OUR JOURNEY CONTINUES - Tourism Holdings Limited

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OUR JOURNEY CONTINUES - Tourism Holdings Limited
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                     2019 Interim Report
A thl Interim Report 2019
OUR JOURNEY CONTINUES - Tourism Holdings Limited
Contents

01  Highlights
02  Chairman and CEO report
08	Consolidated income
    statement
09	Consolidated statement
    of comprehensive income
10	Consolidated statement
    of changes in equity
12	Consolidated statement
    of financial position
13  Consolidated statement
    of cash flows
14	Notes to the consolidated
    financial statements
31  Corporate information
OUR JOURNEY CONTINUES - Tourism Holdings Limited
WHERE WE ARE
As at 31 December 2018

                                                     H1                                  H1
                                                    FY 18                               FY 19

                                                                               $34.7M +4%
EARNINGS BEFORE INTEREST
AND TAX (EBIT)                                  $33.3M

                                               $136.0M                       $144.3M +6%
REVENUE
(RENTALS AND SERVICES)

                                                                               $62.9M -14%
REVENUE
(VEHICLE SALES)                                 $73.1M

INTERIM DIVIDEND1                                13CPS                           13CPS

                                                                                $17.5M -17%
TOTAL NET PROFIT
AFTER TAX (NPAT) EXCLUDING                      $21.0M2
NON-RECURRING ITEMS

                                                                               -$5.4M
DIGITAL INVESTMENT
LOSSES3                                          -$2.4M

Note: 1 50% imputed. 2 Excludes $1.8M non-recurring benefit of re-measurement of deferred tax balances. 3 In H1 FY18 this includes
       losses incurred in Mighway and Roadtrippers. In H1 FY19 this includes losses incurred in thl’s 50% equity investment in TH2.   01
CHAIRMAN AND
   CEO REPORT
   Dear Shareholders                                                     From an outlook perspective, we are wary of slowing growth in
   We are pleased to present thl’s interim report for the first half     global tourism, and will manage our balance sheet accordingly.
   of the 2019 financial year.                                           Despite this, we have initiated a number of projects (with
                                                                         careful capital allocation) that will enhance our profitability
   We have endeavoured in recent years to set clear targets for
                                                                         in the longer run. We are positive that the thl model, as it is
   the business, and to report to shareholders and other
                                                                         evolving, has a strong future.
   stakeholders against those targets. Sometimes those reports
   will reflect success. At other times, and in parts of the business,   Keeping the focus simple, we see the key points from the result
   we will miss. We hold ourselves to account accordingly.               as follows:

   This business is not only growing, but is changing in its scope       •	The core business Earnings Before Interest and Tax (EBIT)
   and structure. We are taking the build/buy – rent – sell model           result was strong, with growth in both the New Zealand
   in our RV business to wider geographies. At the same time, we            and Australian rentals businesses (remembering that
   are extending the scope of what we offer the global market.              H1 FY18 had the Lions rugby tour included in the result).
                                                                            This was another record result for the core business from
   Both of these directions rely on the strong equity base and the
                                                                            an EBIT perspective.
   operating disciplines and technologies which have been built
   in the business. We will continue to manage capital efficiently       •	The El Monte RV business is still adjusting to its new
   while investing in sustainable growth.                                   operating model and has been impacted by negative
                                                                            industry trends.
   The thl profit results at the moment are complicated by a
   number of items that are one-off in nature (a term we use             •	Vehicle sales in the USA, in particular, have been weak
   sparingly) and our changing business model. We look to explain           across the industry but we do not see that as an
   those items clearly in this report, as well as providing answers         ongoing issue.
   to what we see as the critical questions you may have about           •	Our group support costs rose, due to costs associated
   thl and our ongoing performance.                                         with exploring M&A activity.
   The business is creating long term value through the changes          • TH2 is on track with our plans.
   that we are making.
   The core business is performing well in its relatively mature         STRATEGIC DIRECTION
   markets of Australia and New Zealand. The North American              We summarise thl and our opportunities as follows:
   market has been challenging, but the opportunity there is
   enormous. The key immediate focus in this market is for us            A Large, Addressable RV Market
   to optimise the potential of the El Monte RV purchase, while          The RV market is worth tens of billions of dollars on a global
   maintaining the strong earnings of Road Bear, and seeking             basis. We are a very small part of the global industry. There
   further opportunities to expand. After some tough trading             are many opportunities to leverage our skills and operating
   conditions, and the inevitable restructuring costs in getting         model to take a larger slice of the global market.
   the El Monte RV model where it needs to be, we see a positive
                                                                         Future technology developments, like autonomous, data
   outlook for the remainder of the 2019 calendar year.
                                                                         connected and electric vehicles, have the power to make a
   There are positive early signs in our significant TH2 investment      huge difference to the size of our market, and our style of
   with Thor Industries. TH2 has the potential to be a strong            travel is only going to grow – domestically and internationally.
   digital infrastructure provider, not only to thl and Thor, but
   to the wider industry. We also expect it to be a significant          A Digital Approach
   earnings contributor for thl in the future.
                                                                         TH2 is our own form of digital enhancement and low capital
   We continue to see a wide range of acquisition and other              market development. We have confidence that TH2 will
   joint venture opportunities around the world. We are actively         succeed for the following simple reasons:
   engaging with a number of these. Our strong capital and
                                                                         •	We have a strong distribution channel strategy. The JV
   operating disciplines mean that we will find that most do not
                                                                            partners (Thor and thl) have the ability to access the
   meet our criteria. We incur costs for this active, but rigorous,
                                                                            market directly through strong leadership positions within
   approach, but consider these an essential part of optimising
                                                                            our respective industry and geographic segments.
   the opportunities that thl has.
                                                                         •	Roadtrippers and CamperMate already have a strong
                                                                            user base (over 3.5M users).
                                                                         •	We have a series of compelling product propositions
                                                                            ready and in development.

02 thl Interim Report 2019
THE BUSINESS IS CREATING LONG
                                                                         TERM VALUE THROUGH THE CHANGES
                                                                         THAT WE ARE MAKING.

A Disciplined Core Business                                         GOALS
Returns continue to improve in the core business and                thl public announcements over the past five years have
we see ongoing opportunities for improvements in our                included a high level of goal setting. We have been reviewing
operating model.                                                    these stated goals and acknowledge some “drift” in these
                                                                    goals as a result of the wide range of opportunities we have.
We are currently still experiencing reasonable growth in
forward bookings in all markets. We will continue to manage         From a ‘business as usual’ (excluding TH2 losses) perspective,
our fleet capacity and capital expenditure in line with any         we now expect to achieve the $50M NPAT target in FY2021.
market softening from time to time.                                 We consider this more certain than the acquisition and
                                                                    TH2 opportunities.
We have ancillary revenue opportunities in all operating
jurisdictions. The best example is retail servicing. There are      When we consider the TH2 opportunity, the potential
many sites across the world where we have the infrastructure        acquisitions and ancillary business growth aspirations,
and capability to conduct a lot more retail service work            we are targeting a business which, in three years, doubles
than we have historically. We now have much better system           in value. The timing and predictability of this goal is much
capability and marketing power to be able to maximise               less certain.
these opportunities.                                                It makes sense to be considering our goals on this certain/
In summary, the core business still has internal growth with        less certain spectrum. Look for us to continue to discuss
additional adjacent opportunities.                                  this approach.

