change, we've held certain core nonfinancial assets constant, which you can see on Slide 10 of the pack. These assets have always been important to us and include brand equity and trust, customer loyalty and proprietary data, differentiated travel technology, people expertise to navigate complexity, and supplier relationships and access. Whilst we've held these nonfinancial assets constant, we've also continued to innovate, including the development of both Sam and Mel in the corporate division, and a co-consult in leisure, which was built on Anthropic technology, as well as partnering with leading AI innovators. I'll finish by talking to 2 key areas of focus for us over the last few years: capital management; and our ongoing portfolio simplification and strategic reallocation. On Slide 12 of the deck, you'll see that from a capital management perspective, we continue to actively manage our convertible notes on issue. In the first half, we issued new longer-dated notes totaling $450 million, which enables the full retirement of the 2028 notes in May of this year, as well as a further reduction in the face value of the 2027 notes, and also the partial funding of the Iglu acquisition late last year. We've also continued our on-market share buyback of up to $200 million, with $126 million executed to date, retiring just under 10 million shares and enhancing our EPS. Finally, today we've announced an increased $0.12 per share fully franked interim dividend. I should note that due to our utilization of carry-forward losses, our final dividend for 2026 will likely be partially franked, and we will also likely revert to unfranked dividends for FY '27. As we regularly do in light of the impending conclusion of our current share buyback process in May, our convertible note balances, and our franking credit balance, we will review our future capital management strategy over the course of the second half. Finally, as you can see on Slide 13, it's worth revisiting the outcomes of our ongoing portfolio simplification and strategic reallocation program, where we've seen the divestiture of noncore assets such as Cross Hotels during the first half of this year. The closure of underperforming businesses such as Discova Americas, GoGo, the Travel Junction, and StudentUniverse. Strategic pivots in businesses such as Topdeck, which is now small-group focused, and Liberty, which has been rebranded to Envoyage. The acquisition of businesses with defensible moats in high-growth sectors such as Iglu and Cruise Club in the cruise sector, and Scott Dunn in the luxury sector. And organic expansion in key sectors such as meetings and events, stage and screen, and energy and marine in the corporate division, and TA Reserved, Cruiseabout, and Cruise HQ in the leisure division. I'll now hand over to Chris to give some more color around the performance of our corporate division.
Chris Galanty: Thanks, Adam. I'm very pleased to give some more details on what has been a very strong first-half corporate performance. And encouragingly, we're seeing good momentum building in the second half as well. But before I do, I'd just like to reiterate a few points about our corporate business. Firstly, we continue to address the market with 2 world-class brands: Corporate Traveller in the SME space; and FCM in the large global and enterprise space. We see this as a competitive advantage as we think our customers have very different needs in these 2 different segments. And unlike virtually all of our competitors, we approach the market with distinct brands which have separate management teams, different products, different pricing, different customer acquisition, and different service models. And we believe avoiding this sort of typical one-size-fits-all approach gives us strong customer centricity and a competitive advantage. And these are 2 global businesses. As you know, we generate roughly a 1/3 of our TTV and revenue from Australia, New Zealand, EMEA and the Americas, and roughly 10% from Asia. And this global approach means we can build things globally but address the market and the customers locally. We consider ourselves a people-led digital business. And what this means is we invest heavily in terms of both time and money and expertise in building world-class technology. And this digital product is something our customers hugely value and is one of the reasons we continue to win and grow. However, behind that technology are our people and our culture. And it's important that whilst many of our competitors focus solely on technology, we very much believe in the dual benefit of people and technology to deliver value. And also our broadening revenue mix. As we've been saying for the last couple of years, we're investing in new higher-end areas to deliver customer value and also generate revenue for ourselves. And this includes things such as meetings and events, payment and expense, consultancy, VIP travel, and some specialist travel sectors. And this is all about deepening customer relationships as well as generating more value to ourselves. And if you look at this Venn diagram, I think this sums us up quite clearly. We traditionally focused on travel management within our FCM and Corporate Traveller brands. But increasingly now we're making heavy investments in our meetings and events capability. This is something we've always offered customers, but we're investing to ensure that we can offer it all around the world and offer global customers M&E capability for the first time, right through from creative services through to managed meetings. We also are focusing on professional services, things such as; payment and expense, loyalty, consultancy. And this means that these 3 different areas of expertise allow us to generate new revenue streams and give a more holistic experience to our customers. And our aim is really to deliver all 3 areas to all of our customers, or certainly as many customers as possible. And in the coming years, you're going to see more and more customers experiencing all 3 areas from us. And we think this makes customers stickier, we think it improves retention, and we think it'll obviously improve our economics as well. So