Thank you for standing by, and welcome to the Corporate Travel Management CTG Full Year Results Conference Call. All participants are in a listen only mode. There will be a presentation, which will run for a little over half an hour, followed by a question and answer session. I would now like to hand the conference over to to Jamie Ferris, Managing Director. Please go ahead.
Thank you, Darcy, and good morning, everybody. My name is Jamie Ferris, and I'm the MD of CTM. I'm also joined this morning by Cale Bennett, the Chief Financial Officer for CTM. We are pleased to be presenting CTM's full year results for FY 2021. Just on the first slide, as you can see, the logo building is in fact our headquarters in the USA.
It will become clear as we walk through this presentation That our recovery is underway. Central to that recovery, of course, is our North American business. So now if we can go to Slide 5, Well, we go to FY 2021 highlights. So as you will see through this presentation, CTM has had a rapid return to underlying EBITDA profitability in the 4th quarter with North America, Europe and the ANZ regions all profitable. Most surprising was the momentum in the USA.
Given this momentum has continued into the new financial year, CTM is targeting a return to dividends in CY 2022. Secondly, CTM is most exposed to regions with the strongest revenue recovery momentum and advanced vaccine rollouts. This is a theme we will return to several times in this presentation because CTM is disproportionately exposed to North America and Europe With currently near 80% of our revenues derived from these regions. So essentially, our largest regions that have the most impact on performance are recovering the fastest. Thirdly, the environment is conducive to CTM market share gains or organic growth.
Our value proposition of service, proprietary technology and ROI is more relevant than it's ever been before in this very complex environment. Our enhanced reputation in this cycle is leading to material client wins. This is clearly evidenced in revenue recovery rates That are clearly above all corporate public recovery metrics in all the markets we operate in, which we'll touch on shortly. And fourthly, we retain a very strong balance sheet. We got 0 debt, dollars 99,000,000 of cash.
As a result, we have reduced our unused credit facility. This shows the confidence we have Our recovery is in fact underway. And lastly, we remind you that CTM is a much bigger business post COVID. Rather than diluting shareholders well through capital raises through this crisis, we were the first to make a material acquisition early in the cycle and as we will show you, This is bringing long term material benefits to the company. We believe we're now the 4th largest TMC in the world and upon full revenue recovery, The business is expected to increase EBITDA by 57% above our record EBITDA profit in calendar 2019 of 150,000,000 As a result, there is material post EPS accretion to shareholders upon this full revenue recovery.
So now let's move to Slide 6, where we graphically illustrate the rapid return to profitability. Throughout this presentation, we'll focus on financial quarters to better illustrate the momentum in the business, which is pretty clear on this chart. So as you can see on the left hand chart, we're showing revenue for FY 2021. We delivered 4 quarter revenues of $74,000,000 which is a 42% uplift on the previous Q3 revenue number. This uplift was led by North America and Europe.
So when including travel and transport into our pro form a 2019 baseline, 4Q revenues averaged over 41% of pro form a 2019 levels throughout the Q4. Now if we move to the right hand side chart, You can see that this revenue increase translated really well to our bottom line. As the revenue jumped, we turned a 3 quarter loss of $5,500,000 into a $13,600,000 profit in Q4. What makes this all the more special is that we inherited $6,000,000 quarterly loss when we acquired TNT in late October last year. Let's not forget that, that just makes this result really good.
North America is making the largest impact on revenue and EBITDA. It's through a combination of increased activity, the synergies and the CTM model delivering in that region that is getting for CTM. Let's go on to Slide 7 now. So as you can see, a full recovery Where are we? Sorry, our largest regions have the most momentum and impact on FY 2020 performance.
And let me explain very clearly why. So there's a bit on this chart to go through on this slide, but firstly, let me explain the left hand side chart. This chart graphically represents Pro form a calendar 2019 group monthly revenue including travel and transport. So we have always shared with the market that our key metric is revenue growth and EBITDA to revenue conversion. TTV in this market is meaningless if we cannot derive revenue from TTV, and this is where the rubber hits the road.
So at CTM, our whole business focus is on how we bring back the business to support full revenue in both a sustainable and profitable manner while supporting our value proposition. So as you can see, a full recovery on this chart is equivalent to 60,000,000 Dollars of revenue per month or $720,000,000 per annum, subject to fluctuations in foreign exchange, of course. So what's happening on this chart? The blue shaded area represents the monthly revenue recovery by region that has already occurred based upon the 4th quarter averages. As you can see, the monthly North American revenue recovery in value is larger than all the other regions Secondly, the green shaded area represents what is still left to recover by region to get to full recovery.
Again, The recovery potential in North America is greater than all regions combined. So the takeaway here is 3 key points that this graph highlights. Firstly, it's very evident, isn't it, that our largest regions by far are North America and then Europe. Combined, they represent 72 And have the largest impact to incremental revenue recovery. Then we look at ANZ Being an ANZ listed company and what's happening here with border closures, the reality is as you can see from this chart, the impact of border closures in Australia is not incrementally Material to group performance in FY 2022.
