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

Thank you for standing by, and welcome to the Corporate Travel Management Half Year Results 2024. [Operator Instructions] I would now like to hand the conference over to Mr. Jamie Pherous, Executive Director, Managing Director. Please go ahead.

Thanks, Kylee. Good morning, everyone. Good to be here. I'm also joined by James Patterson. And together, we will present our first half 2024 results. If I can go straight to Slide 5, please, the 1H '24 Group financial results. Okay. Just a quick summary here. First, we want to say that the first half was a record result for CTM. And the 2 themes that are consistent across this presentation are twofold. Number one, you'll see that we continue to win clients well above the industry's growth. And number two, we are successfully converting revenue to strong profit growth, which we'll talk about further. And this execution is best portrayed by the key financial metrics versus 1H '23 to the side -- to the right-hand side of this slide. Revenue has grown 25% in the period to $363.7 million, but importantly, it's converting strongly into 96% underlying EBITDA growth, 160% PBT growth and 162% NPAT growth. In fact, we expect the go-forward underlying NPAT to convert at approximately 60% of underlying EBITDA well ahead of our peers. So that shows you how far we are through this cycle of recovery. Yes. As a result, we guided to a 1/3 half EBITDA skew or $87 million, but we achieved more than that, which is $100.7 million EBITDA for the first half. The next thing you'll notice is CTM is in a very strong financial position. We've talked about our share buyback program, which again will start up again tomorrow once we're out of blackout. Importantly, we have no drawn debt with cash reporting date of $131.3 million. And the good thing is operating cash conversion is back to long-term trends of 85% to 90%. We'll talk later in this presentation to our capital strategy. And as a sign of confidence of the future and our financial strength, we're declaring an interim dividend of $0.17 per share, which is a good sign. And lastly, what's really important today, we're releasing our 5-year strategy to the market, which I will go through in a lot more detail in this presentation. We expect to double FY '24 profits in 5 years. That's compound annual growth of 15% per annum, and that's at NPAT as well. And of course, acquisitions are additional of this strategy, which we want to talk about because we think the market is in consolidation phase. Okay. If we can move to Slide 6, if we can, please. Okay. As part of our 5-year strategy, we'll be making ourselves accountable to the market by sharing our key metrics that support our strategy. And I'm pleased to share that for 1H '24, we're executing a plan. As you can see on this slide, the first 2 metrics going left to right, talk to organic growth. So new client wins at reporting date totaled $0.63 billion and of last week now exceed $0.7 billion for the year-to-date. Our FY '24 full year new client win target is $1 billion, and we expect to exceed this target given the strong pipeline of new clients in the business. Next is retention. This is on track to retain 97% of our client base as we've done consistently since we listed in 2010. And the third metric talks to cost control and productivity gains, and we think that's best reflected through the metric of revenue per full-time equivalent employee or FTE. This is up a whopping 17% on 1H '23 and is exceeding our expectations. This is a large reason why we're converting incremental revenue to EBITDA well above the $0.50 in the dollar that we hope to do. Again, I want to reinforce that these metrics are achieved against the Corporate Travel market that has pretty much not recovered since FY '23 versus p.c.p. Market consensus is that the corporate segment has only recovered to 75% of pre-COVID. So we're doing well, considering we're not getting any recovery. On to Slide 7, if we can. On this just to add some awards we've won. I mean, it's important for us that we continue to focus on customer service and user experience in our business. We're really pleased that we've been globally recognized as the best travel management company across a number of industry awards from best agency, [ best-of-best ] agency and 2 key sustainability awards for our innovation of our proprietary booking to Lightning, which is really pleasing. But on to Slide 8 now, let's go through each region's performance. And if we can go straight to Slide 9, please. Again, the Group has recorded 1H revenues of $363.7 million, up 25% and record 1H underlying EBITDA of $100.7 million, up 96%. But what's important is, as you go through this slide, there's a few things that are outside our control. The 2Q '24 macro impact did impact our business. There's a few things going on that reduced client activity for this quarter. The first one, we had a negative travel sentiment related to the Middle East war. The second one, of course, which was big in the U.S. is that client travel budgets were fully utilized by around mid-September. And that was due to, if you can remember some terribly unsustainably high ticket prices and to a lesser extent, the slower outbound China recovery impact us as well. So those macro events cost us $15 million in the first quarter. But as you'll see, as we go through the regions, importantly, we've seen a very strong activity rebound in January, particularly in North America, and we think the macro impacts that impacted our second quarter have largely dissipated and are unlikely to impact the second half. Additionally, without exception around the world, we're experiencing a normalization of airline ticket prices and the recent double-digit declines in ticket prices greatly favors corporate clients. As the travel budgets were in the Northern Hemisphere reset 1 January, will go a lot further in calendar '24 than they did in calendar '23. So as we explain in more detail shortly, we have a number of significant projects and investments also designed to underpin our continue above market share growth and cost control over the long term. So let's first even go to Slide 10 and talk to North America. So again, you can see revenue has only gone 3%, which is really the second quarter impact of the macro, but we've got very strong conversion to EBITDA growth of 23%, which again shows how the business is executing. Again, North America leads away with wins, but it was clearly the most impacted region in the second quarter. As a reference point below, I talked to the big 3 airlines that operate in North America and their profits for the December quarter, as you can see on the slide. The big 3 were down somewhere between 10% and 52.5% in profits, net profits versus December quarter in 2023. At the same time, CTM was up 10%, which really demonstrates how strongly we're going in the first quarter. We still have revenue up 3% and underlying EBITDA up 23% for the half. But more importantly, as I said before, we're really enthused by what's happening in North America because we could see it in the