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

Good afternoon, ladies and gentlemen. It's now just after 3:00 Melbourne Time. I'd like to extend a warm welcome to you to the Webjet Annual General Meeting for 2021. My name is Roger Sharp, I'm the chair of Webjet and I'll chair today's meeting. Our company Secretary, Tony Ristevski, confirms that quorum is present and that no other items of business have been notified, therefore, we will work to the agenda published with the notice of meeting. I now formally declare the meeting opened. Today's meeting was originally convened as a hybrid meeting. However, in response to government restrictions currently limiting physical gatherings in Melbourne, and the potential health risks associated with the ongoing COVID-19 pandemic, the meeting was subsequently convened on a wholly virtual basis. I thank you all for taking the time to join our meeting online via the Lumi platform. I'll say a few words shortly concerning how I propose to run the meeting and the procedures for both voting and asking questions. But first, I'd like to introduce my fellow Directors who are present. Joining today are Deputy Chair, Don Clarke; our Managing Director, John Guscic; our Lead Independent Director, Brad Holman; our Audit Committee Chair and Non-Executive Director, Denise McComish; a Non-Executive Director, Shelley Roberts. I'd also like to take this opportunity to introduce the senior members of the management team from Webjet who are present today. There are too many to call out individually, but I do wish to acknowledge our Chief Financial Officer and Company Secretary, Tony Ristevski; and our Global Chief Operating Officer, Shelley Beasley. You may not be able to see them, but I can assure you that our team is here. Finally, I'd also like to acknowledge the presence of our audit partner from Deloitte, Stephen Rush. Welcome, Stephen. On to the agenda. There will be 2 major components to today's meeting. Firstly, an update on the business, and then secondly, the formal business of the meeting. I'll start by making some introductory remarks about the business about FY '21 and subsequent events in my chair's address. I'll then hand over to John, our Managing Director, who will update you on the company's performance and outlook. We'll then move to the formal business as set of notice of meeting. I'll start by taking the company's 2021 financial year annual report and accounts for comment. I'll then formally farewell Toni Korsanos, who resigned from the Board in March this year, and we will then put 4 resolutions to the meeting: To adopt the remuneration report; to reelect 2 Directors, namely Denise McComish and myself; and finally, to ratify the prior issue of convertible notes. The minutes of the previous AGM of members held on the 22nd of October 2020 were approved by the Board and signed in accordance with the provisions of Section 251A of the Corporations Act. These minutes are tabled, and there are copies available for inspection should any member wish to see them by contacting the company's secretary, Tony Ristevski. The notice of meeting and explanatory statement were dispatched to shareholders on 29 July 2021 in compliance with the company's constitution, and I propose to take them as read. Now I will run through some formalities for both asking questions and for voting. And if you bear with me, this will just take a few minutes. Shareholders and proxy holders attending the meeting online can watch a live webcast of the meeting and will have the opportunity to ask questions and vote on the items of business being put to today's meeting. Each resolution before you today is an ordinary resolution will be passed by a simple majority. The voting restrictions for all resolutions are included in the voting restrictions section of the explanatory notes in the notice of meeting. Voting today will be held by way of a poll on all items of business. I appoint Nigel Bulling from our share registry, Computershare Investor Services, as the returning officer. To provide you with enough time to vote, I will shortly open the poll for voting for all resolutions. Voting will then remain open until I declare the poll closed at the end of the meeting. Questions can be submitted at any time during today's meeting. To ask a question, press on the speech bubble icon. This will open a new screen. At the bottom of that screen is a section for you to type your question. Once you finish typing, please hit the arrow symbol to send your question. Please note that while you can submit questions from now on, they will not be addressed until a relevant time in the meeting. Your questions may be moderated, or if we receive multiple questions on one topic, they may actually be amalgamated together. Due to time constraints, we could run out of time to answer all of your questions, and if that happens, we will, of course, answer them in due course by email. To assist us, could you please identify at the start of your question, which resolution your question relates to. Please note that only shareholders and proxy holders who have registered today on the Lumi platform will be to lodge questions or comments. Now if you're eligible to vote at this meeting, the polling icon will appear on the Lumi platform. Selecting this icon will bring up a list of the resolutions and present you with voting options. To cast your vote, simply select one of the options. There's no need to hit submit or enter, as the vote is automatically recorded. However, you can change your vote by making a different selection up until the time when voting is declared closed. If you experience any difficulty submitting your question or voting online, please consult the online user guide available at www.computershare.com.au/virtualmeetingguide. So I now declare voting open on all resolutions, and I'll give you a warning before I close voting at the end of the meeting. Shareholders should note that your Board strongly recommends that you vote for all resolutions. During the formal business of the meeting, we will display the proxy votes received on the screen before voting by poll is conducted. I will now briefly recap on the 2021 financial year in my chair address, and then I'll pass on to John Guscic, our Managing Director, for a more detailed commentary on FY '21 and the outlook for the business. Webjet Limited's financial performance during FY '21 continued to reflect the carnage reaped by COVID-19 on the global travel industry. For the 9 months to the new 31st March year-end, the company's total transaction value was $453 million, revenue was $38.5 million, and underlying operations reported an EBITDA loss of $56.3 million. As I said in this year's annual report, these are not numbers that we enjoy reporting to our shareholders. Having moved to a new 31 March financial year-end, it is not really useful to provide a comparative discussion between the 12-month FY '20 and the 9-month FY '21 reporting periods. When COVID-19 first hit last year, Webjet took early and immediate steps to secure the balance sheet and drive down costs across the entire business. This was the right strategy, and we are resolute in pursuing the path that we're on. While we wait for global markets to fully reopen, we have not stood still and are focused on the matters that we can control. We've chosen a path that sees us streamlining and improving operations in all our businesses with a view to targeting improved financial metrics and higher market shares as conditions normalize. Recovery, as we now know, will be episodic and not uniform. And we do expect more ups and downs before global travel markets return to pre-pandemic conditions. Just as Australia and New Zealand are again, deep in lockdowns, we're also seeing positive signs in our Northern Hemisphere markets. In fact, our geographic diversification has now become our core strength, as it's clear that different regions will achieve progressive levels of prepandemic normality at very different cadences. We are optimistic that we will emerge leaner, faster and stronger even if the exact timing isn't clear. We're therefore doing everything we can to make sure we're in the best possible position when markets reopen. Our road to recovery depends on retaining our experienced and talented leadership team. This is why the equity remuneration package put in place during the year is vital to the success of this business. The war for talent, particularly for experienced professionals in the technology space is more acute now than it was prepandemic. And our people are hotly sought after. Keeping the team together to capture the upside when we emerge from this long dark tunnel that we're in is essential. Our original ethos of convenience, choice, and customer service remains unchanged. Throughout the pandemic, we've just continued to operate looking after our customers and our people as best we can, sometimes in extremely difficult conditions. We recognize the heightened management and reporting responsibility inherent in contemporary governance. And we've sought to carefully balance the need to run a business in a pandemic with our governance responsibilities. We continue to expand our governance reporting and this year released our inaugural modern slavery statement and sustainability report. We will progressively sharpen our reporting in both these areas as the recovery shows a sustainable trajectory. I'd like to close by saying that Webjet has built a tight-knit team, hardened by the adversity it's been through together and a team that's excited at the prospect of delivering for our owners as we emerge from this pandemic. I'll now hand over to John for his Managing Director's address.

