I would now like to hand the conference over to CEO, John O'Sullivan, and CFO, Gavin Yates. Please go ahead, John.
Thank you. Good morning. Good morning, ladies and gentlemen, welcome to the first half of FY26 results presentation for Experience Co Limited. As our moderator said, with me is Gavin Yates, our CFO. Today's presentation will follow the same format as previous presentations. I'll provide a brief overview of operations for the first half of FY26 and the general trading environment for the half. I'll hand over to Gavin, who'll provide a more detailed look-through of our financial results, I'll close out the presentation by providing an update on our outlook. As per usual, very happy to take your questions from the call.
Turning to page five of the presentation and, to our financial results, whilst Gavin will report on this in more detail later in the call, during the half, the business saw the following outcomes in relation to its performance from our continuing operations. Revenue grew by 5% to AUD 67.5 million, with an underlying EBITDA post AASB 16, up 1% to AUD 10.5 million.
At a business segment level, the underlying EBITDA in our skydiving segment increased by 10%, predominantly driven by the performance of the New Zealand assets. Adventure experiences performance was up by 1%, the business recorded an improved net profit after tax of AUD 2.6 million, and cash was at AUD 8.5 million at 30 December 2025.
Turning to page six, to provide a summary of the business performance was largely in line with PCP. This was despite the impact of several significant external factors playing out on each business unit. Within our Reef Unlimited business unit, despite the significant weather issues in December and a slower-than-expected accommodation performance in Cairns and Port Douglas during the month of visitation, the business unit managed to maintain its position as one of the leading operators in the region.
Across in our tandem skydiving and aviation business unit, our New Zealand business continues to drive the performance of this segment. The Australian business unit remains challenged due to slower-than-expected volume recovery, slower Chinese inbound market into key sites, and impacts in December from the damaging messaging by the Australian Workers' Union regarding safety of the experience. Our Treetops Adventure segment had a mixed performance.
Late in the half, the business was advised of the unsuccessful renewal of our Newcastle lease, and whilst the impact on earnings is immaterial, it was a factor in the volume decrease year-on-year. Work continues across the network on the identification of new sites, as well as incremental revenue streams such as food and beverage and also merchandise.
The loss of the Newcastle lease was an anomaly, with leases at other sites such as Nowra, Canberra and also Hollybank in Tasmania, all renewed during the period. During the half, the business also announced the sale of our Wild Bush Luxury business unit to Intrepid Travel for $5.1 million. This sale simplifies our portfolio composition to a more scalable adventure experiences, and also frees management's time to focus on addressing these remaining verticals.
Work continues with Intrepid Travel to finalize the completion of this transaction during later part of March and also through April, subject to the approval of the ACCC. In our corporate unit, our focus has been very much on the continuation of the cost out, cost out program, which seeks to identify more than $2 million in operational cost savings that we anticipate will start to drop through the P&L during FY 2027.
Of course, the business has pursued a more aggressive capital management strategy with the announcement of its first dividend since FY 2018, paid in September, and a continuation of the on-market share buyback. Turning now to page 7 of the presentation. The key notation to reference in the story of the inbound markets to Australia right now is a mixed one.
Whilst inbound visitation in total is near pre-pandemic levels, the composition of this travel remains inconsistent, with holidaymakers still below FY19 levels by about 11%. In the case of the market, the Chinese market, it's even less, with this market only somewhere around 70% recovered.
Importantly, outbound travel by Australians has seen significant growth over the last 12 months, with over 12.5 million Australians traveling overseas to locations such as Indonesia, Fiji and also New Zealand. Whilst this has been a benefit to our skydiving business in New Zealand, it has impacted our Reef Unlimited and Skydive Australia business units. These two factors have been contributory factors in the business performance over the course of the half. Before I hand over to Gavin, I'd also like to now turn your attention to page 8.
Across our business, the three key markets of Australian domestic tourism, international tourism and New Zealand tourism, feeding our volumes, have seen a mixed performance across the half. Domestic tourism in Australia has been affected by outward bound travel as well as cost of living pressures. Whilst overall performance has been stable within Australia, spend in this segment has softened.
