Full Year 2026 Experience Co Ltd Earnings Call

August 27, 2026

Speaker #2: Thank you for standing by, and welcome to the Experience Co Limited Fiscal Year 2026 full-year results conference call. All lines have been placed on mute to prevent any background noise.

Operator: Thank you for standing by, and Welcome to the Experience Co Limited FY 2026 Full Year Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. I would now like to turn the call over to John O'Sullivan, Chief Executive Officer. Sir, please go ahead.

Speaker #2: After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star, then the number 1 on your telephone keypad.

Speaker #2: I would now like to turn the call over to John O'Sullivan, Chief Executive Officer. Sir, please go ahead.

Speaker #3: Thanks very much, Tiffany. Good morning, ladies and gentlemen. With me this morning is Gavin Yates, CFO of Experience Co, and it's our pleasure to present to you our FY26 full-year results.

John O'Sullivan: Thanks very much, Tiffany. Good morning, ladies and gentlemen. With me this morning is Gavin Yates, CFO of Experience Co, and it is our pleasure to present to you our FY26 annual year results. As per our usual format, today's presentation will be divided up into 3 sections. I will provide an update on the business trading for financial year 2026. Gavin will take you through the financial results in a bit more detail, and then I will close off the four questions with a trading outlook and strategic update. Then, of course, we are very happy to take your questions. Turning now to slide 4. Before Gavin takes you through the numbers in a bit more detail, let me give you the headline picture for the financial year 2026.

John O'Sullivan: Thanks very much, Tiffany. Good morning, ladies and gentlemen. With me this morning is Gavin Yates, CFO of Experience Co, and it is our pleasure to present to you our FY 2026 annual year results. As per our usual format, today's presentation will be divided up into three sections. I will provide an update on the business trading for financial year 2026. Gavin will take you through the financial results in a bit more detail, and then I will close off the four questions with a trading outlook and strategic update. Then, of course, we are very happy to take your questions. Turning now to slide 4. Before Gavin takes you through the numbers in a bit more detail, let me give you the headline picture for the financial year 2026.

Speaker #3: As per our usual format, today's presentation will be divided into three sections. I'll provide an update on the business trading for financial year 2026.

Speaker #3: Gavin will take you through the financial results in a bit more detail, and then I'll close off before questions with a trading outlook and strategic update.

Speaker #3: And then, of course, we're very happy to take your questions. Now, turning to slide 4—before Gavin takes you through the numbers in a bit more detail, let me give you the headline picture for the financial year 2026.

Speaker #3: In short, it was a year of modest revenue growth, but a step back in earnings, driven largely by factors outside of the business's control, which Gavin will unpack shortly.

John O'Sullivan: In short, it was a year of modest revenue growth, but a step back in earnings driven largely by factors outside of the business's control, which Gavin will unpack shortly. Revenue from continuing operations came in at AUD 129.6 million, up 2% on PCP, with modest growth in the top line in a genuinely tough operating environment, with underlying EBITDA from continuing operations at AUD 17.6 million. That reflects the external headwinds that we will talk to shortly, primarily being weather, industrial action, and of course, higher cost impacts caused by the Middle Eastern conflict. Underlying net profit after tax from continuing operations before impairment was AUD 2 million. On a positive note, our NTA per share improved 3% to AUD 0.10, whilst net debt was broadly flat at AUD 10.7 million.

Speaker #3: Revenue from continuing operations came in at $129.6 million, up 2% on the prior corresponding period. With modest growth in the top line and a genuinely tough operating environment, underlying EBITDA from continuing operations was $17.6 million.

Speaker #3: That reflects the external headwinds that we’ll talk to shortly, primarily being weather, industrial action, and, of course, higher cost impacts caused by the Middle East and conflict.

Speaker #3: Underlying net profit after tax from continuing operations before impairment was $2 million. On a positive note, our NTA per share improved 3% to 10 cents, whilst net debt was broadly flat at $10.7 million.

Speaker #3: At a segment level, the skydiving and aviation business had an underlying EBITDA of experiences produced an underlying EBITDA of 15.4 million. Both down modestly on PCP, but adventure experiences, once again, remain the clear engine room of the group.

John O'Sullivan: At a segment level, the skydiving and aviation business had an underlying EBITDA of AUD 9.7 million and Adventure Experiences produced an underlying EBITDA of AUD 15.4 million, both down modestly on PCP. Adventure Experiences once again remains the clear engine room of the group. Turning now to slide 5. As we outlined at last year's result, our strategy had continued to be built around the same 4 pillars of earnings optimization, sustaining trading momentum, growth, and the quality of the portfolio. On earnings optimization, FY26, as we said, delivered modest growth, but a slight decline in EBITDA and EBIT, with cash flow also impacted by softer trading.

Speaker #3: Turning now to slide 5. As we outlined at last year's results, our strategy has continued to be built around the same four pillars: earnings optimization, sustaining trading momentum, growth, and the quality of the portfolio.

Speaker #3: On the earnings optimization, FY26 delivered, as we've said, modest growth but a slight decline in EBITDA and EBIT, with cash flow also impacted by softer trading.

Speaker #3: That said, we increased across the business, and our focus on cost savings—targeting more than $2 million of annual cost out of the business—is really designed to assist us in mitigating the external impacts that we spoke about before.

John O'Sullivan: That said, we managed the fuel cost increase across the business. Our focus on cost savings, targeting more than AUD 2 million of annual cost out of the business, really designed to assist us in mitigating the external impacts that we spoke about before. Of course, our focus on procurement still remaining a priority. On trading momentum, the encouraging story is that underlying bookings remain strong throughout our key trading windows, with performance really only impacted by external factors such as weather and also industrial action. Tourism conditions across Australia and New Zealand also continued to improve. On growth, we delivered a full year of operation from Aquarius II, our new vessel purchased at the end of 2024.

Speaker #3: And of course, our focus on procurement still remains a priority. On trading momentum, the encouraging story is that underlying bookings remained strong throughout our key trading windows, with performance really only impacted by external factors such as weather and also industrial action.

Speaker #3: And tourism conditions across Australia and New Zealand also continued to improve. On growth, we delivered a full year of operation from Aquarius, and from our new vessel purchased at the end of 2024.