ACQUISITIONS AND GROUP ACTIVITY                                     FY19 OUTLOOK
We have been clear about our intention to grow globally.            We have adjusted our FY19 guidance to reflect the changes
We have an ongoing pipeline of opportunities that we are            in the USA market, experienced recently, and the additional
exploring and, when we last reported, we were confident that        costs we have incurred at a group level.
we would see some transactions of significance before now.          We now expect our net profit after tax for the FY19 year to
These have not occurred. This is simply because we apply            be around $32M (excluding potential Australian tax issue) from
the same capital disciplines in this aspect as we do in our         previous guidance of $32-34M.
operating business. We will buy or sell if the price is right and
                                                                    We have previously indicated that we see the FY19 dividends
only then. We do not mind missing chances to reduce value.
                                                                    aligning with FY18, as we have isolated the investment in TH2.
It is the right thing to be open about our plans to grow value      That view remains and, thus, at this point in time, we expect
by acquisition, as well as organic growth. At the right value       the FY19 final dividend to be 14cps, equating to a total dividend
we will transact. We will have some increased overhead costs        of 27cps for the year.
as a result of this approach, though we do not anticipate that
these will repeat at the level of the past year.

                                                                                                                                        03
MARKET AND TRADING CONDITIONS                                      volumes are a return to the historical “norm”, where winter
   There is a negative sentiment portrayed in the media               sales are significantly lower than spring and summer sales.
   regarding tourism at present, especially in New Zealand.           2017 and 2018 winters were higher than the historical average,
   Our view on the markets and environment is as follows:             as supply in the industry could not keep up with demand; thus
                                                                      consumers and dealers were buying whatever they could at
   New Zealand Tourism                                                any time of the year.
   We remain positive about the outlook for New Zealand               When considering the trends in consumer demand for this type
   tourism, although at a slower growth rate than in the previous     of product, we see no long-term concerns with this market and
   four years. Our forward bookings (international) for the           expect to have some growth in H2 over H2 FY18 and ongoing
   remainder of this summer, and early indications for FY20           single digit growth in FY20.
   summer, suggest positive single digit growth rates. The youth
   backpacker market continues to show declines from the UK
                                                                      SHAREHOLDER RETURNS
   and Europe, which impacts Kiwi Experience, but is not an           At the time of writing this report, we have seen a drop in
   issue of any substance for the rentals business. We see a          the thl share price compared to the same time last year and
   small drop-off in domestic tourism; this only impacts              the 2018 peak price. From an internal perspective, while we
   Waitomo and is not material.                                       understand the issues of sentiment and trading activity,
                                                                      we see no fundamental reason why the views on thl as an
   New Zealand Vehicle Sales                                          investment should have changed.
   While we have not cleared all of our carry-over fleet              With the growth in the core business, we have announced a
   from FY18, we remain confident with the position of our            dividend of 13cps – in line with the interim dividend last year.
   New Zealand vehicle sales product. The van product we              We remain confident that we can manage our fleet growth
   convert from “pod units” to minivans is the key issue.             for the core business within our existing equity structure. Our
   We are experiencing growth for the year on FY18 and have           guidance is that FY19 dividends will be in line with FY18, which
   the leads and pricing position for this to continue. We are        was a record result.
   positive about the future of the New Zealand motorhome             We would prefer to continue to provide attractive dividends
   sales market.                                                      to shareholders today and then, if an acquisition opportunity
                                                                      is realised that requires equity, we will address that with
   Australia Tourism                                                  shareholders at the time. This, again, creates a strong
   International bookings into the rest of the summer season          discipline in the business to manage capital appropriately.
   show strong single digit growth over last year and the             This report provides you with some insight on the last six
   Northern Territory peak (June, July) forward bookings are          months for the business and a guide to where we see the
   positive. Early indications into the FY20 summer also reflect a    full year for FY19. We do have a comprehensive investor
   positive growth rate. The general sentiment for international      presentation pack, which we recommend you review in
   tourism is positive in Australia. Domestic travel has slower       conjunction with this report.
   growth, although has shown no signs of decline. We remain
   positive about Australia.                                          BUSINESS UPDATE
   Australia Vehicle Sales                                            BUSINESS PERFORMANCE
   There are mixed reports about the state of the broader RV          Revenue for the period was $207M – down 1% on the prior
   category in Australia. Our experience at the used end of the       corresponding period (pcp). This was made up of an increase in
   market would suggest demand is still in line with expectations,    rental revenue and services of 6%, to $144M, and a reduction
   although there is competitive tension on most sales. Margins,      in vehicle sales revenue of 14%, to $63M. The detail of the
   however, have been consistent. The broader market for              vehicle sales situation is covered later in this address and in
   caravans and new motorhomes does seem to have declined             more detail in the investor presentation pack.
   in recent months.                                                  Operating profit before interest and tax (EBIT) at $34.7M was
                                                                      up 4% on the pcp, reflecting growth in both New Zealand and
   USA Tourism                                                        Australian rentals businesses.
   International tourism to the USA appears to be in a positive       NPAT, of $17.5M, was down 23% on the pcp. It is important
   rebound phase for the coming high season. Domestic demand          to note that the prior year included a one-off gain in tax of
   in H1 FY19 was at a lower yield and reflected pressure from        $1.8M relating to the change in tax rate and legislation within
   the peer-to-peer market and erratic competitor responses.          the USA, which created a change in the deferred tax liability
   The 2019 calendar year outlook for domestic and international      balance. In addition, there has been a $5.5M reduction in
   demand for both the Road Bear and El Monte RV businesses is        earnings from the equity and associate investments. This
   positive and, on a combined basis, well up on last year. This is   includes the investment in TH2, which has been discussed on
   expected to flow through into a stronger H1 result in FY20 for     several occasions.
   the USA business.                                                  Interest costs for the half were up $0.75M, reflecting both
                                                                      increased debt levels and interest rate costs.
   USA Vehicle Sales
   We are down in vehicle sales volumes in the USA for H1 FY19,       NZ Rentals
   and January 2019 reflected a similar trend. The cause of this      The EBIT result for New Zealand rentals was $7.0M – up 7%
   reduction, and what it reflects for the broader market moving      on the pcp result of $6.6M. We indicated in the FY18 interim
   forward, is difficult to confirm. When considering several         result release that the Lions tour added about $1M EBIT in H1
   sources of market data, dealer sentiment reports and a review      FY18. Comparing the July/August period in FY19, it was likely
   of long term historical trends, we believe the reductions in       the positive impact was closer to $1.5M.

