TOURISM HOLDINGS LTD
FY16

INTERIM RESULTS
PRESENTATION

23 February 2016

   
 
 
   

H1 FY16 Highlights

Revenue

Earnings before interest
and tax*

Net profit after tax

$134M

$15.0M

$8.2M

up 20%

up 42%

up 45%

H1 EBIT
10.6
$M

Interim dividend
9 cps
(partially imputed)

15.0

7.2
5.3

up 29%
FY13

FY14

FY15

FY16

* EBIT excludes joint venture and associates earnings
2

 Results Summary
NZD $M

H1 FY16

Operating revenue

H1 FY15

Var

%

133.7

111.4

22.3

20%

Earnings before interest and tax*

15.0

10.6

4.4

42%

Operating profit before tax

13.7

9.5

4.2

44%

Profit after tax

8.2

5.6

2.6

45%

Earnings per share (in cents)

7.2

5.0

2.2

44%

H1 Operating Profit Before Tax (NZD$M)
3.7

1.1

0.9

1.3
0.1

0.1

13.7

0.0

9.5

Profit Before
Tax H1 FY15

Rentals
NZ

Rentals
Aus

Rentals
USA

* EBIT excludes joint venture and associates earnings

Tourism
Group

Group
Services

Action
Manufacturing

Interest

Profit Before
Tax H1 FY16
3

 Rentals NZ
Rental income growth of 11%
achieved with a similar sized fleet.
Flex fleet did not start until late
December.
Improved profitability mainly due to
small increase in utilisation and yield
improvement.

H1 FY16 - NZD
NZD $M

H1 FY16

H1 FY15

Var

%

Rental income

26.5

23.9

2.6

11%

Sale of goods

16.3

13.6

2.7

20%

Costs

42.8

38.6

(4.2)

(11%)

EBIT

0.0

(1.1)

1.1

98%

H1 FY16

H1 FY15

Var

Fleet Sales H1

218

199

19

Fleet Purchases H1

314

196

118

2,038

1,996

42

Costs well controlled, with 3% growth
on operating costs. Total cost
increase of 11% arises from higher
vehicle sales volumes and higher
average net book value of vehicles
sold.
Vehicle sales volumes up 19 units on
LY. Vehicle sales contribution lower
due to mix of vehicles sold.
Core rental fleet is lower than Dec
FY15, with flex fleet (short term
inventory to be sold after peak)
providing growth.

Vehicle Fleet
Units:

Closing Fleet Dec

Peak season demand is strong.
4

 Rentals Australia

A flat result on FY15. Includes
upfront costs for Telematics and
Melbourne RV Sales Centre, with
benefits not yet realised.
Rental income was up 2% in AUD on
FY15 due to higher utilisation with a
lower fleet.
Vehicle sales have improved on
FY15. Melbourne RV Sales Centre is
now open for direct retail sales, with
momentum growing.

Costs excluding vehicle sales were
up 4% in AUD on last year.
4WD owned vehicles have been
reduced and were replaced with
leased fleet for peak 4WD season in
H1.

Fleet numbers down 61 units, mainly
due to 4WD fleet .

H1 FY16 - NZD
NZD $M

H1 FY16

H1 FY15

Var

%

Rental income

30.3

29.9

0.4

1%

Sale of goods

5.9

5.0

0.9

18%

Costs

31.5

30.2

(1.3)

(4%)

EBIT

4.7

4.7

0.0

0%

H1 FY16

H1 FY15

Var

%

Rental income

28.1

27.5

0.6

2%

Sale of goods

5.5

4.6

0.9

20%

Costs

29.3

27.8

(1.5)

(5%)

EBIT

4.3

4.3

0.0

0%

H1 FY16 - AUD
AUD $M

Vehicle Fleet
Units:

H1 FY16

H1 FY15

Var

Fleet Sales H1

145

114

31

Fleet Purchases H1

172

155

17

1,310

1,371

(61)

Closing Fleet Dec

5

 Rentals USA

A strong EBIT result, up 25% in USD
terms and 61% in NZD.

