Good morning, everyone. Thanks for joining us today. As you may have seen, we've achieved some very solid results, particularly from the businesses that have been really crucial to our growth in recent years. Specifically, these are our Corporate travel businesses and our international businesses in general, which highlight both our diversity and our globalization. Naturally, there's also some work to do in some areas, including the Australian Leisure business. At various times this morning, you'll hear from our CFO, Adam Campbell, the President of our Flight Centre Americas business, Dean Smith, and our Chief Operating Officer, Melanie Waters-Ryan. I believe our intrepid CEO, Skroo, will also be joining us to talk about Australia and our global outlook, although he did only tentatively accept the invite for this call. I'll first hand over to Adam for an overview of the results.
Thanks, Haydn. Good morning, everyone. I'll spend a few minutes this morning, first up, just walking through our results at a high level before passing over to Skroo, Dean, and Mel to talk about our businesses and segments in more detail. One of the key themes from our results for the half is that we're seeing the benefits of the diversification strategies that we've been deploying over recent years. And specifically, we've seen strong Corporate results globally and record contributions from our overseas businesses. It hasn't been a completely favorable report card. However, as we're very disappointed with our Leisure results here in Australia, and we've also raised an impairment charge against Olympus Destination Management Company. In terms of sales performance, our TTV has grown by 10% compared to the first half of last financial year and is now over AUD 11 billion for the period.
Our underlying profit of just over AUD 140 million was impacted, among other things, by a debt write-off here in Australia for RCR Tomlinson of just under AUD 2 million, and prior to that, we were tracking a little bit more towards the mid-range of our half-year guidance. Based upon our underlying profit, the company will be paying a AUD 0.60 per share fully franked interim dividend, and an additional AUD 1.49 per share fully franked special dividend has also been announced today. I'll now hand over briefly to Dean Smith to talk to the drivers behind our continuing strong Corporate results. Dean.
Great. Thank you, Adam. The Corporate travel business for the Flight Centre Travel Group has performed extremely well in the first half of this year in all areas, Australia and overseas. We are positioned as one of the four largest TMCs travel management companies in the world, and that has been driven by our strategies, particularly with FCM, our truly global strategy, and our plan to dominate the highly profitable and high-margin business in Corporate Traveller SME segment. This has been achieved by ongoing investment in our systems and technology platforms, particularly Your. CT and FCM Connect. These products are world-class, and they really are delivering great services to our customers, and that's helping us attain new customers with a great win rate of over AUD 600 million in the first half and retaining customers at a very, very high level as well.
So overall, our Corporate TTV for the first half is up 16% and now represents almost 40%. So that's 38.4% of the total TTV for the company and really emphasizes our diversity beyond being a Leisure travel agency. I spoke to the growth in the Australia market, but we're really seeing some significant growth into the markets around the world and really Corporate Travellers, dominating our businesses in these other segments. You'll see on the slide that in EMEA, the Americas, and Asia, which are the three largest Corporate travel segments in the world, regions in the world, more than 50% of our TTV comes from our Corporate businesses in those markets. And you'll see in the middle slide that the Americas now is almost as large as Australia after the first half when it comes to TTV generated. Now, that is as it should be.
The Americas is the largest Corporate travel market in the world, and that's our responsibility to be delivering more and more of our TTV and profit out of the Americas as well as the other regions. So I believe we have a really compelling Corporate growth story that has been driven by organic growth primarily. We have made some key strategic acquisitions in regions. Recently, the Nordics in years past, last year, Laurier du Vallon in Quebec and Canada, and this year we just announced recently Casto Travel in strategically important Silicon Valley. However, most of our growth has not come through acquisition. We are not rolling up lots of small agencies. We are really doing it through growth that is organic, which means that we can continually focus on our customer through that process, and we don't have to be distracted with rebranding and/or aligning systems.
We feel that this is a winning strategy for us, and it is reflected in our growth in sales and retention numbers. We do tailor our business specifically to customer types, which I think is somewhat unique within the TMC business. Our SME customers, we target through the Corporate Traveller brand, and the more larger accounts and multinational accounts, we target through FCM. And then we have the even smaller category where we target through Flight Centre Business Travel. By this diversification, we're able to tailor our product needs and our technology needs and our sales process to different segments and successfully deliver those customers what they want. The global success of the Corporate business continues to grow. We have a proven model that we've deployed in more than 20 countries around the world.
All of our Corporate countries are profitable, and that includes our startup business in Germany with FCM. And we are becoming more and more productive within our business, and this is a key focus for us. And the ability to continue to grow at the pace that we're growing is real, and so we can continue to scale for the years ahead with this business model.
Excellent. Thank you, Dean. The other diversification that we've been talking about here and we've really seen come through in the first half is in relation to the drivers of results coming from our overseas or international businesses. Specifically, we've seen record first-half contributions coming in from those businesses with an 87% increase in combined profits from the non-Australian businesses. As Dean has mentioned, we've had strong growth in both the Americas and Asia, but also we should call out EMEA, which, although there has been some level of uncertainty, particularly in the UK with Brexit considerations, has continued to perform very strongly for us. We've recognized, which I think is important, over half of our TTV has been generated from outside of Australia.
Dean will talk shortly a little bit more in relation to the Americas, but we have included a slide that really just highlights the growth both from a profit and a TTV perspective. As I say, Dean will talk to that a little bit more, both in terms of the results and the opportunities that we have in that space. In terms of the Australian Leisure business, Skroo will also talk a little bit more in detail about those results when we get to the ANZ segment. Leisure results in Australia have been the driver behind a reduction in the ANZ segment PBT. At a high level, that's due to a small decrease in TTV after we closed a number of shops late last financial year, although same-store sales are up a little bit. Our overall TTV has fallen.
We've had some additional wage costs in relation to the EBA and consultant upstaffing, and we've also had decreased revenue margins due to reduced attachment rates in some of our shops and also due to some consultant discounting, which Skroo will talk to. In relation to the company's margins, we have seen a decreased revenue margin as we expected, given the ongoing business mix changes that we see with strong growth in some of our lower margin sectors like FCM, our foreign exchange businesses, and some of our Leisure OTAs, and also the lower gross margins that I mentioned briefly in the Australian Leisure business. Pleasingly, we've been able to continue to reduce our underlying cost margin as a result of some fairly robust cost containment initiatives and also improved productivity.
While our underlying profit has increased in dollar terms as a result of the increased TTV we've seen, we have seen a small decrease in our net margin during the half as we progress through what we see as a fairly intense engineering phase of our transformational program. Mel will talk to that in a little bit more detail shortly as well. Just in terms of the cash flow and balance sheet, the only thing I'll highlight there is our cash position as at the end of December, which does stand out a little when compared to the prior half.
You'll note that compared to last half, cash flow from operating activities were an outflow, which we expect in this first half, but they were approximately AUD 94 million higher than the prior corresponding period, which led to a closing general cash position of just under AUD 300 million, which again is less than we had last year. The key driver for that decline is simply the timing of our BSP payments, with eight days of payments accrued at the end of December 2017 and only four days accrued at the end of this half. That equates to an additional AUD 80 million of BSP payments made in this half versus the same half last year.
Just to put that into perspective, by the end of January, so a month after the reporting date, our year-to-date operating cash flows had returned to positive inflows, and our general cash balance had increased by AUD 75 million compared to 31 December. As flagged at the AGM, we've also performed a comprehensive balance sheet review in conjunction with our independent advisors and identified that we had circa AUD 150 million that was available to be distributed back to shareholders. We considered a range of options for how we'd return those surplus funds and associated franking credits with an overarching objective to create value for all of our shareholder groups, bearing in mind we do have a fairly diverse register, while also considering current market conditions and our outlook.