04 thl Interim Report 2019
WE REMAIN POSITIVE ABOUT THE          The shoulder season and peak period have been very positive,
                                      with good yield and demand growth. Utilisation remains
OUTLOOK FOR NEW ZEALAND TOURISM.      strong and in line with previous periods for the peak.
                                      Operating costs are under control, although there is still more
WE ARE CURRENTLY STILL EXPERIENCING   opportunity to reduce the repairs and maintenance spend, as we

REASONABLE GROWTH IN FORWARD          increase our capacity and capability to do more work in-house.
                                      Vehicle sales revenue increased to $22.7M, from $21.1M, in the
BOOKINGS IN ALL MARKETS.              pcp. Total volume was up 14%.
                                      This business continues to review new product options and
                                      ancillary revenue opportunities to supplement the core rental
                                      fleet growth, which will likely slow over the coming year.

                                      Australian Rentals
                                      The EBIT result for Australia was $8.2M – up 35% on the pcp
                                      result of $6.1M. Rental income grew 8%, to $37M, and vehicle
                                      sales revenue grew 14%, to $8.5M. The strategy for Australia
                                      remains – a tight focus on cost control, best possible utilisation
                                      of the fleet and an increased rental fleet, which is managed in
                                      a controlled and flexible manner.
                                      We are confident in the future ongoing growth of the
                                      Australian business over time. We do not expect the same
                                      EBIT growth run rate in the next half.

                                      USA Rentals – Road Bear and El Monte RV
                                      As indicated previously, we are now in a position where we
                                      are combining the USA from a reporting perspective. The
                                      integration is progressing well. On a transitionary basis, we
                                      will provide a series of split information to provide an update
                                      on the progress within each business.
                                      The combined USA business rental and services revenue was
                                      down 5%, to US$33.9M, for the half. There was growth in the
                                      Road Bear business, which was offset by a decline in the high
                                      season El Monte RV domestic and international revenue – as
                                      highlighted at our Annual Meeting.
                                      The combined vehicle sales revenue was US$20.9M – down
                                      37% on the pcp result of US$33M. Road Bear remains 100%
                                      focused on selling wholesale and El Monte RV is 90% retail.

                                      Tourism Businesses
                                      Revenue for the Tourism Group as a whole was essentially
                                      flat for the half-year, at $18.4M. The EBIT for the Group was
                                      down on the pcp by $0.3M, driven by a fall in Kiwi Experience
                                      performance.
                                      The Kiwi Experience business continues to be monitored
                                      carefully. The business has had a further drop in UK passengers
                                      and this appears to be consistent with wholesaler feedback
                                      that we receive in the youth market. Cost reductions have
                                      occurred year-on-year, with further cost reductions in the
                                      second half under way.
                                      Waitomo continues to reflect the general trend in New Zealand
                                      tourism and has seen a drop in domestic visitor numbers over
                                      the last quarter.
                                      There are no capital commitments of note for these businesses
                                      and they are expected to generate substantive cash over the
                                      rest of the year.

                                      Group Support
                                      Costs in group support (excluding Mighway) were well up, at
                                      $3.4M – a 137% ($1.9M) increase over the pcp. Whilst there
                                      are minor ongoing inflationary and increased overhead costs,
                                      they were in line with expectation. As previously indicated, we
                                      are very wary to use the term “one-off” with costs; however,
                                      it is important for shareholders to know that there were well
                                      over $1M in costs that we can clearly attribute to transactions
                                      that did not complete and other one-off items, which are not
                                      expected to be repeated moving forward.
                                                                                                           05
Associates and Joint Ventures                                     This is in a trial phase and is deemed a success, beyond our
                                                                     planned expectations. The roadmap for Roadtrippers Plus is
   Equity Investment Reporting                                       substantive and will be a core focus for the business over
   We continue to remind shareholders that these part-owned          the coming months.
   businesses are not controlled by thl and are equity accounted.
   The results are not reported in the EBIT and are not included     GENERAL BUSINESS UPDATES AND INITIATIVES
   in our core Return on Funds Employed (ROFE) calculations.
   We do, however, measure each of the businesses on both            Sustainability
   ROFE and other metrics more akin to their business model.         We are in the process of integrating sustainability into all our
   TH2, in particular, now has a material impact on the business     reporting and frameworks, rather than it being solely a discrete
   with a half-year loss of $5.4M.                                   piece of work for certain people alone. The highlight in this half
                                                                     was the work we continued on carbon reduction, through waste
   Action Manufacturing (50%)                                        management and EV trials. We also continued our community
   Action Manufacturing was well down on the pcp – with our          stakeholder impact assessments, which have guided us well on
   share of profit at $563k, compared to $1.7M. This primarily       where we need focus regionally within New Zealand.
   reflects the opening losses for the Fairfax acquisition (which    The launch of the Tiaki Promise in New Zealand late in 2018
   was planned and expected for September to December),              was a real highlight for the industry and it is a concept we
   reduced margins on thl products and expenses relating to          deeply believe in. We are actively engaging with government
   new brand and product.                                            organisations elsewhere in the world to try and expand
                                                                     the concepts.
   Just go (49%)
                                                                     We remain very much focused on our medium-term goals and will
   The Just go business also reflected the trends in the other       look to report some longer term goals later in this calendar year.
   markets, with rental revenue up on the prior year (and a
   positive forward book for FY20); however, vehicle sales have      Capital Structure and Debt
   been lower than expected.
                                                                     Net debt at 31 December was $226M, compared to $178M
   TH2                                                               in the pcp. We do have more fleet in the business as at
                                                                     31 December 2018, but will be adjusting the fleet size to
   TH2 remains a key strategic pillar for thl and the future
                                                                     where we see the market needs over the coming months.
   opportunity remains significant, in our view.
                                                                     We are still comfortable with the covenant position of
   There are a number of component parts within TH2; however,
                                                                     the Company.
   the key consumer-facing products we focus on are Togo and
   Roadtrippers (which includes CamperMate in New Zealand            The forecast net debt for 30 June 2019 is $217M – $237M.
   and Australia). The Cosmos platform, telematics and data          This excludes any acquisitions that may occur and includes
   products are all progressing well; however, will have greater     the current expectations of the TH2 losses.
   commercial focus in 2021 and beyond.
                                                                     Capital Expenditure
   Togo had a successful initial launch in September at the
   USA “Open House” event, where RV dealers from across the          Capital expenditure reflects fleet size and rotation. As indicated,
   country visit Elkhart, Indiana to see the latest RV vehicles      we need to adjust, as appropriate, based on the market conditions
   and products. The dealer response was very positive, with         and vehicle sales situations in each market. We have, therefore,
   a clear understanding of the proposition for customers and        reduced our CAPEX expectations for the year to $190M, from
   how it could add value to both the customer and the               the previous guidance of $200M.
   dealership network.                                               FY20 capital expenditure is expected to be around $190M,
   It has been reported externally that Togo has over 100,000        in line with FY19.
   downloads since launch (February number). The details of
   what constitutes an engaged, revenue-generating customer          Dividend
   is different from total downloads and, thus, the simple           A partially imputed dividend (to 50%) of 13cps has been declared,
   metric of downloads is not one that we are overly focused         the same as the pcp. This reflects the strong balance sheet
   on. It is a good starting number, and beyond our original         position of the Company, the investment in TH2 – which will
   expectations, but not the required indicator of success. From     not recur at the same levels – and the increase in core business
   a Togo perspective, we remain very confident that we have         EBIT for the half-year.
   a product roadmap and capability to increase our active           The Dividend Reinvestment Plan (DRP) will continue. A discount
   users and create meaningful recurring revenue as we head          of 2% is available to shareholders participating in the DRP.
   into the Northern Hemisphere summer. In other words, we
   are generating interest, but not revenue, at this point in time   Timing of future dividends will be adjusted, to better align with
   within Togo (which was planned).                                  thl’s working capital requirements and to better manage debt
                                                                     facilities and headroom. Future interim dividends will be paid in
   The next key milestone is the RVX event being held in the USA     May (previously April) and final dividends will remain in October.
   in March, where Togo will launch phase two and a revenue
   generating proposition.
   Total costs within Togo are in line with expectations and we
   are pleased with the customer acquisition costs in this early
   stage of development.
   Roadtrippers continue to grow the product quality and content.
   User numbers have continued to grow in low double digits and
   the total number of registered users is now over 3.5M.
                                                                     Rob Campbell                          Grant Webster
   Roadtrippers has launched Roadtrippers Plus – a paid              Chairman                              Chief Executive Officer
   subscription product for additional services.