getting back to the results that Adam touched on, I'm pleased to say we did deliver a record TTV. We've got a solid pipeline of new accounts secured across both brands and our meetings and events business, which means momentum will continue to build for the rest of this year and into the next financial year. And please note that Corporate Traveller is well on track to surpass $5 billion of TTV for the first time ever this year, which makes it the largest SME-only TMC in the world. And particularly pleasing is a strong performance in the Northern Hemisphere, with the U.S. in particular, our largest market opportunity, growing at 13%, which is great because it's a very competitive market. M&E and professional services contribute over 10% of our corporate revenue. It's a larger amount in FCM, and we see a huge opportunity to grow this in both brands in all 4 regions in the coming years. Profit growth exceeded TTV growth quite considerably at 20%. And this is really starting to show the scale benefits of what we've spoken about and we call Productive Operations, which is our digital transformation. And we expect to see further gains flowing from Productive Operations in the coming year. On the call, we have Mel Elf, who's our Global COO and Managing Director of FCM. And she's led with her team the Productive Operations initiative. And I'm really pleased to say they've done a great job, and we're generating meaningful financial and operational benefits this first half. We expect to see further benefits as initiatives are embedded in the business, and we're on track for full deployment of some of this key project effort by the end of this year. And really this is all about creating a more automated workflow. And it's about delivering our customer-facing platforms, Melon in Corporate Traveller and FCM platform in FCM, and making sure that those platforms are fully integrated with our consultant operating platforms as well. And it's about building a global operating model and platform for both brands, which gives us real economies of scale and consistency across the board. And for our people, it means they only have to learn one system no matter where they work, which gives us a lot more flexibility in our workforce, gives us much more streamlined processes across all of our markets. For customers, it gives them, and this is particularly important for FCM customers, much consistency and quality across the board in all of our markets. But it does allow us, because we can configure this operating system locally, to preserve our local expertise. And for our business, it gives us economies of scale which leads to efficiency. It reduces cost and complexity, but it still enables us to maintain our market agility. And we are now seeing strong returns on this investment and compound productivity growth quarter-by-quarter, month-by-month, year-by-year. And we expect this to continue as the project comes to completion and we move into a phase of really optimizing a global operating system rather than deploying it. So it's been a big success, a lot of hard work from our people, and we've really tried to make this massive change, which I think is the biggest project in Flight Centre Travel Group's history, without any disruption to our customers. So moving forward, what are the key growth drivers that we're focusing on? Well, firstly, our AI transformation. And unlike many of our competitors, we don't just see AI as about having chatbots in the marketplace. We really see AI as a foundational technology. And I'm really pleased that our team had the foresight to invest in our AI Center of Excellence over 2 years ago, which has meant we do have a competitive lead in many areas. And by foundational technology, what we mean is that AI is embedded in all of our platforms. Our customer-facing platforms, Mel is the AI capability in Melon and Sam is the capability in FCM platform, but also in all of the platforms we deployed in Productive Operations. Which means that this intelligence layer gives a much more personalized experience to our customers and a much more productive experience to our business. So we'll continue to invest heavily in this and we're getting great feedback from our customers. We'll also continue to invest in our global booking platforms, Melon in Corporate Traveller and FCM platform in FCM. And it's really important that we design and control this digital experience because it gives us much more control over obviously customer experience, but also content access and productivity. We'll keep focusing on organic growth, investing heavily in FCM and Corporate Traveller marketing and sales to make sure we keep growing by winning new customers and retaining existing ones. However, we also want to invest more in accelerating new growth models. As I said, meetings and events, specialist travel areas like stage and screen, which is our corporate travel business that focuses on the performance area of music, sports, and entertainment. And of course payment and expense, which is a really important way that we can deliver more value to customers, but also more revenue to our business as well. We're calling out something called brilliant basics, which is really making sure that as we deploy this global operating system we optimize it. Which again gives order consistency and scale benefits, and this leads to productivity growth, more automation which lowers cost for transaction as well as improving customer experience. And finally, and most importantly, our people. Every time I talk to customers, and I talk to customers pretty much every day of the week, they say to us that they like our technology and all the investments we're making, they enjoy using our products, but fundamentally it's our people that make the difference. And I think it is our people all around the world who've contributed to this great result this year. And it's a testament to our culture and our belief in the value of technology and people that has made that true. So I'm really pleased with the results, really pleased with the momentum building into the second half. And on that note, I'll hand over to JK to give an update on our leisure business.
