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

Thank you for standing by, and welcome to the Corporate Travel Management CTD Full Year Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Jamie Pherous, Managing Director. Please go ahead.

Thank you, Darcy, and good morning, everybody. My name is Jamie Pherous, and I'm the MD of CTM. I'm also joined this morning by Cale Bennett, the Chief Financial Officer for CTM. We are pleased to be presenting CTM's full year results for FY '21. Just on the first slide, as you can see, the logo building is, in fact, our headquarters in the U.S.A. It will become clear as we walk through this presentation that our recovery is underway. Central of that recovery, of course, is our North American business. So now if we can go to Slide 5, where we go to FY '21 highlights. So as you -- so as you will see through this presentation, CTM has had a rapid return to underlying EBITDA profitability in the fourth quarter, with North America, Europe and the ANZ regions all profitable. Most surprising was the momentum in the U.S.A. Given this momentum has continued into the new financial year, CTM is targeting a return to dividends in CY '22. Secondly, CTM is most exposed to regions with the strongest revenue recovery momentum and advanced vaccine rollouts. This is a theme we will return to several times in this presentation, because CTM is disproportionately exposed to North America and Europe with currently near 80% of our revenues derived from these regions. So essentially, our largest regions that have the most impact on performance are recovering the fastest. Thirdly, the environment is conducive to CTM market share gains or organic growth. Our value proposition of service, proprietary technology and ROI is more relevant than it's ever been before in this very complex environment. Our enhanced reputation in this cycle is leading to material client wins. This is clearly evidenced in revenue recovery rates that are clearly above all corporate public recovery metrics in all the markets we operate in, which we'll touch on shortly. And fourthly, we retain a very strong balance sheet. We've got 0 debt, $99 million of cash. As a result, we have reduced our unused credit facility. This shows the confidence we have, our recovery is, in fact, underway. And lastly, we remind you that CTM is a much bigger business post-COVID. Rather than diluting shareholders well through capital raises through this crisis, we were the first to make a material acquisition early in the cycle. And as we will show you, this is bringing long-term material benefits to the company. We believe we're now the fourth largest TMC in the world, and upon full revenue recovery, the business is expected to increase EBITDA by 57% above our record EBITDA profit in calendar '19 of $150 million. As a result, there is material post EPS-accretion to shareholders upon this full revenue recovery. So now let's move to Slide 6, where we graphically illustrate the rapid return to profitability. Throughout this presentation, we'll focus on financial quarters to better illustrate the momentum in the business, which is pretty clear on this chart. So as you can see on the left-hand chart, we're showing revenue for FY '21. We delivered full quarter revenues of $74 million, which is a 42% uplift on the previous Q3 revenue number. This uplift was led by North America and Europe. So when including Travel & Transport into our pro forma 2019 baseline, 4Q revenues averaged over 41% of pro forma 2019 levels throughout the fourth quarter. Now if we move to the right-hand side chart, you can see that this revenue increase translated really well to our bottom line. As the revenue jumped, we turned a 3-quarter loss of $5.5 million into a $13.6 million profit in Q4. What makes this all the more special is that we inherited a $6 million quarterly loss when we acquired T&T in late October last year. Let's not forget that. That just makes this result really good. North America is making the largest impact on revenue and EBITDA. It's through a combination of increased activity, the synergies and the CTM model delivering in that region that is getting results for CTM. Let's go on to Slide 7 now. So as you can see, a full recovery -- where are we? -- sorry, our largest regions have the most momentum and impact on FY '22 performance. And let me explain very clearly why. So there's a bit on this chart to go through on this slide, but firstly, let me explain the left-hand side chart. This chart graphically represents pro forma calendar '19 group monthly revenue, including Travel & Transport. So we have always shared with the market that our key metric is revenue growth and EBITDA to revenue conversion. TTV in this market is meaningless if we cannot derive revenue from TTV. And this is where the rubber hits the road. So at CTM, our whole business focus is on how we bring back the business to support full revenue in both a sustainable and profitable manner while supporting our value proposition. So as you can see, a full recovery on this chart is equivalent to $60 million of revenue per month or $720 million per annum, subject to fluctuations in foreign exchange, of course. So what's happening on this chart, the blue-shaded area represents the monthly revenue recovery by region that has already occurred, based upon the fourth quarter averages. As you can see, the monthly North American revenue recovery in value is larger than all the other regions combined. Secondly, the green-shaded area represents what is still left to recover by region to get to full recovery. Again, the recovery potential in North America is greater than all regions combined. So the takeaway here is 3 key points that this graph highlights. Firstly, it's very evident, isn't it, that our largest regions by far are North America and then Europe. Combined, they represent 72% of our pro forma '19 revenues and have the largest impact to incremental revenue recovery. Then we look at ANZ being an ASX listed company and what's happening here with border closures. The reality is, as you can see from this chart, the impact of border closures in Australia is not incrementally material to the group performance in FY '22. You can see at the moment, the recovery is $4 million of the total there in revenue. And looking at this chart, if, for example, ANZ revenue declines from $4 million a month to say, $3.5 million a month, there is minimal group impact. In fact, if we updated this chart for July, post year-end, we would find that North America and Europe's recovery, the blue area, continues to grow at many multiples over the size of any impact from ANZ. That's important to note. Secondly, North America and Europe have the most incremental opportunity to group recovery given they're the most vaccinated and opening up the fastest. That's represented by the green. So just to stop for a moment, our largest regions that have the most impact on performance are recovering the fastest. And thirdly, if we go to the right-hand side here now, we've set forward realistic catalysts for further revenue recovery that we think are all in play. By this, we mean they are either opened, quickly recovering or expected to open up imminently. So we've listed the top 5 catalysts for recovery in value order for FY '22. And again, keeping with the theme, most importantly, 4 of the top 5 are in North America and Europe, where we happen to be the largest. So the first one is U.S.A. domestic. That's the largest incremental upside. And clearly, that is already underway. Secondly is U.K. domestic being the second largest opportunity and is already underway. Now just going back to that chart, although the chart suggests there's only another $4 million per month of revenue required to recover to full COVID levels for Europe. This is a little misleading given the recovery so far has mostly been clients that CTM did not service in CY '19, i.e., we've had a lot of new client wins that weren't there in CY '19. So the domestic recovery upside is