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

Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the CTM Fiscal Year 2023 Conference Call. [Operator Instructions] Jamie Pherous, Founder and CEO, you may begin your conference.

Thank you, Emma, and good morning, everyone. I'm joined today by our CFO, James Patterson, and we are pleased to present our full year FY '23 results. Let's move to Slide 4, the FY '23 highlights and go straight to Slide 5 if we can, group financial highlights. Look, as an opener, throughout this investor pack, you'll hear a lot about 2 themes this year. Firstly, it's our ability to convert revenue recovery into profits, not just EBITDA but importantly, profit before tax and net profit after tax. And secondly, the late FY '23 momentum that we've experienced really sets up our FY '24 results due to profitable new client wins transacting and that's continuing through the year. So with this in mind, let's look at the key financial metrics on the right-hand side. Firstly, revenue of $660.1 million was higher than we anticipated. We guided to $648 million in terms of our recovery back to 100%. But as I said before, we are converting this incremental revenue recovery into profits. As you can see in the right-hand side table, we delivered EBITDA of $167.1 million, but also PBT before client amortization, PBTa, let's call it PBT for the rest of this presentation of $124.8 million and underlying NPAT of $92.5 million, which we think is good. But it's really about the momentum we take into FY '24. We've certainly seen a rapid turnaround in the second half. 4Q '23 revenue was above 90% of our pro forma FY '19 revenue. And since February, EBITDA has averaged over $20 million per month and PBT has averaged $16.5 million per month. That's why we have good confidence moving forward into FY '24. Next, of course, is our continued balance sheet strength. We had 0 debt and cash of $151 million at 30 June, and as a sign of confidence in our cash generation moving forward, the Board has reinstated dividends at our 50% to 60% of NPAT policy. We've declared a final dividend of $0.22 per share unfranked. And this momentum sets up our FY '24 guidance. You'll see we'll also be going to PBTa given this is most relevant to investors. So, when we look forward, underlying PBTa, our range is roughly $193 million to $233 million, up 55% to 87% on FY '23. Underlying EBITDA from $240 million to $280 million, up 44% to 68% on FY '23. And what I want to reiterate is the lower end of guidance will deliver us a record EPS in FY '24. And we think this validates our COVID strategy. As we understand, we'll be one of the first companies in corporate travel in the world to come back to record EPS. So, let's move to Slide 6. Our scorecard that shows key metrics that matter. And first, if I look at the top row FY '23 metrics, our new client wins during the year totaled $2.95 billion and the majority of these had not yet transacted in FY '23, which again, is important for FY '24. Client retention again, remained at 97%, which is our long-term target and our 30 June staff count was 3,206, up only 12% on the prior year as we leverage the vastly larger scale of the business. So, you can see staff numbers went up at a lot lower rate than our revenue. But as I stated earlier, it's all about us 2H '23 momentum. If we look at the second row, as we said, since February, EBITDA has averaged over $20 million a month and PBT, $16.5 million a month. And importantly, for us, and we talk about how we're converting revenue to profit as we move forward, the 2H '23 EBITDA to revenue margin of 31.5% is getting very close to our terminal target of 32.7% margin that we said we'd get at a full recovery or $810 million of revenue. So now, if we go on to Slide 7, let's go around the regions and if we can go straight to Slide 8, please, the group overview. So, just looking at this group overview, this is really a holding page that summarizes the region and group costs, but I want to bring your attention to 3 things. Firstly, the circled area or 2H '23. As we said, it was a big step-up. You can see 2H '23 revenues of $368.2 million, converting to EBITDA of $115.8 million at a margin of 31.5%. Also, it's something important to note here is that you'll note the very different recovery speeds of regions, which is still tied to a choppy year as the industry recovers from COVID. So looking through this, it's important to note it's our geographic and client diversity that mitigates performance risk at group level from an investment thesis. So, we're always going to have unders and overs. But the key point is we just keep performing. And that's a key message I want to share. Next, you'll note that TTV is no longer an accurate measure of performance and we'll talk to revenue and how it converts a profit through this pack and moving forward. So now, let's go through the regions. We might move straight to Slide 9, North America. As you can see, revenue was up 40% to $303.7 million and EBITDA was up 65% to $44.8 million. If I come to the highlights, most importantly, we have completed integration. So, what does this mean? This means all of our focus now is on growing market share and leveraging our scale through technology and automation gains. And integration outcomes are really going to plan for us. So, 2H '23 EBITDA revenue margins hit 24.5% and as result of new client wins of $0.8 billion in the region, the region averaged over $6 million of EBITDA per month since March. So, you can see the momentum is really coming for us. It's all got to do with the wins we've had. And when we look forward, the focus is to continue these market share gains, noting 2/3 of all new clients we're winning are choosing our booking to Lightning. So, we don't expect a full pro forma EBITDA recovery until FY '25, which is about $104 million, given our client bases recover to only 65%, which we talk to on the next slide, but we still expect significant year-on-year EBITDA growth due to growing business from new client wins. And just to put that into perspective, not just the $0.8 billion we've won in FY '23, we