You can see at the moment the recovery is $4,000,000 of the total there in revenue. And looking at this chart, if for example, ANZ revenue declined from $4,000,000 a month to say $3,500,000 a month, There is minimal group impact. In fact, if we updated this chart for July post year end, we would find that North America and Europe's recovery, The blue area continues to grow at many multiples over the size of any impact from ANZ. That's important to note. Secondly, North America and Europe have the most incremental opportunity to group recovery given they are the most vaccinated and opening up the fastest, that's represented by the green.
So just to stop for a moment, our largest regions that have the most impact on performance are recovering the fastest. And thirdly, if we go to the right hand side here now, we've set forward realistic catalysts for further revenue recovery that we think are all in play. By this, we mean they are either opened, quickly recovering or expected to open up imminently. So we've listed the top 5 catalysts for recovery in value order For FY 2022. And again, keeping with the theme, most importantly, 4 of the top 5 are in North America and Europe, where we happen to be the largest.
So the first one is USA domestic. That's the largest incremental upside and clearly that is already underway. Secondly is UK domestic being the 2nd Largest opportunity and is already underway. Now just going back to that chart, although the chart suggests there's only another $4,000,000 per month of revenue required To recover to full COVID levels for Europe, this is a little misleading, given the recovery so far has mostly been clients That CTM did not service in CY 2019, I. E, we've had a lot of new client wins that weren't there in CY 2019.
So the domestic recovery upside is greater than it appears on this chart. The next 2, Transatlantic and Inter Europe Travel, are large segments of CTM and lucrative segments of CTM. Both already opened. We're expected to open imminently. So essentially, they're in play as well.
So those top 4 are all realistic revenue opportunities that are either already occurring or opening imminently. ANZ domestic is 5th with a full domestic recovery, Potentially generating a total of $7,000,000 revenue a month. So currently we're doing $4,000,000 a month when you look at the average of the 4th quarter. So this just reiterates that the ANZ incremental domestic growth will not make or break our FY 2022 performance. Okay.
And this top 5, the whole top 5 would at full recovery generate approximately 80% of our pro form a revenue or roughly 48 So again, you'll note ANZ and Asia International do not even appear as they are unlikely to contribute in any meaningful way in FY 2022. So in summary, our largest regions are North America, then Europe. They are also the regions recovering the fastest and they have the most impact on FY 2022 recovery. And all in all, 80% of our pre COVID revenue In fact, in play. So at CTN, we're not waiting around for ANZ and Asia to open up international borders to be successful in FY 2022.
That's an important point to leave you with. Now if we can move to Slide 8. On Slide 8, we lay out our trajectory to become a significantly larger business in pre COVID. This slide demonstrates why CTM will be much bigger following the acquisition of Travel and Transport in 8 October last year. And to explain this slide, the two charts represent revenue on the left hand side, pro form a revenue and underlying EBITDA comparing 3 points in time.
The first point is the actual CTM CY19 performance, which is the dark shaded bar. Secondly, the light shaded by light blue is a run rate of where we are today, which is the 4th quarter annualized And the green is what a full recovery in revenue and the resulting profitability will look like. So as you can see, CY19 was a record year for CTM where we delivered $459,000,000 of revenue and an underlying EBITDA of 150,000,000 Now if we come to our current run rate, we derive an annual run rate of $296,000,000 in revenue And EBITDA of over $54,000,000 per annum at the moment. Now because of the combination of travel and transport, you'll see that 4th quarter 4th quarter annualized revenue is only 36% behind CTM Seaway 2019 record results. And thirdly, based upon pro form a revenues, A recovery, as we said in the last slide of $60,000,000 revenue per month, which equates to $720,000,000 of revenue per annum, We'll deliver underlying EBITDA of up to $235,000,000 which is 57% higher than our record Profit pre COVID.
So looking at these charts, there's 3 takeaways. Firstly, we are a much larger business in pre COVID post recovery because of the strategic acquisition we made through the COVID cycle. In fact, we're 57% larger at the EBITDA level. Secondly, we do believe we can return a similar pre COVID revenue to EBITDA margins. To explain the recovery in EBITDA on the slide, on the right hand side in the green, $209,000,000 represents the FX adjusted expectations that we outlined at the time of acquisition of Travel and Transport at Full Recovery.
The extra $26,000,000 shaded is a combination of executing cost out across the entire group through this cycle, Further synergy realization with TNT plus several years of automation enhancements, giving us the confidence that the target of 235,000,000 at full revenue recovery is realistic. And thirdly, CTM is organically growing through this cycle. As we have said several times through this cycle, we don't yet know the impact of international travel from COVID. However, when it comes to domestic, We see no evidence of significant structural impacts from COVID and even if there is, our organic growth is more than offsetting any impact if there is such an impact. And let me point you data that demonstrates organic growth is occurring through the cycle.