James Kavanagh: Thank you, Chris. And hi everybody, good morning. Well, to begin with, the leisure business, it looks very different to 5 years ago. We've really transformed from a shop-heavy, single-channel focused model to a diversified, digitally-enabled business that's really built around 4 categories, which is mass market, luxury, specialist brands, and a range of independent brands too. And each of these are now generating over $1 billion in annual TTV, which shows great diversification. The portfolio model itself is really multi-channel by design. And we know that customers really choose a brand or booking channel based on trip complexity, product offering, trust and price. And we saw our online sales grow 14% this half to almost $900 million, which is now making up about 15% of sales overall. And what this does is really frees up our stores and our call centers to handle high-value, complex work. So turning to the numbers. Well, Adam introduced some of the numbers, but to go a bit deeper, TTV was up 10% to just under $6 billion, with all 4 categories growing. Revenue also grew, 6% to $690 million, and our underlying PBT of $61 million, which is slightly below prior year's $64 million. But it really reflects a few things. Firstly, the shift in mix in our business, and the shift in destinations that we saw to shorter haul, more lower margin international travel, as well as some front-loaded investments; sales staff, product design, technology and stores, which we previously flagged. So the good news is the mix is actually already reversing. And you'll see on the slide that in January, we delivered a record leisure profit, which was the strongest month in our company's history, which we're really proud of. And as you can see, TTV and profit are both tracking ahead on a year-to-date basis. Some of the call-out performers for the half were Scott Dunn in our luxury division. TTV was up 20% and profit was up almost 80% with all countries growing. The U.S. has been a standout and Asia is also performing as we expand into Hong Kong with the Scott Dunn brand. Our specialist category, you can also see the list on the slide there, has also grown, with TTV up more than 30%. And a real focus for us has been to grow in the cruise industry, with Iglu now underway with integration. We are on track to exceed $2 billion in cruise TTV this year alone. And our ambition in this space is to become a leading global cruise seller. We're building genuine scale here and some great capability, which you can see illustrated on the slide in terms of the numbers. So everything that I've described here really maps back to our 3 big moves, which is also on the slide. We've talked about these for some time. Flight Centre makes up about half of the leisure portfolio, and growing the core is very important to us. The brand's omnichannel model is really maturing. And the proof point here, which we're proud to actually share, is that the online channel has now delivered over a 2% PBT margin in January alone. And this result is down to enhanced content that we've been investing in to make it available to our customers, as well as change commercials in this channel. In fact, flightcentre.com now makes up about 50% or just over 50% of our bookings are made online. So that really shows that we've got a profitable digital business that is sitting alongside a high-touch retail network, and both are growing in basket size, productivity is also growing, as well as net promoter scores. Big move two for us in leisure is all about betting on winners. And firstly, I call these our margin engines, which is really luxury, cruise, tours, package holidays. And these are all high margin, complex, and defensible business models. The Scott Dunn results speak for themselves. But in the Ignite business, you can see here that our packages model is really thriving. In fact, we sold about $50 million worth of cruise in January alone, versus 2019 across a full year we sold $19 million. So this model has been one that we've been investing in a lot, and it's starting to pay dividends as we expand the model into the U.K. When I look at our volume engines, the independent network is scaling across five markets. Our foreign exchange business, Travel Money, launched a wholesale offering, and that brand itself is up 46% in the half, as well as Jetmax, another low-cost OTA business, which is up 15% and PBT doubled. Big move #3 for us is about launching and lifting loyalty. I'm really proud of the work the team have done to deliver World360 rewards. It's now live across 3 brands, Flight Centre, Cruiseabout, and Travel Associates. This is an app-first program, it's integrated across our new CRM and loyalty management platform, and the early signs are really promising. In fact, we're attracting about 54% of members that have either never booked with us, or they haven't booked with us in the last 3 years. The largest cohort of members in the Flight Centre brand alone are those in the age of 20 to 29, which is really showing that it has broad appeal as a program, and we're excited about more younger customers booking with our group. The launch airline partners include ANZ, Bupa, Caltex, and over 300 retail partners. And this really is becoming a new engine of growth for Flight Centre with a free and paid membership that will generate new revenue streams and give our customers more reasons to book with the group. So what connects all 3 moves is our investment in core platforms, data and personalization. And this is where I believe we're building genuine competitive advantage. For the first time we have a single customer view in leisure that is connecting retail, online, loyalty and behavioral data in real time. We're capturing what our customers tell us what they want, we're also capturing their behavior and what they're likely to buy, and we're also seeing their profile with much more rich information about what they can afford. And this data is really proprietary to us. It deepens with every interaction, and we believe it's becoming increasingly difficult to replicate. Built on this data set is our first AI co-consulting tool. It's live in the Flight Centre brand, and it's actually saving our consultants nearly 30 minutes per itinerary. What it's doing though is surfacing personalized recommendations, it's ranking conversion likelihood, and it fundamentally changes how our consultants work. As Adam mentioned, we're partnering with Anthropic, and this is really going to accelerate AI across the group. So looking into the second half, a record January is already in the bank, which we're very happy about. Key investments that were front-loaded in the first half, they're covering 5 core areas. We've got more sales staff, new product lines, enhanced platforms, and well-positioned stores, as well as new commercial partners. And I believe this sets us up nicely for great upside in what we call our seasonal H2 peak. So leisure is on track for profit growth in FY '26, and we're well positioned now for a record second-half TTV as well. And I just want to say a big shout out and thanks to all of our people who have contributed to these great results. Over to you, Skroo.
