Experience Co Limited (EXP) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Experience Co Limited FY '25 Half Year Results. [Operator Instructions] I would now like to hand the conference over to Mr. John O'Sullivan, CEO.

Thanks very much, Michelle. Thank you, and good morning, ladies and gentlemen. As Michelle said, my name is John O'Sullivan, CEO of Experience Co. And with me today is Gavin Yates, the group's CFO. This morning, we'll be presenting to you Experience Co's first half results for the year FY '25. And as outlined on Slide 3 of our pack and as per previous practice, this morning's presentation will be divided into 4 main parts. Firstly, I'll provide a business update from the half -- from business operations, Gavin will then talk you through the key financial information that's contained in the pack. And then finally, we'll provide a brief trading update from the month of January. Following that, we're happy to take questions at the conclusion of the presentation. Turning now to Slide 5. And whilst Gavin will take you through the financial results in more detail, at a high level, the business produced some pleasing results for the half. Sales revenue was up 9% to $67.9 million. Underlying EBITDA was up 49% against PCP to $10.6 million with both operating segments producing growth in underlying earnings. The business recorded a net profit after tax of $1.4 million, which was up from a $1.3 million loss in the same time last year. And then cash and cash equivalents was $10.7 million, up from the end of FY '24 of $8.2 million and net debt was at $6.8 million versus $8.9 million at the end of FY '24. Turning now to Slide 6. The half saw a continuation of the trading momentum that we've outlined during the course of our Q1 and Q2 '25 updates to the market, primarily driven by our Adventure Experiences segment. Our Skydiving segment has benefited from both the network simplification measures implemented during the half, along with the continued focus on load efficiency and operating site performance. Volume growth on PCP was primarily out of the Australian side of the business despite it having 2 less drop zones from the end of the first quarter, with sites such as Airlie Beach, Cairns and Wollongong all comfortably exceeding volumes on a PCP basis. The New Zealand business experienced more weather impacts, particularly during the Golden Week holiday in October, but still finished ahead of PCP off the back of growth out of our Wanaka drop zone. Supporting this, our Aircraft Operations division, Performance Aviation also benefited from continued focus on securing external revenues for aircraft maintenance and crossfire as well as the simplification of the Skydive network. Turning our attention to the Adventure Experiences division. All operating units within this business unit have benefited from resilient domestic customers despite the macroeconomic settings in both Australia and New Zealand and an improving inbound market, particularly for the Reef Unlimited business unit. Newly invested into or revised experiences such as our Reef Magic Pontoon, Dreamtime Dive and Snorkel as well as our new Treetops Park in Canberra and Zip Coaster attraction on the Central Coast provided positive momentum across these business units. Wild Bush Luxury also traded ahead of PCP, aided by stronger volumes for the half for our walking business as well as cost-out initiatives taken across the business unit earlier in the financial year. Turning now to Slides 7 through to 9. These slides present the further color to the inbound recovery story for Australia in particular, and the continued opportunity for the group. On Slide 7, what we see at a macro level with inbound visitation into Australia that whilst aviation capacity is at close to 100% of FY '19, driven primarily by North American and Middle Eastern carrier capacity, we say that visitor arrivals still remain below pre-pandemic levels, whilst outbound travel by Australians is now above those levels. Within this, visiting friends and relatives is close to pre-pandemic levels, whilst the holidays at November 2024 were at 73%. This all said on Slide 8 shows the outward projections held by the Australian -- both the Australian government and also Oxford Economics, which show that the recovery in the growth of arrivals out to 2029 will continue with both parties projecting that over the next 5 years, the growth in inbound visitors to Australia will exceed levels from 2019. Finally, on Slide 9, we demonstrate the more immediate opportunity for the inbound recovery presented to the group, particularly as we look at the recovery rate versus 2019 via the purpose of travel of all markets and then also China. Bearing this in mind as this was taken in September 2024, we can see that the Chinese holiday market for Australia was still less than 50% recovered at this stage and still lags the rest of the world markets. All of the 3 of these data points present both the longer-term and sustained opportunity as well as the short-term opportunity for the group. I'd now like to hand over to Gavin, who will take you through our financial results in more detail.