Given examples there of New Zealand and China, which are 2 countries In our portfolio that are essentially back to near 100 percent domestic, but of course still have their borders closed internationally. On that basis, we should be trading at around 80% of pre COVID TTV at market when taking into account 0 international travel out of these two regions. But this is not the case. July TTV performance has China trading at 113% of pre COVID New Zealand 163 percent of pre COVID. In fact, New Zealand activity has remained above 150% of pre COVID activity throughout the entire calendar year.
So very clearly, this points to evidence that CTM is gaining market share and organically growing in these specific markets. But this growth is occurring in all our other regions too. As you will see when we go around the grounds in the coming regional slides, Revenue recovery is running higher than all public corporate recovery data in all markets we operate in. This reinforces organic growth through the CTM business. So let's now turn to Slide 9.
Now we'll go through the regional performance and we'll start now with Slide 10, The group overview. As I said earlier, it makes most sense in this year to break the second half into quarters. What we present on all the regional slides is our first half results and the second half broken into the 3rd and 4th quarters in order to highlight the momentum. And we have circled 4th quarter results to highlight the recovery in regions where it was a significant step up. So in summary, at group level, Whilst you can see, CTM had an underlying EBITDA loss for the year of $7,200,000 on roughly $200,000,000 of revenue, CTMs derived an underlying EBITDA at group level in the second half of $8,100,000 on revenues of just slightly over 126,000,000 But it was clearly the 4th quarter momentum that was significant, with the 4th quarter turnaround delivering an underlying EBITDA of $13,600,000 versus previous quarter loss of $5,500,000 And this momentum is continuing into FY 'twenty two.
I'm pleased to report that July 21 revenue for the month was the highest since COVID. So as a result of our return to profitability, We retained the strong liquidity we've been that we've managed throughout the COVID period. As we said before, dollars 99,000,000 in cash, no debt. And as a result, we feel comfortable enough to reduce our unused credit facility as we do not expect to use it. Now let's talk to each region.
Let's go to Slide 11, North America. Again, on this slide, we highlight the turnaround from Q3 to Q4, where revenue grew over 47% from between those two quarters, allowing us to convert a Q3 loss of 7,000,000 into a $5,100,000 profit in Q4. This represents a $12,100,000 profit turnaround in the first in that 1 quarter And that's the key driver of our 4th quarter result. So again, I want to reinforce it through the combination of travel and transport, we inherited a $6,000,000 quarterly loss at the time. So this turnaround makes it really special for us.
Again, I just want to report On a few things here, 4 quarter revenue recovery through the entire 4th quarter averaged over 40% of pro form a 2019 revenue levels, Well above public data on the U. S. Corporate recovery, reinforcing organic growth since calendar 2019 in this region. And then in terms of outlook, This Q4 momentum is continuing into July. Typically, we see corporate activity decline by around 25% in July August Versus June due to it being summer vacation in the Northern Hemisphere, but July revenue was in fact higher than June, a bullish sign of continued recovery.
July domestic revenue recovery was over 60% of CY 2019 pro form a domestic revenue as well. This rate of recovery is also above public statements of corporate recovery. So most pleasingly, the region continues to lead the group in new business wins as well. And in fact, it has all calendar year. So we typically see a strong seasonal second half SKU, which we expect to be even more pronounced this year due to the impact of accelerated domestic And Transatlantic opening up during this half.
And as you can appreciate if that builds over 3 or 4 months, it will become much more meaningful in the second half. That's America. Let's now move to Slide 12, Europe. Again, as with USA, we've highlighted the 4Q rebound, where the revenue recovery averaged 62% of pre COVID revenue throughout 4Q, Materially above all public market data on UK and EU recovery rates. Due to the very high levels of automation and software logistics revenue streams, The 4th quarter delivered revenue of $18,600,000 and an underlying EBITDA of $9,700,000 As a result, Europe delivered a $10,100,000 underlying EBITDA profit for FY 2021, an outstanding result in a market that was predominantly closed throughout the year.
Earlier, I talked to our value proposition and its high relevance in this environment. 2 things are really critical for success in this COVID environment. The first, it is the demand for expert service that can get people through closed borders. And secondly, having locally developed proprietary technology Developed in region that can quickly adapt to a changing COVID environment. We believe we're the only company that has both these levers in high quality And as a result, we've clearly won more than our fair share of essential travel clients, some logistics clients using our software in fact, Plus some short and longer term projects since COVID started in early 2020.
So some of the projects 1, we're high volume, but very low margin work that I can tell you very clearly would not be commercially viable nor profitable Without our own automation, our can do attitude and our end to end software capability. Our team has been working 20 fourseven for most of this half in fact And their dedication to our clients and to find solutions for our clients through these closed border scenarios was truly impressive and above and beyond the call. This is important that I call that out. And despite the stellar performance in the second half, the actual business usual client recovery in the second half was mostly non existent, and it didn't contribute much at all to the second half result. As you may be aware, the UK was in fact in full lockdown for most of this half.
