Earnings Call: H2 2019

Aug 29, 2019

Ladies and gentlemen, thank you for standing by, and welcome to the ExperienceCo's FY 'nineteen Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Bob East, Chairman for Experience Co. Thank you. Please go ahead. Thank you, and good morning, all, and thanks for joining our Experience Co results presentation for FY 2019. I'm joined here by newly appointed CEO, John O'Sullivan and our CFO, Owen Kent. So we'll share the deck somewhat, and we'll try to call out the page numbers as we go through. But first, if I may, just an update from the chair. It's been quite a remarkable number of months and year, in fact, with the core business trading reasonably well, but clearly some challenging trading conditions in particularly up in North Queensland. The just as a brief reminder, I took on the chair role in October of last year. And subsequent to that, we have newly appointed CFO in Owen Kent, a newly appointed CEO in John O'Sullivan, who's only just commenced a number of weeks ago. We've also brought in Ian Douglas as GM of Corporate Development. And it is worth noting that Anthony Boco, the founder of the genesis of this business in the SkyDive sector has today, in fact, transitioned out of a managing director role into a non executive director role, which is good for the business and very good for Anthony. So it's been a period of quite some significant changes. The strategic review that John will discuss very briefly has been embarked on, and there's been some significant progress made in relation to understanding this business and its core components and the future direction of this business. And indeed, at the AGM, we'll have more details to go through at that stage. Moving into FY 2020, the strategic review, as I said, quite significantly advanced and more details to come. The overarching theme is for business simplification a focus back on the core business. The core component parts of this business are actually trading reasonably well, do have upside potential, and we are quite buoyant about the prospects of the core moving forward. There is undoubtedly going to be a streamlining process undertaken to simplify this business and to make it a little bit more nimble, very customer focused. And obviously, as we embark on leasing, those assets that are subpar or noncore will be exited, and this will give us, obviously, a stronger balance sheet. And we will Alwyn will discuss the balance sheet in full terms, but we'll have optionality around our balance sheet moving forward. So all in all, the business is reasonably well placed. We're clearly delighted to have a very senior management team with their hands on the wheel now, and we look forward to significant changes being brought about over the next 12 to 18 months. I'll leave those comments at this stage and ask Owen to give an update on the financial results from Page 6 or Slide 6. Thanks, Owen. Thanks, Bob, and good morning, all. So I'll jump straight into the numbers on Slide 6. Here, I presented the statutory profit and loss. So you'll see some large numbers there. The 2 core ups that I have there is the revenue growth of 19.2%. Now as you would be aware, that's largely driven by the full year contribution of FY 'eighteen acquisition. The other large number you'll see there that we've highlighted is around the other expenses and the impairment. So impairment and significant items, it's actually really important to see. They're predominantly noncash items. So I'll just talk to the impairment in the last number, dollars 52,000,000 dollars and that's largely driven by the Adventure Experience segment. Now what does that number tell us? In short terms, it really tells us that the acquisition takes when we enter into the acquisition does not materialize to the level we would apply. The reason for that, really, we've had 2 things, lower than anticipated benefits from the integration, but that's in a backdrop of some softer tourism conditions, particularly pronounced since September October last year in 2018. And what that does is it impacts our look forward on the projected cash flow towards that cash generating unit. Now naturally, this isn't something we've taken lightly, but it does represent our realistic view of the market in the short to medium term. And that's not to say that North Queensland might improve. And it is a business that has had a cycle of ups and downsizes and quite pronounced on both sides. But just at the stage of where we're at the moment, we're not seeing any definite sign that we'll be in the peak of market in the short term. So naturally, we won't be sitting here waiting for a cyclical recovery. It's our only option. John has talked to me the strategic review, and this business segment will be a key area of focus. The other call that I've had there is really around the dividend. So we have not declared a dividend for the FY 'nineteen year. And there's a couple of things that play there. Really, the FY 'nineteen earnings are coming below initial expectations. The second thing is when you take a step back from the overall cash flows in the period, we've looked at that and then we've just considered the balance sheet optionality in the short term. People entering a strategic review process, we formed a view that, that is the most prudent measure that we have as we enter that process and really have that full balance sheet optionality and have every option on the table in the short term for the strategic review. Moving into Slide 7. The underlying financial performance. For those of you who might be wondering why I haven't put underlying impact, there's a few things going on there. And I've I've awarded doing that because you probably have to pro form a some things as a result of this year. But maybe if I just focus on the underlying EBITDA. So it came in line of the range that we had at the 16th May trading update, dollars 27,200,000 And you'll see there, I started reporting on the EBITDA, which will be an ongoing measure. So that's depreciation is real in this business, and we'll continue to have that. So what we've seen is it's been a story of a couple of halves there. The second half was obviously a bit weaker than the first. But overall, the Skydiving operations has continued to be the key earnings driver. You can see they're representing the lion's share of both the EBITDA and EBITDA level. The other thing we've done in the period, and you'll have to bear with me on this, is just on the cost allocations across the business segments. So as you try and piece together historical that might be frustrating