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

It's now 9:00 Melbourne time, and I'd like to extend a warm welcome to you to the Webjet Annual General Meeting for 2022. My name is Roger Sharp, the Chair of Webjet Limited and I'll chair today's meeting. I would like to start by acknowledging the traditional owners and custodians of the land on which we meet today, the peoples of the Kulin Nation. I also pay my respects to the elders, past and present. Our company's Secretary, Tony Ristevski, confirms that a quorum is present 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 open. Today's meeting, as you can see, has been convened as a hybrid meeting, and I thank you for while taking the time to join us either via the Computershare platform or indeed in person here at Webjet. And I have to say after some years, it's great to see our shareholders turning up. Thank you for being here. For the members attending in person, can you please turn off your mobile phones, turn off your photographic equipment and recording devices during the meeting. I'll say a few words shortly concerning how I propose to run the meeting and the procedure for voting and for questions. But first, I'd like to introduce my fellow directors who are present. From my left, Deputy Chair, Donald Clarke, and Audit Committee Chair and Non-Executive Director, Denise McComish. Of course, our Managing Director, John Guscic; Senior Independent Director, Brad Holman. And of course, Shelley Roberts is joining us from the U.K. I can't see if she's on the screen anywhere, but I am assured that Shelley is with us. I'd also like to take this opportunity to introduce some of the members of our senior management team who are present today. There are too many to call out individually, but I do wish to acknowledge our Chief Financial Officer, Tony Ristevski. Our company -- who is also our Company Secretary and our Global Chief Operating Officer, Shelley Beasley. Finally, I'd like to acknowledge the presence of our audit partner from Deloitte, Stephen Rush, who has now led the audit of the company's accounts for the fifth successive year, ending with the FY '22 audit. We'd like to thank Stephen for his services over the past 5 years and of course, welcome Chris Berman to his right as our new audit partner for the FY '23 order. Thank you, Stephen. Welcome, Chris. There are 2 major components to today's meeting. Firstly, an update on the business; and secondly, the formal business of the meeting. I'll start by making some introductory remarks about the business about FY '22 and subsequent events in my chair address, then I'll hand over to John who will update you on your company's performance and outlook. We'll then move to the formal business as set out in the notice of meeting. I'll start by taking the company's 2022 financial year annual report and accounts for comments, then we'll put 3 resolutions to the meeting. The first of which is to adopt the remuneration report, second of which is to reelect Shelley Roberts as a director and the third is to adopt a new constitution. The minutes of the previous AGM members held on the 31st of August '21 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 Secretary. The notice of meeting and explanatory statement were made available to shareholders on the 29th of July '22 in compliance with the company's constitution. And I propose to take this as read in this if there are any objections. Now a few words on formalities for questions and voting. For shareholders and proxy holders who are here in person today you would have been issued a blue attendee card with voting details on the back. I'll advise the procedure on how to ask questions and vote as we move through the business of the meeting. Shareholders and proxy holders attending the meeting online can watch a live webcast. We'll have the opportunity to ask questions and vote on the items of business being put to today's meeting. [Operator Instructions]. Resolutions 1 and 2 before you today are ordinary resolutions to be passed by a simple majority. Resolution 3, which relates to the constitution, there's a special resolution, which needs to be passed by at least 75% of the votes cast by shareholders entitled to vote on this resolution. The voting resolutions for all -- the value 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 poll on all items of business. I appoint Nigel Bulling from our share registry, Computershare Investor Services as a returning officer. To provide you with enough time to vote, I'll shortly open the poll for voting for all resolutions. Voting will remain open and so I declare the poll closed at the end of the meeting. In the event that technical difficulties arise during the course of the meeting, I will have a discretion to determine whether and how the meeting should proceed. If required to exercise this discretion we'll have regard to the number of shareholders impacted, and the extent to which participation in the business of the meeting may be affected. So a few words on questions for those attending in person. If you'd like to ask a question, please raise your blue attendee card to ask for a question when called upon to do so. You may speak once you've been acknowledged by the Chair of the meeting. For those attending online. [Operator Instructions] Written questions can be submitted online at any time during the meeting and will be addressed at the appropriate time. I ask that you identify the capacity in which you're attending the meeting when asking a question, for example, as a shareholder or as a proxy holder. Please note that while you can submit written questions online from now on, they will not be addressed until the relevant time in the meeting. Your questions may be moderated or if we receive multiple questions on 1 topic, they may actually be aggregated. Due to time constraints, we may run out of time. It just happens to attempt to answer your questions by e-mail. To assist us, could you please identify at the start of your question, which resolution your question relates to. For those attending the meeting online, please note that only shareholders and proxy holders will be able to lodge questions or comments via the online platform. I encourage shareholders who are attending online to submit questions or requests to address the meeting as early as possible. It's a lot more complex than it used to be as [indiscernible]. All right, how to vote. For shareholders and proxy holders who are attending in person, you've been issued a blue attendee card, with voting details on the back. For shareholders and proxy holders who are attending online, you are eligible to vote. The vote icon will appear on the Computershare meeting platform. Selecting the icon will bring up a list of resolutions and present you with your voting options. To cast your vote, simply select one of the options. There's no need to hit submit or enter as your vote is automatically recorded. You'll receive a vote confirmation on your screen. You can, however, change your vote by making a different selection up until the time voting is declared closed. Again, if you have any difficulty submitting your question or voting, please contact computersahre.com.au/virtualmeetingguide or call on 0394-15-1424. I now declare voting open on all resolutions. I will give you a warning before closing voting at the end of the meeting. Shareholders should note that your Board strongly recommends you vote for all resolutions. During the formal business of the meeting, we will display the proxy votes received on the screen behind me as the polls -- before the poll is conducted. I'll briefly now recap on the 2022 financial year, and then we'll pass to John for a more detailed commentary on the year and the outlook for the business. This time last year, I reflected on the carnage wreaked on the travel industry by the pandemic. After 2.5 years of hard work, it's really gratifying to see the recovery well underway. It's good to be able to sit here facing you today with high levels of confidence and optimism, a sustainably lower cost to serve and market share is up sharply with customers who want to travel and by and large with one notable exception, all borders opened. Our view is that consumers desire to travel will continue stronger than ever, notwithstanding the many economic obstacles the world faces at present. When I addressed shareholders this time last year, we reported 9-month TTV of $453 million, revenue of $38.5 million and an underlying EBITDA loss of $56.3 million. It was, of course, for a 9-month period. In the 12 months to 31 March 2022, Webjet's financial performance really started to turn around with TTV of $1.638 billion, revenue of $138 million and an underlying EBITDA loss of $15 million. I said in the annual report that the full year result, a statutory loss of $85 million after tax did not reflect the heavy lifting that our team has done in rebuilding Webjet as a more efficient streamlined business. When John gives his Managing Director address shortly and updates you on the progress we've made in FY '23, and our -- the prognosis, if you like, for '24, you will definitely see the fruit of our team's labors coming through quite clearly. Our 2 major businesses have now returned to profitability, group bookings are almost completely back to pre-pandemic levels on a significantly lower cost base, and cash generation is growing sharply. Notwithstanding this very positive momentum, we also lived by the maximum once bitten, twice shy. We're watching the environment very closely. We continue to watch cash, cash flow and debtor risk very closely and are obviously tuned-in to the global forces threatening prosperity, war in the Ukraine, high inflation, energy and food prices skyrocketing, a still broken supply chain and an on-again, off-again pandemic. Of course, of particular concern for us has been a partly broken nature of many parts of the travel value chain, from airports to borders, from customer service to flight cancellations, it just is not yet quite back to normal. And while the system is mending itself, we're very focused on doing what we can to restore our own customer service to the levels we've always aspired to. I'd like to think back to our founder, David Clarke, whose ethos of convenience, choice and customer service still drive our thinking today. Notwithstanding the challenges we face, at Webjet, we are optimistic about our company and the unique place it holds in the travel sector. I would like to commend our senior management team, the wider Webjet team and my fellow Board members for staying the course during an incredibly difficult 2.5 years. It really has been and is a privilege to work with such a talented and committed group of people. Finally, of course, on behalf of the Board, I would like to acknowledge our shareholders and to thank you for your support. It's been a difficult couple of years, but we are firmly of the belief that from adversity comes opportunity, and that our best years lie ahead. With that, I'll pass over to you, John.