first quarter. And the second quarter masks the growth dynamics in both new client wins and profitability that we're seeing. And the good thing is when I look at January, it looks like we returned to the strong first quarter performance we had and those 2Q macro impacts appeared dissipated. With January EBITDA is up 60% on January '23. And considering the market is about the same recovery, it shows you how well the underlying business is doing, and we're really pleased with that, with a lot of new clients transacting through that. So the other key point I want to make is our proprietary technology in Lightning is opening doors and selling itself and a large reason why we're winning clients and those clients are starting to transact. But now we're through integration. It's really important to note that our cost base is expected to remain flat in the second quarter despite the revenue growth. As a result, we expect strong conversion of revenue to profit above that 50% in the dollar target range to continue. And hence, we have good expectations of a 2/3 profit skew in the second half. Now, the result of these dynamics happening, we feel very confident that we're going to still hit $100 million in FY '25. And the next slide, on Slide 11, if we can move to that, shows it graphically what we're thinking is going on. So this slide has come about from a number of investors asking us to show how things work together. But what you can see on this slide is that there's a couple of key points. Firstly, on the left-hand side shows our FY '23 actual results in revenue and EBITDA and what we hope to do in FY '25. There's a couple of key points I want to make. We only need to grow 14% compound growth at revenue over the 2 years to hit that target. So whilst the second quarter macro impact impacted us, that's not a go-forward impact. So that's really important. Secondly, revenue conversion has to only be about 55%, consistent with our post-integration expectations. You can see on the slide previously that revenue is converting around 80% in the first half. Now the 2 takeaways that make us feel confident about the next 1.5 years and FY '25 is firstly, January '24. It was a really good outcome and August, the activity and the profit, August really well for what we hope to do in FY '25. That's continued through February. So we're really thinking that March and April are going to be at the sort of outcomes we wanted in FY '25. And secondly, we expect our costs to stay relatively flat in the second half. So as revenue comes into the business, nearly all of it's going to go to profit. And that's because we're through integration, we're starting to get the automation benefits we expected out of that integration. So you can see we feel really good about North America. If you can go to Slide 12, please, Europe. Okay. Again, this is a record revenue and EBITDA for the region, with revenue up 118% to $98.5 million and EBITDA up 271% to $63 million. Similar to North America, we're experiencing really strong revenue conversion and profit, and that's really supported in this market by the high CTM uptake of our technology and really a doubling of the size of the business and scale, which is helping supplier contracts in this region. But what I want to point out, every region is a bit different for us. This result really masks the U.K. bridging contract contribution. The project is trading significantly lower in the first half versus the initial customer expectations that we made public to the market. However, its impact is more than offset by the significant client wins transacting in Europe, and also a very strong half in other crisis in humanitarian work that included things like Israel and Ukraine. Ironically, things that gave us a macro impact in the second quarter, but this was countercyclical for the business as well as Afghanistan and Sudan. So when we look at the outlook, we don't expect any growth in bridging, which we'll talk about in guidance shortly. And given some of these, 1H projects are likely to come to an end, we think everyone that wants to leave Israel and Ukraine has. But irrespective of this, we're still expecting the underlying business to achieve EBITDA of around $100 million, which is still a 20% uplift off a very strong FY '23 if you remember. So it's still a really good outcome for the business. Most importantly in this region, we're really focusing upon what we're going to do and how Europe contributes to our 5-year strategy. We're investing right now heavily in a larger sales team to make sure that it plays its role in the future, the compound growth continues. So if we can move to Slide 13. Again, this slide I've had some larger investors asked to show how the region has changed so significantly since COVID. And I think this graphic shows it well in terms of the waterfall chart. From the left-hand side, you can see our FY '19 revenue of around $95 million. The 2 red bar charts show, again, what we've lost in client base, we're not recovering. So the client base has only recovered to 75%. And of course, lost clients at 3% per annum, which is inside our threshold. But as you can see with the green bar charts, it's really the huge amount of wins we've had in this business, BAU and client projects of around $127 million of revenue. So the key takeaway is its client wins that's underpinned this growth. Secondly, just to make it very clear on the crisis projects. Most of the crisis and humanitarian projects form part of an actual U.K. government department that manages crisis like crises, like all departments in the world, governments have parts of their business that manage this. So to put this into perspective, it is BAU to us. To put more perspective on that, since we won this business, this particular department has had 23 projects completed in 3.5 years, which is essentially one every 2 months. It's been a good countercyclical play for CTM because you can see things like Israel and so forth in Ukraine play out for us when activity declines in the rest of the business. And I also want to note that it's very, very important to make it clear that the expertise that we have -- that I guess we've expanded upon through this, we're now seeing business come from outside of the U.K. government. So we're seeing this as part of a global play into large corporations that need this sort of work that need to extract their stuff when there's a crisis, whether it be a natural event or a war event, but also other governments that don't use us. So you can read between the lines there. Okay. So that's how it looks. So I guess now if we can then go to Slide 14, ANZ. Okay, with this slide as well, I want to make it really clear. We didn't expect much out of ANZ in this half. In fact, we said to the market, we expected the first half EBITDA to be similar to 2H '23, and that's because, as we said before, we are carrying 2 sets of costs. Firstly, cost to support the legacy Whole of Australian government system and the cost to support a new system we were implementing. This is always going to be the case until the new framework commenced, and it has