H1 FY16 - NZD
NZD $M

Rental income was up 15% in USD
terms with higher utilisation,
increased fleet and improved yield.

Vehicle sales demand has been
strong, with YTD sales ahead of
expectations. Vehicle sales revenue
in USD was up 25% on LY.
The development of the new Seattle
branch is on track for opening in
summer 2016. Forward bookings are
meeting expectations.
Fleet to be increased for summer
2016 by ~10% units.

H1 FY16

H1 FY15

Var

%

Rental income

16.9

11.4

5.5

48%

Sale of goods

22.7

14.9

7.8

52%

Costs

29.8

20.2

(9.6)

(48%)

EBIT

9.8

6.1

3.7

61%

H1 FY16

H1 FY15

Var

%

Rental income

11.3

9.8

1.5

15%

Sale of goods

15.3

12.2

3.1

25%

Costs

20.0

16.7

(3.3)

(20%)

EBIT

6.6

5.3

1.3

25%

H1 FY16

H1 FY15

Var

Fleet Sales H1

321

267

54

Fleet Purchases H1

155

40

115

Closing Fleet Dec

447

310

137

H1 FY16 - USD
USD $M

Vehicle Fleet
Units:

6

 Tourism Group
EBIT up 37%. Includes launch costs
of new Waitomo Caves Homestead
offering café/ restaurant, retail and
ticketing.

Visitation growth across the shoulder
season and running into summer has
been very strong. Chinese growth, in
particular, is benefiting Waitomo.

H1 FY16 - NZD
NZD $M

H1 FY16

H1 FY15

Var

%

Revenue

15.1

12.7

2.4

19%

Costs

11.8

10.3

(1.5)

(14%)

EBIT

3.3

2.4

0.9

37%

Kiwi Experience peak travel period
started in late December, with travel
volumes up strongly. ‘Glamping’ sites
have been set up in 3 key stop-offs to
ensure accommodation is available.

The Waitomo Caves Homestead
opened on schedule in December.
Initial performance is in line with
expectations.

7

 Action Manufacturing

NPBT down on FY15, as expected,
due to lower motorhome margins.
This results in lower build costs for
thl.

NPBT H1 FY16 (thl share) - NZD
NZD $M

H1 FY16

H1 FY15

Var

%

Revenue

15.6

14.1

1.5

11%

Costs

14.7

13.0

(1.7)

(13%)

NPBT

0.9

1.1

(0.2)

(18%)

H1 included first production of new
KEA Breeze 4 berth and Action Pods,
both used as flex fleet by Rentals NZ
across summer peak.

Continued progress on reducing costs
of motorhomes.

Debt outstanding to thl reduced by
$1.3M.

Focus on international opportunities
for emergency vehicle market.

8

 New Initiatives Update

Flex Fleet
NZ rental income has
met expectations.
Forward vehicle sales
looking positive.

Telematics
Launch slow, but now
fitted in all Australian
vehicles and under pilot in
NZ.
Speeding and other poor
driving behaviour being
positively impacted.

Opened December.
Meeting expectations.

Just Go

Total Customer
Experience
Behind schedule.
Functionality obtained
through Geozone
purchase being
integrated into tablet
offer.

Waitomo Caves
Homestead

Mighway
Vehicle owners signups
over 100 and growing.
First rentals started in
late December.

Provided fleet for flex
fleet initiative.
Growing fleet for next
high season.

9

 Business Model and Capital Flexibility
 thl recognises the capital intensity of the core business model and is adapting its
approach to investment in fleet accordingly.
 Our traditional response to growing demand would be to increase long term core fleet.
This potentially created fleet over-capacity when demand dropped, leading to yield and
utilisation impacts and negative operating leverage.
 Flex fleet initiatives and balance sheet management are enabling thl to take
advantage of the high demand periods without creating potential long term risk for the
business.
 The following changes have been made to the business model to create more
flexibility and resilience:
 Diversification – now operating in NZ, Australia, USA and UK.
 Reduced the core fleet. Introduced flex fleet with a fast stock-turn, building on the
Road Bear model.
 Adjusted covenants with the banks, including creating allowances for shock
events.
 Improved ROFE of the core business and balance sheet ratios.

