ANNUAL RESULTS FOR THE YEAR ENDING 30 JUNE 2020
Tourism Holdings Limited
Tel: +64 9 336 4299
The Beach House
Fax: +64 9 309 9269
Level 1, 83 Beach Road
www.thlonline.com
Auckland City
PO Box 4293, Shortland Street
Auckland 1140, New Zealand
Self drive
Experiences
New Zealand
Australia
USA
UK
Design &
Manufacturing
New Zealand
Australia
Guided
Experiences
New Zealand
18 September 2020
MEDIA | NZX RELEASE
TOURISM HOLDINGS LIMITED (thl)
ANNUAL RESULTS FOR THE YEAR ENDING 30 JUNE 2020
Resilience to reset
Statutory net profit after tax (NPAT) of $27.4M, down 8% on the prior corresponding
period (pcp), and statutory EBIT of $48.6M, down 22% on the pcp
Underlying NPAT of $20.0M, down 28% on the pcp result of $27.9M
Net debt of $128M as at 30 June 2020 has since fallen further to reach $75M as at 31
August 2020
The USA vehicle sales business achieved 68% (in USD) revenue growth in the last four
months of FY20, compared to the pcp
Global rental revenue was achieving revenue growth in the first eight months of FY20
compared to the pcp, prior to the impact of COVID-19
Digital strategy refocused to a regional, cost-effective approach through thl digital and
investment in triptech (formerly Outdoria)
Remain committed to our Future-Fit Business strategy
thl today releases its results for the financial year ending 30 June 2020 (FY20).
Mr Rob Campbell, thl Chair, said “thl’s result for FY20 is, in the Board’s review, an admirable
achievement given the shock to the business from COVID-19 since March. The result is a
testament to the resilience, intellectual capability and dedication of our people and our
organisation.”
“There is considerable uncertainty over the coming 12 months, however we are confident that
we have the right skills and capabilities to lead thl through these turbulent times and through
to a recovery in international tourism. We are constantly assessing all potential scenarios and
actively responding to developments as they occur.”
Mr. Grant Webster, thl Chief Executive, said “in the last six months of FY20, we have had an
unwavering focus on managing the impact of international border closures and lockdown
measures on our core businesses, while developing and implementing new product offerings as
an essential services provider, and capitalising on growth in demand for RVs to effectively
manage our balance sheet by reducing debt.”
“With good control of the balance sheet and strong ongoing demand for RV sales to date, we
have prepared ourselves to operate in the current domestic market environment, and are
appropriately positioned to recover at pace when international tourism returns.”
As previously advised, given current market conditions no final dividend has been declared for
FY20.
The integrated report, including the financial statements, as well as a detailed investor
presentation are all available on thl’s website.
ENDS
Authorised by:
Rob Campbell
Chairman, Tourism Holdings Limited
For further information contact:
Grant Webster
thl Chief Executive
Direct Dial: +64 9 336 4255
Mobile: +64 21 449 210
About thl (www.thlonline.com)
thl is a global tourism operator. We are listed on the NZX and are the largest provider of RVs for rent and sale in Australia and
New Zealand, and the second largest in North America. In the USA, we own and operate the Road Bear RV Rentals & Sales brand
and El Monte RV Rentals & Sales. In the UK, thl owns 49% of Just go Motorhomes. 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. thl is a joint venture partner in Action Manufacturing LP, New Zealand’s largest motorhome
and specialist vehicle manufacturer.
---
Tourism Holdings Limited Results Announcement
Results for announcement to the market
Name of issuer Tourism Holdings Limited
Reporting Period 12 months to 30 June 2020
Previous Reporting Period 12 months to 30 June 2019
Currency New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$400,930 -5%
Total Revenue $400,930 -5%
Net profit/(loss) from continuing
operations
$27,356 -8%
Total net profit/(loss) $27,356 -8%
Final Dividend
Amount per Quoted Equity
Security
It is not proposed to pay a final dividend.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.86 $1.87
A brief explanation of any of the
figures above necessary to
enable the figures to be
understood
Refer to attached investor presentation.
Authority for this announcement
Name of person
authorised to
make this announcement
Rob Campbell
Contact person for this
announcement
Grant Webster
Contact phone number +64 9 336 4255
Contact email address grant.webster@thlonline.com
Date of release through MAP
18 September 2020
Audited financial statements accompany this announcement.
---
F Y 1 9
F U L L Y E A R R E S U L T S
P R E S E N T A T I O N
F Y 2 0
F U L L Y E A R R E S U LT S
P R E S E N TAT I O N
Resilience
to reset
18 September 2020
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Disclaimer
2
This presentation contains forward-looking statements and projections. These reflect thl’s current expectations, based on what it thinks are
reasonable assumptions. The statements are based on information available to thlat the date of this presentation and are not guarantees or
predictions of future performance. For any number of reasons, the future could be different and the assumptions on which the forward-looking
statements and projections are based could be wrong. thlgives no warranty or representation as to its future financial performance or any future
matter. Except as required by law or NZX listing rules, thlis not obliged to update this presentation after its release, even if things change
materially.
This presentation has been prepared for publication in New Zealand and may not be released or distributed in the United States.
This presentation is for information purposes only and does not constitute financial advice. It is not an offer of securities, or a proposal or
invitation to make any such offer, in the United States or any other jurisdiction, and may not be relied upon in connection withany purchase of thl
securities. thlsecurities have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the
United States, except in transactions exempt from, or not subject to, the registration of the US Securities Act and applicable US State securities
laws. Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as an indication
of future performance.
This presentation may contain a number of non-GAAP financial measures. Because they are not defined by NZ GAAP or IFRS, thl’s calculation of
these measures may differ from similarly titled measures presented by other companies, and they should not be considered in isolation from, or
construed as an alternative to, other financial measures determined in accordance with NZ GAAP.
This presentation does not take into account any specific investors objectives and does not constitute financial or investment advice. Investors are
encouraged to make an independent assessment of thl. The information contained in this presentation should be read in conjunction with thl’s
latest financial statements, which are available at: www.thlonline.com.
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Important notes
3
•All financials are in NZ dollars unless stated otherwise (throughout presentation).
•All comparisons are against the prior corresponding period (pcp).
•The average NZD:AUD cross-rate (average of the 12 month rates) for FY20 was 0.9480 (FY19 -0.9383).
•The average NZD:USD cross-rate (average of the 12 month rates) for FY20 was 0.6369 (FY19 -0.6720).
•Return On Funds Employed (ROFE) is a non-GAAP measure that thluses to measure performance of business units, and the Group, in relation to the
financial resources utilised. ROFE is calculated as EBIT divided by average monthly net funds employed. Net funds employed are measured as total
assets, less non-interest bearing liabilities and cash on hand. Lease liabilities resulting from IFRS 16 are not considered in determining funds employed.
Accordingly, the interest expense arising from IFRS 16 is also deducted from EBIT for the purposes of ROFE. The calculation is done in NZ dollars.
•Net debt refers to bank borrowings less cash and cash equivalents.
•The balance sheet is converted at the closing rate as at 30 June 2020. The USD cross-rate used was 0.6426 (FY19 -0.6694), the AUD cross-rate used
was 0.9340 (FY19 -0.9561) and the GBP cross-rate used was 0.5220 (FY19 -0.5284).
•The 2020 financial year includes the following non-recurring items:
•the partial Togo exit undertaken in March 2020 which resulted in a one-off gain of $9.3M including tax and foreign exchange benefits;
•a tax benefit of $1.1M in the USA; and
•the write-off of $3.1M of goodwill attributed to Kiwi Experience.
•The 2019 financial year includes the full-year result for Togo Group and a non-recurring gain of $1.9M relating to a deferred tax benefit in the USA.
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
IFRS 16 | Leases
4
thl’s FY20 results include changes in financial disclosures resulting from the adoption of IFRS 16:
•Right-of-use assets of $69.6M as at 30 June 2020 and lease liabilities of $81.9M as at 30 June 2020 have been recognised on the thl balance
sheet, increasing total assets and total liabilities.
•Opening retained earnings as at 1 July 2019 has been adjusted downwards by $7.2M, net of tax.
•FY19 amounts in the financial statements remain as previously reported.
•The impact on thl’sFY20 income statement is a negative impact of $1.0M on NPAT, a positive impact of $2.6M on EBIT, and a positive impact of
$10.4M on EBITDA. These have resulted from a change in lease expense classification, from operating expenses of $10.4M to:
•Financing costs of $4.0M; and
•Depreciation of $7.8M.
•The impact on thl’s FY20 cash flow statement is that operating lease payments of $10.4M have now been recognised as:
•Interest expense of $4.0M in operating activities; and
•Lease liability principal repayment of $6.4M in financing activities.
•thl’s banking covenants are calculated on a frozen GAAP basis.
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
COVID-19 related events in FY20
5
Description of eventAmount (NZ$)
Recognition in statement of
comprehensive income
Increase in provision for doubtful debts$1,099,000Operating expenses
Restructure and redundancy costs$557,000Operating expenses
Impairment of right of use lease assets$130,000Operating expenses
Impairment of goodwill attributed to Kiwi
Experience
$3,126,000Operating expenses
Wage subsidies received*$5,346,000Netted off within operatingexpenses
Rent relief received$1,030,000Other income
thlhas included the following amounts within its statement of comprehensive income for the year ended 30 June 2020 in relation to
the COVID-19 pandemic:
* Includes the New Zealand and Australian wage subsidy schemes.
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
6
Summary
•Statutory net profit after tax (NPAT) of $27.4 million, down 8% on the prior corresponding period (pcp)
•Underlying NPAT of $20 million, down 28% on the pcp
•Global rental revenue was achieving revenue growth in the first eight months of FY20 compared to the
pcp
•The USA vehicle sales business achieved revenue growth of 68% (in USD) in the last four months of FY20
compared to the pcp
•Net debt of $128M as at 30 June 2020, down from $188M on 31 March 2020. Net debt has since fallen
further to $75M as at 31 August 2020
•Our proactive response in each country mitigated the severity of the impact of COVID-19 on our business
in the last four months of FY20
•We have re-focused our digital strategy to a regional, cost-effective approach through thl digital and our
investment in triptech (formerly Outdoria)
•We remain committed to our Future-Fit Business strategy
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
OPERATING PROFIT BEFORE
FINANCING COSTS AND TAX (EBIT)
1
$48.6M
(FY19 $62.1M)
NET PROFIT AFTER
TAX (NPAT
)1
$27.4M
(FY19 $29.8M)
-5%-22%
A year of two parts
As at 30 June 2020
REVENUE
$401M
(FY19 $423M)
8 MONTHS
$288.3M
4 MONTHS
$112.6M
8 MONTHS
$53.5M
4 MONTHS
-$4.9M
8 MONTHS
$25.5M
4 MONTHS
-$5.5M
-8%
VEHICLE SALES QUANTITY
2,066
(FY19 2,059)
UNDERLYING NPAT
2
$20.0M
(FY19 $27.9M)
NZ DOMESTIC CAMPAIGN
BOOKINGS
~20,000
0%
1
Inclusive of non-recurring items.
2
Exclusive of non-recurring items. See slide 3.
(FY19 $285.5M)
(FY19 $137.5M)
(FY19 $57.0M)
(FY19 $5.1M)
(FY19 $30.3M)
(FY19 -$0.6M)
(FY19 $30.3M)
(FY19 -$2.5M)
7
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
8
FY20 financial
highlights
•Revenue of $401M, a decrease of
5% on the prior year
•EBIT of $48.6M, down 22% on
the prior year
•Underlying NPAT of $20M, a
decrease of 28% on the prior year
•Interest on bank borrowings in
FY20 was $1.9M lower than in
the prior year due to lower debt
levels across most of the financial
year
•Non-recurring items had a net
impact of $7.3M on NPAT. See
slide 3
NZD $M
FY20
FY19
VAR
%
Underlying NPAT
20.0
27.9
(7.8)
(28%)
Deferred tax benefit USA
1.1
1.9
(0.8)
(42%)
Togo transaction
9.3
–
9.3
NA
Kiwi Experience goodwill
impairment
(3.1)
–
(3.1)
NA
Profit after tax
27.4
29.8
(2.4)
(8%)
NZD $M
FY20
FY19
VAR
%
Operating revenue
400.9
423.0
(22.1)
(5%)
Earnings before interest
and tax*
48.6
62.1
(13.5)
(22%)
Operating profit before tax
26.1
39.9
(13.8)
(34%)
Profit after tax*
27.4
29.8
(2.4)
(8%)
* includes non-recurring items
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
9
Our response to COVID-19
A range of cost reduction initiatives
Cost reduction
•Significant cost reduction programme involving:
•Variable costs moving down effectively with volume reductions
•Lowering of labour expense to match staff numbers with activity levels
and utilisation of Government support packages
•Temporary rent reductions on certain properties
•Temporary director and executive compensation reductions (until
August 2020) and executive salary freeze in FY21
•Notwithstanding this, there are a number of fixed costs which will
continue to accrue despite lower volumes
•Whilst the costs indicated for April and May include the benefit of
Government subsidies, they are broadly indicative of the expected
cash burn in our business in a worst case scenario
Costs were cut significantly during the respective
lockdown periods in April and May 2020
1 April –31 MayFY20FY19VAR%
Labour costs
$6.1M $14.5M -58%
Property costs
$1.9M$2.7M-29%
Other overhead and operating
costs
$6.5M$17.4M-63%
Total costs
$14.5M$34.7M-58%
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
10
Our response to COVID-19
Fleet management and cash preservation initiatives
Cash preservation and capital management
•Cancellation of non-committed fleet capital expenditure
•Kiwi Experience business (largely reliant on European backpacker market)
in hibernation until market conditions improve
•Cancellation of FY20 interim dividend and no full year dividend declared
•Received support from banking partners by concluding new funding
arrangements and determined that thldid not need to raise additional
equity at that time
•Managed reduction in fleet levels to meet dual objectives of:
•Right-sizing fleet for anticipated near-term post COVID-19 activity
levels; and
•Monetising inherent value of fleet asset base to drive debt repayment
•Significant reduction in debt driven by strong vehicle sales in Q4 FY20
Net debt of $188M as at 31 March 2020 was reduced by
$60M to approximately $128M at 30 June 2020
1 April –30 JuneFY20FY19VAR%
Vehicle sales revenue
$53.4M$39.6M35%
Rental andservicesrevenue
$43.2M$99.0M-56%
Total revenue
$96.6M$138.5M-30%
Fleet management
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Resilience through the last four months of FY20
187.6
183.9
166.0
127.7
98.2
75.1
-
20
40
60
80
100
120
140
160
180
200
31-Mar-2030-Apr-2031-May-2030-Jun-2031-Jul-2031-Aug-20
Net Debt $M
Our flexible business model and liquid asset backing allows us to effectively manage our balance sheet
11
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
12
Positioned to reset
•For many years we have been focused on our core business model
of BUILD –RENT –SELL. This remains as important today as it ever
has
•In the current domestic environment we have both an opportunity
and need to increase our focus on the sales aspect of our business
•Capital allocation decisions, in some jurisdictions, at some times,
will be based on replenishment of fleet for sale rather than a long
term purchase for our rental fleet. We view this expenditure as
more akin to working capital,as opposed to rental fleet related
capital expenditure
•The short-term debt incurred for this type of expenditure differs to
what we consider our ‘core’ long-term debt for our rental fleet.
•For example, we have certain fleet types in New Zealand that we
are nearly sold out of and are confident that we can sell more of
them over the coming months. It therefore makes sense that we
purchase more of those units and send them directly to our sales
yards, treating them as inventory for sale
•Each jurisdiction is different and will operate to maximise the
opportunities depending on the market conditions
thl and our vehicle sales business
•Strong vehicle sales proceeds and limited capital
expenditure has brought net debt down to $75M as at 31
August 2020
•By reducing debt to the current levels, we have created
flexibility to replenish vehicle numbers as required for sale
and to operate a rental fleet sized appropriately for the
current market conditions
1
Vehicle sales revenue
1 July –31 August ($NZ)
FY21FY20VARVAR%
New Zealand$13.6M$6.2M$7.4M119%
Australia$4.4M$2.7M$1.7M65%
United States$35.3M$13.2M$22.1M167%
Total$53.3M$22.1M$31.2M141%
1
Subject to consent from thl’s banking partners
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Phases in thl’srecovery roadmap
13
Cash burn
Sales proceeds facilitate
positive cash flow
Rental revenue facilitates
positive cash flow
Group profitability
and growth
•Minimal revenue through the
April/May 2020 lockdown period
•Key objective was to reduce cash
outflow through cost reduction
initiatives undertaken in Q4 FY20
and use of Government support
initiatives
1
•Sought to reduce semi-fixed costs
by reducing group support
capacity, seeking temporary rent
relief and re-negotiating lease
terms
•Use of sales proceeds to fund
operating losses and reduce debt
in May and June 2020
•Vehicle sales to right-size fleet as
appropriate within each country,
reflective of the domestic rental
opportunity and COVID-19 travel
risk
•Continued reduction of semi-
fixed costs
•Limited fleet replenishment, in
line with the domestic rental
opportunity and quantum of
vehicles sold
•Expectation of profitability within
certain business units during high
season months
•Vehicle sales to align with fleet
replenishment or to allow for
limited fleet growth if the rental
market experiences a steep
recovery
•Fleet right-sized globally
•Recommence normal fleet
replenishment in all countries
•While timing of this is highly
uncertain, the opening of
international borders on a large
scale should accelerate
permanent return to this phase
•Seek to improve market share
relative to pre COVID-19 position
as some participants exit and
thl’s balance sheet strength
compared to key competitors
provides an ability to grow fleet
earlier
•Return on funds employed
remains a key focus
1
See market announcements on 20 March 2020 and 3 April 2020 for further information.