have forecast to exceed that number in FY '24 in terms of new sales. So, we're really getting that momentum now that we're locked in later with integration. So, let's go to Slide 10, if we can, and this shows how we're really going in graphic detail. First point I want to bring to is the first bullet point there. When we acquired Travel and Transport, we told the market that on a full market recovery, we thought we could achieve EBITDA of $104 million through combination, and that included synergies. But during COVID, we deliberately downsized our non-core divisions because whilst they contribute to revenue, they were probably marginally profitable as we're going into this. And we've taken the decision not to fire them back up. We've chosen to focus solely on our core business of corporate and SME, VIP, high-end leisure. This is represented on the left-hand side bar chart is what it looks like. So -- and this strategy is working, as you can see. We just talked about the profit since March, but also from the right-hand side bar chart. Let's just look at that for a moment. As you can see there, our client base has only recovered to 65% in 4Q '23, similar to our larger corporate travel peers. But the transactions to new client wins means that we have recovered to 85% in 4Q '23. So then on top of that, when you add known new clients won that are not yet transacting, we're confident of a full 100% recovery in FY '24 on a like-for-like basis when we compare it to normalized revenue base. That's important. So, I guess the takeaway is that we can grow our way back to higher EBITDA on lower revenue than pro forma FY '19. But this is going to take it to FY '25, given our client base has only recovered to 65% in 4Q '23. Okay. On to Slide 11, Europe. Revenue was up 70% to $143 million and EBITDA up 125% to $84.1 million. These are record financial metrics and approximately double pro forma FY '19. Why? It's because we had major new client and contract wins with very high adoption of automation by all clients, which is what's contributing to the region's high margins. It's important to note that the new Bridging and Accommodation Services contract did not contribute to this result given had a delayed start date of 1 June. So in terms of outlook, the FY '23 full year result is how you should be looking at as a recurring baseline to future growth and the correct way to view this region. That's how we're viewing it. So for us, it's growth from that $84-odd million into FY '24. Of course, we expect another strong growth year in FY '24, but I wish to highlight that the 2H '23 margins are not sustainable in deriving our group FY '24 guidance. So I'll say it again, all the growth is going to come off that $84 million, that's the recurring base. On to Slide 12, I want to give you an overview of just what we're doing at asylum, but more or our program in terms of our humanitarian success and how this might apply to this new contract. So, the first thing I want to say this is not a new business segment for CTM. It's merely an extension of our core competencies in corporate travel that we've built over the last 4 years through COVID. And this is one of the things we've got out of COVID because we had resources. So, I also want to mention, we're really proud of the work we've done over the last 4 years. You'll see we've dropped sustainability update in our pack today or to the market and you'll see just how comprehensive that is. But the key point is that we firmly believe humanitarian and crisis travel logistics is a natural extension of what we do of our value proposition. And this really has become a constant global requirement with further opportunities to expand our specialist services across other industries. This applies very well to insurance and crisis and other crisis that you're probably hearing around the globe as we speak. But in terms of this particular contract, I just want to talk very briefly about where our responsibility starts and stops and what's it all about. At a high level point of view, the challenge for the client is avoiding a potential humanitarian crisis. As we know, large volumes of asylum seekers are making their way through the EU coming to the EU border and crossing into the U.K. The challenge we had when we won this contract was the accommodation ground transport services previously were managed by a very large number of hotel and service providers. But it appeared they could not keep up with either the volume or the complexity of this particular program. So, we commenced, the contract was delayed. It started 1 June, '23, but there are very positive results. Firstly, the customer has seen an immediate improvement in service consistency and hotel accommodation utilization. Secondly, there's been significant savings due to systems and procurement experience in crisis and humanitarian management from CTM. So, to clarify CTM's responsibility. Our responsibility is limited to travel-related functions in the U.K. only. I want to make that really clear. So that's managing the accommodation allocations, the transport logistics and the meals. What is not part of our remit is duty of care, security, infrastructure, vessel designs, other accommodation structures and management like tents and barracks and camps and any accommodation that's outside of the U.K. And what is important is humanitarian standards underwrite and form part of the remit. So, there's 3 key points that support humanitarian standards. Firstly, the cohort is allowed freedom of movement outside of all CTM managed accommodation, including one vessel. Strong governance too, rooms and service delivery must meet minimum humanitarian standards and value for money. And lastly, there's a lot of government oversight and scrutiny with this project, as you can appreciate. Their internal audits of all accommodation and transport suppliers all have government oversight. So on to Slide 13, ANZ. Okay. Revenue was up 134% to $160.1 million and EBITDA up 256% to $42.4 million. So, in terms of highlights for ANZ, we completed the Helloworld Corporate integration. And importantly, we retained