OUR JOURNEY CONTINUES - Tourism Holdings Limited
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OUR
JOURNEY
CONTINUES.
2019 Interim Report
A thl Interim Report 2019
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
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. 01CHAIRMAN 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 2019THE 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.
03MARKET 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 2019WE 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.
05Associates 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 201907
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 2019Consolidated 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.
09Consolidated 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 2019Consolidated 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.
11Consolidated 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 2019Consolidated 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.
13Notes 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.
15Notes 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 2019Notes 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.
17Notes 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 2019Notes 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.
19Notes 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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