greater than it appears on this chart. The next two, Transatlantic and intra-Europe travel, a large segments of CTM and lucrative segments of CTM. Both are already opened or expected to open imminently. So essentially, they're in play as well. So those top 4 are all realistic revenue opportunities that are either already occurring or opening imminently. ANZ domestic is fifth with a full domestic recovery potentially generating a total of $7 million revenue a month. So currently, we're doing $4 million a month when you look at the average of the fourth quarter. So this just reiterates that the ANZ incremental domestic growth will not make or break our FY '22 performance. Okay. And this top 5, the whole top 5 would, at full recovery, generate approximately 80% of our pro forma revenue or roughly $48 million a month in revenue. So again, you'll note ANZ and ANZ International did not even appear, as they are unlikely to contribute in any meaningful way in FY '22. So in summary, our largest regions are North America then Europe. They are also the regions recovering the fastest and they have the most impact on FY '22 recovery. And all in all, 80% of our pre-COVID revenue is, in fact, in play. So at CTM, we're not waiting around for ANZ and Asia to open up international borders to be successful in FY '22. That's an important point to leave you with. Now if we can move to Slide 8. On Slide 8, we layered our trajectory to become a significantly larger business than pre-COVID. This slide demonstrates why CTM will be much bigger following the acquisition of Travel and Transport in late October last year. And to explain this slide, the 2 charts represent revenue on the left-hand side, pro forma revenue and underlying EBITDA comparing 3 points in time. The first point is the actual CTM CY '19 performance, which is the dark-shaded bar. Secondly, the light-shaded bar, light blue, is the run rate of where we are today, which is the fourth quarter annualized, and the green is what a full recovery in revenue and the resulting profitability will look like. So as you can see, CY '19 was a record year for CTM where we delivered $459 million of revenue and an underlying EBITDA of $150 million. Now if we come to our current run rate, we derive an annual run rate of $296 million in revenue and EBITDA of over $54 million per annum at the moment. Now because of the combination of Travel and Transport, you'll see that fourth quarter annualized revenue is only 36% behind CTM's CY '19 record result. And thirdly, based upon pro forma revenues, a recovery, as we said on the last slide of $60 million revenue per month, which equates to $720 million of revenue per annum, will deliver an underlying EBITDA of up to $235 million, which is 57% higher than our record profit pre-COVID. So looking at these charts, three takeaways. Firstly, we are a much larger business than pre-COVID post recovery because of the strategic acquisition we made through the COVID cycle. In fact, we're 57% larger at the EBITDA level. Secondly, we do believe we can return a similar pre-COVID revenue to EBITDA margins. To explain the recovery in EBITDA on the slide, on the right-hand side in the green, $209 million represents the FX adjusted expectations that we outlined at the time of acquisition of Travel and Transport at full recovery. The extra $26 million shaded is a combination of executing cost-out across the entire group through this cycle, further synergy realization with T&T, plus several years of automation enhancements, giving us the confidence that the target of $235 million at full revenue recovery is realistic. And thirdly, CTM is organically growing through this cycle. As we have said several times through this cycle, we don't yet know the impact of international travel from COVID. However, when it comes to domestic we see no evidence of significant structural impacts from COVID. And even if there is, our organic growth is more than offsetting any impact if there is such an impact. And let me point to data that demonstrates organic growth is occurring through the cycle. Given examples there of New Zealand and China, which are two countries in our portfolio that are essentially back to near 100% domestic, but of course, still have their borders closed internationally. On that basis, we should be trading at around 80% of pre-COVID TTV at market, when taking into account 0 international travel out of these 2 regions. But this is not the case. July TTV performance, as China trading at 113% of pre-COVID and New Zealand is 163% of pre-COVID. In fact, New Zealand activity has remained above 150% of pre-COVID actively throughout the entire calendar year. So very clearly, this points to evidence that CTM is gaining market share and organically growing in these specific markets. But this growth is occurring in all our other regions, too. As you will see when we go around the ground in the coming regional slides, revenue recovery is running higher than all public corporate recovery data in all markets we operate in. This reinforces organic growth through the CTM business. So let's now turn to Slide 9. Now we'll go through the regional performance, and we'll start now with Slide 10, the group overview. As I said earlier, it makes most sense in this year to break the second half into quarters. What we present on all the regional slides is our first half results and the second half broken into the third and fourth quarters in order to highlight the momentum. And we have circled fourth quarter results to highlight the recovery in regions where it was a significant step up. So in summary at group level, whilst you can see, CTM made an underlying EBITDA loss for the year of $7.2 million on roughly $200 million of revenue. CTM derived an underlying EBITDA at group level in the second half of $8.1 million on revenues of just slightly over $126 million. But it was clearly the fourth quarter momentum that was significant. With the fourth quarter turnaround delivering an underlying EBITDA of $13.6 million versus previous quarter loss of $5.5 million. And this momentum is continuing into FY '22. I'm pleased to report that July '21 revenue for the month, it was the highest since COVID. So as a result of our return to profitability, we retain the strong liquidity we have been -- that we've managed throughout the COVID period. As we said before, $99 million in cash, no debt. And as a result, we feel comfortable enough to reduce our unused credit facility as we do not expect to use it. Now let's talk to each region. Let's go to Slide 11, North America. Again, on this slide, we highlight the turnaround from Q3 to Q4, where revenue grew over 47% from between those 2 quarters, allowing us to convert a Q3 loss of $7 million into a $5.1 million profit in Q4. This presents a $12.1 million profit turnaround in the first -- in that one quarter, and that's the key driver of our fourth quarter result. So again, I want to reinforce that through the combination of Travel and Transport, we inherited a $6 million quarterly loss at the time. So this turnaround makes it really special for us. Again, I just want to report on a few things here. Full quarter revenue recovery through the entire fourth quarter averaged over 40% of pro forma 2019 revenue levels, well above public data on the U.S. corporate recovery, reinforcing organic growth since calendar 2019 in this region. And then in terms of outlook, this fourth quarter momentum is continuing into July. Typically, we see corporate activity decline by around 25% in July and August, versus June due to it being summer vacation in the Northern Hemisphere. But July revenue was, in fact, higher than June, a bullish sign of continued recovery. July domestic revenue recovery was over 60% of CY '19 pro forma domestic revenue as well. This rate of recovery is also above public statements of corporate recovery. So most pleasingly, the region continues to lead the group in new business wins as well, and in fact, it has all calendar year. So we typically see a strong