Lockdown periodFY21, depending on demand outcomes and seasonality
Target once international
tourism resumes
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Framework for FY21
14
THE CONTEXT
•Globally,theRVrentalmarkethasbeenmaterially
affectedbytheimplementationoftravelrestrictionsdue
toCOVID-19withthefocusnowturningtostimulating
domestictourisminthenear-termasinternationaltravel
remainssubdued
•Weareoperatingunderthecurrentassumptionthatthl
willoperateinadomestic-onlyenvironmentinall
operatingjurisdictionsforthemajority,ifnotall,ofFY21
•TherehasbeendemandgrowthintheRVsalesmarkets,
withincreasedpopularityforRVtravelasaCOVID-19safe
holidaychoiceanddeclineofotherformsoftravel
•Withouttheinternationalmarket,thlexpectsthatithas
approximately35–45%excessfleetcapacityonaglobal
basisbasedonitsstartingFY20fleetsize
THE RESPONSE
•thlwilllooktocapitaliseontherecentdemandgrowthbymaximising
vehiclesalesineachcountryduringFY21,whilstmaintaining
reasonablemarginsandbeingmindfulofprocurementrestraints
•thlwillinvestinnewvehicles:
1
•wherethenumberofvehiclessoldjustifiesreplenishmentof
vehiclestoallowforfurthersales–purchasingvehiclestogo
directtothesalesyard
•tomeetitsrentalsneedsbasedonexpectationsofdemandfor
theUSA2021summerseasonandNZ/Australian2021/2022
summerseason
•thlfacesdifferentoperatingenvironmentsandhastailoreditsstrategy
ineachcountrytorespondtotheexpectedenvironmentinFY21inthat
region–includingpivotingtodomestic-focusedservicingandretail
aspectsofitsbusiness
•thlwillcontinuetoretainitsmoresustainable,reducedcostbasewhile
itcontinuestooperateinadomestic-onlyenvironment
The framework: Create flexibility through fleet management, cost reduction and debt reduction
1
Subjecttoconsentfromthl’sbankingpartners
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
15
Vehicle expenditure in FY21
•Given our recent vehicle sales achievements, we have
placed an initial order for 300 vehicles in the United
States and expect to order a further 650 during FY21
•The ‘Great New Zealand Motorhome Sale’ campaign
launched in early September increases our targeted
sales in that region by an additional 1,000 vehicles
•Depending on the success of that campaign, we will
likely increase our purchases in order to replenish a
proportion of sold fleet in New Zealand ahead of the
December 2021 summer season, based on our
expectations of demand for that season
•Expected purchases are open ended as quantities will
reflect our vehicle sales performance and will be used
to manage our rental fleet to a size appropriate for the
upcoming summer seasons –all of these factors are
variables that are constantly changing
* Includes 90 buyback vehicles
Management’s current estimates of purchases and sales targets in FY21
FY21 vehicle purchases
1
Current
estimate
Prior
estimate
2
New Zealand170+140-170
Australia220+*160 –220*
United States950+400
FY21 targeted vehicle sales
Current
estimate
Prior
estimate
2
New Zealand1,500+500 -800
Australia450+200 –350
United States1,000+800 –1,200
1
To the extent not already committed, purchases are subject to
consent from thl’s banking partners
2
As noted in thl’s market release on 31 July 2020
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
16
Balance sheet
Net Debt
$128M
LAST YEAR
$202M
Net Debt:EBITDA*
1.5X
LAST YEAR
1.9X
•Net debt and Net Debt:EBITDA as at 30 June 2020
were significantly lower than in the prior year, a
reflection of our efforts to reduce debt in the last
four months of FY20
•Net debt of $202M last year was prior to the
$50M rights issue, which completed in July 2019
•We expect debt to continue to fall in H1 FY21, but
should increase in H2 FY21 as we replenish fleet
1
* Net Debt:EBITDA is calculated using a 12 month EBITDA. Year-end debt used
for the calculation includes the LoC outstanding and derivatives balance. Both
EBITDA and net debt exclude the impact of IFRS 16.
1
Subject to consent from thl’s banking partners
176
199
202
128
10
16
11
14
1.9
1.9
1.9
1.5
–
0.5
1.0
1.5
2.0
2.5
3.0
–
50
100
150
200
250
FY17FY18FY19FY20
Net debtLOCDebt: EBITDA
Net debt
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Banking arrangements
17
•Debt facilities are in place with thl’s banking partners
•New funding arrangements were concluded during FY20, with changes including:
•a requirement for consent from thl’s banking partners for any distribution to shareholders or capital
expenditure beyond a prescribed amount, during the term of the facilities
•that thl’s existing earnings-based covenants (leverage ratio and interest coverage ratio) will not be
tested until 1 July 2022, however other existing covenants (equity ratio and guaranteeing group ratio)
remain applicable
•new covenants relating to minimum shareholder funds, and a cumulative EBITDA requirement
(tested quarterly) from the period ending on 30 September 2021
•new undertakings requiring that EBITDA and vehicle sales performance are not greater than 15%
below amounts determined in a banking case scenario model (tested quarterly), based on thl’s
expectations as set in April 2020
•Given the pace at which we have been able to reduce debt, we are considering reducing
our facility headroom by approximately 10% ($20 million), in order to reduce line fee
expenditure by up to approximately $250,000 per annum
•We have not reviewed our dividend policy at this point, but as previously advised there
will be no dividend in the 2020 calendar year
1
US$ denominated commitments.
Maturity of debt facilities
September 2021
NZ$30M
December2021
NZ$50M
June 2022
NZ$70M
July2022
1
NZ$73M
Total
NZ$223M
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Pivoting to new business activities
18
Mobile Offices
Mobile Diagnostics
ManagedFacility in the United StatesManaged Facility in New Zealand
Remote Project and Seasonal Worker Accommodation
Top row (left to right): Facility for displaced inbound travellers; COVID-19 containment zone (managed by thl);modified sales unit to be a mobile offer for real estate.
Bottom row (left to right): Seasonal accommodation for fruit pickers; mobile testing unit for rural Australian communities.
•During the COVID-19 pandemic, we
were proactive about identifying
unique opportunities by leveraging
our operational expertise and
existing infrastructure
•We were one of the first movers
into becoming a provider of
temporary housing and quarantine
facilities
•Operationally we moved quickly
from a concept to having full
facilities set up in a matter of days
•The feat is a testament to the
strength of our people from a
business design perspective as well
as our collective marketing skills
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
get moving, to get New Zealand moving
19
•We launched our domestic rentals
campaign in New Zealand in May,
with exceptionally low price points
across all of our campervans
•The response from New Zealanders
was far beyond our initial
expectations
•We received hundreds of thousands
of enquiries, and from 25 May 2020
to 16 August 2020, we confirmed
~20,000 bookings on the campaign
packages
Our survey indicated that:
•65% of customers were first-time motorhome travellers
•85% would travel by motorhome again
•40% would consider purchasing a motorhome
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 1 9 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
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Divisional Review
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Divisional EBIT
21
$M
FY20
FY19
Var
Var %
FY20
FY19
Var
Var %
FY20
FY19
Var
Var %
thl
Rentals
New Zealand
30.2
31.5
(1.3)
(4%)
30.2
27.9
2.3
8%
0.0
3.6
(3.5)
(100%)
Australia
8.6
11.3
(2.7)
(24%)
12.1
11.9
0.2
1%
(3.5)
(0.6)
(2.9)
468%
USA
10.9
13.0
(2.1)
(16%)
4.9
11.9
(7.1)
(59%)
6.0
1.1
5.0
465%
Total Rentals
49.8
55.8
(6.0)
(11%)
47.2
51.8
(4.6)
(9%)
2.6
4.0
(1.4)
(36%)
Tourism Group
3.9
12.3
(8.4)
(68%)
8.5
9.1
(0.5)
(6%)
(4.6)
3.2
(7.8)
(243%)
Total operating divisions
53.7
68.1
(14.4)
(21%)
55.7
60.9
(5.1)
(8%)
(2.0)
7.2
(9.2)
(128%)
Group Support Services & Other
(5.1)
(6.0)
0.9
(15%)
(2.2)
(3.9)
1.6
(42%)
(2.9)
(2.1)
(0.7)
34%
Total EBIT
48.6
62.1
(13.5)
(22%)
53.5
57.0
(3.5)
(6%)
(4.9)
5.1
(10.0)
(196%)
EBIT before non-recurring Items
51.0
62.1
(11.1)
(18%)
53.5
57.0
(3.5)
(6%)
(2.5)
5.1
(7.6)
(148%)
Non-recurring items
Togo transaction
0.7
0.0
0.7
NA
0.0
0.0
0.0
0%
0.7
0.0
0.7
NA
Kiwi Experience goodwill impairment
(3.1)
0.0
(3.1)
NA
0.0
0.0
0.0
0%
(3.1)
0.0
(3.1)
NA
Total non-recurring items
(2.4)
0.0
(2.4)
NA
0.0
0.0
0.0
0%
(2.4)
0.0
(2.4)
NA
Split
Australia
8.6
11.3
(2.7)
(24%)
12.1
11.9
0.2
2%
(3.5)
(0.6)
(2.9)
468%
USA
10.9
13.0
(2.1)
(16%)
4.9
11.9
(7.1)
(60%)
6.0
1.1
5.0
465%
NZ
29.1
37.8
(8.7)
(23%)
36.5
33.2
3.4
10%
(7.5)
4.6
(12.1)
(261%)
Total EBIT
48.6
62.1
(13.5)
(22%)
53.5
57.0
(3.5)
(6%)
(4.9)
5.1
(10.0)
(196%)
Full Year
4 Months to 30 June
8 Months to 29 February
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New Zealand rentals and sales
•We are pleased with the FY20 result given the impact of COVID-19 and
the traditional reliance of the New Zealand rentals business on
international tourism
•The FY20 EBIT performance of $30.2M was down $1.3M on the prior
year –a decrease of 4%
•Rental revenue was down 40% in the last four months primarily due to
the low pricing offered in the ‘get moving, to get New Zealand moving’
domestic campaign
•Despite the Alert Level 4 lockdown, hire days in the last four months
were only 14% below the same period in FY19
•The business was experiencing growth in both average yield and hire
days in the first eight months
•The financial performance in the first eight months (EBIT up 8% on the
prior period) indicated that we would have achieved another record
result in FY20 if not for COVID-19
•The ‘Great New Zealand Motorhome Sale’ was launched earlier this
month and has been received well to date
•Recent fire at Mangere branch has been managed well with a
temporary branch set up nearby within 24 hours to continue rental
operations
*Non-fleet vehicle sales are excluded.
NZD $M
FY20
FY19
VAR
VAR %
Rental income
91.6
97.9
(6.3)
(6%)
Sale of goods
45.9
50.8
(4.8)
(10%)
Costs
(107.3)
(117.2)
9.9
(8%)
EBIT
30.2
31.5
(1.3)
(4%)
Full Year
Units:
FY20
FY19
VAR
VAR %
Opening Fleet
2,332
2,083
307
12%
Fleet Sales
(470)
(499)
(29)
(6%)
Fleet Purchases
670
748
(78)
(10%)
Closing Fleet
2,532
2,332
200
9%
Vehicle Fleet*
NZD $M
1 Mar - 30 Jun
1 Mar - 30 Jun
VAR
VAR %
Rental income
15.8
26.3
(10.6)
(40%)
Sale of goods
13.4
21.3
(7.9)
(37%)
Costs
(29.2)
(44.1)
14.9
(34%)
EBIT
0.0
3.6
(3.5)
(100%)
NZD $M
1 Jul - 29 Feb
1 Jul - 28 Feb
VAR
VAR %
Rental income
75.8
71.6
4.3
6%
Sale of goods
32.5
29.4
3.1
10%
Costs
(78.1)
(73.0)
(5.1)
7%
EBIT
30.2
27.9
2.3
8%
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Australia rentals and sales
•FY20 EBIT of A$8.3M was down A$2.3M –a decrease of 22% on the
prior year
•The last 12 months have been a difficult environment in Australia
given it first had the impact of the bushfires, and then the COVID-
19 pandemic
•The business was continuing to gain market share during the first
eight months, with growth in rental revenue, sales revenue and
EBIT on the prior year, despite the impact of the bushfires
•In the first eight months, the business was experiencing hire day
growth but low single digit decline in average yield, compared to
the prior period
•A positive sales performance across the entire financial year with
591 vehicles sold, 5% more than in the prior year
NZD $MFY20FY19VARVAR %
Rental income57.670.0(12.4)(18%)
Sale of goods*16.813.63.224%
Costs(65.8)(72.3)6.5(9%)
EBIT8.611.3(2.7)(24%)
Full Year
AUD $M
FY20
FY19
VAR
VAR %
Rental income
54.7
65.6
(10.9)
(17%)
Sale of goods*
15.9
12.7
3.2
26%
Costs
(62.3)
(67.7)
5.4
(8%)
EBIT
8.3
10.6
(2.3)
(22%)
*Sale of goods does not include buyback fleet, which is included within the fleet purchase and sales
numbers.
**Non-fleet vehicle sales are excluded.
Units:FY20FY19VAR%
Opening Fleet 1,641 1,539 44 7%
Fleet Sales(591) (562) 29 5%
Fleet Purchases 391 664 (273) (41%)
Closing Fleet 1,441 1,641 (200) (12%)
Vehicle Fleet**
AUD $M1 Mar - 30 Jun1 Mar - 30 JunVARVAR %
Rental income6.818.7(11.9)(64%)
Sale of goods*6.74.02.766%
Costs(16.7)(23.3)6.6(28%)
EBIT
(3.3)(0.6)(2.7)471%
AUD $M
1 Jul - 29 Feb
1 Jul - 28 Feb
VAR
VAR %
Rental income
47.9
46.9
1.0
2%
Sale of goods*
9.2
8.6
0.6
7%
Costs
(45.6)
(44.4)
(1.2)
3%
EBIT
11.5
11.2
0.4
3%
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USA rentals and sales
•A year of two parts with performance in the last four months
recovering the majority of the decline in the first eight months,
during which there were continued headwinds in the vehicle sales
market
•FY20 EBIT of US$7.0M, down US$1.6M on the prior year –a fall of
19%
•The highlight of the year is the USA vehicle sales performance in the
last four months –with sales revenue of US$28.3M up 68% on the
prior period. The business had a record sales performance in June
2020, followed by another record sales performance in July 2020 to
start FY21
•In the first eight months, the business was experiencing growth in
average yield but a small decline in hire days compared to the prior
period
•Rental revenue fell by 11% across FY20, however was progressing at
similar levels to the prior year during the first eight months
•As previously noted, we have committed to purchasing 300 new
vehicles in FY21 and expect to purchase another 550, as we continue
to capitalise on the growth trend in the vehicle sales market
USD $M
FY20
FY19
VAR
VAR %
Rental income
49.5
55.5
(6.0)
(11%)
Sale of goods
51.2
44.6
6.6
15%
Costs
(93.7)
(91.6)
(2.2)
2%
EBIT
7.0
8.6
(1.6)
(19%)
Units:FY20FY19VAR%
Opening Fleet2,4402,109 269 44%
Fleet Sales(900)(869) 31 4%
Fleet Purchases3721,200(828) (69%)
Closing Fleet1,9122,440(528) (22%)
Vehicle Fleet
NZD $M
FY20
FY19
VAR
VAR %
Rental income
77.5
82.9
(5.4)
(6%)
Sale of goods
80.8
66.5
14.3
21%
Costs
(147.4)
(136.4)
(11.0)
8%
EBIT
10.9
13.0
(2.1)
(16%)
Full Year
USD $M
1 Mar - 30 Jun
1 Mar - 30 Jun
VAR
VAR %
Rental income
13.5
19.3
(5.8)
(30%)
Sale of goods
28.3
16.8
11.5
68%
Costs
(37.9)
(35.5)
(2.4)
7%
EBIT
3.8
0.5
3.3
631%
USD $M
1 Jul - 29 Feb
1 Jul - 28 Feb
VAR
VAR %
Rental income
36.1
36.4
(0.3)
(1%)
Sale of goods
22.9
27.8
(4.9)
(18%)
Costs
(55.8)
(56.3)
0.5
(1%)
EBIT
3.2
7.9
(4.8)
(60%)
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Tourism
•A difficult year for the Tourism businesses given the significant
reliance on international tourism to New Zealand
•An EBIT of $3.9M in FY20, down $8.3M on the prior year –a
fall of 68%. The result is inclusive of the $3.1M write down in
goodwill for Kiwi Experience and reflective of the operating
losses in the last four months
•The Kiwi Experience business was placed in hibernation in
March 2020, as its customer base consisted of almost
exclusively international tourists. Prior to that, there was
positive momentum in the business with activity in the new
product lines including small group tours
•Waitomo has been provided with a grant of $2M under the
Strategic Tourism Assets Protection Programme (STAPP).None
of this has been recognised in FY20 as the first payment will
be received in FY21
•The Waitomo business currently remains operational at a
minimum viable level with the support of the STAPP funding.