Thank you, Roger. And I'd like to extend my welcome to all our shareholders as we review FY '21 and give some color around how we are tracking in FY '22 and most importantly, how we plan to compete going forward. Three months ago, we spoke at full year '21 results update about transforming the business. And our transformational efforts were a recognition that while markets were in a state of hiatus that we needed to focus on managing our cash, reducing our cash burn, proactive capital management, and extending the terms of our debt repayment. And we did that to the extent where our pro forma cash at the end of FY '21 was $431 million, our average cash burn had been reduced to $5.5 million a month, and we extended our term debt. The focus on the business was that we would transform the business to be ready for the recovery. As you move to Slide 3, we're going to see the immediate impact of those efforts in that our operating cash flow is positive for the first half of 2022. So we started the year with a strong cash position of $431 million, we extended the term debt out to November 2023 and reduced the amount of term debt to $87 million, and we had a target of being 20% more cost efficient at scale. What we're seeing is that we, as a business, have gone from an average cash burn in FY '22 of $5.5 million to where we're seeing strong growth in the WebBeds business that's delivered a positive working capital as well as being profitable in the last quarter of the first half of FY '22. The net result is our operating cash flow for the half is positive. So the first step in the regeneration of the company is on target, and we are now producing cash. As we move to Slide 5, we can also see that we have returned to profitability in our largest business unit. The key measure and the key driver of that has been that we were able to pivot to the domestic marketplace, recognizing they'll be the first to open as the world took a conservative approach to traveling as a consequence of the pandemic. What we've also seen is that we have taken costs out of our business to enable us to reduce the level of breakeven. So much so that we can say that with TTV significantly increasing every month since February that by the time we get to July, we are profitable -- we will be profitable in August, and we will be profitable in September based on the forward bookings. What we have seen is our business has retained its traditional strength of being -- of having a strong global footprint, strong relationships with hotel suppliers, and a deep customer network that's focused historically on interregional travel and international travel markets when they open. And what we've now seen is that when markets do normalize, we are in a stronger position to increase our share with lower costs and improved profitability. Let's talk a little bit about how we've been able to achieve that. The first one is increasing our domestic foothold. The pivot to domestic travel has been a key driver of our return to profitability since July. The domestic sales number has grown significantly if we compare the 4 months from April to July of 2019 to April to July 2021. April to July 2019 saw us predominantly being an international business of roughly 90% and 10% domestic sales. What we see in the most current period is that 54% is international, 46% is domestic. And what we are able to see is that our business overall has got to roughly 51% of pre-pandemic volumes and domestic has been a key contributor. So the first important step as the company has gone through the transformative effort is to focus on domestic travel has paid off because with that initiative, we have been profitable since July and August. Let's talk about what that actually means as we break it out into our respective markets. As you'll see here, circa all of our businesses are roughly 3x greater in their domestic numbers than they were prior to COVID. Clearly, and it's most material for us is the substantial outperformance of our Americas business that have seen that 84% of all sales are domestic. We haven't lost the capacity to sell its international markets, but those markets have generally been shut, and we're sold where customers are buying to partners who need the inventory that we have available. What we can see is on this slide is that we are selling new products to new customers, and we've expanded our target market. Let's talk a little bit about that expanded target market and how we're transitioning to that opportunity. The competitive landscape has changed. For us, the domestic marketplace has been the first to open up, and we have addressed that with the contracts that we've made with hoteliers and with the customers that we have opened up to sell that domestic inventory. We've also seen the stronger outperformance of the B2C channel. And we've been able to effectively implement our technology into those B2C channels to service them more efficiently than we have pre-pandemic. With the financial pressure on some of the smaller players, it's seen a reduction in competitive pressure. And what we're seeing as a consequence of all of these changes is WebBeds, as one of the preeminent leaders in the bed bank industry, we are more relevant than ever in the distribution landscape as we provide a unifying source of content to a broad range of customers, providing valuable market reach to our hotel partners. Our opportunity to sell into that marketplace has increased. The B2B market opportunity that we historically spoke about being $70 billion is now greater due to the increase in B2B distribution opportunities and due to the expansion of the domestic opportunity for us as a business. As we spoke at our full year '21 