Web Travel Group Limited (WEB) Earnings Call Transcript & Summary

Good day, and welcome to the Webjet Limited Full Year Results 2020. At this time, I would like to turn the conference over to John Guscic. Please go ahead, sir.

Thank you, operator, and welcome, everybody, wherever you are in the world, to the FY '20 results investor presentation. Joining me today, I'll have our CFO, Mr. Tony Ristevski. And we will have the pleasure of taking you through what's happened in FY '20, clearly with a significant emphasis on the second half and what was the impact of COVID for our business and in addition, looking at the steps that we've undertaken to preserve our capital strength and enable us to have a vibrant future beyond the next 12 months as we, as a global society, muddle our way through the challenges that are occurring as a consequence of the pandemic that was currently struck. I know some of you are on the line, and some of you have joined through a webcast. We will flick through the slides for you. If you're online, you can download the investor deck from the ASX. It's available at the moment. So moving to Slide 2. Clearly, a lot has changed since we updated the market in -- about our results in February. We had a record first half. I promise not to spend too much time dwelling on the first half, but we had all the strategic objectives that were underpinning the direction of the business, were being executed as we expected. WebBeds clearly cemented itself as the fastest-growing and clear #2 B2B player. We're ahead of our profitability targets, which have been communicated for the 6 years previous, and we're delighted with the progress that we've made on that score. And the OTA business had another solid quarter -- half. So the pandemic has certainly changed everything in the second half of the financial year. We've seen the early signs where there were massive cancellations out of China in January, and that accelerated across all the regions, and we'll cover that in a lot more detail throughout the presentation. Our business, unfortunately, has been severely impacted by the cancellations that have occurred and the lack of booking activity, and we've only had nominal revenues in financial year 2020 since mid-March. And again, we'll talk a little bit about what's happening in the early stages of FY '21. On our side, there were things that we couldn't control, such as the pandemic, but clearly, there were things that we were focused on. And the 2 major items that has consumed the rich business is getting a significant reduction in the cost base of the entire organization, and we've been able to achieve that to roughly 50% of the historic cost base of 2019. And we have also demonstrated, and we've been extremely grateful for the support of the equity markets initially in April, where we raised $346 million. And we followed that up on the 1st of July, slightly outside of FY '20, but clearly important for the market to understand what we've done, but we've then raised another EUR 100 million through a notes offering, which demonstrates that there is still significant appetite for investors to support historically strong businesses and taking a long-term view that when the recovery occurs, that they'll be well positioned to take advantage of their strong balance sheet. And we clearly start FY '21 with a very strong capital position, and we'll talk about that. So moving on to Slide 3. The impact is clearly unprecedented. If you go through all of our businesses, January was roughly in line with our expectations. Even the WebBeds business was roughly in line with our expectations in January, even though it was below the monthly pre-COVID average because January is the slowest month of the year for the WebBeds business. The OTA business was bang on target, as was Online Republic. And then you can see the effect as COVID takes hold and you get to April and May, in particular, where we had negative revenue, negative TTV, negative bookings for those 2 months. And you're seeing a modest recovery in June. That's a little bit better again in July and a little bit better again in August, and we'll cover through all of that. All businesses in all their regions were impacted by what we've seen, and it resulted in a significant number of one-off charges for the business. Slide 4 is the financial summary. I don't propose to go through this in a granular basis. It's there. It highlights what had happened. Underlying performance, EBITDA of $26.4 million, where we were down $59.9 million against $86.3 million in the first half, and the statutory goes through a list of all of the one-offs which I will now go and talk about. So Slide 5 is the one-off summary. It's broken off -- broken out all the one-offs as a combination of cash and noncash items. The noncash items totaling $110 million. The cash items totaling a touch over $7 million. The total one-offs are $117 million. The 2 largest items in the one-offs: the write-off of Thomas Cook in the first half of $44 million and the debtors write-off in the second half that was primarily because of COVID of $39.9 million. So we have a total write-off of over 80 -- nearly $84 million across the 2 halves. There's some costs associated with actions that we have taken, which include the closure of the Webjet Exclusives