seasonal second half skew, which we expect to be even more pronounced this year due to the impact of accelerated domestic and Transatlantic opening up during this half. As you can appreciate, if that builds over 3 or 4 months, it will become much more meaningful in the second half. That's America. Let's now move to Slide 12, Europe. Again, as with the U.S.A., we have highlighted the 4Q rebound, where the revenue recovery averaged 62% of pre-COVID revenue throughout 4Q, materially above all public market data on U.K. and EU recovery rates. Due to the very high levels of automation and software logistics revenue streams, the fourth quarter delivered revenue of $18.6 million and an underlying EBITDA of $9.7 million. As a result, Europe delivered a $10.1 million underlying EBITDA profit for FY '21, an outstanding result in a market that was predominantly closed throughout the year. Earlier, I talked to our value proposition and its high relevance in this environment. Two things are really critical for success in this COVID environment. The first, it is the demand for expert service that can get people through closed borders. And secondly, having locally developed proprietary technology developed in region that can quickly adapt to a changing COVID environment. We believe we're the only company that has both these levers in high quality. And as a result, we've clearly won more than our fair share of essential travel clients, some logistics clients using our software, in fact, plus some short- and longer-term projects since COVID started in early 2020. So some of the projects, one were high-volume but very low-margin work that I can tell you very clearly would not be commercially viable nor profitable without our own automation, our can-do attitude and our end-to-end software capability. Our team has been working 24/7 for most of this half, in fact, and their dedication to our clients and to find solutions for our clients through these closed border scenarios was truly impressive and above and beyond the call. This is important that I call that out. And despite the stellar performance in the second half, the actual business usual client recovery in the second half was mostly nonexistent. And it didn't contribute much at all to the second half result. As you may be aware, the U.K. was, in fact, in full lockdown for most of this half. So when we look forward at the months ahead, domestic BAU travel is recovering quickly since the U.K. has opened up fully in June. U.K. domestic is a very large and highly automated segment of our business, and it's a very important contributor to future recovery. So also, I just want to point out that some of the project work will fall away as international borders fully open, but this also means that the rest of the travel recovery in the U.K. and Europe can occur. So we think one will offset the other as we go through the year. But irrespective, we expect the EU region along with North America, to lead the way to recovery. And again, just like the U.S.A., we think we'll see a much heavier seasonal 2H skew for the same reasons. Again, we'll see accelerated domestic opening up this summer, combined with the eventual intra-Europe and Transatlantic opening up. If we give that a few months to build up, we expect it to be very meaningful in the second half of the year. So now if we can move on to Slide 13, Australia and New Zealand. Again, ANZ is highly sophisticated business in our HQ. And again, this was profitable throughout the year despite the really difficult rolling border lockdowns that we've experienced. Just want to point out the 4Q decline in profits is a direct impact of a combination of a number of factors. Firstly, regular rolling lockdowns, no government assistance through these lockdowns and reemployment by CTM for an expected recovery that have been significantly interrupted. So we know how important up-to-date information and good expert services through this COVID environment, as particularly as people recommence travel. And in ANZ, for a fleeting moment, we saw domestic Australian activity return to 85% of pre-COVID levels. So to manage this recovery, we reemployed heavily for the future, and really pleasing that we welcome back many staff we had to let go next year -- last year, I'm sorry. But the unspoken reality is Australia relies on the Sydney Corridor as the economic life part of the East Coast, whether we like it or not. So the fact is when Sydney is closed for air travel, the entire nation suffers. For example, an open Queensland or Victoria is of low consequence to CTM if no one's going to accept flights to and from Sydney. There is yet no government support that takes account of this nationwide issue facing the travel industry either. So as a result, this is our most difficult region to manage at both the business level and more importantly, at a human level. We are coming up to an unprecedented 18 months of domestic travel restrictions with no deadline or end in sight and have hundreds of staff in their livelihoods to balance against regional sustainability through, of course, no fault of their own. So we're doing our best. And despite this, we still remain very confident of a sustainable and profitable business upon a full domestic recovery. The big question is not if, but the real question is when. But just again to show the resilience and strength of this business, both June and July were profitable, albeit small. And in both those months, we had times that all states were closed down. So again, as I said it earlier, there's no evidence of a significant structural impact from COVID. New Zealand has been running above 150% versus pre-COVID throughout the entire calendar year. And to date -- and that's including July as well. So but that tells you it's a full market recovery, plus we are still having market share growth since COVID. So now if we can move on to Slide 14, Asia. The trading environment remains challenging, given its a large international market, of course. But the 4Q recovery to 17% of pre-COVID revenues is still well above Hong Kong and Singapore market averages in corporate travel. As we flagged, the governments removed support packages in March despite no activity recovering in these regions. And as a result, we had to reduce our headcount by approximately 200 staff to adjust. Again, a very difficult situation for our teams in these regions to endure. But in terms of outlook, we expect to remain marginally loss-making. However, we are winning new business at the highest rates in history for the region. And secondly, competitors continue to over closedown with a partner region. So we really think we -- this we can gain a lot of market share upon recovery if we take a long-term view. So, if we can now go to the T&T acquisition update, we'll move forward to Slide 15 and then on to 16. So what this slide shows is a high-level 2-year plan. And there are a couple of quick takeaways. Firstly, the team has achieved a real lot in a short space of time, but largely thanks to COVID downtime, particularly November to March. The second thing we're really pleased to announce that we do expect to be a fully integrated business by July 2022, which we think is a great achievement for such a big business. So what we've got left to do is pretty much typical. The first thing is its consolidation of back-end systems, which, of course, are not client impacting. And secondly, its transitioning legacy clients under the much improved CTM tech suite, which is a great benefit to both current and future clients. And in fact, we are really buoyed by the progress in the client rollout, but also the take-up of our lightning proprietary booking tool by both legacy T&T clients and new clients to CTM. So as a result, there are more synergies to come and these large projects -- as these large projects come to completion. So now if we come on to Slide 17, the group financial summary. I now want to hand over to Cale Bennett, our Global CFO, to talk through a high-level financial summary.