commenced in early February 2024. This is why EBITDA is down 21% to $18.6 million for the half. And of course, the region also experienced a 2Q sentiment impact like the rest of the world did. But we are pretty excited about Australia for 2 reasons. As part of the new WoAG framework, we implemented a proprietary hotel engine, which we can call Sleep Space, that provides best practice content, choice and user experience. And early indications are beyond our expectations. And the fact that this will be progressively rolled out through the business in CY '24 is really positive. And I'll talk to that in projects in a few slides shortly about our 5-year strategy, because we -- as we forward to the market, we think hotel opportunity in CTM has been underdone. And we think this is the catalyst to change that in the coming years. So the 2H will be about working our way back to historic margins in this region. The business is at 100% recovery in CTV. So it's really now about the revenue and the expense base that finally we can now start to optimize. So as a result, we expect revenue uplift and cost out benefits from the new government framework that started a few weeks ago, including Sleep Space. This will build through 2H '24, and as we said, why we expect the profit skew weighted to the second half. As we said before, to the market, it's the last quarter that will tell us a lot about FY '25. But a nice thing to share, too, as you can appreciate through the Helloworld acquisition and the transition through a rapid COVID recovery in activity that was difficult for us. But what I'm pleased to say is the region had its best half of client wins since COVID. We're getting some boomerang clients that left us wherever promise and coming back, and that's a testament to the strong strength in our value proposition and how settled the business is at the moment. So in terms of that, we remain confident of $70 million in EBITDA in FY '25 through the improved revenue, the fine tuning of costs through AI and automation and the new client wins. And of course, we remain very excited by Sleep Space and the impact it can have, not just in ANZ and not just governments, because we're talking to other governments in the region, but around the world. So if you can move on to Slide 15, please, Asia. Okay. Asia also had a record 1H EBITDA results despite the greater Bay Area of China or the GBA recovering to only 50%. As we said in the 2Q macro, that was slower than we forecast. Again, the common theme in the region is that it's successfully converting revenue into profit growth through automation and productivity gains, the things we've been doing through the recovery process with revenue up 63% to $32.5 million, but EBITDA up 168% to $9.1 million. As we said, that was slightly off what we thought because of the 2Q travel sentiment impact, but consistent with other regions, this business -- this region continues to win new business. And like the other regions, we've seen a really strong January rebound as that sentiment impact appears to have dissipated with EBITDA nearly doubling versus January '23. This is the only region where we expect further post-COVID industry recovery outside of normal 3% to 3.5% annual industry growth. And that's because the market in the Greater Bay Area is only at 50%, but public airline capacity announcements, which are widely public, point to further post-COVID recovery. As a result, Asia is expect to have a record profit result despite being nowhere near 100% of COVID in revenue, which is good. Okay. Now let's go to 5-year strategy. I really want to focus on this, if we can go to Slide 16, if we can, first, please. Look, we're really pleased to present this strategy to the market. Importantly, we aim to double profit and that's EBITDA and NPAT in the next 5 years, which is 15% compound annual growth. And I want to make it very clear acquisition is additional. Now before I go to the next slide, what you'll see are 3 key points. Firstly, the key growth drivers that support the strategy and what we will be accountable for, including the scorecard metrics, which we will share with the market every 6 months. Secondly, the key projects that we're undertaking to support this strategy, their impact, how we aim to identify future projects that will continually enhance both our customer value proposition and support productivity measures. And thirdly, the capital allocation that supports this strategy. So now if we can move on to Slide 17, please, and I'll quickly touch on some of these growth drivers. So you can see there's 4 key growth drivers, growth drivers and [ EBIT ] and acquisition is additional. Firstly, the first one. It's all about sustaining greater industry revenue growth, right, by winning new clients. Now we've gone backwards to say, what do we need to do to compound growth -- organic growth by 10% per annum over this cycle? And what we're sharing with you, it's going to require FY '25 new salesmen of a $1 billion, but that's going to have to progressively rise each year to $1.6 billion by FY '29. But importantly, we're already exceeding these levels in FY '23, and we expect to exceed $1 billion in FY '24. So this is realistic. Secondly, customer retention and growth in client activity offset. We've now come to the conclusion in our business, and we're being very prudent to the market that the post-COVID recovery is done. 75% is where it is, that's where it's going to stop. So from here on in, we expect -- we're being really conservative. We expect 3% growth per annum, which is lower than what the market is forecasting, and we expect to retain 97% of our clients, which means that that's a zero-sum game. So the client base is somewhat like an annuity. And again, I want to reinforce that we've delivered 97% retention every year since the IPO. So again, this is very realistic. But thirdly, it's the key projects that support the strategy, and that's the productivity, growth and innovation. And we think that by doing what we're doing, we can keep the annual cost growth of our business at 5% or below 5%. And the best way to measure the cost savings and the productivity gains is through revenue per full time equivalent, which we'll be talking to all the time. So when you look at all those things, what that really means is that it's the EBITDA growth now that will be faster growing than revenue growth. And as we said before, our end goal was that revenue dollar of revenue fall to EBITDA at 50% of -- to profit at 50%. Again, we're exceeding this target in FY '24 as we've already showed you. So again, when we put one to 4 together, what we expect is the company average EBITDA and NPAT growth will be 15% per annum over 5 years. So more importantly, this -- we think that strategy is realistic. And we've said that because we're already exceeding the 10% revenue growth or the wins we need to do that. We think our industry growth is conservative, and we've already demonstrated that we're actually converting revenue at more than 50% in terms of every extra dollar of the business coming in, going to the bottom line. But importantly, acquisitions