at times, but the other thing that we are looking in the strategic is really better aligning where those costs should fit and how we measure our businesses in summary, and that will follow-up. But we are on the path of improvement there. So EBITDA as well, the final column, probably that's really describing that we are going down the route of return on invested capital has been a key metric. So moving on to Slide 8. I won't dwell on this too much, but we saw the volume performed quite reasonably well, I'd say. On the back of FY 'eighteen, we did have fatalities in the Australian, New Zealand skydive industry for the first time in 30 years. And I guess entering the year, we had thought it would be a tougher trading period. But what was actually what transpired is that you actually take the Far North Queensland drop zones, which comprise anywhere from sort of 27% to 30% of our bulging. That went down by 13% in this period. So if you take that out, Australia and driven by our metropolitan locations was up 5.5% and New Zealand was up 4.8%. This is a good result. And average jump revenue, a lot goes on in there. There's a lot of mix effect that's happened, but that also jumped up at 2% 1.7%. Moving into Slide 9, adventure experiences. Now it's no secret this has been a challenging year for adventure experiences. So we have the revenue growth on the back of the full year contribution of those FY 'eighteen acquisitions, but it really was offset and this is the story, is by the fixed cost leverage at a challenging market. And that challenging market was particularly pronounced in the Q2 of the financial year, but we're talking about October, November 2018, where we saw a downward trend in Canada airport arrivals and REIT volume visitation. So that was particularly pronounced from that period. That's accounted out. Pleasingly, we have been able to hold our market share on volume ex Pans Marina. So that is our share of rig pigmentation as we measure it. So we have seen a mix to a lower yielding product. And part of that is weather and optionality of what's the rig to it after weather plays out. And not just in line with other businesses, when times are tough, some of the issues are magnified. When you have challenging trading conditions, really good highlight, and John will talk to you about his thoughts around the integration and challenges with the way we've approached the operating model and growing market strategy. So I'll let John pick up on running the market. And specifically here, in our GVR business, which is the Helicopters business, we had a very challenging year. It was a lot of the key contract. And look, the key tag at this stage is that when we look at the numbers for that business, it's unlikely to make the correct desired return profile going forward. And that will be one of the areas that we do look at quite closely in the strategic review, and a lot of thinking has been done today. Moving on to Slide 10, cash flow. A pleasing result there in terms of cash conversion on an underlying operating level. So that's a testament to a robust operating cash model, which is great to see, particularly our Skydoring business. The CapEx on a net basis, because we did some trading in and out of the helicopter fleet, So we've repositioned that business. That came in line with expectations, which is good to see. But once again, picking up on the of the capital requirements and specialization of that operation has really proven a challenge for us to get our arms around in the period. Moving on to Slide 11. And here, I'll be talking just about some capital management. Some key things we've done here is we have rebalanced the fixed swing rotary or helicopter fleet at that 30 June 2019. Probably no surprise that the same variables tend to happen. The aircraft transactions are denominated in U. S. Dollar rates, so we are subject to that in each reporting period. The other thing that's actually happened in the period, and this is particularly pronounced for the helicopter market, is we have seen a reset in aviation insurance markets globally. That's led to a bit of transactional activity, as people have had a higher cost base now on some of the regulatory. So insurance cost is really within a whole dislocation in the market and then leading to cost increases in insurance. And that's overlays then just with the general these are quite specialized assets in the main. So it really does depend on liquidity at any point in time for the specific aircraft that is up to value. The other piece here, we've got net tangible assets remained at about $0.17 So it's slightly down if you get to the decimal point, but that's quite pleasing to a quality asset base. And maybe just picking up on the short term strategy before I hand back to John. In the period, we did extend the maturity of the debt facility from May 2020 to October 2020. We continue to work out a healthy dialogue with our incumbent bank, R and A B. And that should we don't see any issues there on the debt side. And then when we talk about resetting the balance sheet and return on investment, I think the key message there is a lot of optionality. And similar to the dividend is we just want to have all levers available as we enter a phase in the short term about a strategic review of the business. So with that and speaking of the strategic review, I'll now hand back over to John first his initial impressions. Okay. Thanks very much, Owen, and thanks very much also to Bob. And good morning, ladies and gentlemen, and thanks for your time this morning. As Bob alluded to before, I've been in the role now for exactly one calendar month I joined on the 29th July. And over the last 4 weeks also, I've spent a lot of time getting around to our operational hubs, getting out to our majority of our drop zones, even just Skydas and Waneta with our team there, meeting a lot of our customers and key suppliers across our network and across our business. And this is a process that's obviously only been a month in. It's still ongoing. So the first impressions I'd give to you are pretty straightforward and set out on Slide 13. And that is from a positive point of view. This business, one of the reasons why less tourism in Australia take its role, this business is really well positioned to take advantage of the underlying trend globally about people traveling for experiences, but more importantly, people traveling to do adventure experiences. This is the fastest growing sector, or niche sector, of tourism globally. And what's really exciting about this sector is that the Asian markets really haven't