Corporate Travel Management Limited (CTD) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to the 2020 Annual General Meeting of Corporate Travel Management Limited, the company's first virtual AGM. My name is Ewen Crouch, and I am the Chairman of CTM. As we gather for this meeting physically dispersed, I wish to recognize the various traditional lands on which we carry out our meeting today. I also acknowledge and pay my respects to elders past, present and emerging of all the lands on which participants in this meeting reside. We have reached the appointed time and a quorum is present. I'm pleased to declare this meeting of members of Corporate Travel Management Limited open. Today's meeting is being held online by the Lumi platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions anytime from now, I will address your questions at the relevant time in the meeting. We have also received a number of questions prior to the meeting, which I will address in my remarks shortly. While we will endeavor to answer all of your questions, please note that your questions may be moderated. And if we receive multiple questions on 1 topic, amalgamated together. Where your questions are not relevant to the business of the meeting, we will contact you after the meeting to discuss your questions with you. Voting today will be conducted by way of poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions and voting will remain open throughout the meeting. If you are eligible to vote at this meeting, a polling icon will soon be visible on your screen. Selecting this icon will bring up a list of today's resolutions and present you with voting options. To cast your vote, simply select 1 of the options, For, Against or Abstain. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting is closed. I now declare voting is open on all items of business. The polling icon will soon appear on your screens. Please submit your votes at any time. I will give you a warning before I move to close voting. We are gathered in our Brisbane and Sydney meeting rooms, and I would like to introduce you to my Board colleagues who have joined me virtually at today's meeting. Sophia Mitchell, Non-Executive Director and Chair of the Board Remuneration and Sustainability Committee; Jon Brett, Non-Executive Director and Chair of the Board Audit and Risk Committee; Jamie Pherous, Managing Director and Chief Executive Officer; and Laura Ruffles, Executive Director and Chief Global Operating Officer. Also with us virtually today is Michael Crow, representing our external auditors, PricewaterhouseCoopers. Members of Corporate Travel Management Limited's global and regional leadership teams have also joined today's virtual meeting. As I mentioned before, if I -- if you do have any questions about CTM's business and operations that we are unable to answer during the course of the meeting today, one of our team will contact you after the meeting to discuss your queries. The meeting has been called under the Notice of Meeting dated 22 September, 2020, which was sent to all shareholders on 25 September, 2020. A copy of the notice is available on the company's website. I now table the notice of meeting and I will take the notice as read. The minutes of the previous Annual General Meeting of shareholders was held on 6 November, 2019. These minutes, being in order, was signed by me as Chairman and are tabled for the information of shareholders. There are 7 resolutions which will be put to shareholders at today's meeting. The background to these resolutions is set out in the Notice of Meeting. As I mentioned earlier, questions can be submitted at any time by pressing or clicking on the speech bubble icon on your screen. I will address your questions at the relevant point in the meeting. Before we get to the formal items of business, I'd like to provide some brief observations about the last financial year. This presented the most difficult operating conditions ever faced by the CTM businesses as government mandated shutdowns, border closures, quarantine arrangements and other travel restrictions to respond to the impact of the COVID-19 pandemic. CTM had entered FY '20 in a sound financial position. The strength of the company's balance sheet has enabled CTM to withstand a prolonged period of reduced travel activity as governments around the world have acted to limit the spread and impact of the virus. Your Board and management team took swift action to assess and reduce the group's cost base. This included reviewing staff requirements, so as to determine appropriate capacity in each of our regions to help our customers return to travel in a safe and responsible manner as restrictions are eased. We have retained staff capacity in each of our regions, which will be deployed back to full-time hours as activity returns and we have continued to invest in our proprietary technology to maintain our technology advantage. Sadly, during the last quarter of financial year '20, we had to reduce our staff numbers substantially to respond to the significant decline in business activity. The Board wishes to acknowledge those people whose roles were made redundant and to thank them for their contribution to CTM. All our staff were affected in some manner, including by way of income reduction. I will shortly speak to the revised remuneration arrangements put in place this year, which are designed to retain our key staff during a period of heightened uncertainty. Through these extraordinary operating conditions, the group reported an underlying net profit after tax outcome of $32 million, which excludes the impact of AASB 16 leases, a decrease of 67% against the prior year performance of $96.9 million. The statutory reported net profit after tax was a loss of $8.2 million compared to the prior year profit of $86.2 million, after the full impact of the cost of redundancies, impairment, increased charges for depreciation and amortization and recognition of bad and doubtful debts were brought to account. In August, we announced there would be no final dividend for the year ended 30 June, 2020. The we also advised shareholders that the Board had resolved to cancel the interim dividend that had been deferred from the original April payment date due to the ongoing impacts of the COVID-19 pandemic on the travel industry and the group. While we understand shareholders may have been disappointed by these decisions, given the continued uncertainty around recovery timeframes globally, cash conservation remains critical. During this most challenging period, the entrepreneurial flair, energy, enthusiasm and drive of CTM's Managing Director, Jamie Pherous, has been fully evident. Jamie has been very well supported by Executive Director, Laura Ruffles, and all the company's key management team, which the Board wishes to acknowledge. This has been instrumental in enabling the company to manage the impacts of COVID-19 and consider and pursue acquisition opportunities, such as the acquisition of Travel & Transport announced at the end of last month, which will benefit our clients, employees and shareholders. On 29th September, we announced that we had entered into a binding agreement to acquire 100% of Travel & Transport, Inc. for a cash and debt-free enterprise value of approximately $274.5 million and subject to a working capital adjustment. Travel & Transport is a leading U.S. travel management company, headquartered in Omaha, Nebraska. The acquisition is expected to complete on Friday, 30 October and will be funded by the proceeds raised from the institutional and retail entitlement offer of approximately AUD 375 million. Funds raised through that entitlement offer will also be used to fund integration and transaction costs and to provide balance sheet flexibility. We have been delighted by the strong support for the capital raising from our retail and institutional shareholders and we thank our shareholders for their contribution. We look forward to completing the acquisition of Travel & Transport, and getting on with the important task of integrating the businesses. The acquisition will enable CTM to strengthen its position as one of the leading mid-market corporate travel managers in the world based on calendar year '19 TTV, and it will materially enhance CTM scale in the North American corporate travel market. We apologize that some shareholders may not have received their retail entitlement booklet by way of mail