Flight Centre Travel Group Limited (FLT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to our 30th Annual General Meeting. My name is Gary Smith, and as Flight Centre Travel Group, Board Chairman, I will chair this meeting. Moving on to our official AGM duties as we have the necessary quorum, I declare the meeting open. This meeting is a hybrid meeting with shareholders able to attend either in person or online via the Computershare meeting platform. Shareholders online can listen to our live webcast and watch our presentation. [Operator Instructions] I'd like to begin today by acknowledging the traditional custodians of country the Turrbal and the Jagera people. We recognize their continuing connection to land, waters and skies in this place known as Meanjin, now Brisbane where we meet today. We pay our respects to them at cultures and to elders past and present. And as a global business, Flight Centre, of course, operates in many countries, and we pay our respects as the slide behind me suggest to people from all of those countries in which we operate. I'd now like to introduce directors John Eales, Graham Skroo Turner, Rob Baker and Colette Garnsey, our Financial Controller, Adam Campbell and company Secretary, David Smith. Unfortunately, Director Kirsty Rankin is unwell and unable to be here in person today, but she is dialed in and listening. So sorry, you couldn't be here with us, Kirsty. We're also joined today by various senior executives representing many of our divisions, businesses and disciplines. Finally, our audit to EY is represented today by audit partners, Alison de Groot and Amy Cinquini. Given this is a hybrid meeting, there are a few matters I need to run through. Only shareholder representatives and attorneys of shareholders and proxyholders who are attending in person today and holding blue admission cards and those attending online are entitled to ask questions or vote during this meeting. For attendees attending in person to ask a question, you will need to raise your hand when I invite questions at the appropriate time. Online attendees can submit questions at any time by selecting the Q&A icon on your device. Select the topic, your question relates to from the drop-down box, then type your question and press the send button. Online attendees can also ask verbal questions by following the instructions written below the broadcast window. Although online shareholders can submit questions at any time, I will address those questions only at the relevant time during the meeting. If we receive multiple similar questions on any topic, we will try to group them together. I will ask Haydn, our moderator to read out the questions at the appropriate time. Voting today will be conducted by a poll on all items of business, and I will open the voting shortly. For attendees present in person, on the reverse of your blue admission card is your voting paper and instructions. You will need to follow the instructions, mark a box beside the motion on the voting paper to indicate how you wish to cast your vote and then lodge it in the ballot box before voting closes. Proxyholders here in person have attached to their blue admission cards a summary of their proxy votes, which detail their voting instructions. By completing the voting paper, you will be [indiscernible] voted in accordance with those instructions. Proxyholders who are entitled to cast any open votes will need to mark a box beside the motion to indicate how you wish to cast your open votes. For attendees online, a polling icon will appear on your device when voting opens. Clicking on the icon will bring up a list of the motions and present you with voting options. You simply select one of the options for the relevant 1 to cast your vote. There is no need to hit a submit or enter button as the vote is automatically recorded. You may change your vote at any time up until I declare the voting closed. All attendees, whether online or in person may submit votes anytime from when voting opens until I declare that voting is closed. Finally, I appoint Lewis Brimelow of computer Investor Services to be the returning officer and to conduct the poll for this meeting. I now declare voting open on all items of business. We will start today's meeting with the Chairman's address. After which, I'll invite Skroo to address the meeting in relation to our plans and prospects for financial year 2026. We'll then move to the formal business for the meeting before finishing with general questions for shareholders. So I'll now proceed to the Chairman's address. The 2025 fiscal year presented challenges but also highlighted the resilience and strength of our company. Despite market turbulence, we achieved year-on-year total transaction value growth for the 26th time in our 30 years as a listed entity, again, open up the world for those who want to see and reaffirming our brands and customer propositions enduring appeal. While underlying profit before tax of $289.1 million fell short of our expectations, a disappointing outcome for us and our shareholders. We've taken decisive steps to position the company for renewed growth in TTV and profit in financial year 2026 and beyond. Overall, we remain very confident in our future growth prospects and our ability to create shareholder value given the ability of our brand portfolio, which includes leading global businesses in both the leisure and corporate sectors. Our track record of delivering year-on-year TTV growth, which means our business value propositions continue to resonate strongly with customers. The strategies that are in place to boost productivity and efficiency thereby drive stronger net margin and bottom line growth. Our strong balance sheet and cash flow, which gives us flexibility to invest in growth and capital management initiatives. And our people led by a very experienced senior executive team with a laser focus on returning our business to a profit growth trajectory during financial year 2026. We're also seeing positive signs in early financial year 2026 trading which is something that Skroo will talk about in greater detail shortly. I'd like to touch on a few highlights from the year. Looking beyond financial results, I'd like to highlight some of our notable achievements. As illustrated on this slide, we invested circa $450 million in capital management initiatives. Since year-end, we've also declared and paid a $0.29 per share fully franked financial year 2025 final dividend, taking total payments for the year to $0.40 per share in line with financial year 2024. We've continued to buy back issued capital on market. We have now spent about $110 million buying back about 8.6 million shares. We've issued a new longer-dated $450 million convertible note, which has given us the capacity to buy back the 2028 notes in their entirety and reduce the 2027 notes face value. We view our convertible notes as debt instruments and intend to continually actively manage them and our capital base to reduce the potential dilution in earnings per share. We continue to invest in growth sectors and innovation. For example, we acquired Cruise Club in the U.K. to expand our MyCruise package holiday business internationally following the successful growth of our in Australia. Cruise Club's results look promising with October TTV increasing about 70% year-on-year. Our investment in the luxury leisure sector has also delivered solid returns with Scott Dunn, the business we acquired in January 2023. It's performing very well and started financial year 2026, promisingly ahead of its peak second half profit periods. You can see where these relatively new additions fit into our global leisure network on this slide. While we've not made any additions to our corporate brand stable, we've seen pleasing and promising growth from 2 specialist businesses that operate under the Corporate Traveller and FCM banners, Stage and Screen and FCM Meetings and Events, respectively. Both segments are large, require specialist expertise and deliver higher margins than transient business travel in addition to giving us access to larger addressable markets. Our corporate brand stable is illustrated on this slide. Group-wide, we've made significant customer experience enhancements by developing a new leisure loyalty program, which is set to launch later in the first half and upgrading technology for leisure and corporate customers and leveraging AI personalization, dynamic price and operational efficiency, and Skroo will talk more to that in his address. While AI presents us with an opportunity, it does, of course, also represent a threat as competitive customer offerings emerge. We are very cognizant of this and are working diligently to combat these competitive threats and offerings globally as they arise. I'd like to talk about sustainability and our people. Our commitment to sustainability and our people remains unwavering. The initiatives we are pursuing reflect our belief in contributing positively to the planet and creating a brightness of the future our people. In recent years, prioritized reforestation and through the Flight Centre Planning for the Planet Program, which we offered to our customers as part of the Captain's Pack. We've now committed to planting more than 2.7 million trees globally and more than committing, we've actually been successful in planning a significant number of those trees. And a really important part of that program is the social impact that, that program is having on communities. And seen that personally. It's really quite special. Travel Associates is also supporting a project in Fiji that aims to restore native forests, improve food security and support local livelihoods. The most satisfying and important investments we make in any given year are in developing and supporting our people. We believe very strongly inviting our people with a brightness of future, a path towards achieving their career and personal goals which encompass crucial areas like training, learning and development and personal and financial health and wellness. This is backed by a commitment to promotion from within our ranks wherever possible. During financial year 2025, 34% of our vacancies globally were filled by internal candidates. That's a statistic we're very proud of. The next 2 slides show our global brand footprint. The geographical footprint means that our people also have the opportunity to further their careers with us internationally, and a number of people in the room today have done just that. We're also proud of the unique and long-standing benefits program that are in place and are currently working to reinvigorate Moneywise, which is financial planning, the Healthwise, health and fitness and Travelwise offerings that Travelwise obviously being travel. Those offerings post-pandemic are made to ensure our people have better access to these valuable services globally. During financial 2025, we moved to modernize and globalize our broader people and culture infrastructure by implementing the Workday Human Capital Management system to gain real-time workforce insights. On behalf of our Board, I'd like to again thank our people for their efforts during what was a reasonably challenging year. I'd also like to thank the directors for their contributions. We have a relatively small Board of 6 with 5 nonexecutive directors, including Rob, John and myself, who all have long tenure. We value this stability, particularly during the very turbulent times we recently saw, but we also recognize the need for renewal and fresh perspectives to ensure the Board continues to evolve to best support our businesses in a rapidly changing global trading environment. Accordingly, the Board has started a director search process that will lead to changes in the near term. On a personal note, I'm conscious that my independence has been questioned by some given my length of tenure. As announced previously, the Board is satisfied that I remain independent but has taken proactive steps to manage any future perceived conflicts should they arise. And we've done that in appointing Colette Garnsey as lead independent director. This appointment provides a formal mechanism for Colette to step in as chair if a situation arises where by my independence question. Colette will do that later today when shareholders are asked to vote on my reelection as a director. In conclusion, I would like to thank you, our valued shareholders, for your continued support. Together, we are building a more resilient, innovative and profitable future. Early financial year 2026 trading is very encouraging, and we're optimistic in relation to our outlook. With a strong balance sheet, global brand portfolio and strategies focused on efficiency and innovation, we're confident to return to profit growth trajectory and delivering stronger shareholder returns. I'd like to now invite Skroo to address the meeting.