are additional to this strategy. There is no doubt to us that opportunities are emerging, a result of 2 structural factors that's going in the corporate travel industry. Firstly, as I said before, time and time again, the corporate recovery is only back to 75%. So for our peers, that is impacting their profit and cash flow optimization because many thought like us, that by now the market would be back to 100%. And secondly, nearly all of our peers, in fact, I think all of them are highly leveraged to debt because they had to secure debt to survive COVID and they secure that debt at very high interest rates. And that debt is still accruing high interest charges. So as a result, we think there's large scale industry consolidation to come, and we think it's really likely. So, of course, as you know, at CTM, we have the strong balance sheet, but more importantly, have a strong track record of successful M&A execution, as well as synergy extraction. So again, acquisitions to make it clear, are above and beyond this 15% compound growth, but will provide additional growth. And we think, as we know, because of our execution could provide further economy of scale and shareholder value. Okay. If we can now move to Slide 18, where I want to share some of these projects in more detail. So on this slide, you can see 4 key projects we're talking to this year and into FY '25. So the first one is Sleep Space, and I touched on it before in the ANZ region. It's our proprietary hotel content engine that brings all content in and allows a marketplace between the supplier and the customer to be able to offer real-time offers to our customers. As we said, we just started to roll that out. It's rolling out through ANZ, and it will be rolled out globally through CY '24 and FY '25. Now the contribution to strategy is for our customers, it's user experience. It increased hotel choice, uptake and the user experience for our customers. And of course, for us, there's more revenue in this. It's cost us $10 million so far. But on -- as I said before, our early indications is the return we're getting is beyond our expectations. So we see this as a key part of our strategy to roll this out globally because we do a lot of accommodation around the world, roughly running around $3 billion at the moment. So to get more basis points in revenue from that is very material to our long-term strategy that's addition to our 10% organic growth for new client wins. Secondly, that's working really well for us is our AI machine learning. And this is all about better servicing customers with simple tasks. We're showing the market right now, we expect that 50% of our entire global nonrevenue transactions to be managed through artificial intelligence and machine learning, which will create more client-facing time. And of course, by that, the measure for us is revenue per FTE data, and that will support win and retention targets. So we said this half revenue per FTE is up 17%, which is beyond what we want, but this is again a key part of how we make sure that as revenue grows, the costs grow a lot slower, and we're still enhancing our user experience to customers. Thirdly, is NDC and supplier content, and that's just not airlines. It applies to hotel, which is what Sleep Space is doing. Again, it's all about ensuring that our CTM customers have access to all relevant content by CTM technology. We think NDC will be cost and revenue neutral. But of course, it's about user experience and supporting client win and retention. And as we said before, having our own booking engine and portal where our own proprietary tools is a key advantage is enabling us to rapidly move with content management in real time with our customers. So the things we've done many years ago, we see with the way the market is going is a big advantage to us because we own the things that matter, which means we can move quickly. And the last big project is Project Atlas. We couldn't tell the market about this. But now we're doing it. It's about globalizing our support services now that we've got a global footprint. And this, of course, is non-client facing, it's back in. There will be a one-off $10 million cost in FY '24, and there'll be an additional one-off cost next year in FY '25, but it's about the gains we get to support this 5-year strategy. We expect $10 million cost savings FY '25, and that will be building gradually through to FY '29 to be $20 million of savings. So getting a very good return on capital from this project. But then it's also about how we identify future projects in the business. We're not sitting still. As you guys know, we've got formal client internal feedback loops that we use to identify both customer-facing projects and internal productivity projects that enhance user experience, enhance client and win -- winning clients and retention measures, but also productivity measures. So again, we've got a number of projects before and we think we're successfully delivering these at large scale. So now if we can go to Slide 19. It's really important to understand that any 5-year strategy needs the support of capital allocation. As we said before, we're really pleased this business is now spitting out cash at long-term rates again, and we expect between 85% and 90%. So what that means that we've got 4 initiatives here that will help us immensely. Firstly, dividends. We expect to pay a 50% NPAT. Right now, they're largely unfranked due to most of our profits being generated ex AU. We just talked about those projects and how we're challenging the business to find projects to deliver return on capital of greater than 25%. We talked about the project this year, and we've talked about how those projects will be identified in future years. Thirdly, we're going to use our strong balance sheet and cash to support acquisitions. As we said, all the targets right now are currently wholly leverage of debt, a result of COVID survival and the 75% global corporate recovery. But we think there now remains a significant opportunity. And this is additional to that 5-year strategy of doubling profits in 5 years. Of course, we've done acquisitions before. We think we're good at acquisition, we're good at finding synergies. And of course, the funding strategy will be mixed on a case-by-case basis, depending on the target nuances at the time. But of course, for those that have followed the stock for a while, we have a strong track record of not just execution accretion, but looking after our stockholders and using a leverage of cash and stock and maybe a little bit of conservative debt whatever makes sense at the time. And lastly, when those first 3 -- when there's excess cash, that don't support those first 3, we'll be continuing to buy back. In fact, we'll be back in the market buying back tomorrow now that we're out of blackout. As we said before, we've got $100 million on-market buyback that commenced late November, and we'll continue that again tomorrow. So now if I can, I'll hand over to James Patterson, our acting CFO, to talk through the Group financial summary on Slide 20. And over to you, James.