So when we look forward to the months ahead, domestic BAU travel is recovering quickly since the UK has opened up fully in June. UK Domestic is a very large and highly automated segment of our business and hence a very important contributor to future recovery. So also I just want to point out that some of the project work will fall away as international borders fully open, but this also means that the rest of the travel recovery in the UK Europe can occur. So we think one will offset the other as we go through the year. But irrespective, we expect that The EU region along with North America to lead the wider recovery.
And again, just like the USA, we think we'll see a much heavier seasonal 2H SKU For the same reasons. Again, we'll see accelerated domestic opening up this summer, combined with the eventual intra Europe and transatlantic opening up. If we give that a few months to build up, we expect that to be very meaningful in the second half of the year. So now if we can move on to Slide 13, Australia and New Zealand. Again, ANZ is a highly sophisticated business in our HQ.
And again, this was profitable throughout the year despite The really difficult rolling border lockdowns that we've experienced. Just want to point out the 4Q decline in profits is a direct impact of a combination of a number of factors. Firstly, regular rolling lockdowns, no government assistance through these lockdowns and reemployment by CTM for an expected recovery That have been significantly interrupted. So we know how important up to date information and good expert service is through this COVID environment, As particularly as people recommence travel. And in ANZ for a fleeting moment, we saw domestic Australian activity return to 85% of pre COVID levels.
So to manage this recovery, we've reemployed heavily for the future and really pleasing and we welcome back many staff we had to let go next year Last year, I'm sorry. But the unspoken reality is Australia relies on the Sydney corridor as the economic lifeblood of the East Coast, whether we like it or not. So the fact is when Sydney is closed for air travel, the entire nation suffers. For example, an open Queensland or Victoria Is of low consequence of CTM if no one is going to accept flights to and from Sydney. There is yet no government support that takes So as a result, this is our most difficult region to manage at both the business level and more importantly at a human level.
We are coming up to an unprecedented 18 months of domestic travel restrictions With no deadline or end in sight and have hundreds of staff and their livelihoods to balance against racial sustainability through of course no fault of their own. So we are doing our best and despite this, we still remain very confident of a sustainable and profitable business upon a full domestic recovery. The big question is not if, but the real question is when. But just again, just to show the resilience and strength of this business, Both June July were profitable albeit small. And in both those months, we had times that all states were closed down.
So again, as I said earlier, there's no evidence of a significant structural impact from COVID. New Zealand has been running above 150% versus pre COVID throughout the entire calendar year And to date, and that's including July as well. So that tells you it's a full market recovery plus we are still having market share growth since COVID. So now if we can move on to Slide 14, Asia. The training environment remains challenging, given it's a large international market, of course.
But the 4Q recovery to 17% of pre COVID revenues is still well above Hong Kong and Singapore market averages in corporate travel. As we flagged, the government's removed support packages in March, Despite no activity recovering in these regions and as a result, we had to reduce our headcount by approximately 200 staff to adjust. Again, a very difficult situation for our teams in these regions to endure. But in terms of outlook, we expect to remain marginally loss making. However, we are winning new business at the highest rates in history for the region.
And secondly, competitors continue to either close down or depart the region. So we really think this we can gain a lot of market share upon recovery if we take a long term view. So If we can now go to the TNT acquisition update, we'll move forward to Slide 15 and then on to 16. So what this slide shows is a high level 2 year plan. And there are a couple of quick takeaways.
Firstly, the team has achieved a real lot in a short space of time, but largely thanks to COVID downtime, particularly November to March. The second thing, we're really pleased to announce that we do expect to be a fully integrated business by July 2022, which we think is a great achievement Such a big business. So what we've got left to do is pretty much typical. The first thing is it's consolidation of back end systems, which of course are not Client impacting and secondly, transitioning legacy clients onto the much improved CTM Tech Suite, which is a great benefit to both current and future clients. And in fact, we are really buoyed by the progress in the client rollout, but also the take up of our Lightning proprietary booking tool by both legacy TNT clients and new clients for CTM.
So as a result, there are more synergies to come and these large projects as these large projects come to completion. So now if we come on to Slide 17, the group financial summary, I now want to hand over to Cale Bennett, our Global CFO to talk through a high level Financial summary? Thanks, Jamie. Good morning, everyone. If we can turn to Slide 18,
the group profit and loss. FY 2021 was a year of 2 distinct halves, cost cutting in FY 2020, followed by continued discipline throughout FY 2021 And then rapid recovery in the Northern Hemisphere in the 4th quarter drove an underlying EBITDA loss of just $7,200,000 for the year. The underlying net loss after tax for the year was $32,300,000 down from a net profit after tax of $28,400,000 in FY 2020. The 4th quarter momentum we take into FY 2022 is encouraging And we remain hyper focused on the balance between cost management and service for our clients as our revenue recovers. We've outlined D and A expectations for FY 2022 of $41,500,000 There's no material change expected from FY 2021's Total of $40,900,000 We've also separated our client intangibles to assist the analysts on the call.