The business is expected to remain in a loss-making position
while the New Zealand border remains closed
NZD $M
FY20
FY19
VAR
%
Revenue
30.7
41.4
(10.7)
(26%)
Costs
(26.8)
(29.2)
2.4
(8%)
EBIT
3.9
12.2
(8.3)
(68%)
Full Year
NZD $M1 Mar - 30 Jun1 Mar - 30 JunVAR%
Revenue2.612.0(9.4)(78%)
Costs(7.2)(8.8)1.6(18%)
EBIT(4.6)3.2(7.8)(243%)
NZD $M
1 Jul - 29 Feb
1 Jul - 28 Feb
VAR
%
Revenue
28.1
29.4
(1.3)
(5%)
Costs
(19.6)
(20.4)
0.8
(4%)
EBIT
8.5
9.1
(0.5)
(6%)
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Equity Investments
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
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Equity investments
•These part-owned businesses are not controlled by thland are equity accounted. The
results are not reported in EBIT, and are not included in our ROFE calculations
•Action Manufacturing (50%)
•Net profit before tax of $1.4M was in line with the prior year and budget
expectations
•Restructuring at the Albany plant during COVID-19 Alert Level 4 enabled costs to be
reduced in line with volume
•Positive outlook for FY21 with a view to grow capacity in the non-thl motorhome
sector
•Just go (49%)
•Net loss after tax of $0.4M, approximately $0.6M down on the prior year
•Committed 2020 fleet order has now been staggered for delivery over the next 12
months
•FY21 remains uncertain but strong domestic demand has provided a positive start
•Togo Group (50% until March 2020)
•thl’sshare of Togo Group’s trading loss to the date of our managed exit was $10.6M
•Moving forward, Togo Group’s financial performance will not impact thl’s statement
of comprehensive income due to the nature of thl’s Class B preference shareholding
•Triptech(48.86% from March 2020)
•The investment in triptech is equity-accounted and included within the Group
Support Services and Other business segment
•Triptech’s trading loss (on a 100% basis) in the last 3 months of FY20 was
approximately AUD$242k
NZD $M
FY20
FY19
VAR
%
Action Manufacturing
1.4
1.5
(0.1)
(7%)
Just go
(0.4)
0.2
(0.6)
(253%)
Togo Group
(10.6)
(12.8)
2.3
(18%)
Total
(9.5)
(11.0)
1.5
(14%)
Equity Investments
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
28
Group support services and other
•Group support services expense of
$2.7M, down 55% on the prior year
•The reduction in expense is
reflective primarily of reduced
labour and rent costs, as well as
M&A expenses that were incurred
in FY19
* EBIT before non-recurring items.
NZD $M
FY20
FY19
VAR
%
Revenue
–
–
–
NA
Costs
(2.7)
(6.0)
3.3
(55%)
EBIT*
(2.7)
(6.0)
3.3
(55%)
Group Support Services and Others
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Other events
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
30
Structured exit from Togo Group
•thlretained rights to Fleet, Insights, Mighway and triptech
(formerly Outdoria)
•Agreed that thl had no further obligation to provide additional
investment into Togo Group
•thlrealised part of its interest in cash through the receipt of a
US$6M payment
•thl received the right to a fixed annual payment from Togo Group
of approximately US$600,000 for the next four years
•thlretained an ongoing interest in Togo Group through its
minority special class shares
•Thor have the option of purchasing thl’s minority shareholding for
approximately US$20m in the next four years
•If Thor does not exercise its option, thl’s 26.49% minority interest
converts to ordinary shares at the end of the four year period
Key commercial deal outcomes
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Accounting for Togo transaction
•The transaction resulted in:
•a disposal of the equity accounted investment in Togo
Group (TH2connect, LLC);
•the recognition of the Togo Fleet and Mighway
software; and
•the recognition of the residual investment of Class B
preference shares in Togo Group
•thl’s Class B shareholding in Togo Group has a US$20.2M face
value and entitles thl to a fixed 3% annual payment
(approximately US$600,000)
•Payment is made annually commencing in April 2021
•The Fleet and Mighway software were valued with reference
to their respective cost of build
NZ$
Disposalof the carrying value of the equity-accounted
investment in Togo Group (TH2connect, LLC)
($48.4M)
Fair value of the assets and liabilities received:
•Cash$9.0M
•Softwarelicence for Fleet and Mighway$9.2M
•Class B preference shares in Togo Group$22.9M
•Net working capital balance($1.1M)
Foreign currency gain transferred to the income statement$9.1M
Taxbenefit arising from the transaction$8.6M
Netprofit after tax arising from the transaction$9.3M
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
32
thl digital
•In August 2020 we established thl digital as the umbrella brand for the
thl100% owned technology business portfolio
•Since our structured exit from Togo Group, we have strengthened our
digital strategy through:
•the acquisition of SHAREaCAMPER in New Zealand and Australia;
and
•by increasing our shareholding in triptech (formerly Outdoria) to
approximately 60%
•thldigital encompasses:
•Fleet –booking, scheduling and pricing management
•Insights –trip telematics
•Mighway –peer-to-peer campervan rentals in New Zealand
•SHAREaCAMPER –peer-to-peer campervan rentals in New
Zealand and Australia
•Together with our investment in triptech, thl digital forms our
regionalised, cost-effective, digital travel and tourism strategy
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
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Fleet
•Fleet is targeted at enterprise fleet vehicle
operators, tourism agencies and travel and
mobility businesses
•Provides an incredibly powerful SaaS
platform for effortless vehicle management
and revenue optimisation
•Customers have access to dynamic product
pricing, booking, inventory management and
maintenance features
•Advanced features include intelligent vehicle
schedule optimisation, capable of achieving
95% utilisation of large fleets within peak
season
•The implementation of Fleet in thl for New
Zealand and Australia is currently in progress
and will be completed in Q4 CY20
thl FleetSchedule Viewer,
enabling an overall assessment of
fleet utilisation across fleet or
subcategories based on vehicle
type or location
thl trade partners will have
access to Fleet, and be able to
make highly customisable
booking searches
In setting rates and availability,
Fleet provides thlwith significant
flexibility for rate adjustments,
minimum charge periods and
discounting
FLEET
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
34
INSIGHTS
Insights Telematics
A fleet management platform powered by telematics and built
to connect rental operators with their fleet, improving safety,
lowering overheads and boosting the bottom line
thl release -August 2020
Market release -June 2021
Key Benefits
•Roadside assistance and remote engine diagnostics
•Disaster management through geolocation and
driver app integration
•Streamlining operations with process automation
•Rules engine, theft alerts and policy enforcement
InsightsAnalytics
A platform dedicated to industry-wide data analytics
empowering fleet operators with the insights they need to drive
their business forward
thl release -February 2020
Market release -January 2021
Key Benefits
•Fleet awareness and in-depth business intelligence
insights
•Fine-tuning unforgettable holidays by
understanding how people travel
•Data lake enrichment through external streams
•Commercial opportunities with anonymiseddata
pooling
Insights Driver Application
A suite of applications to connect fleet operators with their
customers on the road providing an effortless end-to-end
customer experience
thl release -August 2020
Market release -June 2021
Key Benefits
•Communication platform between customer and
operator
•Insights navigation with business specific points of
interest
•Offers a streamlined and contactless vehicle pick-
up and return
•Enabling customers to view and interact with their
booking
Insights
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
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Mighway peer-to-peer
•New Zealand’s leading peer-to-peer RV rentals company, offering
both fully managed and self-managed programs for motorhome
owners across New Zealand
•Mighway has seen an increase in revenue YOY, and improved
guest booking conversion to 48%, fast approve functionality and
improved automated booking communications with 69% of
guests choosing our new deposit option to secure bookings
•Improvements in FY20 included:
•launch of automated Mighway owner app to streamline the
guest pick up/drop off and insurance process
•a new vehicle listing process for owners
•an owner onboarding program including weekly owner
payment frequency
•enhancements in search optimisation
•Over $7M has been paid to date to owners in New Zealand
•PR awareness of Mighway has grown through mentions in NZ
Herald articles, radio promotion and a new guest referral
programme
MIGHWAY
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SHAREaCAMPERpeer-to-peer
•thl acquired the New Zealand and Australian operations of
SHAREaCAMPERin March 2020
•Limited forward bookings at time of acquisition due to impact of
COVID-19
•Business has since experienced a positive recovery in activity
while pivoting to domestic RV customers
•SHAREaCAMPERhas a database of approximately 500 owners
across New Zealand and Australia, with approximately 700 unique
vehicles available on the platform
•Our focus for FY21 will be to:
•connect and integrate SHAREaCAMPERinto the thlrentals
business
•undertake a market re-launch for the Australian business,
focusing on growth in collaboration with thlRentals Australia
and engagement with the Campervan & Motorhome Club of
Australia
•develop and add platform features to continue to enhance
the overall user experience
SHAREaCAMPER
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triptech
What is triptech?
•triptech is an Australasian based travel and tourism
technology company, focused on reaching travellers that are
in-trip
•Owns and operates CamperMate and 13 other custom
branded consumer apps, including for thl
•Reaches hundreds of thousands of travellers across the
network of apps and sites, enabling businesses to receive
bookings and live leads
•Builds and provides comprehensive, real-time dashboards
that report on tourist movement and journey behaviours
•Supports the industry with real-time data and the provision
of actionable insights
•Clients include Tourism Australia, State Tourism Organisations
and several councils across New Zealand
•Over 50 million annual sessions across the 13 apps and
averaging approximately 9,000 downloads per week
•A joint venture partnership between thland Gerry Ryan (founder of
Jayco), with thl having an approximately 60% shareholding
•Revenue generated through:
•Subscriptions -holiday park operators pay an annual subscription
to be on the 13 triptech apps and receive customer leads
•Data -provision of travel and user data primarily through a
Freedom Camping Report and Visitor Economy Dashboard, aimed
at councils and state tourism organisations
•e-Commerce -campground and other bookings through our
booking engine in the triptech apps
•Total FY20 revenue across all revenue streams was approximately
AU$1.7M, of which the majority consisted of subscription revenue
from holiday parks
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 1 9 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
38
Outlook
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
39
Outlook
THE GROUP
•We are managing the business to the constantly evolving environment, with a focus on operating in a domestic-only context for FY21
and likely the 2021 calendar year
•We will manage fleet size to reduce debt, but only to a level where we can still manage demand and position ourselves for a swift
recovery. We expect that net debt will be higher than the current level
1
at 30 June 2021, but below net debt at 30 June 2020
2
•We are not paying a dividend in the 2020 calendar year, but have not made any permanent change to our dividend policy of 75 –90% of
NPAT
UNITED STATES
•We have confidence in the sales and
rentals markets for FY21, even in a
domestic-only market
•We will replace fleet that we sell
appropriately to ensure that we maximise
the rental opportunity
AUSTRALIA
•Once interstate borders open, we will
assess our appropriate fleet size
•We are currently nearing the threshold
that will require new vehicle purchases,
given better than planned vehicle sales in
recent months
•We expect vehicle sales demand to
continue in the 2021 calendar year
NEW ZEALAND
•The domestic market context is difficult for
the rentals business, so we continue to
focus on driving vehicle sales, servicing and
retail to target break even cash flow
•We expect that we will have an operating
loss in the Waitomo and Kiwi Experience
businesses, and are conscious of managing
costs tightly
1
$75M as at 31 August 2020
2
$128M as at 30 June 2020
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 1 9 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
40
Supporting Analysis
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Income statement summary
41
$MFY20FY19VARVAR %FY20FY19VARVAR %FY20FY19VARVAR %
Revenue from trading 257.4 292.2 (34.8) (12%) 210.4 205.4 5.0 2% 47.0 86.8 (39.8) (46%)
Revenue from sale of fleet 143.5 130.8 12.7 10% 77.9 80.1 (2.2) (3%) 65.6 50.7 14.9 29%
Total revenue 400.9 423.0 (22.1) (5%) 288.3 285.5 2.8 1% 112.6 137.5 (24.9) (18%)
Costs 289.2 308.2 (19.0) (6%) 193.1 194.6 (1.5) (1%) 96.1 113.6 (17.6) (15%)
EBITDA 111.7 114.8 (3.0) (3%) 95.2 90.9 4.3 5% 16.6 23.9 (7.3) (31%)
Depreciation & Amortisation 63.1 52.6 10.5 20% 41.7 33.9 7.8 23% 21.5 18.8 2.7 15%
EBIT 48.6 62.1 (13.5) (22%) 53.5 57.0 (3.5) (6%)(4.9) 5.1 (10.0) (195%)
Interest(12.9) (11.2) (1.7) 16% (8.8) (7.0) (1.8) 27% (4.1) (4.3) 0.1 (3%)
Share of Joint Ventures(9.2) (11.3) 2.1 (19%)(8.2) (7.1) (1.1) 16% (1.0) (4.2) 3.3 (77%)
Share of Associates(0.4) 0.2 (0.6) (253%) 0.0 0.0 (0.0) (70%)(0.4) 0.2 (0.6) (286%)
Profit before taxation 26.1 39.9 (13.8) (34%) 36.5 43.0 (6.5) (15%)(10.4) (3.1) (7.2) 230%
Taxation 1.2 (10.1) 11.4 (112%)(11.0) (12.7) 1.7 (14%) 12.2 2.6 9.6 375%
Profit attributable to thl
shareholders
27.4 29.8 (2.4) (8%) 25.5 30.3 (4.8) (16%) 1.8 (0.6) 2.4 (419%)
Basic EPS (in cents) 18.6 23.7
Diluted EPS 18.6 23.3
Full Year4 Months to 30 June8 Months to 29 February
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Revenue
42
$MFY20FY19VARVAR %FY20FY19VARVAR %FY20FY19VARVAR %
thl Rentals - Sale of Services
New Zealand91.697.9(6.3)(6%)75.871.64.3 6% 15.826.3(10.6)(40%)
Australia57.670.0(12.4)(18%)50.550.30.2 0% 7.119.7(12.6)(64%)
USA77.582.9(5.4)(6%)55.954.21.8 3% 21.628.7(7.2)(25%)
226.7250.8(24.1)(10%)182.3176.06.3 4% 44.474.8(30.4)(41%)
thl Rentals - Sale of Goods
New Zealand45.950.8(4.8)(10%)32.529.43.1 10% 13.421.3(7.9)(37%)
Australia16.813.63.2 24% 9.79.30.4 4% 7.14.22.8 67%
USA80.866.514.3 21% 35.741.3(5.6)(14%)45.125.219.9 79%
143.5130.812.7 10% 77.980.1(2.2)(3%)65.650.714.9 29%
Tourism Group - Sale of Services30.741.4(10.7)(26%)28.129.4(1.3)(5%)2.612.0(9.4)(78%)
Total Revenue400.9423.0(22.1)(5%)288.3285.52.81% 112.6137.5(24.9)(18%)
Split
Australia74.483.5(9.1)(11%)60.259.60.6 1% 14.223.9(9.8)(41%)
USA158.3149.48.9 6% 91.695.5(3.9)(4%)66.753.912.8 24%
NZ and other168.2190.1(21.8)(11%)136.4130.46.0 5% 31.859.7(27.9)(47%)
400.9423.0(22.1)(5%)288.3285.52.8 1% 112.6137.5(24.9)(18%)
Revenue Split
Sale of Services257.4292.2(34.8)(12%)210.4205.45.0 2% 47.086.8(39.7)(46%)
Sale of Goods143.5130.812.7 10% 77.980.1(2.2)(3%)65.650.714.9 29%
400.9423.0(22.1)(5%)288.3285.52.8 1% 112.6137.5(24.9)(18%)
Full Year4 Months to 30 June8 Months to 29 February
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Divisional summary
43
* Operating cash flow includes the sale and purchase of rental assets.
$M
REVENUE
DIVISIONAL
EBIT
AVE FUNDS
EMPLOYED
OPERATING
CASHFLOW*
REVENUE
DIVISIONAL
EBIT
AVE FUNDS
EMPLOYED
OPERATING
CASHFLOW*
Rentals New Zealand
137.5
30.2
163.4
10.4
148.7
31.5
159.1
14.8
Rentals Australia
74.4
8.6
80.3
9.6
83.5
11.3
81.5
2.5
Rentals USA
158.3
10.9
170.3
52.7
149.4
13.0
162.0
(14.0)
Tourism Group
30.7
3.9
16.2
6.1
41.4
12.3
22.0
10.5
Group Support Services/Other
(before non-recurring)
0.0
(2.7)
17.8
(9.8)
–
(6.0)
(1.3)
(3.6)
Non-recurring Items
(2.4)
–
thl
100% owned entities
400.9
48.6
448.0
69.1
423.0
62.1
423.3
10.2
Joint ventures
(9.2)
45.3
(11.3)
52.6
Associates
(0.4)
4.5
0.2
4.2
Group Total
400.9
39.1
497.7
69.1
423.0
51.1
480.1
10.2
Year ending 30 June 2020
Year ending 30 June 2019
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
EBIT margin
44
$M
FY20
FY19
VAR
FY20
FY19
VAR
FY20
FY19
VAR
THL Rentals
New Zealand
22.0%
21%
0.8%
27.9%
27.7%
0.2%
0.0%
7.5%
(7.4%)
Australia
11.6%
14%
(1.9%)
20.1%
20.0%
0.1%
(24.5%)
(2.5%)
(21.9%)
USA
6.9%
8.7%
(1.8%)
5.3%
12.5%
(7.2%)
9.1%
2.0%
7.1%
Total Rentals
13.4%
15%
(1.2%)
18.1%
20.2%
(2.1%)
2.4%
3.2%
(0.8%)
NZ Tourism
12.8%
29.6%
(16.9%)
30.3%
30.8%
(0.5%)
(177.3%)
26.8%
(204.1%)
EBIT margin (before non-recurring)
12.7%
14.7%
(2.0%)
18.6%
20.0%
(1.4%)
(2.2%)
3.7%
(5.9%)
Full year
4 Months to 30 June
8 Months to 29 February
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
EBITDA
45
Full Year8 Months to 29 February4 Months to 30 June
$MFY20FY19VARVAR %FY20FY19VARVAR %FY20FY19VARVAR %
EBIT48.6 62.1 (13.5)(22%)53.5 57.0 (3.5)(6%)(4.9)5.1 (10.0)(196%)
Add back non-cash items:
Depreciation 62.0 51.5 10.4 20% 41.0 33.2 7.8 24%21.0 18.4 2.6 14%
Amortisation1.2 1.1 0.1 6% 0.7 0.7 (0.1)(7%)0.5 0.4 0.1 33%
EBITDA111.7 114.8 (3.1)(3%)95.1 90.9 4.3 5% 16.6 24.0 (7.4)(31%)
EBITDA before non-recurring items
Full Year8 Months to February4 Months to June
$MFY20FY19VARVAR %FY20FY19VARVAR %FY20FY19VARVAR %
EBIT before non-recurring Items51.0 62.1 (11.1)(18%)53.5 57.0 (3.5)(11%)(2.5)5.1 (7.6)(148%)
Add back non-cash items:
Depreciation 62.0 51.5 10.4 20% 35.9 33.2 35.9 24%26.1 51.5 (25.5)(49%)
Amortisation1.2 1.1 0.1 6% 0.7 0.7 (0.1)(7%)0.5 0.4 0.1 33%
EBITDA before non-recurring items114.2 114.8 (0.7)(1%)90.1 90.9 32.3 (1%)24.1 24.0 0.1 1%
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Balance sheet
46
* Calculated based on thlshares on issue at the relevant balance date.