As outlined earlier, inbound tourism into Australia, while still growing and overall visitation leading at near pre-pandemic levels, dispersal within Australia and holiday travel to Australia and certain locations within Australia does remain inconsistent. Across in New Zealand, the holiday travel market continues to grow, and into Queenstown, where volumes have recovered more rapidly since 2023.
The focus of the New Zealand government on visa reform and aviation capacity development, particularly out of China, we believe has been a key driver of this and a key driver of our business performance in this market. I'd now like to hand over to Gavin to take you through more details on the financial performance in the half.
Thanks, John. Good morning, everyone. Just starting with Slide 10: Financial Performance. The first half 2026 results are consistent with the update released to the ASX platform on the 29th of January. It's highlighted that the underlying trading results in the slide deck have generally been presented for continuing operations only, with the results of Wild Bush Luxury removed in line with its presentation as a discontinued operation in the interim financial report.
As John has already mentioned, the operating environment during first half 2026 was challenging. However, despite this, the business reported improved statutory profit after tax, revenue from continuing operations growth of 5%, and an underlying EBITDA and EBIT from continuing operations performance broadly in line with PCP.
At business units, there was variability in performance, with stronger performance reported for Reef Unlimited and Skydive New Zealand, which offsets softer performance for Skydive Australia and parts of Treetops Adventure. Within this context, management maintained its focus on optimizing the group's operations for the prevailing market conditions and strengthening the business for the benefit of both the short and longer term.
In relation to sales revenues, management continued to review pricing during the period, with some targeted adjustments made at times for some sites and experiences, as well as increased use of tactical promotional campaigns to stimulate sales volumes. The business also continued efforts to improve ancillary spend of customers, largely through new attractions, food and beverage, and merchandise. It is highlighted that all business units reported higher average revenue per customer in the first half of 2026 versus PCP.
In relation to operating margins, the group reported a slight decrease in its operating margin for the period, which in part reflects the impacts of some cost pressures in parts of the business, driven by the inconsistent volumes, general wages and cost inflation, weather disruption, and an increased use of promotional campaigns.
To help mitigate these cost pressures, as John indicated, management maintained a strong focus on cost reduction in the first half of 2026, progressing initiatives that built on the over AUD 2.5 billion of savings achieved over the past two financial years. Approximately 50% of the greater than AUD 2 million annualized cost out target for FY 2026 has been implemented, with earnings benefits ramping up over the balance of the year. Turning to Skydiving.
The first half performance of the Skydiving segment reflects a stronger performance for Skydive New Zealand, which offset a weaker performance for Skydive Australia. In terms of volumes, Skydive Australia tandem PACs volumes decreased by 7%, driven by the combined impacts of the inconsistent return of international visitors to Australia, cost of living pressures for domestic customers, some weather disruption, and protected industrial action in December.
In particular, the Airlie Beach drop zone reported a stronger return of international visitation, underpinned by a general improvement in visitation for the broader Whitsundays region, whereas the other drop zones reported a more inconsistent level of improvement. It is also highlighted that the volume shortfall versus prior year in December accounted for 68% of the total volume shortfall versus prior year for Skydive Australia in first half 2026.
This coincided with the timing of protected industrial action and negative media commentary by the AWU, citing safety concerns during the peak Christmas sales window in December. In New Zealand, tandem PACs volumes increased by 11%, driven by strong growth in booking levels at both drop zones and despite weather impacts on processing rates during key trading periods, particularly Golden Week in October.
Our New Zealand operations benefited from a strong return of inbound Eastern markets to the Queenstown and Wanaka regions, which was pleasing. In relation to pricing for the skydiving segment, management continued to review pricing in light of prevailing market conditions and the existing price point of the experience. Both Australia and New Zealand reported a slight improvement in average revenue per customer for the core tandem skydiving experience, supported by continued strong uptake of photo and video in both countries.
In terms of operating margins, it was pleasing to see a level of improvement in the operating margins of the skydiving segment, driven by the fixed cost operating leverage of the New Zealand operations with higher volumes. Accelerating the improvement in performance of the Australian operations continues to be a priority focus of management.
A site review is currently underway. Turning to Slide 12: Adventure Experiences. Firstly, just reiterating, the earnings presented on this slide are for continuing operations only. Overall, the Adventure Experiences segment reported another solid result, despite the challenging operating environment. It remained the largest contributor to the group result.