06 thl Interim Report 2019
07
Consolidated income statement
   For the six months ended 31 December 2018 (Unaudited)

                                                                                         UNAUDITED      UNAUDITED             AUDITED
                                                                                       6 MONTHS TO    6 MONTHS TO        12 MONTHS TO
                                                                                           DEC 2018       DEC 2017            JUN 2018
                                                                              NOTES          $000’s         $000’s              $000’s

    Sales of services                                                                      144,318        135,988             273,087

    Sales of goods                                                                          62,935             73,078         152,790

    Total revenue                                                                          207,253        209,066             425,877

    Cost of sales                                                                          (54,468)           (61,762)       (129,765)

    Gross profit                                                                           152,785        147,304             296,112

    Administration expenses                                                                (26,014)           (24,427)        (47,849)

    Operating expenses                                                                     (92,301)           (89,493)       (186,357)

    Other income/(expenses), net                                                 6             261                (37)         24,673

    Operating profit before financing costs                                                 34,731             33,347          86,579

    Finance income                                                                              18                 15              30

    Finance expenses                                                                        (5,188)            (4,443)         (9,411)

    Net finance costs                                                                       (5,170)            (4,428)         (9,381)

    Share of profit/(losses) from associates                                     7             297              (443)            (784)

    Share of profit/(losses) from joint ventures                                 6          (4,883)             1,404            (245)

    Profit before tax                                                                       24,975             29,880          76,169

    Income tax expense                                                           2          (7,473)            (7,098)        (13,815)

    Profit for the period                                                                   17,502             22,782          62,354

    Earnings per share from profit attributable to the equity holders
    of the Company during the period
    Basic earnings per share (in cents)                                                       14.2               18.9            51.4

    Diluted earnings per share (in cents)                                                     13.7               18.1            49.6

   The accompanying notes form part of, and should be read in conjunction with, these financial statements.

08 thl Interim Report 2019
Consolidated statement of comprehensive income
For the six months ended 31 December 2018 (Unaudited)

                                                                                      UNAUDITED      UNAUDITED           AUDITED
                                                                                    6 MONTHS TO    6 MONTHS TO      12 MONTHS TO
                                                                                        DEC 2018       DEC 2017          JUN 2018
                                                                           NOTES          $000’s         $000’s            $000’s

Profit for the period                                                                    17,502            22,782         62,354

Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation movement (net of tax)                           12          (1,964)            4,527         11,419

Cash flow hedge reserve movement (net of tax)                                            (1,130)             514           1,825

Other comprehensive income/(loss) for the period net of tax                              (3,094)            5,041         13,244
Total comprehensive income for the period attributable to
equity holders of the Company                                                            14,408            27,823         75,598

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

                                                                                                                                    09
Consolidated statement of changes in equity
   For the six months ended 31 December 2018 (Unaudited)

                                                                                                    CASH FLOW
                                                                               SHARE    RETAINED        HEDGE        OTHER      TOTAL
                                                                              CAPITAL   EARNINGS      RESERVE     RESERVES     EQUITY
    UNAUDITED                                                        NOTES     $000’s      $000’s       $000’s       $000’s    $000’s

    Opening balance as at 1 July 2018                                        180,806      59,725         (838)      10,318    250,011

    Comprehensive income
    Net profit for the six months ended 31 December 2018                           –      17,502             –           –     17,502

    Other comprehensive income
    Cash flow hedge reserve movement (net of tax)                                  –           –        (1,130)          –     (1,130)

    Foreign currency translation reserve (net of tax)                  12          –           –             –      (1,964)    (1,964)

    Total comprehensive income                                                     –      17,502        (1,130)     (1,964)    14,408

    Transactions with owners
    Dividends on ordinary shares                                        3          –     (17,243)            –           –    (17,243)

    Issue of ordinary shares                                                    3,297          –             –           –      3,297

    Transfer from employee share scheme reserve                                    6           –             –          (6)         –

    Employee share scheme reserve                                                  –           –             –         185       185

    Total transactions with owners                                              3,303    (17,243)            –         179    (13,761)

    Closing balance as at 31 December 2018                                   184,109      59,984        (1,968)      8,533    250,658

                                                                                                    CASH FLOW
                                                                               SHARE    RETAINED        HEDGE        OTHER      TOTAL
                                                                              CAPITAL   EARNINGS      RESERVE     RESERVES     EQUITY
    UNAUDITED                                                        NOTES     $000’s      $000’s       $000’s       $000’s    $000’s

    Opening balance as at 1 July 2017                                        171,241      26,552        (2,663)     (1,186)   193,944

    Comprehensive income
    Net profit for the six months ended 31 December 2017                           –      22,782             –           –     22,782

    Other comprehensive income
    Cash flow hedge reserve movement (net of tax)                                  –           –          514            –       514

    Foreign currency translation reserve movement (net of tax)         12          –           –             –       4,527      4,527

    Total comprehensive income                                                     –      22,782          514        4,527     27,823

    Transactions with owners
    Dividends on ordinary shares                                        3          –     (13,234)            –           –    (13,234)

    Issue of ordinary shares                                                    3,556          –             –           –      3,556

    Employee share scheme reserve                                                  –           –             –         160       160

    Total transactions with owners                                              3,556    (13,234)            –         160     (9,518)

    Closing balance as at 31 December 2017                                   174,797      36,100        (2,149)      3,501    212,249

   The accompanying notes form part of, and should be read in conjunction with, these financial statements.