As at
As at
$M
JUN 20
JUN 19
VAR
Equity
325.1
277.0
48.1
Non current liabilities
184.4
239.0
(54.6)
Current liabilities
62.2
86.5
(24.3)
Lease Liabilities (IFRS 16)
81.9
0.0
81.9
Total source of funds
653.6
602.5
51.1
Intangible assets and goodwill
50.3
44.2
6.1
Investments in associates and joint ventures
14.4
56.1
(41.7)
Property, plant and equipment
359.7
407.0
(47.3)
Right-of-use assets (IFRS 16)
69.6
0.0
69.6
Non-current derivative financial instruments
0.0
0.0
0.0
Financial asset at fair value through income statement
21.4
0.0
21.4
Deferred tax assets
1.7
0.0
1.7
Current assets
136.6
95.2
41.4
Total use of funds
653.6
602.5
51.1
Net debt position
127.7
202.2
(74.5)
Net tangible assets (NTA)
274.8
232.8
42.0
NTA per share*
$1.86
$1.87
Book value of net assets per share*
$2.20
$2.10
Debt / debt + equity ratio
(net of Intangibles)
32%
46%
Equity ratio (net of Intangibles)
46%
42%
AUD exchange rate at period end
0.9340
0.9561
USD exchange rate at period end
0.6426
0.6694
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Funds employed
47
* thlaverage funds calculated over a 12 month period.
Average FundsYear end Funds
$MFY20FY19VARJUN 20JUN 19VAR
Rentals
New Zealand163.4159.13% 152.4148.43%
Australia80.381.5(1%)68.772.2(5%)
USA170.3162.05% 143.8184.3(22%)
Total Rentals414.0402.63% 364.9404.9(10%)
Tourism Group16.222.0(26%)16.921.9(23%)
Joint Venture (excl. Togo Group)10.89.315% 10.99.99%
Associates4.54.27% 4.04.3(6%)
Group Support Services17.8 (1.3)(1477%)56.2 (4.1)(1462%)
Total Net Funds Employed Before Togo Group463.2436.86%452.9436.94%
Togo Group*34.543.3(20%)0.042.3(100%)
Total Net Funds Employed, incl Togo Group497.7480.14% 452.9479.2(5%)
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Gain on vehicle sales and gross profit
48
Full Year
8 Months to 29 February
4 Months to 30 June
$M
FY20
FY19
VAR
VAR %
FY20
FY19
VAR
VAR %
FY20
FY19
VAR
VAR %
Proceeds from sales of motorhome fleet
124.2
109.6
14.5
13%
66.8
66.7
0.1
0%
57.4
42.9
14.5
34%
Net book value of vehicles sold (incl writeoffs)
108.5
95.6
12.9
14%
57.2
56.3
0.9
2%
51.3
39.3
12.0
31%
Gain on sales of motorhome fleet before selling costs
15.6
14.1
1.6
11%
9.5
10.4
(0.8)
(8%)
6.1
3.7
2.4
66%
Vehicle sales costs (warranty only)
1
1.1
1.2
(0.1)
(7%)
0.7
0.7
(0.0)
(5%)
0.4
0.5
(0.1)
(27%)
Gain on sales of motorhome fleet after selling costs
14.6
12.9
1.7
13%
8.8
9.6
(0.8)
(8%)
5.7
3.2
2.6
81%
Gross profit on non-fleet vehicles, retail and accessory sales
3.4
3.5
(0.1)
(3%)
1.4
1.3
0.1
7%
2.0
2.2
(0.2)
(9%)
Reported gross profit
18.0
16.4
1.6
9%
10.2
11.0
(0.7)
(7%)
7.7
5.4
2.4
44%
Total average gain on sale ($000) after selling costs
8.9
8.0
0.9
11%
9.2
10.1
(0.9)
(9%)
8.4
4.8
3.7
77%
Fleet motorhomes sold (incl writeoffs, excl buybacks)
AU
266
255
11
4%
189
168
21
13%
77
87
(10)
(11%)
NZ
470
489
(19)
(4%)
332
257
75
29%
138
232
(94)
(41%)
US
900
869
31
4%
438
528
(90)
(17%)
462
341
121
35%
Total fleet motorhomes sold (units), excl. buybacks
1,636
1,613
23
1%
959
953
6
1%
677
660
17
3%
Flex fleet sales on buy-backs excluded from above
AU
325
307
NZ
-
10
325
317
Total fleet sales
AU
591
562
NZ
470
499
US
900
869
1,961
1,930
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Trends
49
Revenue $M
EBIT $MEBIT Margin
1
$M
EBITDA $MTotal NPAT $MGroup ROFE
1
(Average Funds)
1
EBIT margin and Group ROFE calculated on EBIT before non-recurring items
30.2
37.5
27.9
20.0
24.9
1.9
7.3
62.4
29.8
27.4
FY17FY18FY19FY20
Ordinary NPATNon-recurring items
111.7
47.7
63.5
62.1
51.0
23.1
(2.4)
FY17FY18FY19FY20
EBIT before non-recurring itemsNon-recurring items
87.5
110.9
114.8
114.2
23.1
(2.4)
134.0
FY17FY18FY19FY20
Non-recurring itemsEBITDA before non-recurring items
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Capital expenditure in FY20
50
Proceeds from Fleet Sales ($M)
Net Capital Expenditure ($M)
Notes: Fleet purchased or sold under buyback arrangements are not treated as additions/sales of fixed assets, but are treatedasoperating leases under IFRS reporting. For the purposes of the above, the purchases
and sales values under buyback arrangements are included. The above also includes non-fleet capital expenditure, which has been categorised as core capital expenditure.
Some investors may assess net CAPEX in a non-GAAP manner. The net CAPEX of -$16M could be compared to the total depreciation
for FY20 of $54M, thus showing a net divestment of $70M in CAPEX.
58
58
76
(16)
CoreFlex
FY17 FY18 FY19 FY20
Gross Capital Expenditure ($M)
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Return on funds employed
51
* Total ROFE calculated using EBIT before non-recurring items.
FY20
FY19
VAR
Rentals and Sales
New Zealand
17.9%
19.8%
(1.9%)
Australia
9.6%
13.9%
(4.3%)
USA
5.3%
8.0%
(2.7%)
Total Rentals and Sales
12.0%
13.9%
(1.8%)
Tourism Group
23.7%
55.9%
(32.2%)
Total Return on Funds Employed before Togo Group*
10.2%
14.2%
(4.1%)
Total Return on Funds Employed including Togo Group*
9.5%
12.9%
(3.5%)
Return on Average Funds
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O NF Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
Depreciation and vehicle sales channels
52
* The Real Depreciation Rate (RDR) is the measure of the difference between the purchase price and sale price
of the vehicles sold in the financial year. It allows for no gain on sale or costs associated with the sale or
management of the vehicle.
Channels used for SaleRetailWholesale
NZ~ 87%~ 13%
AUS~ 22%~ 78%
USA - RB 0%100%
USA - EM~ 65%~ 35%
UK~ 20%~ 80%
Real Depreciation Rates per annum *
FY20
FY19
AU
7%
7%
NZ
6%
6%
US
5%
4%
F Y 1 9
F U L L Y E A R R E S U L T S
P R E S E N T A T I O N
53
F Y 2 0
F U L L Y E A R R E S U LT S
P R E S E N TAT I O N
F Y 2 0 F U L L Y E A R R E S U L T S P R E S E N T A T I O N
End
---
Resilience
to reset
INTEGRATED
ANNUAL REPORT
2020
Our crew have continued to deliver in a
tough operating environment. Even before
the outbreak of COVID-19, we were starting
to see macroeconomic pressures and
impacts of climate change related to
extreme weather events like the Australian
bushfires. We discuss our resilience to reset
in detail in the following pages and wanted
to acknowledge our crew, who have
continued to deliver exceptionally well
through these most challenging of times.
The Board acknowledges its responsibility to ensure the integrity of the Integrated
Report. The Board recognises that integrated thinking has become more critical
than ever as we do not only need to survive, but we have to have the right systems
in place to thrive again, including the infrastructure, human capital and stakeholder
networks. The Board has applied its mind to the Integrated Report and believes that
it addresses the most material issues, presents fairly the integrated performance
of the organisation and its impacts in accordance with the principles set out in the
International Integrated Reporting Council (IIRC) Framework. The Integrated Report
has been prepared according to the IIRC guidelines.
The Integrated Report was approved by the Board on 17 September 2020 and is
signed on its behalf by:
Rob Campbell
Chairman
Rob Hamilton
Chair of the Audit Committee
02 A year of two parts:
Financial highlights
04 thl at a glance
06 Chairman's report
1 0 CEO's report
16 We remain future focused
22 Our evolving value model
24 Resilience to reset around
the world of thl
26 - Alternative revenue
30 - Domestic tourism
34 - Discover Waitomo
36 Reflections on the
first eight months
38 Governance year in review
44 Divisional reports
44 - New Zealand
45 - Australia
46 - USA
47 - Tourism operations
48 - thl digital
49 - Equity investments
51 Directors' statement
52 Financial statements
110 Independent auditor's report
117 Corporate governance
133 Board of Directors
134 Corporate information
A year of
two parts
Financial highlights
as at 30 June 2020
This year we have chosen to also present the FY20
figures on a first eight months and second four
months basis, to provide additional insight into our
performance prior to the impact of COVID-19 as well
as our performance during the last four months of
the financial year.
$401M
(FY19 $423M)
TOTAL
$137.5M
to June 2019
4 MONTHS
$285.5M
to February 2019
8 MONTHS
$5.1M
to June 2019
4 MONTHS
$57.0M
to February 2019
8 MONTHS
-$2.5M
to June 2019
4 MONTHS
$30.3M
to February 2019
8 MONTHS
$112.6M
to June 2020
4 MONTHS
$288.3M
to February 2020
8 MONTHS
-$0.6M
to June 2019
4 MONTHS
$30.3M
to February 2019
8 MONTHS
$1.8M
to June 2020
4 MONTHS
$25.5M
to February 2020
8 MONTHS
860
to June 2020
4 MONTHS
1,206
to February 2020
8 MONTHS
829
to June 2019
4 MONTHS
1,230
to February 2019
8 MONTHS
-$4.9M
to June 2020
4 MONTHS
$53.5M
to February 2020
8 MONTHS
-$5.5M
to June 2020
4 MONTHS
$25.5M
to February 2020
8 MONTHS
REVENUE
-5
%
-8
%
-22
%
0
%
-28
%
$48.6M
(FY19 $62.1M)
TOTAL
EARNINGS BEFORE INTEREST & TAX*
*Inclusive of non-recurring items.
*Excludes the following non-recurring items:
• a partial Togo exit undertaken in March 2020 which resulted in a one-off gain of $9.3M including tax and foreign exchange benefits.
• tax benefit of $1.1M in the USA.
• the write-off of $3.1M of goodwill attributed to Kiwi Experience.
~20,000
From 25 May 2020 to 16 August 2020, we confirmed
~20,000 bookings on our 'get moving, to get New Zealand
moving' packages.
TOTAL
NZ DOMESTIC CAMPAIGN BOOKINGS
$27.4M
(FY19 $29.8M)
TOTAL
NET PROFIT AFTER TAX*
$20.0M
(FY19 $27.9M)
TOTAL
UNDERLYING NET PROFIT AFTER TAX*
2,066
(FY19 2,059)
TOTAL
VEHICLE SALES QUANTITY
*Inclusive of non-recurring items.
thl Integrated Annual Report 20200203
NEW ZEALANDAUSTRALIAUSAUK
thl at a glance
~90
330
4,000
Equity Investments:
FY20:FY19:
~150
74 million
74,000
Brands:
FY20:
FY19:
~900
94 million
716,000
employees
pick ups on the busiest
day – 29 May 2020
~600
~260
kilometres travelled
76 million
vehicles sold
575628
562
869
customer experiences
delivered
550,000
Brands:
Equity Investments:
FY20:FY19:
visits to our website in
the first two weeks of
the 'get moving, to get
New Zealand moving'
campaign
500,000
~400
60 million
102,000
Brands:
FY20:FY19:
employees
~130
kilometres travelled
66 million
vehicles sold
including buybacks
591
customer experiences
delivered
60,000
employees
* went down to 240 in
March back up to 300
by 30 June 2020
~300
kilometres travelled
50 million
vehicles sold
900
customer experiences
delivered
80,000
employees
~40
vehicles sold
262
customer experiences
delivered
6,330
pick ups on the busiest
day – 5 June 2020
~182
pick ups on the busiest
day – 4 July 2019
~215
pick ups on the busiest
day – 18 July 2019
~60
Brands:
JAPAN
Brands:
Franchise Operation
Brands:
SOUTHERN AFRICA
Franchise Operation
REST OF THE WORLD
thl Integrated Annual Report 20200405
We have delivered to the initial goals,
secured the balance sheet, protected
our people, and created opportunities.
We must do more of the same in the
year ahead.
This is the second year in which we
have produced an Integrated Report,
which provides the reader with more
than just a financial view of the
company’s performance and outlook.
As with our first Integrated Report,
we are using the six capitals (IIRC)
approach to guide the structure of
our report.
Resilience to reset
The theme for our Integrated Report
this year is ‘resilience to reset’. The
“resilience” element reflects our
response to the unprecedented
disruption brought about by
the COVID-19 pandemic, and the
speed and creativity in which we
pivoted our business and made
critical decisions in the midst of an
ongoing crisis. How we responded
is an important component of this
report and is covered in detail.
The “reset” element is, we consider,
the silver lining amongst the current
turbulence. The impact of COVID-19
has disrupted our daily lives in a way
never seen before. Yet it has brought
about an opportunity to reset with
the right fundamentals underpinning
the business. We are positioned to
challenge matters that were previously
assumed to be permanent, and to
make meaningful and transformational,
rather than incremental change in our
business for the post COVID-19 world.
This is equally applicable to
the tourism industry and society
as a whole.
It is in this context that our Future-Fit
Business commitment is strengthened.
We must acknowledge that some
aspects of our Future-Fit path will
necessarily have to change in the
short-term due to the cost reduction
measures in place for now. We will
have to adopt a less data and
measurement driven approach.
However, we continue to embed the
six capitals framework and system
thinking into our way of working,
and our Future-Fit goals will drive
the fundamentals underpinning
our business as we reset.
Financial performance
Our net profit after tax (NPAT) result
of $27.4M (underlying NPAT of $20M)
was down on the prior year by $2.4M,
and our operating earnings before
interest and tax (EBIT) for the
100%-owned thl businesses delivered
a result of $48.6M, down $13.5M
compared to $62.1M in FY19. In this
unique year these metrics do not
give adequate insight into our
performance for the year.
Given the developments that occurred
part way through the financial year,
the year is best viewed through two
lenses – one for the first eight months
and another for the last four months, in
which we operated in an environment
impacted by COVID-19. In this report,
at times we will refer to these periods
as ‘the first eight months’ and ‘the last
four months’. Our intent is to provide
insight on the progression of the
business from the prior year, and then
a clear delineation of the impacts
of COVID-19 which should help to
guide expectations for the coming
year and beyond.
In particular, our US business achieved
a growth in vehicle sales proceeds of
79% during the last four months,
compared to the prior corresponding
period. A twist of fate would have it
that the US vehicle sales market,
which only a year ago appeared to be
the aspect of our business encountering
the greatest headwinds, has now
become our strongest performer in
the COVID-19 operating environment.
The diversification of our markets,
each with different scales and
operating with countering summer
seasons has been particularly
beneficial during this period.
Financial and manufactured
capital
We are a business heavily invested in
physical assets – mainly motorhomes.
The reasonably liquid nature of these
assets provide our business model
with flexibility that not all asset-
intensive businesses possess. This
was demonstrated in the last four
months, in which we commenced
the right-sizing of our fleet.