not just the Whole of Australian Government, WoAG, but other key government accounts, which, to us, really validates the acquisition strategy. But it is also widely known that the timing of this acquisition occurred during the most rapid recovery period in the region. And as a result, the business we inherited was under resourced. So, we had to find, add and train significant resources in a time when there was no supply of travel people. And we had to obviously also support duplicated systems in a very complex recovery environment where every transaction took twice as long in order to service the business. So it was pretty unlucky, but it is what it is, and this came at a cost of profit in the region. So as a result, we have not been able to convert our full TTV recovery. We have recovered fully by the way into profit just yet. But this doesn't tell an accurate picture because activity in revenue is lagging TTV due to what I think is unique mostly to Australia now and unsustainable high ticket prices caused by a lack of international competition in this region. And we really need more competition. We need more international carriers flying into Australia to change this. But pleasingly, for our customers, these prices are starting to moderate wherever there is competition. But more importantly, from the investment community, what are we doing about this? So, we have 3 objectives and we're keeping it really simple to get back to what we think is pre-COVID or pro forma EBITDA. Pleasingly, there are significant efficiency gains moving the retained government clients from Helloworld to CTM technology. And this is flagged to occur from January 2024. And that's a really good result for us and for our customers. Secondly, supply revenues will return with international recovery and competition. And in fact, wherever there is international competition, we are seeing both affordable airfares and revenues return. And thirdly, it's the productivity gains through technology. We talked about the duplication of systems that will unwind in December. But further to that, ANZ is our test case for artificial intelligence and robotic process and we are encouraged by the early positive signs, which we talk to further in this slide pack. So, given the government clients don't transfer over to our systems until January '24, we don't expect to see these benefits until calendar '24. And as a result, we don't expect EBITDA to get back to pro forma '19 levels or north of $70 million until FY '25. But we've laid out 3 keyways we're going to get there and that's what the business is focused upon. If we can now move to Slide 14, Asia. So, this is a pretty good story, Asia. Revenue was up 198% to $51.6 million. This was our last region to return to profits, delivering $13.9 million EBITDA versus a loss of $3 million in FY '22. And the facts are Asia has gone through outstanding turnaround since China opened up in early 2H '23. Our corporate market share has doubled since FY '19 and we used our COVID downtime very wisely. Automation work completed has meant that in only 2 months after China opened, Asia is already delivering record profits on just a 70% revenue recovery versus pro forma FY '19. And the outlook is very encouraging. We're highly leveraged to the Greater Bay Area of China. We've talked about before in its own right. It's the fourth biggest economy in the world. And importantly, for us, we make all our money from international air in this region and international air has only recovered to 1/3 of the pre-COVID levels in 4Q '23. So if you think about, we've doubled our market share and it's only back to 1/3, it gives a lot of upside. As a result of our significant market share gains and automation, we are targeting EBITDA margins over 30% and expect to have a record profit year in FY '24. Meaning, our record profit was, of course, FY '19, like all the other regions and that was around $25 million. So, let's move to Slide 15, about our artificial intelligence automation. In fact, let's go straight to Slide 16. So, we shared earlier the encouraging size in Australia and how that can drive productivity. So, why are we so excited? Well, we've been developing AI and RPA for 2 years. I'll throw a lot of trial and error. But because we do it in-house, it has brought 2 distinct advantages. The first one is we own our IP and our tech, so we can quickly modify and learn and improve with our clients and for our clients following our normal philosophy. But secondly, we have it working on our existing product suite and data warehouse. So, it's specific to our customers and it takes in all customer needs. And that's the big difference to applying it to say leisure. So, how are we thinking about AI and using it. Our strategy is 2-fold. Firstly, for customers, it enables them to interact with CTM how they want and when they want. And that's really important. So, the service is better. And secondly, for our agents, it's designed to assist them to be much more efficient and free up time for the high-value complex and urgent transactions to remain a significant part of our business. So, when we come to the results, we're really encouraged. Our intelligence, which we named Scout, it can fulfill domestic bookings already, including multi-carrier with accommodation as well as managing changes and cancellations. But most importantly, this is all compliant within a customer's travel policy. This is because we own the profile software and our data warehouse. So currently, it's supported by 1,100 clients to cancel and refunds and it's already saving 1,000 FTE hours a month for the business and this is only the beginning. The AI offering is being continually enhanced in ANZ and being rolled out throughout the regions in FY '24. And both RPA and AI will be underpinned how we're going to get these better margins in the future. So, we think it was a good investment, although it took us a bit of time to get right. It's now rocking and rolling. Now, I'm going to hand over to our CFO, James Patterson, to run through the high-level group financial summary. We might go straight to Slide 18.

