Thanks, Ashley. Good morning, everyone. Thanks for joining us today for our half-year result call. Shortly, you'll hear from Skroo, our CEO, Adam Campbell, our CFO, Chris Galanty, who's traveled all the way from London, our recently appointed CEO of Global Corporate Business, and Mel Waters-Ryan, who's traveled all the way from Brisbane and is the CEO of our Global Leisure Business. Skroo will start and finish things off, and I'll hand over to him now for a short overview.
Thanks, Haydn. Welcome, everyone, to our half-year release. Some of the highlights of this last year: we've produced a record TTV of AUD 12.4 billion in the first six months. That's up about 11%. There is, with really good growth in Asia, North America and Mexico, and EMEA, and 6% growth in Australia and New Zealand. The underlying profit before tax is about AUD 102 million, and it's slightly above our midpoint guidance that we last gave. EMEA had a record profit, up 17% despite Brexit, which most of you probably have heard about. In the corporate area, we've continued to outperform there, gaining market share in most key regions, and there's a lot of growth potential. North America, for example, had about a 24% increase in TTV.
We're still growing leisure market share, mainly through our emerging and lower-cost online ready-made packages area, as well as things like independent contractors. And we're still struggling with translating that growth into bottom-line profit, but you'll see a bit later in probably Mel's presentation on some of the strategies we're using to counter that. Some of you will know we've got a new global structure and leadership in place. In our global team, we call it a task force team, which is my team. There's now eight of us, well, seven, really. Dean, as we announced, is retiring at the end of June, and Charlene Leiss is taking over from him. So the seven of us is myself, Mel Waters-Ryan, CEO Leisure, who's been around a long time, 32 years, I think. Chris Galanty, CEO Corporate, who's based in London. He's been around with us 23 years.
Adam has only been around 14 years, but he's learning the tricks of the trade, apparently. Steve Norris is a new MD of EMEA. He's been with us for 18 years. Charlene, as I said before, she came on board with one of our early North American acquisitions from Boston called Garber, and that was about 15 years ago, and James Kavanagh, who's one of our Irish imports, he's been with us here for 15 years. We met up with another Irishman, Alan Joyce, the other day, and they had a height-off, and James believes he won by about an inch. But anyway, so that's the team. The seven of us, Dean, who I didn't mention because we no longer think of him because he's leaving, but he's still in place in North America. Mel might mention something about that later on.
Some of the highlights, and this is in the last six months, in the U.K., we had Brexit, which I think lasted for about three years, but it's sort of over. There's obviously the trade wars, which has had a significant impact in some parts of the world. The Hong Kong unrest didn't help us in that part of the world. And certainly, from the North American leisure market, the Dominican Republic has had a significant impact and still is having a bit of an impact there. And our consumer sentiment and the trading cycle, some reasonably key markets like Australia and leisure in particular, it's been the lowest, for example, in Australia since the GFC. I didn't mention the coronavirus because that really didn't have an impact in that first six months. So I'll hand over to Adam now, who can give us a few of the financial results.
Okay. Thank you, Skroo. Look, as mentioned previously, TTV for the half of AUD 12.4 billion was a record overall for us as a company. It was predominantly driven by 17% growth in our corporate businesses. Chris will talk to a little bit later, but our pipeline of new TTV is also very strong in corporate and does include our first-ever AUD 1 billion clients who will start to transition to us over the coming months. As you can see from the slide deck, this growth in corporate continues a 10-year trend of strong TTV growth, predominantly from the large corporate markets of the U.S., U.K., Europe, and Asia. TTV growth in our leisure brands has also been positive, with the Australian leisure growth of just over 8% in particular being well above outbound travel growth statistics.
This increase in TTV was driven by our emerging leisure brands, our online brands in leisure and Travel Money across both Australia and New Zealand. Mel will talk to the contributions from and importance of our leisure brands shortly. Our underlying PBT of AUD 102.7 million was slightly above the midpoint of first-half guidance, which in turn, as expected, was down on last year's first-half result. As indicated in our market update earlier this month, we've made a number of adjustments to underlying profit, the most significant of which was a non-cash impairment charge to our touring business following ongoing underperformance. We've announced an interim dividend of AUD 0.40 per share, which at the lower end of our policy of 50%-60% of underlying net profit after tax for the full year.
Paying it at the lower end of that dividend range reflects the fact that it is an interim dividend and the obvious uncertainty in relation to the impact that COVID-19 or coronavirus may have on our second-half results, and that uncertainty is also reflected in the wide range that we're providing for full-year guidance, and Skroo will talk to shortly. Moving back to current year results, at a high level, our segments have performed in line with the expectations outlined at the AGM in October, and I'll talk to each segment individually shortly. Cost margin continues to reduce at a group level, but probably not reducing at the rate that I'd be looking for, given the increased contributions from lower revenue margin businesses such as FCM, our online leisure brands, and Travel Money.
I'll talk specifically to costs shortly, but for now, we'll highlight that the growth in the lower margin businesses has also been the main contributor to our revenue margin dropping from 13.1% to 12.5% over the last 12 months. We've included a slide that breaks down the impact of FX acquisitions and one-off items to give better clarity to overall movements in key cost lines, and you'll see that the underlying increase in these costs was around 4.5%. The increase in sales and marketing spend is due to increased advertising and marketing activity, primarily for our online brands in Australia, as well as a new TV campaign that we undertook in Canada. Increased consulting payments to our growing independent agent network and ongoing consulting activity in relation to a number of IT, leisure, and wholesale projects that Mel will talk to contributed to the increase in other expenses.
Other than movements arising from the adoption of the new leasing standard, which did have a little over AUD 2 million impact to profit for the half that we've stripped out, other than the gross-up movements attached to that standard, our balance sheet and our cash flow statement are consistent with first-half seasonality. And as an example of that seasonality, our total cash balance at 31 December of AUD 835 million has increased to AUD 1.2 billion by 31 January, in line with those normal trading patterns, and that equates to a positive net debt position of AUD 113 million at the end of January compared to the very small net debt position we had at the half-year. To finish on the results section, I'll just talk briefly on each of our geographical segments.
The ANZ segment has seen solid TTV growth of 6% for the half, and that's largely the result of growth in leisure in New Zealand, our emerging leisure brands in Australia, and travel money across both countries. Our corporate brands in both Australia and New Zealand have had more modest TTV growth over the period in somewhat subdued trading conditions. Whilst the in-store gross margins for Flight Centre brand have now stabilized, as we indicated at the AGM, the impact of reduced TTV growth in our store network has impacted override revenue margins. Cost growth for ANZ includes the AUD 5 million impact from the EBA that we entered into back in October of last year, AUD 7 million for the Bentours supplier collapse, and AUD 9 million of cost contributions from Ignite, which is basically their expenses for the period subsequent to us consolidating them into our results.
So if you exclude those one-off items, costs grew by about 4%, including the additional marketing and advertising for our online businesses that I spoke to earlier. As noted at the AGM, the Americas leisure business has been impacted by safety concerns in the Dominican Republic, but the corporate brands across both the U.S. and Canada have again performed strongly, with corporate top-line growth in local currency in the U.S. of just under 20% and in Canada of 12%. Although PBT is down half on half, prior to the impact of coronavirus, we were still expecting full-year profit growth for the Americas region. Similarly, throughout EMEA, organic corporate growth in the U.K., Europe, UAE, and South Africa has again been strong and complemented by the contributions of FCM France and Switzerland, which contributed around AUD 200 million to TTV for the half.
In the U.K., trading conditions were impacted by Brexit, but a strong focus on cost management meant that PBT was only slightly down on prior year, and South Africa continues to perform strongly across both its leisure and its corporate brands. Within Asia, the social unrest in Hong Kong has certainly had an impact on the business, but overall, for the half, we did see solid TTV growth and similar profitability to the prior corresponding period. That segment clearly will be impacted significantly throughout the second half.
Finally, our underlying profit in the other segment has been impacted, again, as we flagged at the AGM, by an increase in net interest expense, underperformance in the touring business, and also consulting costs predominantly associated with the global technology review and transformation project that Mel will talk to shortly. That's probably enough looking backwards for the time being. I'll now hand over to Chris to discuss our corporate strategy.