Thank you, Gary. You obviously read that pretty well. Much bigger print than I've got. I'm right. Good morning, everyone. Thanks, Gary. As we look ahead to financial year '26, I'd like to share why we believe this will be a year of renewed growth and opportunity for our company. Reestablishing our credentials as a growth business is certainly a priority after our disappointing 2025 financial year. Our fundamentals, however, remain strong, arguably stronger than ever, and we expect to return to profit growth this year. Now we're a diverse global business. We worked hard to transform our business divisions and streamline our support structures to create a more productive company with a lower cost base and stronger fundamentals. Today, we operate across 4 regions, Australia and New Zealand, the Americas, which obviously includes India, and U.K., Europe, Middle East and Africa. Globally, we're also structured in 4 divisions with large-scale leisure and corporate operations, global supply procurement and distribution arm and the centralized Global Business Services or GBS area. In addition, we have a small stable of emerging or what we call Horizon 3 businesses, which is in the touring DMCs air charter and the pedal group in bikes. And they sit within the supply division at this stage. Our global footprint and diversified portfolio, which are highlighted on this TTV contribution slide, a key growth factors and a major advantage. We're not overly reliant on 1 sector. We can share resources, capitalize on synergies and leverage supply relationships to deliver better outcomes. Our financial year 2025 results have been widely reported and have been summarized on this slide. I don't intend to run through them in detail today. Instead, I'll provide a bit of color around the factors that impacted our performance. Firstly, leisure trading conditions were challenging. Middle East tensions and a downturn travel to the United States, I'm not sure what the reason was there, but it did hit our business hard during this all important fourth quarter. In Australia, we saw a shift to shorter haul international destinations with Japan overtaking the U.S. and U.K. to become our most popular overseas like Asian behind New Zealand. Secondly, corporate profit was below expectations. This was largely due to the Asian losses flowing from the system changes and customer downsizing that we outlined during the year. Thirdly, supplier super override income decreased significantly wide because of lower TTV growth in core leisure and corporate brands as we have outlined previously. Finally, we invested in future growth drivers, including digital enhancements, the cruise sector and TP Connects. These impacted short-term profits but should help drive stronger future returns. Our TP Connects investment is significant and is geared towards ensuring we capitalize on opportunities flowing from the airlines adoption of New Distribution Capability or NDC. This is gradually increasing, and now it's above 50% with some key carriers. Now despite a challenging trading environment, our corporate division achieved record TTV of $12.3 billion and underlying profit of $190 million in 2025. Excluding Asia's financial year 2025 losses and its 2024 profit, the business delivered a 6% profit growth. Corporate Traveller is set to join FCM Flight Centre as $5 billion per year TTV businesses during this financial year. Its recent growth in the large but competitive U.S. market is very encouraging with 2025 second half TTV increasing by 12% and by 16% over the financial year '26 first quarter. New products also being deployed for Corporate Traveller, including a payment and expense solution and Mel, an AI-powered travel assistant that I'll talk about shortly. FCM is also well placed for growth after securing contracted accounts with projected annual spends of about $1.3 billion in 2025 and developing and deploying new tools and technologies and increasing its addressable markets through new services, including the expanded global meetings and events offering that Gary mentioned just before. Asia's financial year 2025 losses obscured the tangible benefits flowing from corporate's productive operations project, an ongoing initiative designed to enhance the customer experience and drive efficiencies. For example, TTV per full-time employee increased by 13% in the 2 years since productive operations was initiated and grew again during the 2025 first quarter -- sorry, the 2026 first quarter. We've seen significant growth in adoption of our digital products with Melon, Core Traveler's proprietary booking platform in the North Hemisphere, recording more than 60% growth in monthly transactions in October 2025 compared to October 2024 and helping to drive the strong growth we are seeing in the Americas. Leisure delivered $11.8 billion TTV in 2025, and that was up 6.7% year-on-year, with $175 million underlying profit before tax. Underlying profit was 5.3% down year-on-year, but about 35% above the period immediately before COVID. Highlights from 2025 for leisure includes productivity gains. The business achieved 86% of its record financial year 2019 TTV with only 42% of its financial year 2019 workforce. Scalable Channels, the independent agents and online contributed about $4 billion in TTV, albeit at a low margin. Thirdly, solid growth in Specialist Brands. Examples include Travel Money's 31% TTV growth to $1.2 billion and Ignite travels 20% growth to $455 million as well as Cruise & Tours sales increased about 20% year-on-year. The reintroduced Cruiseabout network in Australia and Cruise Club acquisition in the U.K. contributed to this growth but collectively incurred about $5 million in losses while we invested to ready both businesses for meaningful future profit contributions. The first fourth quarter challenges we encourage encountered overshadowed the progress made earlier in 2025 when our new look leisure business was tracking towards a year of profit growth. Now I'd say a new look because I think people sometimes forget the leisure has undergone one of the most significant structural resets in our history. The business has transformed from a large bricks-and-mortar network of 1,500 outlets pre-COVID down 590 now. And it's transformed into a diversified capital-light ecosystem with scalable volume growth, access to high-margin categories and a future blueprint, incorporating AI and loyalty. Our new loyalty program, which is set to launch later this month is an exciting opportunity and will create new engines of growth, rewarding customers, unlocking supplier value and driving personalization. Scaling this new business is a leisure's strategic priority this year, along with growing top and bottom line results in the core flights in a brand and doubling down on high growth as well as high-margin businesses. So we're taking decisive action to manage short-term challenges while positioning the business for sustainable long-term success. Our strategy is focused on 4 key pillars: one, cost discipline and capital efficiency, specifically targeting to hold underlying costs broadly in line with 2025 and