turned onto it the way that they have done with other inbound markets. In addition to that, we are incredibly capable in our full skydiving proposition, as Alan has alluded to. And that's off the back of the fact we have great market share. We have great drop zone locations. And the customer base that we're appealing to being very free and independent, I think, gives us a lot of protection from some of the external shocks that the inbound tourism market can face from time to time. Balancing that up is really looking across our North Queensland business. And what I'd say about North Queensland is that the Great Barrier Reef will always be an iconic part of the tourist journey to Australia. What we haven't been good at is thinking through what our acquisition should have been and needed to be and then very importantly, how do we integrate those into our model, which is quite unique. And when you look at the skylighting business versus the adventure business type, they're quite different in their nature. And I think that's really, for me, from the last 4 weeks, what I've seen as a first part of looking at the business. So for me, the key short term priorities between now and our AGM in November really come down to 2 significant pieces of work. The business simplification process, which both Owen and Bob have alluded to and also the strategic review, which I'll take you through in a little bit more detail in just a few moments. But also, it's really important for us now to really put our minds to having a very clear, very easy to execute strategic plan, which looks at returning this business to key areas around organic growth, but also having a better idea of when we do go into acquisition mode, what we need to buy, where we need to buy and how we execute against that. So turning to Slide 14 and looking at business simplification. Really, as I said before, this is a business that had an almost insatiable appetite on acquisitions. It was really geographically concentrated in one particular part of Australia. And really, when you think about it, we went and acquired that were volume led as opposed to yield led like our Scott Arbing business is. And as I said before, we really didn't have a clear way of integrating those businesses, whether it's our structures or whether it's even just the focus of management when these particular businesses were bought into, but also that core focus on organic growth. Where I intend to take the business is really, as I said before, about turning back to these principles about we're driving organic growth through our core business, particularly skydiving, but also being much better. And the toolset to the table to work with Alan and also Ian and Bob. Now recognizing the key market drivers for tourism particularly, the risks and opportunity and the elements of what makes a good tourism business. And we'll talk about that in a little bit more detail when we get to the strategic review. The thing that I'm really excited about in the 3 steps of this business simplification is the transformation side of the process and in particular, sales and distribution. I've spent the last 5 years looking at a lot of models from around the world. And certainly, I've seen some really great opportunities within our business to accelerate that part of our operations across not only our Sky Diving business, but also our adventure experiences as well. Turning to Slide 15, which talks about the strategic review. As both Bob and Owen alluded to, this strategic review is now underway. And what we will be doing when we look at the businesses across our portfolio, recognizing that skydiving is at the core of our company and also the historical origins of our company, What we're going to be looking at is really 8 key criteria, which I believe goes into that point before around what goes into making a really successful tourism business and also portfolio of assets. And not surprisingly, we want to have businesses that are market leaders in their sector. We want to have businesses that are scalable, businesses that can be grown organically as opposed to just bolt on acquisitions. And also from a competitive context, we also want to have businesses in our portfolio that are hard for our competitors to enter into. We have that in spite in our skydiving business. We have scale. We have a great market share, 70% here in Australia. And we have the best locations around Australia and also in New Zealand. So it's taking those types of criteria, applying that across our business and then looking at what makes sense to retain and what makes sense to potentially divest. In addition to that, we're also going to turn a lot of attention to our corporate costs. And you can see from Slide 15, at $11,400,000 we are in strong belief that there is a lot more opportunities to be a leaner business than we currently are. Turning to Slide 16, looking at our marketing, sales and distribution. I'm really pleased to say that we've already now started to make it easier for the customer, in particular, to get facilitate direct customer bookings into our business. Now why is that important for these types of businesses? The importance around direct business is obviously the cost of sales is far cheaper. You can't you take away agent commissions, you take away the middleman and you have a direct relationship with your customer that allows you to build that 1 on 1 relationship. We are in the process at the moment of rebuilding our digital capability across our business. We've rolled out across our portfolio of brands new websites. And that's been supported, particularly in our skydiving business with a focus on positioning skydiving to a different market, in particular, females, which are now predominantly in about 55%, our largest demographic for our business, to then drive people to our websites and our digital capability in marketing and sales in particular. In addition to that, we've also been focusing on the customer experience. And as you can see here, you'll be I'm sure you're all pleased to know that Owen Temple has finally decided to do its guide. And what we've made it easier for our customers now is from the process and the journey from when they book and when they pay, and we have a fantastic new partnership with Afterpay. That's really important for us because this is ostensibly a millennial product through the experience and then being able to through the rollout of technology, our shred technology to take your experience directly to your mobile and then giving you the ability to share that. These are important for 2 things. The