Okay. Thanks, Adam. I'll take you through corporate business now. First of all, the business overview. I'll start with our unique approach to how we approach the market at Flight Centre Travel Group. We're the only large TMC who approach the market with two brands, and this is very different. Nobody else does it, and we do it because we think it's critical to win in the marketplace. I'll come on to that on a separate slide shortly. We're very much a people company. We have been since we were founded, but we're also an innovator in technology now. Although there are some tech-only players who've entered the business travel market, and of course, we have the majority of the legacy TMCs, we view ourselves very differently.
We very much believe the key to winning is both blending technology and people and having a very different product offering in the large market FCM space and the SME startup to medium enterprise corporate traveler space, and I'll focus on that. We also are, and we're very proud to be one of the few global TMCs who genuinely have the capability to win and manage large enterprise global accounts. So although a lot of our competitors present themselves as global TMCs, we're one of the very, very few who actually can live up to that. Content's critical for our customers, and with the increasing fragmentation of content across the world, both air and land, we put a lot of time and effort into and investment into making sure that our customers have the widest choice of appropriate air and land content.
We negotiate that globally, and we make sure we distribute that both globally and locally for our customers online and offline. And for various reasons to our charts, we really believe that we're very well placed to continue growing. We are growing very rapidly, but to continue growing in what is a large but very fragmented global marketplace. So this is really just showing you an addressable market. It's a very large market. So corporate travel is estimated around $1.5 trillion globally. And despite the fact that we're one of the largest, we think fourth largest TMC in the world, we have a less than 1% market share of this $1.5 trillion addressable market. So very large market. We're one of the biggest players, but even we have less than 1%. And this slide shows the geographic spread of the marketplace.
And the great news for us is that we are present in equity in most of the largest business travel markets in the world. And the ones where we're not present with equity, we have very strong partners. And over the coming years, I suspect we will be increasing our equity presence to some more of those markets, but we're already in most of the biggest ones. So our two-brand approach, I do want to focus on this because I think it is what makes us different, and I think it's one of the key reasons we're not just winning today but have been winning over the last decade. And that's that we, unlike everybody else, do not approach the market with one brand. And we do that for a very simple reason that the $1.5 trillion market is made up of two very distinct customer types.
There's large customers from enterprise, which are truly global, to even just large national customers who require a very different approach to SMEs, startup to medium enterprise customers. And where everybody else approaches them with one brand, with one customer value proposition, often, believe it or not, with one product offering, we very much see the opposite. So we believe that if you're spending $50 million or $100 million a year in either one market or quite often in multiple markets, the type of product you need, the type of offering you need, the type of customer experience you need is very different, very different and often diametrically opposed to if you're spending, say, $200,000 or $500,000 a year, typically in one market.
The level of sophistication, the level of data, the level of customer insight, the level of procurement involvement, duty of care, availability in different marketplaces, so distribution requirements are very different, and therefore, we tailor our marketing messages. We tailor our brand look and feel. We tailor the language we use. We tailor the sort of people we employ to work on the account, the level of sophistication required, particularly in account management. We also tailor our product range. We make sure the product market fit is suited to each of those two customer points. Corporate travel customers typically want faster implementation, often immediate. They want a much more simplified booking process and expense process. They don't require the same level of aggregation that FCM customers use.
We really reckon that what happens with most of our competitors is invariably, even though they do genuinely care about the SME segment, because it's often the most profitable, they find it very, very difficult to focus on them because when a $100 million customer says, "I need this and I need it tomorrow," all resources, quite understandably, get focused on that customer and the customers who lose out are the SMEs. With our structure, we have separate management teams. We have separate investment budgets who can simultaneously focus on the two customer types. Again, it sounds like a basic point, but we think it is well, we know it's unique, and we think it's fundamental to why we are successful. The next slide shows how we segment the market. There's many different ways we do it, obviously, from a marketing perspective, industry types, and various other categories.
But here's a very basic way that we do it. We use our pyramid to divide up the marketplace based on size and therefore requirements of customers. At the top are what we call enterprise customers. So these are the truly global corporations, often Fortune 100 companies, who have a large global spend. We roughly categorize this as a $100 million spend, but in multiple strong key markets. So typically, they have a large presence in the U.S. That's almost universal. But they simultaneously may have a large offering in France, in India, in China, in the U.K., in Germany, in Australia. So they have multiple centers of often decision-making. They have multiple centers of large spend and require a very strong product and management presence across the world. Very, very few TMCs can genuinely cater, can genuinely win, can genuinely retain these customers, and we're one of them.
We're proud to say now FCM's definitely broken into this enterprise space. We then have global customers, which are, again, we typically say $50 million USD plus, and again, they have their global business with multiple operating countries, so again, they could be operating in many countries across the world, 30, 40 markets, but not with huge centers of spend as enterprise customers. They're typically larger in one, maybe two countries across the world, but they are global. We then have regional customers, and this is really where FCM originally grew up a decade ago, a decade ago plus, with those large customers who are typically strong in one market. That market may be Australia, it may be the U.S., maybe the U.K., and then have offshoots or other countries around the world where customers are traveling from, but typically, it's all centered around one large market.
It also could here, for example, be a government account, which is obviously located in one state or country. And that's where FCM operates solely. We then have this purple layer, which is really where the majority of FCM customers are around the world and where Corporate Traveller can operate as well, the upper end of Corporate Traveller's. A small percentage of Corporate Traveller customers, but nevertheless important to the brand itself. And this is really $2 million-$10 million spend, and we have many, many of these customers around the world. And what generally defines these from the tier above is the local thinking. They're very much focused on local markets. So although they may have a small number of bookers, travelers, transactions happening in other markets, their thinking is very much around the market they operate in, be that China, France, U.S., Canada, Australia, it doesn't matter.
They really care and all their interests, all their attention is on the local markets. And we often have dedicated teams and people working with these non-global customers. And again, this is the upper end of corporate traveler and the majority of FCM customers. We then have the bottom of the pyramid, which is the vast number of corporate traveler customers. This is the corporate traveler sweet spot, sub-$2 million spend, very much local market, very much simpler travel program requirements. Lots of customers. This makes up the majority of that $1.5 trillion spend is these SMEs. The customers, many of them will not view themselves as SMEs. An SME means to us startup to medium enterprise, but they have an SME travel requirement, even if they view themselves as actually larger companies in what they do.
And again, very high charge, highly personalized, but also very tech and traveler-led as well. So this is the majority of the CT business. So again, this approach is important because it means we can very much tailor what we offer as Flight Centre Travel Group to the customers depending on which brands they work with. The next slide's our global footprint, and you can see here that we are a truly global business. We have equity across the world, and we have regional head offices in each region with very strong presence in all of the major corporate travel marketplaces. And the ones where we don't have equity, we have very, very strong partners who are deeply integrated in our business who can therefore ensure that we give a consistent customer experience across the world.
And you will see that we are obviously adding countries and France and Switzerland with the latest full acquisition we made last year, which has really strengthened us in the European region and has helped with our global customers. But again, this shows the spread of equity that we do have, and it's very important to how we deliver to our customers. Focusing on FCM sales on the next slide, this is really important to us because we are not a roll-up TMC. We're not a TMC who's bought multiple independent companies across the world and slapped our brand on them and pretended that we are a global company. We're very much an organically grown business.
Yes, we have some original acquisitions, and we make a few strategic acquisitions every now and then, but fundamentally, we grow in FCM through retaining our customers, and they typically sign three to five-year contracts, and we like to win them certainly for at least two cycles of that and winning new business, so new business is very important to us, and we believe we have the best sales machine and marketing machine in the industry in large markets, and you can see this slide that every year we increase the amount of signed business. Now, typically, this business will not fully trade in the year one because it takes some time to implement, but it will obviously fully trade in year two, and 2020 is, again, a record year for us. We're very excited about how the performance is going.