business as well as the Cruise sales business out of Online Republic. There's an impairment to our intangible asset from closure of roughly $20 million and the closure of Exclusives as a $14.6 million cost. They're the largest factors in the noncash items. If you move to the cash items, there's been some restructuring costs as a consequence of actions that we have taken as a business, including the closure of the Cruise business. We have treated the government wage subsidies that we have received, which have amounted for $2.6 million as a one-off positive as opposed to all the -- virtually all the others which are negative on that list. And we do call that out separately as not part of our operating cost or a revenue item, but we do call it out as a wage subsidy that's expected to cease at a point in time. So it's not part of our continuous operations. So all in all, the second half has been materially impacted to the tune of $78 million, and it's had a significant impact clearly on the business as a consequence of the financials, the consequence of those items that are in call. If we move to Slide 6. It certainly calls out the dramatic change in the underlying performance of the business. And again, I did say in my opening remarks, we're not going to dwell on what's happened previously. But as of calendar year '19, when you aggregate our performance across the second half of '19 and the first half of FY '20, we had a business that was doing $155 million at an EBITDA level. And the largest contributor was the WebBeds business. And it has some significance. There's some announcements that we've got at the back end of the deck about future reporting dates that we will talk about at that point in time. So I'm going to spend a little bit more time on the following 3 slides, 7, 8, 9, as they are, in essence, what has been a strategic level, the driver of what the organization has tried to do. So to that end, we have reduced our monthly cost from approximately $28 million to $14 million a month in Q4. That's the new run rate for the business. To achieve that, there's been a reduction across the board for the Board and all executives. There's been a reduction in our workforce of -- by 22%, which amounts to 515 employees. There's been headcount freeze for all vacancies. The vast majority of our staff are now working 4-day working weeks. And on the nonemployee-related costs, we've got -- have a number of renegotiations with operational technology contracts, essential CapEx being spent only. We were about to launch a significant ERP enterprise arrangement, which has been rescoped following some technology platform initiatives that I'll cover off, in particular, in the WebBeds update. And a freeze on nonessential expense. And in the Webjet business, in particular, we've seen a material decline in transactional and operational expenses tied to TTV. And in particular, for us, that means a material reduction in our marketing spend for the Webjet OTA business. And as previously mentioned, and as we have disclosed to the market earlier in the year, we have closed the Webjet Exclusives and the Online Republic Cruise business. And the first half dividend has been deferred. So if we look at our expectations for the first quarter, we've got a burn rate of around about $10.5 million. So the mechanics, the $11.6 million of OpEx, plus the $2.6 million of CapEx, interest and tax, amounts to the costs on average of $14.2 million, which, as I said, we treated the government subsidy as a one-off in the first quarter. They are locked in by government issued decree. So there's $700,000 a month that we're expecting in government subsidies and around about $3 million a month in revenue, giving us a cash burn rate of around about $10.5 million a month. So if we go to Slide 8, we certainly have increased the liquidity of the business and, in particular, we just want to draw attention to the pro forma June 30, 2020 number as a consequence of the notes issue. But in essence, the driver of the increased liquidity within the business is the $346 million equity raise as of the 1st of April 2020. As the market is fully aware, with an institutional placement, accelerated pro rata non-renounceable entitlement offer, we clearly used the proceeds to strengthen the balance sheet. And the primary driver was, at that point, the unknowable expected reduction in B2B debtor exposure, which has been captured at roughly $40 million as per the one-off that I described earlier; and the unwind of the negative working capital, which had been a positive contributor to the cash flow of the business over the last 4 or 5 years. And as that unwind negative working capital, it was clearly going to consume a significant part of our cash resources. In addition, we have raised a note for EUR 100 million in conjunction with our existing lenders. We have used partly those proceeds to pay down some existing term debt as part of a renegotiation of our entire facility, which included extending out the term of the remaining debt into late 2022. And it also rebalanced our undrawn credit facilities. As we raised the notes in euros, we shifted to Australian dollars and reduced our euro facility by a similar amount. We saw a decrease in that over the course of the second half of the year. So all in