We note here that we received government grants of $18,400,000 in FY 2021. Most of the grants passed through to staff costs and they were materially finalized in March 21. Onto Slide 19, non recurring costs. Non recurring costs in FY 2021 overwhelmingly related to the TNT acquisition, consisting of both acquisition costs And the integration costs, which together totaled $19,600,000 of the $24,000,000 total non recurring costs. With TNT integration costs, we expect another $6,000,000 in FY 2022 to complete the integration.
This will bring our total expected integration costs up to just over $18,000,000 which we acknowledge is higher than the $13,700,000 we indicated at the transaction outset. There are 2 drivers of this increase in costs. Firstly, as we integrate the synergies, but this will require additional investment. Given a positive ROI, we are going to go after these opportunities. Secondly, office lockouts and impeded travel have slowed some of the integration work we wanted to do on the back end systems as it has not been physically possible to make adequate headway with our collaboration in the office.
So we will be carrying some support people for longer than expected to ensure that we get the integration done right and eliminate any legacy technical and operational debt. The COVID impact costs of $2,500,000 relate to the Asia downsize in March that Jamie spoke to earlier. As we have previously indicated, government support helped us keep people in quiet times, But we will adjust our cost base to reflect the market activity where that support is no longer provided. Moving on to Slide 20, the balance sheet. Year on year cash has increased by $6,200,000 although that doesn't do justice to the activity throughout the year.
Finishing the year with $99,000,000 in cash, however, does speak to the strength of our balance sheet. The increase in receivables and payables have been as expected given the rapid recovery in the Q4 and the nature of the customers contributing to that recovery. Tight balance sheet management has ensured we have not utilized our debt facility since we repaid it in FY 2020. Given the strength of our balance sheet with $99,000,000 in cash at year end and based on our liquidity modeling through to recovery, We have reduced our funding facility providing immediate financial savings. Our current liquidity is more than sufficient to manage through to full recovery.
Bank guarantees have fallen 64% during the year to $19,600,000 Due to management actions in second half twenty twenty one, The bank guarantee requirements under which we operate have changed ensuring it is unlikely we will return to historic levels when we have fully recovered. Now on to Slide 21, the cash flow. Operating cash flow was primarily impacted We do expect this to flatten over time and normalize. We expect CapEx to remain around our long term averages $20,000,000 per year. We are focused on maintaining market leadership of our proprietary software.
We note the addition of TNT won't lead to an aggregate increase in CapEx in and of itself and most of our IT expenses remain in expense in the P and L. On to Slide 23, and I'm going to hand back to Jamie now to talk about the FY 2022 outlook.
Thanks, Cale. Okay. Just looking at the guidance activity, obviously, given the uncertainty of government decisions on border restrictions in travel supply, CTM is not in a position to offer FY 2022 profit guidance. However, given the business recovery is underway, We are targeting a return of dividend payments in CY22 and outlined below our key expectations to help the market. The Q1, Look, we expect continuing positive underlying EBITDA, noting the Q1 is typically our softest quarter because of Northern Hemisphere summer vacation.
So just to remind you, July August are typically the quietest months of the year for corporate travel in Europe, North America and Asia. But despite this, July revenue was a group record post COVID, a positive sign of continued momentum for us. So the Q2, we expect the building underlying EBITDA, particularly as North America and UKEurope return to offices after summer vacation in September. And for many customers, it will be the first time they've been back to the office in 18 months. And then we go through to the second half.
We then expect a stronger than normal seasonal profit SKU. Now at CTM, our typical seasonal SKU is 67% weighted to the second half in profits, But now also with the run rate of travel and transport as well, we'll expect that to get bigger, but further again because of the next three points. So firstly, we expect North America and UK domestic to recover rapidly post summer vacation as client returns to offices in September. And also the lucrative transatlantic inter Europe travel will be open as well in this sometime in this half both ways. So by the time I get going, it usually takes 3 or 4 months to build up.
We'd expect that into the second half, we'll get a full 6 month impact of those outcomes. Secondly, when it comes to ANZ, we expect and we hope vaccinations will allow for a more predictable and sustainable Strong AU domestic environment in the second half of twenty twenty two. So that's why we think it's going to be a much greater SKU than normal. Then lastly, acquisition opportunities. We are continuing to assess niche opportunities that support our global strategy.
So let me end this presentation by saying Our dance card is full. Now, I'll hand it back over to Darcy for Q and A. Thank you.
Thank Your first question comes from Quinn Pearson from Credit Suisse. Please go ahead.