reducing CapEx by 15% to 20% while prioritizing high-impact initiatives. Secondly, portfolio optimization. Closing, repositioning or divesting noncore or underperforming businesses. to sharpen focus on our growth areas. Thirdly, our margin and supplier leverage. Strengthening supplier relationships to capture emerging travel trends and optimize margins. And fourthly, growth investments, accelerating initiatives on AI, loyalty programs and high-performing sectors, such as cruise, tours and corporate meetings and events. Additional benefits are expected in the 2026 second half financial year from Global Business Services, or GBS, their efficiency programs, which aim to reduce costs across support areas with a committed monthly cost base currently of approximately $20 million. These actions will not only help near-term performance but also create a stronger, more agile business cable of capitalizing on future opportunities. AI has the potential also to transform our industry, and we are embracing it. We're embracing it through partnerships with Quantium and Anthropic, and we are embedding AI in customer service and operations, delivering measurable benefits to our customers and our teams. Our Corporate's Productive Operations initiative is using AI to route inbound requests more intelligently to consultants in addition to enhancing CX, the customer experience. This capability has assessed about 6.5 million requests with some 64,000 full-time equivalent hours saved. FCM Sam product has been upgraded with agentic AI, enabling it to act as a virtual travel assistant that answers questions and completes us autonomously. Corporate Traveller now has a similar product, Mel, which is available to our Northern Hemisphere customers via Melon and to our Southern Hemisphere people via Workspace. Mel leverages decades of expertise and rich data to deliver smarter, more personalized experience while keeping human service at the core. The leisure business is also infusing AI capability into the customer journey as outlined on this slide. The initiatives that are underway broadly fall into 5 categories and include trials for co-consulting and next best action program, currently being trialed in Australia in conjunction with Anthropic and Quantium, respectively. Our trading update outlook and guidance. 2026 financial year is off to a positive start with first quarter results and preliminary October trading data confirming momentum across both corporate and leisure segments. Corporate is strong with FCM securing a pipeline of account wins totaling almost $400 million so far. Asia returning to modest profitability and the business globally delivering further productivity gains. First quarter TTV increased almost 7% with a 5% average FTE reduction. Leisure TTV is also growing at a healthy rate. but the temporary travel pattern shifts that emerged late last year continue to impact year-on-year profit comparisons, which is in line with our expectations. We are, however, starting to see signs of recovery which is a positive signal ahead of our peak second half trading period. Looking from Australia to the U.S. increased in October 2025 for the first time since the March quarter. and Flight Centre's Big Red Sale, which finished yesterday in Australia, delivered promising results ahead of the upcoming Black Friday, Cyber Monday and Travel Tuesday sales. For the full year, we're targeting underlying profit before tax of somewhere between $305 million and $340 million, and this is a 5.5% to 17.6% uplift on 2025 financial year. First half earnings are likely to be broadly in line with last year's $119.7 million, adjusted underlying profit before tax. As indicated previously, with solid corporate profit growth to be offset by leisure profit decrease, reflecting the more volatile climate early in 2026 compared to the same period in 2025 financial year. Higher net interest costs for the half will also slightly increase the other segment losses. Our profit expectations for the half and full years imply a second half profit skew which reflects our traditional seasonality. Key profit and booking months are typically during the 6 months to June 30. This year, we expect various other factors to drive stronger second half results, including: one, the likelihood of a more stable trading climate during key trading periods late in the year, the financial year compared to the volatile conditions that we encountered during the 2025 fourth quarter. Secondly, a more significant Asian turnaround, given 2025 losses were second half weighted and tailwinds from cost out initiatives that are gaining momentum group-wide and from productive operations, which is starting to deliver tangible benefits as well as fourthly, margin improvement if we can deliver continue to deliver stronger TTV growth in core brands. While we will again prioritize organic growth and expect to continue with our on-market share buyback, we will consider investing in M&A, mergers and acquisitions, if attractive opportunities arise that are aligned with our strategic objectives and that create shareholder value. Areas of interest could potentially include businesses with one, technology that enhance productivity or the customer experience or to capability in specialized and rapidly growing leisure or corporate sectors. As announced previously and consistent with prior years, various items will be excluded from underlying results including about $20 million gain in the recent Cross Hotels sale, which was our Southeast Asian hotel group. These exclusions are outlined here and are expected to decrease during 2026 and again, in 2027 financial year as various initiatives transition into a business-as-usual phase. This includes productive operations and the GBS transformation costs along with the loyalty program's one-off establishment costs and start-up phase losses. So in conclusion, in just under 3 weeks on December 1, we'll celebrate 30 years as a listed company. In our first year, we generated $1 billion in TTV, just under $1 billion, I remember and $19 million in profit. Now to put this in perspective, last year, one emerging brand that you don't hear a lot about, Travel Money, delivered comp results on its own with $1.2 billion in TTV and $18 million profit. Our corporate businesses delivered more than 12x our 1995 TTV and 10x our profit. And leisure delivered at almost 12x our 1996 TTV and 9x our profit. Pardon me. Over the same period, we've evolved from a business that was heavily leveraged to a single leisure brand and channel, which was basically flights in the shops to the world's third largest corporate travel management company and a major player across multiple leisure categories. This ability to adapt and grow is reflected in our business and geographic diversity and we believe is among our greatest strengths. I'm reasonably optimistic about 2026 financial year and the chapters ahead just as I was 30 years ago. With disciplined cost management, strategic investments and improving market conditions, we're confident in delivering sustainable growth and stronger returns into the future. Thank you very much.