all, we're in a strong liquidity position. I know there are a number of analysts have used metrics to value travel businesses at the moment by looking at the cash burn rate and dividing it into the total liquidity available. We clearly have a number of years of runway or many number of years of runway if that metric was the exclusive metric to define our particular business, which gives us a high degree of confidence that we can continue to execute against the strategic gains for our businesses knowing that we are not going to run out of cash in the short term, and that the financial impact to our business by banking waivers has been extended for June '21. When we raised the capital back in April of 2020, we spoke about banking waivers being extended in sort of the first half of 2020, but 2021 financial year has now been extended to the full 2021 year. And we have been able to extend the term debt out to November of 2022. So that's a significant improvement in our overall mitigation against all of the potential challenges that could impact us over the course of the next 24 months. From September '21 through June '22, we'll have modified quarterly test in association with the banks, which we'll talk about later. And the notes maturity have been pushed -- it was issued out to 2027. So we've got a significant runway there. So the net effect of all that is that as a business, and I contrast the tenor and tone of the conversation that I had with investors in late March as we're looking to raise capital, we were in a difficult financial position because of negative working capital unwind. And we were in a challenging environment without understanding how many of our customers were going to default on payments to us. We are no longer in that position. And the working capital unwind has occurred. There's no material expectations of a working capital unwind going forward. So that has been clarified. Due to the extensive work undertaken by many of the employees in the WebBeds business, we now have a view about who will pay and who will continue to pay us, and who are viable trading partners and who aren't. And we've written-off an appropriate amount of nearly $40 million to capture that. So we have a high degree of certainty in the operational elements that are going to impact our balance sheet. And as I mentioned, in conjunction with our -- the full support of our banks, we have been able to strike an even better arrangement with regards to waivers and with regards to when debt needs to be repaid. So we're in a very comfortable position over the course of at least the next 2 years to meet those objectives. So I'll now move into an operational review of our key businesses, starting with WebBeds. So for those following on Slide 11, first half, we achieved a 35% EBITDA growth rate, ahead of our profitability plan. Second half clearly impacted by China initially, and then a collapse in bookings to the point where there's only nominal revenues since mid-March. The business' cost base is down 28%. The vast majority of that is the headcount reduction and moving staff to 4 days a week. I'll talk about this in a second. Our broadest objective and one of the key drivers of long-term value creation for shareholders will be in the positioning and the rebound of the WebBeds business. We believe the current disruption to the travel industry gives us a real and viable course to be the #1 B2B provider globally. And the actions that we are undertaking are all in line with our view of what we need to do to enhance the organizational strength of our business to be able to deliver the #1 B2B business. So we're taking a different response, as we have -- as you'll see shortly to the Webjet OTA business when it comes to cost reduction. Second half underlying EBITDA results were also impacted by one-off items, including nonrefundable cancellations, which affected our margin as well as the write-down of our deposits and commissions and overrides that we were due in the second half. There is clearly a lot more information about the business at the back of the deck as well as in the stat accounts, which have been published today. So in any of the calls that I go on over the subsequent week or so, I'll be happy to go through it in a lot more detail. Focusing on the things that matter is the transformation strategy for our B2B business. We have a new stated objective to be the #1 player -- #1 global player in the industry. And we have used the time frame from April till today around the following 5 strategic initiatives. I don't plan to go through all of them, but I will spend a little bit of time talking about streamlining technology and how that will lever our ability to continue to reduce costs on an ongoing basis per booking and continue to improve our EBITDA margins, which are already market leading. Our entire thinking has been what do we need to do in a post-COVID world to accelerate our position to be the #1 player. And part of it is the flexibility that were previously offered by having multiple technology platforms, being streamlining them so that we have a singular operational cost structure and a single operational process center to ensure that we can deliver that effective technology solutions to our customers without impacting the business with a cost burden that