update, our transformational initiatives are on track to deliver at least 20% greater cost efficiency at scale. What this means for our business is we can target more of our customers at a lower cost and be able to drive greater profitability. In conjunction with our strong financial position, it makes us the most trusted partner to our hotel supply because there are no other B2B players that I'm aware of that have more than $400 million of cash on their balance sheet to support their customer initiatives and provide appropriate counterparty support in our arrangements. If we move to Slide 9. As we can see, we are still targeting our objective to be the #1 global B2B provider. And what does that look like? It looks like a $10 billion TTV market opportunity. Pre-pandemic, we were roughly 4% of a $70 billion marketplace. And we were the fastest growing B2B business globally. What we see now is as we look at the market opportunity, as a consequence of the things I've mentioned in increasing domestic market penetration, looking at increasing the ability to sell to B2C players, that our market opportunity is greater than $70 billion. And if we were just to target 14% of that $70 billion opportunity, we would get to $10 billion. And we can do that by delivering on the transformational issues I've spoken about. We're starting to see it in the results of our business already being profitable. But as we continue to diversify to previously untapped buckets, and we've only just started that journey, there's substantial upside. The opportunity to focus on a singular region for North America and gave it more focus within our own business internally sees us much more optimistic about our ability to sell into that marketplace than we were pre-pandemic. The B2C channel expansion I've spoken about a little bit earlier, and that continues to be a significant opportunity. In conjunction with streamlined technology, leveraging our data analytics and simplifying processes across our business, we are on track to deliver a 20% unit cost efficiency at scale, which gives us a changed profitability target. Pre-pandemic, we spoke about 8/4/4, which is our historic mantra of 8% revenue to TTV, with 4% cost to TTV, driving 4% EBITDA to TTV. Our post-COVID target is 8/3/5, which is 8% revenue to TTV, 3% cost to TTV, capturing the 20% more cost efficiency at scale, delivering a 5% EBITDA margin across TTV, an opportunity for us to be a substantially more profitable business as part -- as a consequence of all of our transformational initiatives that are well underway and some of which have been delivered. As we look to what is the organizational structure to support all of this, we have changed the way we operate our business. We've simplified the business to have a singular CEO, Daryl Lee is the WebBeds CEO responsible for the entire business. We've expanded the commercial regions from 3 to 4 with an emphasis on the Americas. Each of those regions have responsibility for selling and contracting for their market and in providing the appropriate content for each of the other regions to sell. We have spent considerable time and effort in building out an opportunity to address the religious market in Saudi Arabia through Umrah Holidays International, and we are opening up the Saudi office to concentrate on other opportunities in Saudi Arabia as well as building out the Uhmrah Holidays Initiative. Our Global Product innovation division provides a unified approach to contracting as well as an ability to continue to look at the cost takeout opportunities as we transform our business and reduce our simplified costs. All in all, our WebBeds business is well positioned to expand its product range to sell to new customers at a lower unit cost, resulting in greater degrees of profitability. The consequence of all of those initiatives have already been undertaken is that we are now profitable from July and will continue to be profitable at least until September. As we shift our focus to our B2C businesses, we'll start with the Webjet OTA business. We saw that as domestic borders opened, we immediately became profitable and had been profitable for the first 6 months of the calendar year. Our structural shift to online has helped our ability to expand our market leadership position, our brand strength has enabled us to reduce our target market spend and still contribute to a profitable result, and our ability to leverage our highly scalable cost base has seen us deliver a profitable result. As domestic borders open, we are profitable. When domestic borders shut, we are no longer profitable. We, as a business, are uniquely placed to benefit from the domestic-led tourism initiatives, and we have still the capability in place to ensure that when international demand returns and borders reopen, we will be able to capture that. So how did our performance -- how does our performance stack up versus our outperformance historically. And as you can see on Slide 13, we have grown our market share. The structural shift to online is accelerating and has been well documented in the Australian media about the beneficiaries of that. Our positioning within Webjet is to take advantage of our unique capability to enable us to deliver a better outcome for our consumers. Our unique mix and match offering drives a value proposition that no other OTA in the world is able to match. We have the broadest range of payment options of any online travel agency in Australia. And with our strong focus on servicing the leisure market with superior levels of customer service and our superior technology offering, the combination in a recovery state shows us growing at 1.6x the overall market. And as the market has evolved