Thanks, Jamie. If we can now turn to Slide 21, the Group profit and loss. CTM has delivered a strong financial performance in the first half, on revenue and other income of $363.7 million, the Group earned underlying EBITDA of $100.7 million, which was up 96%. Importantly, this result delivers strong underlying net profit before tax of $79.1 million and underlying NPAT to $57.9 million. Our statutory net profit after tax was $50.4 million. Nonrecurring costs were [ $4.2 ] million for the half, which relates to the implementation of Project Atlas. As called out on Slide 18, approximately $10 million of nonrecurring costs are expected across FY '24 for Project Atlas. We have outlined our depreciation and amortization expectations. The impact of additional spend on software projects pushed our D&A up half to $29.2 million, with a similar amount expected in the second half. This will bring our total D&A towards $58 million for FY '24 or $43 million when excluding amortization of client intangible assets of approximately $15 million. Our effective tax rate for the half is 25.3%. Now moving on to Slide 22, 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 $131.3 million, including $12.6 million of client cash. The Group's receivables and payables have decreased since June, reflecting the seasonally slow Christmas, New Year period. Now move to Slide 23, cash flow. Excluding the impact of tax and interest, the Group generated $67.3 million of operational cash flow, which gives us operating cash conversion for the half of 70%. Cash conversion was negatively impacted by the timing of rail settlement payments in the United Kingdom. The impact to cash flow as a result of the timing of these payments was approximately $20.9 million. This working capital drag will reverse in the second half. Technology-related CapEx was $18.8 million for the first half of FY '24, which is higher than previously forecast as a result of additional spend on projects, which will deliver immediate benefits and ROI, including Sleep Space, robotic process automation initiatives and AI. Our investment in proprietary software is expected to be similar in the second half with a full year software CapEx forecast of approximately $36 million. And finally, the Group's $100 million share buyback program commenced on the 15th of November 2023, with $3 million worth of shares purchased prior to the half year trading by that period. Following today's release, we will continue to buy shares under the program, which continues through until the 13th of November 2024. I will now hand back to Jamie to talk to the outlook and FY '24 guidance.