Speaker #3: We were also able to commission the Reef Magic 4 vessel project with support from the Queensland Government's Tourism Icons Program, as well as open new attractions at our Canberra Tree Tops Park site and acquire West Beach Adventure Park in South Australia.

John O'Sullivan: We also were able to commission the Reef Magic IV vessel project with support from the Queensland Government's Tourism Icons Investment Fund program, as well as opening new attractions at our Canberra Treetops Adventure Park site and the acquisition of West Beach Adventure Park in South Australia. On the quality of the portfolio, we continued our strategic review of the Skydive Australia business unit, culminating in the entering into a term sheet with Inflight Aviation. Of course, we successfully completed the divestment of Wild Bush Luxury. Turning now to slide 6. This slide summarizes the performance by business unit. Reef Unlimited delivered marginal growth in customer volumes despite several weather events in Q2 and Q3, with the full year contribution from the Aquarius II vessel underpinning a strong cruise and charter performance and providing valuable fleet redundancy.

Speaker #3: On the quality of the portfolio, we continued our strategic review of the Skydive Australia business unit, culminating in entering into a term sheet with Inflight Aviation.

Speaker #3: And of course, we successfully completed the divestment of Wildbush Luxury. Turning now to slide 6, this slide summarizes the performance by business unit. Reefline Limited delivered marginal growth in customer volumes despite several weather events in Q2 and Q3, with the full-year contribution from the Aquarius 2 vessel underpinning a strong cruise and charter performance, and providing valuable fleet redundancy.

Speaker #3: In the tandem skydiving business unit, this business unit remains one of the leading operators across Australia and New Zealand, with continued growth in the New Zealand market underpinned by a strong Queenstown market.

John O'Sullivan: In the Tandem Skydiving business unit, this business unit remains one of the leading operators across Australia and New Zealand, with continued growth in the New Zealand market underpinned by strong Queenstown market. Australian operations were impacted by protected industrial action during the peak trading periods of Christmas, Chinese New Year, and Valentine's Day. We also made the decision during the course of the year to consolidate our Victorian operations into the Great Ocean Road drop zone. Treetops Adventure achieved revenue growth despite broadly flat volumes, reflecting our pricing strategy and continued focus on customer spend. We were also, as we outlined before, able to roll out new experience initiatives such as Networld and zipline courses in Canberra, and that is continuing across several other sites within the portfolio.

Speaker #3: Australian operations were impacted by protected industrial action during the peak trading periods of Christmas, Chinese New Year, and Valentine's Day. We also made the decision during the course of the year to consolidate our Victorian operations into the Great Ocean Road drop zone.

Speaker #3: Tree Tops Adventure achieved revenue growth despite broadly flat volumes, reflecting our pricing strategy and continued focus on customer spend. As we outlined before, we were also able to roll out new experience initiatives such as NetWorld and Zipline courses in Canberra, and that is continuing across several other sites within the portfolio.

Speaker #3: Finally, within our corporate division, the team maintained its focus on cost efficiency and was rolled out the deployment of a new payroll and workforce management system, Tanda, which was designed to which is designed to ensure that at site, we're able to drive better efficiencies with site labour.

John O'Sullivan: Finally, within our corporate division, the team maintained its focus on cost efficiency and rolled out the deployment of a new payroll and workforce management system, Tanda, which is designed to ensure that at site we are able to drive better efficiencies with site labor. As we have said before, we simplified the portfolio with the completion of the Wild Bush Luxury divestment. Turning now to slide 7 before I hand over to Gavin. It is worth stepping back to the macro backdrop in which the business operates, as it remains a key driver of our business. Domestic and international tourism markets in both Australia and New Zealand continue to grow, albeit at a much more modest pace. Australian overnight trips now are at 113 million, which is ahead of pre-pandemic levels, with holiday travel continuing to be the main driver of growth.

Speaker #3: And as we've said before, we simplified the portfolio with the completion of the Wild Bush Luxury divestment. Turning now to slide 7. Before I hand over to Gavin, it's worth stepping back to the macro backdrop in which the business operates, as it remains a key driver of our business.

Speaker #3: Domestic and international tourism markets in both Australia and New Zealand continue to grow, albeit at a much more modest pace. Australian overnight trips are now at 113 million, which is ahead of pre-pandemic levels, with holiday travel continuing to be the main driver of growth.

John O'Sullivan: International visitation to Australia is also continuing to recover well, with holiday trips up 14% on PCP, and New Zealand's international visitor spend is projected to reach NZD 16.3 billion by 2029. Dispersal, however, within Australia still remains a significant issue. We remain as a business, continue to engage with Tourism Australia, Tourism New Zealand and the relevant state and territory authorities, as well as our trade partners to make sure that we continue to take advantage of the continuing growth in tourism in both markets. We do continue to monitor the performance of these markets very closely. I will now hand over to Gavin to provide you a financial update. Thank you.

Speaker #3: International visitation to Australia is also continuing to recover well, with holiday trips up 14% on prior corresponding period, and New Zealand's international visitor spend is projected to reach $1 billion.

Speaker #3: $16.3 billion by 2029. Disbursal, however, within Australia still remains a significant issue. We remain, as a business, committed to engaging with Tourism Australia, Tourism New Zealand, and the relevant state and territory authorities as well as our trade partners to make sure that we continue to take advantage of the continuing growth in tourism in both markets.

Speaker #3: And we do continue to monitor the performance of these markets very closely. I'll now hand over to Gavin to provide you with a financial update.

Speaker #3: Thank you.

Speaker #1: Thanks, John. And good morning, everyone. Just starting on slide 9, financial performance. The FY26 results are consistent with the year-to-date results presented in the Q4 trading update released to the ASX platform on the 4th of August.

Gavin Yates: Thanks, John, and good morning, everyone. Just starting on slide 9, financial performance. The FY26 results are consistent with the year-to-date results presented in the Q4 trading update released to the ASX platform on 4 August. The group's financial performance from continuing operations reported modest improvement, as noted by John, in revenue, despite being significantly impacted by external factors, particularly during the H2 FY26, including adverse weather, the escalation of the Middle Eastern conflict, and subdued consumer sentiment. Revenue from continuing operations grew by 2% to AUD 129.6 million. However, underlying EBITDA from continuing operations decreased by 8% to AUD 17.6 million, and underlying profit after tax decreased by 30% to AUD 2 million, reflecting the impact of these external headwinds on operating margins and business performance.