over the last 18 months, we see our share of GDS bookings continue to increase, and we will see a rapid increase again once domestic markets open up. So we have a strong opportunity to continue to have a significantly larger Webjet OTA business in any recovery profile. Then we move to Online Republic, and it's a similar story to the Webjet OTA. As the Australian and New Zealand markets opened, we saw a profitable -- a return to profitability in April and May. And when markets do shut down, we see that we fall below the breakeven line. What we have is a new CEO that's been appointed in April 2021, who has the mandate to focus on the brand rejuvenation and the global expansion of this business. We still see that the profitability upside is better than it was pre-pandemic. And we see that in an environment in which domestic-focused tourism is opening up around the world that we should be well positioned to take advantage of that. As those markets do open up, and it's a question of when, not if, we will be in a strong position to drive a superior outcome for the Online Republic business. Moving forward to some outlook statements around FY '22 and beyond. What we are seeing is that we are well positioned through the efforts and the initiatives that we've undertaken over the last 18 months to capitalize on the travel recovery. Our geographic diversification has been a core strength as different regions recover at different times. Our market opportunity has increased in all of our businesses. We are serving new market segments and benefiting from the structural shift to online. And that applies to the WebBeds, Webjet OTA, and the Online Republic business. Across the entire organization, our cost base is on track to be 20% lower at scale. We have significant cash reserves and runway, which means that as travel does return, and when it normalizes, we are ready to capture it. If we move to our outlook for FY '22, what we can say in the following statements, our operating cash flow will be positive for the first half of '22, WebBeds has been profitable since July, and there's a direct correlation to those 2 statements of effect with the vaccine rollouts and the level of market recovery. What we're seeing in markets that have a high percentage of the population recovering -- sorry, vaccinated, you're seeing travel markets open up, and you're seeing an immediate surge in travel bookings. No better example than on Slide 6 earlier in the presentation, when you see July, August TTV and booking number for the WebBeds business. As the accelerated vaccine programs rollout in Australia and New Zealand, we expect them to have a positive impact in early calendar year '22. Although the timing for removal of border restrictions are still uncertain, we do feel that when they do open up and -- both domestically and internationally, there will be a surge of online booking activity in the leisure marketplace. As markets open up, we've already seen that they can rebound quickly. We saw that in the April, May period for both Webjet and Online Republic. And we've certainly seen that in the last -- sorry, last 2 months of July and August and the next month of September based on the forward booking profile that markets rebound quickly. And the best part of the scenario is that there is significant upside as more markets are going to open, and we're seeing that on a daily basis. The company will generate positive cash, operating cash, the first half '22 and the key driver, as I've mentioned, has been the Webjet TTV growth. So let's look beyond FY '22, and what do we see? We've spoken about this at the end of FY '21 full year results. We see a world of opportunity. We see that all the key determinants, all the key criteria, all the key components that made the Webjet enterprise one of the fastest-growing ASX 200 businesses historically and to deliver the historic EBITDA is still in place. If all things were just as they were, we are still well positioned to get to pre-COVID numbers. However, we have taken steps to improve on those pre-COVID numbers. There's cost efficiency across the entire book business, which suggests that at that scale, we are 20% more cost efficient. The consequence of which is if we were merely to replicate the historic TTV and revenue numbers that we would be a substantially more profitable business. But that's not our ambition. It's not our target. Our B2B opportunities see us focused on some untapped markets that we've only just started to address. We've seen our expansion into North America, which we think will be a substantial driver for many years to come for our business, we've expanded who we sell to and change the mix of customers with a focus on the B2C channel, and in conjunction with our technology enhancements and our data analytics, we feel that we are in a unique position to address a broader range of B2B opportunities. But it doesn't end there. The B2C opportunities are just as significant. The structural shift to online is a favorable tailwind for our business. It's evidenced by the shrinking number of physical stores, but the unique capability of Webjet to address those markets sees us uniquely positioned to continue to grow our B2C businesses. So I would like to just summarize our position by saying that we will return to our preeminent position as one of the ASX 200's fastest-growing globally focused businesses. We welcome all of our local shareholders on that journey. And in conjunction with my fellow Directors, the management team and all of our employees, we'll work tirelessly to support those initiatives. I'd like to thank them all for what's been a difficult FY '21, but an FY '22, that is full of promise. Back to you, Roger.