Thanks, Jamie. Good morning, everyone. If we can turn to Slide 18, the group profit and loss. FY '21 was a year of 2 distinct halves. Cost-cutting in FY '20, followed by continued discipline throughout FY '21, and then rapid recovery in the Northern Hemisphere in the fourth quarter, drove an underlying EBITDA loss of just $7.2 million for the year. The underlying net loss after tax for the year was $32.3 million, down from a net profit after tax of $28.4 million in FY '20. The fourth quarter momentum we take into FY '22 is encouraging, and we remain hyper-focused on the balance between cost management and service for our clients as our revenue recovers. We've outlined D&A expectations for FY '22 of $41.5 million, there's no material change expected from FY '21's total of $40.9 million. We've also separated our client intangibles to assist the analysts on the call. We note here that we received government grants of $18.4 million in FY '21. Most of the grants pass through to staff costs, and they were materially finalized in March '21. On to Slide 19, non-recurring costs. Non-recurring costs in FY '21 overwhelmingly related to the T&T acquisition, consisting of both acquisition costs and the integration costs, which together totaled $19.6 million of the $24 million total non-recurring costs. With T&T integration costs, we expect another $6 million in FY '22 to complete the integration. This will bring our total expected integration costs up to just over $18 million, which we acknowledge is higher than the $13.7 million we indicated at the transaction outset. There were two drivers of this increasing costs. Firstly, as the integration has progressed, our team has identified opportunities to unlock further synergies, but this will require additional investment. Given a positive ROI, we are going to go after these opportunities. Secondly, office lockouts and impeded travel have slowed some of the integration work we wanted to do on the back-end systems, as it has not been physically possible to make adequate headway without collaboration in the office. So we will be carrying some support people for longer-than-expected to ensure that we get the integration done right and eliminate any legacy technical and operational debt. The COVID impact costs of $2.5 million related to the Asia downsize in March that Jamie spoke to earlier. As we have previously indicated, government support helped us keep people in quiet times, but we will adjust our cost base to reflect the market activity where that support is no longer provided. Moving on to Slide 20, the balance sheet. Year-on-year cash has increased by $6.2 million, although that doesn't do justice to the activity throughout the year. Finishing the year with $99 million in cash, however, does speak to the strength of our balance sheet. The increase in receivables and payables have been as expected, given the rapid recovery in the fourth quarter and the nature of the customers contributing to that recovery. Tight balance sheet management has ensured we have not utilized our debt facility since we repaid it in FY '20. Given the strength of our balance sheet with $99 million in cash at year-end and based on our liquidity modeling through to recovery, we have reduced our funding facility, providing immediate financial savings. Our current liquidity is more than sufficient to manage through to full recovery. Bank guarantees have fallen 64% during the year to $19.6 million. Due to management actions in second half '21, the bank guarantee requirements under which we operate have changed, ensuring it is unlikely we will return to historic levels when we are fully recovered. Now on to Slide 21, the cash flow. Operating cash flow was primarily impacted by timing and a rewind of high-quality clients on credit terms growing quickly in the fourth quarter. We do expect this to flatten over time and normalize. We expect CapEx to remain around our long-term averages at approximately $20 million per year. We are focused on maintaining market leadership of our proprietary software. We note the addition of T&T won't lead to an aggregate increase in CapEx in and of itself, and most of our IT expenses remain in expense in the P&L. On to Slide 23, and I'm going to hand back to Jamie now to talk about the FY '22 outlook.