10

 Long Term Debt Versus Working Capital
We have positioned the business model today to look at debt and working capital in a
different way.
The accounting methodologies haven’t changed and fleet are still considered fixed assets.
We are now positioning flex-fleet as, in essence, working capital as the purchase cycle
and sale cycle are dramatically different to the past.

Traditional
Buy

 
0

Sell

Core debt

 
1

 
2

 
3
Flex fleet

 
4

 
5

 
6 Years

Working capital

Buy Sell

Buy

Sell

Buy

Sell

Buy

Sell

Buy

Sell

Buy

Sell

11

 Capital Spend - Flexibility
Flex fleet in FY16 takes the form of:


USA fleet, turned over in 9-18
months



NZ flex fleet – trialled in NZ for
FY16 summer period, turned over
in under 9 months.



AU flex fleet – 4WD vehicles
purchased under a buy-back
arrangement for the 2016 winter
season, turned over in under 9
months.

The increase in forecast gross capex
spend for FY16 is mainly funding
flexible fleet that is turned over in
under 18 months.
Forecast core gross capex spend on
long-term fleet is stable at around
$60M.

12

 Capital Structure
Net Debt

Net debt has increased to $90M,
predominantly funding flex fleet.

100

3.0

90

70

Key ratios remain well within
benchmark Baa/BBB target rating
measures and are considered
conservative. There is capacity for
value accretive acquisitions.

2.5

$6M

$14M

$79M
$85M

$90M

2.0

$M

60

$69M

50

1.5

40
1.0

30

Ratio^
Debt:EBITDA#
Debt/Debt + Equity
EBIT/Interest
EBITDA/Interest

H1 FY16

H1 FY15

1.3

1.4

38%

38%

8.1

5.5

15.5

12.7

Debt:EBITDA

80

20

0.5

10
0

-

June 2014
Net Debt (lhs)

Dec 2014

June 2015

LC Commitments*

Dec 2015

Debt:EBITDA (rhs)
(incl LC commitment)

*

Commitments under the documentary letter of credit (LC) facility in June each year relate to work in progress on NZ fleet for the following season
produced by AMLP.
^ Based on 12 months ending December.
# Debt includes LC commitment.

13

 Gross and Net Capex Spend
Gross capex spend forecast for FY16
has been increased by ~$25M, all but
$4M (Homestead) related to flex fleet
growth.

Gross & net capex spend (full year)
140
120

FY16 fleet sales proceeds forecast
has been increased by ~$15M due to
higher flex fleet sales - USA and NZ.

100

$M

80
60

Net capex spend has been increased
on last forecast by circa $10M, mainly
due to Australian 4WD vehicles to be
purchased under a buy-back
arrangement as opposed to leased as
per last year, and the Waitomo Caves
Homestead purchase.

40
20
0

FY14

FY15

FY16f

Gross capex spend less
Net capex on core fleet and
infrastructure is stable on FY15.

Vehicle sales proceeds

equals Net capex.
Net capex equals

Net core capex

plus

Net flex capex

plus

Waitomo Caves Homestead.
14

 Outlook and Guidance
FY16 full year profit guidance
NZD $M

Net profit after tax

Current

~$24M

Previous

~$22M

FY15

$20.1M

Outlook
 The outlook for the NZ tourism industry remains positive in both the short and medium
term.

 Globally, tourism remains a high growth industry with emerging markets continuing to
evolve and traditional markets returning to, or reaching, new highs.
 The Australian outlook is positive, albeit not as strong as New Zealand. The USA and
UK continue to grow.

Full Year NPAT Guidance
 Increase to around $24M, up from previous guidance of around $22M.
 The forecast full year result is net of costs related to investment in new resource to
support growth and the launch of Mighway, totalling approximately $2M.

15

 Dividend
 9 cent partially imputed (to 50%) interim dividend declared.
 50% imputation due to approximately 50% of profits before tax being derived from NZ.