delivery prior to the close of the offer. Unfortunately, Australia Post has been impacted by the pandemic, occasioning longer mail delivery times. We also note that shareholders can elect to receive communications electronically by contacting our share registry, Computershare. At the 2019 AGM, I outlined the Board's plan to engage in an orderly Board renewal program. This is an ongoing process, which saw the appointments of Sophia Mitchell and Jon Brett as nonexecutive directors and the retirements of Admiral Robert Natter and Greg Moynihan during the year. I would like to acknowledge the substantial contributions made by Greg Moynihan and Admiral Robert Natter. Bob Natter served on the CTM Board for approximately 6 years. And the breadth of his service background, business experience and deep knowledge of the U.S. market were particularly helpful for CTM. Greg Moynihan served on the Board for almost 10 years. And during his tenure, served as Chair of the Remuneration Committee before serving as Chair of the Audit and Risk Committee. CTM benefited greatly from Greg's insightful guidance and his sound and considered counsel. In January this year, we had the pleasure of welcoming Jon Brett to the Board. Having previously been an executive director of Investec Wentworth Private Equity Limited and an executive of Investec Bank Australia Limited, Jon brings extensive Board and management experience to CTM, particularly in the areas of finance and corporate advisory. Having been appointed since the 2019 AGM, Jon is standing for election at today's meeting. Sophia, Mitchell and I will stand for reelection, although we were both elected to the Board by shareholders at the 2019 AGM by a [ critical power ] rotation policy. Jon, Sophia and I will each address the meeting a little later in proceedings. We are also considering the appointment of a further nonexecutive director to the CTM Board to take place next year. Your Board remains focused on maintaining the right mix of skills, experience and diversity relevant to the CTM's businesses and geographic footprint. As mentioned at the 2019 AGM, during the last year, the Board reviewed the operation and membership of its Board Committees and combined the Audit and Risk Management Committees to establish the Audit and Risk Committee. Further, the focus of the Remuneration Committee was expanded to include oversight of sustainability matters and to reflect this, was renamed the Remuneration and Sustainability Committee. The impact of COVID-19 on CTM earnings meant that there were no rewards for our people under either the STI or LTI opportunities in the last year. The Board also reduced its fees by 1/3 over the last quarter of last financial year. In addition, other actions were implemented to rapidly reduce employment costs and preserve cash. And these included over 1,000 roles being made redundant, affecting every level across our global workforce; the 25% fixed annual remuneration reduction for the period March to August for senior executives; reduced hours and shorter working weeks; and no increases to fixed annual remuneration in the current financial year. Talent retention and motivation are critical for business performance and to create wealth for shareholders. Not surprisingly, employees in the travel industry with transferable skills, who are experiencing uncertain future prospects, have been targeted by other industries during this period of uncertainty. In light of these outcomes and the uncertain environment for employees in the travel sector, the Board decided to make some adjustments to CTM's remuneration for the current financial year to balance the impact of COVID-19 on earnings, preserve incentive remuneration arrangements aligned with shareholders and to maintain the company's ability to attract, retain and motivate staff. The FY '21 equity grant opportunity, known as share appreciation rights, was specifically modified to deal with these particular challenges. These modifications were aimed squarely at retention of our leaders which the Board judged will drive future shareholder returns. Approximately 50 senior managers were offered share appreciation rights, where 2/3 of the rights are subject to an EPS hurdle measured across the 2-year performance period and 1/3 is subject to a 12-month time and conduct-based hurdle. The rights are exercisable 12 months after grant with a further 12-month disposal restriction. In determining this approach, the Board needed to balance significant changes to the workforce size, composition and remuneration arrangements against the company's ability to attract, retain, motivate and appropriately incentivize staff, as I said, through a period of continuing uncertainty. Our overarching philosophy for incentive remuneration remains unchanged to reward, retain and motivate senior leaders; link the reward to shareholder value creation to align senior leaders with shareholders; and provide an opportunity for eligible employees to build an equity interest in the group; and support our employee conduct expectations. Shareholder approval is being sought today for the grant of the share appreciation rights to Laura Ruffles, as she is an Executive Director and shareholder approval is required for the issue of securities to directors. Our Managing Director, Jamie Pherous, is not a participant in this incentive opportunity. However, as the company's major shareholder, he supports the award thus signaling further alignment with shareholder interest. At this stage, it is expected that when business recovers, the previous remuneration structure will return broadly to the pre-COVID-19 arrangements. The Board is of the view that this structure is simple and clear and has served CTM shareholders and leadership team well for many years. Throughout these difficult conditions, the group has demonstrated its ability to manage costs, while keeping the business ready to capitalize on opportunities that align with CTM's strategic direction such as the acquisition of Travel & Transport. I would like to thank and acknowledge the efforts and contributions of all CTM management and team members over the last 12 months. Through a challenging year, their dedication in maintaining high standards and remaining focused on the business has been outstanding. The commitments which our people show to our customers gives me great confidence that the business will perform well and deliver for all our stakeholders. This turbulent year has highlighted the benefits of CTM's highly flexible and resilient business model. The period ahead will undoubtedly present many challenges and opportunities. We have a clear purpose and a sound strategy, and we are well positioned to return to profitability with a modest recovery of domestic travel. Governments have responded quickly and effectively to put in place travel restrictions, contact tracing capabilities and emergency medical care capacity to deal with COVID-19. We acknowledge that these policies have kept communities safe. However, they have also created significant and continuing economic impacts. Public health authorities have developed the capability to deal with outbreaks effectively. Now that policymakers have greater scientific understanding of the virus, indefinite restrictions on business activity, including travel, can be reviewed to allow the economy to reopen safely. Corporate travel is a critical catalyst for economic activity and has a multiplier effect that creates substantial employment opportunities. As knowledge of the virus and the capacity to manage it continue to develop, we would encourage policymakers to take a risk-based approach to travel restrictions and quarantine requirements. We welcome the establishment of the first travel bubbles between Singapore and Hong Kong and between Australia and New Zealand as positive developments to reenergize business activity. But we see these as only the first steps. Hotspot targeting, home quarantine and the adoption of rapid antigen and on-the-spot testing are further policy options that would enable increased economic activity while managing the risk of further outbreaks. Finally, I would like to thank you, our shareholders, for your continued loyalty and support. My commitment, alongside that of your whole Board and management team, is to ensure that we continue growing a great corporate travel business. I will now ask our Managing Director, Jamie Pherous, to address the meeting.