Thanks, Cale. Okay. Just looking at the guidance activity. Obviously, given the uncertainty of government decisions on border restrictions and travel supply, CTM is not in a position to offer FY '22 profit guidance. However, given the business recovery is underway, we are targeting a return to dividend payment in CY '22 and outline below our key expectations to help the market. In the first quarter, we expect continuing positive underlying EBITDA, noting the first quarter is typically our softest quarter, because of Northern Hemisphere summer vacation. So just to remind you, July and August are typically the quietest months of the year for corporate travel in Europe, North America and Asia. But despite this, July revenue was a group record post-COVID, a positive sign of continued momentum for us. So in the second quarter, we expect the building underlying EBITDA, particularly in North America and U.K., Europe return to offices after summer vacation in September. And for many customers, it will be the first time they've been back to the office in 18 months. And then we go through to the second half. We then expect a stronger-than-normal seasonal profit skew. Now at CTM, our typical seasonal skew is 67% weighted to the second half in profits, but now also with the run rate of Travel & Transport as well, we expect that to get bigger, but further again because of the next 3 points. So firstly, we expect North America and U.K. domestic to recover rapidly post summer vacation as client returns to offices in September. And also the lucrative Transatlantic and intra-Europe travel will be open as well in some time in this half both ways. So by the time they get going, it usually takes 3 or 4 months to build up, we'd expect that into the second half, we'll get a full 6-month impact of those outcomes. Secondly, when it comes to ANZ, we expect and we hope vaccinations will allow for a more predictable and sustainable strong AU domestic environment in the second half of '22. So that's why we think it's going to be a much greater skew than normal. And then lastly, acquisition opportunities. We are continuing to assess niche opportunities that support our global strategy. So let me end this presentation by saying our dance card is full. Now I'll hand it back over to Darcy for question -- for Q&A. Thank you.