Thanks, John, and good morning, everyone. Just focusing on Slide 11, financial performance. The first half results are consistent with the Q2 trading update released to the ASX platform on the 29th of January. As John indicated earlier, it's pleasing to report that positive momentum continued for Experience Co during first half '25, with the business reporting improved volumes, underlying earnings and importantly, free cash flow. Revenue of $67.9 million, representing growth of 9% versus PCP and underlying EBITDA of $10.6 million, representing growth of 49% versus PCP, represents Experience Co's strongest first half performance since the onset of the pandemic. Both the Skydiving and Adventure Experiences segments reported improved performance during the half, with underlying earnings growth more pronounced for Adventure Experiences. Pleasingly, Skydiving performance improved despite the impact of weather on volumes for both our Australian and New Zealand operations during the half. During the half, the business benefited from the continued recovery of international visitation and steady domestic volumes against the backdrop of challenging macroeconomic conditions. All business units reported growth in volumes versus PCP other than our Wild Bush Luxury accommodation volumes, which experienced softer trading conditions. A key highlight of the half was improved operating margins driven by improved volumes, site efficiencies and cost management. During the half, management continued its focus on a group-wide cost-out program, which since its commencement in late 2023 has yielded annualized group-wide savings of approximately $2.5 million by identifying efficiencies at both a corporate and an operating site level. As John noted earlier, the group reported a statutory profit after tax of $1.4 million for the half, which is a notable improvement on the loss after tax reported in the PCP. Moving to Slide 12, Skydiving. The Skydiving segment continued its recovery during the half, aided by the ongoing return of inbound markets into Australia and New Zealand. Segment revenue growth of 4% versus PCP and underlying EBITDA growth of 9% versus PCP was primarily driven by improved volumes and operating efficiencies at a site level. In terms of volumes, as can be seen in the bottom left chart on the slide, Skydive Australia reported growth in Tandem packs volumes of 4% versus PCP with a strong second quarter performance offsetting the impact of significant weather disruption in the first quarter. The second quarter performance was particularly strong given it represented a record 64% of pre-pandemic volumes and was achieved with 2 less drop zones operating. As can be seen on the bottom right chart on the slide, Skydive New Zealand reported growth in Tandem packs volumes of 6% versus PCP. However, opposite to Skydive Australia, Skydive New Zealand's performance was characterized by a stronger first quarter performance, which offset the impact on second quarter volumes of weather disruption, including during the key Golden Lake trading period. Despite the impacts of weather disruption during the half, the Skydiving segment experienced a level of improvement in operating margins versus PCP, which was driven by stable average revenue per customer and cost base improvement. During the half, management continued to take a disciplined approach to pricing within the context of the existing price points of the experience and cost of living and travel pressures for our customers. Average revenue per customer for the segment remained in line with PCP and was supported by continued strong uptake of photo and video in both markets. Management also continued to implement initiatives to enhance operational efficiency and optimize asset usage across the network with improved packs per load efficiencies achieved across the network during the half. As reported to the market in our Q1 '25 update, 2 Skydive Australia sites were placed in care and maintenance in mid-September 2024 as part of these improvement initiatives. This allows us to simplify the network structure and provides opportunities to optimize the asset usage and capital requirements of the business. Accelerating the improvement in performance of the Skydiving segment continues to be a priority focus of management. Moving to Slide 13, Adventure Experiences. The Adventure Experiences segment reported a strong performance during the half with growth in revenue of 14% and underlying EBITDA of 40% versus PCP. All 3 business units within the segment reported improved financial performance versus PCP. However, overall performance was led by the contribution of Reef Unlimited and Treetops Adventure and was driven by increased volumes improved average revenue per customer, and cost control. Reef Unlimited volumes remained strong with a growth of 7% versus PCP as it benefited from the ongoing recovery of international tourists, steady domestic customer bookings, and the absence of significant weather events. Reef Unlimited also reported an 8% increase versus PCP in average revenue per customer, which was influenced by the product mix, price increases, and stronger onboard sales. Shifting to Treetops Adventure, it also had a strong half with the business unit reporting volume growth of 6% versus PCP, driven by the contribution from new site attractions and resilient volumes at existing sites. The Canberra site opened in April 2024 and continued to trade strongly and ahead of business case expectations. Additionally, during the half, the business unit reopened the Zip Coaster attraction at the Treetop Central Coast site, adding to the existing ropes course and net-world attractions at the site. Multi-attraction sites represent a key focus area for future growth. The performance of Treetops Adventure was also enhanced by average revenue per customer growth of 11% versus PCP, driven by price increases and the continued focus by management on increasing the average site spend of customers through initiatives such as enhanced food and beverage offerings. Finally, turning to Wild Bush Luxury. The business unit also reported improved performance versus PCP, driven by improved volumes and cost management, offsetting softer accommodation volumes. The segment continued to experience the impacts of Australians traveling outbound as well as a more gradual inbound market recovery. Turning to Slide 14, balance sheet. Experience Co's balance sheet included cash of $10.7 million and net debt of $6.8 million on 31 December 2024, which are an improvement on the 30 June 2024 balances. The business also continued to maintain strong tangible asset backing, largely attributed to Experience Co's large fleet of aircraft and marine vessels. As can be seen at the bottom left table on the slide, the group's debt facility with CBA remains available to support the business. On 31 December 2024, the market rate loan facility, which is currently the key facility available for growth initiatives had $16.2 million of undrawn funds. Finally, turning to Slide 15 and cash flow. Firstly, just in terms of the tables on the slide, we've included some additional information to provide further insight on the underlying free cash flow of the business, specifically the middle and bottom tables. The top table represents a summary of the statutory cash flow statement reported in our interim financial reports. A key highlight of the half was the improved underlying free cash flow generated by the business, as can be seen in the table at the bottom of the slide. This was a function of 2 key factors. Firstly, the business maintained strong conversion of EBITDA into cash flow during the half with underlying free cash flow improving in line with business performance and inherent operating leverage in the asset base. Secondly, during the half, maintenance CapEx remained at a similar level to PCP and is primarily driven by scheduled maintenance activities at the aircraft and vessel fleet as well as equipment renewal for Skydiving and Treetops Adventures. As noted earlier, during the half, management implemented network simplification measures to help optimize aircraft maintenance schedules. In terms of growth CapEx, the key investment during the half was the purchase of interest in a hangar facility and related equipment at Shellharbour Airport, primarily to secure our position at this key location for our Skydive Australian operations, which was previously leased. In terms of the net cash outflow from financing activities of $1.8 million, it primarily comprised scheduled principal repayments for our CBA equipment loan facility and AASB 16 lease liabilities net of a drawdown of $1.3 million to fund the purchase of the Hangar. It's noted that the PCP included cash flows associated with the December 2023 refinancing, which limits comparability. Looking forward, improving the free cash flow of the business will continue to be a priority focus area for management as well as building out the pipeline of growth projects with a particular focus on Adventure Experiences. I'll now hand it back to John.