Ultimately, a fully franked special dividend was deemed an attractive option given its speed, simplicity, and certainty, and our ability to release our franking credit balance, and I'll just note that the board is and will continue to actively consider our future capital management initiatives subject to our trading conditions and business needs, but we felt that that was an important step to be able to return some of that excess capital to shareholders. I'll now pass over Skroo, who's going to talk a little bit more about the Australia-New Zealand segment.
Okay. Thanks, Adam. And hello, everyone. Good morning, or whatever it is. Yes. I'll just give you a bit of a rundown on ANZ, and that's Flight Centre Australia, New Zealand, not the bank I'm referring to here. So as you can see from the slide, TTV was up marginally in Australia. Profit was down 31% to AUD 73 million, underlying profit. And our net margin decreased 1.77% to 1.24%, which was a bit disappointing. And you can see from the other slides the Leisure, Corporate, and other business in the ANZ area. If you go to the next slide, just with a trading overview, we did have a record TTV, but it was only up 2% this year.
And with that 73 million underlying PBT, and most of this profit decreased, and you'll hear a bit more about this later, was due to the poor trading in some months of the Australian Leisure business. The Corporate businesses are performing well in Australia with record profit despite the loss of RCR Tomlinson and a modest increase in overall Leisure TTV, mainly driven by OTAs and especially the Flight Centre brand business, also Travel Money and Travel Partners. There's an increase on same-store sales but on a somewhat smaller base, but a disappointing profit result, particularly in Flight Centre brand, which obviously is our big brand. As Adam said, it was impacted by this EBA and lower gross margins. New Zealand had a 9% TTV growth and good profit growth during the softer period of the first six months.
Corporate business is performing well there as the Travel Managers and Executive Travel, which were acquisitions last year. Now, the segmented results for EMEA. EMEA is, you probably know the answer, Europe, Middle East, and Africa, and Europe does include the UK at the moment. We're not sure for how long. As you can see, there's quite good growth there, 12% in TTV in AUD and a strong PBT of AUD 39 million. Net margin's 2.46%, marginally up from last year. You'll see the contributions there on the other side of the page from the UK, Europe, South Africa, and UAE, so the next slide, the trading overview on EMEA. As we said, record TTV and profit and an 18% PBT growth across the region, and part of that growth was achieved with fewer people, so we got some good productivity gains there.
UK and Europe that we've sort of varied it out now, so Brexit must have happened. TTV topped AUD 1 billion. It's the third country to achieve this during the first half. Strong contributions from the UK Corporate businesses. For example, FCM's up 30% and obviously a healthy profit contribution from Corporate travel in the UK. The Journeys and Escapes margins, product ranges are proving popular, and Ireland businesses now break even. And obviously in Europe, we're growing. We had a startup in FCM Germany, which is going okay, and it's been quite a big investment there. And the results, particularly in Leisure, have been affected by the UK credit card legislation change. Basically, you are not allowed to charge any credit card fee to Leisure customers.
Middle East and Africa, UAE is growing well off a small base with 33% TTV and doubling the profit before tax and strong contribution from FCM in South Africa and Flight Centre Associates, which is the independent model. I think I'll hand over to someone else now.
Over to Dean. Over to you to talk about the Americas.
Great. Thanks, Skroo. Thanks, Adam. So we've had a very pleasing first half in the Americas with an 18% TTV growth and a pretty significant improvement in PBT, which was equivalent to AUD 8 million last year, and it's on 33. We're on AUD 33 million at the end of the first half this year, which is really pleasing because everyone's aware, I'm sure, that the first half of the year is the lower trading half for the Americas, very seasonal business generally. So last year was the first time that we did achieve profit in the first half, and to have grown that significantly this year is very pleasing. We have done that with lower staff, so there's a huge focus on productivity, and we are getting obvious productivity gains there.
Good decrease in our cost margin as well, with an emphasis on really focusing on where we spend our money and how we spend our money and an improvement in net profit margin up to 1.33%. So what has been driving some of that? In the USA, we have seen growth in all sectors and profit growth in Corporate, Leisure, wholesale, and in our specialty StudentUniverse brand. Our Corporate business continues to perform extremely well. Sustainable growth over a number of years. TTV growth that's been in the double digit just continues to grow on the top line as well as that flowing through to the bottom line. We're excited to have added Casto Travel, as I mentioned earlier, into our footprint on the West Coast for our Corporate business and particularly important as they are based in the strategically important Silicon Valley and the Bay Area.
We have continued to see the turnaround in our Leisure business and wholesale business with TTV growth, quite healthy TTV growth, and wholesale, flat TTV growth or slight decline in Leisure, but with same-store comparisons are up year-on-year, so Liberty Travel, as a result, as a result of the productivity gains as well, we expect a modest profit in that business this year as opposed to the small break-even result last year, so we're very pleased with that, and StudentUniverse has had a record first half, which has been awesome to see both in TTV ticket numbers and profitability. In Canada, we have a 9% TTV growth, so it's a good growth there, not quite as aggressive in the U.S., much of that being driven again by our Corporate business.
So healthy double-digit growth in Corporate, again re-emphasizing our focus on the Corporate segment in the world's largest Corporate travel market and a focus on sales in both markets to achieve that. And then really solid growth in the Flight Centre Independent model in Canada, and that also reflects in the USA as well, where we now have over 550 independent agents across the two countries. And Mexico, strategically important to us because it gives us that equity ownership across all of the North American markets, especially for our Corporate customers. So we're happy that our Mexico business is performing and continues to perform to expectation, albeit a small contributor. So what are the success drivers? We have a really compelling offer to our Corporate customers. Our sales teams across the Americas, USA, and Canada are exceptionally effective.
As I mentioned earlier, we segment the market with our brands, FCM and Corporate Traveller. We really know what customer, what of our products, whether they're technology products, service products, or travel products, appeal to those customers, and we have an extremely high win rate, which I'm very pleased about. We have introduced a world-class. We're targeting to have a world-class marketing operation. We have appointed a new CMO into the Americas, Frank Dudley, who teaches at the Medill School at Northwestern University in digital marketing. He's on a contract basis with us, and it's really about upgrading and modernizing our marketing plan and strategy across all segments. It's not just the Leisure strategy. It's Leisure, Corporate, and StudentUniverse and across all markets within the Americas, and we'll be adding more talent to that team as the year progresses.
As we have for the last few years, continue a productivity focus across all brands, and we just continue to see our productivity of our consultants improve, whether it's Corporate or Leisure. And that's great news. It means that the consultant is more successful, our retention rates are higher, and we're receiving very good scores on our Culture IQ surveys as a result. We have introduced new technology to drive that. Red Connect and Leisure is definitely driving a significant conversion improvement. So Red Connect connects the customer who's inquiring with the consultant most likely to convert that sale and give the customer the best experience. So we're happy that that is both driving improved conversion, improved net promoter scores, and higher productivity.
We've introduced Softrip, which is a wholesale group system into the wholesale business, and our group's business in wholesale is growing at double digits, and we're very pleased with that. And the next big opportunity is Project One, P1 on the slide, which is a combination of Microsoft Dynamics and our proprietary RedDoc system, which we rolled into Corporate Traveller starting next month, or a Corporate Traveller brand, both Stage and Screen and Corporate Traveller starting next month. And we expect to see significant productivity gain as a result of that. Continued workforce planning and network planning across the U.S. and Canada to ensure we have the right people at the right time to satisfy our customers' needs. And as I mentioned earlier, growth in the new models, which has now over 250 independent agents in the U.S., over 300 in Canada.