Hi, good morning. Thanks for your time. Maybe just firstly, is there anything you can talk us through regarding new customer wins? So you've mentioned that a few times throughout the call and it sounds like some good win rates. Can you A few times throughout the call and sounds like some good win rates.
Can you just talk us through how much, I guess, your net new customer wins would annualize to? So in Reference to, I guess, the $720,000,000 of pro form a revenue, kind of how much additional we might be able to look for from new wins annualizing? Thanks.
Quinn, we said that we're not going to we don't firstly answer about clients or the value. I think the value is misleading because we can win a client said it's worth $10,000,000 it's not trading. So it's just I think it's a little misleading to say that. But what we are doing, we're letting our numbers do the talking. Rather than making claims, you can see that with all the public data that we're clearly doing better than market in the corporate sphere.
Look, we know leisure in some markets is back to 100% or greater, and we can see that as well, and we've got smallpox of that here and there, but We know our corporate data in all regions is above market and there's enough public data to suggest that. So we're just on our policy, but we'll let our numbers in the talking. I hope you understand that. But we wouldn't be signing it if we weren't winning it.
Understood. And maybe just secondly, so you mentioned that July trading is staying strong. So particularly in the U. S. Where we're seeing data Coming off in the U.
S. In July and into August off of Delta concerns. And fairness, it does look like corporate cat is pulling up better. But I guess your data seems to suggest stronger than market continuance into July August. There anything you can kind of connect the dots or bridge for us to kind of understand why your data seems to be holding up better than the market?
Yes, I think it's a combination of things we've won. But also, secondly, I think it's a bit like what happened back in Australia back in December going into summer, finally opened up. I think people tried Get some things done in June and certainly July. But look, we've seen this enough now. Even with Delta, We've seen here and there slow pullback for 2 or 4 weeks through this cycle.
We saw it back in U. S. In February as well. But importantly for us, August is a dead month for corporate anyway. So if it's going to do it then, it's going to do it then.
But look, we're speaking to enough customers That know that they've got to get back on the road to win business to get their people together and some good data metrics like forwards on Conferences, meetings, incentives are as strong as they would ever been in our history. So we still think, yes, there's going to be It's not going to be linear, is it? But we feel pretty comfortable that things continue to grow. And July was a fact was just, yes, it surprised us as well, Because it should have gone backwards on June just because of seasonality alone. But we'll just have to see how the year pans out.
But we're really focusing on September, right? September, when everyone comes back is when it should be. Yes, September, October is what we're really looking forward to because again, it is summer vacation, right, and corporates are on holidays. And people are on holidays, let me tell you that. So as one of the CEOs said to us, if my staff are traveling to Cancun, I'd actually, well, they can't come back to the office and travel for me.
So that's one of the that's how we're looking at things.
Thanks. And just lastly from me, so I think you said that you expect the full group business To be at similar margins as CTD was, trade the travel and transport acquisition. So I guess that's a bit over a 33% EBITDA margins, I just wanted to confirm I heard that right. Your expectation is Yes,
Yes, it's actually 32.7%. So we're just saying, I think, yes, the trade off is that is we know when we acquired TNT, there was a dilution margin. But at the same time, We talked about the synergies we've created through that acquisition. We've said very clearly on this call that we're there's more there. We're making bigger investments because now that we're in Under the hood, we can see more.
We've also said that the whole business has had taken cost out and a lot of that will be permanent. We've also talked about greater automation over the business over the last 2 years. When markets do recover, we're seeing very solid revenue per FTE metrics That are larger than we were pre COVID. And that's why we're saying that. And then we'll see where it goes.
But We feel pretty I mean, I've said before, the hardest thing I don't think the investment community appreciates is how hard it is to bring a business back. And that's where we're focusing all our energy. We're way through survival, and I think that's put us in a very good position. We've got a very good framework, and we've been managing that. If you remember, Our revenue was all the way back to $4,000,000 $5,000,000 at one stage a month there.
It's more than fivefold and it's getting bigger and bigger and The way we've been managing the business and our expectations have proven have proved up the whole way through this cycle. So it gives us a lot of confidence In the way and the structure we put in to manage the business, but if
you like, it's helped give you that scale when it comes to getting on the tender panels
Yes. Hi, Mike. Yes, no doubt. I mean, I think if you go back to our strategy and we've been strategic for 10 years, we said we wanted to get to the right Scale in North America, we always felt that over $2,000,000,000 at the time, we're clearly well on a recovery anyway, we're well over that and there is no doubt. There is no doubt that we're on the radar.
It takes a long time, but we certainly are. And I think that's Holding up in terms of the client wins we're talking to, just how we can leverage the scale of the business, the buying power of the business. These are all little upsides that we're seeing. But also you can see in the recovery rates too, I mean there's enough public data of what corporate is doing over there and we're beating that data, which We're obviously winning market share, but we have been we started to see this in early calendar 2020 as we flagged. If you go back, it's just There's no doubt, particularly the last this calendar year where they're going well, but The team are a great team.