Thank you, Ewen, and good morning, everyone. Firstly, I wanted to recap on the FY '20 results highlights, then move forward to FY '21, starting with a first quarter result update, the Travel & Transport acquisition, and more importantly, what it means for the company and lastly, how it helps us fulfill our long-term strategy. So if we go to Slide 13, FY '20 highlights. I won't go into this too much, but just briefly recap the 30 June 2020 results. We had a full year underlying EBITDA of $65 million, including a small $0.5 million underlying profit in the second half. So once COVID hit, the second half result was achieved through a combination of 3 initiatives: firstly, our ability to swiftly reduce costs because we have a high variable cost base. Secondly, greater revenue generation from our significant proportion of essential travel clients that use us because of our high expertise and service. And thirdly, our excellent cash management delivered an outcome that has placed CTM in a financially strong position today. So this minute, 30 June, CTM has 0 debt, strong liquidity. And as a result, we're able to avoid the need to raise emergency capital to survive, protecting our shareholders from dilution, but also positioning the company to be in the box seat to make key strategic acquisitions that will position the company for the future. And our most recent capital raise to acquire Travel & Transport is just one example of leveraging that opportunity for our shareholders. As a result, the global management team was able to focus upon setting up CTM for a future recovery versus focusing on survival. So on to our first quarter FY '21 activity results. So firstly, in our most recent update to the market as part of the Travel & Transport acquisition, we advised the market of our underlying EBITDA loss and resulting cash burn for July and August of 2020. We also noted that given over 80% of our revenues are derived from the Northern Hemisphere, July and August are typically quiet travel months for corporates due to it being summer vacation in the north. But now that September results are in, we are pleased to report that for the first quarter, our underlying EBITDA loss averaged $2.4 million per month, and cash burn was around $5 million per month. But more importantly, now that we've got into the year, September has seen a continued improvement and was our best trading month since COVID-19, with the September underlying EBITDA loss of only $1.6 million and cash burn down to $3.6 million per month. And now to put that EBITDA loss into perspective, it would only require a further 4% recovery in revenue across the CTM glide to breakeven. So we are really close to breaking even than you may think. But the best part for us, this is despite things actually getting worse in the COVID environment. There's been no material new travel restrictions being lifted for months around the globe. And Europe, of course, has gone into a further lockdown through September. So what [ does this ] -- shareholders should reinforce is a number of points. Firstly, the resilience of both the CTM business model and the corporate travel segment because people must get on with business despite these restrictions. And secondly, as we've said before, CTM can be highly profitable upon domestic travel recovery only, and we are not dependent upon international borders opening to be successful. So now let's look at activity by region, and we've got a summary on the slide pack, but I'll go into a little bit more detail. Firstly, Australia and New Zealand. It's important to note, it was actually profitable in the first quarter, which is extraordinary in our environment. This unlikely result underpins the scale of the business via technology and automation and the ability to rebound to profitability with the slightest of changes to domestic client activity. October continues to be better than September, with last week's activity recovering to 40% of the prior year, the highest rate in any region post-COVID. So given that Brisbane, Sydney, Melbourne and that triangle represents roughly 45% of all Australia/New Zealand client activity in calendar '19 or nearly additionally a $4 million a month of revenue, you can appreciate that imminent border openings will have a material impact on not just ANZ profit but also global profit, but more importantly to us, our ability to bring our loyal and dedicated ANZ operational staff back to full-time hours. That's why border openings are very important to protect our staff. So on to Europe. Again, the most recent lockdowns that we didn't expect to have tempered activity. But given our strong essential travel client base in this region, which is the highest in the world inside of CTM, we remain very close to breakeven and profitability returned quickly when the U.K. domestic restrictions are once again relaxed. I want to remind you all that Europe was profitable in 2 of the 3 months in the fourth quarter of FY '20, as a very large proportion of Europe travel being domestic in nature. And in fact, it is the region that could be the largest contributor to domestic recovery for CTM. And onto U.S. And again, amazingly, we continue to experience month-to-month recovery in client activity despite an escalating COVID-19 environment. Obviously, every region in the world is very different in how they relate to COVID, but it seems Americans are just getting on with getting on with business, I guess. September was our best result with October on track to be even better, and last week, again, being a record post COVID. So what that means is that the U.S.A. is also close to breakeven despite receiving no government assistance. Again, this is a testament to the hard work done in the last financial year through integration and the rollout of CTM client tools beginning to yield good results for both our clients and our business productivity. And of course, the T&T acquisition, we expect to close this acquisition 30 October, and despite not even owning the business yet, the integration has already commenced. As we've said before, we've already agreed to a combined USA organization, who will be part of that organization and the duplicated costs will be eliminated. Again, an extraordinary achievement considering we do not yet own T&T, which again says much about the combined leadership team and their razor-sharp focus on setting up the USA for recovery, but also much success. And lastly, on to Asia. As Ewen said before, we have some Singapore-Hong Kong travel bubbles and 11 other travel bubbles in the pipeline to be opened. As we also said before, Asia is our only region that relies on international travel to be profitable. So given the bubbles are slated to open up progressively throughout Asia, this means that losses are manageable and becoming smaller each month. Importantly, the region is well positioned for any recovery in client activity. We have ample capacity in the business to manage this. So in wrapping up, as a result of our continued improving performance, our liquidity remains very strong. We have clearly no debt. We have access to an unused committed finance facility of over $180 million, should we ever need to use it. And of course, approximately $120 million of net cash. Our net cash is net of all foreseeable future restructuring and capital raise costs already earmarked as part of the