more we upsell our customers to take video and photographic packages on Skydive, the better yield we drive per customer. And you've seen that in our numbers for this year where we did have some improvements in the revenue per Skydive. But also the sharing of the experience, particularly for millennial and Asian markets, which are really core to our business. This is the way that they this is the way now that they look to book experiences and prioritize experiences when they're in market. Turning to Slide 18, really around our corporate focus. As I said earlier before, part of the strategic review is that we're very much looking at how we make our organization far leaner, how do we make our organization far simpler. And as a key part of that, as I said before, we'll be looking at that overall structure, cleansing our business systems and also ensuring that our business managers and our managers of our businesses have clear lines of accountability. But what I say to the market particularly is that at the core of this, we will always ensure that asking the safety, the safety of our team members and building a high performance culture is really, really important. Slide 19. The way forward. The strategic review, as I said before, will be in a position to be presented at the AGM in November of this year. And what that will focus on is those 4 core areas that we've outlined there on Slide 19, which goes to the outcome of the review of the business, looking at areas around capital discipline and also debt, but also importantly, the growth story in and around ExperienceCo for the years ahead. So in closing, on Slide 20, as I said before, we'll provide a trading update and also the strategic review update and the results of the business program at the November AGM. As I said before, I believe that ExperienceCo is very well positioned in both the broader experience market here in Australia and New Zealand, but also importantly in the adventure tourism market globally. And whilst we are facing some geographic challenges in the North Queensland market, I do believe that the company has added for the business to be able to push through that. And we'll also be focusing in the months ahead on our FY 2020 operational trading as well. So with that, I'll hand back to Bob to say a few concluding words and then look forward to taking your questions. Thank you, John and Owen. I think that captures the content we wanted to share today. I think it portrays that the business has and I'm very excited about the management team in place and the future direction of the business. There's clearly some more work to do in component parts of the business, but we are quite buoyed by our findings to date and where we believe we'll be taking the business moving forward. So I think on that note, we'll leave it at that and open it up if there's any questions. Thank you very much. Thank Your first question today comes from the line of John Hein from Wilsons. Please ask your question. Thank you very much and good morning, Bob, John and Owen. Perhaps if we could start with the outlook where you finished. How should we be thinking about given it is early days, but how could we be thinking about the adventure experiences business? Are you expecting it to track on a similar, I guess, trajectory in FY 2020? And are there initiatives and the initiatives you're rolling through now with marketing and organic growth, is that enough to offset any of those any of the further weakness from the Adventure Experiences business? Yes. Good question. And that's the one that's front of mind, John, for us at the moment is in terms of what actually the momentum from half to what's going against us in that area. So I guess how we're looking at it is certainly achieving FY 'nineteen is no means a lock away at this stage. Like I wouldn't be looking at the business and saying, yes, absolutely, that's on track because we did start FY 'nineteen quite well in North Queensland. But in saying that as well, and this is a key element of what John and I are looking at in the strategic review is around, well, what can we do to address that in the short term? So how quickly can we tackle some of those challenges? But I guess if I looked at a headline view, it would be a hard start to go and with the momentum we're seeing now heading into FY 'twenty. We're certainly not seeing an upswing in the market, not seeing an upswing in airport arrivals. So it's up to us to see what we can do inside on the business. Yes. That's quite helpful. And second question, again, around adventure experiences. Are you able to help us understand what the composition was like at potentially an EBITA line, please? In terms of by the various businesses we acquired, John? Yes, if that's possible. Yes. Probably the way I've been thinking about this, John, is I don't want to continue to talk about the businesses we bought now that we do operate them as a whole. But maybe by through a demarcation between what I see as businesses that sort of naturally belong together would be really the helicopter assets versus the marine and other assets. So mainly in terms of the helicopter numbers there, if you're looking maybe if I just give you some numbers around EBITDA. EBITDA for the period was 3.7%. Now naturally, as you're aware, we have lost the Quicksilver contract in from 1st April. So that would have only impacted us about $500,000 But on an annualized basis, getting there by 'twenty, that's probably more around the 1.6 basis. So that's at play. And then at an EBITA line, the helicopter business is quite different as well. So it's more about EBITDA of 3.7, we're probably looking at the business at an EBITA line, probably around the 1 low ones. So it's and you can sort of connect the dots with the financial report. But that's probably the best way of looking at it, I think, John, in the short term. Yes. That's helpful. And what about corporate costs? I think you've sort of spoken about near term trying to make the business leaner. And I think it did come back a little bit already this year on a year on year basis. Can you give us some indication on what you're doing there and what we could be thinking about? Sure, sure. And I think the 2 things to think of there is that first of all, it's early days of joining the chair, and we're balancing up the desire to continue to grow with actually having the right platform. So one thing we are committed to internally is really making this business properly scalable throughout the business. So in terms of that, would I be expecting to see corporate costs just come off dramatically