Thank you, Roger. And you mentioned the complexity of running a meeting doing this for the 11th year, and it will be the first moment that I'll need glasses. So you'll have to bear with me. My vanity is no longer a precursor to being able to deliver the presentation. So as Roger has touched on, I'm going to spend a little bit of time going through what happened in 2022. The numbers weren't great, and they're a reflection of where we were in the travel recovery cycle. And I'll spend a little bit more time on where we think we are today and what we think the opportunity that is ahead of us, which we're very excited about. So if we move to the next slide, group profitability in the second half of '22, we saw a recovery at both WebBeds and the Webjet OTA. WebBeds that was driven by an improvement in our underlying performance in North America and Europe. And as we spoke about our driver of the reestablishment of the core components of our business, we had said we would do it at a lower cost base. And we started to see that occur in the second half of 2022. And we'll talk a little bit about that and how that's tracking with regards to the current financial year of 2023. The Webjet OTA business is profitable for the full year, notwithstanding impact of Omicron, we've seen such a long time ago now. And we started to see a little bit of international bookings come back, having been predominantly a domestic booking marketplace in financial year '22. GoSee, we said that we would rebrand to enable us to get greater efficiencies, improve the customer experience and improve the underlying performance. So at a high level, cost efficiencies are coming through the business as we're returning to scale. And most importantly, we were -- we generated cash last year of circa $50 million, which is a cash surplus of $4 million a month, which, as Roger made specific mention to once bitten, twice shy. We're going to make sure that cash is at the forefront of all of our decision making-criteria going forward. Next slide. Key metrics are there for you to look at I am extremely confident that come August 31, 2023, the numbers will be a material improvement on everything that you see there. We will touch on this in regards to current trading, but TTV is up substantially. Revenue will be up substantially. Expenses will not be up at the same level that revenue and TTV have been up, and we will be significantly profitable this year with a view to getting back to pre-pandemic EBITDA levels in the following financial year of FY '24, which we think is a major milestone that very few travel companies around the world have got the ability to confidently predict. Next slide. WebBeds profitability in the second half, you can see the recovery occur and you can see a little bit of the muted response as a consequence of Omicron through the December, January period of last year. And I'll just make the point yet again that on track, we will be 20% more cost efficient. You'll see that come through in this year's numbers. Going to the next slide. The Webjet OTA business has been profitable for the full year, notwithstanding the significant amount of lockdowns that occurred and international borders being shut for a significant period of the last financial year. The opportunity still exists for us to rapidly improve our OTA business. In particular, we are focused on expanding our market share of international bookings. And we'll talk a little bit about that as we go forward into FY '23. The GoSee rebrand was launched in October '21. So there are all things we spoke about at the full year results, and that's obviously a very brief summary because it feels almost like it's the dim distant past what I've just made reference to. Let's talk about what we're going to do from now on. So if we move forward 2 slides, the WebBeds business is targeting growth, and it's no different to what we said was going to be a driver of our underlying performance in FY '22, which is that as markets reopen, we will be well positioned to capitalize on the reopening of those markets. WebBeds, in particular, will be more relevant than ever because hotels need global reach. And as all of you -- as shareholders will know, the WebBeds business is the fulcrum that enables supply and demand across the entire hotel industry to be satisfied, and we're able to do that very, very efficiently. And we'll talk about what that means for the financials in a few slides time. What the great opportunity for us is that the market opportunity in regards to what is the total addressable market has increased. Prior to COVID, we spent most of our sales effort focused on traditional hotel distribution through retail travel agents, corporate travel agents, tour operators and the like. The opportunity that has expanded for us is that the online travel market is the most significant growth opportunity that we have, and it's the largest growth market that still exists in the travel ecosystem. And we're well positioned to take advantage of that through our WebBeds business, and we'll share some of the successes that we've had in the current financial year. The competition has decreased, which has enabled us to substantially outperform the market during the course of the last 6 months. So as we look at it, we think that the new market opportunities, the operational efficiencies and the differentiation of our offering enable us to derive a substantially better outcome than we would have had pre-COVID. I move to the next slide. It comes across in 3 specific areas that we're focused on internally. And I'll just pause here to say that next Monday, we will be doing a Strategy Day in which we will outline in significant detail, the competitive positioning of our business, what our opportunities are and how we're taking advantage of those opportunities and why we think that in the WebBeds business, in particular, the macro events that Roger has described in some detail in his opening remarks, will not impact on our accelerating growth profile of our WebBeds business. I'll contrast that later on to the opportunities in the OTA business, which are a little bit different where the macro events will impact the recovery thematic for our OTA business in general. If we look at what we think is going to enable us to become the #1 global B2B supplier, it's the ability to address the domestic marketplace, which is an initiative that we've spoken about at the last 2 AGMs, and it's a primary focus of our business, expanding our regional push into North America, and we'll highlight again in a few slides time, the progress that we've made and the new e-commerce opportunities in relation to the OTA markets that we think are substantial for us to address. On the second element that's going to enable us to be competitive because we are firmly of the belief that the low-cost provider in this industry will win is that lowering our cost has been driven by a number of things, including the simplification of our technology platform, a series of automation processes