 Within dividend policy of 75%-90% of NPAT.
Dividend cps
10
9
8
7
6
5
4

3
2
1
0

FY14
Interim*

FY14
Final

FY15
Interim

FY14

Payout ratio % NPAT

110%

FY15
Final

FY16
Interim

FY15

85%

Dividend dates
Ex date

6 April 2016

Record date

7 April 2016

Payment date

14 April 2016

* FY14 Interim dividend 100% imputed. Subsequent dividends 50% imputed
16

 Strategic Outlook for thl
 The business remains focused on achieving ROFE targets in all businesses and
delivering the $30M NPAT growth goal by FY2019 or earlier. This goal does not
include any growth by acquisition.
 The balance sheet metrics remain strong and we continue to explore opportunities on
a global basis within the tourism industry, with a particular focus on the wider RV
industry. We are very cognisant of the need to ensure that if any acquisition occurs it
is appropriately earnings per share accretive.

17

 Disclaimer
The information in this presentation was prepared by thl with due care and attention. However, the information is
supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy,
completeness or reliability of the information. In addition, neither the company nor any of its directors, employees,
shareholders nor any other person shall have liability whatsoever to any person for any loss (including, without
limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection
with it.
This presentation may contain forward-looking statements and projections. These reflect thl’s current expectations,
based on what it thinks are reasonable assumptions. However, for any number of reasons the future could be different
and the assumptions on which the forward looking statements and projections are based could be wrong. thl gives no
warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX
listing rules, thl is not obliged to update this presentation after its release, even if things change materially.
This presentation is for information purposes only and does not constitute financial advice. It is not an offer of
securities, or a proposal or invitation to make any such offer, and may not be relied upon in connection with any
purchase of thl securities.
This presentation may contain a number of non-GAAP financial measures. Because they are not defined by GAAP or
IFRS, thl’s calculation of these measures may differ from similarly titled measures presented by other companies and
they should not be considered in isolation from, or construed as an alternative to, other financial measures determined
in accordance with GAAP. Although thl believes they provide useful information in measuring the financial performance
and condition of thl’s business, readers are cautioned not to place undue reliance on these non-GAAP financial
measures.
The information contained in this presentation should be considered in conjunction with thl’s latest financial statements
and other market announcements, which are available at: www.thlonline.com
All currency amounts are in New Zealand dollars unless stated otherwise.

18

 Supporting Analysis

 

 

19

Income Statement Summary

$M

Revenue from sale of services
Revenue from sale of goods
Total revenue

6 Months to December
FY 16 FY 15
Var
Var %

88.8
44.9
133.7

77.9
33.5
111.4

10.9
11.4
22.3

14%
34%
20%

EBITDA

31.9

26.8

5.1

19%

EBIT

15.0

10.6

4.4

42%

Interest
Share of JV Profit (loss)
Share of Associates

(2.3)
0.9
0.1

(2.2)
1.1

(0.1)
(0.2)
0.1

5%
(18%)

Profit before taxation

13.7

9.5

4.2

44%

Taxation

(5.5)

(3.9)

(1.6)

42%

Profit attributable to thl shareholders

8.2

5.6

2.6

45%

Basic EPS

7.2

5.0

2.2

44%

20

 Revenue
$M

THL Rentals - Rental Revenue
New Zealand
Australia
USA

THL Rentals - Sale of Goods
New Zealand
Australia
USA

Tourism Group
Total net turnover as reported
Split
Australia
USA
NZ and other

Operating Revenue Split
Sale of Services
Sale of Goods

6 Months to December
FY16
FY15
Var

In Base
Currency

26.5
30.3
16.9
73.7

23.9
29.9
11.4
65.2

11%
1%
48%
13%

11%
2%
15%
8%

16.3
5.9
22.7
44.9

13.6
5.0
14.9
33.5

20%
18%
52%
34%

20%
20%
25%
22%

15.1

12.7

19%

19%

133.7

111.4

20%

13%

36.2
39.6
57.9
133.7

34.9
26.3
50.2
111.4

4%
51%
15%
20%

5%
21%
15%
13%

88.8
44.9
133.7

77.9
33.5
111.4

14%
34%
20%

9%
22%
13%
21

 Divisional EBIT

; $M
THL Rentals
New Zealand
Australia
USA

6 Months to December
FY16
FY15
Var

(0.0)
4.7
9.8
14.5

(1.1)
4.7
6.1
9.7

98%
(0%)
61%
49%

3.3

2.4

37%

Total Operating Divisions

17.8

12.1

47%

Group Support Services

(2.8)