The sales proceeds that we generated,
whilst maintaining healthy margins,
allowed us to strengthen our balance
sheet by achieving debt reduction of
approximately 30% in the last three
months of FY20. We were able to
become one of the few publicly-listed
tourism operators in our region to not
seek additional equity. This was the
best outcome for thl shareholders
given that the share price was, and
continues to, trade at well below the
highs of recent years, and at times
below the net assets of our company.
This doesn’t mean we will never raise
equity, but we have created a strong
level of stability and confidence with
our lenders. As at 31 August 2020,
our net debt (excluding the Action
Manufacturing letter of credit) has
reduced to $75M, a drop of $112M from
31 March 2020.
"The impact of COVID-19 has disrupted our
daily lives in a way never seen before. Yet it has
brought about an opportunity to reset with the
right fundamentals underpinning the business."
Dear Shareholders
On behalf of the Board, I present the
Integrated Report and accounts for the
2020 financial year (FY20).
We ended the financial year in a world
that looks very different from a year prior.
The impact that COVID-19 has had on
each part of our business has been severe.
The primary focus of the business in recent
months has been to shift the model from
one of continual improvement and growth
to one that is focused on ensuring survival
and creating the frameworks to prosper
again as conditions improve and
opportunities arise.
Rob Campbell
Chairman
CHAIRMAN'S REPORT
07thl Integrated Annual Report 202006
Human capital
In the last four months we experienced
the biggest organisational change in
the history of thl. The substantial and
sustained downturn in revenue and
prospect of extended operational
losses meant we had to review all
expenditure across our business.
We pulled the levers available to
us by stopping uncommitted capital
expenditure, arranging for rent
abatement and deferrals, and as a
Board and Executive team, agreeing
to temporary reductions in fees and
salaries. We made use of the
Government support available
through various wage support
schemes. We explored options to
raise revenue in new and unique ways,
and in New Zealand we launched
heavily discounted pricing to increase
operational activity. Many jobs were
kept in place as a result.
Despite all of these actions, like
many other businesses, we were in
a situation where our crew numbers
no longer aligned with our operational
needs, resulting in a difficult but
necessary decision to reduce the
number of people we employ. This
was a devastating situation faced
by most in our industry. This wasn’t
about the performance of our crew; it
has simply been beyond our control.
Intellectual capital
From an intellectual capital
perspective, thl has had a mixed year.
On the one hand, the unavoidable
reduction in staff results in
organisational knowledge being lost,
despite us taking measures to retain
the capabilities needed. On the other
hand, the unique circumstances and
the manner in which the business
responded, showed the intellectual
capability and depth in the
organisation. There are many stories
throughout this Integrated Report
which highlight that strength.
We had to go back to the
fundamentals of business design,
as overnight we had transformed
from primarily an RV rentals and
sales business to a company that
owned a large fleet of underutilised
motorhomes and branches. The team
showed the strength of their design
thinking skills in analysing the core
capabilities of our people and
products, in order to pivot our
business to alternative use cases
through different channels and
using different marketing skills.
It was this initiative that commenced
our re-deployment into becoming a
provider of temporary housing and
quarantine facilities. We were one of
the first movers in our industry to
pivot into this market. We were
proactive about contacting
Government agencies and private
organisations globally, and we were
able, on short notice, to leverage our
operational expertise and existing
infrastructure to meet COVID-19
containment needs in the countries
we operate in.
Social and relationship capital
It has never been clearer that as an
organisation, we operate as part of
a wider system of relationships with
our suppliers, Governments, the
community and wider stakeholders.
All of these relationships are
interconnected and, from time to
time, each will need to rely on one
another to ensure continuity.
As an organisation, with the support
of our crew, we were able to make
our contribution to this wider system
through our provision of temporary
housing and quarantine facilities.
Many of the thl crew from our
operational teams, to our head office
crew and our senior management,
stepped up to assist in deploying
these solutions at short notice
regardless of the situation. On behalf
of my fellow Directors, I want to take
this opportunity to thank all of the
employees who have worked so
tirelessly through this most
challenging time. There are so many
people that performed well above
expectations. I am confident that we
have a team that can lead us through
the next stages of this crisis and to
a point where we will be stronger
than before.
Through our ‘get moving, to get
New Zealand moving’ campaign,
we have engaged with a new group
of customers, many of whom are
first timers with thl or to travel by
campervan. Our customers are at
the heart of everything we do at thl,
as our core purpose is to ‘create
unforgettable holidays’. Undoubtedly,
we have had some operational
challenges in New Zealand given the
momentous response to the ‘get
moving, to get New Zealand moving’
campaign, while adjusting to changes
in Alert levels, and more recently, due
to the devastating fire at our Māngere
“We have the goal to become cash
flow positive within the core global
rentals business, and seek to continue
to drive profitable sales of motorhomes,
maximising the strong tailwinds in the
global sales market at present.”
branch. However, the majority of
our customers have been highly
supportive and understanding.
We have had numerous customers
thanking the crew for the campaign,
which has given them the opportunity
to take a campervan holiday which
otherwise would have been out of
reach. Customers also reached out
to our crew after the Māngere fire
by bringing flowers, chocolates and
cards, after seeing how tirelessly our
crew were working at our temporary
branch to ensure our customers
could still take their holidays, while
still devastated by the recent event.
I would like to thank all of our
customers over the last 12 months,
including those who are new to thl,
and hope that we are able to
accommodate you for your future
campervan holidays in more
normal times.
Natural capital
The last 12 months have seen
numerous crises, each of which alone
could be considered a catastrophic
event. In September 2019, we saw
the start of intense bushfires burning
throughout Australia which continued
for six months. In 2020 we saw the
emergence of COVID-19 which,
although unrelated to our actions in
society, was a clear illustration of the
vulnerability of our global economy
and the impact that an external
shock can have on our normal way
of living. Recently we have seen
more devastating fires in the US,
closing some of our branches. I was
disheartened to find myself recently
referring to the risk posed to our
business from the upcoming wildfire
season, which has unfortunately now
become considered a norm, as
opposed to an infrequent anomaly.
Our world’s natural capital resources
are finite, cannot be replaced and
are essential to the functioning of
our economy, and more broadly
society, as a whole. We can recycle,
regenerate, but not replace.
The occurrences of these events
demonstrate that there are clear and
direct consequences to our inaction
on climate change and that we will
have to change our habits to fit our
environment, not the other way around.
Where to next?
To an extent never before seen,
the future of thl and society more
generally, is uncertain and the old
adage of ‘the only certainty is
uncertainty’ rings true. How long
it takes for international borders
to open, and for a sense of normality
to return to daily life on a global basis
is an unknown, and something that is
out of our control. Expectations in this
area are constantly changing. Some
months ago, a Trans-Tasman bubble
seemed likely to be implemented
shortly, yet even that possibility now
seems to be some time away.
What is in our control at thl, is the
ability to constantly assess all of the
likely scenarios as developments
occur, and to reassess and prepare
thl for any of those scenarios on an
ongoing basis. It is that drive which
has led us to our framework for the
upcoming financial year, ‘create
flexibility through fleet management,
cost reduction and debt reduction’.
On 31 July, we released our approach
and framework for the coming year.
That framework guides us for now,
but we will be constantly reassessing
and responding as the environment
inevitably changes. From an outlook
perspective it would be foolish to
provide a forecast for the coming
12 months. We have the goal to
become cash flow positive within the
core global rentals businesses, and
seek to continue to drive profitable
sales of motorhomes, maximising
the strong tailwinds in the global
sales market at present.
In short, based on what we can see
today, we are confident that we have
managed the situation effectively to
date to survive, we have created new
opportunities with decisive action,
and we are well prepared to make
the most of a recovery when it
commences. As of today, in our view
it is not a matter of if thl will return
to recent historical profit highs, but
when. Importantly, we will also look
to be a better version of ourselves
from a Future-Fit perspective.
This is a difficult balance, but not
an impossible one with vision and
action combined in equal parts.
Across the thl Board and Executive
team, we have an extensive amount
of experience in both the RV and the
wider tourism sector. The thl Board
believes that we have the right
people and culture, as well as balance
sheet strength, to direct thl through
these uncertain times and into a
position in the future that is better
than before.
Rob Campbell
Chairman
thl Integrated Annual Report 20200809
CEO'S REPORT
Off the back of that context, we
consider our FY20 NPAT result of
$27.4M (underlying NPAT of $20M)
to be an admirable achievement,
and a reflection of our responsive
cost control, determined alternative
revenue generation and solid marketing.
Despite this, we acknowledge it was
down on the prior year by $2.4M.
The result is reflective of contributions
made by a large number of stakeholders.
Firstly, the hard work and dedication
of the thl team across the entire year,
but particularly in the last four months
in which many remained resilient and
continued to dedicate themselves,
many on reduced pay or reduced
hours. Add to that the Government
support schemes thl received, the
support we received from our
landlords and our banking partners,
and some critical and well thought
out strategic decisions by the thl
Board and management team in
the midst of a crisis.
The first eight months
In our FY19 Integrated Report, we
referred to our mantra for the FY20
financial year as being ‘Don’t Stop.
Change. Deliver’. For the first eight
months to March, management were
heavily focused on executing to that
mantra. In every part of the business
this meant a relentless focus on doing
things better. The US market was
improving but still relatively weak, so
driving outcomes from the US review
of 2019 was the top priority to ensure
that we improved our capital employed
and operating returns within this
market. By contrast, the New Zealand
rentals business had delivered another
year on year record performance over
the peak season, but still had the
same level of focus driving operational
efficiencies and improved customer
experience to ensure continued
growth. Australia’s performance in
the first half had tracked well, before
being impacted by the bushfires.
The tourism businesses were equally
focused on growth opportunities and
driving operational improvements.
Kiwi Experience had turned the corner
and was on track for a positive year,
growing market share on an improved,
lower cost base.
The last four months
Then in March, as the severity of
COVID-19 became clear and global
travel restrictions and quarantine
measures came into place, thl,
along with the rest of the tourism
industry, did exactly the opposite
of our mantra for FY20 – it stopped;
however we did get back up, change,
and then delivered on our immediate
goal of survival.
Having a global footprint and being
heavily reliant on international
tourism, we became quickly aware of
the COVID-19 travel restrictions that
were first implemented in the US and
began to plan for a range of scenarios
for all of our businesses globally. While
the ultimate speed and severity of the
pandemic, and its total disruption of
‘business as usual’ could not have
been anticipated, as a group we
adopted a ‘crisis’ approach very early
on and pivoted rapidly to each new
announcement and change in
our operating environment.
At roughly the start of the COVID-19
pandemic, we had net debt of $188M
(as at 31 March 2020). As at 31 August
2020, net debt was $75M. While our
revenue largely disappeared overnight
and cancellations commenced in large
numbers, we sought to take action in
the areas
that we still had some control over.
The speed of cost cutting and cash
preservation we implemented to
ensure survival, while at the same
time managing the operational
challenge of winding down tourism
related travel was no mean feat.
In April and May 2020, with the
assistance of Government support
packages globally, we reduced our
operating costs down to $14.5M,
compared to $34.7M for the same
period in FY19.
Our ability to quickly pivot and
develop a compelling proposition
for COVID-19 related use cases for
our motorhomes in each country was
a testament to the resilience, agility
and creativity of our people. In this
space, thl was the leader and created
the wave of COVID-19 quarantine
accommodation, which was followed
by others in our industry. Across our
business we estimate that the
quantum of this form of alternative
revenue since March 2020 has been
well in excess of $7M.
We identified these opportunities and
responded with urgency. We went
from a concept to having full isolation
facilities set up with dozens of
motorhomes in a matter of days.
"Our ability to quickly pivot and develop a compelling
proposition for COVID-19 related use cases for our
motorhomes in each country was a testament to the
resilience, agility and creativity of our people."
Dear Shareholders
This is a very different report, a year which
is best assessed as two separate periods,
being the first eight months of normal
operations, and the last four months of thl
operating in a COVID-19 world. Those last
four months have been difficult for many,
but as one of the businesses at the
forefront of tourism, it is easily said that
the impact of COVID-19 is the single
greatest challenge that thl has faced in its
history. However we responded decisively
and will continue to do so, positively, with
focus and energy.
Grant Webster
CEO
11thl Integrated Annual Report 202010
All of these actions were delivered
with care and diligence from an
employee and customer health
and safety perspective. This feat
is a real testament to our
operational capabilities and agility,
our understanding of the market
and the value of the relationships
we have established globally over
the years. It is a true example of
thl executing to the second and
third elements of our mantra –
Change; Deliver.
Our framework for FY21
Given the increased uncertainty of
the current environment, in July we
decided it was appropriate to provide
you, our shareholders, with an update
on our direction for the year ending 30
June 2021 (FY21). That direction is well
summarised in a single statement
– ‘creating flexibility through fleet
management, cost reduction and
debt reduction’.
A surprisingly positive consequence
of restrictions on international travel
has been the growth in popularity of
the RV as a travel type domestically.
As an independent mode of transport
allowing freedom of travel away
from densely populated areas, the
motorhome is well suited to a world
concerned with COVID-19. This,
combined with the decline of other
means of travel has created a
significant amount of category
growth for RVs, with some in the
United States RV industry dubbing
2020 as the ‘Year of the RV’.
In the US we are riding the RV wave
well, setting record vehicle sales
performances in back to back months
in June and July, and following with
another excellent sales performance
in August. In New Zealand, we took
the initiative to create the wave of
excitement ourselves through our ‘get
moving, to get New Zealand moving’
campaign, with our motorhomes
available for hire at our lowest rates
in recent history.
We recently also launched ‘the Great
New Zealand Motorhome Sale’
campaign, with 1,000 additional
vehicles being made available across
New Zealand in our branches and
partnership with dealers. To date this
has been received very positively.
This campaign is all about flexibility,
and maximising the strengths of our
business. As we sell down our fleet,
we create more options for thl. We
always retain the ability to quickly
ramp up our business again when
required. We continue to sell our
vehicles with healthy sales margins,
evidencing the quality of our
motorhomes and sales channels.
This is a result of decades in the
manufacturing and design industry
with first-hand experience on what
works and what doesn’t from both
a quality and design perspective.
thl as a vehicle sales business
As mentioned in our July market
update, our framework for FY21 was
on the assumption that we will be
operating in a domestic-only
environment for the majority, if not
all, of the year.
In the absence of an international
market, naturally we pivot our
business more towards the aspects
that have always served domestic
customers, namely vehicle sales,
servicing and retail product.
People
The changes to our business in
the last four months included an
organisational restructure of a scale
never before seen at thl, in order
to align our crew levels with our
significantly reduced operational
needs. Across the business, at our
lowest point we had a reduction in
labour costs of almost 60%. These
changes were difficult but necessary
actions that impacted thl crew from
all aspects of the business, whether
they were recent additions or long-
standing members of our team.
I would like to take this opportunity
to thank all of our former thl crew
that were impacted by these
decisions for the contribution they
made to the business. We lost a lot
of talented and loyal thl crew. We have
every hope that we can re-employ
many of those crew in future, as we
have done recently in the US.
The 'get moving, to get New Zealand
moving' campaign was driven by
several objectives across a number
of the six capitals. By all measures,
this campaign was a huge success in
promoting our industry and achieved
the objective of getting New Zealanders
moving to explore their own backyards.
The activity generated through our
normally subdued winter period
enabled us to retain well over 100 more
jobs in New Zealand than if we had
operated in a manner consistent with
a normal winter period.
Surveys we conducted in New Zealand
as part of our campaign also showed
that we were reaching a new, younger
audience that had never travelled
by motorhome before: 65% of
respondents indicated that it was
their first time using a motorhome,
with 85% indicating that they would
travel by motorhome again.
We remain focused on the wellbeing
of our crew. Beyond the obvious
operational health and safety
measures we have implemented to
ensure we keep our crew, and our
customers, safe and at low risk of
contracting COVID-19, we are also
conscious of the mental wellbeing
of our team.
It is natural that with large
organisational change in this current
world environment, there comes
increased stress for individuals. In
particular, our crew in the US have
been living with months of ‘stay-at-
home’ orders and with an extremely
prevalent COVID-19 presence. We
remain in contact with our crew
globally to just check in, as well as
offering one-on-one support as
appropriate. In Christchurch, we
are trialling an anonymous wellness
daily check-in app that assists us to
understand the overall situation and to
help guide individuals to professional
services when required.
As mentioned in the Chair report, our
crew in Auckland showed enormous
resilience again this month when
the flagship branch in Auckland was
destroyed by fire. The coming year
will inevitably be tough for this team
with further changes in operating
locations, but we know they are
motivated to deliver.
Executive changes
Within our Executive team, we have
also had some recent changes with the
resignations of Jennifer Bunbury, our
Chief Financial Officer, and Jo Allison,
our Chief Operating Officer. Nick Judd
has now joined us as our new Chief
Financial Officer, bringing a wealth
of experience in the tourism industry
from 17 years at Air New Zealand.
Given Nick’s expertise and background
beyond the financial function and the
number of changes taking place, this
was an opportune time to review our
existing Executive structure.
As part of our COVID-19 response
framework, we established a thl crisis
management team consisting of Jen,
Jo, a number of General Managers
from across our business globally, and
myself. This team led the key business
decisions and response in a highly
efficient manner during the early days
of the crisis, and as a group, had a
broad set of skills that cover the key
business functions.
With this in mind, our new Executive
structure, which was implemented
on 1 September, sought to create a
small leadership team with largely
similar capabilities as that of the
crisis management team. The changes
have seen Matthew Harvey (GM
New Zealand rentals), Kate Meldrum
(GM Australian rentals) and Gordon
Hewston (Senior VP US rentals) move
into regional Chief Operating Officer
roles, taking over the majority of
Jo’s responsibilities as the former
sole Chief Operating Officer.