Thanks, James. If we can move to Slide 24, the outlook and trading update, if we can. Look, in order to explain the guidance impacts, we wanted to share how we built the FY '24 guidance midpoint and what has changed to make it clear to the market. And we do that on Slide 25, we're going to move to Slide 25, please. Okay. So if we can first look at that right-hand chart, right-hand side chart. The first column shows the original midpoint of EBITDA guidance being $260 million, broken down between the underlying business of $230 million and the bridging project contribution of $30 million. And the next column shows what has changed. So you can see firstly, point one. As we said before, the 2Q macro impact has a $15 million impact to EBITDA. It is what it is. But as we said before, we feel very comfortable that, that has dissipated as we've seen a strong January rebound. And we think that's unlikely to have an impact on 2H '24. But really, it's about the bridging project underperforming that's outside our control. So as we said before, the U.K. immigration challenges and timing delays, essentially, this project is trading significantly below the customer's initial expectations. And the way we built this, we knew it was building. We didn't build much into the first half, but we will build pretty much all of, as you can see in number 2 the $30 million in the second half, and it's just not happening. So as a result, we're taking conservative guidance approach. We're going to assume there's no growth from the current levels and that $25 million estimated impact to EBITDA, it is what it is. So any future activity is up from this project will be upside to guidance. So what that -- what's that mean, means the guidance being revised down. You can see revenue there, $730 million to $760 million, EBITDA $210 million to $230 million, and then we've got PBTA and NPAT. NPAT at $125 million to $140 million. Now at the midpoint, if we can go now to Slide 26, if we can. I just want to again reinforce that those 2 things outside our control, the macro. They are what they are, but the underlying business is performing well. There's 5 key points I want to make a summary. As we said through this presentation, firstly, the second -- the 2Q '24 macro impacts appear to have dissipated, and we think are unlikely to impact the second half. And that's through what we've seen in January. We've seen these big rebounds, most notably North America with underlying EBITDA they're up 60%. So we're really back on track in North America. ANZ revenue being up 11%. Again, we never expected to get double-digit growth in ANZ due to its [ sheer ] size. We thought maybe [ CPI ] plus a few percent when we take a long-term view. That's sound and now we know costs are coming out. That's going to be good for the second half as well. And of course, Asia, underlying EBITDA nearly doubling in January. The second point is we are controlling the things we can control and the underlying business is executing to plan. So when you consider that the backdrop that the actual corporate travel market hasn't recovered at all, we're doing really well. EBITDA -- I'm sorry, revenue at the new guidance, the midpoint of revenue is up 15% on FY '23. And EBITDA at the midpoint guidance is up 31.7% to $220 million. So if you think about a blank canvas in this business moving forward, with a steady or no growth market, we're already obtaining revenue of 15% growth and EBITDA growth of 31.7%, which is above our 5-year annual target. And that's because point 3. The metrics of the success that we're going to be accountable to the market for are already being met or exceeded. We said before, new client wins are doing well. We've now surpassed $0.7 billion as of last Friday. And we expect the second half '24 conversion of the new revenues coming into the business, we'll convert very strongly into profit and remain above the 50% target range, particularly North America and ANZ regions as they both benefit from a combination of the synergies I've created, the automation and the revenue builds coming in those 2 regions. The fourth point, as we've outlined again, we've got a 5-year plan. And that 5-year plan is going to deliver compound growth at EBITDA and NPAT of 15% per annum. And as we've said before, this is realistic. The key metrics that are required to execute this plan are already being met or exceeded. And lastly, to make it clear again, acquisitions are additional to this 5-year plan. We think we remain very well positioned for what we think is highly likely industry consolidation. And of course, CTM, we believe we have a strong record of acquisition execution and synergy extraction. So before I hand back to the moderator, I just want to quickly go through some appendices on Slide 27. If I can quickly go to Slide 28, if I can, Appendix 1. Again, this is a recap of a slide you've probably seen before. It showed all the way back when we came out of COVID how we build for recovery with acquisitions and so forth. And that essentially meant that we would get back to $246 million in FY '24, if the market was back to 100% recovery. And we have a little bit of growth on that as well to get to $265 million as you can see in that table. But of course, the markets only recovered to 75%. So if CTM was operating at market or 75% recovery, we've extrapolated that revenue would be about $607.5 million, and EBITDA would be $143.5 million if we are at market. But the difference, as we said over and over in this presentation is that we're tracking materially ahead of that because of our execution. We're winning market share above the market, and we're successfully converting incremental revenue into strong profit growth and ahead of our target that we hope to aspire to. And if you can go to Slide 29, Appendix 2. Again, I just want to remind you of the high-quality compound ROE model we're talking about. We're a big company. We're fourth or fifth biggest in the world. We've been doing this for 30 years. But the key point I want to bring you to now is the investment-grade metrics of this business. We've done really well since we've listed in 2010. And now what we're saying with this 5-year growth strategy, if you drew a blank canvas over this business, our compound growth just through organic means is double the ASX200 average and acquisition is going to be additional for that. And of course, we've talked about capital management. We've got -- we're trying our best to maximize shareholder returns now that things are back to normal in our business. We've got dividends. We're really looking at projects going to deliver a return to shareholders in our business, as well as future acquisition opportunities and the share buyback program. So with that, I'm going to hand back to the moderator for questions.