Well, thank you, John. Now I note from the Lumi platform that we have 6 or 7 questions that have come in. The first 5 or 6 for John and one for me on dividends. So I'm going to ask Carolyn Mole, our Head of Investor Relations, to direct the questions for John directly to him, if you could do that, Carolyn, and then come back to me on dividend at the end, if you could.

Sure, certainly, Roger. John, one of the first questions -- we have a number of questions from shareholders. The first one is, in relation to WebBeds, the 2021 annual report said, we are committed to emerging from COVID as the global B2B leader and are taking advantage of new opportunities to target $10 billion TTV. What year do you estimate WebBeds to be the global leader? What will change for this to occur? And when do you estimate WebBeds will reach $10 billion?

Thank you, Dr. Carolyn. Difficult question to start off proceedings to be so specific, around when this will occur. The initiatives that we spoke about, and I draw attention to anyone who's interested in following up in greater detail, are all contained on Slide 9 of the presentation. And we see that we were fast-growing pre-COVID, and we had a trajectory that was going to take us well north of $5 billion just with our existing initiatives. And what we're seeing is that with the opportunities on the back of the domestic marketplace, opportunities on the back of penetrating North American business, the slightly nuance change, the competitive landscape, all of which give us a greater opportunity to take share from our competitors. And we believe we can do that because we will be the low-cost provider. And having a competitive edge price point enables us to drive volume. And I think that's going to be the key driver of how we get to $10 billion. As to when we get to $10 billion, that's not determinable at this stage. There's clearly a great world of unknowable events that we're all living through. But directionally, we have, within our existing organization, and where we're heading in the relative strengths that we're continuing to build out in our existing organization, we have the capability of getting to $10 billion in the WebBeds business.