Thanks, Gavin. Just before we hand over for questions from the call, just turning our attention to Slide 17 and the trading update. As we reported to the market during our quarter 2 FY '25 update, January was a strong trading month for the business with all business units having stronger PCP results in both revenue and underlying earnings, with the business at a group level recording an underlying EBITDA of $3.7 million versus $2.8 million in the prior corresponding period. Of note for this month, Skydive, in particular, was a strong month for both our Australia and New Zealand operations due to good demand from both domestic markets as well as the commencement of the Chinese New Year trading period at the back end of the month. In Adventure Experiences as a division, the results were ahead of PCP with Treetops Adventure and Wild Bush Luxury both finishing well ahead of first half '24 results, with Reef Unlimited having a similar operating performance for the month despite being more impacted by weather events during that time. Subsequent to the first half, you will note that during the month of January, the business also purchased a new vessel using our CBA debt facility to augment our Reef Unlimited business. We believe that this business will be very complementary to our operating capacity in the region, and we look forward to welcoming this vessel into our operations from April of 2025. As we sit here today, management and the Board's view of the longer-term earnings potential remains unchanged with the continued recovery of inbound markets and the domestic consumption remaining the key sensitivities. This said is optimism around the longer-term recovery of inbound tourism into Australia and New Zealand, along with recent interest rate cuts, both here and also in New Zealand, and have given management the belief that the continued momentum experienced during this half should continue into the remainder of the full year. Thank you, as always, for your attention, and we're now more than happy to take questions.