Up until the end of January, we're almost at $1 billion of signed business, $940 million, which is significantly ahead of this time last year. And we are well on track to smash through our target of $1.2 billion. We should comfortably beat that. And the good news is that not only are we winning larger customers, but the geographic spread of those wins is, again, truly global. And you can see those top six. We're not giving names, but you can see the geographic spread. The top two U.S., we then have Germany, France, and two Asian businesses. So long gone are the days where most of the big wins just come out of Australia, U.S., and U.K. So very much a varied win across the board. And the good news is we're winning more than ever.
To touch on some brand priorities, I'll start with Corporate Traveller. Again, a consistent SME-only focus. We're retaining that. Hyper-investment in sales and marketing. Very important for us that we spend more than our competitors on sales and marketing to keep winning market share, and that's going very well. Really exciting for us, the launch of what we're calling DBX. It's a project name for digital booking experience. We're not going to reveal the brand today, but it is a new mobile-first platform that we're launching in three markets initially: U.S., Canada, and the U.K. And this is the biggest innovation in technology in the history of Corporate Traveller, the brand.
So what we're doing is bringing to market completely new cutting-edge microservices-based technology that uses artificial intelligence to give very much a traveler-first approach, a mobile-first, traveler-first approach that gives access and aggregates a wide range of content in a very simple user experience, but also gives bookers and managers great insights and control of their travel policy. We believe it's the best technology that will be available in the marketplace. It's certainly the newest. And this is not a vaporware presentation. It's currently in beta testing with customers in the U.S. today. So we're very excited about that. I'll touch on that in a moment. We're going to carry on investing in artificial intelligence and robotics.
People will very much remain the heart of Corporate Traveller, but we also often see them as superhumans using technology behind the scenes, artificial intelligence, robotics to make our people even more productive and to give an even better customer experience. So that's a great way that we blend technology. Every single booking we make goes through an artificial intelligence layer, whether it's booked online or offline. And again, widest choice of content. Very important for CT customers that they know they're getting the best airfare, the most appropriate airfare, hotel, transfer, or any other type of land arrangement that they're booking. So very quickly, the message within corporate travel is care uplifted. Our people have always cared for our customers. Through the use of new technology, we're uplifting that care to make sure that we really blend cutting-edge technology with our people.
We think that's very much the winning formula in the marketplace. And again, launching DBX to make sure this mobile-first, simple platform, which has personalization and can aggregate content, that's being launched this year. And again, the iPhone there shows very much traveler-centric. With FCM, key priorities, again, to continue or actually to increase investment sales and account management teams. We are winning record amounts of business, as I said earlier. We need to make sure we are working very closely with those customers, particularly large global ones, to get them to re-sign for at least two, hopefully three, maybe even four cycles. And that's making sure that we really have strategic insights as well as great service in their travel program. Global rebrand. We are rebranding FCM. I'm afraid I can't show you any of that today. It's being launched to media and customers and staff in April.
But this is really going to reflect what the new FCM is. We are an enterprise TMC. We are very much a technology innovator. And we're going to be bringing to market a new brand which reflects why we believe we are winning on the value propositions that we bring to our customers. We're very excited about that. Again, increasing investment similar to Corporate Traveller in market-leading technology products. This is one of the reasons we are winning, is that our approach to technology is viewed very favorably with existing and new customers, making sure that we have great tech with a best-in-region booking capability, which is one of the reasons we're winning, but also consistent global data analytics. And I think that this is not something that's going to go away.
This is a constant and continual investment to make sure our tech is one of the reasons we keep winning. Again, a major investment has been ongoing into this year, is an upgrade to our data insights. We very much are launching a new analytics platform. A lot of work is behind the scenes to make sure, as the industry is becoming more fragmented, that we can really give customers excellent timely data so that we can analyze with them and they can analyze themselves their travel program. Again, using AI and robotics to make sure we're more productive across the business and the widest choice of content applies in FCM as well. Not just NDC, which you've probably heard a lot about with airlines, but also all the different ways customers can book land and transportation.
It's very important we bring those online and offline to our customers. And the next slide just sums it up, really. We have our FCM labs at the bottom of the slide, which is our innovation tech hubs. We have them in Barcelona, in Bangkok, in Boston, in Australia. Really some really fantastic new product management and engineering happening there that's bringing to life a lot of the innovation. And you can see across this slide, it starts with a rebrand, but it's also about solutions designed for customers, automation, quality control, and new travel world technology suite, which we're developing right now with customers, all backed up with intelligent data platforms. So bringing all those analytics to life in FCM. The next slide just briefly, just an example. It's actually a local example in Australia, Uber for Business.
We are the launch customer bringing Uber for Business to our FCM and CT customers. And this simply means that when they use Uber, which many of our customers do, they can go into the Uber app and book. And unlike all of our competitors, that is fully integrated with FCM or Corporate Traveller. So we have their profiles in Uber, which means that their duty of care is captured in the program. Their expense management is captured in the program. So it's a completely seamless experience for them. And I use this example because it's an Australian one, but actually this is something we're doing across the world with airlines, with transportation, with hotels, to make sure we find innovative ways to get our content to our customers.
So that's just a brief overview, really, of why we believe we are winning today and why we will keep on winning into the future. So the summary thing I think to remember is our unique two-brand approach, very much belief in both brands that it's a combination of people and technology that means we'll keep winning, and investment, the market-leading investment in sales and marketing for both brands. And again, although we're the largest and one of the fastest-growing travel management companies in the world, we still have less than 1% market share of that $1.5 trillion U.S. market. So that's it from corporate. And I think I'll hand over to Mel now for leisure.
Thanks, Chris. That was good details, a view of the corporate business, which I don't think we've had to that extent before. So hi, everyone. Firstly, I thought I'd just go through a snapshot of what currently makes up our leisure business throughout the globe. And despite the current results, it's a large business with many assets. And I think it's also important to remember that the leisure travel industry is also a growth business globally, both on and offline. And I think that's important to note. So just that snapshot. Leisure is, in fact, our largest business sector globally in TTV terms. At the half year, I think we'll hit around about AUD 6.7 billion. We have large-scale mass offerings in Australia, New Zealand, and South Africa with leading market share with the Flight Centre brand and also a solid premium business under our Travel Associates brand.
We have smaller offerings than in the rest of the world. It's also important to note we now have omni or multichannel offerings with a diverse range of brands and models, including community stores, the traditional red shop on the corner that everyone knows us for, but just as importantly now, so flagship locations, online contact centers, events, home-based, and ready-made models, and we're growing share rapidly through some of these new and emerging models. As I mentioned previously, TTV is at a record level, but unfortunately, that growth is not translating to profit in the current trading cycle, so in the context of our 7-10-2 goals, which we stated at a group level a few years ago, we are very much front and center of the leisure business as well, and as I mentioned, we are achieving top-line growth.
I think at the half, we're hitting about 6.5% aggregated growth globally in leisure. Obviously, corporate is a lot higher, but that's in line with expectations, and the growth is happening in most places, although it is challenged in some of our businesses. And I've got specifically some of where the growth is coming from there. I won't go through it in detail now, but interesting to note, and I'll call out the last line, which is our strongest growth is actually in the e-commerce segment, where we will hit a record AUD 880 million in online leisure sales during the first half, and we hope to get well over AUD 2 billion at the end of the year, and the following slide just shows where that leisure e-commerce business is coming from in both standalone brands and with multichannel offerings in Flight Centre.
There is no doubt, however, there are current challenges in our leisure business, and that top-line growth is not translating to bottom-line profit growth. In fact, it's the reverse, and I think just to point out some of the challenges that we're currently facing. Number one, there's a lack of scale in our emerging businesses. They're meaningfully becoming quite a contributor to our top line, but they have not reached the scale yet to contribute to the bottom line as aggressively. There's also been, over the last few years, which I know we've spoken to you about, lots of internal disruptions, system changes, new wage models, brand rationalization, productivity programs, and we have not yet had the stable environment to deliver the planned outcomes from those initiatives in light of the suppressed demand and all of that upheaval.