Graham Turner: Thank you, JK. Very good. And thanks, everyone, for joining us here today. Just as you heard from Adam, I think I'm happy to reaffirm our FY '26 guidance of $315 million to $350 million in underlying profit before tax. The midpoint of this is about $332.5 million. This represents 15% year-on-year growth and implies a 38%-62% skew between first-half and second-half earnings. This is consistent with the trading patterns we typically see across the business in the past. So as we enter this peak trading period of the second half, we believe we're pretty well placed for the full financial year. As you heard, January delivered a record leisure profit and TTV. And importantly, both the leisure and corporate divisions are now tracking for year-on-year profit growth. Now while some of this momentum will be partially offset by losses in Global HQ, driven largely by those interest costs, the group's operational performance remains good. We continue to invest where we feel it matters. FY '26 CapEx remains at about that $85 million, aimed more towards systems and technology to drive scale, efficiency, and that long-term capability across the organization. We are, of course, continuing to open shops and growing physical teams in certain brands, certain locations, particularly where we feel underrepresented. At a macro level, underlying travel demand continues to be pretty good. According to IATA, global passenger traffic is expected to grow by nearly 5% this year, with APAC forecast to grow even faster at over 7%. On the corporate side, 84% of global travel buyers expect their travel spend to hold or increase, reinforcing what we see as resilience in the category, and we see the opportunity for further expansion here. All of this gives us some pretty good confidence in the year ahead. And this is because we've got strong brands, good momentum in corporate, differentiated and some AI-driven profitability capabilities, and a leisure portfolio positioned for sustainable, good quality growth. With these attributes, we believe we're well placed to deliver on our FY '26 targets and continue to build a stronger, more productive, more competitive Flight Centre Travel Group over the next few years. As you've seen in our half year results, Flight Centre Travel Group enters the second half with some pretty good momentum and a strong position that leaves us well placed to benefit from our growth across our 2 core sectors, leisure and Corporate Travel. Our global model various and various well-trusted brands continue to show their strength. Even in the challenging trading environment, demand has remained resilient, and we've delivered some record TTV in the first half. That consistency speaks to these brands enduring value and the effectiveness of our longer-term plans across both corporate and leisure. Also, our corporate business continues to outperform the market. We delivered record TTV and a significant profit uplift supported by our operational performance, our significant productivity gains and our new revenue streams beyond traditional travel management. We're expanding into other areas, of course, such as payments, meetings and events and consulting, broadening our relevance to clients, expanding our addressable markets and giving us more revenues to capture growth as corporate travel generally continues to grow. Thirdly, we're embedding AI at scale across the group, creating real operational leverage as volumes grow. In corporate, AI is already handling millions of inquiries and supporting more consistent service delivery across the group. In leisure, our new co-consulting tools saving consultants, as you heard, I think, from JK, up to 30 minutes in itinerary. These gains allow us to effectively serve more customers, improve the speed and accuracy and support margin growth as that holiday market grows. Finally, our diversified leisure business is building momentum. Specialist categories are growing strongly. Our digital channels continue to scale. And the integration of Iglu is accelerating our cruise offering, one of the fastest-growing sectors globally. Combine this with our World360 Rewards program proposition, the leisure division is now positioned to deliver effective and profitable year-on-year profit growth. So as the industry continues to grow, Flight Centre Travel Group is well placed to outperform. We have those strong brands, the corporate growth momentum, the differentiated AI-driven productivity capability and of course, the diversified exposure to high-growth leisure segments. These advantages give us confidence in reaffirming that financial year '26 guidance and in our ability to continue delivering sustainable, profitable growth into the future. So thank you very much. Haydn?
Haydn Long: Thanks, Skroo. I think we're now ready for Q&A.
Operator: [Operator Instructions] Our first question comes from Michael Simotas from Jefferies.
Michael Simotas: Can I just start with productivity? And I'd be interested in having the conversation across both corporate and leisure. There's been a lot of work done on productivity initiatives, and we can see it coming through the P&L. If you sort of looked at the programs that you've got underway, how much is in the P&L now versus how much is still to come?
Haydn Long: Michael, I might send that to Chris initially. I've got Mel Elf sitting here with us as well, so Mel might have a few words to say. Chris, do you want to address the corporate side?
Chris Galanty: Sure. Yes, thank you for the question, Michael. Yes, obviously, we are seeing gains already, and that's largely because our staff numbers have been consistently coming down this year whilst we've been growing turnover, revenue and transactions. Look, I think we're confident we've got a lot of future benefit to come, and it comes from 2 main areas. One is obviously we win more business without adding staff. We get more self-serving through both Melon and FCM platforms, so customers can do more things themselves as we add more features. And then the work that Mel has been doing with productive operations in her team, we see more automation, whether it's robotics or AI. So we think there's more to come. But Mel, do you want to add a few words to that as well?
Melissa Elf: Yes, look, I think as we continue to deploy the systems and start to optimize those systems, we'll not only get the benefits as we go through to future markets, but just optimizing the existing markets and getting our consultants more productive on new systems as well, we'll start to see more productivity gains there. And then also moving into our support businesses as well that obviously support our front end, and that's a focus for the coming 12 months.
Haydn Long: JK?
James Kavanagh: Yes. And Michael, it's JK here. Just to give you a view on leisure, firstly, we have also grown productivity. Our TTV has grown 10%, and our employee benefits has not grown at the same growth rate for a few reasons. One is actually our employee benefits costs have actually uplifted, so we're not actually seeing it materially benefit the P&L at this stage, but it's actually resulting in more cost avoidance to make sure that we don't need to grow our employee benefits at the same rate as what TTV is growing. We have been investing in staff numbers to generate sales, and as you know this is really the period, the first half, is when we invest. We've got over 100 new staff to be able to get ready for our peak H2.
Michael Simotas: Okay. And then maybe one on the corporate market for Chris. There's been a lot of change in the market with consolidation and some challenges faced by one of the competitors. Is that changing the competitive landscape, or do you think that benefit is still to come?
Chris Galanty: Well, there's separate things here. I think the consolidation in the marketplace has been happening over many years, as I'm sure you know, and the most recent big move was Amex GBT taking over CWT, and we think there's still some benefit there with more RFPs coming out this year. I think with the competitor I think you're referring to, I mean, I suspect that there may be some opportunities still to come, certainly in the Australian market. But again, Mel, do you want to have an Australian view? And the reason I touched on Australia is we don't really come up against them very much in North America or Europe. But anything to add there, Mel?