The result was underpinned by stronger performance for Reef Unlimited, offset by some softness in parts of Treetops. Reef Unlimited reported revenue growth of 11% versus PCP, driven by a combination of volume growth and average revenue per customer. Growth, sorry.
Reef Unlimited volume growth of 7% was underpinned by improved volumes, particularly for Fitzroy Island and Port Douglas, as well as benefits from the ramp-up and integration of Reef Unlimited's new vessel, Aquarius II, into its operations during the period. A key highlight was the introduction of new Cairns-based experiences utilizing the enhanced vessel fleet.
It is also noted that key trading period between Christmas and New Year was unfortunately impacted by poor weather, which was followed by Tropical Cyclone Koji in January. Reef Unlimited average revenue per customer growth of 4% reflected targeted price increases, partially offset by a higher proportion of sales of lower priced products, which reflects a level of price sensitivity of customers in the current economic environment.
Against the backdrop of persistent cost of living pressures for Australian consumers, Treetops Adventure reported another solid overall result with varied performance across individual sites. Treetops reported revenue in line with PCP, driven by improved average revenue per customer, which offset softer total volume.
The volume decrease of 4% was driven by mixed performance across the site network, weather impacts, and the loss of the Newcastle volumes, as John's already mentioned. Excluding Newcastle site volumes, total volume was only down 1% on prior year for the remaining sites. Treetops Adventure reported average revenue per customer growth of 3%, was supported by increased focus on ancillary revenue streams, such as new attractions, with the key example being the new zip line at the Canberra site and enhanced food and beverage sales.
The Adventure Experience segment reported a marginal decrease in its operating margin during the period, which in part reflected some cost and wages pressures in parts of the business, despite the improved average revenue per customer across the segment. Turning to Slide 13: Balance Sheet. A prudent approach towards the group's balance sheet and gearing was maintained during the period.
Importantly, Experience Co's financial position remains sound and appropriately structured to support the business. As can be seen at the bottom left table on the slide, the business maintained AUD 14 million of undrawn funds available across the market rate loan facility and asset finance facilities at 31 December. The maturity of the market rate loan facility was also extended by 1 year to December 2027 during the period.
As previously mentioned, in December, the group announced it had entered into an agreement for the sale of Wild Bush Luxury to Intrepid for cash consideration of AUD 5.1 million on a cash and debt-free basis. Subject to customary working capital adjustments. For clarity, it's noted that under the cash and debt-free deal structure, Experience Co will not receive an additional AUD 5.1 million of cash on top of its existing closing cash balance.
Rather, at completion, Intrepid will pay AUD 5.1 million, less the value of debt and debt-like items assumed. Subject to other customary working capital adjustments. With the key debt-like item being bookings in advance, which historically have ranged between AUD 1 million-AUD 2 million, depending on the month. It's noted that the cash received for bookings in advance at completion is retained by Experience Co under the deal structure.
It is currently intended that a portion of the net proceeds from the Wild Bush Luxury sale will be used to repay a portion of the CBA debt outstanding, with future redraw available and subject to the routine CBA facility drawdown process. Discussions are ongoing with CBA in relation to this.
Completion of the sale of Wild Bush Luxury, as John mentioned, is currently anticipated to complete in the next couple of months. It's also been highlighted on the slide that the New Zealand government loan of NZD 2 million, provided to the group's New Zealand operations, sorry, during COVID-19, matures in April 2026, as previously disclosed in the group's financial statements. Turning to Slide 14: Cash Flow.
Firstly, just again, just in terms of the geography of the slide, the top table represents a summary of the statutory cash flow statement reported in our interim financial statements. However, similar to recent results presentations, we have again included some additional information to provide further insight on underlying free cash flow of the business, specifically the middle and bottom tables.
The business reported a net decrease in cash during first half 2026, which was largely driven by free cash flow generated and lower free cash flow generated and capital management initiatives. As seen in the table at the bottom, the business reported a AUD 4.1 million decrease in underlying free cash flow, which was a function of two key factors. Firstly, the conversion of EBITDA into operating cash flows was impacted by working capital timing.