is disproportionate to the solution that we're providing the market. So as a consequence, we have continued to build out and invest in our technology platform, and the view that we will reduce the current number of platforms to 3. And we're looking to enhance the similarity of those 3 platforms, and that will continue to be a key strategic driver for the business. The other 4 elements are, in essence, thinking about how we do business and how we use the data that we capture in our existing business to lever better outcomes for our customers. And there's a significant number of work streams within our organization that are focused in task on doing all of those things. And whilst it's difficult to measure in an environment with very small transactional volumes, we have a high degree of optimism that when we get out of this post-COVID world that we will be even better placed as an organization to address the significant needs of the entire travel industry. So what does that travel industry look like? We've spoken about this over the years. But we are a -- primarily a domestic -- sorry, we are primarily intra-regional leisure intermediary, and we deal with retail travel agents, wholesalers, corporate travel agents, tour operators, super apps and OTAs are our 6 customer profiles. And 75% of our existing bookings are intra-regional, and we have over 44,000 travel providers or end customer points worldwide who are in our network. And clearly, we have a strong exposure or a significant exposure to the leisure segment. And our underlying thesis is that the leisure markets, led by the domestic leisure markets, will be the first to open up on a global basis. We're already starting to see that in Europe. And intra-regional will be the next component, and long-haul leisure travel will be the slowest and the last to recover. And as we have restructured our business and reduced our costs, the breakeven scenario has significantly changed for our existing business. As you can see on Slide 13, if we get to 45% of the TTV numbers of calendar year '19, we're at a breakeven scenario. And as you can also see from April through till June, there was virtually no activity in this segment as the amount of cancellations massively outstripped any booking activity that occurred across our business. And you can see that pickup gradually occur from early June to where we're seeing a doubling of our business in the first week of August compared to the third week of July. So we are starting to see some growth return to the B2B business, albeit of a low base. There is no way that I would have any confidence in predicting anything other than Q1 of this current financial year, but we expect modest growth off the 5th of August number to continue for the balance of the first quarter, subject to nothing else extraordinary happening that haven't been factored into the current consumer travel expectation. So moving on to the OTA business. So Webjet had a very solid first half. Revenue certainly was -- and TTV was strong until the sort of end of February. As Australian borders started closing, there was a significant reduction in booking activity, and that impacted us because we didn't make any of our rebates and overrides and commissions. So that impacted our revenue numbers in the second half as well as the subdued TTV and booking numbers. As you can also see, the Webjet OTA is a highly scalable business where the Q4 costs are down 78% compared to the cost base in 2019. And that's a factor of, other than our employees and redundancies and the 4-day working week, many of our expenses are volume-related to booking activity, such as marketing spend and any credit card processing costs associated. So we see a highly variable cost base, which had meant, until the borders shut between Victoria and New South Wales, an opportunity that we would have expected to see that business breaking even by this time -- this time of the year based on the trajectory it had, and I'll cover that in a second. We also have seen that it was an incredible period of dealing with consumer cancellations and booking changes, which was clearly unprecedented in travel history where there were tens of thousands of requests in a 3-month period for us to work through, which was extremely challenging for everyone in the customer service team, and they've done an incredible job in dealing with all of those -- all that unknowable travel changes that occurred at that particular time. Again, we've got more detail about the OTA business at the back of this deck as well as in the stat accounts. As I mentioned, we closed down Webjet Exclusive, primarily, because we have took a view that it would be a long time before the international markets will open up again for Australian travelers. And it didn't make sense for us to maintain that business in a nonsteady state over that extended period. And whilst the market is extremely patchy in Australia and episodic in how it's responding to various outbreaks and various lockdowns and various quarantine procedures, we are well prepared for a domestic-focused tourism industry. And I think that's no better example. Then on Slide 16, where we spend -- we used to be 50% of the entire OTA market. In the pandemic, we are more than 50% of the entire market. We have increased our