(1.6)

(79%)

15.0

10.6

42%

4.7
9.8
0.5

4.7
6.1
(0.2)

(0%)
61%
(308%)

15.0

10.6

42%

Tourism Group

EBIT
Split
Australia
USA
NZ and other
Total EBIT

22

 Divisional Review
6 months to December 2015
Divisional
Funds
Operating
Revenue
EBIT
Employed Cashflow*

$M

6 Months to December 2014
Divisional
Funds
Operating
Revenue
EBIT
Employed Cashflow*

Rentals New Zealand

42.8

(0.0)

129.0

(17.8)

37.5

(1.1)

124.1

(14.7)

Rentals Australia

36.2

4.7

55.0

1.9

34.9

4.7

59.8

0.4

Rentals USA

39.6

9.8

38.0

8.9

26.3

6.1

21.7

14.9

Tourism Group

15.1

3.3

26.0

4.9

12.7

2.4

23.7

4.7

Group Support Services

-

(2.8)

3.1

(6.9)

-

(1.6)

7.0

(3.4)

Non-recurring Items

-

-

-

-

-

-

-

-

133.7

15.0

251.0

111.4

10.6

236.3

0.9

5.1

1.1

7.4

0.1

3.9

16.0

260.0

thl 100% owned entities
Action Manufacturing - JV^
Associates

#

Group Total

133.7

(9.0)

1.9

0.3

(9.0)

111.4

11.7

244.0

1.9

^AMLP Joint Venture 50% NPBT
* Operating cashflow includes the sale and purchase of rental assets.
#
Associates includes Just Go (UK) and Geozone until October 2015, when 100% acquired.

23

 EBITDA

$M

6 Months to December
FY 16 FY 15
Var Var %

EBIT

15.0

10.6

4.4

Add back non-cash Items:
Amortisation
Depreciation

0.8
16.1

0.8
15.4

0.0
0.7

EBITDA

31.9

26.8

5.1

42%

19%

24

 Balance Sheet

Dec 15

As at
Dec 14

Equity
Non current liabilities
Current liabilities

169.6
109.0
49.1

159.3
75.4
66.4

10.3
33.6
(17.3)

Total source of funds

327.7

301.1

26.6

Intangible assets and goodwill
Investments in associates
Non current assets
Current assets

20.9
3.8
249.2
53.8

20.6
0.3
232.7
47.5

0.3
3.5
16.5
6.3

Total use of funds

327.7

301.1

26.6

90.4

84.8

5.6

148.7

138.7

10.0

NTA per share

$ 1.31

$ 1.23

Book value of net assets per share

$ 1.49

$ 1.42

$M

Net debt position
Net tangible assets

Debt / debt + equity ratio (net of Intangibles)

38%

38%

Equity ratio (net of Intangibles)

48%

49%

AUD exchange rate at period end

0.9563

0.9737

USD exchange rate at period end

0.7002

0.8021

Var

25

 Cashflow

$M

6 Months to December
FY 16 FY 15
Var
Var %

Vehicle sales
Vehicle purchases

44.9
(61.9)

33.5
(39.5)

11.4
(22.4)

34%
57%

Net fleet capex

(17.0)

(6.0)

(11.0)

183%

8.0

7.9

0.1

1%

Cashflow from operating activities

(9.0)

1.9

Purchase of property, plant and equipment
Other investing cashflow

(6.6)
2.2

(1.0)
0.9

(5.6)
1.3

Cashflow from investing activities

(4.4)