Thanks, John. The next question from shareholders is how is WebBeds offer differentiated from other global leading bed bank competitors?

The first thing I'll say is that there are only 2 true global players in the market. We're one of those 2 true global players. And by that definition, it's where we have a substantial physical presence in every geographic and every major country that is meaningful in the travel landscape, and we are one of the only 2 businesses that operate there. So that's first thing. The second is, as we think about our business and we think about where the market is heading, as I described in the previous answer, we have an opportunity that enables us to focus on the emerging elements of the market that we haven't previously addressed, and we think that will provide us with a point of differentiation. And having a level -- a lower level of cost base to everybody in the market gives us a unique position. This is a business of scale, and in a business of scale, the low-cost provider inevitably wins. We believe we are the low-cost provider, and we believe that, that is our destiny to win as a consequence of being the low-cost provider in the scalable business.

Thanks, John. The next question is does WebBeds or Webjet OTA have any acquisitions that are likely to eventuate in the short term?

One of the things that we did speak about when we issued the convertible note is that it gave us a better hand to play when it came to looking at M&A opportunities. We still have that capability on the back of the $400-plus million that we started the half and the cash being generated by the business. So we certainly have the capacity without having to tap up the equity markets to make further acquisitions. It would be inappropriate and premature to announce those on the back of an AGM. But suffice to say that we continue to scale the market for appropriate opportunities, and they have to be compelling in light of the uncertainty of the markets for us to engage in any of those conversations. So we continue to look. And if and when there are appropriate opportunities that the Board is comfortable with, we will let the market know at that point in time. But there is certainly wouldn't be my intention to make any announcements at this point.

Thank you, John. The next question, what exactly are we doing on the technology level to be ready when the border reopens?

Well, that's a question that we focus on every single day across the business unit or the various business units, whether it's Online Republic or the Webjet OTA and enhancing the consumer experience, looking at the integration of content and the display of that, making it relevant and compelling to our consumers is something that our entire organization from the product-led teams to the IT development teams that are involved in that on a daily basis based on the feedback that we capture across our business. There are continuous improvements made to the Webjet business, including, for example, our most recent deployment last week on an improved way of self-servicing your bookings on the back of cancellations because of COVID. So there are many initiatives that are underway on the B2C side. On the B2B side, it's all about delivering sub-second scalable 300,000 hotel inventory at great pricing, connecting to our clients' technology stacks and being able to do that at scale. And that's the primary driver of our assets there. And that is an ever ending quest. So we continue to look at ways in which we can drive greater value through XML connectivity to our customers.

Yes. Thanks, John. I have 2 more questions for you. The first is how did we cut cost or reduce cash burn. By reducing manpower or just delaying repayments?

It certainly wasn't the latter. We have continued to pay everybody per terms and on time. So that is definitely not an element to the improved operating cash burn of the business, which is clearly now positive for the first 6 months of FY '22. I spoke a little bit during the presentation about the transformative efforts of our business, some of which were externally focused on what we were doing to attract new customers, but a number of those transformative efforts were also in regards to simplifying the business, producing technology solutions that enabled us to do more with less resource and clearly, in the early stages of the pandemic. And by that, I mean, the sort of the first 6 months, there were a number of cost reduction initiatives to take manpower out of the business as a consequence of the reduced volumes. And as we have restructured the business to take advantage of what we see will be higher growth opportunities for us, we've looked at ways of doing it with less physical resources and using technology to drive efficiencies across the entire organization. So that's been the major driver. And on the B2C side, that's been complemented by more efficient marketing spend as a consequence of reduced competitor activity. They've been the 2 key drivers of the efficiencies that we've been able to obtain. It certainly hasn't been in abusing our position with our partners. We've always taken pride of being a good corporate citizen. And by that definition, paying people on time, get to a favorable longer-term relationship, which is important for a business like ours in which we are at the intersection of hundreds of thousands of suppliers and tens of thousands of consumers and thousands of corporations that rely on our solutions.

Thanks, John. Another question has come through. So there are 2 more for you. The next one is, to what extent is the 20% cost efficiency driven by the blockchain initiatives, or are there still more gains to be made?