T&T acquisition. So as a group, we remain in a very strong financial position to weather a prolonged COVID impact, but also remain well positioned to continue to invest in technology and sales, as well as capitalize upon any future M&A opportunities that may arise in the future. So on to an update on the Travel & Transport acquisition. I'll just quickly touch on it, some key points. Again, we expect this deal to close 30 October. As we've said to the market before, it is expected to be highly EPS accretive. But more importantly, it's the strategic rationale that is most relevant to us all. And firstly, it's the global scale that this creates. Once combined, we'll have TTV on a calendar '19 pro forma basis of over $10.8 billion and become the fifth biggest travel manager in the world and the biggest mid-market travel manager in the world. Secondly, it's the industry and geographic advantages we get from this acquisition. So firstly, in North America, it now means we'll have on a calendar '19 basis of TTV of over $5 billion. But more importantly, it covers the holes we had in both our geography and industry. As we said before, we are underweight in professional service clients and we are underweight in New York. And this acquisition changes our scale in these and geography and impact in this region overnight, which we're really comfortable with. Thirdly, it's how we always want to work on enhancing our value proposition. And this gives us the opportunity to leverage the Travel & Transport’s Radius Hotel program, which again will enhance our global hotel offering to our clients. And fourthly, it's culture and people, which is very important to our business. So firstly, Travel & Transport has a strong cultural alignment with CTM with a strong focus on customer service and proprietary technology and also what it does to our management team. It really strengthens our entire leadership team to a whole new level to manage the scale and size that we aspire to be in the future. So again, lastly, we have successfully completed the $375 million entitlement offer, thanks to all of our shareholders. So what will CTM look like post acquisition? And this slide touches on the size. So as we said just previously, combined on a calendar '19 year basis, we'll have global TTV in excess of $10.8 billion, making us the fifth biggest player in the world. But more importantly, it's what this does in North America and the globe. It positions our teams very well to leverage future organic growth, mainly from New York and the Atlantic opportunities from professional service clients but also to the entire broader client base, and that will present opportunities for our entire sales team, not just in North America but in Europe to continue and fuel organic growth. So on to Slide 19. So what does it mean for our operations and our pro rata EBITDA when we combine? So as you can see from this slide, USA on a CY '19 pro forma basis will contribute over half of group revenue or over $5 billion of TTV. And we think this is the right exposure to be a serious global company, given that the U.S.A., and particularly the New York corridor, is the largest feeder market of corporate travel in the world. So we want to be part of that. Of course, not only is it material to the U.S.A., but it also adds scale to Europe, with CTM now becoming the third biggest TMC in the U.K. market, a result of the combination with pro forma calendar '19 TTV of over $1.5 billion. But more importantly, we expect $25 million of synergies to crystallize as activity recovers, delivering on a pro forma calendar '19 basis, EBITDA of around $216 million. Secondly, there is no structural reason why the T&T profit to revenue margin of 14% can't rise towards the CTM USA margin of 27% when activity recovers over time. So clearly, as a group, we now have the scale we have always aspired to in every region of the world. And those investors have been with us for a long time, we always talked about getting to over $10 billion TTV, and that will -- what that would mean to really scale our organic growth, and we're now there. Okay. Lastly, on to Slide 21 and our strategy. Again, at CTM, the entire management team are focused upon executing to our long-term strategy. What is most pleasing is that our strategy is sound and as a result, has been consistent for many years. It isn't chopped and changed, and we continue to execute to this plan. If we go to that plan, there's 5 key points. Firstly, we do have a track record of execution. CTM has been successful -- successfully growing for 24 of the 26 years of our existence. But more importantly, our execution got us through the worst of COVID-19 in the best shape possible under the circumstances versus our peers. Secondly, it's the huge potential growth opportunity, that still presents itself in corporate travel. Our COVID-19 execution created the opportunity to acquire T&T. This is a very important milestone for CTM, who now have the scale we've always aspired to in all the regions with combined scale and TTV of over $10.8 billion on a calendar '19 basis. Yet, even after the T&T combination, we are still just 1% of the global USD 1.5 trillion market. Importantly, we now have the right scale in all the markets we aspire to, to leverage into that scale and win market share. Thirdly, it's our value proposition. We have said over and over to be successful in corporate, you must be able to combine highly personalized service with technology and deliver return on investment. And CTM has been able to demonstrate this in every region it operates, amplified in COVID-19 environment, where travel logistics were and will likely remain very complex, playing into our strengths and hopefully assisting us to win more market share into the future. Fourthly, it's our tech competitive advantage. We remain one of the very few TMCs to build our own client-facing technology, built in region with and for our clients. This has served us very well and will be even more relevant in a COVID-19 environment as clients who rely more heavily on us to provide up-to-date information on their trip and more relevant personalized content to travelers. We could not do either very well through a lot of third-party technology, and this strategy should set us very well as we move forward into the future. And lastly, it's what we aspire to be. We just -- we want to be the best we can be. That's all we've ever said, not just in our own industry, but as a world-class business model, where we achieve high compound growth through winning market share, delivering free cash flow and a model that doesn't require debt to generate this growth. These are hard models to find in the investment community, and that's what we aspire to continue to be. So lastly, I want to thank the entire CTM team that worked harder than ever, despite the uncertainty of the environment we've operated in. Their loyalty and dedication to service our clients has been beyond our expectations. It is a testament to why we find ourselves in such a strong financial position and why clients that don't use CTM should be using CTM into the future. I also want to thank the Board for their ongoing support and confidence they have shown not only on me but my management team, and I would now like to pass back to Ewen to walk through the resolutions associated with the meeting. Thank you.