market share over that period. Our focus is, as I mentioned, is that the entire organization, the OTA business will be geared towards the domestic leisure markets. And as that market opens up, we expect the OTA business to be the first of our businesses to go back to profitability. So if you have a look at the chart at the bottom of Page 16, you'll see that as of the 1st of July, with that underlying trajectory where we were 16% and the New South Wales/Queensland border had only just opened, if we roll forward to the 5th of August, I'd expected us to be making money in the OTA business. But a week later, the lockdowns begin, New South Wales/Victoria border closes, and you see the resulting impact to our underlying booking volumes. And we're now roughly operating at half of what we were 5 weeks ago. To go back to why we think we're in a strong position in the OTA business, there are 2 factors that will play to us as markets -- play to our advantage as markets open up. Factor number one is the search screen for Webjet facilitates mix-and-match bookings better than any OTA in the world. And in an environment where there's going to be patchy airline schedules for foreseeable future and getting on the right aircraft at the right price, at the right time, will be of paramount importance to the vast majority of travelers. Nobody can do that better than Webjet. So we're well positioned, as evidenced by the strong recovery that we saw as markets are starting to open up. And we believe that, that will facilitate us continuing to extend growth. And the second element is, as we've already heard from some of the off-line retail travel agency businesses, their stores are not opening up again. So as a consequence, there's going to be increased demand for platform businesses like ourselves that can facilitate the need for people's travel requirements without having to see someone face-to-face. And we believe that, that will also be a key stimulus to the rebounding and renewed growth of the Webjet OTA business. Again, there are a number of strategic initiatives, and I won't go through any of them other than you can read them at your leisure. I am conscious of the time of this call, and we still have a fair bit to cover. Moving on to Online Republic, Slide 19. Cars and Motorhomes performed well. Cruise was patchy in the first half. We did have some other outsized events that impacted this particular business, in particular, the bushfires in early 2020. The nominal bookings from March have been consistent with what I've discussed in both WebBeds and the Webjet OTA business. The cost base is down roughly 23%, primarily through the same measures that we have implemented across the rest of the world, which is headcount reductions and 4-day work weeks. We have closed the Cruise business. Obviously, our Cruise business hadn't performed well for a number of years. And in light of COVID-19 and the difficulty I could foresee in the Cruise business recovering to a sustainable level for us to warrant the investment that we've made, we made the decision to close that business. We have still a high degree of confidence in the management team or the new management team that we have in place in the Online Republic business. And they're tracking not far behind the Webjet OTA business in the recovery back to profitability. But for reasons to do with the cancellations associated with the Cruise business, there were negative revenues. The vast majority of the April to May scenario for Online Republic, that was a factor of the Cruise business refunds being processed and, therefore, that was taken off our books. So that will clearly impact us. But we still have a pretty good recovery leading into the new financial year, where breakeven is 37% of calendar year '19's bookings, and we've exceeded and we're roughly at around about 50% of that -- those booking numbers. The business itself is well placed to -- for domestic tourism, where 70% of our existing bookings are domestic bookings, in particular, Cars are domestic, and the vast majority of Cars are domestic. And all of Motorhomes and the vast majority of our Cars business are also leisure based. So whilst it's a global domestic leisure market that we serve, the vast majority of our bookings as dictated by our car solution is domestic, which gives us an opportunity to lever quite quickly. So as we go through the 3 businesses -- sorry, just going to Slide 21. The whole theme of the strategy is to improve the performance of that business. Again, I won't go through them in detail, they are there for the record. If I go through the summary of our 3 businesses, they currently sit today with what I know about the market. Our expectation is the Webjet OTA business would be the first to return to profitability, followed by Online Republic. And because of the higher cost base for the strategic regions that I outlined earlier about our driver to be the #1 player in the WebBeds business, we think the WebBeds business will be the third one or the last one of our 3 business units to return to profitability. But inevitably, we think all 3 of them will. I'll now hand over to Tony Ristevski, who will cover off our corporate and the financial summary before I come back to go through and cover off a few other points about our business. Tony?