Blockchain initiatives, as a reminder for our shareholders, is something that we started the investment back in 2017. It has -- we ended up building out the first working blockchain solution in the travel industry and has been integrated into the workflow of the WebBeds business since 2019. It has been a key contributor to us getting to the 4% cost target for our business. And as that -- as we scale, it will continue to provide economic benefit to the broader WebBeds customer service function with regards to ensuring that the appropriate people are getting the appropriate services that they've contracted and making sure that then flows through to the entire back-end processes within the WebBeds business, including payments and receivables from our respective partners along that journey. So blockchain has been a key component. We continue to invest in it. And it's a contributor to the greater than 20% cost takeout initiatives that we have for the B2B business. And as the B2B business will have a greater impact as it's a larger business unit, it contributes to our overall 20% cost reduction at scale for the entire business. So it is a key component of that equation.

Thank you, John. And the last question I have for you at the moment, is management of debtors became an issue for you previously, the demise of Thomas Cook was a significant example. What has Webjet done to ensure this is a reduced risk moving forward?

It's a very appropriate question to ask in a period of recovery. There were many lessons that we learned as a consequence of the pandemic and the change of emphasis within our organization around sustainability of customer relationships and ensuring that we have appropriate safeguards in place. To the extent that I can, I will attempt to summarize them in the following steps. We have significantly changed the process of approvals and credit limits and payment terms across the board. The example that you gave was a one-off shock with Thomas Cook. We don't have and do not plan to have any customers have the same level of credit exposure. And part of the recalibration of our business in the recovery phase has seen us implement more appropriate procedures in place to ensure that doesn't happen again. There are other instances where we have prepayments. There are other markets where we see either market-specific risk or geopolitical risks that we tend not to trade with those people, or we don't trade with those people, or we do at significantly improved terms to us where we have appropriate securities in place for those customers. So there are a substantial number of initiatives driven across the organization to ensure that we don't end up in the same position that we did when Thomas Cook went bankrupt 3 years ago.

Thank you, John. There are all questions we have for you at the moment. Roger, there's one question for you at the moment. Any update as to when dividends will start to flow again, please?

Well, thank you, Carolyn. I was starting to feel lonely here with John answering all those questions. Actually, I think the last question that John answered is a perfect segue into dividends, and I'd like to answer it in 2 parts. Firstly, to talk about an interim dividend that we have been communicating with our shareholders on and then looking to the future. On the 17th of February this year, we announced the payment of our $0.09 interim dividend for the 6 months, just so you understand that 2019 would be reviewed at the time of the H1 '22 result, which is usually released on or around the 24th of November. So the point I would make is the 6-month dividend that we have held on to for obvious reasons will be addressed at that time. As for future dividends, look, as much as we would like to, it would not be wise to make commitments or dividends at this point. We need to achieve a sustainably profitable business before we can consider paying out dividends. I'd like to give you a clearer position, but let's get through this pandemic before we consider paying out dividends. Carolyn, any further questions for us?

Not at this stage, Roger.

All right. Thanks very much. We'll come back to you in a few moments, Carolyn. But for now, I'll move to the formal business of the meeting. Now there will be an opportunity to ask questions on all items of business. The first item of ordinary business on the agenda is to receive and consider the financial report, the Director's report, and the auditor's report for the company for the financial year ended 31st March 2021. Although this is not a voting item, we would certainly be pleased to receive questions and comments. Our auditor, Stephen Rush, is also available to answer questions on the conduct of the audit, the auditor's report, the company's accounting policy, or indeed the independence of the auditor. Again, please raise any matters you believe require attention. No written questions for the auditor were received in advance of the AGM. Carolyn, have we received any online questions or comments in relation to the financial report and accounts?

Not at this stage, Roger.

