Welcome everybody to the Boardroom Experience Co full year 2021 results call. All of our participant lines are currently on mute, and following the presentation, we'll be opening up the call for questions. You will be able to queue for a question by pressing star one on your telephone keypad. I'd like to thank you all for joining us today and hand over to our first speaker and Chief Executive Officer, John O'Sullivan.
Thanks very much. Thanks very much, lady. Good morning, ladies and gentlemen, thanks very much for your time this morning. Welcome to Experience Co FY 2021 results presentation call. With me today is Owen Kemp, Experience Co's Chief Financial Officer. This morning, the format will be, I'll provide some context and overview of the year that's been. Owen will walk you through our financial results in a bit more detail, and then both of us will wrap things up with providing you on a strategic outlook and a quick trading update, and then we're happy to take your questions. Turning to slide four of the presentation. FY 2021 presented, without question, some of the most challenging and irregular conditions that our business has faced with continued state government-induced lockdowns and border closures. Throughout the year, however, three themes emerged within our business.
The first was that we were extremely pleased with the response of an Australian-only market in embracing our experiences, particularly on the Great Barrier Reef and also at our Skydive Australia drop zones. Secondly, the health of our balance sheet enabled us to commence the execution of the first part of our acquisition strategy with the acquisition of Wild Bush Luxury and The Maria Island Walk, both award-winning wilderness experiences located in Australia. Finally, as we have done so during FY 2020, we have continued to focus on investing in our technology platforms, new products, and processes that will enable the business to take advantage of returning demand in the year ahead. Basically, all of this means that the business is very well positioned to capitalize on Australia's reopening, which we expect to happen during the first part of the calendar year 2022.
Turning now to slide number five and the FY 2021 financial snapshot. Owen will obviously take you through our financial results in more detail, at a very high level, despite the ongoing volatility generated by the pandemic, I'm very pleased to report that our revenues were AUD 44.4 million excluding any form of government support, and the business was able to generate an underlying EBITDA of AUD 6.8 million. Our balance sheet efforts and the continued focus on restoring the health of the balance sheet saw our cash and cash equivalents position improve to AUD 13.3 million and net debt reduce further to AUD 2.8 million as a result of the last of our major divestment programs through our business simplification process. Turning to slide six before I hand over to Owen.
Laying out before you on this slide has been our strategy that we've adopted during financial year 2021 to manage the impacts of COVID-19 on the business and how we are approaching the first half of 2022. From a very high level, each quarter has been very different and characterized by externalities that in some cases have arisen in matter of days, such as the Northern Beaches lockdown in December of 2020 and of course, the introduction of the Delta variant, which occurred in June of 2021. Despite all this, demand for the business has remained constant and in some cases and some experiences has been enhanced as Australians have sought to escape the year and take advantage of their destination.
For the first half of financial year 2022, our focus will be navigating some of the most adverse trading conditions that we've seen since the quarter four of FY 2020.
By doing so, we are focusing in maintaining our position on strong cash management disciplines, a disciplined approach to the management of our costs, and we will continue to ensure that the business is in a good position to take advantage of the Australian summer holiday period, which we believe, due to the vaccination rates upswing in recent weeks, presents a great opportunity for the business. With that overview, I'll now hand over to Owen to take you through our financial results.
Thanks, John. Good morning to you all. As you've alluded to, John, the financial performance for the period is one of a story of the pandemic. We'll start with the financial results for the period. Revenue of AUD 44.4 million was in line with our expectations for the year, which we always knew was going to be a tough one. In amongst that, trading has been a month-to-month proposition of border restrictions and lockdowns in all major metropolitan locations throughout the year, notably in key holiday periods. Underlying EBITDA of AUD 6.8 million was assisted by government support in the period, in particular the JobKeeper program, and also targeted industry support from the Queensland and New Zealand governments. Net debt in the period reduced to AUD 2.8 million, down from AUD 9 million at the commencement of the period, and in line with the half year balance.