Thank you, John, and thank you, everyone. Why don't we kick off on Slide 23 and just talk through where we land with corporate. As I've mentioned in past conversations or presentations, our FX program continues to yield the right outcome, where in the second half of the financial year we made a modest gain of just under $400,000 versus that of last year of around $200,000, bringing the gain for the year of $1.1 million versus last year's loss of $2.2 million. So the program that we used to get almost 18 months ago now is proving to yield the right outcome, which the idea was to get to a neutral outcome as such. That being said, as we grow our business, the cost of administration continues to grow. Last year, just to remind the investors and the like that we only had debt to wind for the 7 months. So as a cost compare, we don't have like-for-like. We did, obviously, in the current year, increase the compliance cost, particularly around orders and tax, bringing that group into the broader group. Equally and well known is, obviously, these overhead costs around D&O insurance in the marketplace. We renewed our policy back in February just before the crunch time around June when we undertake that program. Equally, as you would see through our statutory accounts, our register has grown exponentially. This time last year, we were speaking of around 10,000 shareholders. Just prior to the capital raise in February, we had around 25,000 and now it's around 65,000 shareholders. So obviously, we're tracking a lot more activity into the register, and some will see that through the degree of the volatility we're seeing. As we think about expenses going forward other than the cost that the management team has taken, vastly, the other costs are pretty much still flat or on the incline. So as you think about the coming year, the way I think about it would be probably end up being closer to [ $15 million ] for the year ahead, and that's excluding any sort of noncash costs associated with any sort of equity plans that the Board might choose to reintroduce in the current year. I think one thing that John did recall at the start was considering the -- how extreme this year was, we ended up canceling all of the executive plans, and that resulted in the write-back. So that would be the only thing that would still be considered into the new year, but we'll have more information about that at the AGM. If you can turn to the next slide, on our balance sheet. Obviously, our balance sheet at June is vastly different to the one we saw back in June of last year. Back then, obviously, our debtors were $300 million higher. Our payables were $440 million higher. So obviously, from that last 12-month period, we've dramatically reduced both. I know debtors are the key focus for the audience, so it's on the right there. You would see that we've called out specifically the B2B debtors, which currently sits at around $44 million. As we presented debtors back on the 1st of April, capital raising, Slide 9, which looked at obviously the net risk as part of that slide on a comparable basis, that risk currently sits at around $15 million. And we continue to manage that downwards. So obviously, we do have a high degree of cyclicality, accruals and the like that we've preserved on our balance sheet that mitigates many of that risk at this stage. The other thing to call around trade debtors, as John talked about is -- obviously, we're reviewing and have reviewed and changed our -- and refined, should I say, our credit policies as it relates to the learnings that we've just gone through. Obviously, the intent here is not to have the same risk transpired going forward. So highlight here is focusing on quality of earnings as a management team. Accruals in the B2B business, and we do break out payables and accruals, still remains cautious. We have taken most of the downside into the current year. So as we think about the year ahead, we don't expect any one-offs or anything of substance to be called out, having been quite cautious with our provisioning at 30 June. And then lastly, just to cover off, as John talked about, the closure of Exclusives business. As we cycled through the receivables and the payables, we did issue in that process around $23 million of gift cards, which have a 3-year lifespan to the customer group, which can be then used across the webjet.com.au website, so as I said, for the next 3-year window. And equally, as we will get to later in the slide deck, we've decided to defer a dividend, so that still sits as a provision as part of the other current liabilities. Moving forward to the next slide on cash flow. No surprises. Unfortunately, as we communicated back on the 1st of April with the capital raise, the size of unwind of working capital, the carries and that would be funded through any capital raise. Obviously, just reiterating, again, we wrote-off the $40 million net debtors in the second half. Equally, we still continue to pay down debt as we roll through the year. And post 30 June, we paid down further $50 million debt following the $163 million of proceeds from the notes. The cash conversion, obviously, is unprecedented at where we are and sort of making it 200%, but we'll be relatively focused on that going forward. We'll provide more information, I suppose, that will be coming next, particularly at the AGM as we speak about the first and second half going forward. On to the CapEx slide. As John said earlier, we have rescoped the ERP project, considering we had the opportunity to streamline our technology aspirations going forward, considering the slower trading volumes that has allowed us to undertake decisions that otherwise would have precluded us when we were growing at sort of 20% plus organically. That has allowed us and the finance team to really sharpen the focus and derisk the implementation. That still is on track, and we have continued with a critical project for us. This is a core backbone for us to be able to grow from where we were pre-COVID of around 4 million transactions to sort of, in our minds, to be able to do over 20 million bookings going forward, is the way we see that platform. So it is something that is more important for us over the next 5 years plus as we think about our longer-term destiny. As we think about next year's CapEx, the way to think about in the first half is we'll continue to spend in the low 2s. And then as the ERP projects start to pick up in the second half, that'll end up being in the mid- to high 2s going forward. And then lastly, on to the next slide, being Slide 27. As I said earlier, unfortunately, with the uncertainty, as we speak, it was prudent of us at this stage to defer the dividend for further 6 months, thereby looking to pay out on the 16th of April of '21, with no final dividend being declared. And before handing over to John, I'd just like to say a big thanks to the finance teams globally, and we appreciate them for having to close the books virtually and doing it all through remote screens and the like as opposed to shoulder-to-shoulder in the office. So a big thank you to the team.