that enable us to grow the business without having to add significant human capital to our organization and the ability to differentiating our offering through the use of data to provide insights into the processes required to be efficient, and also to deliver better insights for our customers so that they can be more effective in utilizing our technology to make bookings for their individual business needs. What our differentiation always focuses on is leveraging our technology to optimize hotel revenue and to get the broadest distribution base possible. And we've been able to do that pre-pandemic. And through the use of more significant and sophisticated data tools, we believe that we can increase our level of market share, and we'll talk about the success of that in a few slides. If we go to our FY '23 trading, as you can see it's been a quarter-on-quarter improvement since the first quarter of '22. And if you look at the 2 most recent quarters, obviously, we're 2/3 of the way through the second quarter, but you're seeing that we are at a bookings level of 106% of pre-COVID bookings. We would be one of a handful of travel companies globally that have seen that level of recovery for one of their major business divisions. As opposed to some of the others who have achieved that, they have seen a slowing down of their respective performance in July and up, as the macro headwinds that Roger described take hold, that has not been our experience. And you're seeing an acceleration of our growth where we went from 83% of bookings in the last quarter of FY '22 to 106% of FY '19 bookings in the first quarter and 116% as of yesterday in the second quarter of our financial year. The things that have contributed to that substantial outperformance have been a very strong Northern Hemisphere summer, in particular, in Europe, which is our largest market. North America, which pre-COVID was the smallest of our 4 regions is now the second largest of our regions, and we've seen a substantial growth in that particular area because of the investments we have made, as we described 12 months ago for our business. And APAC, notwithstanding that China is effectively shut to outbound and inbound travel and is merely a domestic market, Japan has started to reopen yet there are high levels of restrictions of who can and can't come into that particular country. They're our 2 largest markets in Asia Pacific, and we've got back to pre-pandemic booking levels without those 2 markets operating for the benefit of our interregional travel. We've outperformed the market where IATA calculates that the air travel market, which is a pretty good proxy for demand is circa 70% of pre-COVID levels. And we're tracking well north of 100% for the first half of the current financial year. There's been lots of commentary about macroeconomic indicators suggesting a slowing of the travel market. We are not seeing that. So much so that you can see that our TTV numbers for the first quarter continue to accelerate into the second quarter, and our TTV is higher than our pre-pandemic level in the second quarter of 2023. Now a question that I've been asked by a number of analysts previously is why is the bookings growth exceeding our underlying TTV. That's a reflection of the strategic driver that we have implemented into the distribution of our inventory by focusing on domestic markets, and domestic bookings are typically shorter duration -- shorter in duration and at a lower average booking value. So that's the driver of the delta between our TTV numbers and our booking volumes. If we push forward 2 slides and talk about the Webjet OTA market. As I mentioned about the B2B market, we will have a Strategy Day next Monday, focusing also on the opportunities for our 2 B2C businesses, Webjet.com and GoSee, and we'll talk a little bit about what are the opportunities there and how we are attempting to address those and accelerate our growth rates beyond what we achieved pre-COVID. The opportunities are substantial for the OTA business. The structural shift to online continues, and the ability for us to address that structural shift is enhanced as a consequence of the competitive landscape changing, which is being well documented about the closure of bricks-and-mortar stores and consumer preferences moving online. All that is represented in our outperformance of the current market. And whilst the demand for travel remains strong, we will perform well in that environment. We are the #1 OTA in Australia and New Zealand. We've got strong domestic market, especially the leisure market penetration with a focus on investing into the international opportunity that we believe will be substantial for us in the years ahead. We move through to the next slide. Year-to-date, we've seen our domestic bookings up 35% against our share of the entire GDS market, and all bookings are up 57%, which suggests that we're outperforming on the international side as the market starts to rebound. We are not at pre-pandemic booking levels for the OTA business, and we're a long way of the pre-pandemic TTV numbers for 2 reasons. One, the full domestic marketplace has not returned to its pre-pandemic capacity. There's been a large number of redemptions of flight credits that have occurred over the course of the last 12 months that mutes our actual numbers because they're not reflected in any of the numbers that I've just spoken about. And we're seeing the inbound international -- the international uplift out of Australia is substantially reduced. And as you could imagine, the average booking value for a ticket that we sell for an international passenger is substantially greater than a domestic passenger, so we see that there are substantial opportunities, and the most significant one that we are going to address over the course of the next couple of years is through the acquisition of Trip Ninja which is an innovative solution that provides lower pricing, unique content and greater choice for customers than anybody else is able to provide, and we'll talk about a little bit more when I go through the innovation and what we making the investments that we have made in that course. If you look at our next slide, if you look at our FY '23 trading position, you'll see that we have improved in domestic trans-Tasman and international compared to Q4. And if you look at trans-Tasman and international, they are up substantially quarter-on-quarter, and they're also up in the second quarter versus the first quarter. And as you can see quite clearly that the domestic marketplace has contracted as the various carriers have withdrawn inventory from the market, and that's reflected in our market share position -- sorry, it's reflected in our comparative position to the pre-COVID numbers that I've made reference to earlier. So what have we done? We've obviously operated, and it's been well documented in an extremely difficult customer service environment where every airline has a unique set of criteria around how flight credits need to be