straight away? We'll probably know because I think we're just going to have to get better at implementing a few things internally. And that might mean some cost. We have to put some cost in, in the short term. But certainly, John and I share a view on one of the pieces we have going that's where into the strategic review is how can we be truly lean up and truly scalable? We could ultimately, that's where we want to take this business and believe there is an opportunity there. Okay. And last question for me. Positive to hear you talking about the focus on organic growth with skydiving. Can you share some examples of what you think that looks like? And again, obviously, early days, but I mean how long does it take for something like this to be implemented and then converted by converted into sales with your customers? Yes. It's early days. It's still early days, John. But for example, we have some of the most premium drop zones as any skydiving operator in Australia and New Zealand in places like Glenorchy, Great Ocean Road, for example. We have a reputation in the premium tourism market internationally as the number one skydiving or number one experience in the world for sort of to buy Virtuoso Travel Advisors. So the idea there is, I think, I think there's an opportunity around the high yielding visitor, which I know tourism Australia are chasing, which I know are, I guess, the more robust visitors to the country from our Canadian bound markets, particularly Asia. So along the lines of that type of product, I think there's possibly some we're now with our technology implementation of shred across our drop zones. I think there's the opportunity to further drive upselling from products of customers whilst they're at our drop zone. So it's the example of products like that, that will again feed into the strategic review and articulate timing in a bit more detail in November. Okay. That's fine. Just one final one for me. With again, back on the Venture Experiences, you talked about a trend to the lower yielding product. Could you just give us a little bit more color on what that meant, please? Yes, yes. So I wouldn't overplay it probably, John. But what it really means is after this year, we have had the seasonal weather play out as well. So for example, that makes the going to Fitzroy Island, which is protected from the weather in a shorter trip and much easier journey. Now for us, that's a lower yielding product compared to a REIT Magic out on the pond turn out in the moore reef, which is more likely to be affected by adverse weather. So you're talking if you just talk to sort of basic ticket price, you're talking the $200 per person versus in the high double digits for a fixed fluoride online product. Great. That's really helpful. Thanks, guys. Thanks, John. Thank you. Your next question today comes from the line of James Tracey from Veritas Securities. Please ask your question. Yes. Good morning, John, Bob and Owen. Thanks for taking the call. First question is around the strategic review. So it now looks as though you bought a lot of the adventure assets at the top of the cycle. How do you mitigate the risk that you don't sell 1 at the bottom? Yes. And I think that's obviously something in front of mind. And we don't want to be premature in going with our findings there at the car because we certainly don't. The phrase that we often use internally, you don't want to sell at the bottom of the market by the top. Now it sounds simple, but equally, there's some things we can do to change the business while we've got it, and we'll be doing that. So certainly, this isn't as simple as, oh, let's just wait for the cycle to return and then sell it or while we're after the cycle has gone against us. So I don't think we're certainly not in a position where we'd be looking at fire selling these assets, James. They're good assets, fundamentally. It's just the conditions in short term have gone well as what we would have liked. And I don't know, Bob, you've got a lot more experience there longer term. Maybe just some overarching things. We clearly, cancer has come off to a degree. The latest stats show international arrivals into the international airport is marginally up and domestic is slightly softer. It's reasonably benign. So whilst we're not pleased with where the business is relative to a couple of years ago, I think we just need to put some context in around that. Our strategic review, it's not and clearly, there will be a look at divestment of subpar assets. So we've tabled that. But it's really about what is scalable, what is the best use of our capital moving forward, what's the highest and best use of aggregating what is good and then looking at what future acquisitions might look like. So that's a long way of saying that they're actually trading not too bad relative to the last sort of 12 months, clearly off over the last couple of years, clearly some weather events affecting it. Clearly, we're not going in that market, but we are not seeing it drop off a cliff. And I don't really I don't want it to be portrayed as cancer is a one way street. We actually still have reasonable prospects for that in the medium to long term. We won't try to call out when there would be an uptick. We are cautious on the market. As we stated in the half year, we said we thought that the benign conditions would prevail, and they have. So I don't think we're in danger of just going backwards and quickly get it out the door. We actually have a fair bit of value to add, and those assets we do decide to move on are trading quite reasonable. Again, relative to 2 years ago or 3 years ago, clearly not wonderful. It's at the end of the law level. That makes sense. You made the comment in the release that you saw throughout the year that the total number of passengers out of cans for the reef was down 8% year over year. And I remember speaking with Owen and I think the exit rate was closer to sort of down 20%. First half is better than the second half. What is that looking like today? And then just on the EBITDA, the first half EBITDA was €17,000,000 second half is €10,000,000 Do we expect FY 2020 to look like the second half or the first half or a combination of the 2? Thanks. Yes. Look, I think in terms of overall passenger so that number called out was out of the harbor. So again, that's an aggregate number, and it does depend on what our competitors are doing and how often they had to pass their boats due to ill weather. So it's yes, it's probably not it's certainly not trending down as it was before, and it feels very flat and it's