This is Gary Smith again. So sorry about that. Thanks, Skroo. We'll now move to the meeting's formal business. The notice of meeting has been circulated to all shareholders registered as of the tenth of October 2025, and I'll take that notice of meeting as read. The minutes of the previous Annual General Meeting, which was held on the 14th of November 2024 were approved by the Board and signed by the Chair of that general meeting. Minutes are available for inspection at the company's registered address. We now move to the company's reports and accounts. The financial report, directors' report and the auditor's report has been forwarded to shareholders in the annual report, and they are tabled at this meeting. I'll now invite Colette to chair this meeting while shareholders consider the first item of business for today, which relates to my reelection as a director.

Good morning. As the first item of business is the reelection of Gary Smith as a Non-Executive Director of the company, I will chair this meeting while this resolution is put to the meeting. In accordance with the company's constitution, directors may not hold office past the third AGM following their appointment. This, of course, excludes the Managing Director. At least 1 director retires each year and offer themselves for reelection. Accordingly, Gary retires and offers himself for reelection today. The number of proxies received prior to the meeting should now be showing on the screens. And I invite any questions on this item from shareholders attending the meeting in person today. And I believe we have Sarah and Chelsea here who with microphones. So should shareholders wish to ask a question, put up their hand and microphone. There being no questions from shareholders attending in person. I shall ask Haydn, if there are any online. Very good. As there are no further questions, please now cast your vote if you have not already done so. Gary will now resume as Chairman of the meeting. [Voting]