Thank you, Carolyn. At this point, I would actually like to farewell and give a vote of thanks to Toni Korsanos, who resigned as a Board member of the company on the 24th of March 2021, having served as a member of the Board since June 2018. Toni was a valued member of the Audit Committee, which he was Chair and of the Risk Committee. The Board formally extends to Toni its very best wishes for the future. And of course, I note that as one door closes, another one opens, and we are very pleased to formally welcome Denise McComish to the Board as both a Non-Executive Director and as Chair of our Audit Committee. We will now move to the resolutions to be voted on today. All resolutions will be voted by a poll, and I'll give you ample warning before closing the poll after conclusion of the final item of business. Resolution 1 is to consider, and if thought fit, pass the following resolution as an ordinary resolution. That pursuant to in accordance with Section 250R(2) of the Corporations Act for all other purposes, the remuneration report set out in the annual report for financial year ended 31st March 2021 be adopted. This resolution is advisory in nature and doesn't bind the Directors or the company. Please note that key management personnel of the company, including Directors and their closely related parties are excluded from voting in any capacity on this resolution as per the notice of meeting. Also, please note that as Chair of the meeting, I will be voting undirected proxy votes where I've been appointed as proxy in favor of this resolution. I now draw your attention to the proxy votes received in the table on the screen. Before proceeding, I would like to make a few comments about our shareholders' response to the remuneration report. Despite a lot of careful thought and discussion with shareholders and proxy advisers during the year, it's very clear to us that a significant proportion of our shareholders is not happy with the remuneration structure put in place for our leadership team and in particular, for our Managing Director. I could go into a long discussion about this and list the reasons why we believe the judgments we've made as the Board during the year were and remain in shareholders' best interest, but the fact is that the significant proportion of our shareholder base does not agree with decisions we've taken recently on remuneration. And we want you to know that we acknowledge and are listening to your feedback. So after this meeting, Brad Holman, Chair of our Remuneration Committee, and I, will again be engaging with our major shareholders and with the proxy adviser community with a view to looking forward. We will also be engaging with external consultants to ensure the remuneration framework continues to be fit for purpose and aligned with shareholder value creation. And I should just conclude by saying that the tight rope that we are walking is to meet our shareholders' expectations while retaining our talented executives in a pandemic that has not only smashed the travel sector, but has intensified the war for talent. So now we will move on to the resolution. If you have questions or comments about this resolution, please enter them on the Lumi platform now so that we can respond to them before voting. Now I see, Carolyn, that we have a couple of questions that have come through. And I wonder if you could direct those please, to the Chair of our Remuneration Committee, Brad Holman.

Certainly, Roger. Brad, we've currently got 2 questions for you. The first is from the Australian Shareholders' Association. Last AGM, the Australian Shareholders' Association raised concerns regarding the Managing Director's incentive plan, specifically the exercise price and low vesting hurdles for each of the 3 tranches of options. Despite unsuitable trading conditions for our travel business over the past 12 months, the Webjet share price has traded well above the target price for each of the 3 hurdles. Given this, can you please expand on the reasons why the Board remains comfortable with this decision?

Thanks, Dr. Carolyn, and thanks, Roger. The Board remains comfortable with the long-term incentive put in place for the Managing Director. At that time, we made decisions based on information we had and the environment we were operating in, and also in terms of what we could best foretell. And as a reminder, that was at a point in time with the global pandemic, no vaccines, focusing on securing our balance sheet to have sufficient capital to meet the future unknowns, and a share price trading at sub $3 in late July 2020. That was the period when we were deliberating a long-term incentive plan for the Managing Director to lead the company through the challenges that lay ahead. Options were granted to the Managing Director under this long-term incentive plan as options act in such a way that there are intrinsic growth hurdles and options have higher value as the company's share price increases and this aligns with long-term growth of the company and creation of shareholder value. The proposed hurdles for the 3 tranches of options were determined during July 2020 based on Webjet's share price experience at that time since the initial impact of COVID-19, expected future growth, and noting significant operational challenges as a travel technology company in the midst of this global pandemic. The value of these grants can only be assessed at vesting points based on share price performance at that specific time, and negative volatility needs to be taken into consideration beyond the potential for unexpected gains as well as the need to hold on to these shares for 12 months post exercise as these were key items of concern when implementing the structure for this plan.

Thank you, Brad. We have another question also from the Australian Shareholders' Association. Was consideration given to implementing safeguards on the incentive plans to prevent windfall outcomes?

Well, firstly, I'd say there is no guarantee of any windfall outcomes. As mentioned earlier, options act in such a way that their value increases in alignment with the growth of the company and creation of shareholder value. As such, there are no windfall gain safeguards implemented in the long-term incentive. However, similarly, in the circumstances that options do not vest due to the share price falling below the hurdle set, there is equally no windfall loss safeguard. The award in this circumstance would typically not vest and have no value. And again, lastly, at the period in time in July 2020, at the time this package were priced, I would remind the audience, there were no vaccines, victoria was in the midst of a 4-month hard lockdown and bookings for our peak Northern Hemisphere summer were not existent. And so at that time, the VWAP of the company's shares trading on the ASX in the 30 days up to the 19th of August 2020, was [ $3.08]. So hopefully, that gives comfort in that question, Carolyn.