redeemed. And at the same time, you've had the most unstable airline performance in living memory, if not in the history of the airline industry as a consequence of some of the supply chain issues that have been well documented. They've had an enormous knock-on effect for our business so much so that we have, as a consequence of the challenges that we are faced as an organization had to increase our customer service staffing levels by 100%. And we have had an extremely challenging time in addressing all of the volume of requests that we've had to deal with, but we're finally getting to a position where, over the course of the next quarter, we will move back to an equilibrium state in which we will be able to hopefully revert to the exemplary standards of customer service that we have had as a business throughout our 24 years as an OTA organization. So one of the things that would concern some people is, on my God, they've increased customer service by 100%. What does that mean to the profitability of the business? And I'll be very explicit that notwithstanding the increase in the customer service, our EBITDA margins for the full year are tracking ahead of 35%, which is very close to our historic norms of around about 40% as an EBITDA margin for our OTA business. So we're in a very, very strong position to continue to provide superior returns as we have done throughout our history, and we'll continue to provide superior returns to any other OTA that operates on a global scale as we do. Moving forward to GoSee. 2 slides further on, please. We had a very good business based out of Auckland, New Zealand called Online Republic. It contributed meaningfully to our overall OTA or our B2C division results. However, we had a high dependency on paid search, and we didn't have the appropriate brand recognition to enable us to get the repeat customers without having to pay Google the opportunity of getting access to customers. So we made the strategic direction and strategic decision to rebrand the business, simplify the tech, move to a singular tech platform with a view that with the benefit of time, we can build out a value proposition of the same level of comprehensive offering and the same level of consumer recognition as the Webjet brand. And that's the driver of our GoSee rebrand, which is the old Online Republic business. And what we have is we are halfway through that process in the sense that we've done the tech, we have rebranded and now we are starting to build the brand recognition across both our car business and our Motorhome business. Now we've been able to do that and notwithstanding that, that is a challenging exercise, we've been able to do that and still maintain the profitability of that business in the current financial year. If we go to the next slide, I've spoken about, we will have 1 platform, and we're having a more focused growth-orientated strategy, but -- and the opportunity is substantial here. But the reality is that this is a market that is reliant on, in particular, the Motorhomes business, which is one of the higher margin business and the larger TTV business went in regards to an individual bookings that requires inbound tourism into both Australia and then New Zealand. And that has been a struggle and continues to be a struggle as of today. So to put that into perspective, for every 1 visitor coming from overseas into Australia, we're having 3 Australians leaving, and we're only at 45% of our international capacity. So until there's a substantial change in the inbound capability of the markets to open up, it will restrict the ability of this particular business unit to be reverting to the profits that we made in 2019. If we move on the next slide, this will give you a look and feel of the newly rebranded GoSee business. And everything I've just said, I am optimistic that over the course of the next 2 to 3 years that, that will revert back to type and see us drive superior outcomes for that particular business unit. Moving forward 2 slides. I just want to spend a little bit of time because we have spent some of your money making some acquisitions and/or strategic investments for the course of -- during the course of the last 12 months. And they are important for us as we start thinking about accelerating the growth opportunities that exist in a massively fragmented and dislocated travel marketplace. So we'll start with Trip Ninja which I spoke very briefly earlier. It is a piece of tech that nobody else in the world has. And it's a piece of tech that is going to be integrated into the Webjet technology platform in the next 30 to 60 days. It's a piece of tech that will enable us to do everything that we previously found difficult, which is if it was a complex itinerary that required a level of responsiveness that only an experienced travel consultant could deliver, then we previously were shut out of that market. We now will have the best solution in that marketplace. And we will build on that piece of technology to do some other elements that are complicated in the travel space and be able to deliver that to our customers more efficiently than anybody else. So much so we see this as a two-pronged strategic initiative. One is within Australia and the OTA market, this technology will be made available exclusively to Webjet and our associated companies. And we will be selling this to traditional retail travel agents outside the Australian marketplace. We are building up the sales force to do that, and we built out the technology to enable that to be implemented seamlessly into many other businesses. So we think that will help propel our business not just to recover to 2019 numbers, but to us, to substantially improve our share of the international outbound market. And our aspirational target is that pre-COVID, we had circa 3% of all Australians leaving the country booked through Webjet. We think this can help us target getting 10% of all outbound Australians who are leaving the market. So we have a big opportunity ahead of us, and we have a large sense of commitment to achieving that opportunity, and we think that the Trip Ninja, a piece of technology will enable that to happen. The second of our initiatives that we have -- or sorry, companies that we have invested is ROOMDEX, where we've taken a 49% stake in a business that is complementary to what we do in the WebBeds B2B business. And what it does is it has the most effective way of enabling hotels to upsell their room either through early check-in, late checkout or upgrades and so much so that it has, and this is phenomenal, 100% track record of every hotel that they have implemented into a trial has gone live and become a paying customer of the ROOMDEX business. I know no other business that can make that claim, and I've been around a long time. So we're highly confident that the synergistic leverage of the WebBeds access to hotels, and we've got direct contracts with circa 30,000 hotels will enable us to substantially accelerate the opportunity of ROOMDEX to be