This is an investment in the U.S. It will cost us some money this year and the following year as we grow that, but we expect that in the medium term, it'll be a nice profit contributor to the group.
Thanks, Dean. I'll just quickly go through the India and Asia segment, which has had great results, spectacular results. One of the best cost margins in the group, and some of the huge productivity gains as well in the Asia region are driving that profit increase. The TTV is, in fact, up almost 40% across the region, with India up to 59%. And I think India will actually hit AUD 1 billion during this financial year, so making it our sixth largest country by TTV. So there's been solid profit improvement there. In the Asian business, we've seen a great increase in our net margin, an improvement of 57%, which is a huge credit to the team. Our TTV increase specifically in Asia is 17%. New wins for the path, I think, are up for about AUD 100 million, and retention is over 90% in what is largely a Corporate business now.
We still have a small Leisure business in Asia, and it's also performing strongly compared to previous years. So as I said, very pleasing results for the Indian and Asian segment.
Thank you both. Just in the interest of time, very briefly with the other segment, that's a segment that includes our global businesses, in Travel Experience Network businesses. we've seen a slight improvement in the segment for the half, predominantly reflecting an improvement in those travel experience businesses, particularly in the touring business, which has improved by about AUD 1 million in PBT year-on-year, or half- on- half, I should say. And that's been offset a little bit by some global technology costs that we've incurred as expected, but overall, a slight improvement in that segment. And we'd expect for the full year that we'll be seeing a similar small improvement when compared to last year. But with that, I might hand back over to Mel to run through our strategy and transformation.
Okay, thanks, Adam. As you can see from the changing mix and results within Flight Centre Travel Group, we are an Australian company that's really become truly a global force in travel. And it's important to note, I think, before we talk specifically about some strategies, our ongoing three strategic commitments that have and will be core to our company throughout our history and future. Number one, we are a growth company, and we put the TTV since float there to show and reinforce that we're not a company who will shrink to greatness. We grow. We are committed to ongoing growth, and hence we've maintained our transformational target, although it's not really transformational because we've been doing it, of 7% CAGR year-on-year. Secondly, we're a diverse company, and I think that's come out throughout the presentation.
Our Corporate division has been growing exponentially and is now pretty well as large as our Leisure business, and our Travel Experience Network is also growing, albeit small at the moment, but it will be a significant contributor to our future in the group, and number three, we are also a change company, and having been here for over 31 years, I can certainly attest to that, and we are building a stronger future. Just under two years ago, we announced our transformation program, and this was in specific response to a need to make more significant change to solve issues and realize opportunities. We're now very much in our second phase of that transformation as we move towards our third, where we will own many market-leading models and brands.
I'd like to remind everyone of the group goals that we announced as part of the transformation program that are on the right-hand side of that slide. Our commitment, as I said, to a 7% compounding annual TTV growth, our goal to get to an underlying cost margin of less than 10%, and a goal to return to a 2% net margin by 2022. As we said when we announced these, they're not linear. They will be lumpy, but we're pleased with progress. Our transformation journey, when we started, ticked off with seven themes some 18 months ago. These seven themes, which I'm not going to talk about specifically, have been realized into many programs of work and projects completed and ongoing, which are being deployed now in our three core divisions of Corporate, Leisure, and the Travel Experience Network.
As I said, I won't speak to all those seven specific initiatives. Rather, I'll talk to each particular division. As I stated, we're also now in phase two of transformation, which can be summarized as a laser-focused on engineering our business model phase. We've always been obsessed with brands, and we will continue to have brand obsession to try and deliver famous and distinctive brands into the marketplace and to continuously focus on a quality and consistent customer experience. We're now also obsessed about business models, and front and center in that is a focus on productivity and efficiency, which I think you've heard throughout the presentation so far, and scalable growth with sustainable revenue and cost margins. All of our transformation projects have this at the front and center, and accountability and ROI metrics are centered on those specific themes.
So firstly, if we look at our first key pillar of Corporate, what are our key plans and initiatives in our Global Corporate business? Again, I think you've heard a bit about this already through the presentation. But in summary, in FCM, which is our mid to large market Corporate business, our strategies revolve around fueling growth, predominantly organically, by super investing in sales and marketing, standardizing and globalizing under one FCM, and major investment in platforms. In CT, and a little bit in our Flight Centre business travel, we're very focused, as Dean said, on dominating the lucrative SME global travel market.
And we have similar strategies, albeit obviously with different plans around, again, super investing in sales excellence, and we believe we're one of the best sales businesses in the world for Corporate travel, investment in technology and digitization, and again, ongoing product development, right further than just the hotel, the flight, and the car. We also have our niche brands and/or specializations, which provide additional customer benefits and retention to round out our stable of Corporate offerings. So very pleased in our progress in Corporate. Our transformation initiatives in Corporate, again, there's multiple programs and projects, but they largely focus on five key areas. Number one, globalizing key functions for increased capability and reduced cost. An example being we're currently implementing a global implementation center of excellence so that we can bring on board Corporate customers much more efficiently and quickly.
We're also very—we have a lot of projects around digital and technical investment, and I think you've heard some of those, things like Project One, Next Generation Data, and the truly one FCM global platform. We're also very focused on financial solutions for our customers, things like integrated expense management and payment options to cover the diversity of our customers and the countries that we operate in. We have projects related to the expansion of our Corporate product vertical and also about our people, ensuring that we have a workforce of the future to meet the changing needs of the dynamics of the Corporate travel market. There's just a slide there on some of our Corporate technology, which we don't necessarily talk a lot about, but just to reinforce, we are very committed and very invested in our Corporate technology.
We actually have FCM Labs in countries throughout the world, in Stockholm, in Barcelona, in Boston, and in Brisbane, and now also in Bangkok. These are company-owned tech hubs delivering market-leading and innovative digital and technical solutions for our Corporate customers. And the rate that they're turning out products for our Corporate business is fantastic. Again, you'll see a bit more of that in the year ahead as part of our Corporate strategy. In our next major pillar of Leisure, we have three key pillars. And what is turning into a northern and southern hemisphere approach across those pillars? After reducing some brands and businesses, we now have the following listed grouping of brands in mass travel, in premium travel, and in youth travel.
In Australia, South Africa, and New Zealand, our strategies revolve around maintaining our position as market leader while we grow in new models exponentially, specifically in online models and independent contractor models as an example. We also have strategies around our vertical expansion. We've bought a lot. We're in the business of buying more at-destination businesses, and we want to continue with that to leverage our distribution in Leisure travel. We also have a lot of programs and strategies around digitization, both including self-service and powering our human service, and even within those market-leading mass brands, we also have a focus on specialization within these brands as a key part of our ongoing strategy.
In the northern hemisphere in the U.K., USA, Canada, and Asia, we are a much lower market share player, and our strategies, while similar, are focused more on specialization and niche segments in those markets, for example, with our FCBT business, which is very focused on the unmanaged small business customer. So that's in Leisure. We've had huge improvement in our Leisure business internationally, as I think Dean mentioned with USA, Canada, etc. But as Skroo stated previously, our Leisure in the business in Australia has not performed, and Skroo outlines the reasons for that. But we do have a plan. We have an entire transformational Leisure transformation program focused around three key areas. The first one is Flight Centre Brand 2.0. Some of you may have actually attended a presentation on that recently.