All right. Thanks, Tony. So moving on to Slide 29. Clearly, we're operating in a world that is a long way from what's normal. And what's normal is that we have a global society that's interconnected, and travel is a fundamental component of that interconnectedness, that the vast majority of us yearned for and deliver against, and that we made our personal objectives. And we've got a couple of graphs to talk about why historically the tourism industry is one of the great industries to be involved in. And you look at the international tourist arrival by world region, and you got a 70-year world view with the exception of a couple of other exogenous shock events has been a continuous growth over that cumulative period. And if you go to the bottom graph, you'll see leisure tourism, which is where we are firmly entrenched, going up by 150% in a 20-year time horizon. It's a great industry to be part of, and it's a great fill up for a better society and people being self-actualized to a higher degree as a consequence of travel, and we pay a small part in that. And it's one of the reasons we enjoy coming to work and it's certainly one of the reasons that we've levered and extended the assets that we have on a global basis. We believe these things -- while it's hard to see today, these things will rebound, and these things will be the driver of longer-term value for us and all of our shareholders over the full tenor of time. And whilst we haven't spoken about it explicitly, clearly, many of the assumptions we make change dramatically with the advent of any successful vaccines that implemented into the market. But at a point in time, we know that travel demand will return to historic levels and we'll continue to grow off those historic levels. And both of our businesses, whether it's the B2C businesses or the B2B businesses are vital COGS in the distribution channels for that industry. And we have a global footprint. We still operate a global business. And we still have interactions with both hotel supply and customers to ensure that as that demand comes back, we will capture that demand. And as international borders reopen, we will be party to travelers' needs over that journey. And there are things that will position us well, in particular, in Australia, as I mentioned, we would expect our business to continue to grow quite quickly once the domestic borders are open. The technology offering is unsurpassed, and we believe that will put us in an unparalleled position from a competitive positioning point of view. And we have strong capacity to pick up the share that occurs in the Australian domestic market. Online Republic has got strong marketing capabilities, and we're starting to see some of the rebound in the data we shared earlier. And our WebBeds business is well positioned globally to sell to everybody, including the top 5 largest OTAs in the world who have become an increasing important part of our distribution channel. So yes, we're optimistic about where this industry heads. But clearly, the next 12 months will be challenging. So if we look at our outlook, we're focused the last 4 months of -- the last 3 months in particular, financial year, in July, in providing financial and strategic flexibility through the capital raise and the notes. We can extend a significant period of travel uncertainty and take advantage of any opportunities that come our way, whether it's through organic growth or M&A, there are still potential for us to do that. As domestic leisure markets open up, we believe that, that will be a key driver of people's desire to travel. We understand essential worker travel market is what dominates travel at the moment. But I'm in the privileged position of speaking to lots of people in the industry and getting feedback and collating that. And the people's desire to travel remains unabated. It's just -- mostly, it's a factor of time before that -- the level of confidence in traveling will return. And we're well positioned through both WebBeds and the OTA business and Online Republic to pick up that business. And our core outlook, as I mentioned a couple of times in the call, is to WebBeds become the #1 global player. That's our strategic objective. Web OTA to increase its market share leadership, and we're 5% of the domestic market. In a post-COVID recovery, I expect this to be more than 5% of the entire market -- domestic market. We're about 3.5% of the international market. I expect us to be more than that in the post-COVID recovery. So I think we're well placed there. And Online Republic, the underlying performance, focusing on the 2 profitable elements of that business in Motorhomes and Cars, plus with a strong marketing capability that we've got in that team, should enable us to continue to improve the profitability of that particular business. So all in all, that is the summation of what is and what happened for us in financial year '20, and some early insight into the trading environment for financial year '21. We do have a change that we would like to announce in that we are going to change our year-end from 30th of June to 31st of March. It's something that we have been considering for more than 12 months now. In essence, the key driver is, in the next 5 years, whilst WebBeds has now a bigger business than the entirety of our B2C business and it accounts for roughly 60% of our EBITDA in calendar year '19, we expect that number to even increase further over the course of the next 5 years. And the major period for us of activity and the major EBITDA contribution is over June to August, which straddles the existing end of financial year, which places commercial burden on our organization. And as a consequence, we'd like to change and we will be changing our financial year to the 31st of March. So the next financial year will be a 9-month financial year. First half will end 31st of December, second half will end 31st of March. And the benefit to the investment audience is that when we deliver our first half result, which will be the April to September half, it will capture the vast majority of our -- or a significant component of our earnings for the year, which will give people a high degree of confidence in our full year number. It aligns to what our Northern Hemisphere peers all trade around, and it gives us the greater scope to focus on operational period when we're in the peak demand and have our financial objectives achieved around the 2 reporting periods in shoulder periods of activity for our business. So with that, I know that we have -- and we got 7 minutes left. So operator, hopefully, we have a chance for 2 or 3 questions before we close this call.