Thank you, Jamie. So before we proceed to the items of business for today's meeting, I remind you that only shareholders, proxies or other authorized representatives are entitled to ask questions. And matters raised must be relevant to the business of the meeting. A total of 7 resolutions are to be put to shareholders. All resolutions are ordinary resolutions, meaning that to pass they require at least 50% of the votes cast in favor by shareholders entitled to vote. Each agenda item will be discussed in turn, and we will address questions relevant to that item of business. Questions can be submitted at any time. To ask a question, press on the speech bubble icon. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you have finished typing, please hit the arrow symbol to send the question. While we endeavor to answer all of your questions, please note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. Where your questions are not relevant to the business of the meeting, we will contact you after the meeting to discuss your questions with you. In accordance with the company's constitution and appropriate governance practice, all resolutions put to a vote at this meeting shall be decided by a poll. As I explained earlier, voting for all resolutions is now open and will remain open throughout the meeting. If you are eligible to vote at this meeting, a polling icon will be visible on your screen. Selecting this icon will bring up a list of today's resolutions and present you with voting options. To cast your vote, simply select one of the options For, Against or Abstain. There is no need to hit a submit or enter button as the vote is automatically recorded. Please submit your votes at any time. I will give you a warning before I move to close voting. Valid proxies received are held by Computershare, CTM's share registry provider. I will announce the valid proxies received for each resolution when each agenda item is discussed. All valid proxies that have been received within the prescribed time have been admitted. I confirm that I intend to vote undirected proxies given to me as Chairman in favor of each item of business. The Corporations Act and the Listing Rules require that certain persons must not vote in particular ways, and the company must disregard particular votes cast by or on behalf of certain persons on resolutions 1, 3, 4A and 4B. Full details of these restrictions are set out in the Notice of Meeting. I will now move to the formal items of business. The first item is to receive and consider the accounts as required by Section 317 of the Corporations Act. I, therefore, table the annual report, the financial report, directors report and the independent audit report for Corporate Travel Management Limited and its controlled entities for the year ended 30 June 2020. This report has been sent to all shareholders. There is no requirement for a shareholder resolution on this item. The company's auditor, Mr. Michael Crowe from PwC, is present and available to answer any questions in respect of the independent auditor's report. I will now ask our company secretary if there are any questions in respect of the independent auditor's report, and then I will move to other questions.