We're obviously also in a poor trading cycle with low consumer confidence in many markets, and then we had the Dominican Republic issues in America, and now, of course, we're being hit with the coronavirus. All of this has led to underperformance in our leisure businesses, but particularly in the Flight Centre brand in Australia and Canada and some other minor brands throughout the globe. So we are, of course, proactively addressing these challenges. And just to touch on that, currently, we have two longer-term reviews underway, both here in Australia and in North America, where we are evaluating all current leisure businesses and recent moves to cement and refine choices as to our winning moves over the next five to 10 years.
We're really looking at materiality of businesses, return on invested capital, net margin potential, and growth capability to determine which of the choices we need to double down on or make for the foreseeable future. We have also a new and upgraded transformation office in place. As you know, we've had a transformation program going for a few years, but this much more heavily resourced transformation office is now because we're now focusing on large businesses like the Australian leisure business, and we've upped the ante on process, discipline, accountability, and reporting with a real focus on cash value, either through revenue increase or cost benefit. Working with McKinsey here in Australia has been very beneficial to that process, and we're building on the previous work that's already been done over the last few years.
We have done a significant amount in deploying initiatives to help shape our future strategic choices, things like our digital upgrades, Flight Centre Brand 2.0 program, and investing in new travel models. Over the page are some of the key foci to date that we've had in the leisure. I won't go on to that, but I'm going to call out some of the initiatives that we've been working on that have delivered pleasing results that we can now materially build upon, just to give you an idea of some of the things that we think will allow us to win in leisure in the future. I'll just go through these one at a time. The first one is we have made a foray into standalone online brands. You would remember a couple of years ago, we did the Aunt Betty startup.
We've also bought BYOjet and Student Universe, I think about three years ago now, three or four years ago. We did that because we wanted to move into the online channel and get much better digital capability. And BYO and Aunt Betty are now leveraged heavily in the metasearch world, which is one of the fastest growth segments in the industry. So what has happened? Well, it's delivered strong top and bottom line growth with those two businesses, circa 60% growth in the first half of this year and 90% profit growth. Again, as I said, they're still small and not delivering to scale, but we're certainly very pleased with those results. And Student Universe, which we also built, which is our global sorry, bought, which is our global online youth brand focused on student and youth flights.
In the first half, I think it's up about 30% globally and now profitable in all markets that we operate in, and we only started it up in the Australian market, I think, July last year. We launched, and we're expecting to do AUD 60 million in TTV for this year, which was well above our initial expectations, and Student Universe is having a record year, so our standalone online brand, we are very pleased with moving into that. We've also then very expanded our multichannel offering in our Flight Centre brand, primarily in Australia, New Zealand, South Africa, and Canada. Our objective here was to offer greater choice for our customers, and clearly, the Flight Centre brand is resonating with our customers in this channel. We are again experiencing rapid growth in the online channel, up about 54% at the half in Australia.
And I think South Africa has had similar growth, if not more. New Zealand stalled a little bit for now, but it's definitely growing. What's great between these online brands and the multichannel offering is that we can now leverage the different plays in e-commerce across the group. So, for example, Student Universe and BYO are doing very well with ancillary sales, and we can now move that capability across into the Flight Centre brand.com. We've also had a move into other new models, which I know we've spoken to about in the past, such as the home-based model. And we've both had organic startups in certain countries and M&A activity in countries like Australia with the purchase of Travel Partners and in New Zealand with Travel Managers.
And again, we've experienced strong growth trends, again, off a small base, but we believe this segment will be a huge part of our future and again allows us to leverage a lot of our core capability into other B2C offerings. The most recent model was our 100% ownership of Ignite, which I think only happened in December. We've, of course, had an investment in that business over the last few years. I've got over the page just some specifics on what we're calling the ready-made model. It's growing rapidly as a category overall, and we expect to get about AUD 250 million full-year TTV out of this highly productive model. What's great, just you may remember, we got rid of a brand called Cruiseabout about 18 months ago.
Within two years, My Cruise, which is one division of this business, will deliver the same TTV at a much higher profit level than Cruisea bout ever did. So a much better model selling that cruise product. We're also now leveraging this product across our Flight Centre brand, and you're seeing a new range of My Holidays products, including My Cruise, will be distributed through the vast network of Flight Centre stores and online. The final area that we've had a foray into recently was we'll call it the leisure B2B growth. So this is a little bit like the home-based, where we are using our product and tech capability and allowing non-Flight Centre agents to use that, affiliates, members, franchisees, etc., although our franchise is currently limited to our Travel Associates brand here.
Again, this is to leverage things we already do and provide capability for non-Flight Centre Travel Group B2C brands. We also launched just recently a soft launch of a B2B bed bank called Travel Junction just at World Travel Market late last year, and again, strong growth, albeit of small bases. So these forays into new models have absolutely delivered on expectations, and we're now set to ramp those up and to move some of the models into our older and more traditional brands. To help that transformation process, our transformation program has now formed two speeds. Speed 1 is very much focused on operational effectiveness. And as I mentioned previously, we've ramped up the transformation office and resourced it as we now focus our attention on the large, particularly Australian leisure business. And it is very much looking at network optimization, further work costs, marketing effectiveness, productivity.
It's a very zealous focus, as I said, on delivering cash value, all about making it better, faster, and cheaper. The Speed 2 transformation work is really where we're focused on the growth horizons of the future and where we can move our leisure business to where the value now is in the industry and very much about fast-tracking the growth of those winning models and new opportunity and maybe others that we don't already have in our camp. What's been interesting in this review is most of the assets we have are there to take us into the future. This process, Speed 2 work, is still very much underway, and I can't give you the complete picture of what we are finalizing with our winning choices for the next five to 10 years.
It's underway both here in Australia and North America, and then we'll turn our attention to parts of the rest of the world, including our at-destination businesses. But our objective from this process is to end up with a rebalanced leisure portfolio and a return to our 2% net margin, which will take us in leisure a little bit longer at a total level than we initially had envisaged, but certainly in the next few years would be an expectation. So that's in a nutshell, just at a high level, where we're at with leisure. When we see you next time, we'll give you a bit more detail on the outcomes of those strategic reviews. And finally, I thought I'd just update our global technology transformation program, which is across leisure, corporate, and a newly formed shared services or about to be formed shared services division.
We did speak about this at the last roadshow, where we've engaged with Hudson Crossing, a technology travel specialist who we've worked with in the past, and that review is being finalized. The recommendations have been agreed and are now about to be implemented, and we have a massive change management program. Along with the corporate and leisure and at-destination or supply business line structures, Chris is obviously the CEO of our corporate division, and I'm the CEO of our leisure and supply business. We're splitting our technology into those three lines of business with their own chief product officers and chief technology officers to recognize the important investment that you heard about from Chris that we're making in both corporate travel and with me in leisure travel to help us realize our growth ambitions and our winning aspirations for the future.
Also implementing a discipline of product management, not project management, but product management and agile development. And as I mentioned, we'll be implementing a globalized shared services model for core infrastructure, networks, compliance, etc., that will service both the corporate and the leisure and also the supply business. So we're very pleased with the progress on that technology transformation, and the next 12 months will see us implement most of these recommendations. So thank you very much for listening to a bit of an update on leisure. I'll be happy to take questions, and I'd like to say thank you, and I'll now hand over to Skroo. Thanks very much.
Thanks, Mel, and thanks, Chris. I'm just about exhausted now, but we're just going on to the outlook for this year. And obviously, as you heard before, we're tracking in line with our most recent guidance up to December. We believe when the trading cycle improves, we're in a good place to capitalize on things. Obviously, the corporate businesses have been delivering consistent and sustainable growth for some time now, and we expect that to continue, certainly when things normalize. We certainly have an ongoing focus on improving leisure profits, and with the good TTV growth we've got, making sure we can translate onto the bottom line, as you heard with Mel. Obviously, the elephant in the room is the impact of the coronavirus, and we'll give you a few insights of where we think this. There's no doubt that the virus is affecting global travel patterns at the moment, particularly in the corporate sector, in various ways.