Speaker #1: The group's financial performance from continuing operations reported modest improvement, as noted by John, in revenue, despite being significantly impacted by external factors, particularly during the second half of FY26. These included adverse weather, the escalation of the Middle Eastern conflict, and subdued consumer sentiment.

Speaker #1: Revenue from continuing operations grew by 2% to $129.6 million. However, underlying EBITDA from continuing operations decreased by 8% to $17.6 million, and underlying profit after tax decreased by 30% to $2 million, reflecting the impact of these external headwinds on operating margins and business performance.

Speaker #1: Pleasingly, all business units other than Skydive Australia achieved revenue growth during the year, despite the external impacts affecting consumer demand and processing rates. During the year, management responded to the prevailing market conditions through targeted rate changes and increased promotional activity, particularly for Skydive Australia, and continued to focus on improving the average customer spend.

Gavin Yates: Pleasingly, all business units other than Skydive Australia achieved revenue growth during the year despite the external impacts affecting consumer demand and processing rates. During the year, management responded to the prevailing market conditions through targeted rate changes and increased promotional activity, particularly for Skydive Australia, and continued focused on improving the average customer spend. Management also removed a further AUD 2 million of annualized operating costs during the year via the group-wide cost out program, building on the AUD 2.5 million of annualized savings delivered across FY24 and FY25, which helped to mitigate some of the impacts of the inflationary operating environment. The group's performance also included the full year benefit for Reef Unlimited of Aquarius II. New attractions for Treetops Adventure, mainly in relation to Canberra from the Q4.

Speaker #1: Management also removed a further $2 million of annualized operating costs during the year via the group-wide cost-out program, building on the $2.5 million of annualized savings delivered across FY24 and FY25, which helped to mitigate some of the impacts of the inflationary operating environment.

Speaker #1: The group's performance also included the full-year benefit for Reefline Limited of Aquarius 2 and new attractions for Tree Tops Adventure, mainly in relation to Canberra from the fourth quarter.

Speaker #1: It’s highlighted that the statutory loss after tax from both continuing and discontinued operations of $3.3 million included a loss after tax of $0.9 million in relation to the part-year contribution of Wildbush Luxury, and transaction costs in relation to its divestment, which was effective from the 1st of May.

Gavin Yates: It is highlighted that the statutory loss after tax from both continuing and discontinued operations of AUD 3.3 million included a loss after tax of AUD 0.9 million in relation to the part-year contribution of Wild Bush Luxury, and transaction costs in relation to its divestment, which was effective from 1 May. Turning to slide 10, skydiving. The skydiving segment reported a mixed year, with a stronger performance in New Zealand offsetting softer trading conditions in Australia. Segment revenue decreased by 2% to AUD 63.8 million, and underlying EBITDA decreased by 3% to AUD 9.7 million, although underlying EBIT increased 9% to AUD 5.4 million. Skydive New Zealand reported total revenue growth of 7% and volume growth of 9%, reflecting bookings growth in every month of the year, partially offset by a lower average processing rate due to weather impacts, including during key trading periods.

Speaker #1: Turning to slide 10, skydiving. The skydiving segment reported a mixed year, with a stronger performance in New Zealand offsetting softer trading conditions in Australia.

Speaker #1: Segment revenue decreased by 2% to $63.8 million, and underlying EBITDA decreased by 3% to $9.7 million, although underlying EBIT increased 9% to $5.4 million.

Speaker #1: Skydive New Zealand reported total revenue growth of 7% and volume growth of 9%, reflecting bookings growth in every month of the year, partially offset by a lower average processing rate due to weather impacts, including during key trading periods.

Speaker #1: During the year, the 11% depreciation of the New Zealand dollar against the Australian dollar also impacted the conversion into Australian dollars of the local currency earnings generated by our New Zealand operations.

Gavin Yates: During the year, the 11% depreciation of the New Zealand dollar against the Australian dollar also impacted the conversion into Australian dollars of the local currency earnings generated by our New Zealand operations. Skydive Australia reported a total revenue and volume decrease of 7%, although revenue and volume for our current operating sites, which excludes Melbourne and Yarra Valley, decreased by a more modest 4%. Australian operations were impacted by protected industrial action during peak trading windows, and volume performance across our Australian sites was inconsistent over the year. During the year, management consolidated the Victorian operations into the Great Ocean Road drop zone, placing the Melbourne drop zone into care and maintenance and permanently closing the Yarra Valley drop zone. Pleasingly, photo and video uptake continued to remain strong across both countries.

Speaker #1: Skydive Australia reported a total revenue and volume decrease of 7%, although revenue and volume for our current operating sites—excluding Melbourne and Yarra Valley—decreased by a more modest 4%.

Speaker #1: Australian operations were impacted by protected industrial action during peak trading windows, and volume performance across our Australian sites was inconsistent over the year. During the year, management consolidated the Victorian operations into the Great Ocean Road drop zone, placing the Melbourne drop zone into care and maintenance, and permanently closing the Yarra Valley drop zone.

Speaker #1: Pleasingly, photo and video uptake continued to remain strong across both countries. And, as previously announced on the 14th of July, the group has also entered into a non-binding term sheet with Inflight Group in relation to the proposed combination of our respective skydiving and aviation businesses. John will provide an update on this later in the presentation.

Gavin Yates: As previously announced on 14 July, the group has also entered into a non-binding term sheet with Inflight Group in relation to the proposed combination of our respective skydiving and aviation businesses, and John will provide an update on this later in the presentation. Turning to slide 11, adventure experiences. The adventure experiences segment remained the largest contributor to the group result, with both Reef Unlimited and Treetops Adventure achieving revenue growth despite the challenging operating environment. Segment revenue grew by 6% to AUD 65.8 million, although underlying EBITDA decreased by 4% to AUD 15.4 million, and underlying EBIT decreased by 3% to AUD 9.4 million, reflecting the impact of the externalities on operating margins, particularly during the H2 of the financial year. Reef Unlimited revenue increased by 7%, with volume growth of 4% driven by a solid H1, which was partially offset by softer H2 volumes.