Thanks, Jamie. On Slide 18, the group profit and loss. CTM has delivered another strong financial performance in FY '23. Travel demand has accelerated globally post pandemic and the group is realizing the benefits of scale and technology investment. On revenue and other income of $660.1 million in FY '23, an increase of 70%. We earned underlying EBITDA of $167.1 million. Importantly, this result translates to stronger underlying net profit before tax of $124.8 million and underlying NPAT of $92.5 million, which shows that our business is converting the recovery into profitability. CTM has always been less reliant on volume-based supplier revenue to generate profitability. The fact that nearly 90% of revenue is generated from transactional revenues validates our model strength in this environment. One-off items for the year were not material with the expense mostly related to acquisition integrations, which are now complete. Expectations for our effective tax rate in future periods should center around 27%. We will now move on to Slide 19, the balance sheet. CTM continues to maintain a very strong balance sheet. We have 0 debt having not utilized our committed funding facility since June 2020, and the company maintained significant cash holdings of $151 million, including $12.3 million of client cash. The group's receivables and payables have increased in line with the rapid increase in client activity, which accelerated in FY '23. Most of the increase in receivables relates to government business, which is on invoice terms and is very low risk from a credit perspective. Now, moving on to Slide 20, the cash flow. In FY '23, the group generated $80.3 million of operational cash flow with cash conversion impacted by the return of activity relating to clients on invoice terms. Despite the fact that all the operational cash flow was generated in the second half, cash conversion was adversely impacted in this period by a rapid increase in U.K. government activity on invoice terms, which amounted to approximately $47 million. The rebuilding of the group's receivables balance because of the retaining client activity is now largely complete. And therefore, we expect operating cash conversion to return to historical averages moving forward. Supporting this, as at July, the group's cash balance has increased to $165 million. Technology-related CapEx was $32.5 million for the year, which is higher than previously expected as a result of additional spend on projects identified during the year, which will deliver immediate benefits and ROI. These projects relate to the whole of Australia government hotels program, delivery of the U.K. Bridging and Accommodation Services contract in addition to AI and automation initiatives, which are showing encouraging results. Our investment in proprietary software will continue in FY '24. However, the spend is expected to reduce to approximately $29 million as the ramp-up phase of the previously mentioned projects nears completion. I will now hand back to Jamie to talk to the FY '24 guidance.

