THL
28/02/2013 09:19
HALFYR
REL: 0919 HRS Tourism Holdings Limited
HALFYR: THL: Tourism Holdings Half Year Results to 31 December 2012
28 February 2013
NZX | MEDIA RELEASE
TOURISM HOLDINGS LIMITED
FINANCIAL RESULTS
SIX MONTHS ENDED 31 DECEMBER 2012
This report has been prepared in a manner that complies with generally
accepted accounting practice and gives a true and fair view of the matters to
which it relates. It is based on unaudited accounts.
The amounts presented have been prepared in accordance with New Zealand
equivalents of International Financial Reporting Standards (NZIFRS).
December 2012 half-year NZ$m; Up/down %; December 2011 half-year NZ$m
Total Operating Revenue $108.5m; Up 8%; $100.7m
Operating Profit from continuing operations before tax $1.0m; Down 86%; $7.4m
Less tax on operating profit $1.5m; Down 53%; $3.2m
Operating Loss after tax from continuing operations $(0.5)m; Down 112%; $4.1m
Profit
Profit from discontinued operations after tax $nil; Down 100%; $0.1m
Loss after tax attributable to members of the listed issuer; $(0.5)m; Down
112%; $4.2m Profit
Earnings per share from continuing operations (0.4)cps; Down 110%; 4.2cps
2 cents per share (cps) dividend declared
Record date: 15th March 2013
Payment date: 22nd March 2013
THL'S KEA AND UNITED MERGER BEATING TARGETS
Key points:
o Half year Operating Profit Before Financing Costs (EBIT) of $5.3 million in
line with guidance. Down on prior corresponding period of $11.4 million due
to Rugby World Cup and New Zealand rentals merger costs.
o Net profit after tax falls from $4.2 million to a loss of $0.5 million as
per market guidance.
o Debt reduction target achieved for the half year.
o Strong USA result and future outlook.
o All New Zealand rentals merger key performance metrics achieved.
o Year End Operating Profit Before Financing Costs guidance adjusted down to
range of $14 million to $16 million, from $19 million due
to falling Australian revenue.
o Dividend maintained at 2 cents per share.
New Zealand's leading tourism operator Tourism Holdings Limited (thl) today
announced good progress on the integration of KEA Campers and United
Campervans with its New Zealand rentals business following their merger at
the end of October 2012.
thl United and KEA, operating as a single rentals entity in New Zealand for
the two months to December 31, have made a seamless transition into a merged
entity.
Total Group net debt at 31 December 2012 stood at $134 million, $8 million
better than forecast. We are on target with all planned cost savings and
synergies.
Group net profit for the six months to 31 December 2012 fell from $4.2
million to a loss of $0.5 million which was at the top end of our November
guidance for a loss between $0.5 million and $1.0 million.
Earnings improvements were insufficient to offset the $1.4 million cost of
the merger with KEA and United and the one-off $4.5 million contribution to
earnings in the prior comparative period from tourists attending the 2011
Rugby World Cup.
thl chairman Keith Smith said: "thl continues to face significant challenges
in the core in-bound tourist markets from Europe, the United Kingdom and the
United States. However, we are satisfied our first half result was on track
with expectations for the period. And as the success of the merger
demonstrates, thl is making good progress reconfiguring the business for
these conditions."
The Board has declared a fully imputed interim dividend of 2 cents per share
unchanged from last year The record date for the dividend is 15th March and
the payment date is 22nd March 2013.
thl Chief Executive Grant Webster said: "I am delighted with the progress we
have made on both the merger and the group's other operations.
Nevertheless, the second half of the financial year presents several
important challenges. Notably, the Australian market remains tough. The
strong and sustained rise of the Australian dollar against the currencies of
core in-bound tourism markets is entrenching perceptions that Australia is an
expensive destination.
We are taking steps to put in place a cost structure that reflects these weak
demand conditions, but we expect the business to underperform our previous
forecasts for the year to 30 June 2013."
Business Overview
The table below summarises the performance of the business units.