In light of market conditions, no dividend will be declared for the period. Clearly, the results for the year do not reflect the earnings potential of the business in normal conditions. In amongst these numbers, it has been really pleasing from the CFO chair to see how quickly and rapidly the consumer demand responds when market conditions allow. This was particularly evident as the year progressed and most pronounced in the Q4 period where despite the lockdowns and border restrictions, domestic demand was a driver to encouraging trading performance. That's the trading performance we like, which is without the government support of the JobKeeper program. Overall, we've been extremely pleased to have managed the profitability and cash flow so prudently in what has been a challenging period. Moving on to Slide 9 in our skydiving business.
Skydiving, including our maintenance activities, saw encouraging volumes despite the ongoing impact of lockdowns. In particular, the Australian drop zone performed well, with key metro locations trading at 50%-60% of pre-pandemic levels prior to the emergence of the Delta strain late in FY 2021. New Zealand, with its exposure to the international market, has continued to see subdued volumes with a tick below 15% of the FY 2019 comparator. Pleasingly in the skydiving business, both Australian and New Zealand maintenance and air operations businesses flexed really well in the period, making the most of short-term excess capacity of both labor and equipment to generate some temporary income. John will also speak shortly to some of the initiatives in relation to new product and investment in systems and processes that positions us well for the market reopening.
Of course, today we are faced with the challenges of the lockdowns, particularly in New South Wales and Victoria for our skydiving business. Fortunately, in some ways, it is in our seasonal low period. With that all said, we are encouraged that there is light ahead for skydiving as we approach the peak summer trading period. Moving on to Slide 10 and our GBR Experiences business. This business was slower out of the blocks in FY 2021 than the skydiving business, somewhat unsurprisingly given the Queensland border. Interestingly, when we looked at the numbers, Victoria had been closed for 293 days for the year, and New South Wales over 200. What we are pleased about in this business, as John alluded to, was the swift return of demand when the conditions allow, but also the cost reduction of prior years is clearly being embedded.
The investment in online and digital has yielded benefits, with record levels of bookings being achieved despite the lower overall numbers. Exiting the period, we were quite excited to see Q4 volumes be about 76% of pre-pandemic levels. This was encouraging because, as we all know, New South Wales and Victoria, the two key source markets, were not fully open for the entirety of the period. These results in the July period tells us one clear message in relation to this business. Demand is strong when conditions allow, and we expect consumers to improvingly recover quickly as markets and airlines are opened up to the region. Moving on to Slide 11 and the balance sheet. It's probably a simple update for today. We leave the business better positioned than at the start of the period, despite the challenges that John alluded to in relation to the pandemic.
Seeing out the FY 2021 year without a need to raise capital while maintaining the earnings capacity of the business is an achievement the management team is extremely proud of and prove that the capital management disciplines instilled in the business from 2019 is certainly the right way forward. While we expect August and September to be challenging times in the near term, it is pleasing to see vaccinations progressing in what feels like a pathway emerging ahead of our peak summer season. With that, I'll turn back to John now to take us through the final phase of the presentation.
Thank you very much, Owen. Turning now to Slide 13, with the strategic outlook and trading update section of the presentation. Throughout calendar year 2020 and to date during this calendar year of 2021, management and the board of Experience Co have made a strategic priority to continue to invest in the business to ensure that we're in a position to take advantage of what we believe will be rapidly improving trading conditions from the beginning of next year. As you know, a key part of this development has been our investment in new products, in particular, I'm very pleased to report that our new Great Barrier Reef experiences pontoon, developed in partnership with the Queensland State Government, is well progressed ahead of its launch for early calendar year of 2022.