[Operator Instructions] Your first question comes from Quinn Pierson from Credit Suisse.

Maybe just firstly, is there anything you can talk us through regarding new customer wins? So you've mentioned that a few times throughout the call and it sounds like some good win rates. Can you just talk us through how much, I guess, your net new customer wins would annualize to? So in reference to, I guess, the $720 million of pro forma revenue, kind of how much additional we might be able to look forward from new wins on annualizing?

Quinn, we're not going to -- we don't -- first, we don't talk about clients or the value. I think the value is misleading, because we can win a client, let's says that is worth $10 million is not trading. So it's just -- I think it's a little misleading to say that. But what we are doing, we're letting our numbers do the talking rather than making claims. You can see that with all the public data that we're clearly doing better than market in the corporate sphere. But we know leisure in some markets is back to 100% or greater, and we can see that as well. And we've got small pockets of it here and there, but we know our corporate data in all regions is above market. And there's enough public data to suggest that. So it's just not our policy, but we'll let our numbers do the talking. I hope you understand that. But we wouldn't be saying it if we weren't winning it.

Understood. And maybe just secondly, so you mentioned that July trading is staying strong. So particularly in the U.S., where we're seeing data coming off in the U.S. in July and into August off of Delta concerns. In fairness, it does look like corporate data is fully enough better, but I guess your data seems to suggest stronger than market continuing into July and August. Is there anything you can kind of connect the dots of sort of bridge for us to kind of understand why your data seems to be holding up better than the market?