Key examples of this included an additional fortnightly payroll period in first half 2026, as well as school holiday timing impacts on bookings in advance at 30 June each year, particularly for Reef Unlimited. Secondly, maintenance CapEx increased by $0.7 million to $4.7 million, driven mainly by the scheduled maintenance activities for the aircraft and vessel fleet. In terms of growth CapEx, limited capital was deployed during the period, with the amount primarily relating to new attractions for our Treetops Canberra site, specifically the launch of a new zip line course and the commencement of construction of the new NetWorld course.
Management also continued its review of site operating assets, with a non-core aircraft sold during first half 2026. In terms of financing net cash flows, a breakdown has been provided on the slide. Key capital management activities undertaken during the period included payment of the AUD 0.0025 per share, fully franked dividend in September, and the ongoing on-market share buyback.
Since commencement in June 2025, the group has purchased 2.79 million shares, representing about 0.37% of the issued capital by the on-market share buyback. Looking forward, the board and management will continue to evaluate capital allocation options within the context of business performance and the operating environment. Improving free cash flow generation of the business remains a priority management focus, particularly for Skydive Australia. I'll now hand back to John.
Thanks, Gavin. Turning to the trading update and outlook for our business before we open the line up for questions. Just going to Slide 16, this outlines the key priorities for the business that we identified and communicated to the market during FY25, and also at our annual general meeting in November of last year.
In summary, the focus of the management team will be on the following: ensuring operational discipline at both the site and group level, continuing to identify and action quantifiable cost control across the group, as already outlined. We will be conducting a review of our pricing and channel strategies, particularly in light of the challenged macroeconomic performance in Australia and also slower than anticipated recovery of international volumes.
We will continue to focus on organic growth, opportunities within the continuing portfolio, and also ensure that we maintain and strengthen our balance sheet. Charting a clear path to earnings normalization within continuing operations and also allowing for the changes in our portfolio since FY19 will also remain a key priority for management, as we move forward.
Turning to Slide 17. A key part of this, and as a priority for management, we have now commenced an operational on-site review of the Skydive Australia business unit. As a management team, we are not happy with the current performance of the business unit. In recent years, the business has seen major changes in its operating environment across labor availability, employment legislation, customer mix and preferences, and general inflationary pressures. Compounding this has been a more challenging macroeconomic backdrop as well.
As a result of these factors, we've seen a decline in its performance, its performance and volumes over the course of the half. This review will be completed internally and will focus on all available options to the board and management for consideration. The outcome of this review, we will provide to the market ahead of the release of our FY 2026 results in August of this year.
Finally, now, turning to page 18. As reported during the quarterly update in January trading was extremely disappointing given critical external factors, notably Tropical Cyclone Koji and also poor weather on the South Island of New Zealand. We also saw a resultant lower than PCP arrivals into Cairns, with domestic flights arrivals down 8% and international volumes down 12% during the month.
Finally, the impact of protected industrial action and AWU messaging, which focused on safety during December sales period, linger ed and also impacted our January sales figures for Skydive Australia. Turning to February. February has seen better forward demands ahead of PCP due to Lunar New Year, particularly across Reef Unlimited and Skydive New Zealand, as well as Skydive Australia.
The latter, that's in Skydive New Zealand, was affected by poor weather during the Lunar New Year period. Sadly, Skydive Australia also lost a further 6 days of protected industrial action, timed purposely over the Valentine's Day and Lunar New Year trading periods, which impacted some 1,700 bookings in this period.
In closing, our longer-term outlook of the business, whilst remaining positive, has been adversely affected by the slowing down of the key sensitivities of domestic consumption and growth of inbound tourism. Based on the current performance in both of these inputs, management and the board believe that the achievement of this earnings recovery will now take longer than originally anticipated and discussed previously.
We'll provide a further update on this at our FY26 results briefing after the completion of the full year trading, as well as the completion of the Skydive Australia review. Thank you once again for your attention, and we're now happy to take questions. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from John O'Shea of Ord Minnett. Please go ahead.
Morning, John and Gavin. Can you hear me okay?
Yep.
Yep.
Thanks a lot. Just two questions from me. Firstly, your comments about the recovery taking longer, should we imply that what you've come to conclusion is that the arrival of the Chinese holiday makers is a structural issue now, rather than a cyclical one?