It's a large program of work led by our CBO, Atle Skalleberg, who has relocated to Australia to drive this program, and it has five key components to it: membership, where we can create personalized offers and close user groups to improve service for our customers and irresistible deals, product and pricing, self-service channels, things like mobile apps, new websites, and e-commerce, lead generation and lead management, and Dean mentioned Red Connect, which is the product we've developed in North America, and it has been a successful pilot there and will be coming to the Australian marketplace over the next six months, and also modernizing our marketing, not so much in the way that we represent our brand, but the way that we approach marketing to our customers with using much more automation and data-driven. We're also very focused in our Leisure transformation, as previously mentioned, on the new models.
Independent contractor, affiliate are very much within our models, both overseas and within Australia. We want to move from simply being a host independent contractor or affiliate model to being a referral model. I won't talk too much about that right now, but this is where the Red Connect product will really give us advantage over other groups, and Liberty have been successfully trialing this with their independent contractor group. We're also, as I said, focused on online growth, both within brand, for example, Flight Centre Brand, but also with our online brand, BYO, StudentUniverse, and Aunt Betty, and they're all performing exceptionally well this year. The final new model that we invested in over the last few years, the flash sale or voucher model with our JV with Ignite. Again, we're pleased on the performance of our Flight Centre Exclusives product.
We have an ongoing focus as well on productivity and people in terms of developing the businesses where productivity is higher, having much greater levels of flexibility for our people, and also we have a major cost out and efficiency program in our Leisure businesses, particularly in Australia, currently in play, so our commitment to and the future for our Leisure businesses is strong, and as we implement better business models to match our world-class brands, we're very confident that results will follow. I've just got there an example too of a sort of approach we're taking with Leisure at the moment with the Umapped purchase, which I think we only completed in August last year. We've actually already rolled it out in our Canadian business, in our Travel Associates business, in our digital business, and now it's being rolled out in the Flight Centre Brand in Australia.
Essentially, this is using digital technology to power our human service. It allows us to service before, during, and after our trips, serving up dynamic documentation where travelers can actually collaborate with their consultant right throughout the journey. So I think an excellent example of some of the things that we're working on in our Leisure business. Our final pillar is our Travel Experience Network of at-destination businesses. Obviously, as I said, very small at the moment in terms of contribution to the group, but a very big part of our future. Our touring brands are focused on digitization, product development, and social engagement as they grow into the future. Our destination management businesses is a bit of a tale of two halves, and Adam did point out the write-down on Olympus Tours business, but we're very confident, again, in this DMC business.
Buffalo is performing very strongly, and we're now working on one global brand, one global platform, and one global sales team to get our destination management companies selling not just through our own vertical, but other companies. Our hotels business under our BHMA Hotels management, we have a couple of different brands there, but I think what's interesting to note is the Camakila investment that we made, I think very recently, shows the pivot that we're now making to hotels that fit our vertical. This is a very mainstream hotel in Bali that we should be able to sell to our Leisure businesses throughout the world. Again, we have transformation initiatives in product, and I'll just touch on those. Ongoing globalization of our procurement and distribution.
We now have 684 people based in Jakarta servicing our global air and land businesses to show the strength of that particular initiative and its progress. We're very committed to vertical integration, not just vertical expansion. So while we've been buying at the vertical, we're now going to really leverage those vertical assets to create better products and experiences for our customers, almost as if you were handing over or introducing to more Flight Centre employees at destination. Air product distribution and NDC, and I thought I'd call out NDC specifically. We now have a global team in place. We're fully working with our GDS partners. In fact, we're, I think, a cutting-edge GDS partner in terms of NDC capability. We're at industry forums, and we're in discussions with key airline partners, and I think recently you saw we came to agreement with Qantas.
NDC is part of the travel future, and we're at the forefront of those plans. And finally, we have a lot of initiatives around pricing and yield management, globally powered, but locally deployed. That's in a nutshell our three core pillars of strategy and transformation. As I said, pleasing results. We've certainly dealt with what's urgent in transformation, and now we're dealing with what's important to our future, and I think that's exciting. Skroo, over to you for the outlook.
Okay, thanks, Mel. That was very exciting and very interesting. Just for guidance, we're currently tracking the bottom of our targeted range, and our underlying PBT guidance was 390-420. There's still some volatility in our Leisure Australian business, but we're obviously continuing to monitor that. And looking at the overseas businesses to really keep producing as well as they have been in the past.
From an outlook point of view, the overall Corporate business globally is going great guns, a good pipeline of account wins, and as Dean said, there's been some, it's already a strong business, and we've had some good small but significant acquisitions, and of course, as I said, the overseas businesses in general are going very well, and we expect them to continue to perform, not only this year but into the next few years, and in Australia, the Corporate business is going quite well, growing quite well, and obviously, we talked a fair bit about the Leisure business, which has been disappointing in Australia, specifically in terms of the challenges and how we're addressing it, and I'm confident we can get our Leisure results under control over the next six months.
But initially, we're looking at productivity and margins, and that's a lot about products, packages, and selling our Flight Centre family products like Topd eck and Back-Roads and our DMCs. Costs, we have a major cost-out program going on at the moment, particularly in Leisure, but not only in Leisure. Network planning is very important. We have close to 1,000 shops in Australia, and a big focus is getting out of really underperforming shops, but also opening new shops in the right locations and relocating shops in different areas where we need to. And the fourth one is growth.
It's really important that we continue to grow, and that won't only be through new shops or new teams in various areas, but certainly in the specialist businesses and also in the online, which we've had some reasonable growth in, and things like home-based and flash sale segments that Mel mentioned before. So overall, we are looking at the main challenge being Australian Leisure, which we are confident that we've got the strategy to improve that. But if you look at the Corporate globally and the overseas countries, they're going really well, and we expect them to continue to do so over the next year or so. Thank you.
Thanks, everyone. I think that now brings us to the Q&A.
We have a little bit of time, but if we do run out of time, we might have to cut you off, so we'll come back to us later if that happens. But I think we should be okay. Ready when you are.
Ladies and gentlemen, we now begin the question and answer session. 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 the pound or hash key. Once again, ladies and gentlemen, to ask a telephone question, it is star one and wait for your name to be announced. Thank you. We have multiple questions in queue. Our first question is from Ben Gilbert from UBS. Please ask your question, Ben.
Morning . Just wanted to touch on the Australian Leisure business first.
And just on the bricks and mortar side, in some of the comments you made around the store portfolio optimization and just given some of the growth you're seeing in online, does it make sense to more aggressively look to reduce or consolidate the network? Because I'm sure these numbers are wrong, but on my numbers, it looks like the brick-and-mortar Leisure pace was down upwards of 40% for the half. So there's obviously a lot of operating leverage in that business. Just interested in how aggressively you're thinking about the network.
Thanks, Ben. Good question. One of the things to remember that in the Australian Leisure business, which is worth about AUD 40 billion, about AUD 22 billion of that is offline, and another AUD 14 billion or so is direct-to-supplier. So still, the vast majority of Leisure business is transacted offline.
That's still by far the biggest part of the business, and that's where we're fairly heavily involved. From our point of view, I think the Leisure results were not driven by online competition, but more by other factors, some costs internally, some margin erosion, and TTV growth was basically flat. They're the things we're really looking at, and they're the things we need to fix. The network planning is an important part of that. I agree with you. In 10 or 15 years' time, the online may be more significant here, which we've seen probably in the States. At this stage, we need to fix some of the basic issues we've got in Leisure, and we're fairly confident we know what they are.