Thanks, James. If we can go straight to Slide 22, FY '24 guidance. So before I talk of this slide, we've always told the market that as the market recovered, the important factor was how we could turn incremental revenue into profitability. We are very confident now that we're mostly there and our ability to do that. And as a result, the best way to think about our business from the investment thesis is to assess revenue and how this converts to PBT and EBITDA. So as a result, we give revenue guidance and this correlates directly to profit guidance. So, guidance is as follows. We see our revenue, it's $770 million to $850 million. Now EBITDA, again, correlates that's $240 million to $280 million and PBT is roughly $193 million to $233 million. So, just to talk this through to make it very clear to everyone, the top of the range is $850 million, that would be for outperformance in revenue. So, if the business was to generate $850 million, we expect to deliver EBITDA of $280 million and PBT of $233 million, respectively. $810 million revenue wasn't always our FY '24 target and is roughly the midpoint. And EBITDA, we expect we can get that 32.7% margin. So, it will be slightly higher than the midpoint or we think that's $265 million if we do $810 million and $770 million is our base case, and this is assuming no further market recovery. But this is becoming more unlikely given the data points or 3 key data points we talk to on the next slide in our activity statement. So, while we've got a wider range than normal is because we're still in recovery mode and things could still be choppy. But it is what it is. So first -- the other thing too, when we come to the economy, as we've said all along, we're not seeing anything, we haven't seen anything. We continue not to see anything. In fact, the forwards look very positive, but we do remind you that over half or around half our client base now is essential travel and government clients and these clients are typically more resistant to economic impacts and normal corporate travel. It's also timely to remind you that even at the bottom of this range, CTM will deliver a record earnings per share. Whilst others peers raise capital or debt to survive COVID, we took a different route and achieving record EPS in FY '24 clearly validates our strategy and how we've navigated our way through COVID. In terms of profit SKU, we think it's going to get back to normal, broadly in line with historic trends, which is first half will be 1/3 of profit, second half, 2/3. And have we -- and just at the bottom there, we've added an EBITDA to PBT bridge, noting the difference between EBITDA and PBTa is conservatively around $47 million. So, let's go on to Slide 23, the summary and trading activity. So as we said, we're currently on track right to the middle there, as we said. And why we think the revenue margin is going to go up and get 265% in terms of that midpoint of the revenue of $810 million is because as we forecast our staff numbers only grow by 6.5% in [ FY '23 ] versus that revenue range of 17% to 29%. And that's because of the 2-year investment in artificial intelligence and robotic process starting to deliver returns. So, we're really starting to leverage our scale. But now I want to really touch, I guess, on 3 key data points that are very encouraging for us. Firstly, it's our July trading data. Whilst July is typically seasonally quiet for corporates because of the Northern Hemisphere vacation, July transactions are up 42% on July '22 and revenue is up 34% on July '22. This is largely a result of new clients won and transacting. Also, we have reached 15% of our annual sales target by the end of July with a very healthy sales pipeline, pointing to another good growth year for CTM. And with this, we've got a bigger scale and integration is complete. So, our focus is a lot more aligned to the things that matter in our business. Secondly, we're encouraged by the recent survey of CTM clients that we undertook in late May. The key point here is we ask clients, will you spend the same or more on travel in the next 12 months. And we expected the first 2, client