I think it's an interesting question. I think what we're seeing, and you know, researching what Tourism Research Australia have said, is that they anticipate that Chinese inbound volumes will get back to that 1.45 million visitors sometime around 2030.
I think from that perspective, there is certainly a timing lag on the volume recovery for that market. I think the interesting thing, what we're seeing particularly play out in Australia, though, is that there seems to be more of a preference for the China market at the moment to be into things. There's a change of preferences and experiences.
Okay.
They're looking at things like self-drive experience holidays. They're looking at, you know, health and wellness. Probably not as they are in New Zealand, where we're seeing in our New Zealand business, they're, you know, they're back in force and consuming adventure experiences. I think there's a timing lag. I think there is a change in the experience preferences of the market, and, you know, for that reason, I think there's some dynamics playing out that we, you know, we didn't foresee as late as a year ago.
Yep. Thanks, John. The second part of the question is, and the two are interrelated: Should we take it then, that given that business is under review, the Australian part only of skydiving, that it doesn't have a meaningful impact on the divisional earnings?
Well, I think the way you should really think about it is that we're currently not happy with its contribution to divisional earnings. As we've said in our earlier commentary, the divisional earnings are being driven by the New Zealand business at the moment. For various-
Okay.
Yeah, for various factors. That's why we're reviewing it, that's why we'll take a deeper dive into it very quickly, then come back to the board with some recommendations on how to deal with that.
Yeah. Thanks, John. That's clear. That's all from me. Thanks very much for taking my questions.
Thanks, John.
Again, if you would like to ask a question, please press Star and then one. Our next question will come from Allan Franklin of Canaccord Genuity. Please go ahead.
Morning, John. Morning, Gavin. Thank you for your time. Maybe just following on from one of those questions, just in terms of Skydive New Zealand, perhaps talk to the extent to which you think that market has fully recovered from China and/or, I guess Australian inbound into New Zealand, or how we should think about the next two years of that asset from a capacity side of the equation?
Yeah, sure. Again, certainly, the way to think about it, Allan, is that we see that our Queenstown asset, you know, NZONE , has pretty much got back to, you know, its pre-pandemic volumes. I mean, the issue that we have there at the moment is more around the ability to process, i.e., weather.
Our Wanaka site is still probably 50%, 60% of the way back, that's the one that we're spending most of our time on the recovery. That's where a lot of the growth in volume for that business unit will come out of, is the continued recovery of Wanaka.
Following. Thanks. On Treetops, yeah, perhaps just, you know, framing the last couple of years. Yes, there has been volume growth and sort of pricing growth, but, you know, flattish volume growth. Can you maybe just sort of talk to perhaps the dynamics within the network, you know, to the extent they're underperforming sites?
Yeah, noting Newcastle is sort of shifting out, you're saying that's not necessarily a contributor at a sort of earnings level. Yeah. What else is sort of happening underneath the hood, I guess, within Treetops?
Well, look, I think with Treetops, what we're, you know, what we're seeing play out obviously is that the volumes are centered on your weekend. What we're finding is it's softer during the week. That's the first area we're focusing on.
The second area, as we've said before, is that we think there's a, you know, a much bigger opportunity in that business unit for food and beverage, merchandise, the things that, you know, you can do when you've got people on a site for two hours. That, you know, when we bought the business, you know, that concept wasn't developed, and now that we have a new leader, in taking that business unit forward, that will be a key focus for us.
What we're finding is that, you know, in certain parts of, you know, in certain parts of Australia, at certain times of Australia, there's, you know, there's different behavioral patterns in our customer base. We've seen, you know, for example, places like Belgrave, it's a very, very strong site. We see in places like Western Sydney, we see in places, you know, places like Hollybank in Tasmania, for example, that, you know, it can be a little bit more volatile depending on the time of year. We think that might be a cost of living pressure playing out.
It's also whilst we're focused, and we have been focused on, since the employment of a new general manager for the experience, on looking at, you know, new attractions. We're currently building a NetWorld out in Canberra, we've, you know, installed some zip lines. We're looking at further expansion of experiences for things to do within the existing network, hopefully to stimulate further growth and demand.