(0.1)

(4.3) 4300%

Borrowings
Dividends
Share issues

21.5
(9.1)
0.6

7.4
(6.7)
0.5

14.1
(2.4)
0.1

191%
36%
20%

Cashflow from financing activities

13.0

1.2

11.8

983%

Net cashflow

(0.4)

3.0

(3.4) (113% )

Other operating cashflow

(10.9) (574% )
560%
144%

26

 Gain on Fleet Vehicle Sales and Gross Profit

$M

6 Months to December
FY16
FY15
Var
Var %

Gain on sales of motorhome fleet before selling costs

6.5

5.8

0.7

12%

Vehicle sales costs ($M)

2.1

1.6

0.5

32%

Gain on sales of motorhome fleet after selling costs

4.4

4.2

0.2

5%

Gross profit on non-fleet vehicle and accessory sales

0.6

0.4

0.2

37%

Reported gain on sale

5.0

4.6

0.4

8%

Average gain on sale ($000) incl selling costs

6.4

7.2

(0.8)

(11%)

Fleet motorhomes sold
AU
NZ

145
218

114
199

31
19

US
Total fleet motorhomes sold (units)

321
684

267
580

54
104

1,310
2,038
447
3,795

1,371
1,996
310
3,677

(61)
42
137
118

Fleet motorhomes at period end
AU
NZ
US
Total fleet motorhomes

27

 Forecast FY16

$M

NPAT
H2

H1

FY15 reported actual NPAT

FY

5.6

14.5

20.1

FY16 forecast NPAT before exchange rate impact

7.2

15.7

22.9

Exchange rate impact*

1.0

0.1

1.1

FY16 forecast NPAT

8.2

15.8

24.0

FY16 forecast NPAT

NPAT growth before exchange rate impact

1.6
28%

1.2
9%

2.8
14%

* Impact of movements in NZD:USD exchange rate on translation of USD earnings.
H2 FY16 is based on forecast exchange rate at 0.68.
The impact of movements in NZD:AUD exchange rates is negligible.

28

 Fleet Size
Rentals Australia

Rentals NZ
1,400

2,200

1,350

2,000

1,300
1,800

1,250

1,600

1,200

1,400

1,150
1,100

1,200
1,050

1,000
June 2014

Dec 2014

June 2015

Dec 2015

1,000
June 2014

Rentals USA

Dec 2014

June 2015

Dec 2015

Proportion of Fleet

650
600

12%

550
500

54%

34%

450
400
350

300
250
200
June 2014

Dec 2014

June 2015

Dec 2015

Rentals NZ

Rentals AU

Rentals USA

29

 Gross Capex Spend

Gross capex spend (full year)
140

120

 Waitomo Caves Homestead +$4M

100

 Increase in US fleet due to strong
sales, increase for summer 2016 &
exchange rate

80

 NZ Rentals flex-fleet
 AU 4WD fleet for winter 2016 on a
buyback arrangement, vs lease in
2015

$M

FY16 gross capital spend forecast has
been increased by ~$25M to $125M$130M due to:

60

40

20

0
FY14

Rentals USA

FY15

Rentals AU

FY16 fcast

Rentals NZ

Other

30

 Fleet Sales Proceeds

Fleet sales proceeds forecast
increased by ~$15M to $80M-$85M
due to:

Fleet sales proceeds (full year)
80

 Improved US demand for vehicle
sales

70
60

 NZ Rentals flex-fleet

$M

50

40
30
20
10
0
FY14

Rentals USA

FY15

Rentals AU

FY16f

Rentals NZ

31

 Net Capex Spend

Net capex cashflow forecast for FY16
$40M-$45M. Increase on last forecast
~$10M mainly due to:

Net capital expenditure (full year)

 Australian 4WD flex-fleet for winter
2016. This year will be on buy-back
arrangement vs operating lease in
2015.

45

35

 Waitomo Caves Homestead.
$M

25

15

5

-5
FY14

Rentals USA

FY15

Rentals AU

Rentals NZ

FY16 fcast

Group and Other

32