[Operator Instructions] Your first question comes from John O'Shea from Ord Minnett.

Look, I just wanted to sort of flesh out a little bit more what you're mentioning about that new vessel, John. Can you perhaps give some sort of idea of how you're thinking about the sort of payback on that particular type of vessel and sort of a rough time frame around payback there? And maybe just you mentioned about your confidence around the inbound side and given your experience in the past, sort of how you see that playing out in terms of the Chinese market, given how important that is, particularly to your Australia and New Zealand business?

Yes. So I think from where we're sitting on the vessel, we see a really good opportunity in that market to add capacity to our existing fleet. We operate up in cans with about a 30% market share out of that marina. And we've seen once we've invested organically into new projects such as the Reef Magic Pontoon, there's a fairly quick payback on that type of experience because the market does respond to new experiences in that particular market. So we see this vessel primarily as adding its optionality, both out of Cairns and Port Douglas. We see it as a vessel that can be utilized to double capacity in certain experiences during peak times. And as we've seen during the course of January, a number of our competitors weren't, for whatever reason, able to operate during certain weather conditions and other times. So we were able to take advantage of that, and this will give us further opportunity to do that. In terms of payback, I mean, look, the way that we that we're thinking about this. We think that this investment will pay itself back within a 4-year time frame. We think that the earnings on this will be very strong. And as I said before, we've seen that organic investment into our Reef business up in North Queensland has produced good results. I mean the Pontoon, for example, has already paid itself back since that investment was made. As to the longer-term recovery of inbound into Australia, I mean, I think as both Oxford Economics and the Australian government have outlined, it will be a steady recovery out through to 2029. I think we're now starting to see a bit more normality returning into the market. And certainly, with the aviation capacity settings as they are, we certainly see that, that will continue. And certainly, in places like Queenstown, which I know is separate to Australia, we've seen that, that market has responded incredibly quickly and is now operating near to or exceeding arrivals that it was pre-pandemic. So in both markets, we're feeling pretty optimistic that this will continue. And then importantly, what we've seen even during these macroeconomic conditions during the half, we've seen that domestic trading has been quite resilient.

The next question comes from Eric [indiscernible].

How do you anticipate the potential impact from cycle outfit on your operations? Have you sort of taken any steps ahead of the cycle?

Is this the one emerging up off the Northeast at the moment?

Yes.

Look, we haven't seen any -- Eric, we haven't seen any sort of impacts from that emerging weather event. I mean -- and it really will depend on, I guess, how it impacts the region and is what we've learned over the years dealing with Jasper and other things is that these cyclones can sort of emerge and then they disappear and then they can come back again, and it's hard to track. But we haven't sort of forecasted or looked at any potential impacts on the business up there.

The next question comes from Allan Franklin from Canaccord Genuity.

Good to see the free cash flow building on through. I just had a question on the January number. And I guess just sort of reflecting on that and then sort of looking into February, March, April, just sort of intrigued how you're thinking about the sort of balance of the -- or sorry, your experience of the balance of Chinese New Year and how you might be thinking about Easter being later this year versus last? And if there are any other sort of particular months or period we should think about whether you're cycling a strong period or a weak period, please?