[Operator Instructions] Your first question comes from Tim Plumbe with UBS.

Yes. Jamie, thanks for taking my call or my questions, rather. Just 2 questions from me. The first one on Sleep Space, if possible, please. How do you think about the addressable revenue opportunity within ANZ? And if we think about that maybe against the backdrop of current run rate ANZ revenue of about $170 mill, please?

Yes, it's a good question. The thing we said, ANZ is actually back -- we're actually back to what we have to do. We're doing roughly around $3 billion in TTV, which means the activities there. It's just that we haven't had to optimize the cost of the revenue. Why Sleep Space is so good. We think about 1/3 of that is accommodation. And of course, the first client that we're doing this with is the whole of Australian government. And that is obviously a minority of the opportunity. But I think they're a great customer to start with because I've got some strong nuances, which meant that we had to build this module in a way that it was fit for purpose to anyone else because the government has different demands and nuances in a normal corporate. So what that means is that if we think how we're rolling it out, it's sort of 3 phases. We're talking to the rest of our government business, first in ANZ, then all our clients in ANZ. And I think through the -- this process in the next few days that we're talking to investors. U.S. is the next [ cab of the rank ] and they're chomping at the bit because they've got the next largest amount of accommodation as well as other client opportunities with this. So we said time and time again that we think we're underweight in revenue from accommodation. We're really grateful to the whole of the Australian government for trusting us because they were a test case that we had to build this for. And I'm really proud of our team, too, because we delivered this not just on time. It's a big project, but it's gone exceptionally well and above our expectation, which I'm really pleased with our team because it's showing they can do big projects that are complicated on time and as planned. So when I take a view, we're seeing this in the next 5 years as a key plank. And if you look at organic growth, we've talked about 10% organic growth. That's just by winning clients. We're hoping that Sleep Space can mean that only we grow that 10% compound growth of revenue, but that helps that incremental dollars per transaction, we get a little bit more out of every transaction that happens in the business.