10 thl Interim Report 2019
Consolidated statement of changes in equity (continued)
For the six months ended 31 December 2018 (Unaudited)

                                                                                                 CASH FLOW
                                                                            SHARE    RETAINED        HEDGE        OTHER      TOTAL
                                                                           CAPITAL   EARNINGS      RESERVE     RESERVES     EQUITY
AUDITED                                                           NOTES     $000’s      $000’s       $000’s       $000’s    $000’s

Opening balance as at 1 July 2017                                         171,241      26,552        (2,663)     (1,186)   193,944

Comprehensive income
Net profit for the year ended 30 June 2018                                      –      62,354             –           –     62,354

Other comprehensive income
Cash flow hedge reserve movement (net of tax)                                   –           –         1,825           –      1,825

Foreign currency translation reserve movement (net of tax)          12          –           –             –      11,419     11,419

Total comprehensive income                                                      –      62,354         1,825      11,419     75,598

Transactions with owners
Dividends on ordinary shares                                         3          –     (29,181)            –           –    (29,181)

Issue of ordinary shares                                                     9,324          –             –           –      9,324

Transfer from employee share scheme reserve                                   241           –             –        (241)         –

Employee share scheme reserve                                                   –           –             –         326       326

Total transactions with owners                                               9,565    (29,181)            –          85    (19,531)

Closing balance as at 30 June 2018                                        180,806      59,725         (838)      10,318    250,011

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

                                                                                                                                      11
Consolidated statement of financial position
   As at 31 December 2018 (Unaudited)

                                                                                         UNAUDITED      UNAUDITED       AUDITED
                                                                                           DEC 2018       DEC 2017      JUN 2018
                                                                              NOTES          $000’s         $000’s        $000’s

    Assets
    Non-current assets
    Property, plant and equipment                                                4         379,094        336,917       384,160
    Intangible assets                                                                       44,239            42,156     44,647
    Derivative financial instruments                                            10             664                 –      1,472
    Advance to and investments in joint ventures                                 6          52,449             6,393     52,410
    Investments in associates                                                    7           4,366             4,070      4,188
    Total non-current assets                                                               480,812        389,536       486,877
    Current assets
    Cash and cash equivalents                                                                4,720            13,473     13,534
    Trade and other receivables                                                             32,206            45,312     26,647
    Inventories                                                                             49,440            42,061     49,788
    Advance to joint ventures                                                    6             578               27         850
    Taxation receivable                                                                      4,947             2,467          –
    Derivative financial instruments                                            10              39               62         291
    Assets held for sale                                                                         –            12,765          –
    Total current assets                                                                    91,930        116,167        91,110
    Total assets                                                                           572,742        505,703       577,987
    Equity
    Share capital                                                                          184,109        174,797       180,806
    Other reserves                                                                           8,533             3,501     10,318
    Cash flow hedge reserve                                                                 (1,968)           (2,149)      (838)
    Retained earnings                                                                       59,984            36,100     59,725
    Total equity                                                                           250,658        212,249       250,011
    Liabilities
    Non-current liabilities
    Interest-bearing loans and borrowings                                        8         211,198        169,371       212,102
    Derivative financial instruments                                            10           3,246             3,033      2,916
    Deferred income tax liability                                                           32,554            22,075     23,053
    Total non-current liabilities                                                          246,998        194,479       238,071
    Current liabilities
    Interest bearing loans and borrowings                                        8          19,078            22,545        221
    Trade and other payables                                                                23,073            34,211     51,946
    Revenue in advance                                                                      24,469            29,972     24,565
    Employee benefits                                                                        6,874             7,788      8,409
    Derivative financial instruments                                            10             153               29           –
    Current tax liabilities                                                                  1,439             2,136      4,764
    Liabilities directly associated with assets classified as held for sale                      –             2,294          –
    Total current liabilities                                                               75,086            98,975     89,905
    Total liabilities                                                                      322,084        293,454       327,976
    Total equity and liabilities                                                           572,742        505,703       577,987

   The accompanying notes form part of, and should be read in conjunction with, these financial statements.

12 thl Interim Report 2019
Consolidated statement of cash flows
For the six months ended 31 December 2018 (Unaudited)

                                                                                      UNAUDITED      UNAUDITED             AUDITED
                                                                                    6 MONTHS TO    6 MONTHS TO        12 MONTHS TO
                                                                                        DEC 2018       DEC 2017            JUN 2018
                                                                           NOTES          $000’s         $000’s              $000’s

Cash flows from operating activities
Receipts from customers                                                                 137,125        123,379             278,145

Proceeds from sale of goods                                                              62,935             73,078         152,790

Interest received                                                                            18                 15              30

Payments to suppliers and employees                                                    (105,268)           (92,580)       (212,601)

Purchase of rental assets                                                               (88,834)           (85,724)       (178,096)

Interest paid                                                                            (5,188)            (4,443)         (9,411)

Taxation paid                                                                            (7,926)            (4,348)         (6,254)

Net cash flows (used in)/from operating activities                                       (7,138)             9,377          24,603

Cash flows from investing activities
Sale of property, plant and equipment                                         4               –                  5           1,240

Advance to joint ventures                                                     6          (1,500)                 –            (456)

Receipts from joint ventures                                                  6             397               367                –

Purchase of property, plant and equipment                                     4          (1,194)            (2,004)         (2,618)

Purchase of intangibles                                                                     (18)             (459)          (1,985)

Dividends received from associate and joint ventures                                          –                  –             250

Investments in associates and joint ventures                                             (3,279)             (100)          (9,393)

Net cash used in investing activities                                                    (5,594)            (2,191)        (12,962)

Cash flows from financing activities
Net proceeds from borrowings                                                  8          17,942              9,820          15,343

Dividends paid                                                                3         (14,120)            (9,789)        (22,858)

Proceeds from share issue                                                                   100                  –           2,805

Net cash flows from/(used in) financing activities                                        3,922                 31          (4,710)

Net (decrease)/increase in cash equivalents                                              (8,810)             7,217           6,931

Opening cash and cash equivalents                                                        13,534              6,117           6,117

Exchange gains/(losses) on cash and cash equivalents                                         (4)              139              486

Closing cash and cash equivalents                                                         4,720             13,473          13,534

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

                                                                                                                                      13
Notes to the consolidated financial statements

   Index to notes to the consolidated financial statements
   Note
   			     About this report                                 15
   			 Section A – Financial performance                     18
   1			    Segment note                                      18
   2			    Income tax expense                                20
   3			 Dividends                                            20
   			 Section B – Assets used to generate profit            21
   4			    Property, plant and equipment acquired and sold
   			     during the six month period                       21
   5			    Capital commitment                                22
   			     Section C – Investments                           23
   6			    Joint ventures                                    23
   7			    Investments in associates                         25
   			 Section D – Managing fund and risk                    26
   8			 Borrowings                                           26
   9			    Seasonality of business                           26
   10			   Financial risk management                         26
   			     Section E – Other                                 28
   11			   Related party transactions                        28
   12			   Foreign currency translation reserve              30
   13			   Contingencies                                     30
   14			   Events after the reporting period                 30