a big bumps in there. But the season wasn't too bad up there. On the upside, there's a couple there's a new hotel open there and another one about to open in time. So there is some stuff happening there. So I don't want to call this out as across this area or anything, anywhere near that. I mean, there's still positivity in cans. In terms of we're not going to call it half year by half year. Clearly, we'll come back with more detail in November. It will be around where the divestment strategy is up to, and clearly, we might have more announcements around that. So it's and that will obviously impact things as well. So we're not really good we really don't want to call out get a half year call out at this stage because there's a fair bit that is in play there. And likewise, how we structure ourselves, that will also impact bottom line performance, and we've clearly got plans underway there. Your next question today comes from the line of John O'Shea from Ordinet. Please ask your question. Good morning, guys. John, very proud of you jumping out of the plane, mate. That was a big effort, mate. Yes. It was good. It was a fantastic experience and the offer is there to all of you on the call if you'd like to see one. I'll give it a bit. Thank you very much, mate. Look, a couple of questions from me. Firstly, on the skydiving business. And I just wanted to get a sense, obviously, the Australian jump numbers are slightly down, New Zealand up. How has that sort of performed now in FY 2020 so far? Are we seeing a continuation of those trends? Are we just wanted to get it sort of some sort of confidence level on how the jump numbers are kind of performing in FY 'twenty thus far. What we're seeing in FY 'twenty is that with the cycle of this business is the big period for us is where we'll get a much better sense is in and around Golden Week because of our business. Our business has, particularly in New Zealand, but significantly also in Australia, a very large Chinese component. There's obviously been some well documented weather events on the East Coast of Australia in recent weeks. But what our team members are very good at is reallocating people. So what you often find is whilst we might have an adverse number of weather days in, say, July, they're able to rebook those passengers into other parts of the month or in other locations depending on if they're a visitor that's traveling around. But we'll have a better sense on that, I think, John, in October. But again, this comes into some of the weather patterns and other things that are in and around the business. No major trends. In July August, John, are the low point here, hence the volume of the year. So you don't a great read through until that's John. But there's nothing adverse there that we should be concerned about? Or is there? No. There's no You're not missing anything? No, there's nothing there, John. Okay. Thank you. The second question was just on CapEx. Obviously, this business is thrown around a fair bit of CapEx in the past. Can you give us sort of some sense on how we should think about that moving forward? And what sort of next year should look like as an initial guide? Yes. Just before Alan jumps in there, obviously, more detail around our divestment strategies, and that will certainly move the dial reasonably significantly. So I suppose in the absence of that, I don't give the voice over around some of the CapEx, particularly in the And I think probably the nice helpful guide I can give with that introduction is really around I think like at half year I called out I think maintenance CapEx to be in the order of 6 to 12 in any given year. I think and generally it will be around 9, I think, is my gut feel and still a little bit. But probably the other call out I've just introduced there is sort of around what the helicopter business does, John. So I think if you could imagine a world where you sort of broke up the portfolio and you had held up as we didn't, then that number would be naturally a little bit lower as we go through that. But that's Bob. That's one of the areas that we're looking at. And with return on invested capital being a key criterion, Boris, we'll be able to give you a bit more color on that in November. Sure. So the $9,000,000 number includes I assume that you would retain the helicopter business? Yes. Yes. Yes. Yes. Yes. Yes. Thank you. Thanks a lot, guys, and well done for cleaning the slate. Thank you, John. Thank you, John. Your next question today comes from the line of Rodney Prior from Nordleaf Investments. Please go ahead. Guys. Thanks for taking my question. Possibly one directed towards Owen. Just wondering if you could comment a little bit when I look at the skydive split between Australia and New Zealand in the appendix to your presentation. If you sort of cost it all out, the cost per jump, Australia has gone from $280,000,000 from $268,000,000 up 4.5% and New Zealand 355% from 337% up about 5.3%. So just wondering if you can give us a bit of an idea as to what were the drivers of that. Yes. Probably when we read, Sumant, that's probably some of my allocation going off there. I'm getting some of the aircraft costs. So that really depends on where the ownership is of the actual airplane itself. So some of those costs were typically not captured and may be reporting different elements of the business. Okay. That was at the EBITDA line that I was looking at it, so before depreciation. Yes. But I'm talking operating costs there, Rodney. So yes, operating costs. So I think things like registration, insurance, things like that. It did no structure in our on-site all their careers, always a year that looking at what we can do to bolster the customer experience. As we get additional revenue, we'll look at additional services. But early days on that, status quo there. And the only thing we will have here is just with the other line that you see come through there, a lot of that is very low margin like maintenance work. So if you have that bouncing around, it does play with that cost per jump, which isn't really driven off the jump. But nonetheless, it will impact that metric. Okay. Thanks for the color on that. And just the other one you have possibly done in the past is sort of Scott Ives processing rates, I guess, just to understand a little bit. Yes. I've actually been yes, can I talk about it? Because it's quite a deliberate thing for me to venture away from that one because I think for us, certainly, what I look at it is that's a very internal metric that really depends on the day. So and there's a lot of variables there. So