I now move to the next item on the agenda, which is the reelection of Director Kirsty Rankin. The second item of business is the reelection of Kirsty. And as I explained earlier, unfortunately, she is not able to be with us today, but she is online and listening. So similar to Resolution 1, Kirsty Rankin retires and offers herself for reelection today. The number of proxies received prior to the meeting should now be showing on the screen. I now invite any questions on this item from shareholders attending in person today. Once again, Sarah and Chelsea are there with roving mics. So are there any questions on the reelection of Kirsty? No questions. No questions from shareholders attending in person. Haydn, are there any online questions in relation to this. So as there are no further questions, please now cast your vote if you have not already done so. And I now move to the next item on the agenda. [Voting]

Resolution 3 is the approval of the grant of long-term incentive plan rights to the Managing Director. Approval is sought including for the purposes of ASX Listing Rule 10.14 to grant to the Managing Director and Group Chief Executive Officer; Graham Turner, up to 95,804 rights under long-term incentive plan operated under the company's long-term retention plan and to his acquisition of ordinary shares in the company on the exercise of those rights. Voting exclusions have and will be applied as outlined in the notice of meeting. The number of proxies received prior to the meeting should now be showing on your screens. And I now invite any questions on this item from shareholders attending in person today. Are there any questions from the floor? Could you state your name, please and stand and we'll get a microphone. Over to you.

Thank you, Mr. Chairman. George Bomber is my name. I'm a Director of Faircase Proprietary Limited, a shareholder. I don't know whether this is in the best interest of all the shareholders. You spent $54 million buying back shares and now you want to issue more shares to increase the value of the shares that Mr. Turner has already we need an increase in profit and dividend to shareholders. If you put more shares out, the dividend per share goes down. You bought shares back to bring the dividend per share up so you're repeating the purpose, if he gets fully franked dividend, he has less tax considerations because they did more tax efficient. We have cloud in Canberra that want to introduce a unrealized capital gains tax. No offset against capital losses. Gives these shares, create capitalizes better off to have the share price going up without issuing more shares. So these existing shares aren't underwater like most of ours.