(See pdf)
New Zealand Rentals and Merger Update
The integration of thl's New Zealand rentals business with KEA Campers and
United Campervans is proceeding very well, positively achieving or exceeding
forecasts on its key performance indicators including:
o Vehicle sales volume
o Vehicle sales values
o Debt reduction
o Property synergies
o Labour synergies
o Back of house synergies
o Procurement synergies
New Zealand rentals revenue fell by 20% from $25.1 to $20.2 million. EBIT as
a result fell from a $2.9 million profit to a loss of $2.2 million. The
result includes two months contribution from United and KEA which was not
enough to offset the gains in the prior year from the Rugby World Cup, which
contributed $4.5 million to 2012 operating profits.
Ensuring debt remains within forecast has been a key focus since the merger.
We are exceeding our initial targets. Over the three months since the merger,
we have achieved sale prices on the United and KEA vehicles at or above the
initial thl purchase prices.
Our Albany Recreational Vehicle Super Centre is playing a pivotal role in
achieving these results. At the same time it is showing early signs of
achieving our plans for the site to be a destination for campervan
enthusiasts.
The debt position of the New Zealand business accordingly remains ahead of
plan. Staffing spend for the first two months of the merger shows all
synergies have been achieved. Procurement, back office and property cost
savings are also being achieved.
Demand from our core European markets especially the United Kingdom remains a
concern. The improved cost savings, positive fleet sales and debt reduction
in New Zealand have reinforced that the merger has been the most logical and
best strategic response to the current New Zealand market conditions.
Rentals Australia
Australian revenues rose 1% from $37.1 million to $37.4 million from the
prior corresponding period. Strong domestic event business in October and
November and the acquisition of the KEA campers brand in June of last year
offset declines in key European markets.
EBIT at $3.4 million was the same as last year. Focus on fleet reduction
created cost savings, however these gains have been moderated by falling
yields and other cost increases - principally operating leases of fleet taken
on as part of the KEA brand acquisition.
Trading in Australia remains tough. The fall in yields in the six months to
December reflected heavy discounting in the market and customers trading down
to lower specification vehicles and brands i.e from Maui to Britz vehicles.
This mix change is expected to continue over the coming year and continue to
reduce yields and hence revenue.
We are taking further steps to right-size the business for these demand
conditions and are targeting an additional reduction in annual fleet
operating costs and depreciation of up to $3 million. We expect to see the
benefits of these initiatives in the 2014 financial year.
We expect to lift our Australian Rental's return on funds employed (ROFE) for
the year to June 2013 through continued growth in EBIT and the reduction of
fleet and working capital. This ROFE improvement is slower than we
anticipated last year, but it is a reflection of the reality we face from
these markets.
Rentals USA
The USA campervan rentals business Road Bear is performing well. Revenue
grew 1% to $11.4 million from $11.3 million as the USA continues to gain
market share from the core European markets.
EBIT increased 5% from $6.1 million to $6.4 million in the six months to
December. In the prior corresponding six month period fleet rebates were
included in sundry income however this was changed in June 2012 and the
rebates are now accounted for as a reduction in the purchase price for
assets. On a like for like basis EBIT increased for the six months by $1.4
million or 28%.
We opened a new branch in the major USA-tourist gateway Orlando during the
period and it is operating to plan. We also appointed a new Chief Operating
Officer to ensure greater capability to support the demands of the business.
Demand for the coming high season and Northern Hemisphere summer are in line
with our expectations and fleet growth of 10%.
Tourism Businesses
Revenue fell 3% from $9.2 million to $8.9 million and EBIT was up $0.1
million on the last pcp at $0.8 million.
We are encouraged by the increase in visitors to Waitomo from the Chinese
market. However the total penetration in this market still needs to increase
to offset falls in our traditional markets.
The new Black Odyssey adventure and Waitomo Trilogy products are receiving
very positive customer feedback. We look forward to seeing these products
grow as awareness increases over time.
Manufacturing Joint Venture
Revenue at our manufacturing joint venture RV Manufacturing Group LP, formed
on 1 March 2012, was $16.2 million for the six months and thl's share of its
loss before tax was $0.7 million . This loss was largely due to transitional
costs associated with the move of thl's production facilities from Hamilton
to Albany and lower volumes through the joint venture following the merger of
thl's New Zealand rental business with KEA and United.
thl remains the core customer for RVMG and further reductions in fleet will
delay progress. Although we expect a positive result for the second six
months of the financial year it will now not offset the loss incurred in the
6 months to December 2012. Aligned with the other business units in thl this
business is focussed on an achieving an improved return on funds employed for
the coming 12 months.