In addition to this, in July of this year, we've also been able to launch in partnership with Sea World Helicopters and also the Gold Coast City Council, a premium helicopter skydive experience over Surfers Paradise. We believe that this drop zone will only grow into becoming an iconic adventure experience, not only in Australia, but also globally. In addition to our investment in product, we've continued to focus on the improvement of our technological capability and business systems with the introduction of automated check-in and pre-arrival systems and waivers for our GBR Experiences and Skydive Australia business units, as well as the rollout of a new online safety portal through a partnership with Donesafe, and continued investment in our online presence and our reservations capability. Again, making it easier for customers and also our sales teams to execute on the growing demand.
Finally, I'm very proud of the work that Experience Co has continued to do with our work in the community. In particular, a highly successful partnership with the mental health research institute, the Black Dog Institute, with the CEO Skydive in April of 2021, which will continue into 2022, also our work with Stellar Experiences, a not-for-profit organization providing experiences for people with all abilities. These two initiatives, in conjunction with our work on the Great Barrier Reef with the Mars family also the Citizens of the Great Barrier Reef, are continued examples of our position within the community. Turning to Slide 14 to talk a little bit more about acquisitions. You know, we announced the acquisition of Wild Bush Luxury and The Maria Island Walk in April of this year.
I'm extremely happy with the progress of the integration of Wild Bush Luxury into the EXP business. We now have in place the final approvals from the Tasmanian government to be able to complete our Maria Island Walk transaction. These two businesses continue to trade strongly, even with the impacts of the pandemic. We're both enjoying record levels of advanced bookings for 2022, and in the case of Wild Bush Luxury, we're seeing strong interest into 2023. Both provide us not only with unique organic opportunities, but also give us the opportunity for other bolt-on acquisitions, which we are currently looking to progress. More broadly, we're very excited about some of the acquisition pathways ahead for the company. We're well-positioned now with a clear strategy, a healthy balance sheet, and an ever-growing pipeline of opportunities for us to execute against, both in Australia and also in New Zealand.
To close today, I'd like to turn to slide 15, where Owen and I would also like to provide you with a quick trading update and also outlook.
Thanks, John. In the short term, as would be unsurprising to many of you, there are short-term headwinds for the business in the first quarter of FY 2022. New South Wales and Victoria's skydiving operations are suspended at present, including our largest drop zone in Wollongong. All a result of the Delta strain that has resulted in the lockdowns in New South Wales, Victoria and New Zealand. In amongst all this, in the July month, we saw the GBR Experiences business record its highest post-pandemic volumes with close to 17,000 customers in the month of July, highly biased to the front end of the month. Remembering that Victoria and New South Wales were largely closed for the period. That was particularly pleasing to see 60% of the FY 2019 comparator, which was a strong one in that market despite those conditions.
As John alluded to, Premium Adventures continue to see strong forward bookings, of course, in the short term, are impacted by the availability of key source markets to travel into the regions. Overall, what we're seeing continually is as operations open up, demand continues to be robust. Even when we have the restrictions, each time we opened up, we're seeing fast snapbacks as and when lockdowns and restrictions ease. As at today, we've got a net debt balance of AUD 4.7 million and cash of approximately AUD 11 million, and that includes the completion of the acquisition of the Wild Bush Luxury business in late July 2021. Over to you, John, for the final comments on the outlook.
Thanks, Owen. Despite what we're seeing in quarter one, our outlook does remain positive due to the fact that we believe there is a far more intelligent dialogue being taken by the federal government and various state governments with the Australian people on the inevitability of having to live with COVID-19 in the same way as we do as a nation with diseases such as influenza and other infectious diseases. We also believe that as Australia reopens once again internally, there will be a spate of revenge spending, as so aptly coined by Ahmed Fahour, and will result in a very strong summer period, and our suite of experiences and new products are very well positioned to take advantage of this.