I think you've already heard Flight Centre's Greater China, Singapore corporate businesses, which are about 2%-2.5% of our group TTV, and usually would deliver double-digit, perhaps double-digit AUD 12 million profit or so, and that's going to be significantly affected. There's also reduced activity from global clients, global corporate clients, and this relates to travel policies and companies using the opportunity to save money on travel and other expenses like that. Obviously, travel to China, most companies have stopped that as well, even though China looks like it might be getting under some level of control. In leisure, some leisure customers are obviously reviewing or delaying or cancelling their travel arrangements. We've seen some downturn in demand and some cancellations. It's still very early days on that, depending on the country that we're in. The next slide will give you a bit of an indication.
I won't go through this, but Haydn's given us those four areas. China and Singapore businesses have been obviously significantly affected. The global corporate business, a fair bit of that's to do with the traveling company travel policies in terms of particularly the higher risk, what they believe is the higher risk destinations. The destination businesses, quite a few of these are based in Southeast Asia, and they had a reasonable Chinese market there. And obviously, global leisure, generally, we've got pretty good alternatives here, and you'll see later on there are some fantastic prices going on, particularly out of Australia too. And this is just in the last few days, so there's no doubt that's going to stimulate a lot of travel, particularly to North America and probably Europe as well. So our guidance has been amended to reflect the current uncertainty.
At the moment, it was 310-350 underlying PBT, and that was predicated on conditions stabilizing, improving late in the first half and early in the second half. Now, it's impossible to really quantify this accurately or reliably because of the coronavirus impact, but there's no doubt it'll lead to some subdued activity through particularly the next couple of months, but probably through the end of this financial year, so we've amended the guidance to an underlying PBT between 240 and 300. At the bottom, the range is based on current conditions continuing through to year-end. Top of the range based on some recovery, and what we saw with SARS was that the activity picks up as soon as the initial impact is over, so we really don't have one right answer, but that's our best estimation at the time.
So we believe that we're well placed to weather the challenges posed by this coronavirus. We've got a healthy cash position. I think end of January, we had AUD 1.2 billion in cash in the company and relatively low debt. So I think it's, for customers, our total peace of mind. We've got the scale and diversity through the countries that we operate in, both in leisure and in corporate, to be able to switch clients to areas that are not significantly impacted. And you will see our marketing ramp up over the next few months to promote these destinations, particularly in leisure. And there's some of our experience from the SARS in financial year 2003, which the coronavirus may have a similar pattern and it may not.
Haydn's later on has got a really complicated slide that I'll show you, and anyone who can understand exactly what it is within a minute will get some sort of prize. What we found with SARS is it contributed to four- to five-month slowdown in outbound travel. This is out of Australia, but it was exacerbated, of course, by the unrest in the Middle East when the U.S. invaded Iraq in March of that year. It was followed by significant concerted rebound. That's basically pent-up demand, and you'll see that in Haydn's slide, which is the next one with three lines. There's two red ones and one blue one. Haydn's going to tell you what that actually means very quickly.
So basically, this tracks Australian outbound departures over 2002 calendar year, 2003 calendar year, and 2004 calendar year. If you look to the right of the screen on the slide, you'll see the blue line is 2002, the orange is 2003, and the red is 2004. And that's the normal pattern you get because Australian outbound travel tends to always grow.
If you go back to the start of that line, though, you can see the same trend as at the start of the year, and then a couple of months in, the red dips below the blue. So that's where SARS started to impact around February, March of 2003, and that was followed by the U.S. invasion of Iraq about a month later. Then if you follow that orange line along, you'll see it meets back up with the blue one around July, August, so four to five months later, as Chris said, and then it kind of powers ahead from the last quarter, and then the following year, you have rapid growth throughout the year in 2004, which is that top line.
Yeah, and that orange line that looks like it's red is actually orange, isn't it? So what are we doing about the coronavirus impact? Certainly, costs. It is an opportunity to really have a deep look at our costs, which we already were through part of the transformation process, so that we can capitalize on opportunities when the market recovers, which it inevitably will. And as I said before, we'll have an aggressive promotion. You'll see this in our marketing, particularly in Australia, over the next few months in two areas that we feel will probably not be too badly affected by this, although it's early days yet. Certainly, flexible work arrangements. We are operating them now in our Asian businesses. We will be spreading that to other businesses throughout the world and possible expansion into other businesses in terms of those flexible arrangements if demand further softens.
And if you go over to the next page, this is indicative of what's happened in the last few days, and I think there's a slide right at the end of the appendix, appendix four, which will show you what has happened, Australia to U.S. just in the last three days. And we expect this will follow, and there will be this certainly will stimulate demand. So that's about it. End of the presentation.
Back to questions when everyone's ready.
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're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Michael Simotas with Jefferies. Please go ahead.
Good morning, everyone. Just the first question from me. When you look at the results across all of the regions, it's a trend we've seen for a while where PBT margins generally come down. TTV growth has been pretty robust. Revenue margins come under pressure and cost margins a little bit mixed and some one-offs in there as well. What needs to happen to get to your 2% net margin target? Do you need to stem the revenue margin decline, or is that just a natural mixed shift that will continue to happen and it's all about costs?
Sorry, Michael, it's Adam here. I'll answer that first, and then Skroo might want to jump in as well. As you say, we're certainly seeing good TTV growth fairly consistently. The revenue margin is pretty much driven by the business mix. So when I look at the decline over the last couple of years, if we just park the Australian leisure margin impact for a minute, the rest of that revenue margin decline is pretty much in line with the mix that we've seen coming through in some of those low revenue margin businesses.
So on the face of it, my view would be that we need to focus more heavily on our cost base because as we're reducing those sorry, as we're increasing the proportion of lower revenue margin businesses, we should also be seeing a natural decline in cost. While we're seeing, I sort of indicated when I was talking earlier, while we're seeing even this year, this half, a further decline in that cost margin. I don't think it's enough, and that's an area that we need to be continuing to focus on.
Yeah, I think. Sorry, Michael.
Yeah. Just related to that and following on, you did mention overrides in the Flight Centre core business in Australia. How much of an impact was that, Adam?
So that's certainly flowing through. If you look at the Australian revenue margin, we've had growth, particularly in travel money, but also in the online businesses, both Jetmax and also you will have seen some good growth coming out of flightcentre.com.au. That's driven the majority of it, but the impact of the revenue margin was probably around about 10 basis points decline.
That was overrides? That was that issue?
Yeah, predominantly. Predominantly. It's the flow-on effect from the TTV.
Okay. Sorry, I cut you off, Skroo.
No, that's all right. Yeah, the other thing, obviously, I think you can see most of our corporate business, the net margins aren't bad and generally quite good, particularly in EMEA and the Americas. In leisure, it is partly focusing on other models like online in the Flight Centre brand, getting more online with less cost growth and higher margins through doing more online, also our premium business, which Mel talked a fair bit about. We still got a lot of work to do there, but we accept that.
Okay. And the second question from me, can we just talk a little bit about the balance sheet? You're in a debt position for the first time in a long time, and I mean, we've spoken before about the old strategy of holding three months of cash OpEx on the balance sheet. Maybe that was too conservative, but we've got a pretty difficult, uncertain time ahead of us. It sort of looks okay at the moment, but is there anything that can happen that can cause a balance sheet problem, or do you think it's conservative enough at the moment?
Look, again, Michael, I'll answer first, and certainly, I'm sure Skroo's got a view as well. Hopefully, they're not too dissimilar. But if you look at it, as you know, when we report our half-year results, there is a huge seasonality mix that flows through to the balance sheet, and particularly with the cash balance. So our cash balance of a bit over AUD 800 million at December had increased by about AUD 350 million by the end of January. Liabilities is sitting at about AUD 1.2 billion with a net debt position at the end of January of over AUD 100 million. So that just sort of highlights the seasonality of it. So I think if and as a comparison, we put the debt facility in place in January, February of last year.