successful. And I'm sure that over the course of the next 6 to 12 months as we build out scale of this particular business, it will be a meaningful contributor to our results. Okay. Let's go to what's going to happen. This is the fun bit. So this slide is no different. One more slide, please. Thank you. This slide is virtually the same slide that we spoke about 12 months ago that WebBeds has got an ambition to be the #1 provider of -- in the B2B space. The Webjet OTA is going to be focused on increasing market share, and we see GoSee as a transformational opportunity. So I thought I'd just go back to the very last slide that we spoke about in last year's AGM, and I said that we're well positioned as travel recovers, and we see a world of opportunity. All of those fabulous aspirational statements that are self-serving to us at that particular point of time. But I said that we would achieve it and -- the historic year-on-year EBITDA or pre-COVID EBITDA numbers were our target. I said we would achieve it by doing three things. One is we'd be more cost efficient at scale of circa 20%. I said that in the B2B environment, there were untapped markets. North America will be an expansion from us. The B2C channel would be an expansion, and the technology enhancements that we're working on will contribute to our success. And on the B2C side, I spoke about the structural shift online and the decline in the physical number of stores will give us a B2C opportunity. So if we go to the final slide, what does it already look like? We're only 12 months down the track, and to be fair, we're barely into the recovery thematic of travel on a global basis. For us, the outcome is all 3 of our businesses, GoSee, the Webjet OTA business and WebBeds are profitable for the current financial year. Cash surplus from operations is expected to be more than $100 million. To put that into perspective, last year, which was a substantial rebound, notwithstanding the statutory loss that we made, we generated $4 million a month in cash. We've doubled that in the course of the first 6 months. We expect that to play out for the first 6 months to where we're going to generate $100 million of cash. So if you take that on an annualized basis, assuming nothing was happening in the second 6 months, it's still a doubling of the cash inflow, which, again, is a great outcome and provides us with balance sheet strength. And the entire group, so everything in our business at a bookings level is circa 95% of pre-pandemic levels. And I've shared with you the OTA numbers and the B2B numbers. B2B is the key driver. What we see on the WebBeds side is we've been ahead of pre-pandemic numbers since May of 2022. July was the highest TTV month in the history of WebBeds only to be surpassed already this month, and we've got another day to go of bookings. So we did around -- our record month was EUR 187 million in August of '19. We did EUR 194.7 million in July. And I don't know exactly what we're going to do in August. So it will be somewhere around about EUR 198 million to EUR 200 million is the result. Now I would never have thought any of these numbers were possible 6 months ago. We would have been fantasizing about them, would have been dreaming about them. But to see the market recover to the level it has is -- been gratifying primarily because of the significant hard work and the resilience that the employee base within our organization is shown to enable us to stick together during a very, very difficult period, so much so that the business environment that we now see ourselves is conducive to a substantial outperformance. The second fantasy element to all of our current recovery thematic, is our first half '23 EBITDA margins are going to be greater than 50%, which is again exceptional. And 8/3/5, which is a target that we announced circa 12 months ago, and I won't explain it because I lose myself in the logic. But it basically means that we're going to deliver 62.5% EBITDA margins at scale. That's what we said our ambition was. We achieved that in July and August on the back of those record TTV bookings -- and TTV and bookings that we delivered during that month. They are seasonal peak. So we're not going to -- we're not expecting 35 to fall through the whole year, but it's exceptional that we've been able to deliver that. So there's significant scalability as the business expands beyond pre-pandemic levels and the infrastructure changes that we've made with regards to the tech platform. The cost take-out and the efficiency enables us to get those greater than 50% EBITDA margins for that particular business. We will share a lot more color and movement on how we're achieving all of that at the Strategy Day on Monday. On the Webjet OTA, our share is up 57%. We're ready to launch Trip Ninja in the next month or so. As capacity returns, we know that we will maintain and drive superior outcomes based on all the work that we've done with regards to the brand and with regards to the tech improvements. We are getting on top of all the customer service challenges that this particular business has, and it's been a difficult period for us in dealing with all of that. And we are getting to the point where we're almost past -- where we are past the worst of it. We are getting towards the end. And notwithstanding the doubling of our customer service employee base, we still will drive EBITDA margins of circa 35% for that particular business. And as I said in the presentation, we won't return to pre-pandemic earnings until international capacity returns to volume similar to 2019, and that's unlikely to happen in the current financial year. GoSee, we spoke about rebrands going to plan. Return to pre-pandemic earnings will be driven by inbound tourism, and I covered that off previously. So that's what we think will happen in the current financial year. It's a delight after 2 years of sitting in front of you and explaining what we're doing in a very difficult environment to see the fruits of all the decisions we have made and with the support of the Board to enable us to deliver against that. So it's a great outcome, and I sit here on behalf of the entire employee base delighted that we're making progress. But more substantially than all of that is that next year, we expect to exceed pre-pandemic earnings in FY '24. And just as a reminder, for most people who don't know this, our financial year is April through to March. So that is substantially ahead of any global IATA expectations of recovery, which is much further down the road than the financial year that we're representing, and it's a reflection, not just on market share gains, but it's a reflection on making the business more effective and more efficient so that when markets do recover, we're in the best position to enable us to pick up share and most importantly, deliver a global scalable business at EBITDA margins that nobody else that I know of can deliver. So with that, I would wrap up the overview of the market and what we're doing. Back to you, Roger.