Balance Sheet
The net debt position for the business of $134 million is below forecast for
the period by $8 million. Our forecast for debt to reach $117 million at the
year-end which assumes the sale of thl's Hamilton manufacturing site remains
in line with the indications provided at the merger announcement in September
2012.
Based on current performance within the businesses we are still expecting
debt to reduce further in 2014 to around $100 million.
Gearing or net debt to net debt plus equity stands at 49% an increase of 7%
from June 2012 reflecting the KEA and United acquisition.
Outlook
The continuing decline in demand from our core markets combined with the
strong New Zealand and Australian dollars is a reality that thl faces. As
such the business remains focussed on trialling new initiatives including
further activity in emerging geographies such as China as well as changes in
our retail approach in our traditional markets.
China and South East Asia markets are an area where we will continue to
invest and we have partnered with industry experts to explore how to develop
these markets for self-drive activity. However, we recognise these new
revenue streams will take time to develop as Free Independent Travel tourism
traditions in Asia are still developing.
We therefore remain passionately focussed on promoting our products in the
core high-value European markets. We will also continue the on-going
rebalancing of our debt position and reconfiguring the business to cut costs
and increase ROFE to an acceptable level. These plans are currently being
finalised and any costs associated with these changes are not currently
included within the forecasted profit.
Guidance
The New Zealand businesses and USA business are on track with previous
guidance. The debt targets are also in line with previous guidance. However,
the Australian business' earnings will be below previous market guidance.
As a result we expect year-end EBIT for the year to June 30 2013 to be in the
range of $14 million to $16 million and Net Profit After Tax
(NPAT) in the range of $3 million to $4 million. These forecasts exclude any
costs associated with reconfiguring the business that may be incurred over
the balance of this financial year. This is down on the previous guidance
given of $19.3 million EBIT and $6.7 million NPAT.
Meanwhile, we expect full year return on funds employed to stand at just over
5%. This is down on the June 2012 figure which included the Rugby World Cup
contribution. This return remains unacceptable to both the board and
management with a clear goal to achieve a double digit return.
Looking further out it is too early to assess the forecasts for the year to
30 June 2014, however it is clear we will be operating off a lower revenue
base.
Board and Governance Update
At our annual meeting in November the thl Board constituted a sub-committee
led by Independent Director Graeme Wong to review the Board's composition and
future appointments. The committee has been actively engaged in reviewing
potential new appointees over the past three months. Discussions are
continuing.
Summary
thl's performance reflects the dynamics of the market in which we operate.
We are confident we are taking the right steps to reconfigure our portfolio
of businesses to meet these challenges. Indeed the merger with KEA and United
is the best example of this and evidence of the skill and determination of
the thl crew to deliver the outcomes shareholders are seeking.
Authorised by:
Keith Smith
Chairman
Tourism Holdings Limited
For more information:
Grant Webster
Chief Executive
DDI: +64 9 336 4255
Mobile: +64 21 449 210
Ian Lewington
Chief Financial Officer
DDI: +64 9 336 4212
Mobile: +64 21 952 254
About thl (www.thlonline.com)
thl is New Zealand's premier tourism company. We are listed on the NZX and
are the largest provider of holiday vehicles for rent and sale in Australia
and New Zealand under the Maui, Britz, Mighty, KEA, and United and Motek
Vehicle Sales brands. In the USA we own and operate the Road Bear RV Rentals
& Sales brand. Within New Zealand we operate Kiwi Experience and the Discover
Waitomo Group which includes Waitomo Glowworm Caves, Ruakuri Cave, Aranui
Cave and The Legendary Black Water Rafting Co. In 2012 thl entered in a joint
venture to form RV Manufacturing Group LP, New Zealand's largest campervan
and specialist vehicle manufacturer based in Auckland.
End CA:00233559 For:THL Type:HALFYR Time:2013-02-28 09:19:02