So like for like, we didn't have that facility sitting there, and that's been used to fund a couple of the acquisitions and, in particular, the 3Mundi business that now operates as FCM in France and Switzerland. So no, personally, I don't believe that we've still got quite a conservative balance sheet. The extent of debt we have for a business our size is relatively low. The cash holdings that we have, I'm comfortable with, are sufficient. But you're right, we have a period of uncertainty that we're heading into over the next number of months. I'm actually more comfortable with the balance sheet that we've got than I'm sure a number of other companies would be at the moment.
Sure.
Skroo, do you agree with that?
Yeah, I think our main aim to make sure we're going forward that we do have a positive net cash flow position over the next five months in particular, and that certainly will be one of our major goals, even though there will be some significant impact from this coronavirus for sure.
GFC times, I think there was a year 2009 where you actually ended up with negative operating cash flow in the second half as well. Is the mix just different now, so that won't happen again, or does it just depend on how bad coronavirus gets?
The mix is certainly different. If you go back to 2009, the vast majority of the growth in profit we were seeing would have been coming around that sort of time coming from our leisure business in Australia. If you look at the mix now, TTV for corporate is about 40% of our total, but the growth is really coming out of that corporate space and non-Australia. So I think the diversification we've got certainly helps with that. Sorry, Haydn, do you want to?
Michael, I think also back then, I think that was just after the Liberty GoGo acquisition, and I think, from memory, I might be wrong, but I had a feeling that they recognized revenue the opposite way to what they do now, so their seasonality was different back then too, so that was actually the strong growth, the weaker period, then now is the stronger period.
Yeah, that's good color. Thank you.
The next question comes from Grant Saligari with Credit Suisse. Please go ahead.
Yes, thank you. It's almost bizarre that you can be distributing sort of a quarter of Australia's outbound travel and not make any money out of it. The thing that surprised me a little in the ANZ accounts was your comments just earlier that the net revenue margin, the override impact was actually relatively minor in the overall scheme of things. You had your strongest cost growth that I've seen in ANZ for several years. I mean, most retailers would be happy with 3% revenue growth, but your costs went up AUD 50 million and consultant productivity improved. Can you sort of elaborate on what's actually happening within that business to generate that outcome?
Yeah, maybe I'll start by talking about cost. The cost increase, as you said, nearly AUD 50 million, which is about 7%. That's got about AUD 5 million included in it from the EBA that we entered into in October last year. So on a like-for-like basis, that's flown through for the first four months of the half. That includes AUD 7 million for the Bentours' supply collapse, which is a one-off, as we've outlined, that we made sure that our customers were either rebooked or refunded as a result of that collapse. It also includes just under AUD 10 million, which is the costs incurred by Ignite in their normal business that we've now taken on post-consolidation of that business in September. So again, that's a year-on-year difference, but there's not an additional spend, if you like. It's just the consolidation of that business coming on board.
On top of that, the other major sort of spends that we've had that you'll see in there really are in relation to the investment in our sales and marketing activity. And again, that was largely in relation to both flightcentre.com.au. We've removed booking fees. We've really put that branding and that messaging out into the market. And so we've seen an increase for the half year on year, certainly through those costs. So there's a bit of color, hopefully, around the cost-based movement in that ANZ market.
Yeah, but the revenue from Ignite should have been consolidated as well. So it's a bizarre outcome coming through that ANZ business in a time in which revenue growth is really low. The cost growth is actually accelerating. Actually, another specific question. Are the actual new businesses that you're developing, the home-based channel and as the online businesses grow, actually profitable? Like you say, they're not contributing to profit, but actually, are they loss-making?
Grant, they are profitable. Probably Circle, I think the online's doing about 1% net margin at the moment, and I believe we can get that to 2%. We have, as Adam indicated, removed booking fees to generate top-line growth, but we've got some developments coming online soon that will allow us to sell seats and ancillaries and other products much more easily. So yes, they're profitable, but we're not really capitalizing on the scale. But that was our intent, was to get the top line and then to start looking at how we would improve that net margin. The same with the home-based. The home-based is also growing reasonably quickly, although it's still small. But again, we believe we can get that to about a 2% net margin fairly soon and then grow exponentially from there. Yes, they're profitable, but not at the levels we would quite like at the moment.
Do you need to shut more shops to cut it back to basics? Because if your online is generating a 1% PBT margin, the group's only 0.75% for ANZ as a whole. Corporate is presumably generating a reasonably solid margin given what you've been discussing. So I mean, it sounds like shops are probably loss-making.
There are some. There's no doubt about that. And the network optimization is a key part of the strategic review. And yes, there will be network consolidation and changes over the next few years as the pattern of travel shopping changes. And also, we moved to more home-based agents. Of course, you don't need a physical location to put them in. So yes, they are some of the key considerations. There's a great balance between where the shop contributes and where it doesn't, and we're working through that in the retailers' aspect.
Okay. All right. Thank you.
Your next question comes from Bryan Raymond with Citi. Please go ahead.
Good morning. Yeah, just following on, actually, from the previous question on the fixed cost base in leisure, could you give us an update of where the store network is at the moment and how many stores you think you really need if online keeps growing at the pace it is? Clearly, there's some cannibalization occurring, so just want to understand where you're at, where you think you could get to, and what sort of fixed cost you could remove as you go down that path.
Yeah, I mean, as Mel said, Bryan, we are looking at our network. We have been looking at that for some time. We have been consolidating over the last few years, more or less in the business as usual. But I think at the moment, we have about 900 locations in three different brands. And as leases come up, we'll be looking at the viability of each store by store. And inevitably, I think over the next few years, we'll have fewer but larger, more viable locations.
So I can't give you the exact number at the moment, but I can assure you that we are looking at the viability and making sure we've got the right number of locations in the right suburbs and the right demographic areas. It is quite a complex area, but we have been looking at this in detail over the last two and a half years. We will have said last year when we did the rebrand, we did consolidate quite a bit of that then, and this will continue.
And then just, I guess, the flow and effect of that is on the staff levels. I'm just looking at your presentation now. You had 8,300 sales staff in ANZ. How many of those should we be putting in the leisure bucket as opposed to corporate and head office?
Look, I think in Australia, we have about 5,000 or so, and even if we do rationalize our network to some extent, there probably won't be a dramatic change in those numbers. It'll be making sure we have the right staff in the right locations, Brian, so that is the main thing. It's one of the. It certainly is one of the strategies that we're looking at.
Okay. And then just on some of the TTV trends that you've seen over the past four weeks or so since coronavirus has picked up, and essentially just trying to work out what your guidance is implying for the second half. It feels like corporate has had a bit bigger impact on leisure as there'd be less switching destination. So I'm just interested, is leisure seeing better TTV growth globally than corporate? And then also just maybe by region, if there's any regions more heavily affected than others in terms of TTV growth?
Yeah, it is very early days. Yeah, the main impact seems to have started to become obvious in February, and it's happening both in corporate and in leisure. And it would appear, and I say this is early days, we've had our mid-month picture given to us, but it'll really, and there's no doubt that both, and this is in all countries. Asia, obviously, has been significantly affected, and it would appear just in the last few days or weeks that it is spreading a bit to most of the other major centers where we have leisure and corporate. But it's just a bit early to say how significant that will be.
It'll be significant for the next, I believe, for the next few weeks and certainly March. Whether it goes beyond March and April, we just don't know yet, Brian. It's really a bit of a watch and see for us. But from what we've seen, ticket numbers and TTVs probably dropping off in the vicinity of around the 10% or plus, just depending on where we are and what the destinations we're talking about.
Right. And do you think, though, that the travel agent channel generally would be benefiting in times like this as uncertainty probably weighs more on the OTAs and people do want that ability to go back and change plans or get refunds or whatever else it might be? Do you think that the travel agents, including yourselves, would be relatively better off in this environment?
Yeah, I think that's probably right, Brian. But just the other thing to consider too is if this does slow outbound international travel, then a lot of that's done online. A lot of the domestic stuff's done online. So it probably levels out overall.
Yeah, I think it will have people, particularly those who are travelling, and particularly if they've got a slightly more complex arrangement and certainly internationally, it will be, and there will be opportunities for the offline business. But from our point of view too, I think it is a good opportunity to look at winning market share through marketing activity and other things like that. This is what we did quite successfully during the SARS and in 2001. So we're certainly looking at that right now to make sure that we're ready to take advantage of this as the impact of the virus and that slows, which it already is in China, but we don't know exactly the rest of the world yet.