Ollie Farnsworth (GM Marketing &
Revenue Management) has also
moved to a new Chief Commercial
and Customer Officer role. Jo’s
remaining responsibilities have been
assumed by both Ollie and Nick. With
Steven Hall being promoted to Deputy
Chief Financial Officer, Nick is able to
take on these broader responsibilities
beyond the financial function.
Reflective of our commitment to
responsible business management
and a sustainable way of thinking, the
new Executive structure includes a
Chief Responsible Management
Officer. While Saskia Verraes (GM
Responsible Management) initially
moved into this role, Saskia will be
shortly departing thl to join the
leadership team at education provider
The Mind Lab. As such, we are
currently in the process of recruitment
for the new Chief Responsible
Management Officer role.
The new wider Executive team is a
reflection of thl as a global company
and the reality that we operate in
a very different environment. Our
response to COVID-19 demonstrated
that we have the right people,
capabilities and experience within our
existing team and are well equipped
to face the current challenges.
NPAT
$27.4M
ROFE
9.5%
Net debt*
$127.7M
The General Manager and “C” level
group in the business are the team
that have created our high points as
a business, ensured we have survived
the worst tourism period in history
and are going to re-position thl to be
successful again.
Structured exit from Togo Group
and formation of thl digital
During the early part of the calendar
year we determined that whilst we
remained supportive of the strategic
intent, the necessary further
investment likely to be required to
deliver the desired financial outcomes
of Togo Group was greater than what
made financial sense for thl at that
point in time. We have always had a
positive ongoing relationship with our
Joint Venture partner, Thor Industries,
and both commenced discussions on
the future of Togo Group in a positive
and open manner.
* Bank borrowings less cash on hand.
thl Integrated Annual Report 20201213
" A surprisingly positive consequence
of restrictions on international travel
has been the growth in popularity of
the RV as a travel type."
Perhaps we will see customers
become more attuned to the benefits
of working with companies that are
measuring what all of their impacts
are on society, and perhaps we will
see communities embrace our type
of tourism in a more inclusive manner.
We remain committed to reaching
the break-even point for all 23 of our
Future-Fit goals, as we continue to
believe that it is simply better business.
Capital expenditure
As indicated in our market update
in July, we have been focused on
minimising capital expenditure in the
current environment, except where
required. Since then, we have decided
that we will be reinvesting in fleet
in the US, as we have confidence in
our ability to perform in the July –
September 2021 summer season,
whether it be on a domestic only basis
or with a return of international
tourism to the US. Despite this
reinvestment, we expect that the total
fleet we will operate in that summer
period will be lower than in prior
years, and thus our total funds
employed in that business will be
lower. We currently consider the US
business as most likely to be the first
to return to EBIT profitability within
our group, and will be most focused
on delivering an appropriate return
on funds employed.
The ‘Great New Zealand Motorhome
Sale’, if successful, may also create a
situation where we invest in additional
fleet in New Zealand beyond our
currently committed capital
expenditure as outlined in our July
update. This is the flexibility we need
to create. If New Zealand’s borders
open during the 2021 calendar year,
we could be in a position where we
need additional fleet. We will work
through that scenario if and when
In working with Thor, we agreed a
deal in which thl effected a structured
exit from Togo Group through the
receipt of a combination of intellectual
property assets, a cash payment and
a residual special class minority
shareholding. Rather than a retreat
from our digital ambitions, we view
this as a necessary change to re-focus
on a cost-effective regional strategy
which will continue to keep thl as a
leader in this space in Australasia.
The transaction achieved a number
of objectives for thl and Thor.
A significant amount of intellectual
capital had been developed in Togo
Group since its formation, so it was
important that we retained rights to,
what are from a thl perspective, the
key assets of Togo Fleet, Togo Insights,
Mighway in New Zealand and the
joint venture shareholding in triptech
(formerly Outdoria). We were also
able to receive US$6M in cash, and
to retain a minority shareholding
in Togo Group that Thor have the
option of acquiring at any time in
the next four years at a purchase
price of US$20M. In the interim,
we also receive an annual payment
of US$600,000 over that four
year period.
Shortly following our structured exit,
we expanded our regional digital
offering through the acquisition of
the New Zealand and Australian
businesses of SHAREaCAMPER, a
peer-to-peer RV rentals business
similar to Mighway. We were also
able to take a majority shareholding
position in triptech. Both of these
opportunities became available to
us with minimal requirement for
capital investment, enabling us to
develop our technology portfolio
notwithstanding the headwinds
relating to COVID-19.
it occurs. Our banking partners
continue to be supportive of our
business and understand the need
for us to meet demand as it returns.
Capital position and balance
sheet
There has been a reasonable amount
of commentary in the market about
tourism and travel companies, and
the need for additional shareholder
equity. We have, since the start of the
COVID-19 crisis, assessed our balance
sheet position and whether we have
needed to raise equity. We have
worked with our lenders, and as
indicated in several places throughout
this report, we have managed our
fleet position well in order to reduce
debt. We will continue to consider our
equity position, however at present
we are in a position where we are
using our existing shareholder equity
and reducing debt.
Given that thl is likely some time
away from becoming profitable in
all businesses in our group, we are not
considering in depth what we believe
the right debt to equity ratio is for this
business, in the new environment.
We have also not reviewed our dividend
policy at this point, but have previously
advised that there will be no dividend in
the 2020 calendar year. Moving forward,
we seek to return to paying dividends.
The current terms of our banking
facilities require approval from our
banking partners for any distributions.
Governance
As management, you always hope
that you have the right skills and
capabilities as a collective on your
Board for all situations, a crisis
included. From a management
perspective, we can reassure
We have now established this
technology arm, consisting of an
impressive portfolio of businesses
including Fleet (interim name),
Insights, Mighway and
SHAREaCAMPER, as thl digital.
Together with our investment in
triptech, thl digital forms our
regional digital strategy.
A few months on, we are now ready
to launch the Fleet and Insights
products within our thl core rentals
business. It is timely to remind
shareholders that this suite of
products lies at the heart of the thl
rentals management processes. It is
equivalent to a heart transplant for the
business and replaces a system that is
well over 20 years old. The team, over a
number of years, have created, what
we believe is the most sophisticated
RV rental management software in
the world, which we expect to enable
more efficient revenue, fleet and cost
management across the business.
New Zealand and Australia launch this
calendar year and we hope to launch
in the US in 2021.
Future-Fit business
The FY19 report was, in my view, a
substantial highlight for the nearly
35 years that thl has been operating.
It marked a move to thl becoming
a better business that was building
a stable foundation and taking a
long-term view that would ensure
all stakeholders could benefit in an
appropriately balanced manner.
The reality in the current environment
is that some of our work in this space
has slowed, but we are also taking the
opportunity to see what aspects we
may be able to accelerate. With the
lowest fleet renewal for many years,
perhaps we will see an opportunity
for suppliers to accelerate the
electrification of our vehicle chassis.
shareholders that we are fortunate to
have a Board which has been highly
engaged, appropriately responsive
and provided excellent advice and
guidance during the worst of the
outlooks. In particular, it should be
noted that our Chair has worked
tirelessly across his interests, providing
global insights and support to thl
management every day of the week.
Outlook, next steps and
opportunities
As indicated previously, we are not
currently in a position to provide a
forecast for FY21, given the ever
changing external landscape and
number of influential factors that are
beyond our control, including the
restrictions on international travel.
We have indicated how we see our
business operating in a domestic-only
environment, and the key metrics by
which we will be managing our
business. We are focused on ensuring
balance sheet security, then will
progress towards becoming cash flow
positive, and then towards profitability
once again. We will continue to apply
ourselves in creative ways, while
remaining adaptable to the changing
environment. We believe that there is
always more to do in every business
for improvement.
In recent years we had set some goals,
and while the COVID-19 pandemic
has essentially shattered those in the
short-term, we remain confident in
our capabilities and strategy, and
therefore believe that thl’s recovery is
a matter of when, not if.
While it is important to ensure we are
appropriately focused on dealing with
the issues at hand, we have previously
mentioned that we manage thl with
the view to seeing that we continue to
be around in 10, 20 and 30 years. This
requires us to retain an element of
focus at all times on our long-term
intention, in this instance beyond the
impact of COVID-19 and our reset.
Our Crew
Despite having mentioned the
exceptional performance and
dedication of the crew on multiple
occasions, it just seems right to
conclude this year’s review with a
further reflection on the thl crew.
From the leadership team who
stepped up immediately, to the
management group that went above
and beyond expectations, and our
front line crew who came back day
after day to work hard and support our
customers, thank you.
Grant Webster
CEO
thl Integrated Annual Report 20201415
With the work on sustainability at thl since 2014 and,
more recently the commitment to the Future-Fit Business
Benchmark
1
as the underlying holistic performance
measurement, thl believes it can be counted as one of
these businesses with that wider purpose already built-in,
and this may be a contributing factor to our resilience in
the current crisis.
That said, the reality of the COVID-19 crisis on the thl “ESG”
efforts, was that it required us to put all measurement,
education and engagement work related to our Future-Fit
Business Benchmark on hold whilst we focused on
business survival.
This has meant that the commitment to establishing a
clear overview of where we are on each of the 23 Break-
Even goals by the end of FY20 has not been met, and the
start of further crew engagement that was planned in the
last quarter of FY20 has also been put on hold.
GoalHow did we do in FY20Plan for FY21
0 notifiable
incidents.
0 notifiable incidents in AU and NZ.
Number of incidents reported:
FY20FY19
Australia
3135
New Zealand
381523
0 notifiable incidents
remains our goal.
Our Health and Safety focus
stays top of mind and in
FY21 we have established
a Health and Safety role
within the Future-Fit team
that brings both
performance and strategy
components together.
Engagement score
of 75% or higher.
Whilst engagement has been a key focus throughout the
COVID-19 crisis as is evidenced throughout the report, we did
not believe this was the time to conduct a survey. We are
committed to start pulse surveys by October 2020.
We continue to commit to
delivering on all Future-Fit
people goals as soon as
possible. For FY21 this
means firstly to get our
people back to thriving.
To help with this, we are
trialling a wellness app to
give our crew a safe space
to share how they feel, and
for our leaders to listen
and learn.
Move towards
gender, cultural
and age group
diversity in all our
roles, with at least
a 5% improvement
each year from
our FY19
benchmark data.
As we did not complete a survey (see above) we do not
currently have updated data on this goal.
For our wider Board and Executive team the statistics are:
FY20FY19FY18
mfmfmf
Board
3
(50%)
3
(50%)
3
(43%)
4
(57%)
2
(33%)
4
(67%)
Wider
Executive
team
11
(73%)
4
(27%)
10
(71%)
4
(29%)
12
(80%)
3
(20%)
We continue to strive for
gender, cultural and age
group equality and we
aim to have updated
data on this by our FY21
half year release.
The global system implications of the crisis, aggravated
by lockdown measures, whilst having negative short-term
financial implications on many businesses, have shown that
businesses that have a strong governance structure, long-
term view, ability to change, as well as engaged and resilient
people, can recover and reset.
We remain
future focused
How did we perform last year?
Separate to the Future-Fit commitments, we have been
tracking the following people goals:
However, we are confident that we have a good
understanding of where we want to go long-term.
This year, whilst we agree that measurement is important,
we will focus first on embedding Future-Fit decision-
making to continue with progress towards creating System
Value, and less on resource-intensive data collection
and measurements.
Getting our people back to thriving
The outbreak of COVID-19 and associated lockdown
regulations have impacted on our crew in many ways, good
and bad. As part of the recovery process, we are reviewing
all impacts and setting our crew up to thrive again. This
includes how we work, what our workforce looks like from
a capacity and capability perspective and where we work,
Health and Safety remains a key focus, with a specific focus
on mental health and wellbeing.
1 https://futurefitbusiness.org/
thl Integrated Annual Report 20201617
Reducing our footprint
We continue to take responsibility for the emissions of our
activities, and those of our customers. We are committed
to reducing them to zero, in line with our Future-Fit goals.
All of our businesses capture data as part of their monthly
processes. This year we started looking at capturing gaseous,
solid and liquid emissions on top of the Green House Gas
emissions which we have been capturing since 2016.
Unfortunately, due to the reprioritisation of resource as part
of our crisis management plans, we have had to delay the
data capture and we have not been able to fully complete
our FY20 footprint as yet.
The teams have restarted their emissions data capture
and we will release our FY20 footprint and our new
reduction goals as part of our FY21 half year results.
Our website thlsustainability.com will also be updated
as data becomes available.
A renewed health check and becoming a Pioneer
In last year’s Integrated Report we showed the results of a
high-level assessment against the 23 Future-Fit Break-Even
goals and committed to in depth assessments conducted
throughout FY20, leading us to a full understanding on
where we are on the journey to become Future-Fit. Even
though we have not been able to fully complete these
assessments, they have given us valuable insights. In
consideration of these insights, and the impacts of COVID-19,
we felt that an updated Health Check was required with
commentary reflecting this new understanding of where
we are at on our Future-Fit journey. We share some of these
insights here.
Future-Fit
break-even goals
2019 health
check
2020 health
check
Automotive
retail heat
map rating
Tour
operators
heat map
rating
Explanation of differences between a
typical industry player and thl health
check assessments
BE01: Renewable
energy
thl operationally is already on the way to reducing
power use and replacing unsustainable power
supply. For example by swapping to power suppliers who
guarantee more renewable energy in the mix.
BE02: Water use
thl rentals operations are aligned with Automotive Retail
in terms of impact and with increased drought risk it has
become a major focus to reduce our use of water, for
example in our wash bays . We are looking at installing
water tanks where possible.
BE03: Natural
resources
For thl, management of natural resources only applies
to Discover Waitomo and our assessment in FY19 showed
that natural resources there are managed in accordance
with the fitness criteria.
BE04:
Procurement
The rating acknowledges the complexity of thl's supply
chains and low traceability especially for our motorhomes.
Supply Chain hotspot assessments are data intensive
to start with. We acknowledge that this is an important
area to understand better, and we believe industry or
RV ecosystem wide hotspot data collaboration is the
best way forward to gain full insight on our supply
chain impacts.
BE05: Operational
emissions
Rentals, Vehicle Sales and Discover Waitomo operations
align with the Automotive Retail heat map rating. For Kiwi
Experience, transporting tourists between destinations
is included as a core activity, and as such, this business
aligns with the ratings given in the Tour Operator heat
map. The data collection for emissions other then GHGs
(BE06) has proven harder then expected.
BE06: Operational
GHGs
As above, the majority of our business units have limited
scope relating to operational GHGs e.g. electricity, gas,
commuting, tyres and batteries. For Kiwi Experience, bus
operation is core operational, and therefore aligns with
the Tour Operator indicator. The collection of GHG data
is standard in our business units now, but the reduction
towards zero is a big challenge as solutions are not always
readily available.
BE07: Operational
waste
Operational waste is more challenging for thl than
described in both the Tour Operator and Automotive
Retailer heat map due to the part/product dependent
vehicle preparation process, i.e. our locations tend to
generate more waste than typically described in the heat
maps. We are well on our way to reducing our waste in all
our locations and especially our US operation has made
big inroads this year replacing single-use plastic.
BE08: Operational
encroachment
For Waitomo and Kiwi Experience, where thl decides on
destinations, or brings customers to a destination of high
value, we align with the Tour Operator heat map and
have high influence on community impact. For our other
stores/branches/locations, they are commonly located
in city-f ringes and away f rom areas of high value, and
typically align with the impact rating in the Automotive
Retail heat map. Our community assessments where put
on hold in March 2020.
Performance against Future-Fit Break-Even goals
HEALTH CHECK ASSESSMENTS SHOW
HOW THL IS PERFORMING AGAINST
THE FUTURE-FIT BREAK-EVEN GOALS
HEAT MAP INDICATORS SHOW THE
TYPICAL IMPACT OF THIS INDUSTRY
ON THE GOAL
We are on track and can
continue our journey
Typical business activities cause little harm to people
or planet in this issue
Typical business activities are unlikely to cause any
harm to people or planet in this issue area
We have minor gaps but
know how to close them
There is no evidence that typical business activities
cause either severe or little harm to people or planet
We have major gaps and
need to rethink
Different subsets of typical business activities fall into
either highest or medium impact levels
We are off track and need to
redesign our course
Typical business activities cause severe
harm to people or planet in this issue area
KEY
Becoming a Pioneer
In addition, we have become one of the world’s first Future-
Fit Pioneers
2
, extending our desire to not only become
Future-Fit ourselves, but to take others along on our journey.
To support Pioneer companies in their prioritisation efforts,
Future-Fit Foundation is creating a suite of industry specific
“heat maps”. Each heat map ranks the likely negative impact
of a particular industry with respect to all 23 Break-Even
Goals. This gives further relevance to our internal prioritisation
and impact assessment. For thl, the closest relevant heat
maps are: Automotive Retail and Tour Operators. The
rankings of both are shown in the table following. Every
Future-Fit Pioneer is expected to publish its first Statement
of Progress on the Future-Fit website within 12 months of
signing up to the programme. This is a completely new kind
of extra-financial disclosure, which explains not only where a
business is now, but where it’s going and why. We were
planning to issue our Statement of Progress alongside this
report, but Future-Fit Foundation also suffered COVID-19
related impacts which delayed completion of the disclosure
guidelines. We now expect to publish our first Statement of
Progress alongside our half year results in FY21. Until then,
for more detail on our journey, we would like to invite you to
explore our stories on www.thlsustainability.com
2 https://futurefitbusiness.org/pioneers/
thl Integrated Annual Report 20201819
Future-Fit integration and
prioritisation
An important step in FY21 is the implementation of a decision
framework that will drive our progress toward becoming
Future-Fit, even if we are not able to continue with our
assessments as originally planned. Below is the high-level
overview of the decision framework.