Thank you, John. Well, at this point, we'll invite questions from shareholders and proxy holders. We'll start with those present, and then we'll move to those online. Please raise your blue attendee card, if you wish to speak to the meeting, once you've been handed microphone, please state your name and who you represent, prior to asking your question or providing a comment. Do we have any questions from the room, please?

My name is Bill Ellen, shareholder? Just a question on profitability. I'm not sure if I understood it correctly, but you mentioned that margin should be 35% to 45%. When you look at your $1,638 million as the total transaction value and the revenue was $138 million, that's only 8.4%. I'm not sure if I understand the numbers correctly, but is there a disparity in [indiscernible]?

Look, I'll hand over to John, but I think the discrepancy is we're talking a forward-looking view. John?

Correct. The numbers you're referring to FY '22. So that's the past. Those numbers that you've just outlined are correct. The numbers I'm referring to is the expectation for what will happen in the next 6 months for the business. So it's 35% of the OTA business and 50 -- greater than 50% for the WebBeds business.

Thank you for your question. Any other questions from the room, please. Right. Thank you. Carolyn Mole, our Head of Investor Relations, has been monitoring questions and comments submitted online. Carolyn, do we have any questions related to either John's or my address of the business general?

Hi, Roger, is that on? Yes, we've got a number relating to the general business. I'll just go through them. The first is from the Australian Shareholders' Association. There are hundreds of recent comments on Facebook from Webjet customers expressing their dissatisfaction with the process in attempting to use travel credits. Much of the frustration stems from being unable to reach Webjet and receive a satisfactory response. Does the Webjet Risk Committee read the social media commentary about Webjet? And are the directors concerned about reputational damage to the company?

Well, good question. It's the elephant in the room. Yes, we're all acutely aware of the issues around customer service. In fact, your Board frequently interacts with and helps customers who have issues. I think it's important to look at the overall context here. So of course, the Risk Committee and the entire Board are aware. When the pandemic came to the Board is closed, it ends. Airline partners, for example, shed their own customer service staff. They became a huge backlog of vouchers and cancellations to be processed. And then as we've moved through the pandemic in different phases, we've now got different issues. We've got our cancellations of flights. I think ASIC, Qantas and Virgin have canceled 10% to 15% of for flights over the next couple of months. So every time you have these cancellations, you have significant customer service spikes. So we had 130,000 -- 126,000 customer inquiries last month, of which 30,000 were dealt with robotically sales, 96,000 of that were at was through SMS, e-mail and phone call. That's 11% up on the prior month. As John said, we've doubled our customer service numbers. We're hopeful in the next quarter that we'll be over this hump. We have a lot of empathy for our customers. They do, I think, in frustration revert to social media channels to try and get attention. We understand why that occurs. We experienced similar difficulties getting through to our airline partners. We would hope that, that is resolved in the next couple of months. I see Dave got nodding. Shelley, anything you wanted to add to that response.