Melissa Elf: Yes. Look, you're right, we're not really seeing it in a global space, but certainly here in Australia, we're starting to see a lot more RFP activity, a lot more inquiry, starting to see a bit of conversion. But yes, there's definitely heightened activity over the past 6 months or so.
Michael Simotas: Okay. And can I just squeeze one quickly in on the loyalty program, and just the setup costs? So you've taken $16 million below the line in the first half, it sounds like another $10 million in the second half. Is that $26 million for the setup costs, and then it will just sort of fold into the leisure business, or should we expect more development over time there?
James Kavanagh: Look, it will be, it will mostly roll into the leisure business as we go into the year ahead. There's a few caveats there depending on how much we invest in new markets and other ventures as we expand the program, but broadly, we expect it to roll into the leisure results next year.
Operator: Our next question comes from Ben Gilbert from Jarden.
Ben Gilbert: Just following on from the corporate, how are the contract wins or the wins looking in terms of the run rate that you're at? And also, just interested in sort of the ability to continue to ramp. Obviously, you've had a lot of profit -- a lot of wins over the last 12 to 18 months, just that maturity profile from a margin standpoint in corporate?
Chris Galanty: Sure. Mel, do you want to start with FCM, and then I'll touch on Corporate Traveller?
Melissa Elf: Yes, sure. So we're actually ahead of where we were this time last year in terms of new wins, and that's certainly across both activity and bid volumes coming through. So we are actually starting to see a lot more activity in the market generally, which is helping our position. We're winning on value, not price at the moment, so we're actually seeing that a lot of our solutions and a lot of our technology and positioning is really starting to resonate in the market. But yes, we are doing well, our pipeline is strong, so we still have a solid pipeline in play at the moment. We've got a number of key active opportunities which we hope we can see materialize within the next 6 to 12 months, but yes, we're definitely seeing more activity, which is positive.
Chris Galanty: And in CT, look, it's a similar story. We've actually had a record first 6 months of wins, and the good news is a lot of that is coming out of the North American market, which we've always identified as our largest opportunity market, mainly the U.S., but also Canada is important too. And the great news for us really is that we're winning in that market, which is probably the most advanced with digital disruptors. So the Melon product, which we've invested heavily in, is really holding its own against some of the new disruptors there. So we're pretty pleased, actually, it's been a good first 6 months, and we do expect that to carry on into the second half.
Ben Gilbert: And a second one for me, maybe for you, Adam. Could you just help us remind what you're cycling through in the second half? Because you've still got what, $5 million to $10 million of the Asian ticketing piece from the PCP, appreciate most of that washed in the first half. Liberation Day, I think that had a pretty material impact on your numbers sort of through April, and then obviously the Middle East tensions in the June quarter really knocked around the overrides. I appreciate -- you probably won't be able to put numbers around all those, but just remind us of those comps because you do cycle over some easy periods in the second half.
Adam Campbell: Yes, Ben. I mean, look, as you say, the key things that we're cycling against. First of all, Asia issues that we had, and they were relatively heavily weighted towards the second half. As you've seen in the first half results, we've pretty much got that back on track now, and we have released about $4 million to $4.5 million I think, Mel, of provisions that is sitting in that Asia result. So excluding that, the Asia segment overall was probably about $1 million or thereabouts, so a very small profit, but as we expected it to be. And we probably expect the second half for Asia, excluding any further releases of provisions, to be about the same run rate. So a small profit in that market with added some cost as we've stabilized the region, and it's also still relatively volatile, a bit softer market for us in that space. So the Asia segment, we are expecting to be profitable, small profit excluding the release of provisions. We're not expecting as high a release of provisions in the second half. We have had to utilize some of those as we've completed discussions with some of our customers and the like. Some we've still got we're holding there as well. So I think it'll certainly be a positive for us in the second half for Asia like-for-like. And then, as you said, we saw that last quarter impacted by some external things like the ongoing impact of Liberation Day and the Middle East tensions. So that last quarter was pretty soft for us across the board, and that did impact down on overrides. So we are expecting, all things being equal, that we'll be comping against what wasn't a great final quarter for us.
Ben Gilbert: And April was pretty poor as well, wasn't it? You had a pretty material drop in the U.S. on the back of Liberation Day?
Adam Campbell: Yes, it started in April that we saw a lot of that impact coming through, and then really did continue through the last couple of months of the year.
James Kavanagh: Yes, Ben, it started a little bit earlier in some markets too. I think Canada and the leisure business, they had their downturn sort of around January, February when Trump first made his tariff comments. So -- but as Adam said in Australia, it was more like April we started to see it.
Operator: Our next question comes from Sam Seow from Citi.
Samuel Seow: Maybe if I can just follow on and just dig into that fourth quarter 2025 comp a little bit more. I mean, now from our perspective, it looks like volumes are down kind of mid to high single digits, you're telling us we had minimal overrides. Just wondering, was that fourth quarter 2025 actually loss-making for the business, or anything financially you can kind of give us as context?
Adam Campbell: No, it certainly wasn't loss-making. And when we say our overrides were minimal, we do have guaranteed levels with most of our supplier agreements now. So I think what we were talking to last quarter, in the last quarter of '25, Sam, was we were pretty much operating at guaranteed minimum levels for those overrides. We just weren't seeing any uptick in them coming through. So not quite that we were not really getting any overrides, more that they were at that base level.