That's true.
Adam, just one for you as well, just around the one-offs that you had through that second half of last year, because you had the rebranding, which, I don't know, was AUD 5, six, seven million bucks, remembering? You obviously stepped up marketing, and then you also exited some leases, which I think must have been sort of around that sort of AUD 5 million again. How are you thinking about some of those things that you're cycling through the second half in terms of providing some tailwinds to this second-half Leisure number?
Yeah. Good question, Ben. I think the reality at the moment is, as Chris said, some of the initiatives we have, particularly in Leisure, but also more broadly in Australia, in terms of cost reduction, we'll probably have some upfront costs attached to them in the second half.
We won't see the same scale of network planning or store closures as we did last year, but we still will see some of those come through as we're working through in a little bit more detail what they look like. So on balance, I would say that in the second half, we should have slightly less of those transformational costs that we recorded last year, but we are still expecting to have some costs come through.
So what? Should you have a few million-dollar type tailwind from that?
Yeah. Look, it depends a little bit on timing of some of the initiatives, but at the moment, I'd be saying there should be AUD 2-3 million of tailwind that should come through on a like-for-like basis. But again, that'll play out more as we deploy some of the, particularly the cost-out and network strategies.
Great.
Just final one from me. Just, sorry, and I come on a touch light, so apologies to mention this. Just how I know you sort of said things start off a bit softer through this half. Just how you've seen the expos through January and February, the engagement sort of views around just how that's feeding into your thinking with respect to guidance?
Ben, we haven't seen the actual final results. Some of the expos were up in numbers, some down a bit. But I think overall, we're reasonably happy with them, although they weren't actually booming, but we weren't unhappy with them so far. But we haven't seen the final results yet. The last one was in Brisbane on the weekend, and I believe it went reasonably well.
Okay. Thanks very much, guys.
And next question is from Michael Simotas from Deutsche Bank. Please ask your question, Michael.
Morning, everyone. Can I start on the Australian Leisure business as well? Just the first one's a clarification. There's a comment, I think it's on slide 12, that Australian Leisure accounts for most of the PBT decline for ANZ. I would have thought that the Aussie Corporate business grew. So could you just talk a little bit more about that statement, or maybe I'm reading it incorrectly?
Yeah. No, you are right, Michael. I think there's probably a wording issue with that more than anything else. So the Corporate business in Australia grew, and we also saw growth coming through some of the other Leisure businesses like the OTAs for BYOjet and also through our Travel Money business. So it came through Leisure.
Yeah. Yeah. No, that helps.
Then just to give us a little bit more context around the Australian Leisure business, I mean, you've obviously called out some issues within your business that you're looking to address. There's been a lot of commentary across the market on consumer sentiment and impact of wealth effect from housing, etc., etc., coming through in November and December. What are you seeing in your business? Maybe a way to think about it would be, if you look at some of the businesses that were performing very well, have you seen a change in that dynamic, and is there a pattern, whether it's mall-based stores or something else?
Look, Michael, I think in our Leisure business, and this is not making excuses, but we did have a lot of distractions and disruptions over the last 12 months, and we've, starting with Sabre and the rebranding and GDS, and we also had an EBA, if you remember, late last year. So there's certainly those disruptions, but overall, there's no doubt that November and December were quieter. The consumer sentiment did seem quieter to us, but that does seem to have come back at least somewhat in the last two months, but it's a bit hard to see what's going to happen in that particular area in the next six months from our point of view.
Yeah. Okay. So your comment that you're comfortable you can get control of the business in the second half is more about the things that you're doing rather than the consumer environment.
Yeah.
I mean, look, you can't have a booming environment all the time, and I certainly don't think it's going to be quieter, but I think a fair bit of this is internal fixes that we can do. And part of it is things like network planning, not only with our shops, but making sure we have the right staffing levels in the right shops is very important to us as well.
Yeah. Okay. And then the last question from me, just on the capital management, just trying to understand the rationale behind the timing. I mean, obviously, you've got a potential regulatory change coming, but pushing that aside, your company cash balance has actually been relatively stable for some time, and I would have thought the business is perhaps doing it a little bit tougher than what it was maybe a little while ago.
So can you just talk about the rationale for pulling the trigger on this now? And also, you touched on why a special dividend and not a buyback, but is that indicative of your sort of medium-term outlook for the business as well?
Yeah. Michael, probably a couple of things on that. The potential changes, regulatory changes, certainly that comes into your thinking without a doubt. But more broadly, I think we've spoken a little bit over the last year or two around the fact that we were looking at capital management, we were looking at what surplus funds we had. And you are right, the level of cash has stayed pretty flat for a couple of years. But what that says to us is actually we're not eroding into that, and basically, we do feel that we've got that level of excess cash available. You're right.
Again, you look at some of the headwinds that we've seen in the Australian Leisure space. We really carefully thought through those as well to make sure that we're comfortable. But we are very, very comfortable with all the scenarios we ran and all the analysis that we've done. So we're quite comfortable that the timing's right for it. In terms of a special dividend versus a buyback, look, again, we actually engaged external advisors with part of this to help us walk through that. In the end, we felt that based on that, it's simple, it's known, and it's relatively quick and easy to do, and it has the impact of giving back the capital reasonably quickly, and it also allows us to free up those franking credits.
But it allows us also to get back to the day-to-day job that we've got of really looking at our internal business and trying to improve that, whereas a buyback does take a little bit of time and probably a little bit of focus from some key people that we need focused internally at the moment.
Yeah. Fair enough. Thank you.
Once again, ladies and gentlemen, it's time I ask a question. Our next question is from Grant Saligari from Credit Suisse. Please ask your question, Grant.
Two questions, if I could. So the first question on the Flight Centre Leisure business, all the macro data on arrivals, departures, the airline data is a lot stronger, obviously, than the TTV you've talked about in Flight Centre. But you have closed some shops, I acknowledge. Are you actually losing market share significantly?
Have you done a top-down analysis as to why consumers are actually shopping elsewhere and what you actually need to do to get them back, if you can, into the stores?
Yeah. We've had a good look at the numbers in Leisure, and there's no doubt that the OTAs in Australia, like for example, we do about AUD 7 billion in Australian Leisure. And over the last few years, the OTAs have grown faster than we have. I think they're a total of about AUD 6 billion now, all the OTAs put together. So they're still a relatively small part of the market, 15% or something like that. And the point is, a lot of the commoditized travel and that, which you make very little money out of, is the sort of business that does go to either OTAs or the suppliers direct.
So we're not too worried about losing that sort of market share, and we probably are losing a bit of that. There's a lot of more complex travel that we do a lot of that now, but we need to do a lot more of that. And with that, market share is really not that important as long as our major suppliers where we get a lot of our margin from. And these are a lot of suppliers such as tour operators and various holiday packages and other things like this. That's where we need to increase our income, and we're reasonably confident we're okay with that. So market share is really pure market share is not of a great concern to us, even though we might be losing a little bit of it.
Okay. Thanks. Second question.
Just on that one, mate, with the departures, there's obviously, and as you know, there's a difference between airline departures and our data. So as Chris said earlier, November, December were a bit soft for us. So in a case like that, you might see that the departures start to slow a little bit in coming months, although obviously, December is the Christmas period, so that's probably going to be pretty strong. But you might see a little bit of a lag before you notice that decline in outbound.