Speaker #1: Turning to slide 11, adventure experiences. The Adventure Experiences segment remained the largest contributor to the group result, with both Reefline Limited and Tree Tops Adventure achieving revenue growth, despite the challenging operating environment.

Speaker #1: Segment revenue grew by 6% to $65.8 million, although underlying EBITDA decreased by 4% to $15.4 million and underlying EBIT decreased by 3% to $9.4 million, reflecting the impact of externalities on operating margins, particularly during the second half of the financial year.

Speaker #1: Reefline Limited revenue increased by 7%, with volume growth of 4% driven by a solid first half, which was partially offset by softer second-half volumes.

Speaker #1: Volume growth was reported in all months other than December, January, March, and April, which were impacted by weather events and a crocodile impacting our Port Douglas Low Isles operations, mainly during the third quarter.

Gavin Yates: Volume growth was reported in all months other than December, January, March, and April, which were impacted by weather events and a crocodile impacting our Port Douglas Low Isles operations mainly during the Q3. Average revenue per customer increased by 4%, reflecting the impact of historical rate increases and product mix. Treetops Adventure revenue increased by 2%, with volumes slightly down on prior year, reflecting mixed performance across sites, contribution from the new Canberra Networld attraction from the end of March, and the loss of the Newcastle site from the end of October 2025. Average revenue per customer increased by 2%, driven by historical price increases, site mix, and our continued focus on increasing customer dwell time and average site spend. Operating margins across the segment were impacted by the weather events, fuel cost increases, and general wages and cost inflationary pressures despite improved average revenue per customer.

Speaker #1: Average revenue per customer increased by 4%, reflecting the impact of historical rate increases and product mix. Tree Tops Adventure revenue increased by 2%, with volume slightly down on the prior year, reflecting mixed performance across sites, contribution from the new Canberra Networld attraction from the end of March, and the loss of the Newcastle site from the end of October 2025.

Speaker #1: Average revenue per customer increased by 2%, driven by historical price increases, site mix, and our continued focus on increasing customer dwell time and average site spend.

Speaker #1: Operating margins across the segment were impacted by weather events, fuel cost increases, and general wages and cost inflationary pressures, despite improved average revenue per customer.

Speaker #1: During the year, we also continued to invest in the growth of Tree Tops Adventure, with the acquisition of the West Beach Adventure Park in Adelaide on 30 June, marking Tree Tops' first entry into South Australia.

Gavin Yates: During the year, we also continued to invest in the growth of Treetops Adventure with the acquisition of the West Beach Adventure Park in Adelaide on 30 June, marking Treetops' first entry into South Australia. Turning to slide 12, balance sheet. As John indicated, the group's net debt and gearing remained at a similar level to the end of the prior year, with net debt of AUD 10.7 million and a net debt to trailing 12 months underlying EBITDA ratio on a pre-AASB 16 basis of 0.76 times at 30 June 2026. Closing cash decreased by AUD 5.7 million to AUD 5.4 million at 30 June, driven by the dividend paid, debt repayments, and reduced business cash flow generation during the year. Gross borrowings, including asset finance, decreased by AUD 5.8 million to AUD 16.2 million, which I will touch on shortly on the cash flow slide.

Speaker #1: Turning to slide 12, balance sheet. As John indicated, the group's net debt and gearing remained at a similar level to the end of the prior year, with net debt of $10.7 million and a net debt to trailing 12 months underlying EBITDA ratio, on a pre-SSB 16 basis, of 0.76 times at 30 June 2026.

Speaker #1: Closing cash decreased by $5.7 million to $5.4 million at 30 June, driven by the dividend paid, debt repayments, and reduced business cash flow generation during the year.

Speaker #1: Gross borrowings, including asset finance, decreased by $5.8 million to $16.2 million, which I'll touch on shortly on the cash flow slide. The divestment of Wildbush Luxury, together with the decrease in cash, accounted for the majority of the movement in tangible assets during the year.

Gavin Yates: The divestment of Wild Bush Luxury, together with the decrease in cash, accounted for the majority of the movement in tangible assets during the year. Tangible assets at 30 June also incorporate the outcome of independent market valuation of our aircraft fleet obtained during the year in line with the group's accounting policy, which resulted in no material change to the aggregate value of aircraft. As can be seen on the bottom left of the slide, the group's Commonwealth Bank of Australia debt facility remains available to support the business with undrawn funds of AUD 15.8 million at 30 June available across the market rate loan and asset finance facilities, which are the key facilities available to support growth initiatives. Further, at 30 June, the Australian operations of Experience Co had 57.7 of carried forward tax losses, and the group had a franking credits balance of AUD 8.5 million. Turning to slide 13, cash flow.

Speaker #1: Tangible assets at 30 June also incorporate the outcome of an independent market valuation of our aircraft fleet obtained during the year, in line with the group's accounting policy, which resulted in no material change to the aggregate value of aircraft.

Speaker #1: As can be seen on the bottom left of the slide, the group's CBA debt facility remains available to support the business, with undrawn funds of $15.8 million at 30 June. These funds are available across the market rate loan and asset finance facilities, which are the key facilities available to support growth initiatives.

Speaker #1: Further, at 30 June, the Australian operations of Experience Co had $57.7 million of carry forward tax losses, and the group had a franking credits balance of $8.5 million.

Gavin Yates: Further, at 30 June, the Australian operations of Experience Co had 57.7 of carried forward tax losses, and the group had a franking credits balance of AUD 8.5 million. Turning to slide 13, cash flow. Firstly, in terms of the tables on slide 13, the top table represents a summary of the statutory cash flow statement reported in our audited financial statements. However, similar to recent results presentations, we've also again included some additional information on the slide to provide further insight on the underlying free cash flow of the business, specifically the middle and bottom tables.

Speaker #1: Turning to slide 13, cash flow. Firstly, in terms of the tables on slide 13, the top table represents a summary of the statutory cash flow statement reported in our audited financial statements.