I look at it the other way and sort of say, well, how are my bookings going? And I know we have done processing like historically, but I probably think it's not too helpful to share with you guys because it doesn't really tell you a lot in terms of the KPIs of the business because it can just show a lot of things that vary in a short period of time. So that was quite a deliberate thing. So not looking to hide it, that's for sure. So I'm not seeing anything change in that regard, but I'm just trying to give you a SKU that's probably not that helpful a metric for you guys to look at. And we're looking at all KPI's So the fact that we don't have people jumping due to adverse weather is this is all captured in how we view our business and how we track and reward people and it's really not relative. Even internally, it's relative to a select view, but it's we've just got to we're just mindful now what we think are the meaningful KPIs in our business and those that we find out our business when we come out to future communities. They'll be very much simulated as the way we talk to the investor community. They'll be very similar. So we're changing up how we analyze our business, how we track and reward people in our business. And then we'll see a bit of a change up with a bit pieces of different KPIs coming out. Yes. Okay. And then just Just to wrap that up, Rodney, there hasn't been a fundamental shift in processing rates as well. So that's not a reason for that not being there. Okay. And then one final one, just a clarification, if I could. I think in your actual balance sheet, there's a current tax asset of just over $4,000,000 as that you obviously paid out 6 and a bit. Is that just a function of sort of the tax installments that you've done effectively being off the higher base that was last year? What it is, is it's very much a timing driven piece of that because it's to do with our tax return profile. So when we bought a lot of these businesses in our installment profile, until you submit your first tax returns and enter the group as a whole, you are stuck on the installment base. So that was on a high base of earnings. So we'll expect to see a large component that unwind. So that is a genuine refund position. And that sort of will mostly come back in by the end of the first half? Is that right, the way the installment is? Yes. We would like to get that by the end of the first half. Yes. Okay. All right. Thanks a lot, guys. Appreciate the color. No worries. Thank you. Your next question today comes from the line of Hamish Burns, who is a private investor. Hamish, please go ahead. Yes. Hi. Good morning, gents. My first question just relates to the ARPU expectations for expectations for skydiving moving forward. So I know you reported 1.7% for FY 2019. But I would assume that Australia and New Zealand are both relatively high cost countries, probably at the top end of the cost curve for most things and Scott Ireland is part of that relative to international comparisons. So what would your expectations be moving forward for ARPU in Aus New Zealand? In New Zealand, it's Peter. Yes, because I think there's a few things that tie there as well. So we have a lot of mix effect that comes into where the price point of each drop down is quite high. Even within New Zealand, that our Queenstown product is higher priced than they want to go. So I think overall, it does yes, it sort of I don't think you'd be missing anything from sort of your 2% to 3% sort of underlying range. Like if you pass it on all the mix and that sort of thing, you're looking at sort of CPI style business in terms of pricing. Sure. Okay. So don't interpret, say, the 1.7% as the across the board increase. It's a function of mix reductions. Yes. Correct. So how we look at price is very much speeded specific. So and as you can imagine, you're doing increments of $10,000,000 in some and 0s in other and maybe $30,000,000 in another one. So it's really market specific. As we look at our product mix moving forward, clearly, the more popular venues, you would imagine that we have better price, yes, pricing ability and or price leadership ability. So clearly, we'll have a rationalization and we're flagged with everything we have a strategic review. Clearly, they'll be more focused on those that have that better price point. And the more challenged side, we'll establish what to do with those. So there should in time be if everything else remains, and I'm trying to flag out a call out on 'twenty. But if everything else stays the same, you would expect us to be able to get price increases, John, as John implements certain standards and a few things that we think will add value to the experience. And those bigger sites, we have plans on a greater focus on those more popular sites. But we're sitting here for the Q1 and the strategic view is still sort of playing out to see more color in November. So for a full year run rate, I wouldn't expect anything miraculous, but clearly it's setting it up for future Okay. And with regards to adverse weather events, my understanding is that the customers obviously get fully refunded and I think you spoke about rebooking them. But on the flip side of that, I'm assuming that there's no flexibility around your staffing and costs for drop zones and pilots, etcetera. So does that present evidently a fairly? Salary? There's a few variable costs, and it depends on the boat because there's a few variable costs. It's a mixture. But yes, clearly, when we have the weather event, there is a fixed salary component, fixed cost component in this business. And that's the nature of the business. So there are on the fringe some casuals and some labor adjustments we can do and some reallocation. But yes, it's a reasonable So in terms of things like pilot and the actual tandem market is highly variable cost base. So that does flex up and down. So you've got the way I'd simplify it, it's got an highly variable cost base. You'll have a lot of deep debt cost that still continue because we still got to be able to still get our call centers, all sorts of things. But you do have a lot of volume variable activity that can get switched on and off at the drop of the hat, whereas that's what we're going to do there. You're probably speaking more to the Venture Experiences segment where you you're a highly fixed cost business. Okay. All right. Thanks. Understood. And sorry, just a very final one. But with regards to the adventures segments on Slide 9, the EBITDA margins were obviously compressed heavily for the year despite revenue growth. So sort of down 