Okay. And then just my final question is just on some of this price war that you're calling out in airfares, at least to the West Coast of the U.S., if not further. How should we be thinking about demand elasticity to that reduction in airfares? Last time we saw TTV down materially a few years back, we saw very good volume growth that more than offset it, and you still had positive TTV growth. Do you think in the current environment, demand elasticity has been dented a bit by what's going on around the world in terms of the virus and other issues?
Yeah, for sure. It is. But particularly destinations like LA, New York, or North America and London and Northern Europe in particular, it's quite a big market. And when you get fares like that you saw on that Appendix 4, it will stimulate demand quite significantly, particularly for the younger demographic who are not too worried about something like the coronavirus. And so we expect there'll be certainly stimulation. Obviously, these fares are very cheap, so the TTV impact mightn't be as great as it would normally be to sell these. But you'll see a lot more of these really quite amazing deals coming out over the next few weeks as airlines, they really do need to fill their seats.
Brian, so just on those fares that we were talking about, a lot of those were really short-term. It was basically a two or three-day sale, but they were made available at the start of the week, and a lot of them expired yesterday. So I think it was the airlines just testing the water a little bit, perhaps.
Okay. Interesting. Thanks, guys.
Your next question comes from [audio distortion] with UBS Investment Bank. Please go ahead.
Hi, guys. First one for me, can you please just talk through the PBT trends in Australia throughout the half and just your outlook moving forward? Sorry, Australian leisure. I'm talking about.
No, Mel, do you want to? Leisure PBT.
PBT or TTV? [audio distortion]
PBT. Profit.
So the PBT trends in Australian leisure in the first half. Okay, so disappointing in the legacy business, the Flight Centre, absolutely. That's obvious. And reasonably okay in the small and emerging brands, particularly the Jetmax ones, BYO, and Travel Money. And obviously, Ignite, we didn't really have that consolidated until the December months. I think our premium brand was relatively flat, and our home-based, again, was a reasonable PBT growth, although still very slow. So our major issue was certainly in the legacy Flight Centre brand in terms of the shops. And our Universal Traveller brand as well, which was only new at the start of the fifth year, hasn't been performing very strongly either. So that's probably the PBT trends anyway for the first six.
Yeah, and the Flight Centre brand in Australia, from a TTV perspective, just in terms of your stores, I mean, how's that performing? And can you just give us a bit more color around what you're doing within the stores to sort of improve performance there?
The TTV, I think, was slightly down in the stores, but up in the online, which I think produced minor growth overall in the Flight Centre. But obviously, the stores being still the lion's share of the turnover is where the PBT impact was poor. So they've had, and it's actually a lot of the initiatives are in that transformation Speed 1 program about strong sales performance mechanisms going on at the moment. Certainly looking at cost reductions wherever possible. There's quite a few initiatives in play at the moment: efficiency of marketing, those kinds of things. Ultimately, though, we do know we need to shift the model's profit margins and reduce that legacy cost base, which we referred to a little while ago. You will see stores being worked on over the next few years as leases come up. We certainly won't be expanding the shop network.
There will be some consolidation of the shop network, and also looking again at ongoing productivity growth as well. Again, a lot of the growth will come from this online. We've been really pleased with the growth online, and that was certainly the aim, not at a profit contribution, but certainly to get the growth going over the first six. Now the aim has shifted to get the profit margin up in the online space.
Cool, and just final one for me, just more of a clarification. I think, Mel, you mentioned that it'll probably take a bit longer to get back to that 2% net PBT margin. Were you referring to Australian leisure only, or was that on a group level?
No, that's both. Well, that's the group leisure level, totally. I mean, we're also, remember, just as challenged in the North American business from a leisure perspective as well. So we're certainly focused on getting back to that 2% net margin at a group level in leisure. And obviously, then that will impact the group level. That does differ in different markets. We're certainly achieving that in leisure and markets like South Africa, very solid business, and I think U.K. as well. But our main focus will be getting the leisure businesses to that level.
Yeah. Just on that level, the biggest driver, if you look at the group level of getting to that 2% PBT margin, as Mel said, the biggest drag on that that we can see at the moment is the Australian leisure and potentially North American leisure, but predominantly the Australian leisure impact of it. If you look outside of that to our other geographies, and specifically in the corporate businesses, we're very much happy with the way that we're tracking towards their required contributions to get that blended PBT margin of 2%.
So overall, on a group level, leisure and corporate, are you still comfortable with getting 2% PBT margins within your targeted period?
The 2% is targeted within - we're actually exactly halfway through that program. It's two and a half years from now that we've set that out for. At this point in time, we are comfortable with the progress being made by all regions and all businesses with the exception of the Australian leisure business. So that is the unknown at the moment as to whether or not in the next two and a half years we get that to the required PBT margin to make sure it's not dragging us under the target.
Perfect. Thank you, guys.
Your next question comes from Mark Wade with CLSA. Please go ahead.
Yeah. Good morning, team. Just looking at—you've got McKinsey's come in to help you with the transformation there, Mel. And I guess I'm just looking back 15 years ago when you had Bain helping you with full throttle and Shane Flynn's involvement. I mean, I guess the question is, what does McKinsey bring that you can do yourself?
Good question. I was there during the Bain period, which wasn't necessarily one of the greatest moments in our history.
I know.
I think (and I've worked closely with them over the last few months) I think the level of rigor they bring in terms of the process that they apply to transformation is definitely an upgrade from where we were. Don't get me wrong, you're right. We were already working on many of those things. But they also bring a lot of benchmarking and other industry insights, if you like, that you can apply into the travel segment. So I've actually been quite pleased with the impact they've had. But don't get me wrong. It's still our initiative. We're driving it. This is more to help get to the greater level of specifically process to this program, which I think has definitely happened.
Okay. Fair enough then. And just turning to the corporate business, I mean, Chris gave us a good overview there and that $1.5 trillion market. I'm just trying to understand how much of that's kind of currently outsourced to TMC or agents like yourself versus how much would be done in-house. And where I'm getting to with that is, does it need a different approach to your plan to try and win share in those respective subsegments of that big market?
No, we're pretty confident approaching it the way we are with the large market customers through the STM brand and the SME through corporate travel, but also in the leisure business through FCBT. The market is so big and so fragmented. We believe that those two approaches are enough. Sure, we could go into other niches, but we really don't feel like we need it in any of the markets we operate in.
I guess specifically, Chris, I mean, what is your plan, though, to try and increase that share by 1% other than having two brands and great technology and etc.?
It's a mixture of tactical M&A, but largely winning new customers. I think that's. You've got to bear in mind the largest TMC in the world, the significantly largest, which is Amex GBT, still only has a very small single-digit share. So there is nobody out there playing a dominant role in the marketplace. It's so fragmented, which suits us quite well. It means we're very confident we can keep growing.
Okay. I'll leave it at that. Thank you, guys.
Your next question comes from John O'Shea with Ord Minnett. Please go ahead.
Morning, everyone. And thanks for the increased disclosure around corporate. Much appreciated. Perhaps my question may be related to James and perhaps anyone else in the team, but just wanted to sort of, if you could give him a little bit more color around what you're actually seeing in corporate, particularly in the recent few weeks, how they're responding, what he expects to happen to unfold over the remainder of the year given the uncertainty surrounding it. And secondly, how traditionally have you seen the recovery when there is a resolution? Let's assume there is a resolution at some point. How do you see the relative recovery rates of leisure versus corporate based on your history?
So John, it's Chris here. I'll take the question around corporate trends. Really, it's very early on outside of Asia. So we obviously have seen significant impact in our greater China and Southeast Asia business from January onwards, but really, really seeing a dip in corporate travel in the last three weeks outside of Asia. So it's very early days.
Can you give me some idea of the magnitude, man?