As also alluded to previously, we also expect during the financial year to be able to take advantage of an ever-growing pipeline of acquisition opportunities. Also importantly, reap the benefits of our investment in new products and systems that we've made in the business over the last 12 months and also during FY 2020. As has been the practice since last financial year, we won't be providing any guidance for financial year 2020 due to the environment that we exist in. With that, I'd like to once again thank all of you for your time this morning. Thank, of course, the team at Experience Co, our staff members, our contractors, and of course, very importantly, our customers for supporting us during the last financial year. With that, Owen and I are now very happy to take your questions. Thank you.
Thank you, John and Owen. Just a reminder to the audience today, if you'd like to queue for a question, you can do so by pressing star one on your telephone keypad. We do have one question that's come through. We'll open that first question up. Just a reminder, star one to queue for a question. Our first question comes through from John O'Shea from Ord Minnett. Please go ahead, John.
Morning, John and Owen.
Morning, John.
Morning, John.
Just a question from me. You mentioned that on the acquisition side and obviously with the lockdowns, what are you seeing there in relation to the kind of opportunities that have arisen as the lockdowns kind of created more pain for people and how you sort of view it in that sort of framework? In other words, if an opportunity arises that's attractive, are you keen to press a button despite obviously the lockdowns being there, albeit for perhaps a short period of time? What are you seeing in relation to vendors' expectations in that sort of environment?
Yeah, thanks, John. I think certainly, in answer to the first part of your question, obviously the trading conditions, particularly since late June, is probably we've seen more operators who were previously not so interested in having a discussion become a little bit more interested in perhaps doing that, and that's for various reasons. Some people might decide to go to another industry, others might decide to retire. For others, they just feel that, I guess the trading conditions of the last few months have probably been the last that they want to endure, so they'd like to check out. Certainly for us, the way we're approaching it, really as we outlined on slide 14, and as we did so with Wild Bush Luxury, is the focus for us is obviously within Australia and New Zealand.
That's obviously our sweet spots in terms of operating geographies. Second to that is really this focus on adventure experiences that have a domestic audience primarily, can flex to internationals. What we do know is that Australia will open up again to the rest of the world. I think, having obviously been in the chair where I've been selling Australia to the rest of the world, safety, the way that we've managed the pandemic will be a big advantage for the country moving forward, and also New Zealand. We're looking for those experiences that have that domestic audience, but have that ability to flex up. In terms of timing, look, from our point of view, we're timing agnostics.
We think now that the work that we've done in terms of restoring the balance sheet health, getting our management on costs, we've got a good discipline now in applying the ruler as we run over acquisitions. We will execute when we think the time is right for us. With a focus, of course, on the return on invested capital that any such acquisition may also generate.
Thanks very much, John.
Thanks, John.
Thanks for your question, John. Our next question comes through from James Tracey from Veritas Securities. Go ahead, James.
Hi, John. Hi, Owen. Thanks for taking my question.
Hi, James. No problem.
I'm just hoping you can give us a bit of an update. I know you sort of gave us a small update on current trade. Obviously, the skydiving, the big top going, the closed. Can you just talk about where you see the sort of pathway out of this pandemic? Clearly the vaccinations are going up. There's also, I suppose, the issue of some states like W.A. and Queensland, not wanting to have any COVID, whereas, maybe New South Wales and Victoria will be living with COVID. I just wanted to sort of get your thoughts on how you guys emerge as vaccinations go up and what happens over the next year.
Thanks, James. It is the question of the hour, I guess, isn't it? For us, probably if I start from the high level of how John and I are looking at things at the moment with the management team. I guess the first point we just sort of want to draw out of all of this is we are in that sort of low season point. If you're going to have a pandemic, let's not be complacent, but you rather have it in the first quarter and the lockdowns. What we are really focused on, given the earning bias of our business, particularly Skydive, is really monitoring that we're ready to operate for summer. It certainly doesn't look like September is going to be a great month. That would come as no surprise to you.