Thank you for your question, George. it's good thing that those I think you said referred to them as the clouds and Canberra, at least they backed off that unrealized capital gains watch this space. The proposed LTI for Skroo basically all it does is brings his pay structure in line with other senior executives. It's not just for him. And this is to incentivize them to drive the share price. So exactly what you're saying about having a negative impact, we would argue, hopefully, will have a positive impact. The 30% is a transitionary component. The objection, I guess most people have made is around the LTIP which is a long-term retention plan. That's something we'll be phasing out over time. All benchmarks show that Skroo has paid well below his peers. And one example of an analysis of this is CGI Glass who ran some numbers that suggested here and about half is market rate in financial year 2025. So the Board is certainly very comfortable with the value that we receive as a company from Skroo in the role of Managing Director. But thank you for your question. Are there any other questions on? Susan.

Good morning. My name is Susan Bailey, I'm the representative of the Australian Shareholders' Association. And I have a question regarding long-term incentive plan. The proposed plan for Mr. [indiscernible] has a 30% weighting to simply being employed at the time of vesting. As you're a founder and a major shareholder, why do we need to pay part of the LTI based on you being employed at the time?

Thank you, Susan. As I said, the plan is the plan that applies to all senior executive Skroo is included along the same terms and conditions as everyone else. That 30% is something that is phasing out. So that was -- we had a long-term retention plan. which we launched partway through the pandemic. If my memory serves me correctly, and that was all about wanting to keep our good people. That's now something we're phasing out, and that will take a couple more years to phase that out, and it will disappear from the LTI is our current intention. Are there any other questions on this, Susan?

Sorry one more question, too. If the issue is as following on from the previous question that Skroo is underpaid, then why not boost his base salary and show the benchmarking. I and are supposed to be incentives and at risk not to correct and underpaid KMP.

We don't really want to pay him anymore. He's good value. And we take your point, and we have actually increased Skroo's remuneration over recent years to better reflect the market, but it's still well shorter market. We do recognize the fact that in time in appointing a new that remuneration will have to increase further. At this point in time, Skroo is happy with the arrangements we have, and the Board is happy to leave those as they currently stand. Any further questions? So let me just move on. If there are no further questions from shareholders attending in person, I ask Haydn, if there are any online questions. Thank you, Haydn. So as there are no further questions, please now cast your vote if you have not already done so. [Voting]

I'll now move on to Resolution 4. The fourth item of business is to approve the issue of convertible notes into refresh placement capacity. Approval is sought to the ratification for all purposes, including for the purpose of ASX Listing Rule 7.4 of the issue of 2,250 senior unsecured and subordinated convertible notes. Voting exclusions have and will be applied as outlined in the notice of meeting. The number of proxies received prior to the meeting should now be showing on your screens. And I now invite any questions on this item from shareholders attending in person today. Do we have any questions on that motion? Susan?

Thank you, Mr. Chairman. My question is that there's been a lot of dilution with the shares since COVID. There were 80% more shares issued to get through COVID and then another 10% issued so far to the end of COVID, although 2032 might seem quite a way off, might there be a risk of further excessive dilution, which might depress the share price for ordinary shareholders.

Thank you for the question. We're very cognizant of that risk, and that's why we've been actively looking to buy back convertible notes when it made economic sense to do so. It's our intention to keep doing that. So we don't have any dilution. So it's something that's actively bed. Any further questions on that motion? So if there's no further questions from shareholders attending and personally ask Haydn if there are any online questions. As there are no further questions, please now cast your vote if you have not already done so. [Voting]

The fifth and final item of business is the adoption of the directors' remuneration report as presented in the annual report. Just a reminder that the key management personnel listed in the annual report and their closely related parties are not permitted to vote on this resolution. The number of proxies received prior to the meeting should now be showing on your screens. And I now invite any questions on this item from shareholders attending in person today. Yes, sir.

Good morning, Chairman. Good morning board, all the shareholders. My name is Roman Kosnik, I'm representing my personal shareholdings, my company, shareholders and self-managed super fund. And I come all the way from Sid to share with you my worries and my experience with this company. I would like to start with company share price...

Ramon. Can I just interrupt, please? This is the motion to discuss to report remuneration report. So we will move on once we complete that to general questions in general business. So if you don't mind, we'll pick up your question when we get to that part of the agenda. Is that okay?

Yes. But this is going to be affect, which way people are going to work for innovation report.

So can you narrow your comments to the motion at hand, which is the remuneration report.

So you don't want people before they're going to vote. We don't want them to hear what the experience people have with your company.

We have a motion to specifically about the remuneration report. So if you can narrow your focus of the question on this instance, and when we come back to general business, you can raise your broader question.

But I'm not going to vote before we discuss it because we're talking about a nomination report. It's been people need to be paid to do the job. If they're not doing the job properly, they're not supposed to get paid whatever you offer them. Now with Graham, I was sitting quiet for one reason. He really not paid enough for his position. But according to surprise, I will never want for him to get increase because we are the shareholders losing money. We're losing our company, actually. The way which we're going but I'm happy to wait.