No, I think you captured that the goal for the team is to total service levels in the customer quarter, and we are on the trajectory to achieve that, notwithstanding any other natural disasters or major significant changes in the airline landscape today. So, thanks.

Thank you, Carolyn. Next question please.

The next question is from Mr. Stephen Mayne, did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and ASA recommend a vote against any of today's resolutions. Which of the proxy advisers are covering us and has there been a material proxy protest vote against any of today's resolutions? Will you disclose the proxies before the debate on today's resolutions, so shareholders can ask questions about the reasons if they have any protest votes?

Well, thank you, Stephen. And you will see before we put the resolution to you. We will post the numbers on the screen. It's running between 97% and 98% in favor. So I think it's fair to assume that we have received solid support from all proxy advisers, and they might have all the major proxy advisers that you named do cover Webjet. Next question, Carolyn.

The next question is from the Australian Shareholders' Association. In a recent report by the Australian Council of Superannuation Investors, ACSI, about ESG reporting to ASX 200 companies. Webjet's ESG reporting was rated as being basic, the second lowest of the 5 ranked categories. What is the company planning to do to improve this rating? What is the time frame for the release of the TCFD report referenced on Page 19 of the 2022 sustainability report?

Thank you. Well, let's break that question into two. I'll answer the first part of it, and then I'll pass to Shelley to answer the TCFD question. The ACSI report to which you would refer, as I think updated by 2 years. You recall, we changed our balance date to 31 March. I'm pretty confident that report that rated us as basic is 2 years old. I think when you see the latest report, you will note that we've invested a lot of time and effort in contemporary issues such as Modern Slavery Statement, et cetera. I would also like to point out, however, that we have been preoccupied with surviving and with looking after our customers in very difficult circumstances. And if you ask shareholders what they want, ESG is important, but survival and looking after customers are more important. As we continue to recover, you will see more investment in ESG. And indeed, when you see the latest ACSI report, you'll see a significant improvement, one would hope on sorry. Actually, now it's off to Shelley for TCFD.

Thanks, Roger. I think I'd also add that in regards to the ACSI rating, as Roger pointed out, that was 2 years ago. We've had verbal advice from ACSI that our FY '21 report would come in at moderate. We've subsequently published an FY '22 report, and we've -- are expecting an improvement even on the moderate rating that we've been verbally advised from our FY '21 report. So definitely expecting improvements there. In regards to the TCFD reporting that we will be moving forward with, our first cab off rank is to finish our carbon audit, and that is being completed now and will be completed in this quarter. Following the carbon audit, which will set the goals for us to get to carbon neutral, we will undertake TCFD reporting in the coming years off the back of that.

Thank you.

The next question is from Mr. Stephen Mayne. Given we have a market capitalization of $1.93 billion, why not just fully repay the full $4.226 million in JobKeeper payments that we received across the past 3 financial years so that we can proudly declare we did not draw on the widely rorted $90 billion scheme. The likes of CIMIC, Iluka Resources, Credit Corp, Santos, Centuria, Wesfarmers and REA Group repaid all their JobKeeper whilst partial repayments were made by the likes of Mosaic brands, Premier Investment, Cochlear Tube Holdings, Peter Warrant Automotive, SEC, Domain Holdings, Helius and Lynus Rare Earths, why didn't we repay even $1, and will the Board now consider repaying some or all of our JobKeeper claims?

Stephen, no, we won't. None of those companies were in the travel sector and none of them faced the extent of the issues we faced. You talked about a widely rorted JobKeeper scheme. This is not a company that took JobKeeper money and then paid a dividend to shareholders. This is a company that had to raise significant amounts of money under emergency conditions during a pandemic pre-vaccine. And I don't -- there is no concept of repaying the capital. That's what we've paid taxes for over the last 15, 20 years. Next question, please.

It's another question from Mr. Stephen Mayne. Last year's online AGM started at 3:00 p.m., and this year, we have gone for a hybrid at 9:00 a.m. In 2020, it was a 5:00 p.m. online AGM. And in the years before that, it was generally an 11 a.m. start for the physical meeting. Will you commit to ongoing hybrid meetings with full online participation, including questions? And what is the thinking behind all these unusual start times over the past 3 years when the vast majority of companies start their AGMs between 9:30 a.m. and 11:30 a.m. Are you having a Board meeting after the AGM or did that occur yesterday?

We had a Board meeting last night. Look, I think the simple reality is, for those of you who haven't noticed, we've been in the pandemic for 2.5 years, and we haven't been able to meet in person for quite some time. And you may not know that a number of us were stuck behind borders. I was stuck in New Zealand for a year. John was stuck in North Africa. We have managed our AGMs around our availability. And if you wanted to see us in our PJs at 2 in the morning in a hybrid meeting, maybe we could have obliged, but I think we would all like to get consistency in meeting times. We've just been doing what we had to do during a pandemic. Next question please.