Gavin Yates: Firstly, in terms of the tables on slide 13, the top table represents a summary of the statutory cash flow statement reported in our audited financial statements. However, similar to recent results presentations, we've also again included some additional information on the slide to provide further insight on the underlying free cash flow of the business, specifically the middle and bottom tables. Statutory operating cash flows decreased by 30% to AUD 11.9 million during the year, primarily reflecting the decrease in underlying EBITDA, lower cash conversion due to working capital timing, and the impact of additional non-recurring significant items during the year. As seen in the table at the bottom, while the business remained underlying free cash flow positive at AUD 2.3 million, the business reported a AUD 5.1 million decrease compared to the prior year, which reflected the decrease in underlying earnings and lower cash conversion.

Speaker #1: And, however, similar to recent results presentations, we've also again included some additional information on the slide to provide further insight on the underlying free cash flow of the business—specifically, the middle and bottom tables.

Speaker #1: Statutory operating cash flows decreased by 30% to $11.9 million during the year, primarily reflecting the decrease in underlying EBITDA, lower cash conversion due to working capital timing, and the impact of additional non-recurring significant items during the year.

Gavin Yates: Statutory operating cash flows decreased by 30% to AUD 11.9 million during the year, primarily reflecting the decrease in underlying EBITDA, lower cash conversion due to working capital timing, and the impact of additional non-recurring significant items during the year. As seen in the table at the bottom, while the business remained underlying free cash flow positive at AUD 2.3 million, the business reported a AUD 5.1 million decrease compared to the prior year, which reflected the decrease in underlying earnings and lower cash conversion.

Speaker #1: As seen in the table at the bottom, while the business remained underlying free cash flow positive at $2.3 million, the business reported a $5.1 million decrease compared to the prior year, which reflected the decrease in underlying earnings and lower cash conversion.

Speaker #1: It's highlighted that the average cash conversion over the past three years is 94%, with 91% in FY24, 108% in FY25, and 84% in FY26.

Gavin Yates: It's highlighted that the average cash conversion over the past three years is 94%, with 91% in FY24, 108% in FY25, and 84% in FY26. A key driver of the fluctuations in cash conversion is the movements in trade receivables and deferred revenue balances associated with the timing and profile of the group sales and bookings. This was partially offset by a modest reduction in maintenance CapEx to AUD 7.7 million, which is primarily comprised of the scheduled maintenance of our aircraft and vessel fleet. In terms of growth CapEx, the key investments during the year were the acquisition of the West Beach Adventure Park and the construction of the new Treetops Adventure Canberra net build attraction, together with product enhancements at existing sites, such as installation of zip line courses.

Speaker #1: A key driver of the fluctuations in cash conversion is the movement in trade receivables and deferred revenue balances associated with the timing and profile of the group's sales and bookings.

Speaker #1: This was partially offset by a modest reduction in maintenance capex to $7.7 million, which is primarily comprised of the scheduled maintenance of our aircraft and vessel fleet.

Speaker #1: In terms of growth CapEx, the key investments during the year were the acquisition of the West Beach Adventure Park and the construction of the new Tree Tops Canberra Net World attraction, together with product enhancements at existing sites such as the installation of zipline courses.

Gavin Yates: Proceeds from the sale of assets of AUD 4.5 million primarily comprised the Wild Bush Luxury divestment net proceeds of AUD 3.4 million after completion adjustments and transaction costs, and proceeds from the sale of one surplus skydiving aircraft. It's also noted that the majority of the net proceeds from the Wild Bush Luxury divestments have been allocated to the repayment of debt in line with Commonwealth Bank of Australia's approval of the divestment, albeit the funds are available for future redraw subject to the normal drawdown process under our facility terms. In terms of financing cash flows, a breakdown's been provided on the slide.

Speaker #1: Proceeds from the sale of assets of $5.45 million primarily comprised the Wildbush Luxury divestment net proceeds of $3.4 million, after completion adjustments and transaction costs, as well as proceeds from the sale of one surplus skydiving aircraft.

Speaker #1: It's also noted that the majority of the net proceeds from the Wild Bush Luxury divestments have been allocated to the repayment of debt, in line with CBA's approval of the divestment. Albeit, the funds are available for future redraw, subject to the normal drawdown process under our facility terms.

Speaker #1: In terms of financing cash flows, a breakdown's been provided on the slide. Key items included corporate debt and asset finance facility repayments of $4.2 million, the repayment in full of the New Zealand government loan at expiry of $1.7 million, SSB 16 lease principal repayments of $3.4 million, and capital initiatives during the year comprised the dividend paid of $1.9 million and the on-market share buyback for purchases of $0.2 million.

Gavin Yates: Key items included corporate debt and asset finance facility repayments of AUD 4.2 million, the repayment in full of the New Zealand government loan at expiry of AUD 1.7 million, AASB 16 lease principal repayments of AUD 3.4 million, and capital initiatives during the year comprised the dividend paid of AUD 1.9 million and the on-market share buyback further purchases of AUD 0.2 million. I will now hand back to John.

Speaker #1: I'll now hand back to John.

Speaker #2: Thanks, Gavin. To close off this morning's call, I'd now like to give you a brief update on our strategic priorities for the financial year ahead, the proposed Skydive transaction, and, of course, a look-through of trading in the month of July.

John O'Sullivan: Thanks, Gavin. To close off this morning's call, I would now like to give you a brief update on our strategic priorities for the financial year ahead, the proposed Skydive transaction, and of course, a look-through of trading in the month of July. Turning now to slide 15. Our priorities for FY27 remain consistent with the four pillars that we have operated to during FY26. These being around earnings, trading momentum, growth, and quality of the portfolio. On the focus of earnings, free cash flow generation remains the number one priority. We will continue with the rollout of the Tanda platform to assist us in optimizing rostering and labor efficiency at site and also driving incremental savings through focused initiatives on procurement. With regards to trading, underlying demand for Australia-New Zealand tourism still remains strong and will continue to invest in our direct-to-consumer channels while strengthening our positioning with trade and wholesale partners.

Speaker #2: Turning now to slide 15, our priorities for FY27 remain consistent with the four pillars that we've operated to during FY26. These are earnings, trading momentum, growth, and quality of the portfolio.

Speaker #2: On the focus of earnings, free cash flow generation remains the number one priority. We will continue with the rollout of the tender platform to assist us in optimising rostering and labour efficiency at site, and also driving incremental savings through focused initiatives on procurement.