Good point. Can I just ask another question? Just on the productivity improvements in the offshore business, I mean, they're amazingly big numbers, 20%, 50%. And actually, the absolute staff numbers fell, I think, in every region.
Can you just talk a bit more just to what specifically has changed there and whether those productivity improvements have now annualized, or do you continue to get that into the second half of 2019?
I think a lot of the productivity gains that we've made in many overseas areas is largely through automation, digitization. So particularly, remember, a lot of the overseas businesses have a very high Corporate volume, and not just through customer demand, but our own development of the business model. We've had huge automation both to the consumer and both to our own people. So they should continue to, I think, deliver further productivity gains. So it depends on which country, though, as to where they're at. Dean, do you have any comments that, for example, particularly in America, which is one of our very productive businesses in Corporate?
Sure. So yeah, definitely focus on technology.
In the Corporate space, using the online booking tools, which generated a lower margin for us, do drive productivity, so your cost of people to income is really improving as a result of the technology improvements. It's not just customer technology. It's back-end process improvement, which we're seeing a good success in. We're expecting to see what we saw some through Project One, which was Microsoft Dynamics in the FCM business over the last two years in the Americas, and expect to see that accelerate into the next year with Corporate Traveller. So to answer your question, do we expect to see that going away? We don't, and then also, it is a really strong emphasis on network planning and people planning and making sure that we have the right people, the right numbers.
And so interestingly, we're continuing to see that productivity gain, perhaps not at the same high rates as we saw last year, but we still expect and anticipate to see productivity gains in around the 10% mark at least going forward.
Okay. Thank you. That's helpful.
Once again, ladies and gentlemen, it is Sterling. Our next telephone question is from Brian Raymond from Citi. Please ask your question.
Good morning. Look, my question's also on Australian Leisure. I'm just trying to sort of get a picture of how it's performing from a profitability perspective. Obviously, you've sort of provided some color before, but when I think about the overall decline in margin, I just want to confirm, is the overall PBT margin for the Australian business, would it be sub 1% now on that TTV that you outlined earlier?
I'm just trying to get a feel for sort of how low it's fallen and then obviously what the recovery profile could be. Could you shed any light on that for us, pleas e?
Brian, I think the number Skroo was talking about was an annual number. So the TTV for a brand like Flight Centre Brand is not AUD 6 billion in the first half. So I'm sure. Yeah. I mean, the net's probably about one, but the real issue for us, Brian, is the gross margin. And that's really what I was talking about because obviously, and that's been a little bit to do with the mix of product.
But yeah, and also, we have had significant wages increase as well, which we've talked about with EBA. But we're reasonably happy that we did the right thing with doing an EBA. It's not totally finalized yet.
It has to get approval, but it does mean if we do get a loan to government, and that will be good for us into the future, I think. But the main thing is we believe the gross margin with the right product mix can come back reasonably well. And that's certainly, as I mentioned in one of those slides, that the productivity and margin are both really vital parts of a Leisure operation, and that's one of our major focuses.
Yeah. Okay. I mean, one of the changes I noticed you made around the end of last year or start of this year is you've stopped price matching on flights only, like when you're not doing a package with accommodation in Australia. I'm not sure if that's the case overseas as well.
I'm just interested in the impact that might have on the Australian business, whether you're going to be walking away from some unprofitable TTV. Is that material, do you think, to the overall outlook, or do most of your customers now book with accommodation or cruises or some other package? I'm just trying to get an idea of what sort of magnitude that could have on those margin and TTV lines.
That's a good question. I mean, we dropped the Lowest Airfare Guarantee effectively on OTAs and those sort of metasearch sites just because generally, they were a totally different customer. For example, we have BYOjet that is a metasearch sales air only, which we were getting a lot of price feeds from.
When we ran their customer base against the Flight Centre Brand, for example, there was almost no customers that go to a metasearch that come on to that are our customers, I think it's 0.1%. So we realized that they were just a totally different sort of customer. And when we're perfectly comfortable with dropping that, we'll still be competitive with airline sites. We still match or beat them as well as with land product. So generally, although we don't advertise the Lowest Airfare G uarantee, basically for competitive reasons, we'll match most prices except for metasearch and their generally OTAs like Skyscanner, that sort of thing.
Okay. Okay. One of the big focuses I've had on the business and the Australian business has been on the sales staff numbers and the decline you saw over the past sort of 12 or 18 months there.
Hello? Are you there, Brian?
All right. Let's go.
Seems to have lost Brian.
We lost the whole call.
No, it's still going.
Where's that? You didn't hear anything?
No.
Kevin, you there?
They can still hear us.
Oh, okay. We can't hear anything. Guys, we have lost audio. I believe you might be able to hear us, but we can't hear you.
Sorry about that. Tom Kierath from Morgan Stanley. Please ask your question.
We're back. Nice. Yeah.
No, mate, we've gone.
Yeah. Just want to ask a couple of questions on the Americas segment. Obviously, the PBT is up a lot in the first half. Are there any one-off, one-time items there, or is that just underlying trading?
No. It's all underlying trading numbers.
Okay. Great.
And then just secondly, can you maybe split out FCM Corporate Traveller in the Americas? I guess just trying to get a sense of the direction of margins and what's driving the improvement in the performance there.
Sure. So look, we just separate Canada out briefly because Canada's the Corporate business, and there is almost Corporate Traveller. So only a small piece of that is FCM. So then in the United States, of our Corporate TTV, we're about 60% of the TTV is, and I'm doing rough numbers here because Adam didn't share with me exact ones, but we're about 60% FCM and TTV, about 40% Corporate Traveller. But you have a significant deviation when you come to your margin, to your gross margin. So in FCM, we run around a 5% gross margin, and Corporate Traveller, around 11%.
So at this Corporate Traveller is growing faster. It's an easier business to grow quickly because of the sales model. It's a handshake and easier to win than the long-term win ratio with FCM. But FCM, over the last few months, has been doing very well for us as well. So both are growing in the high teens to 20% growth rate, and both are performing exceptionally well based on really the success of our sales team and then a great retention rate for both businesses.
Right. And so, fair to assume that FCM, sorry, that Corporate Traveller continues to outpace FCM?
In, yes. I would say that will be the pattern that we'll see.
Right. Okay. Cool. And then just to quickly clarify the acquisition that you did, can you maybe tell us how much that could make on an annualized basis?
I think you spent about AUD 20 million there post the balance date.
Yeah. I can do that. Yeah. The profit in there was circa AUD 1.5 million. So it wasn't. It's not a huge profit center, and that wasn't really the key driver for the acquisition. It was really important to us to get a substantial foothold, particularly for FCM on the West Coast. We're very strong in the Northeast. We're very strong in the Midwest, but for whatever reason, over the years, we've not quite got the FCM business really performing as well as we'd like on the West Coast.
So we really like these guys being in the Bay Area, San Francisco, Silicon Valley, some great access to a customer base that they've been unable to tap, even though they've been around for a long time, and they have an excellent reputation, particularly in the tech area because they don't have a global solution like we have in FCM. They were unable to really go out and bid for those customers. So we feel the combination of our global footprint and our FCM brand and their relationships and being in the marketplace there and also then acquiring some great leadership in that team to lead our business in the West, that that'll be all positive for us going forward.
Great. Many thanks.
Thanks for yours. Just going to the question before, I think Brian wanted to know about sales staff numbers.