Yes. Thanks, Allan. Yes. I mean, I guess as we sort of outlined, January for the business was a solid month, particularly if we look across December and January over that sort of key sort of Christmas, New Year period, we were pleased with how the business operated. We saw improved margins across the business. With respect to Skydiving, we did see improved operating leverage across, and it really sort of highlighted the potential of that business when it isn't hampered by weather. We saw -- it was a period where we saw both improved volumes and improved packs per load efficiencies. And certainly, relative to the first half performance, we just sort of zeroing on those 2 months, the margins were higher with the business unit closer to that sort of the 20% level overall relative to sort of the 12% that it reported in the first half. So that's encouraging. And certainly, as we've sort of outlined a number of the measures that we've been implementing over time is starting to bear fruit. And obviously, we'll continue to do so and maintain that focus moving forward to accelerate the recovery of our Skydive business. Obviously, in terms of Skydiving overarching volume, the second half of the year is generally a bit stronger than the first half, with the first half of the year, obviously, having Q1, which is under winter, which is a seasonal low period. So obviously, we'd expect that volumes might be a little bit stronger half-on-half over the second half with obviously the China or the Lunar New Year period, which I'll let John talk to one of the key sort of periods within that trading time frame.

Yes. So in terms of Lunar New Year, which sort of started at the back end of January and then went through, if you go to all the markets that are covered by Lunar New Year goes through to about the middle of the month. I mean what we've seen is, certainly in New Zealand, we saw -- we had a good Lunar New Year from what we're seeing. And I think importantly, in Australia, the way that we would describe it is that the underlying demand has been there, but there has been some more inclement weather, in particular, in locations like North Queensland and also for Skydiving down in Victoria. But what we saw in markets like Wollongong, where, generally speaking, that's where the bulk of our Chinese tourists for the Skydiving Australia segment will tend to gravitate towards. We certainly saw that, that business was on a PCP basis, the volume for February, we're seeing that it was up in double-digits, so in a percentage terms, so around about, I think, probably close to 20% on a year-on-year basis for that site, particularly. And certainly, in other locations like Byron Bay, we had -- certainly had a strong response to the trading period. But it was more impacted by weather. And in North Queensland for the Reef Unlimited again, we saw Reef Magic responded well despite the fact that we had a number of days where we had to cancel operations because of the weather. But certainly, what we're seeing in the market up there, though, is, I guess, a more aggressive targeting of group series, which we just don't go for because it's profitless volume. So in some of our experiences that they probably will have a different outcome. But we're still waiting to see what the month holds to wrap that up. I think in terms of the other important trading period for us will obviously be the Easter and April school holiday period. So that's the that's the next important trading period for the business. So if you think about -- in the first half, it was around about October and then December. In the second half, it's around January and April as those important trading periods.

Perhaps just on Adventure Experiences, obviously, some strong cost control there and great incremental drop-through in that first half. Just moving forward, how to think about the sort of cost growth? Should we think of sort of more aligned to revenue growth on a look-forward basis? And just when you do roll in the vessel, how does that sort of change operating costs or as you're sort of alluding to, it's incrementally earnings flow through with that. So just sort of timing of that it will be in the numbers from April, so we can obviously think about a bit of growth helping FY '26 Adventure Experiences, if that makes sense?

Yes. So I mean, going back to France, I mean just in respect to the vessel, I mean, John already talked through, I guess, some of the overarching economics around the purchase. And yes, I guess it goes without saying that with those payback period that John mentioned that there's an incremental drop-through of margin or earnings on top of what we've reported for the first half. Obviously, it will take time to come through. I think it's due to be in service from the end of March, I think, is the targeted time frame at this point. But yes, that will be on top of what we've done. In terms of, I guess, the broader cost and the margins of the business, I think if I look at Treetops I guess what we saw across the half was growth in revenues and that was sort of if I look at -- unpack that a little bit, it was definitely growth volumes being driven by new attractions, which the Canberra site, in particular, has been, as I said earlier, has been performing really strongly. But then in terms of the balance of the sites, they have shown resilience across and albeit, I guess, without new attractions in the current economic environment, we'd sort of currently expect them to sort of trade at similar levels. And I guess with the margin, the margin is generally around a similar level to what it's been historically. With the Reef, I think, as I said, the Reef margin is probably something similar as well, albeit we'd expect some absolute drop-through of earnings with the addition of the vessel.