It's really difficult to say at this stage. It's really difficult to say. So we're trying to pull that together now. In terms of bouncing back, it's normally very quick. So typically, in previous outbreaks, we're looking at the SARS data because we believe it's the most comparable. The bounce back was pretty quick with corporate travel. So I think that we, there's definitely been an impact. We're not sure how long it's going to last and is really following that. Yeah, we're talking very closely with our customers, and quite rightly, they're following the news and following the updates as we are. But typically, it bounces back, but not until customers feel like it is safe and appropriate to travel.
Sure. And how on the leisure side? Perhaps someone else from the business can give a comment on how they see that response.
Mel and Screw are probably a better place to comment on it than I am. But with leisure, you've got the opportunity to switch people to destinations that are considered to be safe. You don't really have that opportunity with corporate because they're traveling because they need to go to a particular region. So with your domestic customers, with SARS, we did see a shift back to domestic at the time because obviously, there were pretty big outbreaks in America, pretty big outbreaks in Asia at the time with SARS. And then you had the unrest in the Middle East. So people were a bit concerned about traveling anywhere overseas, and they shifted back to domestic.
So I was just saying to Adam before, when you look at that chart that I produced in my capacity as Professor of Data Science, the impact on us probably wasn't as long as that downturn either because those departures, and we would have started recognizing that TTV a little bit earlier than the departure was recognized. So it probably bounced back a bit quicker than corporate.
Yep. Thanks very much.
Your next question is from Peter Drew with Carter Bar Securities . Please go ahead.
Oh, good morning. Just first question just on the Americas result. Can you just talk through the PBT performance of the corporate business versus PCP? And then in terms of the leisure and wholesale PBT performances, just trying to understand how each of those moved versus PCP.
Yeah. Peter, it's Adam, happy to do that, so effectively, across the Americas business, both the corporate business in the U.S. and the corporate business in Canada both had improvements in EBIT. I'll talk about that at an EBIT level, and corporate for the US grew circa 15% in terms of profit. Canada grew in corporate a little bit higher than that, about 20%-25%, but off a smaller base, so it was really the leisure and wholesale business in the U.S. as well as the Canadian leisure business that underperformed versus PCP. And particularly in leisure, I think we were quite disappointed with, sorry, yeah, in Canada, we were quite disappointed with the leisure results there. There's a lot of work being done there.
There's been some impact on backend in the Canadian market, but that's been driven again by some of the TTV impact we've seen over the last 12 months or so. But both the U.S. and then if you look at U.S. leisure and U.S. wholesale, there's no doubt that they've both been impacted by the Dominican Republic safety concerns. And the estimate that we've got from the business is it's around about that $4 million-$5 million impact to leisure and wholesale.
Okay. Thanks. And what about from a TTV perspective? How did U.S. leisure perform and Canada leisure?
Yeah. So Canada leisure was down about between 5% and 7%, that sort of range. US leisure was up, but up slightly.
Right. Okay. And then just going back to the ANZ result, can you just confirm what the corporate PBT margin, sorry, the PBT margin is for the corporate business in ANZ?
Revenue margin or PBT margin?
PBT to TTV, your net margin.
It will typically operate at just over 3% net margin.
Right. Okay, and so has that been sort of relatively consistent year- on- year?
It has fallen a little bit year- on- year because we've seen TTV has only grown by a couple of percent in that corporate market in Australia, with the increase in cost that we spoke about earlier growing a little bit higher than that and revenue margin just coming off a bit. The profit for corporate is down slightly year on year in the Australian market. So it has come off a little bit, but nothing major. It typically sits at around that level. We would be looking to see that net margin continue to increase both in Australia and more broadly across our corporate businesses.
Yep. Okay. And then just last question, just on the other expenses, can you give us some sort of an idea of what your expectation is for that for the full year in the other segment?
Yeah. Sorry. So we're talking to make sure we're talking about the right one. We're talking about the other segment?
Yeah. Correct.
Yeah. So I'd expect the same sort of run rate through to the second half. If you look at what's impacted on the first half movement in underlying PBT, interest has certainly had a significant impact. Our touring results, as we've said, have really underperformed. So we're about AUD 2.5 million down with those. We've had some consulting costs going through for some of the initiatives, which is a couple of million dollars there as well. So my expectation is that we'd have a similar sort of run rate in the second half as what we've had in the first half, which probably, excluding any impact of coronavirus, probably means we end up at around about AUD 45 million-AUD 50 million loss in that segment compared to just under AUD 40 million last year.
Great. Thanks, Adam.
Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Wei-Weng Chen with JP Morgan. Please go ahead.
Hi there, guys. Just a couple of questions from me. So just back onto costs. So they increased AUD 160 million, of which you flagged about AUD 66 million with FX and acquisition. Given that you guys are expected to be net beneficiaries of a weak dollar and acquisitions and revenue, only increased AUD 85 million on the PCP, does that mean you guys went backwards at the revenue line in constant currency pre-acquisition terms?
So I'm trying to back all of that out to get down to it. So if you let me look at it, separate it out a little bit. Acquisitions, first of all, is probably the one to talk through. Acquisitions contributed about AUD 360 million of TTV, about AUD 5 million net of cost. Sorry, not cost, of PBT.
Yeah.
And a half. FX contributed about AUD 2 million to the PBT in total.
What about the TTV, though?
Total TTV, FX was AUD 280 million.
Okay. All right. Cool. And then just a question as well on your initiative for—I realize it's just small at the moment on the leisure side—but growing a B2B business and the launch of a bed bank business. What's your thinking behind moving into this market? Are there synergies to the existing business, or is it just a further diversification of business mix?
Sorry, Wei-Weng. I didn't quite hear, but the justification to move in there is we're doing the majority of what we need to do anyway in terms of we're kind of a B2B business to our own company, if you like. So the supply company we have supplies their own leisure business and our corporate business. So we've had small forays into this actually for quite a long time, and we just tested actually a brand and the launch of a brand at World Travel Market, and the response has been quite enormous. When I say enormous, off a small base. So we think this is an area that we can absolutely pursue. It is not necessarily just in that bed bank, or we're actually calling it a travel bank.
We believe with some of our systems that we're about to implement that we can really improve the product capability of other agency businesses. So particularly where it's not conflicting with some of our own, we don't see any reason why we shouldn't do that. So this is an area that we see great opportunity. It's a good net margin business, and that's a leverage of the cost base in many instances that we already have.
Yeah. Okay. It's just interesting to note that between that and also the focus on growing your OTA business. I mean, to me, that sounds like Webjet, which according to media speculation is up for sale. I guess you know how to speak about Webjet specifically, but any comments on whether you could or would take on a sizable acquisition or accelerate growth in these segments?
I don't think at this stage that we're in that race. No. I mean, we always look at acquisition versus organic, and where the one's better than the other. I mean, that's a very large-scale business. And our own bed bank internally at the moment is probably not too much difference in size.
I think they're worth about AUD 1.5 billion. So I think Michael Simotas might get quite angry at our capital management if we used it all up on that sort of thing.
Okay. Cool. And then just two very quick questions. Are you expecting 100% of EBITDA to be converted to cash over the full year?
We typically fall just below that. So typically, we're generally in that 90%-95% range. And again, the second half is somewhat uncertain, but right now, we would aim for the same sort of conversion rate as we traditionally have.
Okay. Great, and then last one was just Flight. What's Flight Centre's exposure to cruise in leisure?
Sorry, I didn't.
Exposure to cruise in leisure.
Oh, look, the cruise volume has certainly dropped off. I mean, we don't have a specific cruise branch now in the bricks and mortar capacity, and certainly, our My Cruise business is actually still growing exponentially. It's having an impact, so I think 30% down in about cruise volumes being reported, but it's not a major, major chunk of our turnover in leisure, so it will have a small impact.
Okay. Thank you.
There are no further questions at this time. I'll now hand back to Mr. Long for closing remarks.
Thanks very much, everyone. Hope to see a lot of you later today. Probably some of you hope to see us as well, or maybe not. So we'll catch up with you later. Thanks for your time. We are going to be meeting back-to-back pretty much, but shoot through an email if there's anything you need. Thank you.
Thank you.
Thanks, everyone.