Yes. I think it's a combination of things we've won. But also, secondly, I think it's a bit like what happened back in Australia back in December going into summer, finally opened up. I think people tried to get some things done in June and certainly July. But look, we've seen this enough now. Even with Delta, we've seen here and there slow pullback for 2 or 4 weeks through this cycle. We saw it back in the U.S. in February as well. But importantly, for us, August is a dead month for corporate anyway. So if it's going to do it, then it's going to do it then. But look, we're speaking to enough customers that know that they've got to get back on the road to win business, to get their people together. And some good data metrics like forwards on conferences, meetings, incentives are as strong as they would ever been in our history. So we still think, yes, there's going to be a little -- it's not going to be linear, is it, but we feel pretty comfortable that things continue to grow. And July was, a fact was just, yes, it surprised us as well, because it should have gone backwards on June just because of seasonality alone. But we just have to see how the year pans out. But we're really taking on September, right? In September everyone comes back is when it should be, yes, September, October is what we're really looking forward to because, again, it is summer vacation, right, and corporates are on holidays. And people are on holidays. Let me tell you that. So as one of the CEOs said to us, if my staff are traveling to Cancun actually, well, they can't come back to the [indiscernible] travel for me. So that's one of the -- that's how we're looking at things.

And just lastly for me. So I think you said that you expect the full group business to be at similar margins as CT was freed the Travel & Transport acquisition. So I guess that's a bit over 33% EBITDA margins. I just wanted to confirm I heard that right. Your expectation is synergy...

Yes, it's actually 33.7%. So we're just saying -- I think, yes, the trade-off is that is we know when we acquired T&T, there was a dilution margin, but at the same time, we talked about the synergies we've created through that acquisition. We've said very clearly on this call that we're -- there's more there. We're making bigger investments because now that we're in, under the hood we can see more. We've also said that the whole business has had taken cost out, and a lot of that will be permanent. We've also talked about greater automation over the business over the last 2 years. when markets do recover, we're seeing very solid revenue per FTE metrics that are larger than we were pre-COVID. And that's why we're saying that. And then -- and we'll see where it goes. But we feel pretty -- I mean, as I've said before, the hardest thing I don't think the investment community appreciates is how hard is to bring a business back. And that's where we're focusing all our energy. We're way through survival, and I think that's put us in a very good position. We've got a very good framework, and we've been managing that. If you remember, our revenue was all the way back to -- it was back to $4 million, $5 million at one stage a month there. It's more than five-fold and it's getting bigger and bigger and the way we've been managing the business and our expectations have proven -- have proved up the whole way through this cycle. So it gives us a lot of confidence in the way and the structure we're putting to manage the business, but also our management team executing.

Your next question comes from Mark Wade from CLSA.

With the acquisition of Travel & Transport, do you feel like it's helped give you that scale when it comes to getting on the tender panels of the bigger clients?

Yes, no doubt. I mean I think if you go back to our strategy, we've been strategic for 10 years. We said we wanted to get to the right scale in North America, and we always felt that over $2 billion at the time, now we're clearly we're on a recovery anyway, we're well, well over that. And there is no doubt, there is no doubt that we're on the radar. It [ is taking ] us a long time, but we certainly are. And I think that's holding up in terms of the client wins we're talking to, just how we can leverage the scale of the business, the buying power of the business. These are all little upsides that we're seeing. But also you can see in the recovery rates too. I mean there's enough public data of what corporate is doing over there, and we're beating that data, which means we're obviously winning market share. But we have been -- we started to see this in early calendar '20 as we flagged, if you go back at just -- it's no doubt, particularly the last -- this calendar year where they're going well. But the team -- the team are a great team. They've got all the tools to win business and they're leveraging that.

And then some comments from American Express suggesting they thought that the smaller corporate SMEs were coming back a lot quicker. The larger corporates would come back eventually, but they were just not yet. Would you concur with those comments based on what you're seeing in your business?

Depends on the industry. I think for AMEX GBT, they're real big guys that have a lot of governance about people and what they can and can't do, would be slow, but we don't have many clients over $100 million, right? So yes, I think the other guys tend to be moving a little quicker. Yes, that would be our view, too. But it's very industry focused as well. There are certain industries that are still slower than others. And you've got -- and we have some clients spending over 100% of pre-COVID. There's no doubt about that. They're what I call the goers that understand that going to see clients is how you're going to win customers. So, there's a real sense of urgency in the open markets too -- it's all about growth in travel and growth highly correlated.