I guess we're increasingly optimistic that November, December, and that Australian summer, which remembering we haven't had really with the bushfires and the pandemic then last year. This will be the first time in three years we've had a decent run, fingers crossed, as we go through it. Probably the other comment is, while it is impacting the skydiving operations today and they are closed, I guess the thing for us is not to forget the impact that when you've got your two population centers closed on the eastern seaboard, and I think this is where you're heading, James. With Sydney and Melbourne, you're talking the best part of 11 million people who are key source markets for our Great Barrier Reef business.
Also while those locations are locked down and going through some pretty high caseload, the prospect of the once touted Trans-Tasman bubble seems like something that's a little way off there in terms of that. I guess that's a probably long way of saying, look, we're encouraged by where the vaccination path is heading. That horizon of getting to that 80% threshold by the November month is really key for our business. That'll give us a great shot at having a great summer.
I think just to add to that, I think one of the other things or a couple of other things to remember, James, is that the skydive drop zones particularly, or the skydive business, particularly within Australia, will really be the trigger for when the reopening is worth. It's not really influenced whether or not you can travel interstate or not. They're operating as interstate businesses or local businesses.
Okay.
New South Wales and Queensland opens, we're able to operate. We turn those drop zones back on, and we know by looking at the volumes of bookings that are in limbo at the moment, we're pretty confident they'll be pretty busy. As we approach summer, that's the same. For the reef, the other key thing in this is around Southeast Queensland. What we know during the course of last year, that on average, Southeast Queensland or Interstate Queensland travel was about 35%-40% of the volume up there. Again, with the cost that we've taken out of that business, the lower sort of cost base that we have across that business up there, we can operate that pretty well with tapping into that source market out of Southeast Queensland. That's probably what the key thing there is.
Whilst we'd like to see travel between Victoria and New South Wales, and it's very important, as Owen alluded to, for the skydiving business particularly, it's not really a big factor currently because of the nature of the customer. For the GBR Experiences business, provided we can get Southeast Queensland up into the northern parts of Queensland, it will be busy, we think, particularly during September and then also December.
Okay. That's good to know because it seems like that GBR business especially can be a bit stronger than what I thought. I previously thought it was mostly people from
Victoria and New South Wales, it seems like Queenslanders are also wanting to go north as well, which is good.
Yeah, look, I think overall, each of the markets, James, if we were to say one thing that's probably exceeded our expectations, shown on the upside, is given Cairns's historical reliance on international markets. Once those borders are open, that's a real upside to that in the short term, sort of domestic.
Yeah, I think what comes just across Australia is that Australians like to travel, and we're kind of sick of the situation at the moment. When we're able to travel, we'll travel. Queenslanders will do that within their own state.
Yeah. That's great. Just to follow up to the previous question, can you talk about vendor expectations on some of these assets you might be looking at? I know that early in the pandemic, because of JobKeeper, people retained very high, sort of multiple expectations for selling businesses. Do you think that's changing at all?
Oh, look, I think certainly, what we've seen most recently is probably vendors becoming more malleable to have the discussion than they were previously and have a more serious discussion than they would've previously. I think we're starting to see that, and the longer it continues, I think you'll see more of it.
Good stuff. Thanks, John.
No problem.
Thanks.
Thanks, James.
Thank you, James. Our next question comes through from Alan Franklin from Canaccord Genuity. Go ahead, Alan. Your line's now open.
Yeah, thank you. Morning, guys. Hope you are well.
Morning, Alan. How are you?
Thanks for your time. Yeah, just hoping to get a bit of color. Perhaps it's hard to comment on having this part, of course. Apologies if it's a repeat, but how to think about the cost base now going forward to whatever extent you think you sort of variabilized the costs, and obviously the push towards sort of direct bookings and the like. Just sort of leading into perhaps a comment on how to think about the cash burn through this quarter if possible.