It's another question from Mr. Stephen Mayne. Given the interesting discussions across a range of topics today, could the Chair undertake to make an archived copy of the full webcast plus a full transcript of proceedings available on the company's website? At the moment, only the CEO's address is available as a webcast archive from last year's AGM. Will you commit to publishing a transcript from today plus the back catalog of AGM transcripts, so investors can access a full history of debate at the most important governance meeting of the year. The likes of Nine, AGL, ASX, ANZ, CIMIC, Domino's, G8 Education and Lendlease all produced their first AGM transcripts in 2021? Will you follow suit today?

I'm not sure if we have the technical capability. If we do, we'll consider it. Thank you. Next question, Carol.

I have 4 more questions. One more from Stephens. One more question.

We're going for a world record here.

When disclosing the outcome of voting on all resolutions today, could you please advise the ASX how many shareholders voted for and against each item similar to what happens with the scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus after the 2021 AGM.

Yes. Next question, please.

This is a question from Patrick Urwin of Berlis Proprietary Limited. Is there any specific plan to reintroduce dividends?

Thank you, Patrick, not something we're focused on. We need to reach a net profit after tax. You've heard us talk about EBITDA and EBITDA margins. We need to produce a significant net profit after tax. The subject of dividends is something we'll consider when we think we're in a sustainable recovery, which clearly, we think we're trending towards but not in the position to make a commitment today.

A question from Mr. Stephen Mayne. Is it time that we moved to having an independent Chairman as opposed to a Nonindependent Chairman and a lead independent director? Could Chair Roger Sharp also please explain why he is not independent?

Well, I'm independent. I don't have any other business interests involving Webjet and supply to them have been regarded as independent by proxy advisers for the last forever. So I don't really understand that question. Any other parts to that question?

No, that's how I read it.

Okay, thank you. Next.

I think this is the last question here from Mr. Stephen Mayne at the moment. When disclosing the outcome of voting on all resolutions -- no, I think I've already read that, I apologize.

Okay. Any other questions? Right. Well, I think we can now move to the formal business of the meeting. There will be an opportunity to ask questions or make comments on all items of business, and I'll take questions from those attending in person and then online. The first item of ordinary business on the agenda is to receive and consider the financial report the directors' report and the auditors' report for the company for the financial year ended 31 March 2022. This isn't a voting item, but we'll be pleased to receive questions and comments. Our auditor, Stephen Rush, is available to answer questions on the conduct of the audit, the auditors report the company's accounting policy for the independence of the auditor. Again, please raise the matters you -- that you believe require attention. No written questions for the auditor were received in advance of the AGM. So I now invite shareholders and proxy holders who are attending in person to raise their blue card and identify themselves, if they wish to speak to the meeting. Carol, are there any online questions or comments relating to the [indiscernible]?

Yes, Roger, there are 2 questions from Mr. Stephen Mayne. Looking back at the $346 million capital raising in April 2020, do you agree that the huge discount was a mistake? The stock last traded at $3.76 before it was suspended. And when it resumed trading, it finished the week at $2.73, a massive 60% premium to the $1.70 placement and entitlement offer price. Given that more than 11,000 retail shareholders didn't participate, do you agree that the structure and pricing particularly disadvantaged to those retail shareholders who are unwilling or unable to participate? Will you consider launching a discounted retail only SPP to compensate your retail shareholders for this massive dilution?

Well, I think to answer the latter question first, if we're managing our business to EPS, then we've got to ask, why would we do an equity issue right now. But I will go back to the original question about the $346 million. Nobody at the time understood how this pandemic would end. There were no vaccines. John and I and Tony were literally swapping the streets of this company trying to raise money for a week after week. We put the stock in suspension because it was in free fall. The Australian wrote headline time Webjet cannot raise money at any price. I recall working all night -- we're in Sydney, working all night for a couple of weeks. The Ruby Princess was disgorging passengers who are landing at our -- coming into our hotel with COVID. There was absolute pandemonium in financial markets. I make no apologies for what we did, raising that capital. It was necessary to ensure the survival of this company. You can't get it 100% right in an emergency situation, which that was -- so could it be better? Possibly. Was it the right thing for the company? Absolutely. Next question, please.

Thanks, Roger. A question from Mr. Stephen Mayne, the 3 underwriters of the $346 million capital raising in 2020, Goldman Sachs, Credit Suisse and Ord Minnett were collectively paid a 3% fee of around $10 million. Did we pay the bonus 0.5% fee disclosed in the underwriting agreements? And have any of those firms offered corporate hospitality benefits to the company's directors or executives since this deal was struck?

All right. To answer, there's 2 parts to that question. Tony, did we pay a 0.5% bonus? We didn't. Okay. And then post-deal entertainment, well, Ord Minnett, haven't seen a soul from Ord Minnett since the deal. Credit Suisse never had as much as a cup of coffee with them. Adrian Lee from Goldman is here and Adrian under other circumstances, I would have said you owe us for meal, but I'm glad you've never bought us a meal. So I think it's fair to say that we have not had hospitality leveraged on us. Any other questions?