14 thl Interim Report 2019
Notes to the consolidated financial statements (continued)

About this report

Basis of preparation                                                 Changes to accounting policies
The primary operations of Tourism Holdings Limited (the              The accounting policies used in the preparation of these
‘Company’ or ‘Parent’ or ‘thl’) and its subsidiaries (together       interim financial statements are consistent with those used
‘the Group’) are the manufacture, rental and sale of                 in the 30 June 2018 annual financial statements, except as
motorhomes and other tourism related activities. The Parent          disclosed below.
is domiciled in New Zealand. The registered office is Level 1,
83 Beach Road, Auckland 1010, New Zealand. Tourism Holdings          Issued standards and amendments effective from 1 July 2018
Limited is a company registered under the Companies Act 1993         The following accounting standards and amendments to
and is an FMC reporting entity under Part 7 of the Financial         existing standards are effective and have been adopted by
Markets Conduct Act 2013.                                            the Group:
The interim consolidated financial statements of the Group           (i) NZ IFRS 9 ‘Financial Instruments’, addresses the
have been prepared:                                                  classification, measurement and recognition of financial assets
                                                                     and financial liabilities. The complete version of NZ IFRS 9
• in accordance with Generally Accepted Accounting Practice
                                                                     was issued in September 2014. It replaces the guidance in
   in New Zealand (NZ GAAP). They comply with NZ IAS 34
                                                                     NZ IAS 39 that relates to the classification and measurement
   Interim Financial Reporting and consequently do not include
                                                                     of financial instruments. NZ IFRS 9 retains but simplifies the
   all the information required for full financial statements.
                                                                     mixed measurement model and establishes three primary
   These condensed Group interim financial statements should
                                                                     measurement categories for financial assets: amortised cost,
   be read in conjunction with the annual report for the year
                                                                     fair value through other comprehensive income and fair value
   ended 30 June 2018;
                                                                     through profit or loss. The basis of classification depends on
                                                                     the entity’s business model and the contractual cash flow
• in accordance with the requirements of Part 7 of
                                                                     characteristics of the financial asset. Investments in equity
  the Financial Markets Conduct Act 2013 and the
                                                                     instruments are required to be measured at fair value, through
  NZX Listing Rules;
                                                                     profit or loss, with the irrevocable option at inception to
• u
   nder the historical cost convention, as modified by the          present changes in fair value in other comprehensive income
  revaluation of certain assets and liabilities as identified        without subsequent recycling to profit or loss. There is now a
  in specific accounting policies; and                               new expected credit losses model that replaces the incurred
                                                                     loss impairment model used in NZ IAS 39. NZ IFRS 9 relaxes
• in New Zealand dollars with values rounded to thousands           the requirements for hedge effectiveness by replacing the
   ($000’s) unless otherwise stated.                                 bright line hedge effectiveness tests. It requires an economic
                                                                     relationship between the hedged item and hedging instrument
These condensed interim financial statements were approved           and for the ‘hedged ratio’ to be the same as the one
for issue on 25 February 2019.                                       management actually use for risk management purposes.

These condensed interim financial statements have not                The Group has applied NZ IFRS 9 retrospectively but has
been audited.                                                        elected not to restate comparative information. As a
                                                                     result, the comparative information provided continues to
Throughout most months during the financial year, the Group          be accounted for in accordance with the Group’s previous
has net current liabilities excluding assets held for sale. This     accounting policy.
arises mainly from the revenue in advance liability that reflects
the collection of rental income from customers prior to the          Impact on adoption
month of travel. This liability is recognised as revenue in future
                                                                     The classification and measurement of financial assets were
months, and does not represent a future outward cash flow.
                                                                     aligned with NZ IFRS 9 but there was no impact on the
                                                                     reported balances. There was no impact on the classification
Critical accounting estimates and judgement                          and measurement of financial liabilities. The expected credit
The preparation of interim financial statements requires             loss provision did not change from the provision for impairment
management to make judgements, estimates and                         of receivables as recognised under NZ IAS 39.
assumptions that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and       The interest rate swaps in place as at 30 June 2018 qualified
expenses. Actual results may differ from these estimates.            as cash flow hedges under NZ IFRS 9. The Group’s risk
                                                                     management strategies and hedge documentation are aligned
The estimates used in the preparation of these interim               with the requirements of NZ IFRS 9 and these relationships
financial statements are consistent with those used in the           are, therefore, treated as continuing hedges. Accordingly there
30 June 2018 annual financial statements.                            was no impact.