John O'Sullivan: We will continue with the rollout of the Tanda platform to assist us in optimizing rostering and labor efficiency at site and also driving incremental savings through focused initiatives on procurement. With regards to trading, underlying demand for Australia-New Zealand tourism still remains strong and will continue to invest in our direct-to-consumer channels while strengthening our positioning with trade and wholesale partners.

Speaker #2: With regards to trading, underlying demand for Australian and New Zealand tourism still remains strong, and we'll continue to invest in our direct-to-consumer channels while strengthening our positioning with trade and wholesale partners.

Speaker #2: And on growth, our focus is on actual organic opportunities that are already in train—Reef Magic 4, and the continued rollout of site enhancements across our Tree Tops network, and investment in customer connectivity in our Skydive Australia facilities and ground transportation.

John O'Sullivan: On growth, our focus is on actioning organic opportunities that are already in train. Reef Magic IV and the continued rollout of site enhancement across our Treetops network and investment in customer connectivity in our Skydive Australia facilities and ground transportation. Finally, on the portfolio quality, our key priority remains the progression of the proposed Skydive transaction, which I will speak about in a minute, along with continued disposal of surplus assets and evaluation of any accretive growth opportunities. Turning now to slide 16. As we announced to the market on 14 July, the business has entered into a non-binding term sheet with Inflight Aviation to combine our Skydive and Aviation business unit with Inflight's business, creating an Australia-New Zealand aviation tourism business.

Speaker #2: Finally, on the portfolio quality, our key priority remains the progression of the proposed skydive transaction, which I'll speak about in a minute, along with the continued disposal of surplus assets.

Speaker #2: And evaluation of any accretive growth opportunities. Turning now to slide 16: as we announced to the market on 14th of July, the business has entered into a non-binding term sheet with In-Flight Aviation to combine our Skydive and Aviation business unit with In-Flight's business, creating an Australian and New Zealand aviation tourism business.

Speaker #2: Upon completion, the combined business is estimated to have an enterprise value of approximately $110 million on a cash-free, debt-free basis, with EXP receiving consideration of approximately $65 million.

John O'Sullivan: Upon completion, the combined business is estimated to have an enterprise value of approximately AUD 110 million on a cash-free, debt-free basis, with EXP receiving consideration of approximately AUD 65 million, made up of AUD 41 million in upfront cash, a AUD 5 million vendor note repaid after five years, and a 32.5% equity interest in the combined entity. Since the announcement of the term sheet, the focus of both parties has been engaging in financial, legal, and tax due diligence, as well as conducting of management site inspections across Australia and New Zealand, which have now both been completed. In addition to that, we are also progressing due diligence, commercial and legal negotiations, and also the financing plan in parallel. I have to say that the intent on both sides has been extremely positive and we remain confident in our ability to complete this transaction.

Speaker #2: Made up of $41 million in upfront cash, a $5 million vendor note repaid after five years, and a 32.5% equity interest in the combined entity.

Speaker #2: Since the announcement of the term sheet, the focus of both parties has been engaging in financial, legal, and tax due diligence, as well as conducting management site inspections across Australia and New Zealand, which have now both been completed.

Speaker #2: In addition to that, we are also progressing due diligence, commercial and legal negotiations, and also the financing plan in parallel. I have to say that the intent on both sides has been extremely positive, and we remain confident in our ability to complete this transaction.

Speaker #2: I want to be clear, however, that no action is required by shareholders at this stage, and we'll continue to update the market in line with our continuous disclosure obligations.

John O'Sullivan: I want to be clear, however, that no action is required by shareholders at this stage, and we will continue to update the market in line with our continuous disclosure obligations. Turning now to slide 17 before we open up to questions. I am pleased to say that the group had a solid start to the financial year with July revenue and underlying EBITDA both ahead of PCP. July delivered an unaudited revenue from continuing operations of AUD 11.7 million against AUD 11.4 million in the same prior comparative period, with an underlying EBITDA of AUD 2.3 million against AUD 2.1 million, with growth reported across every business unit aside from Skydive New Zealand, which was impacted by generally less favorable weather at our Wanaka drop zone.

Speaker #2: Turning now to slide 17, before we open up to questions. I'm pleased to say that the group had a solid start to the financial year, with July revenue and underlying EBITDA both ahead of PCP.

Speaker #2: July delivered an unaudited revenue from continuing operations of $11.7 million, versus $11.4 million in the same prior comparative period, with underlying EBITDA of $2.3 million, compared to $2.1 million, with growth reported across every business unit aside from Skydive in New Zealand, which was impacted by generally less favourable weather at our Wanaka drop zone.

Speaker #2: Skydive Australia reported revenue growth despite a reduced operating footprint, supported by improved external aircraft maintenance and cross-hire income, while Refund Limited and Tree Tops Adventure both delivered ahead of PCP on the back of higher average revenue per customer.

John O'Sullivan: Skydive Australia reported revenue growth despite a reduced operating footprint supported by improved external aircraft maintenance and cross-hire income, while Reef Unlimited and Treetops Adventure both delivered ahead of PCP on the back of higher average revenue per customer. Looking ahead, the board and management remain positive of the group's longer-term earnings outlook. That said, I am going to be upfront that changes to our business structure, the more gradual and uneven recovery in international tourism, ongoing macroeconomic uncertainty, does mean the earnings recovery of the group is likely to take longer than we had previously anticipated. This said, our outlook for FY27 remains positive, underpinned by the continuing solid performance tourism markets in both markets and consistent demand for our experiences. Operating efficiency and free cash flow generation remain a key focus for the group.

Speaker #2: Looking ahead, the board and management remain positive about the group's longer-term earnings outlook. That said, I'm going to be upfront that there will be changes to our business structure.

Speaker #2: The more gradual and uneven recovery in international tourism, along with ongoing macroeconomic uncertainty, does mean the earnings recovery of the group is likely to take longer than we've previously anticipated.

Speaker #2: That said, our outlook for FY27 remains positive, underpinned by the continuing solid performance of tourism markets in both regions and consistent demand for our experiences.

Speaker #2: Operating efficiency and free cash flow generation remain a key focus for the group. Finally, we will also remain committed and focused on progressing the in-flight aviation transaction in the year ahead.