They've got all the tools to win business and they're leveraging that.
And there's some comments from American Express suggesting they thought that the smaller corporates SMAs were coming back a lot quicker. The larger corporate would come back eventually, but it was just it's just not yet. Would you concur with those comments based on what you're seeing in your business?
Depends on the industry. I think for Omex GVT, the real big guys that have a lot of governance about people and what they can and can't do would be slow, but don't have many clients over $100,000,000 right? So yes, I think the other guys
tend to be moving
a little Yes, that would be our view too. But it's very industry focused as well. There's certain industries that are still slower than others, then you've got and we have some clients spending over 100% of pre COVID, doubt about that. They're the what I call the goers that understand that going to see clients is how you're going to win customers. So There's a real sense of urgency in the open markets too that it's all about growth and the growth in travel and growth is highly correlated.
And last one, just in
the annual report, like I know it's audited, I'm just surprised to see a lack of any related party transactions in relation to you or Sophie, Given the travel and transport, the Beijing and the deal done there?
Well, they're both independent directors. So what kind of transactions we're expecting to see there?
Oh, I thought there might have been a listing of a breakdown saying, look, We used Morgan's to drive equity. We used Allens for the consulting, well, the legal services when
we done the TNT acquisition. Is that a consideration?
No, no, it wasn't. Thanks for the question.
Okay. Thanks, Kyle.
Thank you. Your next question comes from Sam Searle from Citi. Please go ahead.
Well, hey, guys. Thanks for taking the call. Maybe just on Page 6, that kind of rapid return in underlying profitability, Just noticing the $22,000,000 increase in revenue pretty much dropped to the bottom line or the EBITDA line at least. Could you perhaps maybe give us an understanding or rule of thumb on how costs will come back, I guess, into FY 'twenty two and I guess the operating leverage we can
Yes, it's a good question. So as we if you go back in time, we always said because we had a lower fixed cost base than our peers, We could carry a lot more staff for recovery. And as we said over and over and over, recovering is hard, right? Sometimes things come back this fast. Not many businesses can cope.
So we always carried more people. So we had capacity. So what we saw in that Q4 was With the soaking up of that capacity, I think from here on in, if you go backwards, it's not linear, but if you draw a line from where we are today in run rates, Particularly if you go to more of a Slide 8 view and you draw out how that annualized will get back to that full recovery EBITDA, it says much about the sort of incremental dollars. So every dollar of revenue, there'll be an incremental Dollar dropping to the bottom line and clearly most of our fixed costs are complete, so it's all variable costs now. So that we need a strong Incremental profit drop from every new dollar of revenue.
I hope that makes sense. And again, we've modeled this before, we've been modeling this. I just can't I just want We've gone all the way back from I've even forgotten now, I try to forget about the past, but I think we're down to $2,000,000 a month or $4,000,000 or $5,000,000 a month of revenue. All the way through we've been modeling the same model and it's been proofing up really well. So we've put a bit of fat in that for things that don't go right.
But clearly, it won't be linear. Sometimes when it's going really fast in recovery, we're going to employ more travel agents ahead of the curve. And then in some other areas where we've got very, very high automation or we've got capacity, like we still got a lot of capacity in Asia, we've got the high automation in the UK for domestic, We might see that go be ahead of the curve in terms of the way it drops to profit. But again, we've done a lot of modeling. We had a bit of downtime the last 12 months to do this properly and we're comfortable with what we're trying to achieve.
Sure, sure. So maybe just to clarify, I guess, With domestic coming back in the high levels of automation, you'd expect more operating leverage. I guess when international comes back, Yes, high touch customers, is that when you'll probably see more linear? Is that how to think about it?
Somewhat, I think I wish it was that simple. It just depends because we're getting stops and starts, right? So another example is ANZ. We employed a lot of people for recovery that never happened, and it's heartbreaking. So you're going to have that sort of handbrake on the whole group as well, albeit it's on a big waiting.
So I think we'll talk to it as we do things and I will try to explain the upside or the downside and why, but you can see that we've certainly laid out a path that we think is good.
Cool, cool. Thanks. That's a good color. Maybe
also could you give us
a quick round of grams to help us understand what The activity levels are in terms of bookings as a percentage of FY 2019 and then maybe where you think the corporate recovery data is at?
Yes. Look, we haven't done that on this call other than on we wouldn't be saying it will be. July domestic, Sorry, July revenue is higher than June and it just shouldn't happen. So that tells you the momentum that we saw in the business. And I say it shouldn't have happened because Europe and North America in summer vacation and it's just it's like in Australia.
Christmas and January drop back from November. It's just how it works. So we're seeing good momentum. We're watching all this closely. Obviously, things have come up a little in ANZ.
But again, if you go back to that Slide 7, it's not going to make or break us, right? It's really about North America and Europe and We're buoyed by both. Look, we're watching the Delta strain carefully, but we've seen this before. It might slow things down for a month or so or just make people think a little bit more. But I'll just remind, things are opened in those two regions and corporate hasn't done anything for a long time.