                                                                                                                                       15
Notes to the consolidated financial statements (continued)

   About this report (continued)
   a. Classification of financial assets                                FVPL: Assets that do not meet the criteria for amortised
                                                                        cost or FVOCI are measured at FVPL. A gain or loss on a
   From 1 July 2018, the Group classifies its financial assets
                                                                        debt investment that is subsequently measured at FVPL is
   in the following measurement categories:
                                                                        recognised in profit or loss and presented net within other
   • t hose to be measured subsequently at fair value (either          gains/(losses) in the period in which it arises.
      through Other Comprehensive Income (OCI) or through
                                                                        c. Impairment of trade and other receivables
      profit or loss), and
                                                                        From 1 July 2018, the Group assesses, on a forward looking
   • those to be measured at amortised cost.                            basis, the expected credit losses associated with its trade and
                                                                        other receivables which are carried at amortised cost. The
   The classification depends on the business model for                 impairment methodology applied depends on whether there
   managing the financial assets and the contractual terms              has been a significant increase in credit risk.
   of the cash flows.
                                                                        For trade receivables, the Group applies the simplified
   The Group reclassifies debt investments when, and only when,         approach permitted by NZ IFRS 9, which requires expected
   its business model for managing those assets changes.                lifetime losses to be recognised from initial recognition of
                                                                        the receivables. To measure the expected credit losses, trade
   b. Measurement of financial assets
                                                                        receivables have been grouped based on shared credit risk
   At initial recognition, the Group measures a financial asset at      characteristics and the days past due. The expected loss rates
   its fair value plus, in the case of a financial asset not at fair    are based on the historical credit losses experienced. Where
   value through profit or loss (FVPL), transaction costs that are      appropriate, the historical loss rates are adjusted to reflect
   directly attributable to the acquisition of the financial asset.     current and forward-looking information.
   Transaction costs of financial assets carried at FVPL are
   expensed in profit or loss.                                          (ii) NZ IFRS 15 ‘Revenue from contracts with customers’
                                                                        Effective 1 July 2018, the Group adopted NZ IFRS 15
   Debt instruments                                                     ‘Revenue from Contracts with Customers’ on a modified
   Subsequent measurement of debt instruments depends on the            retrospective basis.
   Group’s business model for managing the asset and the cash
   flow characteristics of the asset. There are three measurement       Based on the assessment performed by the Group, there is
   categories into which the Group classifies its debt instruments:     no material impact of the revised standard on the Group’s
                                                                        revenue recognition and accordingly no transition adjustments
    mortised cost: Assets that are held for collection of
   A                                                                    have been made. The majority of revenue earned by the Group
   contractual cash flows, where those cash flows represent solely      is derived from the satisfaction of one or more performance
   payments of principal and interest, are measured at amortised        obligations, which are satisfied at or over a similar period: the
   cost. Interest income from these financial assets is included in     sale of goods relate to the satisfaction of a single performance
   finance income using the effective interest rate method. Any         obligation at a point in time; whilst sale of services can
   gain or loss arising on derecognition is recognised directly in      comprise various performance obligations, which satisfaction
   profit or loss and presented in other gains/(losses) together        may occur evenly over the period or at a point in time and is
   with foreign exchange gains and losses. Impairment losses            recognised accordingly. In relation to the contract price, it has
   are presented as separate line item in the statement of profit       been determined that there are no material changes under
   or loss.                                                             NZ IFRS 15 to the accounting for discounts, or any other
                                                                        variable consideration. It has also been determined that there
    VOCI: Assets that are held for collection of contractual cash
   F                                                                    are no significant financing components as part of the Group’s
   flows and for selling the financial assets, where the assets’ cash   sales arrangements.
   flows represent solely payments of principal and interest, are
   measured at FVOCI. Movements in the carrying amount are              Impact on adoption
   taken through OCI, except for the recognition of impairment
                                                                        In regards to the rental of motorhomes, a lease component has
   gains or losses, interest income and foreign exchange gains and
                                                                        been identified and accordingly this portion of revenue will be
   losses, which are recognised in profit or loss. When the financial
                                                                        recognised under NZ IAS 17 (prior to adoption of NZ IFRS 16), as
   asset is derecognised, the cumulative gain or loss previously
                                                                        opposed to under NZ IFRS 15. This does not have any impact on
   recognised in OCI is reclassified from equity to profit or loss
                                                                        revenue recognition, however does affect the disclosure thereof.
   and recognised in other gains/(losses). Interest income from
                                                                        For the six months ended 31 December 2018, Sales of services
   these financial assets is included in finance income using the
                                                                        includes $100,359k of revenue which is recognised under NZ IAS
   effective interest rate method. Foreign exchange gains and
                                                                        17, and $43,959k of revenue that is recognised under NZ IFRS 15.
   losses are presented in other gains/(losses) and impairment
   expenses are presented as separate line item in the statement        Sale of goods
   of profit or loss.                                                   The Group sells a range of motorhomes, accessories and retail
                                                                        merchandise. Sales are recognised when control of the goods
   
                                                                        has transferred, being when the goods are handed over to the
                                                                        customer and the customer has the ability to direct the use of
                                                                        the goods.

16 thl Interim Report 2019
Notes to the consolidated financial statements (continued)

About this report (continued)
Revenue from these sales is recognised based on the price
specified in the contract, net of the estimated discounts or
other promotions. Accumulated experience is used to estimate
and provide for the discounts, using the expected value
method, and revenue is only recognised to the extent that
it is highly probable that a significant reversal will not occur.

Sale of services
Sale of services includes revenue from wi-fi, accessories
and additional services relating to the rental of motorhomes
and the sale of tourism experiences (for Kiwi Experience
and Waitomo).

Sales of services are recognised in the accounting period in
which the performance obligation is satisfied, being when
the customer obtains the benefit from the service.

Rental Revenue (in accordance with NZ IAS 17)
Rental revenue is recognised in the accounting period in which
the services are rendered, by reference to completion of the
specific transaction. Where the rental covers a period of
more than one day, revenue is recognised on a straight-line
basis based on the number of days of the booking that have
occurred by year end as a proportion of the total number of
days in the booking. The portion of the revenue that occurs
after year end is shown as Revenue in Advance on
the statement of financial position.

The following accounting standards and amendments to
existing standards are not yet effective and have not been
early adopted by the Group:

(iii) NZ IFRS 16, Leases NZ IFRS 16, Leases replaces the current
guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or
contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange
for consideration. Under NZ IAS 17, a lessee was required to
make a distinction between a finance lease (on balance sheet)
and an operating lease (off balance sheet). NZ IFRS 16 now
requires a lessee to recognise a lease liability reflecting future
lease payments and a ‘right-of-use asset’ for virtually all
lease contracts. Included is an optional exemption for certain
short-term leases and leases of low-value assets; however,
this exemption can only be applied by lessees. The standard is
effective for accounting periods beginning on or after 1 January
2019. Early adoption is permitted but only in conjunction
with NZ IFRS 15, ‘Revenue from Contracts with Customers’.
The Group intends to adopt NZ IFRS 16 on its effective date.
The Group has a number of operating leases, predominantly
relating to the leased premises from which it operates.
The Group is currently assessing the full impact of the new
standard. It is expected that it will result in the recognition
of a material right of use asset and lease liability on the
consolidated statement of financial position. There will also be
a corresponding increase in depreciation and interest expense,
with a reduction in operating lease expense on the consolidated
income statement.

                                                                     17
Notes to the consolidated financial statements (continued)

   Section A – Financial performance

   In this section
   This section explains the financial performance of thl, providing additional information about individual items in the income
   statement, including segmental information, certain expenses and dividend distribution information.

   1. Segment note

   The operating segments of thl are made up of the following business operations:

   • N
      ew Zealand Rentals – Rental of maui, Britz and Mighty motorhomes, and the sale of motorhomes sold under the
     RV Super Centre retail brand

   • Tourism Group – Kiwi Experience and the Discover Waitomo Caves Group experiences

   • A
      ustralia Rentals – Rental of maui, Britz and Mighty motorhomes and 4WD vehicles, and the sale of motorhomes
     sold under the RV Sales Centre retail brand

   • United States Rentals – Rental and sale of Road Bear, Britz and El Monte RVs

   • O
      ther – includes Group Support Services and Mighway, prior to it being contributed to TH2. The joint ventures and
     associates are also included in this category

                                                             NEW ZEALAND
                                                                      TOURISM       AUSTRALIA UNITED STATES
                                                         RENTALS        GROUP        RENTALS       RENTALS        OTHER            TOTAL
    SIX MONTHS TO DECEMBER 2018                            $000’s       $000’s         $000’s         $000’s      $000’s           $000’s

    Sales of services                                     38,470         18,438        36,968        50,442           –       144,318

    Sales of goods                                        22,695              –         8,509        31,731           –        62,935

    Revenue from external customers                       61,165         18,438        45,477        82,173           –       207,253

    Depreciation                                          (9,276)         (765)        (7,378)        (7,221)       (89)      (24,729)

    Amortisation                                             (50)         (344)           (17)             1       (145)            (555)

    Other costs                                          (44,795)       (12,884)      (29,899)      (56,514)     (3,146)     (147,238)

    Operating profit/(loss) before interest and tax         7,044         4,445         8,183        18,439      (3,380)       34,731

    Interest income                                            –              –             7              5          6                18