Just a quick one on that vessel, sorry. So I mean, just to the extent it's a purpose-built vessel or where did you source it And just the scale of that vessel versus what is in the market with competitors and I guess, compared to your existing fleet?

Yes. So we sourced it from private owners in North Queensland. It was a vessel that it was built and commissioned, I think, at the end of 2022, '23, hasn't been operated commercially. So it's as new. And that was after we looked around Australia for a number of other vessels. So we looked at other, I guess, pre-used vessels, and we, in fact, passed on a number of vessels from other operators in the region or around Australia. So we sourced it from up there. Look, it has -- the way the vessels work, Allan, is that they get surveyed for certain classes. And so this has -- the great thing about this vessel, it has 2 survey types, one that allows us to use it for like a ferry commuter vessel and another one that allows us to use it basically as a substitute or an additional vessel for some of our other operations up there. So the operating capacity is anywhere from about 195 passengers and 5 crew to about 225 passengers and 5 crew. And that for us is probably the ideal number. As I said before, we're not a business that chases some of the group series business, particularly out of the Eastern markets like some of our competitors do. So that size vessel for us is right where we see the opportunity for the market, for the FIT market in particular. So that's the way we're thinking about it. The beauty of the vessel is that if we see additional demand for, just say, an outer Reef Cruise up in Port Douglas, we can deploy it up there to take advantage of that. Equally, as we've seen before with some of our services out of Cairns, there are times of the year where we -- if we had another vessel of a similar size, we could deploy that to sell more experiences out of that market. And then it also opens up for -- there's quite a bit of business event activity that is becoming more of a trend up in North Queensland. And then it also gives you redundancy if you have a vessel breakdown. So I guess it's kind of like all of the above, and it's a similar operating capacity to probably 90% of our fleet with the exception possibly of midcap, which is quite a large vessel that operates on the Green Island run.

The next question comes from Julian Mulcahy from E&P.

John, can I ask about the mix of customers you're seeing in the Skydiving business now? And are you kind of relying on the Chinese coming back and forth to get back to sort of past margin?

Yes. So I think the way to think about the Skydive customer base in Australia and also over in New Zealand, Julian, is there's a domestic component. There's a, I guess, a rest of world component, which is primarily built out of your traditional backpacking markets like U.K., Germany, Italy, also markets like the U.S. and then you have your Eastern markets, which are primarily built around, obviously, the Chinese market. I guess the way to think about it, where are the -- where do we need to continue to build out to get back to where the business has been previously. I mean, obviously, China is a key part of that story. So that we're focusing a lot of efforts on that market, but also the domestic market, particularly in Australia as well. So whilst we've seen periods of really strong trading out of Australia, so December and January, which are traditionally big months for that Australian customer. We probably haven't seen that demand as strong in other months. So that's the area that we're working on. The backpacking market, that Western market is probably getting close to sort of 70-odd percent of the way back. So that market is certainly progressing well. But the 2 markets that we're really focusing on in that business unit are your Australian domestic market and then that Eastern market, in particular, the China market, but also Taiwan and also Hong Kong, which feature prominently as well.

And are there any like strategy to get the promotional just to get the volumes through because I imagine the incremental margin on each passenger is pretty high.

Yes, that's right. So look, it's certainly, don't want to divulge too much to competitors that might be listening in. But certainly, within Australia, we think there's a lot of opportunity in the direct-to-consumer market. So we've obviously -- back during COVID, we've obviously invested in CRM technology. We're spending money on Google search ad words through social media. We'll start to probably start using more influencers as well to appeal to that market and then also just sort of general sort of presence within the local communities we operate in. Your inbound markets are a little different in that they're very much driven by -- yes, there's a direct component, but they're very much driven by third-party distributors. So for us, it's been really focusing on those inbound travel agents, the online travel agents as well as some of the wholesalers in market. So for example, next week, we'll have our Chief Commercial Officer will be in China as part of a tourism roadshow, basically building out those relationships. So it's -- there are different strategies for different markets because the way they consume the experience is different.