Let's make that comment as noted, and we'll move to are there any other further questions on the remuneration report?

Thank you. I'm a long-term shareholder, also a member of a team investor. I'm not speaking on behalf of Teaminvest. One of the things that we do look at quite closely to the remuneration report. And what I noticed this year is the LTI has relatively -- relative total shareholder return. Incentives are meant to direct employees to strive to achieve outcomes, the Board and shareholders want. Relative TSR includes the share price and the performance of other companies both of which are outside of control of an individual and share prices are subject to the women of the market. So how can a TSR possibly be considered as an incentive if employees can't control what factors are? So will the Board please not standing that vote, remove the relative total shareholder return as an incentive because it's not something the staff can possibly control?

Thank you for that comment. There was a lot of consideration made about the design of the new LTI. And the total shareholder return metric is a very commonly used metric in public companies in Australia. So I think it's something like 80% of the ASX 100. You've got something further?

In John's leader at the start of the remuneration report, it says Flight Centre do things differently. That's not different. That's just following the proxy advisers.

That's a fair comment. That's a fair comment.

So you're not doing anything different.

I guess the logic of that metric is to try and align our executives focus on driving a positive increase in the share price and distributions to shareholders also a part of that. So I note your comment that the remuneration report vote is with the meeting basically. So if there are no further questions, please now cast your vote if you haven't already done so. Haydn, we have a question online?

Given the FY '26 focus on cost optimization and productivity gains, how will executive incentives be structured to reward sustainable profit growth rather than short-term cost reduction that's come from Mr. [indiscernible].

I'm going to ask you Chair of the Remuneration Committee to answer that question. John Eales.

Gary, I might actually throw this a bit more to Adam because I think Adam is very integrally involved in cost aspects of the business. But I think just in relation to a couple of the other questions, it's probably worth reflecting on the amount of input we took from a lot of shareholders but also other advisers in how we prepared the report this year and prepared the structures of the LTI moving forward, taking into consideration how we've done things in the past but also the fact that when shareholders do well, we want our executives to do well as well. So we wanted to align that more. Yes, look, we have always been proud of doing things differently, and we have changed how we've done things this year to align to what we think is a better structure moving forward and adjusting what we've previously done the year before. So we're not afraid to change. We do listen and we do make adjustments there. But Adam, I think from a cost perspective, you'd be better speaking on that.

Yes. I'll answer the direct question in 2 ways or 2 parts. The first, from a cost-out perspective, there is a combination there, certainly of short-term cost mitigation. But the second element is restructuring our cost base and establishing the business the future. The reality is that we need to completely redesign the way that we operate and the operating models for ourselves going forward. And that will feed into ongoing sustainable profitability rather than just short-term. The second element that I'll point out is the STI is based on current year profitability for the group or for specific businesses. But going back to the new LTI, it does have an EPS component of it over 3 years, which does mean that our executives are focused not just on the current year, but also on the way that the earnings continue to grow over that 3-year period. So that's probably my response to that one.

Any further questions on this motion?

So as there's no further questions, please now cast your vote if you have not already done so. [Voting]

And I'll now move to the next item on the agenda, which is general questions. So we'll now address questions and comments submitted on the annual financial report, the directors' report, the auditor's report or the company's management. Alison to grid from EY is available to answer questions about the audit's conduct, the audit reports, preparation and content, the accounting policies adopted by the company in relation to the financial statements preparation and the auditor's independence in relation to the auditors conduct -- the audit's conduct. Are there any questions from shareholders attending in person today? Ryman. Yes. More than welcome.

So I start from beginning or should I continue?

I think you can continue.