    Interest expense                                          (4)             –          (393)       (1,268)     (3,523)           (5,188)
    Share of profit/(loss) from joint ventures
    and associates                                             –              –             –              –     (4,586)           (4,586)
    Operating profit/(loss) before tax                      7,040         4,445         7,797        17,176     (11,483)       24,975

    Taxation                                              (1,971)        (1,311)       (2,340)        (4,976)     3,125            (7,473)

    Operating profit/(loss) – after interest and tax        5,069         3,134         5,457        12,200      (8,358)       17,502

    Capital expenditure                                   42,654            241        17,495          5,561         71        66,022

    Total non-current assets                             175,248         24,358        89,386       133,100      58,720       480,812

    Total assets                                         203,974         27,929       109,170       166,825      64,844       572,742

    Net funds employed                                   173,354         20,523        79,704       143,336      59,297       476,214

18 thl Interim Report 2019
Notes to the consolidated financial statements (continued)

1. Segment note (continued)

                                                          NEW ZEALAND
                                                                   TOURISM      AUSTRALIA UNITED STATES
                                                     RENTALS        GROUP        RENTALS       RENTALS       OTHER         TOTAL
SIX MONTHS TO DECEMBER 2017                            $000’s        $000’s        $000’s         $000’s     $000’s        $000’s

Sales of services                                     35,722         18,258        34,184        47,663        161        135,988

Sales of goods                                        21,076              –         7,473        44,529           –        73,078

Revenue from external customers                       56,798         18,258        41,657        92,192        161        209,066

Depreciation                                           (7,930)        (824)        (7,083)       (5,951)       (99)       (21,887)

Amortisation                                            (183)         (333)           (16)            –       (185)         (717)

Other costs                                          (42,102)       (12,399)      (28,490)      (67,438)     (2,686)    (153,115)

Operating profit/(loss) before interest and tax         6,583         4,702         6,068        18,803      (2,809)       33,347

Interest income                                             –             –             4             3           8            15

Interest expense                                         (15)             –         (496)          (962)     (2,970)       (4,443)
Share of profit/(loss) from joint ventures
and associates                                              –             –             –             –        961           961
Operating profit/(loss) before tax                      6,568         4,702         5,576        17,844      (4,810)       29,880

Taxation                                               (1,839)       (1,385)       (1,673)       (3,017)       816         (7,098)

Operating profit/(loss) – after interest and tax        4,729         3,317         3,903        14,827      (3,994)       22,782

Capital expenditure                                   35,556           341         20,492         9,416        863         66,668

Total non-current assets                             157,014         25,964        87,863       107,245     11,450        389,536

Total assets                                         197,362         30,613      108,049        144,083     25,596        505,703

Net funds employed                                   157,315         23,458        78,764       112,402     18,753        390,692

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating
Decision-Maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the executive management team, together with the Board of Directors, who together make
strategic decisions.

Interest income and expenditure are not included in the result for each operating segment that is reviewed by the CODM.

Inter-segment transactions are entered into under normal commercial terms and conditions that would also be available to
unrelated third parties. All revenue is reported to the executive team on a basis consistent with that used in the
income statement.

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating
cash. Investments in associates and joint ventures, assets held for sale and derivatives designated as hedges of borrowings are
included in “Other” as they are not allocated to specific segments. Net funds employed are total assets less segment non interest
bearing liabilities and cash on hand.

                                                                                                                                     19
Notes to the consolidated financial statements (continued)

   2. Income tax expense

   Income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected
   for the full financial year.

   In December 2017, a new corporate tax rate was enacted in the United States. Consequently, as of 1 January 2018, the corporate
   tax rate in the United States was reduced from 35% to 21%. This change resulted in a gain of USD$1.3M related to the
   re-measurement of deferred tax assets and liabilities of the Group’s US subsidiaries being recognised during the six month
   period ended 31 December 2017.

   3. Dividends

   During the six months ended 31 December 2018 the Group paid dividends of $17,243k (14 cents per share). The final and interim
   dividends paid in the year ended 30 June 2018 were $13,234k (11 cents per share) and $15,947k (13 cents per share) respectively.

   Under the Dividend Reinvestment Plan, 590,065 ordinary shares were issued in October 2018 at an issue price of $5.283 per share
   to shareholders who elected to participate in the scheme. 484,007 ordinary shares were issued in April 2018 at an issue price of
   $5.935 per share to shareholders who elected to participate in the scheme.

20 thl Interim Report 2019
Notes to the consolidated financial statements (continued)

Section B – Assets used to generate profit

In this section
This section describes the assets thl uses in the business to generate profit, including:

Property, plant and equipment
 he most significant component is the motorhome fleet. Premises in general are leased, however significant owned properties
T
are the Waitomo Caves Visitor Centre and the Waitomo Caves Homestead.

4. Property, plant and equipment acquired and sold during the six month period

                                                                                        OTHER PLANT &    CAPITAL WORK
                                                                        MOTORHOMES         EQUIPMENT      IN PROGRESS      TOTAL
                                                                             $000’s            $000’s           $000’s     $000’s

Period ended 31 December 2018
At 1 July 2018                                                               362,800          24,253           29,007     416,060

Additions and transfers from work in progress (net)                           80,281            1,032         (15,291)     66,022

Disposals                                                                    (45,136)           (154)               –     (45,290)

Exchange differences                                                          (2,527)            (17)               –      (2,544)

Depreciation charge                                                          (22,139)         (2,590)               –     (24,729)

Closing net book amount                                                      373,279          22,524           13,716     409,519

As at 31 December 2018
Cost                                                                         470,299          51,214           13,716     535,229

Accumulated depreciation                                                     (97,020)        (28,690)               –    (125,710)

Net book amount                                                              373,279          22,524           13,716     409,519

Reclassification of motorhomes to inventory at balance date
Cost                                                                          42,467                –               –      42,467

Accumulated depreciation                                                     (12,042)               –               –     (12,042)

Net book amount                                                               30,425                –               –      30,425

Closing net book amount post reclassification                                342,854          22,524           13,716     379,094

Period ended 31 December 2017
At 1 July 2017                                                               311,134          28,123           22,549     361,806

Additions and transfers from work in progress (net)                           74,925            1,010          (9,267)     66,668

Disposals                                                                    (51,357)            (65)               –     (51,422)

Transfer to assets held for sale                                                    –          (1,037)         (1,780)     (2,817)

Exchange differences                                                            7,027            371               (2)      7,396

Depreciation charge                                                          (19,135)          (2,752)              –     (21,887)

Closing net book amount                                                      322,594          25,650           11,500     359,744

As at 31 December 2017
Cost                                                                         405,701          49,257           11,500     466,458

Accumulated depreciation                                                     (83,107)        (23,607)               –    (106,714)

Net book amount                                                              322,594          25,650           11,500     359,744

Reclassification of motorhomes to inventory at balance date
Cost                                                                          31,530                –               –      31,530

Accumulated depreciation                                                      (8,703)               –               –      (8,703)

Net book amount                                                               22,827                –               –      22,827

Closing net book amount post reclassification                                299,767          25,650           11,500     336,917

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