Chris Galanty: Sam, the business was significantly profitable in that fourth quarter. It's just the fourth quarter is normally a very big quarter, and the fourth quarter wasn't massively bigger than some of the others, and normally it would sort of swamp the other quarters.
Samuel Seow: Got it. That's helpful. And then when you talk about that weak fourth quarter, was it impacting the corporate or leisure business more?
Adam Campbell: We certainly saw it coming through in leisure, was heavily impacted by it. So -- and a lot of that was due to those minimum guarantees in the overrides but flowing from top line. JK, do you want to talk to the impact in leisure?
James Kavanagh: Yes, it was mostly leisure. We saw the biggest decline when April hit to the U.S., and we dropped about 20% in volume in that month alone. May recovered a little bit, and then June dipped further. So the biggest impact was literally what was happening from the U.S., but then we also had June the political unrest that was happening in the Middle East, and there were a few other things that happened. So all things combined, it just meant that travel volume dipped down below expectations, and then we just didn't hit those override tiers in terms of the growth rates.
Chris Galanty: So we still saw, Sam, people were traveling, but they shifted destinations. And that's when you started to see that Japan was already looking pretty popular, but Japan really took off at the same time as America started to drop off. So I think if you look at outbound departures, I think you'll see that Japan is up about, say, 10% and America has dropped about 10%. So not all of those people would have shifted obviously, but one has kind of gone through the roof and the other one has dropped off. With Japan, a little bit closer to home out of Australia obviously, and dominated by an airline like Jetstar, which doesn't necessarily pay us as much as some of the other airlines would.
Samuel Seow: Got it. So then as we think about your guidance, you've guided to -- you're telling us there's a fairly weak comp, and you've given us a conservative skew compared to historic periods. Is there something that we're missing in the second half that's a headwind, or is it you guys just being a little bit conservative?
Adam Campbell: Look, I think there are a couple of things. I think the second-half comparative, I think we're looking at what was it 38%-62% of profit in the second half. I think that actually is probably more in line with expectations. It's been fluctuating a bit over the last few years, but probably more in line with what we might traditionally expect to see. I think that, certainly from our perspective, we don't want to get ahead of ourselves. I think we need to actually see how things play out over the next couple of months because they are our busiest trading months. And there will always be things that move around in the world, and it's not entirely settled out there at the moment. So whilst we're seeing some good momentum finishing off that first half, coming through January, certainly don't think we should be getting too far ahead in terms of what's to come. So there may be a bit of conservatism in there, but I think it's probably appropriate conservatism from us at the moment in terms of how we're looking at the business.
Haydn Long: And yes, just bear in mind too, mate, that we're only 4% up at the moment, and to get to the midpoint we've got to be 15% up. So we are banking on a kick already, and part of that is because we think we'll do better in the fourth quarter.
Operator: Our next question comes from Damen Kloeckner from CLSA.
Damen Kloeckner: Just a couple of questions on the leisure business, please. So you called out customer destination mix is improving into the second half. I think you mentioned a reversal in some of the trends you've seen between Japan and the U.S. Which other regions are driving this, and which are still lagging? And are you continuing to see this more as a trading-down cost-of-living pressure effect, or are there other factors at play there? And then the second question on the leisure business, the margin drag that we've seen in this first half, can you give us a sense of how much of that was due to weaker super overrides versus some of that front-loaded OpEx investment that you were talking about? Thank you.
James Kavanagh: Sure. So the recovery that we're seeing, and if you look at the month of January, we highlighted a record month. And that's attributable to a number of brands where we're seeing the likes of Scott Dunn, their biggest month of the year is January, and they outperformed that month. We also -- and Scott Dunn has also seen travel returning to the U.S., and their U.S. business is also performing. So we're quite pleased to see that luxury travelers are typically at the front of the recovery. And then you see the mass market follow soon after. But other destinations that are starting to open up more is we're seeing a lot of return to Europe again. Japan is still super popular. The U.S. is challenged from different markets, but Asia, more broadly speaking, is still very, very popular. Our packages business that does a lot of long-haul travel, Ignite and so on, is really starting to take off as well. So there's a lot of good positivity in a number of brands in the month of January that gives us good indication that we're starting to see a bit of the tide turning, but it hasn't turned fully, and we certainly haven't seen the U.S. recover to the levels that we would like it to across the board. The second question about business mix is really the driver for the revenue drop in the first half. And to give some color behind that, our lowest margin brands, who have performed very strong in the first half, these are typically brands that make up less than 11% of revenue margin, and on a comparative basis, they shifted from about 34% of the portion of the profile -- portfolio to about 38% in the first half. So as a result of that being a lower margin brands it really dove a significant shift in terms of revenue margin, coupled with the destination shifts as well. We haven't really seen much of a softening in terms of overrides at all, that gives us any concern. But we typically start to take up overrides more in the second half as we get more confidence at hitting those next tiers in the various contracts.
Operator: Our next question comes from Wei-Weng Chen from RBC Capital Markets.
Wei-Weng Chen: Just sticking with leisure again. Interesting you guys called out a record leisure PBT and profits in January. I'm not sure if you've seen it as well, but Helloworld also this morning said that January was up 12% for them. Is your sense that a large part of these improvements are kind of macro or kind of cyclical factors rather than sort of self-driven factors such as improved marketing or conversion, et cetera?