In the Flight Centre Brand Australia, I think we're up a few hundred at 31st of December from about 5,100 to 5,400. But we do have some performance management plans, and we expect that to probably even out at the end of June to about 5,200. So we're pretty stable in that overall, Brian, from your previous question.
Thank you. The next question is from Wei-Weng Chen from JP Morgan. Please ask your question.
Hi guys. Just a couple of questions from me. So just the first one on EMEA Leisure. Just through the weakness in Leisure, are you seeing any mixed shifts in destinations or products, and what impact has that had on margins?
Look, yeah, we have one of the outcomes probably of the Rebrand and Grow where we went from six brands to three was that there were some product mixes that we lost a little bit of volume on, and they tended to be some of the higher margin ones. In terms of destinations, there's nothing dramatic. I think the States last year came off quite a bit, but Europe was quite strong. And you usually find that, and I think outbound was about 3% or 4% growth. So you see the mixture of those different products, whether it's from Fiji to Bali to Phuket or Europe or North America. So they do change around a bit, but there's nothing dramatic that has changed there, right? Yeah. Okay.
So, we're not seeing any sort of because low consumer confidence, we're not seeing a mixture from sort of long haul to short haul?
Sorry, Wei-Weng Chen. I was just going to say domestic seems like it's been up. You're looking at a lot of the sort of industry data. So maybe there is a little bit of a switch to domestic, but you're still getting a level of growth in outbound, although it's a little bit hard to know exactly how much it's growing by at the moment because you haven't seen what the partners are doing for the last couple of months.
All right. Cool. Thanks. And then just a question on Corporate. You've said that it's about 37% of TTV. What's the proportion of, say, earnings coming out of Corporate?
It's nearly about 50% of our profits come out of Corporate versus Leisure.
And then, yeah, no, that's all for me. Thanks.
Thanks, Wei-Weng. Thank you.
And the next question is from Mark Wade from CLSA. Please ask your question.
Hi guys. Bit of a follow-up from that last question to start with, if I may. I mean, the presentation had a big focus on Corporate, and I think the improved disclosure is helpful in that regard. And I just want to get a sense of why do you think it's now the time to really accelerate that business and then to really set the context for what this business could look like in 10 years, and it could be bigger than Leisure and perhaps offset any potential erosion you get in that Leisure business. Yeah, the vision and why now?
We've been growing Corporate since we started in the late or mid-to-late 1990s. Generally, it's been a success story in just about every market we've been in. Leisure has been harder, particularly in the northern hemisphere, although it's still generally doing well in other southern hemisphere areas such as New Zealand, South Africa. We're confident that we'll get it back into good shape in Australia as well. Corporate, generally, particularly with some of our tools, our platforms, the technology that we've made great advances in over the last five or six years, and we'll be continuing that. It'll change, and it has changed the last couple of years, but we see a big future in Corporate travel.
And obviously, Leisure is always going to be important to us, particularly with the Travel Experiences Network, the ground operations that we have that Leisure supports as well. You got any other, Dean, on that?
So I think the FCM strategy, there are really only four players in the world globally who can handle really large multinational customers. And we're one of them. And we are positioned really strongly in the Americas and EMEA to be able to handle those customers, win those customers, and satisfy them. So we've spent a long time to get to that position with this one FCM strategy. We have partners where we don't have equity business. We have partners, I think, in 97 or 98 countries. So we truly are a global player with the FCM brand.
I think somewhat that perhaps has been overlooked, and we probably haven't told such a good story. By diversifying our business between the Corporate Traveller brand and the FCM business, it really allows us to focus on that small to medium market as well. That is such a sort of aftermarket in the industry. Everyone wants that small to medium customer. No one knows how to get them. Airlines want them. Everyone wants them. We have the best sales force in the world in Corporate Traveller, and we know how to win those customers. I see a future very bright and continue to be bright in those areas. We'll invest in technology. That's really where we need to invest next to make that business as productive and as modern as we can. That's our focus. We're really, really positive about our Corporate future.
Thank you. That's useful. Last one for me. Just want to go back to the full year 18 presentation six months ago. Mel spoke a bit about aspects of the FY19 business transformation priorities. Now we're like six months on. I just want to get an update on that. There's a particular aspect of it that talked around the application of so-called brand DNA research to answer some key questions on what makes the various Flight Centre brands unique and understanding their relative market positioning. An update on that if I can.
Thanks. Actually, that DNA work's been ongoing and very interesting and also rewarding for us because we've done it now with quite a few of our Leisure brands. We just did the DNA session literally in New York in December for FCM.
And in our Leisure businesses, what's become apparent, whether it's Flight Centre or Liberty, and it's not necessarily new to us, is our brands are very strong in terms of consumer awareness and confidence. It's been our work in our model, if you like, to modernize and make our models more efficient in Leisure, which is exactly what we're currently now working on with programs like Flight Centre Brand 2.0. And even in the States, when we had the session on Liberty, the Liberty brand is very valuable. We need to change the model. And hence, we're moving more to what we would call an independent agent model, but a referral model, not a host model. So flip to Corporate where our models are actually very sound. We've got to work on the brand a bit more. And that came out in the FCM session.
Those sessions are great in terms of realizing or crystallizing or reinforcing what you think is great about your brand from a consumer perspective. And then what we do is then work on, okay, if that's the case, what's the model that needs to change? And as I said, in Corporate, it was completely the opposite. So yes, we've got Corporate Traveller plans. We're basically doing all our major brands, but it's been great work. And do you think from that, Mel, I mean, is it bringing out a real clear understanding of why people are shopping with you and how to ensure you're still relevant in the next five to 10 years? Yes. Actually, that's exactly what it brings out. So it kind of, and Liberty was an interesting one because I don't think it aligns, but we've had a long battle with Liberty.
What we came to realize is it's a highly trusted brand for people seeking human service in the American market. And so our issue is not to change the brand. It's to change the model and the economics of that model so that we can leverage that. So that's what we're literally moving faster to do. So yes, I think it has helped, as I said, really understand that we are actually relevant in a customer's mind, and particularly Flight Centre. I mean, Flight Centre in Australia has 97% brand awareness, I think. People want to shop with us. We just need to change a few of our operating economics to make it worthwhile for us more so. So that's what we're doing.
Terrific. That's helpful. Thank you.
And the next question is from Morena Hunter from Macquarie. Please ask your question.
Hi, Just a really quick question and a follow-up from an earlier question on capital management. Should we think about the special div as a one-off, or is it likely to be a rolling program?
Yeah. Very good question. Look, at this stage, certainly we're treating it more as a one-off, although we are going to continue to monitor it. And I think it comes back to, I think it was Michael's question earlier in relation to cash management and why now. We certainly felt that AUD 150 million quantum is the appropriate amount now for us. As we progress over the next 12 to 18 months, we'll obviously be continuing to monitor that. We'll be monitoring the Leisure business in Australia, which generates a lot of cash for us as well. And that'll help us to be discussing with the board as to how we go forward with it.
So it's certainly a continual item for us to monitor. But at this stage, I would say this is more of a one-off at this point in time.
Okay. Thank you.
And our next question is from Ray Tolleson, Private Shareholder? Please ask your question, Ray.
Good morning, Team. Firstly, very pleased to hear your commentary about market share and not bothering to chase this low to no margin stuff. It's really a waste of effort. A couple of questions. Can you expand on what's gone wrong with the Olympus acquisition or business? And I assume from the write-down that you think that any signs of recovery are not good.