And last one, just in the annual report, like I know it's audited. I'm just surprised to see a lack of any related party transactions in relation to you or SoFi, given the Travel & Transport providing and the deal done there?

Well, they're both independent directors. So what kind of transactions we expecting to see there.

I thought there might have been a listing -- yes, I break down saying [indiscernible] we use Morgans to drive equity. We use Allens for the consulting, on the legal services when we've done the T&T acquisition, is that a consideration?

No. No, it wasn't. But thanks for the question.

Your next question comes from Sam Seow from Citi.

Maybe just on Page 6, that kind of rapid return in underlying profitability. Just noticing the $22 million increase in revenue pretty much dropped to the bottom line or the EBITDA line at least. Could you perhaps maybe give us an understanding or [ real look down ] on how costs will come back, I guess, into FY '22? And I guess, the operating leverage we can expect?

Yes, it's a good question. So as we -- if you go back in time, we always said -- because we had a lower fixed cost base than our peers, we could carry a lot more staff for a recovery. And as we said over and over and over, recovering is hard, right? Sometimes things come back this fast. Not many businesses could cope. So we always carried more people. So we had capacity. So what we saw in that Q4 was a soaking up of that capacity. I think from here on in, if you go backwards, it's not linear. But if you draw a line from where we are today in run rates, particularly if you go to more of a Slide 8 view and you draw out how that annualized will get back to that full recovery EBITDA, it is much about the sort of incremental dollars. So every dollar of revenue, there'll be an incremental dollar dropping to the bottom line. And clearly, most of our fixed costs are complete at all variable costs now. So that -- so it is a strong incremental profit drop from every new dollar of revenue. I hope that makes sense. And again, we've modeled this before. We've been modeling this. So I just can't -- I just want to stress it again. We've gone all the way back from -- I've even forgotten now, I try to forget about the past, but I think we're down at $2 million a month or $4 million or $5 million a month of revenue. All the way through, we've been modeling the same model, and it's been proofing up really well. So -- we put a bit of fat in that for things that don't go right. But clearly, it won't be linear. Sometimes when it's going really fast in recovery, we're going to employ more travel agents ahead of the curve. And then in some other areas where we've got very, very high automation or we've got capacity, like we've still got a lot of capacity in Asia. We've got the high automation in the U.K. for domestic. We might see that go -- be ahead of the curve in terms of the way it drops to profit. But again, we've done a lot of modeling. We had a bit of downtime in the last 12 months to do this properly, and we're comfortable with what we're trying to achieve.

Sure, sure. So maybe just to clarify, I guess, with domestic coming back in the high levels of automation, you'd expect more operating leverage? And I guess when international comes back, the high touch customers, is that when you'll probably see more linear? Is that how to think about it?

Somewhat. I think -- I wish it was that simple. It just depends because we're getting stops and starts, right? So another example of ANZ, we employed a lot of people for recovery that never happened. And it's heartbreaking. So you're going to have that sort of hand break on the whole group as well, albeit it's not a big waiting. So I think we'll talk to it as we do things -- and like we'll try to explain the upside or the downside and why. But you can see that we've certainly laid out a path that we think is good.

Cool. Cool. That's good color. Maybe also, could you give us a quick around [indiscernible] to help us understand what the activity levels are in terms of booking as a percentage of FY '19? And then maybe there you think the corporate recovery data is at?

Yes. Look, we haven't done that on this call other than on, you just got it, we wouldn't be saying it will be July domestic -- sorry, July revenue is higher than June, and it just shouldn't happen. So that tells you the momentum that we saw in the business. And I say it shouldn't have happened, because Europe and North America are in summer vacation. And it's like in Australia. Christmas and January dropped back from November. It's just how it works. So we're seeing good momentum. We're watching all this closely. Obviously, things have come off a little in ANZ. But again, if you go back to that Slide 7, it's not going to make or break us, right? It's really about North America and Europe, and we're buoyed by both. Look, we're watching the Delta strain carefully, but we've seen this before. It might slow things down for a month or so or just make people think a little bit more. But we -- I just remind -- things are opened in those 2 regions and corporate hasn't done anything for a long time. There's a real sense of urgency to get things moving again. So we feel pretty comfortable on a trajectory. And that trajectory has been going really since -- it's all about vaccinations, right? Once you get to that number, we've seen it since February, and it's been fairly steady through February, March and beyond.