Got you. And the second question, just around your comments around the Corporate Travel market, 75% recovered and staying there. Are you referring to the number of trips TTV here? And is that kind of consistent with what you're seeing across all of your geographies? I'm just thinking in terms of ANZ recovery?

Yes. It largely fits transactions. So some of you see obviously price the way through the roof, but we're a transactional-based business. So it's roughly 25%. I've given you a few pointers there. I mean, the latest, the [ saver ] that came out and said the same thing. So we're all seeing the same thing. The only exception that is Asia, which is roughly at 50% because we've got an overweight to the Greater Bay Area. But our conservative view and prudent view is we're just going to accept now that, that's it. it's done at 75%, that the market is going to just carry on like it always has, where it's going to go at 3%, 3% plus per annum. And if it does more than that, that's upside. But we're trying to do is reset our business for the reality of how things are. And I think we made it really clear that what we're trying to do in the next 5 years by doubling profit organically is that those key metrics of organic growth, retention and how we're going to get the productivity gain through artificial intelligence, ML we're already doing. So that's how we're really focusing the business. Let's get our 10% compound growth. We'll squeeze more than that to the bottom line as we've always said. We're working really hard on those 3 metrics, and we're going to be accountable to the market metrics. For every 6 months, you're going to see us talk to those metrics.

Got you. So just so that I'm clear, if ticket pricing coming down, resulted in increased transactions, that would be upside versus what you're underlying...

Yes. There's no doubt. I mean, I called out North America purposely. I mean there was -- it's something we would have never imagined, right, that customers run out of their budgets. And that's because, as we all know, you all travel, it's been [ obscene ] The prices were unsustainably high. We never saw that coming. And that's a big part of the second quarter, that's outside our control. But our customers have said to us through that period that, hey, look, we know that they're coming off materially. And that's a really good thing for us. So that 1 January, we're resetting, particularly in North America. And that's a good thing because customers transactions can go further, right? If prices are off, and some of them are off quite significantly actually. That means they can do what they want to do at a lower cost. And I think we're seeing that North America for January to have profit up 60% on the prior year is pretty solid, right? It's a big business. And that's where we really feel good about that.

Understood. Thanks for taking my questions.

Thank you.

Your next question comes from Julian Mulcahy with E&P.

Jamie, just a question on the U.K. contract. I mean there's still plenty of [ asylum ] seekers being lodged. So what is it about the nature of your contract? Was it just new arrivals that were going to drive your growth?

Yes. It's a lot of things, I think. I think it's how -- how they chose to manage it. Look, I can't say too much other than to be fair, that the government are doing an excellent job of turning things around like no other. They have -- they've moved a lot of people very quickly out of asylum and on their way. I think the other thing for us is that there's some things that they'd like us to do that I can't so much more than -- if you look at what's going on over there, it's politically difficult at the moment to put new people into things. I don't think at the moment, for example, in a perfect world, we would have all assumed we'd have a dozen cruise ships going by now. But right now, that's not very acceptable politically, right, as you could see from what's happened in the last 6 months. So our strong view is we have a very good relationship with the government. As you can see from other projects, we still get other projects that aren't that. We're just taking a very conservative view that it's done. Maybe after the election, things might change or who knows what. But I think we're just trying to reset the market and focus on what we're trying to achieve in the next 5 years.

So to be clear, because they're not being relocated to the cruise ships, for example, that's why you're not getting a transaction and they're still being culminated where they were previously?