John O'Sullivan: Finally, we also will remain committed and focused on progressing the Inflight Aviation transaction ahead of the year ahead. Once again, I would like to thank you for your time this morning and thank you for your ongoing support, and happy to take questions.

Speaker #2: Once again, I'd like to thank you for your time this morning. Thank you for your ongoing support, and I'm happy to take questions.

Speaker #1: As a reminder, if you would like to ask a question, press star, then the number one on your telephone keypad. To withdraw your question, simply press star one again.

Operator: As a reminder, if you would like to ask a question, press star, then the number 1 on your telephone keypad. To withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Allan Franklin with Canaccord Genuity. Please go ahead.

Speaker #1: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Alan Franklin with Canaccord Genuity.

Speaker #1: Please go ahead.

Speaker #3: Thank you. Morning, John. Morning, Gavin. Hope you're well. Thanks for your time. So I think just to reflect on a couple of the organic growth pieces within Trees and Reef.

Allan Franklin: Thank you. Morning, John. Morning, Gavin. Hope you are well. Thanks for your time. I was hoping just to reflect on a couple of the organic growth pieces within Treetops Adventure and Reef Unlimited, and just perhaps the prospectivity of growth on a look forward. Could you just talk to how you feel you have put in place growth for the next couple of years within those two divisions? Noting there obviously was an acquisition in South Australia in Treetops Adventure and looking at adding another boat into Cairns with the help of that government grant.

Speaker #3: And just perhaps, the prospectivity of growth looking forward—could you just talk to how you feel you have put in place growth for the next couple of years within those two divisions, noting there obviously was an acquisition in South Australia with Trees, and you're looking at adding another boat into Cairns with the help of that government grant?

Speaker #2: Yeah, thanks, Alan. I'll kick off with a response to that, and then also hand over to Gavin. I think as you've summarised, the primary focus on the Reef Unlimited business is the delivery of Reef Magic 4.

John O'Sullivan: Yeah. Thanks, Allan. I will kick off with a response to that and then also hand over to Gavin. I think as you have summarized, the primary focus on the Reef Unlimited business is the delivery of Reef Magic IV. That vessel will provide us with an increased capacity for us to be able to service our Reef Magic pontoon, as well as we believe, gain more market share in that market. Because what we have seen is that investment in assets such as that do generate a growth in market share, particularly. So that is the primary focus for that business, along with the efficiencies that we are seeking to gain at site through the implementation of the Tanda rollout, as well as also trialing artificial intelligence within our reservations function. Within Treetops Adventure, our approach to growth is a combination of approaches. As you have identified, we did purchase West Beach Adventure.

Speaker #2: That vessel will provide us with increased capacity for us to be able to service our Reef Magic pontoon, as well as, we believe, gain more market share in that market because what we've seen is that investment in assets such as that does generate a growth in market share, particularly.

Speaker #2: So that is the primary focus for that business, along with the efficiencies that we're seeking to gain at site through the implementation of the tender rollout.

John O'Sullivan: That is the primary focus for that business, along with the efficiencies that we are seeking to gain at site through the implementation of the Tanda rollout, as well as also trialing artificial intelligence within our reservations function. Within Treetops Adventure, our approach to growth is a combination of approaches. As you have identified, we did purchase West Beach Adventure.

Speaker #2: As well as also trialling artificial intelligence within our reservations function. Within Tree Tops Adventure, our approach to growth is, I guess, a combination of approaches.

Speaker #2: As you've identified, we did purchase West Beach Adventure. We're really excited about that purchase. We were able to buy it for a good multiple.

John O'Sullivan: We are really excited about that purchase. We were able to buy it for a good multiple, and it adds another 25,000 customers, close to AUD 500,000 in underlying earnings. And we also think that it is a site right for expansion in terms of more experiences on the location, enhanced food and beverage offering, that we can grow those earnings. And what Mark Heinrich and his team are doing at the moment is starting to fill out the number of organic opportunities that we are able to have to support that. So we are in negotiations with a number of councils at the moment around Australia for new organic sites, as well as we are also in discussions with a number of other operators that have single sites that may be looking to divest. So it is a combination of the approach for growth for that particular business unit.

Speaker #2: And it adds another 25,000 customers, close to half a million in underlying earnings. And we also think that it's a site ripe for expansion.

Speaker #2: In terms of more experiences on the location-enhanced food and beverage offering, we can grow those earnings. What Mark Heinrich and his team are doing at the moment is, I guess, starting to fill out the number of organic opportunities that we're able to have to support that.

Speaker #2: So we're in negotiations with a number of councils at the moment around Australia for new organic sites, as well as we're also in discussions with a number of other operators that have single sites that may be looking to divest.

Speaker #2: So it's a combination of it's a combination of the approach for growth for that particular business unit.

Speaker #3: Thank you. And then maybe just talk to the inbound visitation—how you feel the health of the Cairns market is stepping into this next key trade period.

Allan Franklin: Thank you. And then maybe just talk to the inbound visitation, how you feel the health of the Cairns market is stepping into this next key trade period, and any sort of anecdotes around the lead into Golden Week and whether you feel that will be an important trading period for you.

Speaker #3: And any sort of anecdotes around the lead into Golden Week, and whether you feel that'll be an important trading period for you?

Speaker #2: Yeah. I mean, look, Golden Week has always been an important trading week for us across the group, particularly for Skydive as well as the Reef Unlimited business.

John O'Sullivan: Yeah, look, Golden Week is always an important trading week for us across the group, particularly for Skydive as well as the Reef Unlimited business. Certainly, where we sitting here right now, we're very encouraged with the forward bookings we have within our Skydive New Zealand business. The feedback that we're getting anecdotally around Australia is that the demand is coming, but it will come a lot later. Whereas in New Zealand, there is more propensity from our trade partners to book in advance. Our Reef Unlimited bookings for October look pretty solid as well. We saw last year and we saw during FY26 and FY25 that the underlying demand during those key trading periods has always been reasonably strong. We just need to be able to execute against that.

Speaker #2: And certainly, where we're sitting here right now, we're very encouraged with the forward bookings we have within our Skydive New Zealand business. The feedback that we're getting anecdotally around Australia is that the demand is coming, but it will come a lot later.