Yeah. Okay. I'll start maybe with the cost base, James. Sorry, Alan. Around the cost base, I think what we'll see is the cost savings that we've gone through, they seem to be sticking. Perhaps in terms of the sort of fixed cost base. The bits that will continue to be varied, obviously the skydiving business has a highly variable cost base, and somewhat the GBR business does too at the moment. It's best to think of it like variable, given its dependence on casual labor and running services, etc. In saying that, it's a constant game for the management team at the moment of just trying to run things profitably as best we can. That'll continue to be the case.
Particularly, I think that'll be deep into Q2 this year, that we're not going to see a regularity that where we look at margin and it becomes predictable, for example. It's going to be highly sensitive to volume. In terms of the cash burn, approaching that question, what's really interesting is it's sort of been If I take the July month, Alan, as the one factual point of reference, I think it was around about AUD 0.5 Million burn rate. Now, that's before any JobSaver, for example, or any support programs, which are obviously now rolling out across New South Wales, and then there's various rent abatements. The thing that we're actually noticing is it's a bit different to the first pandemic, where you can have a clean assumption that everything remains shut. We're actually still operating today up in North Queensland.
We're operating in Perth, operating in Southeast Queensland for skydiving. It's one of those sort of watch and see things. I think we'll have a better read around that as we go in sort of the mid part of September around what that might look like. That all said, I think it's fair to assume it'll be slightly on the negative side, heading into September, October. With a bit of ray of light if the GBR business can have a strong school holiday period of intrastate travel.
Yeah, I think that is powerful. Just in terms of managing people, particularly perhaps the jump instructors, obviously rolling lockdowns. As things ramp up, how do you sort of envisage bringing volumes back on? Are those individuals still obviously pretty available and willing to ramp up heading into summer?
Look, I think the pleasing thing, I guess, for that aspect, if we take that example, they are well supported. I know everyone would rather be working, so let's put that out there, and that's what we'd rather be earning our money from operating. The workforce is quite the same there. They are eligible for a lot of assistance at the moment, which is encouraging from the government. I think we'd be foolhardy not to sort of say that managing labor and that aspect is actually going to be what we've got to be good at in the next two months. We've spent a lot of time with our teams to really just keep on to, I guess investing probably a bit strong of a word, Alan, but making sure we're recruiting what we need to and keeping that engagement there with people as well.
We obviously can't keep them whole for what would have been if we were operating at full tilt today. I think at the same time, people are also quite realistic at the moment. They know that the business isn't operating. They know there's a lot of businesses not operating. That's not to say that people might not opt out of the tourism industry, as we're seeing. I think it's fair to say, John, we're not seeing people leave in droves. It is a challenge, but it's also something we talk about as a management team that we just need to be good at and expect there's going to be a natural level of churn, but it's all manageable in the near term.
No, that's why I think things like the investment that we've made in new product and business systems has been really important on that front. Some of the origins of the business when, Bo is very strong on this when he founded it and through and even to the day around the fact that, for our Tandem Master contractor workforce particularly, it's around having the best aircraft, the best equipment, the best drop zones to make us an appealing place to work. That goes across the business. For our team up in Great Barrier Reef, they know, for example, that we're going to be one of the few operators up there that in January and February will be launching a brand-new piece of infrastructure on the reef for the first time in 10 years.
Things like that are really important, the message to the broader team that this is a place that you do want to continue to stay attached to because of what's ahead.
Yeah. No, understood. No, thank you. That's helpful context. Well done, guys. Chat soon.
Thanks, Owen.
Thanks, Alan.
Thanks for your question, Owen. We don't have any further questions at this stage, so now I can hand back to John and Owen for any further or closing remarks.
Well, thank you once again, ladies and gentlemen, for your time this morning, your ongoing support and interest in our business. We look forward to further dialogue as we march through the year ahead. Thanks again, and have a good day.
Thanks, all.
Thank you.
Thank you all. That concludes our Boardroom Experience Co full year 2021 results call. Thank you for joining us today, and thank you for your interest in Boardroom Media. We'd like to wish you a pleasant day.
The conference is now in moderator only mode. Call recording is off