Actually, Ray, before I might let Dean do a handle there, thanks for saying that and reinforcing why you're my favorite shareholder. Thanks.
That was a well-positioned question. Thank you.
So, Olympus, so it's not well. It's in my region, so I can speak to it because I know the business very well and was very much in favor of the acquisition prior to us making it. So, a couple of things happened post-acquisition that the business lost some of its major non-Flight Centre customers, one due to basically the business folding, and the other was a large Brazilian Leisure business, and for reasons that we expected we'd be able to retain that customer, and we did not. Unfortunately, we made some bad decisions around management of the business in Mexico. We thought we were putting someone in who would be able to manage the business successfully and win new customers and manage it better than they did. We have acted on that in the last several weeks. So, that person is no longer in the business.
So unfortunately, in the time that's taken to improve that, the business did deteriorate to a point that I think we felt that the impairment was required. I'm confident that we have made some changes with senior executives actually from Australia who run our DMC business now relocating into the Americas and will be working out of the Montvale office, looking to really put a focus on improving the Olympus business. It's still at its core, a very good business, a very good customer-focused business, and will be ultimately in the future good for us. But unfortunately, we have mismanaged that acquisition in the last 12 months.
So Ray, I think that's a really important point, is that certainly from an accounting perspective, we've had to raise an impairment, which is what we need to do, and it's proper.
But from our perspective, from a business perspective, we certainly haven't given up on that as a business, and we are working towards bringing it back to where we believe that the business should be operating.
Righty. Thanks. And this may expose my lack of accounting knowledge. But what does the touring cost of sales cover? And why isn't it just included in the part of the overall sales costs?
Yeah. We used to have that netted off as sales and cost of sales netted off. So it's effectively the cost of running the tours. So running the buses, the individuals who are working on those buses, the drivers, the cooks, everybody else that I'm looking to Skroo to tell me who's on them. But essentially, it's those costs. About 12 or 18 months ago, we had to make the change for accounting purposes.
It's really just a change due to that, Ray. So we have to strip them out. We have to show them separately. It's really there to show what the different cost base is. So understandably, it does highlight that. But you're right. I mean, for us, internally, we would still net the tour off and look at it as a net gross margin.
Righty. Thanks. That's all from me.
Thanks, Ray.
Our next question is from Brian Raymond from Citi. Please ask your question, Brian.
Hi, guys. Not sure what happened last time. The only follow-up I had, thank you for clarifying on the consultant numbers. The only follow-up I had was on there was something you mentioned earlier. I only caught half of it on the RCR Tomlinson issue.
So you said you were tracking to the mid part of the range in the first half, but then you had a debt write-off or something. Can you just talk us through that in the first half and then what it means for the full year versus previous guidance as well?
Yeah. Sorry. I should be clear on that. All I was referring to there was when RCR went into administration, we had debts owing to us of just under AUD 2 million. So we've had to write those off in the first half. So our first half, if you exclude that out, our first half would have been around about AUD 142 million, a bit over AUD 142 million profit. So obviously, we don't strip it out. It needs to be part of our underlying result, but it is a factor in the Australian results.
So it's not about the ongoing earnings you're making at that point? No. All you'll see there is the same amount in the second half flow through for the full year. So it's no ongoing impact. Rig
ht. Okay. Okay. That's fine. Maybe I'll squeeze one in given I'm still online. So you mentioned that you had 90 store closures in the first half. How many do you think you'll get in the second half? Or do you think you're pretty much done there because that was all related to the brand? Well, they were in the second half of last year. So basically, we've got a smaller network at the moment, which is what that client related to. And so no further store closures planned on any scale?
It'll be pretty net. As I said, we're opening this financial year, we're probably opening 20 or so new locations.
And you'll see a couple in Melbourne, in CBD and that, and in various shopping centers. There'll be relocations as well. In the Flight Centre brand, there could be up to 20 that we will close. But most of those are pretty normal network planning year to year anyway, Brian. So yeah.
All right. That's great.
Thanks, guys. Okay. Thanks, Bryan. I think I was just going to say, as you've heard, our main issue is fixing Australian Leisure, which we're committed to. But I think you heard from Dean and that the Corporate globally is going well. New Zealand, South Africa is going well. And Asia, EMEA, and the Americas are all doing really well. So it is with our main focus, obviously, on that Australian Leisure.
I think we've got one more person in the queue, Mr. Peter Drew.
But after that, I think we probably have to move on to our next meetings. Peter, please ask your question. Morning, guys.
Just a question on, I guess, the strategy on Australian Leisure. And I mean, you're talking about cost out now. Six and 12 months ago, you were talking about sort of ramping up costs by consultant recruitment. But you haven't talked about that today. I'm just wondering, what's the sort of strategy for Leisure now in terms of that consultant recruitment? And then in terms of the income margin, that was a sort of guided to a decline in the income margin in the Aussie business. Understand that the higher Corporate growth dilutes that margin. But how should we be thinking about the income margin for the Australian business in the second half, please, too?
Peter, one of the things we've seen some initial margin recovery, and certainly it's one of our focuses to get our margin up a bit there. And a lot of this just comes from a slightly different mix of product, selling more of the ground and tours and other things like this, which we believe we can get back. In terms of staffing, yes, it was a strategy to upstaff. And with our network planning, and that includes our people planning, what we've found is there's quite a few locations that we can get back into profitability by right staffing rather than just upstaffing. So that's why, as I said, we'll probably end up. We were aiming for about 5,500 or 5,600 by June 30. That'll probably be around the 5,200 in the end. And that's mainly about right staffing.
We've found quite a few locations that are our really big shopping center shops, generally about 100, 150 of them, generally can do with more people. Whereas there's others, more what we call community stores that are probably overstaffed, have been overstaffed. So that's certainly one of the strategies that we're going through. And we've been working on that in the last couple of months. But certainly, next five or six months, that'll be one of the plans.
Okay. Thanks. So in terms of the second half, we should assume some level of improvement relative to the decline in the first half. In income margin? Yeah. Yeah.
Yeah. It will still be down half by half in the second half. But as Chris said, we're certainly seeing some narrowing of what that decline is. And we'd expect to see that continue.
So it shouldn't be as dramatic a decrease in the second half.
Yeah. Okay. And then just in terms of the cost out that you talked about in Australia and the costs associated with that, could you just maybe provide a little bit more detail about what exactly you're talking about there?
Yeah. Look, there's a few areas in that that we're working through. So essentially, we are doing some work on trying to limit our cost growth going forward, particularly in support functions. And we're trying to ensure that we're looking for more flexible options with that as well. So we are doing work with companies like Cognizant to be able to look at what opportunities we have around that. And that's been something that's been ongoing now for 12 or 18 months and is going to continue as well. So we'll continue to look at that.
We're looking at some of our external spend and ensuring that the spend that we've got externally is, right now, a necessity and not a nice-to-have. So we're effectively going through a line-by-line cost-out approach to ensure that we're only operating where we need to while we're focused on getting the margin and TTV in our Leisure business back up to where it needs to be, and then we can reintroduce some of those other costs as needed, so what we're really looking at there is, I think, if you look at over the last couple of years, the last couple of halves, we have had some costs in terms of redundancy costs and the like that have flown through. Some of those may flow through again in the future.
Okay. Thanks, guys.
Thanks, Peter. Thanks, Pete. Thanks, everyone, for joining us.
If you have any further questions during the day, probably email is the best way to get hold of me. And we'll come back to you as soon as we can.
Thank you.
Thank you.
Thank you.