Chairman, there are no questions in relation to the auditor's independent report.

Thank you. I will now open the meeting for questions in relation to the annual report or in relation to the remarks that Jamie Pherous has just made or that I have just made. Before I start doing that, I'd like to acknowledge Shirley Watson from the Australian Shareholders' Association, who submitted 4 questions to us in advance of the meeting. I will answer 3 of them, and then I will hand over to Jamie Pherous to answer the fourth question. So the questions that we received were as follows: Given the COVID-19 disruption, including the worsened Northern Hemisphere situation with continued travel uncertainty, from where do you believe most revenue will be derived? And is there a likely return to the payment of dividend by FY '21 or '22? And Shirley, Jamie will address the question about revenue when he deals with your first question. But insofar as the dividend is concerned, let me just say this. The Board's policy is to pay 50% of the after-tax profits back to shareholders by way of dividend. We can't say when further after-tax profits will be derived as that will depend on when life gets back to normal from COVID-19. However, we can say that our policy is unchanged. The next question that you raised was in relation to the composition of the Board and its committees. As I mentioned in my remarks, we are looking at appointing an additional non-executive director at the appropriate time during 2021. This will depend on the geographic footprint of the business and the skills that the Board assesses compared to the skills that we currently have on the Board and identifying a suitable candidate. It would not have been appropriate to appoint an additional director during the course of this year despite the retirements of Admiral Natter and Greg Moynihan because we were reducing our staff headcount overall. And the last question that you asked was in relation to technology and our experiences with cybersecurity and whether there have been any significant difficulties. Fortunately, we have not had significant difficulties with cybersecurity. We have systems and processes in place to mitigate this risk. They are constantly tested and reviewed. Let me now pass to Jamie to deal with your question about the company's market share, and it's -- where we expect to derive our future revenues. And thank you, Shirley, very much for your questions.