There's a real sense of urgency to get things moving again. So we feel pretty comfortable on a trajectory and that trajectory has been going really since all about vaccinations, right? Once you get to that number, we've seen it since February and it's been fairly steady through February, March and beyond.
Sure, sure. But Just to understand, I guess, your market share, could we use maybe like TTV as a proxy of, I guess, activity levels? Or is there something you caveat that with Yes. In terms of transaction sizes and
Yes. CTD doesn't work much anymore because what you're seeing, you're seeing as you can appreciate, you're seeing so many bookings and cancellations And moving, so it's the revenues really that is more the activity of the business. I know no one else will talk revenue, probably they probably don't want to talk revenue revenue It's really good and I'm sure you guys will look deeper into our revenue mix. You can see there's not much variable revenue or volume based revenue, Which again is a really good sign because it's going to come back. So we're doing these sort of numbers and outcomes without any growth overrides, Which I think is a good sign.
So we're going to talk revenue because at the end of the day, revenue minus cost equals profit, TTV doesn't do much. So that's the way we're going to speak because look, the way we're setting this business up very clearly is we are managing the business To service the recovery and that's the whole business globally. All our leaders are all chimed into that process. So we'll be talking to it the same way as we talk to our management team.
Cool, cool. And just quickly, if I may, one more. Just wanted to confirm Something you enough to cut comment you said before, that you don't have many customers above 100,000,000?
Yes.
And so I guess that part of the market is recovering the quickest?
No, I wouldn't
say the ones above the I think the ones above 100 Probably not recovering the quickest, to be honest with you, in terms of the big corporates. Look, we've got a mix and match of clients. We have some Big clients, but in terms of things are recovered and that's the way we like it to be. But I mean, I think our numbers, so to speak, underestimate that we've obviously won a lot of business through the cycle as well for this to happen.
Great, great. Thanks.
Thank you.
Thank you. Your next question comes from Weiwei Chen from JPMorgan. Please go ahead.
Hi, guys. Just a couple of questions from Mividwerk. And also in the U. S, just wanted to confirm that what we're seeing is your bread and butter corporate travel revenue. There's no projects in there
as well that might roll off, right?
Yes, both good questions. In what we can do and we've said this before, an online booking tool can't do things In isolation, when borders are closed, it needs a lot of expertise nor can a call center. And I think the fact we've got our own technology that we've adapted for some customers, The answer is yes, and we're seeing that without a doubt, not just in that region, but globally. And secondly On
1Q 'twenty two, You're guiding to positive underlying EBITDA. Just wanted to clarify the expectation that this will be higher or lower than 4Q And the integration costs? Yes. 2 things. Firstly, we don't know where I
would have guided. I mean, obviously, normally July and August is so. We still think it's Kemba is going to really tell us where we're at. And then there's enough opportunity through this year.
Just, I guess, the integration costs, I mean, you just said that they are linked to addition
Yes, what we're
thinking across the whole group. It's a combination of a few things. But I mean, look, through this all, we've always been a curious company It's very opportunistic and we've approached that with that same methodology with travel and transport. And
Just a few ones. Just trying to understand where some of the revenue lines you're expecting to go in through the government grant income, $18,000,000 FY 2021, what should we expect there? The level of inventory was $10,000,000 Can you maybe run through what this revenue Is there an expectation for 'twenty two?
There's pretty much nothing at the moment. They've pretty much stopped in March. So I mean, we'd love to see Relating to
a legacy part of the TNT business we acquired, it's very When you put the two numbers together, you'll find it's extremely low margin. It's as I said, it's a bit of a legacy. So I wouldn't expect too much.
And just finally on the licensing revenue, is that from Tramada or can you just run through that please?
Yes. So there's a number of different sort of Has increased the line enough that we've now disaggregated it. And you can see in the notes that the kids some of the legacy Radius business And Tremato make up the
Morning, Jamie. Hi, John. In the sector and the, I guess, consolidation opportunities, a lot's going on, sort of been Quite aggressive there in terms of their approach. And obviously, in terms of scale players, there's not a lot Sort of linking about that, is it is there sort of some mopping up still to do, is on things to go or how do you think we should think about Your approach to that moving forward?
Yes, I think all of the above. There's still things to do out there and I think in certain markets, people are on their knees as well, as you can appreciate. So We're still thinking things that make strategic sense and it's still a corner plank of what we want to do. Some will be opportunistic, some make good strategic sense. And As I said, our dance card is pretty full.
You can pretty much accept that anything that's material that comes to market comes across our desk. We're very fussy, And so we should be. But yes, I think anything that's going to go out there, we're having a good look at things all the time. Does that answer your question?
It does. Thanks, John.
Yes. Thanks, John.
Thank you. There are no further questions at this time.
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