James Kavanagh: Look, these things are always a blend of both. When the macro swings in your favor and your business strategies are actually starting to take off and your investments that you've made are aligned, well then arguably you should see, by luck, good management, good strategy, it's a combination of all of those things that's really driving performance. But I think there's been a fair degree of -- there's volatility and uncertainty, but at the moment you can see that January is that peak holiday period, and we've been investing to make sure that we can do our best in this month, and it paid off.
Wei-Weng Chen: Yes, cool, cool. And then apologies, I missed a lot of the initial presentation, but just the acquisition of Iglu, how's that going? And then I guess, is there any appetite for further acquisitions at Flight Centre, either corporate or in the leisure segment?
James Kavanagh: On Iglu specifically, the transaction closed 10 December, and integration is going well so far. Their biggest month as well now is really that kind of January, February period. The U.K. market has -- they've been outperforming the market in those months, and we're very happy with the engagement so far. It's still very early days, but we know it's a very good business, and we've got good plans for the cruise category overall, as you'll see in the presentation pack. In terms of broader acquisitions, I might hand over to Skroo on that. Thoughts around broader acquisitions.
Graham Turner: Thanks, JK. Look, we won't be rushing into acquisitions, but in the areas that are doing well, and whether that's in specialist corporate areas or in the leisure, the luxury and cruise type leisure, we're certainly looking at these. So -- but yes, we're obviously being reasonably cautious. There are macro issues in various countries which, from Iran to what the administration is doing in America. So we're modestly cautious at the moment, but we're certainly looking at some that fit those strategies that we are focused.
Operator: Our next question comes from Brian Han from Morningstar.
Brian Han: In leisure, I'm not sure whether you've ever spoken about this, James, but what do you think the demographics of your leisure customers look like? I mean, is it more heavily skewed to older cohorts who are sort of less hostage to economic volatility?
James Kavanagh: It's really mixed, Brian, across the portfolio. And it's also mixed by need state as to how customers are thinking about their holidays as to where they shop in the various channels. Broadly speaking, we haven't seen too much of a shift in terms of older demographics, and the average has been holding still for our Flight Centre brand as an example. Offline in-store bookings are typically around that mid-50s, whereas our online channel, which is one of the fastest-growing channels, is around that mid-40s. When we look at our luxury customers, Scott Dunn as an example, the average age in that brand is actually mid-40s as well. And we're actually attracting more and more younger customers with some of the latest investments in our loyalty program and so on. So we really look at all the various cohorts, and we're designing the right product line, and we've got the best channels to be able to service those various demographics dependent on their need state, because we think customers shop that way as opposed to just thinking I'm a certain age group and I only do X. It's not like that anymore. It's very much a case of need state, and we've got the right solution.
Brian Han: Just at the group level, on your portfolio simplification initiative, is there a timetable you're working to in terms of divesting noncore and underperforming businesses?
Adam Campbell: Brian, it's Adam. I mean, no, there's not. I mean, we've been reviewing for the last couple of years our businesses, and it's an ongoing thing. I think it should be part of any business like ours with a fairly diverse range of businesses and portfolios. We're looking to see, always, how best we can get the true value out of those businesses coming through, and that could be through divestiture like we did with Cross Hotels. It could be some rebranding, it could be organic growth, it could be M&A bolt-on, or it could just be holding the line with the strategies that we've got in play and organically growing those. So there's not a time line in place. We've done most of that heavy lifting though, I've got to say, over the last couple of years now. And we think that we're in a reasonable position, but it will be an ongoing piece of work that Chris and his team in corporate do, that JK and the team in leisure do, and that us as a CEO group with Skroo, myself, and Greg attached to them, will continue to do as well.
Brian Han: When you say noncore and underperforming businesses, are we still talking mostly in that HQ division that you call it now, or are you talking across the other businesses too?
Adam Campbell: Well, it's about looking at -- it's not just about noncore, and it's not just about underperforming. It's also how do we accelerate performance and get to the value that we believe into the businesses. So no, we're looking at different brands and businesses through corporate, through leisure and in those HQ businesses as well as to how we do that. So an example of that is if you look at the cruise segment in leisure, the purchase -- the acquisition of Iglu was a way to really enhance the growth there and to take us more quickly towards the value that we could see extracting out of that sector of the leisure business. And we've got other areas, meetings and events in corporate that we're at the moment organically supercharging to try and grow and extract the value from as well. So there's a bit of a mixture. It's not just about those businesses that are so-called underperforming, it's also how do we accelerate performance.
Operator: Our next question comes from John O'Shea from Ord Minnett.
John O'Shea: Just a question, and I may have missed some of this early on, but directionally where do you see the revenue margin going for the business in the second half and into FY '27? Obviously, revenue margin down a couple of percent in the period, but -- not a couple of percent, but 13 basis points. Where do you see it heading directionally?
Adam Campbell: I might get JK and Chris to talk about it from a corporate and leisure perspective. JK, do you want to kick off?
James Kavanagh: Yes. Across the portfolio, if I take the brand-by-brand view, John, I expect revenue margin to lift, and that's typically the second half is our highest margin broadly speaking. The mix, though, will depend on which brands perform the fastest rate in the second half. But we do expect to see an uplift in revenue margin in H2 versus H1.