11%, I think is what the slide alluded to. So I mean, our question already came up about the yields and that's a bit of a mix. It sounds like there may literally be no variable costs within this business or could I guess in simple terms, get a bit of an explanation on the 11% decline there? Yes, sure, sure. And probably the way it goes in the short term, and it probably goes to some of John's comments on the strategy and the operating model as we are conforming that segment of our business is that we probably put a few additional cost flows in there that in the short term weren't variable. And there's some of the bits we're looking at. So you will have a contraction, but it has been magnified, I'd say, in the period with our brand model our choice of operating model as we've entered the market, where we had to think of things like management layers, corporatization of multi brands and things like that. Those costs, they stick. And sales representation, that sticks in the period in the short term. But there's a sort of thing that John and I have high on the agenda and the strategic review is what is the appropriate cost base because that EBITA margin, let's all say, it's not something that we consider acceptable. Sure. No, no. I don't think many investors would hire. But yes, I understood that. So there is some scope for improvement there. And I take it that there's no dynamic sort of pricing and potentially that's not appropriate for adventure cruises. But to deal with decline in buying, you're not offering sort of 30% sort of discounts to try and flex volume in down months, etcetera? The position that I'm taking on our product, the one thing we have is the majority of our products we are at the premium end of the market. And when you start getting into discounting or excessive commissions, you did start to rise to the bottom. And particularly in the Lorraine brand, the last thing that the industry out there needs is businesses just heavily discounting and heavily with over the top commission rates because it just when the market does rebound and when the market does rebound, then everyone's got a pretty stable life of their own back. So our product is and I tested it myself with our call center on skydiving. I put out a price of 1 of our competitors for a 9,000 foot jump, and the reply back from our call center was exactly as I had hoped it would be, which was, sorry, that's our cost. We offer a brand new product. And your next question today comes from the line of Alan Franklin from Paterson Securities. Please ask your question. Yes. Hi, all. Thanks for the call today. Just given timing, just a couple of very quick ones, if I may. In terms of the skydiving business, do you have any capacity limitations, I guess, in different parts of the network, you know that there was obviously some strong growth in certain drop zones? 2nd one, just in terms of cans and perhaps given your history in all your histories in sort of tourism, at points in time, does the Queensland government and or Tourism Australia sort of step in and do specific marketing campaigns for markets like Cairns if and when there are downturns such as an FY 'nine, FY 'ten? And just a last one, housekeeping on D and A, if I may, Owen. Presume depreciation sticks roughly the same in FY 'twenty and then amortization comes back quite a lot given the write downs. Alan, I might cover the 2 easy ones to throw in here. So I'd say in terms of capacity, there's no issues there that are of note across the die dive networks. That's a relatively easy one. And you're spot on in terms of your comments on D and A. I'd expect that the fee will continue, provided no material change in our fleet and size of business, but the amortization as a result of the impairment will come down considerably. So you're looking at a $3,500,000 charge this year will come down. It's probably something I'm expecting more in the order $700,000 And on the cans view, I guess I could speak with some regard with regards to tourism Australia and tourism events, Queensland and various governments have done. Despite some recent commentary by some operators in the market, the Great Barrier Reef and particularly tropical North Queensland does over index on in market activity for businesses or organizations like PA and also TEQ. The reason being is that, by and large, a first time itinerary to Australia usually will include the Great Barrier Reefs. Now notwithstanding there's a little bit more competitive tension, I guess, on the REIT at the moment with Fundos. But certainly from a marketing standpoint, it does get the lion's share of focus from both of those organizations. You just might not see it in a TV ad, which those businesses release. And I can tell you the TV ads are a very small percentage, but a high degree of profile for those businesses. The Queensland government and the Australian government have also been quite aggressive in funding new tourism experiences, tourism infrastructure to, I guess, make the conditions more conducive out there. So for example, the Green Islands here will be redeveloped. That's a partnership between the Queensland government and the federal government. And with a view of that type of infrastructure in and around experiences in that region, making it up, giving those marketing bodies and the trade and operators like ourselves and New News to talk about. I don't think there's one single particular issue that's causing the challenging conditions in cans at the moment. I think it's a combination of things. But again, from our perspective, I guess, the one thing we are relatively pleased about with the adventure experiences is that our passenger we've grown share out of our fleet going out of Cairns Marina, which has been looked at the data that we get from Portsmouth on passenger movements. And by and large, the majority of our products up there are actually even more premium. And so things like Calypso dive and snorkel, our Dreamtime dive and snorkel, which is a new product that's being launched, has done very well because it's new experiences in the region. And we think that, that's a possible opportunity for us as well. But for the region, I think there's a lot of attention from a government perspective from marketing but also hard infrastructure going into that, including aviation development, which is obviously critical. There are no further questions today. I'll now turn the call back to you both for your remarks. Thank you. Bye bye. Ladies and gentlemen, that does conclude our call for today. We thank you all for your participation. You may now disconnect.