Yes. Thanks, Ewen, and thanks, Shirley. I'll address the first one, where we expect most of our revenue to be derived from? Right now, it's in North America, that's currently the case, which is a good place to be, particularly with T&T coming on board, so it'll be even more from there. But I think in the short term and medium term, it's going to be from Australia and New Zealand. Imminent border is Brisbane, Sydney, Melbourne, that is roughly $4 million a month of revenue last year and even it's more than that in the U.K. domestic area, which seems to be delayed now that relaxations have been put aside for the moment. So the next key point would be Australia, and we expect America to continue to keep rolling forward. In terms of your next question, which was how do we get to -- what is our financial position in an unprecedented operating environment. It's a good question. I think there's 3 things that are very, very important to us that differentiates us from our peers. The first one is because we've got such a high variable cost, and we could move very, very swiftly with cost reductions. I mean we see other people still paper cutting and so forth, trying to manage. All the way back in the first week of March, we were very direct in what we did and did very forcefully at that time, which has put us in a much better position today. Secondly, it's again our model. We've said before that you have to have good technology, but also very good expert service. And that's going to attract the blue-chip companies. And blue-chip companies are essential travel clients. And there is no doubt that our percentage of revenue versus last year is materially above the market. And that's why we're so close to breaking even. So we put it down to our high percentage of essential travel clients in our client base. And thirdly, a very strong focus by the entire management team around the world on cash management. We looked at anywhere we can improve our client terms on 30 days, what we are doing with that. And I think the entire team, including the finance team, managed that very well. So what that means is that we've got a real low cost base. We've got a lot of capacity in the business to recover. And we're looking for domestic travel to be the key factor that will drive that improvement in revenue.