meetings and internal meetings, they are the things that we know customers travel for, but we're really buoyed by the next 2. International travel has been lagging. Now people are saying they're going to spend the same or more. 85% of clients will do that. And the other big one is same-day business trips. That has been materially lagging in recovery because of just constraints in supply and frustration and our customers are saying they expect to spend the same or more -- 84% will spend same or more on same-day business trips. The third encouraging point is the most recent Global Business Travel Association estimates to travel, which they recently upgraded a few days ago. They've said that further market recovery will likely continue. And when I look at CY '23 to CY '26, it's going to average at 7.9% per annum or roughly 2% a quarter. through to calendar '26. Now that's quite a bit higher than the long-term average of 3%. So what this means, it likely adds to CTM's EPS compound growth rates through market share gains from winning for the next number of years. So, we think that's a good thing for investment thesis. We want to remind you of our financial metrics as well. As we said, no debt, we expect operating cash conversion to return to long-term averages. James just talked about how cash really came back in July. We've reinstated our dividend payout, which gives us confidence in our cash flow. And lastly, we expect record EPS in FY '24. And we think we're probably the first people in the world in corporate travel to do that. And then what this really means, it all positions us exceptionally well for mergers and acquisitions. The corporate market was meant to be back to 100% recovery by 4Q '23 and it's somewhere between 70% and 80%, depending on the market. And also for the corporate market, comp set to survive, they got that through COVID, but often with high debt. And I think what the market seems to have forgotten about is the capital required to support returning clients, like we had to do as well, those returning clients on invoice terms as they ramp up activity. So all in all, this is combining to create some real value opportunities that we haven't seen for a long while. But before I hand over to questions, I've attached an appendix on Slides 24 and 25 that recap our original assumption to a full recovery. It's nice to look back and think just how well we're going versus the actual market outcomes. If we can go to Slide 25. This slide recaps our COVID strategy. Whilst all our peers chose to navigate it differently, often with massive capital raises or massive debt profiles, as you know, given our financial position, we had an enviable position we came into it. We acquired transformational acquisitions of Travel and Transport and Helloworld Corporate. And that's really how we approached it. And this table shut our pathway to return to $265 million EBITDA. So, I won't read it out, you can all see that. But you can see that this is always based on the assumption of 100% corporate travel recovery by 4Q '23 to happen in FY '24, yet the market has only recovered to somewhere between 70% and 80%. And for us, like Asia, the actual corporate markets only recovered to 33%. So yet despite this, why are we on track? It's really 3 factors. And I can't stress these enough. We have had a real disciplined focus to -- upon profitable market share gains. And we have won an additional $2.95 billion in FY '23 on top of the other profitable clients we've won through the cycle. And as I said with FY '23, the majority of that $2.95 billion is not trading. These flow through to '24. So as a result, we've been able to turn this growth into profits. And the proof of this is our 4Q '23 exit momentum. We said revenue is running higher than 90% of pro forma FY '19 and the EBITDA run rates are over $20 million and PBT at $16.5 million a month. So, it's just good to reflect on how we're going. Now, I think we'll probably move straight to Slide 26, just as a glossary just for those that -- I know some of the acronyms there, but we might just move to straight to Slide 27 and take questions, if we can.