Following. Thank you. Then maybe, sorry, just in terms of a question earlier on China. I mean, working on the assumption that perhaps that doesn't snap back in the Australian context, you know, we are seeing pretty strong growth from other regions, you know, the likes of India included. The extent to which you can perhaps sort of drive some of that volume or some of that attention, is that plausible? Yeah, how else are you sort of thinking about chasing volume, please?
Yeah, I mean, I think for us, the way we're thinking about chasing volume is firstly the Australian market. That's obviously a key market for the Skydive Australia business unit in particular, but also the Reef Unlimited business unit and also Trees. That's a key focus for us, and particularly given the direct nature of that business as well.
I think on the inbound markets, you know, one of the things I used to say when I was at Tourism Australia, you know, China is a hard market to replace because of its size and scale, and it can move and recover very quickly as well. But I think for us, you know, one of the key things is that we've been diversifying our focus on markets.
India, as you say, Southeast Asia particularly, is also a market that we've been looking to develop further, particularly for both of those markets in our Reef business, but also within Skydive Australia. You know, I think it's for us. You know, we are looking to diversify away from China, but we still recognize that China is a great market. You know, that independent Chinese traveler is still very high yield. They like experiences within Australia, and we know that from past performance, they like experiences within the portfolio.
Helpful. Thank you.
Our next question, will come from Alex McLean of Evans & Partners. Please go ahead.
Morning, team. Thanks for the questions.
Hiya.
Can you guys give us a bit more information around what the possible options could be for the review that you're undertaking on the Skydive Australia business?
Well, I think it's, you know, it's pretty early to sort of speculate on that, but it's like any review, it'll look at operating performance, it'll look at site structure, operating structure, our operating cost bases. You know, it's certainly, you know, root and branch review of the business unit. I'm not gonna sort of throw out, you know, speculative comments right now on what it may or may not put forward, but it's, you know, as we said in the presentation, it's all options for the board's consideration.
Okay. Can you give me a sense for what you think the net asset value is for those, for that business?
Yeah, I mean, I think, we provide a little bit of color in our annual financial report.
Sure.
-of the value. I guess obviously the key, the key value of that business unit at the moment, in terms of its asset value, is its planes, and the current carrying value of its planes across Australia and New Zealand is AUD 45.7 million, per the interim financial report.
Okay. All right, that's helpful. Cheers, guys.
Thanks.
Our next question will come from Rodney Pryor of Nordlys Investments. Please go ahead.
Hi, thanks for taking my questions. Just one on the aircraft you sold. Can you just clarify what the profit from sale was on that particular aircraft?
Yeah, I think it was recognized. It was the majority of the profit on sale and the profit loss. I think it was a few hundred thousand dollars or something to that effect.
I think there was AUD 500, just over AUD 500 of profit on sale. The majority is the, that aircraft, is it?
Yeah. No, that's right. Yep. There's a few other bits and pieces in there, but the majority of that AUD 500 was relating to the aircraft. It was a smaller aircraft, one, as I said, that wasn't core to the operations.
Okay. Can I just clarify? I think in previous annual reports, you disclosed you revalue the aircraft every 3 years, and are we up for a revaluation this year?
That's right.
Yeah. Yep.
Yeah. You're right. You're right, Rodney. I mean, that's something that we'll do over the coming months in advance of our annual financial reporting.
Then maybe for John, acknowledge that you've also been doing a little bit on capital management and sort of buying back some shares. I mean, where we sit today, we're basically at, you know, tangible asset backing. You know, question mark on, you know, what may uplift on the aircraft values. No goodwill for the Reef business, no goodwill for the Treetops business. I mean, is it a time to staying, you know, a bit more active on that buyback, given the relative opportunity of that?
I think certainly the, Rodney, the intention, you know, post restrictions on trading, obviously with the results, is that we recommence that buyback, subject to, as Gavin said in his presentation, subject to business performance. I think that's, you know, you can read through the comments as you will, but that's certainly the intention.
Okay, great. Thanks very much for taking my questions.
Thanks, Rodney.
There are no further questions at this time. I'll now hand back to John O'Sullivan for closing remarks.
Thank you very much, everyone, for your time this morning, and look forward to catching up with many of you during our upcoming one-on-one meetings. Thank you.
That concludes our conference for today. Thank you for participating. You may now disconnect.