Thank you very much, Jamie. Anne, are there any further questions on the financial statements and reports?

Chairman, there are no further questions on the financial statements and reports.

Thank you very much. I will now move to the first resolution, which is the adoption of the remuneration report. The preparation of the remuneration report is required to be considered by shareholders in accordance with Section 250R of the Corporations Act. I would like to remind shareholders that the vote on this resolution is advisory only and does not bind the Board or the company, although the Board will take any discussion at today's meeting into consideration when determining the company's remuneration framework and policies. I will now ask our company secretary if there are any questions in respect of the 2020 remuneration report?

Chairman, there are currently no questions in respect of the company's 2020 remuneration report.

Thank you. So I will now move that the remuneration report for the financial year ended 30 June 2020, be adopted. As Chairman, I have decided that this resolution will be put to a poll. And the proxies will now appear on your screen. [Voting]

Thank you. I will now move to resolutions 2A, 2B and 2C that concern the election of directors. The Listing Rules and the company's constitution require the company to hold an election of directors each year. This year, the directors offering themselves for election are Jon Brett, Sophia Mitchell and myself. Resolution 2A, which appears on the screen, relates to the election of Jon Brett, who was appointed by the Board as an additional director on 31 January, 2020. Before we put the resolution to a vote, I will now invite Jon to address the meeting.

Thank you, Ewen, and thank you for this opportunity to serve on the CTM Board. I'm a qualified chartered accountant and bring a number of skills to the CTM Board, including Chair of Audit, M&A and Technology. I'm the Executive Chair of Stridecorp, an Australian Financial Services License venture fund. I've also served on the Board of the ASX-listed high-tech, Mobilicom, which provides communication drones in military, amongst others, without the need of infrastructure. Previously, I spent over a decade as an executive director of Investec Wentworth Private Equity, with funds of over $500 million, with responsibility of all aspects of the fund. I was also an executive of Investec Bank and was a member of both the Investment and Credit Committees. I previously also served on the Board of Vocus Group from its inception as a small listed company with a market cap of $5 million to at its peak, where we had a market cap of over $5 billion. I'm very pleased to be standing for the Board of CTM. This is a wonderful company with a great management team. Thank you.

Thank you very much, Jon. I will ask our company secretary, if there are any resolution -- questions in relation to this resolution.

Chairman, there are no questions in relation to this resolution.

Thank you. I now ask that the proxies be displayed on the screen. I now move that Jon Brett be reelect -- sorry, be elected as a director. The Board, with Jon Brett abstaining, unanimously recommends the shareholders vote in favor of Jon's election. As Chairman, I have decided that this resolution will be put to a poll. Voting on the resolution is open, and shareholders can vote at any time. [Voting]

I now move to resolution 2b which is the election of Sophia Mitchell. Sophia, would you address the meeting, please?

Thank you, Ewen. Last year's AGM, I provided a background -- an overview of my background similar to what Jon has just provided. So I thought it would be more useful to provide my reflections on my first year as director. And since joining the Board in September last year, I've only become more passionate and committed to CTM. I've been very impressed by the leadership team and how they responded to the extreme challenges, and more recently, the opportunities created by COVID. I trust I made a useful contribution to the Board's oversight and support of management during this very difficult year. I've enjoyed my role as Chair of the new Remuneration and Sustainability Committee despite the very trying circumstances we found ourselves in. We introduced a letter this year from the committee in the annual report to describe what we focused on during the year and why. This included the rapid reduction in employment costs that involved some hard but necessary decisions. And then turning our attention to designing the remuneration structure for FY '21 that would motivate and importantly, retain our amazing talent moving forward in a period of heightened uncertainty. The committee's work on sustainability continued throughout the year despite the trying operating environment and the sustainability section of the annual report describes the framework used by CTM to consider the important nonfinancial influences of success for our business, including people, communities, diversity and the environment. If reelected today, I look forward to contributing as a Board member to the ongoing success of this great company. Thank you.

Thank you very much, Sophia. I'll now ask our company secretary to read out any questions on this resolution.