Speaker #2: Whereas in New Zealand, there is more propensity from our trade partners to book in advance. Our Reef Unlimited bookings for October look pretty solid as well.

Speaker #2: And we saw last year, and we saw during FY25, that FY26 and FY25, that the underlying demand during those key trading periods has always been reasonably strong.

Speaker #2: We just need to be able to execute against that. I think this stepping back more broadly, I think for inbound into both Australia and New Zealand, look, the New Zealand market where we're very comfortable with, particularly Queenstown and via association Monaco, they're just they're must-do destinations for most first-time visitors.

John O'Sullivan: I think just stepping back more broadly, I think for inbound into both Australia and New Zealand, look, the New Zealand market we're very comfortable with, particularly Queenstown and by association, Wanaka. They're must-do destinations for most first-time visitors to New Zealand. I think just most recently, Tourism New Zealand have reported that they've hit close to 3.94 million international visitors. So it is, as a market, going well. I think at a macro level, Australia is also traveling well. I think the issue is more around dispersal within the market, within Australia. Certainly, what we've seen in our reef business is that we've seen a real shift in the customer base being more predominantly Australians as opposed to internationals. I think that in of itself has been quite illuminating in that we're seeing in that market particularly, a changed demographic. So we're watching that.

Speaker #2: To New Zealand, I think since just most recently, Tourism New Zealand have sort of reported that they've hit close to 3.94 million international visitors.

Speaker #2: So, it is, as a market, going well. And I think on a macro level, Australia is also travelling well. I think the issue is more around dispersal within the market, within Australia.

Speaker #2: And certainly, what we've seen in our Reef business is that we've seen a real shift in the customer base, being more predominantly Australians as opposed to internationals.

Speaker #2: And I think that that in and of itself has been quite illuminating, in that we're seeing, in that market particularly, a change in demographic. So we're watching that.

John O'Sullivan: I think that in of itself has been quite illuminating in that we're seeing in that market particularly, a changed demographic. So we're watching that. I think Australia has benefited from the Middle Eastern conflict. It's seen as a safe destination, particularly for markets like Japan, which is a really important market for North Queensland. But I think, that's something, as I said earlier in the presentation, we'll continue to watch.

Speaker #2: I think Australia has benefited from the Middle Eastern conflict. It's seen as a safe destination, particularly for markets like Japan, which is a really important market for North Queensland.

John O'Sullivan: I think Australia has benefited from the Middle Eastern conflict. It's seen as a safe destination, particularly for markets like Japan, which is a really important market for North Queensland. But I think, that's something, as I said earlier in the presentation, we'll continue to watch.

Speaker #2: But I think that's something, as I said earlier in the presentation, we'll continue to watch.

Speaker #3: Helpful, thank you. One last quick one from me. I appreciate you touching on the divestment key points, but could you just maybe reframe the importance of the site visits now that you've gone through that?

Allan Franklin: Helpful. Thank you. One last quick one from me. I appreciate you did touch on the divestment key points, but just maybe reframe, what's the importance of the site visits now that you've sort of gone through that? From the looks of it, the next couple steps are obviously both within your hands and the hands of the counterparty bidder.

Speaker #3: And from the looks of the next couple of steps, obviously both are within your hands and the hands of the counterparty bidder.

Speaker #2: Yeah, I think, well, I mean, site visits are obviously pretty important because they give both parties the opportunity to look at each other's operations. Because upon completion of the proposed transaction, EXP will still have a substantive shareholding in the proposed merchant entity.

John O'Sullivan: Well, site visits are obviously pretty important because it gives both parties the opportunity to look at both parties' operations because, upon completion of the proposed transaction, EXP will still have a substantive shareholding in the proposed merged entity. In particular for the Inflight team, it was an opportunity to see the Australian skydive market, which they have not had exposure to. We both know each other pretty well as companies. It just gave us that opportunity to look at both of their experiences and equally for ourselves to look at their operations that we are not so familiar with, such as their ski plane operation, and some of their scenic flight operations, particularly around Mount Cook, on the South Island. I think it also gave the opportunity to flush out any sort of issues that may have been presented at site.

Speaker #2: And in particularly for the in-flight team, it was an opportunity to see the Australian Skydive market, the Australian Skydive market, which they haven't had exposure to.

Speaker #2: I mean, we both know each other pretty well as companies. But it just gave us that opportunity to look at both of their experiences.

Speaker #2: And equally for ourselves, to look at their operations that we're not so familiar with, such as their ski plane operation and some of their scenic flight operations, particularly around Mount Cook on the South Island.

Speaker #2: I think it also gave the opportunity to flush out any sort of issues that may have been presented at site. And, obviously, those types of visits do flush out different issues.

John O'Sullivan: I think it also gave the opportunity to flush out any sort of issues that may have been presented at site. Obviously those type of visits do flush out different issues. Both parties have been working through that, and now it is really down to, I guess, the lawyers and the accountants and the tax accountants to work through their RFIs, with the intent of being able to produce an outcome that we are able to transact against.

John O'Sullivan: Obviously those type of visits do flush out different issues. Both parties have been working through that, and now it is really down to, I guess, the lawyers and the accountants and the tax accountants to work through their RFIs, with the intent of being able to produce an outcome that we are able to transact against.

Speaker #2: Both parties have been working through that. And now it's really down to it's now really down to, I guess, the lawyers and the accountants and the tax accountants to work through their RFIs and with the intent of being able to produce an outcome that we're able to transact against.

Speaker #3: Helpful. Thank you.

Allan Franklin: Helpful. Thank you.

Speaker #2: Thanks.

John O'Sullivan: Thanks.

Speaker #1: That concludes our question and answer session. I will now turn the call back over to John O'Sullivan for closing remarks.

Operator: That concludes our question and answer session. I will now turn the call back over to John O'Sullivan for closing remarks.

Speaker #2: Thank you once again, ladies and gentlemen, for your time. We look forward to seeing many of you at our investor meetings over the next couple of weeks.

John O'Sullivan: Thank you once again, ladies and gentlemen, for your time. We will look forward to seeing many of you on our investor meetings over the course of the next couple of weeks. Thank you.

Speaker #2: Thank you.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.