Chris Galanty: I think, John, from a corporate perspective, our revenue margin was flat for the first 6 months. It was the same as versus last year. I don't really expect to see much change. I think revenue margin is holding, which is good as we grow. So really we see net margin improvements through productivity, but probably reasonably consistent revenue margin.
Operator: Our next question comes from Alex Mclean from Evans & Partners.
Alex Mclean: I just had a question on the Iglu business that you bought. You basically gave an implied EBITDA earnings base when you took over the business in December, and there was some uncertainty around where it'll wash out at the PBT level. Do you have a better sense for where that sits now that you've had it, I guess, in the portfolio for a couple of months now?
Haydn Long: Yes, mate. Haydn, I might start off and hand over to JK. So we obviously, when we bought the business, we increased our guidance at the same time, and that predominantly reflected the contribution we thought Iglu would make, and that's obviously based on underlying PBT. We also -- we are seeing some reasonably positive trends in the business as well, so potentially a little bit of movement there, but captured within our overall range. The PBT uplift of $10 million, we felt that that would cover the PBT range that the business would deliver, but as you said, it was a little bit difficult to work out. The business also loses money in December, which we knew about, and then makes a lot of money in January and February, and that's the way it's panned out so far. I might let JK talk to you about expectations though.
James Kavanagh: Yes. That's pretty much the expectations as Haydn has covered it. And then it's really just making sure that they perform to plan, and things are going okay so far.
Alex Mclean: Okay. And then maybe while I've got you, JK, just attachment rates in the leisure business. Are you seeing any improvement there with what you're doing rolling out AI to your frontline agents?
James Kavanagh: We have, actually. Yes. We've rolled out quite a few new solutions, and it's been quite positive. But you can imagine the last half we've been heavily testing a whole range of initiatives that have been AI-generated. A lot of them have been in POC proof-of-concept stage, and then as we've scaled up quite a few, we've seen an uplift particularly with our novices in terms of attachment and conversion more so in some of their bookings. But I have to say it's too early to tell in terms of forecasting into our numbers as to what the uplift has been. But it's showing some positive trends in terms of just some of the conversion rates and also accommodation rates in terms of prompting things like next best action with hotels and that for our consultants to be able to convert more. So early signs are promising, but we'll be able to share more next time we speak.
Operator: [Operator Instructions] Our next question comes from Belinda Moore from Morgans.
Belinda Moore: JK, if I could ask you, this leisure uplift you've seen of 4% in January, I mean that obviously includes Iglu, so what would the base business be doing ex that, please? And then for Adam, how should we think about the full-year loss from Other, I know you've changed the name today, but from that division, please?
James Kavanagh: So first question, we swung over into year-to-date growth excluding Iglu, and then if we add Iglu onto it, then it's just extended out to the 4% lift.
Chris Galanty: I think, Belinda, just to clarify, I think the 4% is year to date, correct? Yes. The 4% wasn't the swing in January. It was 4% down at the end of the half, and by the end of January, it's actually up 4%, so the swing is a little bit bigger.
Adam Campbell: Belinda, just in relation to the other segment or the HQ segment, we did, I think from memory, we did about a $75 million PBT loss in that business last year. I'd expect interest to continue to be a headwind for us in the second half at a similar run rate to what we saw in the first half. Now that could change obviously if we see some changes in interest rates over the next couple of months, but that's my initial expectations. Outside of that, other costs, we're certainly going to be investing another couple of million in technology in the second half, but that should start to be offset by a lot of the changes we put in place in terms of changing operating model that we've been investing in the first half through both our enterprise technology business and also more broadly through GBS. So at a gut feel, I would suggest that including interest being up, you're probably looking around about a $90 million to $95 million loss for that HQ segment for the full year.
Operator: And our next question comes from Tim Plumbe from UBS.
Tim Plumbe: Guys, sorry most of my questions have been asked, so I might throw a different one in there. Following on from the Asia losses, guys, in the corporate business, if we looked at the corporate underlying...
Chris Galanty: Sorry, Tim -- excuse me, Tim. Can we ask you to speak up a little bit?
Haydn Long: You were very soft, muffled mate. Asia, you were talking about?
Tim Plumbe: Yes, sorry, guys. So Asia into the corporate business, if we thought about the corporate underlying PBT growth, do we just take off the $4 million provision that's been released, or can you talk to what the kind of growth in corporate PBT was ex Asia?
Chris Galanty: Yes, I mean, our PBT growth, most of it actually came out of -- it wasn't really Asia. Asia contributed some, but a lot of it came out of Australia, New Zealand, the Americas, and particularly the Corporate Traveller business in the Americas. So Asia contributed about $4 million of the release there, but some of the other Asian improvements came just from operational improvements as well. So yes, Asia contributed, but it certainly wasn't, yes, the lion's share of the contribution.
Operator: And in showing no additional questions at this time, I would like to turn the floor back over to Mr. Campbell for any closing remarks.
Haydn Long: Haydn impersonating Adam. Just thanks, everyone, for dialing in. Thanks for your time today, I know it's very busy for a lot of you. Shoot us through any other questions that you have, and we'll try and get back to you as quickly as we can. We'll see a few of you over the next few days. Thank you very much.
Operator: And with that, we will conclude today's conference call. We do thank you for participating. You may now disconnect your lines.