Based on the renewed health check and the overall impacts of the pandemic on
our people, we are prioritising the Human and Social Capital related goals this year.
Unlike some of the product harm goals, the execution of the people goals is mostly
within our own control. This is also in line with the current global trends due to
COVID-19 in ESG focus areas.
3
A key focus to achieve these goals is the implementation of a Future-Fit employee
feedback mechanism, which we aim to complete by the end of 2020.
Financial
To achieve our financial capital goals and milestones.
Manufactured
Considering the impact of our decisions on pollution (GHG and
other harmful emissions), generation of waste, intensity in usage
of energy and water, especially in areas and times of stress on
those resources. The impacts on our supply chain, and other
social and environmental impacts.
Intellectual Property
Ensuring that our communications are ethical and honest, and
that the generation and capturing of our intellectual property
and know-how is ethical.
Human
Avoiding poor labour practices including excessive overtime,
hazardous working conditions, irresponsible use of agency
labour, underpayment or non-payment, undisclosed
subcontracting, discriminatory practices and lack of rights
to representation (i.e. unions and collective bargaining).
Social/Relationship
Ensuring our activities are not harmful to land, such as
encroachment into areas of importance to local communities,
conversion of pristine ecosystems (e.g. primary forests and
wetlands), or lack of respect for community rights. The impact
of our decisions on the goodwill, health and resilience of the
communities affected by our presence and activities. Avoiding
potentially unethical business conduct in any new operational
activities.
Natural
Reviewing our use and impact on natural resources, which
could be in the form of physical degradation of the environment,
depletion of renewable resources, loss of biodiversity or diversion
of agricultural crops.
Factors driving our decision-making
3 https://www.bsr.org/en/our-insights/blog-view/rising-to-top-six-big-sustainability-issues-companies-should-watch-covid-19
For more information see www.thlsustainability.com
Future-Fit
break-even goals
2019 health
check
2020 health
check
Automotive
retail heat
map rating
Tour
operators
heat map
rating
Explanation of differences between a
typical industry player and thl health
check assessments
BE09: Community
health
For Kiwi Experience and Waitomo, we have a clear impact
on the communities we visit/we are part of. For our vehicle
sales businesses, the rating for Automotive Retail is
appropriate. For our rentals businesses, while we have no
direct control over the communities our customers visit,
we do have significant influence and look to ensure that
we listen to any community concerns and seek to make a
positive impact, explaining the variance in rating between
heat map impact ratings and our own measurement. The
community outreach work during COVID-19 has given us
a lot more insight in our place in the wider community
and our duties as a good neighbour. The implementation
of a Future-Fit community feedback mechanism is a key
goal in FY21.
BE10: Employee
health
We acknowledge the change in environment post-
COVID-19, and the increased focus on wellbeing.
Additional to this, for H&S from an adventure tourism
perspective, at Blackwater Rafting there is a greater risk
of injury.
BE11: Living wage
Whilst we are still committed, COVID-19 has slowed
down the work that was being undertaken on the Living
Wage. This continues to be a focus point and we believe
we are in a better place than either heat map suggests.
BE12: Fair
employment
terms
Whilst not fully completed, the assessments in FY20
suggest that we are well on our way to achieve BE-
12. thl pro-rate part-time roles in NZ and AU (this is
different in the US). Also post-COVID-19, there are less
seasonal workers so it has become less of an issue.
BE13: Employee
discrimination
There is potential for discrimination to occur in all sectors,
and therefore it should always be a consideration.
Traditionally automobile-related roles have been
dominated by males, and therefore it is important we look
into this.
BE14: Employee
concerns
thl is already partly there with having a course of action
in place and having started on the work to implement a
Future-Fit employee concern mechanism and process.
This is expected to be piloted by December 2020.
BE15: Product
communications
Whilst we agree with the heat maps that it is high-impact,
our assessments in FY19 demonstrated that we already
perform well in this space and only relatively minor
additions need to be made to achieve BE15.
BE16: Product
concerns
We agree that having a clear product concerns
mechanism is extremely important, and for the most
part, we have elements in place across all of our business
units. Our rating reflects the amount of input still required
to meet BE16 fitness criteria.
BE17: Product
harm
This is a significant and difficult goal for thl to
achieve, as our vehicle products force the user to
pollute the environment during use and at the end
of life, perpetuating reliance on fossil-fuel-dependent
infrastructure. Viable alternatives are not yet available
and we require wider vehicle manufacturing industry
participation in this goal to be able to achieve it.
BE18: Product
GHGs
As above, this is a significant and difficult goal for thl, as
our vehicle products depend on fossil fuels to operate.
BE19: Products
repurposed
Repurposing at end of life for our vehicles and all its
parts in all countries we operate is challenging for thl. We
have started initial work on our top 10 parts used to try and
find ways of repurposing. For this goal we will also require
wider industry participation to achieve.
BE20: Business
ethics
The high rating presented in the Tour Operator heat map
is specifically related to child exploitation and indigenous
exploitation, sometimes associated with tourism in
different parts of the world. This has limited application
to thl and our rating reflects that thl is on its way to
achieving this goal.
BE21: Right tax
As a publicly listed company, subject to strict auditing
and compliance requirements, achieving BE21 is relatively
straight-forward across all jurisdictions.
BE22: Lobbying &
advocacy
Although the automotive industry, in general, may actively
lobby Government against increasingly stringent GHG
restrictions, thl does not participate. Based on our CEO's
role within the Future of Tourism Taskforce, and with TIA,
which is public facing and aligned with Future-Fit goals,
we believe that thl 's lobbying and advocacy is aligned
with the pursuit of Future-Fitness.
BE23: Financial
assets
It is expected that achieving BE23 is relatively straight-
forward as thl does not rely on the management or
ownership of financial assets.
thl Integrated Annual Report 20202021
Our evolving
value model
Our evolving
value model
thl is focused on establishing itself as a global leader in
the RV ecosystem. This took on a whole different meaning
in 2020. Last year we introduced the six capitals context,
showing the inputs that we took for granted in our
business model and sharing how they help create value
for thl and the wider system in which we operate. Our
move to Future-Fit helped define this further, and also
the embedding of enterprise risk management in our
operations this year has created a more conscious and
deliberate way of operating.
NATURAL CAPITAL
Reputation
Reputation &
$ Returns
Climate change and
increasing number of
extreme weather events.
• Increased compliance and legal changes
in all our jurisdictions.
• Heightened Health and Safety concerns
for crew and customers.
• Increased Cyber Security risks.
• World recession and jagged recovery.
> See page 40
RISKS THROUGH A COVID-19 LENS
Outcome | CIRCULAR ECONOMY
Impacts | END-OF-LIFE
Reputation
$ Savings
Impact
of supply
chain.
SOCIAL & RELATIONSHIP CAPITAL
Our operations have had to adapt to
changing systems, including very strict
H&S regulation and changing demands.
The outbreak of COVID-19 and the resulting halt of
international travel has had a major impact on this model
and forced us to rethink fast. It showed the resilience of
all our capital inputs and allowed us to create positive
impacts on many of our capitals as well. This year we
present our value model in this context.
C
O
M
M
U
N
I
T
Y
O
T
H
E
R
S
T
A
K
E
H
O
L
D
E
R
S
FINANCIAL CAPITAL
INTELLECTUAL CAPITAL
MANUFACTURED CAPITAL
BUSINESS
HUMAN CAPITIAL
ACTIVITIES AND PROCESSES
PRODUCTS AND SERVICES
Flexibility, resilience, skills and creativity of our crew through
the crisis have been an essential building block for continuing
to deliver value.
The core of our business, whilst priorities changed, still exists.
Pivoting to become an Essential Services Provider. > See page 26
Driving Domestic Tourism using our existing IP and quickly
driving innovation creating a whole new stream of skills and
knowledge. > See page 30
Our access to, and management of, capital has proven vital in
our resilience. Refer to financial statements. > See page 52
We run a flexible, optimised RV-centric ecosystem that allows
us to adapt and pivot in times of crisis. This includes, and is not
limited to, many different branch locations providing back up
to each other, and technology that provides safe operations.
ACCESS
RENT
P2P
BUILD/BUY
SELL
PROPRIETARY
EXPERIENCES
VISION
To sustainably connect millions with personalised local
experiences, leveraging out expertise in RVs and tourism globally.
VALUES
be the
best
we care
everyday
be
curious
do the
right thing
GOVERNANCE
> See page 38
We aim for elimination of harm to the environment. Elimination of harm to
the environment over products' life cycles f rom obtaining supplies, operations,
product usage and end-of-life product disposition. > See page 18
Being a good
neighbour.
> See page 28
We aim for
elimination of
harm to customers,
communities, and
society-at-large.
Being a good
neighbour is even
more important in
crisis times.
> See page 32
We aim for elimination of harm to our
crew. Our health check shows we are on
our way but need to focus on getting our
crew back to thriving this year.
> See page 18
O
U
R
C
U
S
T
O
M
E
R
S
O
U
R
C
U
S
T
O
M
E
R
S
O
U
R
C
U
S
T
O
M
E
R
S
O
U
R
C
U
S
T
O
M
E
R
S
Reputation
Social licence / $ Other income
Impacts | BEING A GOOD NEIGHBOUR
Impacts | RESPONSIBLE TRAVEL
Serving a domestic market is exciting
and brings new challenges. Our NPS
scores in Waitomo have never been so
high. In the US we are using it to educate
our customers as a more responsible
way of travel. > See page 37
Impacts |
OPERATIONAL
Reputation
$ Savings
Reputation
Reputation
$Revenue
$ Savings
Inputs | SUPPLIES
Inputs | LENDERS & INVESTORS
Inputs | PEOPLE
The environment is core to
our operational ecosystem.
> See page 34
thl Integrated Annual Report 20202223
Resilience to reset
around the world of thl
Last year we started looking into our value creation and
impacts through the lens of six capitals. The COVID-19
crisis showed just how relevant applying a systems lens
like the six capitals is in regard to how we operate.
In this report we reflect our value model, our impacts
and outcomes, and risks and opportunities, to show
our performance in a holistic way with a COVID-19 lens.
It helps to see how we operate within a system and
how all the capitals work together.
A crisis like the current one reveals the quality of leadership,
the effectiveness of our governance structures, robustness
of our systems and processes, and resilience of our crew.
In the following feature stories we apply the integrated
lens and share our key stories of this year that reveal our
integrated strengths, weaknesses, inputs and outcomes.
2524thl Integrated Annual Report 2020
FY20 was tracking well for the global rental
businesses, delivering revenue growth in
New Zealand and Australia and stable
revenue in the US. We were starting to see
positive impacts of our Future-Fit focus over
the summer in New Zealand through customer
education and a f reedom camping project
providing real-time capacity information on
f reedom campgrounds to CamperMate users,
resulting in less freedom camping fines.
The sudden loss of income f rom international visitors in all our markets
in March forced us to move quickly to adapt how we worked and create
new sources of revenue to keep the business afloat. In a crisis like this,
the system needs to come together, which includes finance, people,
communities and IP.
thl’s vision to sustainably connect millions with personalised local
experiences, leveraging our expertise in RVs and tourism globally, held
true. Whilst we were not able to provide traditional international travel
experiences, we quickly pivoted to provide many other opportunities
using our RV experience.
Our main initial action was in response to the increased need for essential
services support and emergency accommodation. We decided to provide
self-contained RVs as emergency accommodation solutions for isolation/
quarantine, essential worker services, and emergency housing across a
number of different industries and business sizes.
Leveraging off our years of experience as the world’s leading RV rental
provider, we were well-positioned to adapt our operational experience to
support COVID-19 containment needs worldwide.
A new business as an
essential service provider
Even before the borders closed, the team in New Zealand
quickly jumped on the opportunity to help the Government
establish its first quarantine base. This involved providing
75 campervans to the Defence Force’s Army Bay training
camp for 157 people evacuated from Wuhan in China,
the epicentre of the novel coronavirus in February 2020.
For the rentals operational team, this was a very steep
learning curve, which built IP that gave us a head start
in establishing our operational processes to become an
essential service provider when required a few weeks later
in NZ, AU and the US.
The pivot involved providing motorhomes to Government
agencies, utilities, healthcare providers and other
organisations to assist in the response to the COVID-19
pandemic. Our vehicles provided mobile, self-contained
facilities that could easily be located where the community
need was greatest.
Alternative revenue:
pivoting a business
in two weeks
In the US our motorhomes were used
to provide temporary accommodation
for vulnerable community members
who had been exposed to COVID-19,
and as mobile units for COVID-19
testing. We also supported essential
services to operate safely. Working
with a number of utilities and power
companies to supply RVs that were
used to comfortably accommodate
essential employees on site at key
power generation facilities, enabled
them to safely isolate while ensuring
the continued operations of the
power plants.
In total we provided 600 vehicles to
over 20 community support
organisations to set up as temporary
housing. “Through our outreach work
we connected with counties, cities,
states and other Government entities
with a need to provide social distancing
accommodations for their
communities.” said Gordon Hewston,
Senior Vice President US Operations.
“We were proud to be able to serve the
community, to help protect America
from the coronavirus and to keep our
people in jobs.”
RVs as alternative accommodation in the US
thl Integrated Annual Report 20202627
Community support in
California
We worked with several counties
in California to set up temporary
facilities in response to COVID-19, to
effectively provide self-isolation for
vulnerable community members
who lacked the option to isolate at
home. Counties were looking for
solutions to be used in cases where
a resident may test positive and need
to self-isolate but did not require
hospitalisation. The ability to respond
quickly as the situation developed
made an RV solution attractive.
We provided large numbers of RVs,
which in some cases were set up
in a central campground facility
with over 100 vehicles. We arranged
delivery and set up of the RVs and
provided a managed service for the
RVs with staff on site.
Caring for people
As part of this pivot, ensuring the health,
safety and wellbeing of our crew and
customers became even more front-of-mind.
Crew showed their resilience, drawing on
their combined expertise, professionalism
and commitment and quickly adapted to
the new situation. This involved being flexible,
and changing how and where we worked, to
respond to the rapidly developing situation
globally and locally.
Crew plays a huge part in our survival and
recovery. Not only through the safe operational
execution, but also in creating new revenue
streams. Their ideas and hard work, coupled
with Government support, helped us retain
roles, as well as skills and knowledge we need
to rebuild our business. We were able to save
many jobs in Australia and New Zealand and
have also been able to rehire all US crew
members who wanted to return.
Community support for
COVID-19 response
In a further pivot, the teams focused on
the communities we operate in. We had
made a small start through some of our
Future-Fit work looking into our
community connections and placement.
However, this crisis showed just how
important being part of a community
really is. The US outreach team comprised
of up to 30 virtual team members from
across the business who made contact
with thousands of community support
agencies. Through our outreach work
we developed connections with
Government agencies, community
support organisations and departments
in all of our operational locations.
The branch teams were able to provide
support and services to community
organisations to respond to the COVID-19
situation locally. The ability of our teams to
quickly understand the needs of the
community and identify and develop
flexible solutions and new services was
critical. This included developing the
delivery, set up and management of RVs
being used for COVID-19 response, and
providing on-site services. Our RVs were
used to support states like California to
meet their emergency accommodation
needs during the COVID-19 pandemic.
As a result of our outreach efforts, we have built
relationships with local and state Government
agencies and departments, and greatly
strengthened awareness of our role as a
community service provider during
emergencies.
We can already see the benefits of this in the US
and Australia where we are now well positioned
to support a wide range of agencies and
organisations responding to a variety of
emergency situations.
LOOKING AHEAD
thl Integrated Annual Report 20202829
New Zealand
The relative size of our fleet per head
of population in New Zealand meant
that we could make a particularly big
impact in this market. Our 'get
moving, to get New Zealand moving'
campaign launched shortly after the
removal of domestic travel
restrictions and was premised around
heavily discounted flat-rate pricing
(from $29/day) until 31 October 2020.
Pricing was set using a marginal-cost
methodology, whereby revenue only
covers the incremental services to put
our vehicles on the road.
The response was phenomenal, with
coverage as one of New Zealand’s
top stories on Breakfast TV, One
News, the New Zealand Herald, and
stuff.co.nz. Over the first two weeks
of the promotion there were tens of
thousands of social media shares and
500,000 visits to our websites.
The popularity of the promotion was
unprecedented in the history of thl
and caused significant strain on our
booking systems and contact centre.
Circa 20,000 bookings were made for
travel during the promotion and
reached the physical capacity of our
branches to prepare any more
vehicles. The campaign has saved
jobs and is delivering better customer
satisfaction metrics than previous
years. It has been very well received
by local tourism operators and,
through the Tiaki Promise, spread the
‘responsible travel’ message by
encouraging locals to care for
Aotearoa New Zealand’s
communities, places and culture.
Despite the success of the campaign,
from a financial perspective the New
Zealand rentals business continues to
be significantly impacted by the
closure of New Zealand’s borders as,
historically, approximately 90% of
customers in this business have
been international visitors. Revenue
intake from bookings received
since the start of March has been
approximately 50% below pcp.
Australia
The devastating summer bushfire
season in Australia had impacted the
Australian rentals business, prior to
the closure of borders and travel
restrictions established due to
COVID-19.