[Operator Instructions] Your first question comes from the line of Samuel Seow with Citi.

Just on ANZ overrides, I noticed there was a step up there in the second half on the first half, but they're still well below FY '19 levels. Just wondering if you expect that to get back to pre-pandemic levels and potential time frame we should be thinking about?

It's a good question, Sam. I think 2 things happened through COVID. And you can see in our revenue disaggregation notes, we're moving more and more to the customer, which we think is a lot safe way to play it. But there is no doubt that international overrides are lagging and they will come back with international competition. That's why we implore the government to ensure that more aircraft are flying in and out of this country because of the high prices and so forth. But it is one of our 3 prongs to come back. It's a smaller sort of 3 prongs, but it is certainly one of them.

And then just following on from that, you've got transaction revenue at 89%. What would that look like then in a normalized world and you're shifting business? I guess I'm just trying to understand what the revenue run rate might actually be if things are normal.

I think the volume base, we expect it to come back higher. So that's just another tailwind that's not -- I mean, the good thing for us is when you look at the way we're earning revenue, being near 90% being from transactional, it's a really good sign that we're converting the revenue, the incremental profits without the tailwind of overrides. So, the way we look at it, it's just another thing in our pocket in future years.

Your next question comes from the line of Mitch Sonogan with Macquarie.

Just looking at the European results, clearly, a very strong result there. Just wondering, can you talk to expectations for EBITDA margins in '24? Just looking at FY '22 to '23, you had 78% of incremental revenue converted to EBITDA. And you made a comment about the second half EBITDA margin not being sustainable there. Just trying to understand what drove that really high conversion to profit but also how we should think about that trajectory into '24?

No, thanks, Mitch, for the question. I think you summed it up. I mean the base of $84 million is a recurring base. So that's what we're going to grow upon. The reality is the business has doubled. It's all using our tech over a large scale. So obviously, when it uses our tech, a lot of it's touchless. So, we think that all in all, something around that margin is probably sustainable moving forward for the BAU business. And then, of course, when we look at next year, we know we've won a lot of business and that's transacting. And of course, we have this other project that's about -- that's just started in June. So, we'd expect all things being equal that probably that margin is going to stack up moving forward, give or take, the full FY '23 margin.

And just touching on the bridging contract there. You mentioned it's going to contribute to result at the start of 1st of June, but you've also called out the $47 million impact on cash flow from U.K.'s government invoicing. So can you maybe just talk to that? Was there no revenue and profit recognized from that bridging contract? Or if there was, can you maybe provide a bit of detail about how much was?

Yes, sure. I think as you probably know, it was meant to start in March and it didn't. So, you can imagine that we had a lot of people employment before that date setting it up that we didn't have anything to do till June. So, I think the revenue from June offset the cost of having those people for 3 months. In terms of the cash out, a lot of it was to pay for some things on behalf of the client that were reimbursed in July. So moving forward, it's now very much like-for-like.

Your next question comes from the line of Ben Wilson with Wilsons Advisory.

Jamie, just my first question just relates to new client wins. I know you said approximately $800 million came from North America in FY '23. I assume that the vast majority of the remainder of the $2.2 million would have come from Europe, just given the strength of that region? And just interested in your thoughts on what the -- do you think you're in a position to win a similar or higher or lower level of client wins going forward?

Yes. Specifically in North America, we expect more because that was really good result for North America, but we expect more now. I think when you look at North America for what it is, right now, we've got a good reputation. We've got a very good value proposition. Everything is integrated. So now, it's the machine is just moving forward. And as I've said before, they've started the year very well. They are leading the market in terms of where they are versus their forecast as well, which they're currently exceeding. So, we expect a bigger number from them this year. And that's why we said with North America, it's another important point to note is that we don't need a recovery to get back to where we want to get back to, we can grow there.

I'm just interested in ANZ, roughly what level of EBITDA margin uplift we can expect in FY '24. I know you've said that the sort of automation uplift from the WoAG contract, probably wasn't signed until January. But just interested in your thoughts on uplift in EBITDA margins over FY '24 for ANZ.

Yes. I mean I think for us, it's a 2-year pathway back. And that pathway will probably be a little bit more skewed to FY '25 and FY '24 because of the things we're doing. So, where we sit today, our service is really good in Australia now. We're really pleased. It's at the level that we demand. But at the moment, we're still supporting 2 different systems, which isn't very efficient. So, I think when you think about that panning out, we've got to keep those people to support 2 systems until we get to December, January. It's from that point on, we'll start to see that. So, I think you're going to see an improvement of -- in margins in the second half in terms of EBITDA margins. And then in '25, getting back to the sort of margins we used to do is hopeful -- is that what we're hopeful for.

And just a follow-up to that. Obviously, the Helloworld Corporate business was a lower-margin business than CTM in ANZ pre-COVID. So, do you think you can recover to your pre-COVID margin levels as a result of the automation activities?