And just on the Adventure business, that's where you seem to be getting the best margins and returns. And I hear that -- I mean, I guess you're buying a vessel, but are there any more sort of capital-light expansions you could do to continue to grow that business?

Yes. So certainly, what we're doing at the moment is we're looking through. We think, as we've said before, we think there's a particularly good opportunity within Treetops Adventures for that. And as we've seen with the Canberra site, I mean, we built that site for $1.3 million, $1.4 million, it will have a payback period sort of within 2 to 3 years. So we certainly see that organic rollout of that vertical has certainly got some opportunities. But then also looking at, as we've alluded to before, I guess, increasing dwell time within the existing sites and working within the local sites on things like food and beverage as well as increasing average revenue per customer, which is what we've spent a lot of time doing during the first half. And we are just currently scoping out what parks we're able to put in additional attractions into. So we've seen already, for example, but reintroducing the Zip Coaster in the Central Coast has had a positive impact on momentum. So we certainly think that philosophy of organic enhancement of that business unit is an opportunity. We've already done that on the Reef. And I guess this is the second time we've done that post the Reef Magic Pontoon. And even within Skydive Australia, the teams are always on the lookout for either new drop zone locations or additional parachute landing areas so that the processing rate for that business unit, particularly, can improve so we can take advantage of that increasing underlying demand that's there.

Right. And is there any plans for Zip lines in sort of metropolitan areas, CBD...

Yes, we're always open to that. But I mean the -- it's increasingly -- one of the things we certainly learned is that it all comes down to the, I guess, the malleability of the local government authorities and landlords. And certainly, what we found with trees is that local councils, private landowners, forestry departments generally have a -- you're able to get things done more quickly. But we're always open to those ideas. We have got an urban-based version of that vertical up at Sunshine Plaza at Maroochydore. And look, that has a higher capital cost. But there is certainly that option, I guess, to look at that. But primarily, where we're looking at pipelines and organic growth in that business unit is enhancing existing sites, increasing dwell time and then looking at other locations that complement where its existing footprint is.

We broke down here in Victoria. I'm sure the government would rather stand any idea.

That's right. Well, you think so but we are looking at Victoria and Southeast Queensland as priority locations to expand the BA.

The next question comes from Charlie Kingston from K Captial.

John, just a few quick questions. Firstly, around the strategic review that didn't amount to anything, I suppose. And I think we were trading around $0.13, $0.14 prior to that or a bit higher actually, prior to the announcement, but compared to where we are today. Obviously, it's a bit awkward if nobody wanted to buy the business privately. So for listed market participants. It's a bit of an awkward proposition. But can you just provide some more color around that strategic review? Was there a bid for the entire company at a higher price than what we're trading at today? Was the strong interest in particular segments of the business? But yes, just appreciate any color that you can share around that? And maybe are you looking to sell divisions? Is there an ongoing process? Or what's the status, please?

Thanks, Charlie. Always good to hear from you. Look, I think we've been through the results of the strategic review. Those materials are published online in our Investor Relations section of our website. We went through it during the AGM, and we've also briefed institutional shareholders on the outcomes of that. And I think the overarching feedback, you might see it as being embarrassing. I guess we don't sort of see it that way. We sort of saw that there are a lot of learnings that we took from it. The overarching feedback was that the platform was good and that there were interesting assets within it. So I think we've been through all that and prosecuted all of that. So I don't think there is any further time to sort of go over that or really talk about where the share price was or where the share price is. So we're just really focusing on operating the business, which was underlying was the key feedback that came out of it was deliver on the operating improvements of the business, and that's really what's going to drive value for your shareholders and other things. As for portfolio composition, look, our Board is always open to that. And we've proven that since FY '19 when we went through a quite a radical reshape of the business. And like any company, we constantly review that. So I'm sure that answers your questions.

Yes. And then look, on a positive note, well done on the free cash flow. That's very good to see that finally translating. So that's great. But is it fair to annualize that half number to circa $9 million? I'm not sure what the seasonality is. And I suppose if $9 million for an annualized figure is fair, the enterprise value of the company today is around about $90 million. So 10x post-tax-free cash flow seems very cheap. But are you looking at any capital management to return that free cash flow to shareholders, dividends or potentially buying back the stock given we're still trading at $0.12 and is there a free cash flow target going forward, noting the historical target of what was it $40 million EBITDA, but is there a free cash flow target that you could put out to the market so we get a sense of what your aspirations are, please?