Okay. I would like to start with the company's share price. It's a level of covered shutdowns. Let me remind you that during COVID shutdowns, people could not travel to neighbor suburbs so it is understandable why our share price was so low. But now whenever one going overseas, including your legist the report, the share price should force ask to ask questions from our managed company management. Why? I would like to analyze some changes. This is a company introduced after COVID. Before COVID, this company was mentioned or even provided better price. This is one of the reasons that I recommended to all my family members, friends and business partners to use this company for all the travel arrangements. And they did. After COVID all these people stop using this company because there is no price matching anymore. And there is much better deals and services on the Internet or smaller. offices. Now I want to share my personal experience with this company that I am sure this management not aware of. First, I was introduced to one travel agent, who was told is one of the best agents. I had tried to book business trip to Europe and then at [indiscernible]. I contacted the agent and she suggested to meet in her office to discuss the trip. I wasted more than hour in her office and got nothing. She was wasting my money like garbage. The book with someone else. Second time, I contact the same agent with special package. We won't ask her to book the package but she decided that we would not enjoy the package and offer a different package 4x more expensive. We booked package with different agents, and we love our trip. What really upset me that the agent can decide on my behalf what I like and what not. This is not her job. After this, we decide not to deal with this agent who wasted our time. We were introduced to another agent. His name is on Mark. He's a very good agent and a highly recommend him. You booked me a couple of trips but some segments of tip,we needed to book ourselves because this company were not cost competitive. One of the example is that we needed, one night hotel to catch flight next day. I was offered a hotel without transfer and no breakfast. We book hotel ourselves with transfers -- and breakfast from the transfer form to airport and breakfast at quarter of price that offered by Mark. But now I want to raise the biggest problem that this company has. Mark booked as another package that we paid over $7,500. As a result, we met a group of Chinese tourists who paid $2,000 for the same package. This group come with Russian -- sorry. Then we met Russian group who also paid $2,000. This group comes with a Russian travel agent from small offices in North Russia. I ask her how she succeeds to get this package at so low price. And she explained to me that she negotiated this price and immediately offered her services. Not enough. So for her group to visit a number of resorts at this price so not like us stack 7 days of the same resort, but they could go to visit couple neighboring resorts at the same price. Then we met english couple who paid around $2,400.

Ryman, I think we get the gist of what you're saying. Can we get some comments from a Skroo to comment on? You've obviously had some service issues where you weren't happy with the price given you've also commented on the share price. Is that the crux of what your question was going to be?

Yes.

So can I ask Skroo to respond to those two points?

Yes. Look, I'm not close enough to it. But I know Roman does have my mobile so he's going to complain directly to me next time. But I think we should hand this over to JK as the most senior leisure person in the room to actually answer Roman queries, JK. Why are you not priced correctly?

Thank you for that, Skroo. And thank you for the feedback, and I'm really sorry to hear of your experience like that, but we would love to talk to you personally one-on-one so we can really those needs. It's clearly, we haven't met your needs and we'd love to make sure that we can actually sort them out for next time. Thank you.

As far as the share price, we're all very, very focused on improving profitability and growth in TTV and growth in profit is what's going to drive that share price. There's a lot of innovation happening in the company, which you've heard about today. So we would be quite confident that we'll see a strong improvement in the coming 12 months. Are there any further questions?

[indiscernible] More just trying to understand what the company is doing, et cetera. Earlier this year, I came across a little story that said Infinity Holidays shift a number of roles to New Zealand. What's the story with Infinity Holidays business and its future potential?

Skroo, would you like to pick that up? Or do you want JK to talk to that as well?

Greg. Greg Parker is the Head of Supply for Flight Centre Group, one of our 4 divisions.

Yes, Infinity Holidays is our B2B offering, where a lot of hotel product and air products sold a lot of packages. We made a decision over the COVID period to close Infinity Holidays in Australia, predominantly because we're changing tech systems and instead of having our consultants having to pick up the phone and call someone to do an admin function, we deployed our online booking system, which meant our consultants could actually do it in store. So it improved the customer experience. We did bring Infinity Holidays back in the New Zealand market over that period. We didn't make the same change. And all we've been looking at now is an ANZAC approach across Australia and New Zealand. So we moved a lot of the roles currently had in Australia across to NZ because it was a cheaper cost base to be able to do it. There is a huge opportunity for Infinity to actually expand the footprint, not just with our independent business in Envoyage but also externally to sell product to other agents in this market as well. We've got some really solid plans in place over FY '26 and beyond to grow that business.

And that leads to the second question much of a drag on that targeted 2% NPAT, which has been around for some time, is the lower margin Envoyage business. I'm assuming it is quite a bit lower on.

Yes. Yes, it is. And I'd throw that to Adam, if you could speak to that, Adam?

Yes. Sure, Gary. Look, I think 1 of the biggest drags that we have on that 2% margin target is the lower-margin businesses. And Envoyage is one of those. We've got other very successful and profitable businesses such as FCM Travel Money who are lower margin but still bring in very good profitability for us. And we don't want to turn away from those. We think that they're very important part of our infrastructure and our house of brands. So I think it's important that we have them there, but they are certainly a drag on that. If you look at some of our other brands like Corporate Traveller, Flight Centre brand, Travel Associates, they're all operating well above that 2% mark on average. So it's just the nature of it, unfortunately, that we've seen or fortunately, we've seen top line growth in some of those lower margins exceeding the higher-margin businesses over the last couple of years. Well, it's interesting. I mean, I think as I say, we still see that though, while they're lower margin, those businesses are still really important to us. So we are absolutely focused on trying to improve the margin in those businesses. Travel Money is a prime example where we do a lot of wholesaling now and that's allowed us to increase the margin just in the last 12 to 18 months. So we're focused on increasing margin in those businesses. But whilst they're profitable, they bring in actual profit for us, we're not going to turn away from that, both because of that profitability. But importantly, that's the way that our customers want to interact with us as well. So we need to give that offering to them.

George, I'm sorry.