[Operator Instructions] We'll now take our first question from Quinn Pierson from Crédit Suisse.

Thanks for the update. I guess, firstly, just in terms of thinking about the bookings outlook for the Bedbank division. I mean, I'm looking at some industry data suggesting U.S. and U.K. bookings over the next 4 months down by 50% from their pre-COVID levels, that's up from -- down by 75% 2 months ago. Obviously, those levels would be meaningfully higher than where your current August bookings are. I guess 2 questions. Firstly, if you're seeing similar trends in terms of booking outlook over the next couple of months? And then secondly, if you think the WebBeds business should outperform or underperform industry booking rates, given your exposure to various distribution partners?

Thanks, Quinn. So the -- I'll start with what we expect. Yes, we do expect to grow at least in line, if not faster than the underlying business -- underlying sector as a consequence of picking up market share. That will be the key driver. I think any data that you see in the short term is so skew-ish as a consequence of whatever assumptions that are made, that it's hard to draw adding meaningful parallels. We are seeing an improvement in our underlying bookings. And we would expect that -- as long as borders remain open, we would expect that to continue into -- as I said, I'm not brave enough to predict beyond 30th of September for this current financial year, but we are seeing bookings picking up across the WebBeds business and, in particular, in Europe.

Okay. So picking up, but probably not as high as some of the figures that I kind of just mentioned, if I summarized that correctly?

Yes. I haven't got -- I'm not going to go through the U.K. and every market specifically, but it sounds high, would be my first thoughts about that number.

We will now move to our next question from Tim Plumbe from UBS.

I'll just ask 1 question and let someone else ask another 1 as well. Just thinking about that cost base, John, at $11.6 million. Can you give us a bit of a feel in terms of how much revenue that sort of cost base could support? And when do you think you'd have to start ramping back up, thinking about the kind of automation and the reduction in headcount that's going through the business? How do you think about that cost base long term when things have recovered?

Tim, we think that, that cost base -- if we look at our historic revenue numbers of around about $400 million, with roughly double the cost, we think with the advances that we're making in -- or I'm sorry, the streamline that we're doing in some of our tech platforms in B2B, the advances we're making in processes across the entire business unit, we would be comfortable at roughly $250 million before we'd start to see any operational increases. The only caveat I'll have about that is that the first thing we'll do is we move people back to 5 days a week at some point. So aside from that, we see there's sort of maybe $300 million before we would look to rehire people.

We will now take our next question from Wei-Weng Chen from JPMorgan.

John, like everyone else, I'll just ask one. Just noticed that volumes in B2B still grew in August, even though sort of the U.K. changed rules around travel requirements for places like Spain. Can you maybe speak to how that particular announcement impacted our Web? And maybe speak to, I guess, changes that Germany has made in the last week?

Yes. We haven't seen a decline in our B2B business over -- post those announcements. So as I said on the call, we're continuing to see modest growth of that number. So that's what we're seeing. So there has been no material impact to the underlying volumes.

We have unfortunately run out of time now. So I would like to hand back to John Guscic for any additional or closing remarks.

Thank you. And I know there's a lot of people on the call. And since we raised some capital in April, there's been a massive increase in the number of shareholders in Web. And we'd like to obviously welcome all of those people to the share registry. I think we're well in excess of 50,000 shareholders as of last count. So we're delighted to see the broader portfolio of retail investors investing in Webjet. We're delighted that you're on board with us. The travel industry is going through unprecedented times. The difficulties that we've faced are enormous, but I think the business is well placed to ensure that in a recovery we will be one of the standout businesses that enable us to achieve our strategic objectives. And that's for a number of reasons, but I'll summarize in very, very briefly. Point number one is, I strongly advocate to all and sundry that we have, over the course of the last 20 years, build out the strongest management team in the travel industry. They have done an extraordinary job in fighting off all of the issues that we've faced, and we've come out with high degree of solidity in the management team that enables us to have a high degree of confidence in ourselves, that we can address whatever issues come our way. Second is, structurally, our business, with the nature of the changing competitive dynamic, well positioned in both B2B and B2C to continue to outperform our peers. And thirdly, our financial liquidity place us in a strong position to withstand whatever other unknowns buffered us over the course of the period. So they are the things that I feel optimistic about and confident that we have the right people, processes, strategies and financial resources in place to deliver that. With that, I thank you for your time. I apologize for taking a full hour, but we felt that in what has been an unprecedented time, we wanted to give you as much color as we possibly could about our strategies and what happened and how we've mitigated some of the impact to our respective business units over the journey. With that, thank you very much. Enjoy your day. Cheers.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.