Yes. I mean, going back to front, I guess, just in terms of the target, I mean, we're not providing specific guidance. I think what we're focused on is just providing color around the underlying improvement in the business. And we certainly saw that in the first half. And we remain focused on that for the second half. In terms of the deployment of that free cash, I guess that's something that John and I can work through with the Board. As you've seen, we've got a combination of undrawn funds in the debt facility and then improving free cash. And I guess, like all businesses, we go through the options with the Board. And I guess we select the options that we feel are the best at that point in time based on the information at hand.

Okay. So nothing currently being discussed for buyback or dividends?

We'll make those sort of announcements, Charlie, in line with continuous disclosure obligations, which I'm sure you'll appreciate.

The next question comes from David Kingston from K Capital.

Look, just a couple of quick ones, John. Look, you raised capital at $0.33 a while ago. I appreciate there have been some challenges. But as a significant shareholder, I would have thought it's more appropriate to look to pay dividends soon, particularly for shareholders who paid $0.33 rather than too much focus on growth. But secondly, John, Wild Bush, I'm not sure how big it is, but certainly, it's a small business. In my opinion, it would be good to let go some of the small businesses, which are arguably a distraction. And finally, John, you continue to say that the Board is hopeful of returning to the earlier target of $40 million EBITDA. But do you have a time line for that, John? So just 3 quick issues, please.

David, I think just going back to front, as we said earlier, in terms of that underlying earnings target of $40 million, we originally sort of thought that, that might be sometime during the 2025 calendar year. We think that, that's probably going to be pushed out now in line with where the inbound recovery is going to be and obviously, the domestic recovery issues as well, which have always been highlighted as key sensitivities. So I think that's currently where we're sitting on that particular issue. On Wild Bush Luxury, I think we answered this in Charlie's question, we're always looking at the portfolio composition. So I'll just leave it leave it there. And on the capital management, that's something that we'll constantly discuss with the Board.

John, I understood that the $40 million has been termed out from 2025. Can you give us any guidance? Is it 2026 now?

Look, we're not providing any guidance, David. We just think the 2 key sensitivities are, as we've said before, inbound recovery, which has been pushed out and also the domestic sensitivity. So the business hasn't provided guidance before. We don't intend to now. And as I said, we pushed that $40 million target out by sort of 12 months or so, but we'll review that at the end of the financial year.

Okay. No, that's fine. All I'd say in conclusion is from a shareholder value point of view, John, unfortunately, I bought some at a fairly cheap price. But I do think you've raised a lot of money at high prices. Those shareholders had no dividend. And I do think it's important to look after the shareholders who are supporting it. But other than that, thank you and good to see you've got some positive cash flow, John.

The next question comes from Laura Kina from Laura Kina Limited.

I just had a quick question. I know you said that a lot of the efficiencies came from the optimization in the network and 2 of those being Skydiving drops into care and maintenance. Is there a strategy for kind of following on to David's question actually, for some of those smaller businesses to go into care and maintenance or be sold off? Is that any of the discussions that was happening?

Look, I think I've answered this a couple of times, Laura, and thanks for the question. The Board and management are always reviewing the portfolio composition of the company. So that's probably the best way to answer that question. I mean the decision around the Skydiving sites was around optimization of the network and also the ability to redeploy some capital assets in locations that were more appropriate. So it was a little different in the decision tree. But look, we're always looking at the portfolio composition. We've done that since FY '19. And like any business, it's constantly under review.

Sir, would you like me to remind for more questions?

No. We're all good. Thank you.

There are no further questions at this time. I'll now hand back to Mr. O'Sullivan for closing remarks. Over to you.

Thank you, ladies and gentlemen. Enjoy your day. Thank you for your time. Goodbye.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect. Thank you.