Then in March 2020, with international
borders closed, we refocused on
supporting the growth of domestic
tourism. In the aftermath of non-
essential travel restrictions in many
of our operating territories, there has
been strong demand from people
wanting to get away with a road trip
ranking highly as a travel preference,
and recreational vehicles being viewed
as a safe means of travelling.
thl has therefore run a series of
successful initiatives to stimulate
domestic tourism, achieving goals of
saving jobs, supporting regional
economies through travel, creating
some much-needed positive travel
stories, and building new markets of
motorhome advocates.
International tourist arrivals worldwide grew 4%
in 2019 to reach 1.5 billion.
4
Growth was strong but
had started to slow f rom previous exceptional years
especially in European markets.
We continued to see strong forward bookings
and a reasonably positive outlook in most of our
businesses around the world. Kiwi Experience
successfully launched small group tours and our
rentals Auckland branch location got a facelift just
before the summer with a real focus on responsible
local travel experiences.
Getting domestic
tourism moving
During the bushfires, our telematics
system in each of our campervans
allowed us to keep in close contact
with customers on the road, directing
them safely away from regions
affected by the fires. None of our
customers were hurt and no vehicles
were impacted. After the bushfire
events, we actively campaigned to
encourage our customers to get back
into the regions and support the
towns and shires that were so
affected by the disruption to their
summer tourism season.
COVID-19 followed hard on the heels
of the bushfires. As each state
provided certainty to their residents
with travel restrictions, we worked
with national and state tourism
bodies to encourage locals to get out
and see their own back yard. We have
seen some recovery in domestic
booking activity as intrastate travel
restrictions lifted. We expect that
bookings will continue to recover;
particularly once interstate travel
restrictions have also been lifted.
The domestic tourism campaigns
run by a number of states in Australia
has created interest in road trips and
motorhomes.
Sales of our new and ex-rental
motorhomes and campervans have
never been stronger, as the
Australians, prevented from travelling
overseas or taking a cruise, have
looked to mark a road trip around
Australia off their bucket list.
US
The US experienced a rapid increase
in domestic rental bookings from
mid-May, with RV travel increasingly
seen as a safe way to travel with social
distancing. With international travel
restricted, domestic demand for RVs
surged, traffic to the US websites
increased 88% from mid-May to
August and domestic bookings were
up by nearly 100% on last year. US
domestic customers include many
first-time renters, often motivated by
the desire to avoid flying and to have
fully self-sufficient accommodation.
June and July also saw record RV
sales volumes, the highest in the
history of the US operation.
Awareness of our US businesses
received a significant boost with
major media outlets including
MSNBC, Fox and CBS running news
stories featuring our RVs as a safe
option for vacation travel. In July,
PR efforts generated 180 million
impressions with a publicity value of
over US$70M. We expect the strong
interest in RVs to continue, research
reported by the RV industry
association on travel choices in light
of the COVID-19 crisis showed that
46 million Americans plan to take an
RV trip in the next 12 months.
5
" As a campground owner I want to thank the
decision makers for the special deal they put up.
I have a holiday park at Houhora Heads in the far
north and we have had so many happy families
having a fabulous time exploring NZ. Your deal has
made the school holidays a time of great fun for so
many NZ families. Cheers to you all at Britz Maui."
CATHY WAGENER
HOUHORA HEADS(WAGENER) HOLIDAY PARK.
4 https://www.unwto.org/world-tourism-barometer-n18-january-20205 https://www.rvia.org/news-insights/46-million-americans-plan-go-rving
thl Integrated Annual Report 20203031
We continue to focus on developing our
domestic tourism capabilities and are
focused on creating new customer
centric propositions to grow categories,
always backed up with a strong
understanding of profitability. We
simplify processes to enable higher
turnover of vehicles with shorter hires
and larger pick-up and drop-off
capacities. We are supportive of the
proposed Trans-Tasman travel bubble
and, if accomplished, we expect that
the bubble would be positive for our
New Zealand and Australian rentals
businesses. The Australian market has
historically been important for this
business in New Zealand, with Australians
making up approximately a quarter of all
customers. In the US we are ready for all
scenarios, to ride the wave of the golden
age of the RV, and continue to drive safe
and responsible travel through our travel
with heart programme.
LOOKING AHEAD
Partnerships
We are committed to offering high-value
opportunities and experiences to our
customers, and coupled with our strong desire
to support our local communities and wider
industry throughout the COVID-19 pandemic,
we realised this could be best achieved by
setting up and extending valuable, sustained,
collaborative partnerships.
TOP10 HOLIDAY PARKS
We have partnered with New Zealand’s largest holiday
park network to open 10 pop-up branches around New
Zealand within their sites. This is providing accessible
travel opportunities to people not living in Auckland,
Christchurch, or Queenstown.
NZ TOURISM OPERATORS
NZ Tourism Operators – as part of the ‘get moving, to get
New Zealand moving’ campaign, thl assembled a group
of exclusive travel offers from operators around New
Zealand. These are available only to those
in thl campervans and have successfully driven
increased visitation to these attractions.
AUSTRALIAN NATIONAL, STATE, AND REGIONAL
TOURISM OPERATORS
thl is actively partnering with tourism operators to
promote destinations and road trips. Examples include
Wonder out Yonder with Tourism Western Australia and
Travel Your Road with Tourism Australia.
People. People. People.
The COVID-19 restrictions had a major impact on thl’s
global business, and especially on our people with
restructuring looming in all parts. Wage subsidies and
other Governmental support delayed the need to down
size and the global teams worked hard to save as many
jobs as possible by encouraging domestic demand.
The demand for campervans exceeded expectations
and helped save many jobs.
For crew on the job, whilst continuing to focus on
delivering unforgettable experiences to our domestic
customers, it is our highest priority to ensure the health,
safety and wellbeing of our crew, now more than ever.
The COVID-19 crisis required us to make changes to our
pick-up process and put in place new cleaning and
sanitation protocols to prevent the spread of the virus.
Office-based staff were required to work from home and
were quickly equipped to do so with very little notice,
enabling them to continue to provide the support needed
to deliver domestic tourism experiences. Team work and
the ability to quickly adapt was critical. This involved being
flexible and changing how we worked to respond to the
rapidly developing situation globally and locally, to
implement the clean promise for customers, new SOPs,
team training with a continuous focus on safety leadership
at all levels. Some of the measures implemented include:
• quality PPE available for everyone
• more manager check ins
• daily team chats
• COVID Clean Business accreditation achieved in AU
– for crew and customers.
A secondary focus for our people stream has been
on capacity building, both from an engagement and
efficiency perspective. With different skillsets and varying
pressures in different teams, we combined teams where
we could and also gave people the opportunity to learn.
This was not restricted to one site, but saw the whole
country become one cohesive team, with the digital way
of working helping to bring geographically dispersed
people together at a scale not experienced before.
Despite all the pressure, this has resulted in good team
morale and unprecedented cross-functional collaboration
to put together domestic campaigns, and then deliver
large numbers of customer experiences day in and day out.
We do recognise that all these changes have happened
really fast, and our strong culture has allowed us to
succeed in this new environment. Opportunities have
emerged and changes to our new way of working needs to
be reviewed. So, as we commence FY21 we will refocus on
our culture and align some of our workplace policies and
processes with these changes.
Being flexible and trying new things
The NZ/AU domestic customer typically books later and
takes shorter trips, so we have instituted a number of
innovations to increase travel flexibility for them.
• Deposit – deposit now only $1 (was 10%)
• Cancellation terms – cancellation fees now only from
seven days out (was 90)
• Opening hours – extended opening hours on Fridays to
enable weekend travel
• Allowing pets – allowing pets in certain brands
• Pick-up / drop-off processes – refined processes
to support customers getting quickly and safely
on the road
SOME EXAMPLES OF THESE ARE:
thl Integrated Annual Report 20203233
At the time of writing it is still
unclear when international
borders will reopen. In the
meantime, our crew are taking
the opportunity to ‘build back
better’. For example, customers
are loving the smaller ‘boutique’
tours we are offering and a
simple change to our mustering
point (now round the
pouwhenua or carved pole at
the heart of the complex) has
added to the visitor experience.
LOOKING AHEAD
COVID-19 has shown us just how
connected the world is. We’ve seen
the planet as the system it is – a
network of inter-related countries,
people, organisations, animals, natural
resources and activities.
COVID-19 has had a big impact on an important system
in our thl business too: the world-famous Glowworm Caves
in Waitomo, New Zealand. The natural environment lies at
the heart of this system. A tightknit community of people,
many affiliated with the Maniapoto hapū (tribe), work in
the caves which are owned by the Ruapuha Uekaha Hapū
Trust and the Department of Conservation (DOC).
The pandemic has touched every part of this system.
Unfortunately, many of the economic and social impacts
have been negative – though better than they might have
been, thanks to actions you will read about below. And
there has been an environmental upside: the CO
2
levels
in the caves are lower.
COVID-19 and
Waitomo’s famous
glowworm caves
The unfolding
COVID-19 crisis
February and early March at Discover
Waitomo was a time of watching,
waiting, and taking precautions,
resulting in new COVID-19 signage,
hygiene practices, and training for crew.
By mid-March New Zealand was facing
a health crisis. Economic and social
crises were close behind. With borders
closed to tourists and the country in
‘lockdown’, we shut the caves.
COVID-19’s economic and social
impacts have been heartbreaking for
thl and the local community. Eighty-
seven percent of our visitors are
international. Without them, we have
had to reduce crew numbers by more
than half. Other local businesses have
suffered too, including accommodation
providers and suppliers to our
Homestead Café. These businesses are
part of the Waitomo system too.
Support for the local
community and our
business
At this difficult time, there have
been some positives. The first was
negotiating a Government grant
that recognised Discover Waitomo’s
national importance as a ‘strategic
tourism asset’. This funding has kept
the caves open and saved ~35 jobs.
Then in May, our domestic campaign,
'get moving, to get New Zealand
moving', saw thousands of Kiwis take
to the roads when the Government
lifted travel restrictions. The campaign
has generated revenue for Waitomo.
Thirdly, DOC is considering local
opportunities to enlist the skills of
crew no longer employed by us.
An environmental upside
Other encouraging news involves the
caves themselves. Guardianship
(kaitiakitanga) is a Discover Waitomo
value, and it extends to caves and
glowworms.
Every ten minutes (144 times a day),
our environmental team monitors the
caves’ CO
2
levels. They aim to keep
emissions below 2,400 ppm (parts per
million) and prevent condensation
corroding the beautiful limestone
formations. When the caves are
hosting visitors, keeping to this target
can involve managing entry by
limiting tickets or delaying tours.
With no visitors from 24 March to
22 May, our Environmental Advisory
Group was able to establish the
‘no-visitors’ baseline for the first time
ever. They recorded CO
2
emissions of
500 to 600 ppm. They also learned
how rain raises CO
2
, with drip waters
and streams releasing the gas.
Closing the caves let us control
lampenflora, the invasive mosses and
algae that damage caves. Articles for
the Australasian Cave and Karst
Management Association and a
scientific publication will follow.
The impact on the ‘stars of the show’
– the glowworms – is less clear. Some
guides believe the insects’ ‘fishing
lines’ look longer, and the population
is bigger than before shutdown. We’re
investigating further.
35thl Integrated Annual Report 202034
EVs to trial
Kiwi pivoting to new
product types
Kiwi Experience successfully launched
a new product offering in the small
group tour category. It created the
opportunity to expand the customer
base and respond to a growing
demand for shorter trips that pack
in the very best New Zealand has to
offer. The small group tours feature
transport for up to 16 passengers, a
selection of real New Zealand
experiences which aim to show off
the best of New Zealand through a
local’s eyes, and of course the
passionate and experienced Kiwi
guides that Kiwi Experience is known
for, focusing on showing passengers
around New Zealand, not just as
guests, but as whanau.
We have restarted small group
offerings for the domestic market
in September 2020.
To help bring to life El Monte
RVs vision to put sustainability
at the heart of their company
culture, customer experiences
and business practices, every
branch in the US developed a
Store Sustainability action
plan in FY19.
The branch managers identified
five key areas for action every branch
could work on that would reduce
our impact. The focus areas of energy,
waste, water use, lowering emissions
and community contribution align
well with a number of Future-Fit
Break-Even goals and support
progress towards becoming a
Future-Fit business.
The starting point for each store was
completing a water and energy audit
to provide advice on opportunities to
improve. Then each store put in place
initiatives to monitor use and increase
awareness of energy and water saving
practices. In October all the stores
reviewed current recycling stations
and improvements were implemented
for all the customer areas. Many stores
also started programmes to donate
food and surplus items to local
community organisations.
There is no denying that our world changed this year in early 2020
and that how we recover and reset is most important to all our
stakeholders. However, we wanted to share some reflections on
the first eight months of FY20, as whilst some of these activities
had to be put on hold, we want to acknowledge that many great
things were happening in our global businesses.
El Monte putting
sustainability at
the heart of travel
At the leader's conference in
January 2020, the team reviewed
the programme progress in 2019,
sharing successes and highlights
from the programme. A vote by
all the managers present for the
manager’s choice Sustainability
Superstore 2019 recognised LAX
and SFO stores efforts to reduce
their impact and progress their
action plans.
“ In October all the stores
reviewed current recycling
stations and improvements
were implemented for all
the customer areas."
Highlights for SFO included
achieving Silver Level in their Local
Green Business Award – the Dublin
Green Shamrock, and participating
in the local creek clean-up for
international coastal clean-up day.
For LAX, successes including
leading a pilot to remove single-use
plastics from bedding and
household kits, and upgrading to
LED lights.
Queenstown
sustainable site
Queenstown had unprecedented
growth over the past five years prior to
2020 and the Queenstown branch
location had reached operational
capacity at the existing site. The aim
was to find a new site to enable thl in
Queenstown to grow into becoming
the global example of a motorhome
rentals and sales branch of the future,
with the capability to meet increased
business demands in the region, and
deliver an enhanced customer
experience for both rentals, sales and
maintenance services.
thl continued their journey towards
low emission motorhomes. Please
see this case study from EECA for a
great overview of our journey so far:
genless.govt.nz/stories-and-case-
studies/case-studies/electric-
campervans-open-new-zealand-to-
sustainable-touring
After adding 11 Electric 2-Berth
LDV-80 to our customer fleet in
FY19, the next steps focused on our
larger 4 to 6-Berth offering and
finding options that would extend
the range beyond the 120K limit of
the current eLDVs. We worked with
Action Manufacturing in Albany and
EMOSS in the Netherlands
6
to
repower two Mercedes Sprinters.
These were delivered in early 2020
and ready to be road-tested by our
crew at the time New Zealand went
into lockdown.
We will continue this research
and development towards lower
emission fleet as soon as we can
in FY21.
The new location, design and business
operation factors in the Future-Fit
business framework and includes
things such as an automated truck
wash, solar power, recycled water,
rain water collection and other
sustainability initiatives.
By the time we were business case
ready, New Zealand had moved into
lockdown. With the current changed
market expectations, this will be
relooked at in FY21.
Reflections on the
first eight months
6 https://www.emoss.nl/en
thl Integrated Annual Report 20203637
Governance
year in review
The Tourism Holdings Limited Group operates under
a set of corporate governance principles designed
to ensure the Company is effectively managed.
The detail of our governance structure is explained
in the corporate governance section of this report.
Changes to the thl Board
In the last 12 months, we had Dr. Guorong Qian join
the thl Board. Dr. Qian is the Vice Chairman of CITIC
Capital Holdings, thl’s largest individual shareholder.
He brings a wealth of experience to the thl Board from
previous roles in various brokerage, asset management
and investment roles. Due to Dr. Qian’s position with
CITIC Capital, the Board has determined that Dr. Qian
is a non-independent Director for the purpose of the
NZX Listing Rules.
Long standing Directors Graeme Wong and Kay Howe
also retired from the thl Board following thl’s Annual
Shareholder Meeting held in October 2019. The thl Board
thanks Graeme and Kay for their contributions over
recent years. Current Directors Rob Hamilton and Debbie
Birch were appointed to the vacant Chair roles of each of
the Audit Committee and Marketing & Customer
Experience Committee, respectively.
Governance in the context of COVID-19
Given thl’s role at the forefront of the tourism industry,
the thl Board and management were closely following
the developments of COVID-19 in early 2020 to assess the
potential impact on thl’s global operations.
From a thl perspective, the first major event occurred on
12 March as the US Government announced a 30 day ban
on travel originating from Europe, being the largest origin
market for thl’s US rentals business. This was shortly
followed by similar travel restrictions being announced in
New Zealand and Australia. The initial event triggered a
move to daily management reporting to the Board with
Board meetings being held approximately every second
day. By way of comparison, the regular Board schedule
consists of management reporting each month,
meetings being held every second month, and ongoing
communication in the interim as important issues arise.
From a management perspective, a COVID-19 crisis
management team (CMT) was formed to effectively
deal with the issues that were arising globally. The CMT
consisted of key management personnel from across all
of our jurisdictions, including the General Managers of our
New Zealand, Australian and US rentals businesses. Daily
stand up meetings were held for regular communication
of developments and to share knowledge between the
teams. In particular, knowledge from the US operations
were invaluable for New Zealand and Australia, given that
the developments in the US were occurring a few days
ahead of the other two countries.
Ensuring that the market was appropriately informed was
front of mind for the Board. An interim announcement
was released on 12 March to acknowledge the
developments while the impact of the various
restrictions on thl were assessed. The following day, the
Board made the decision to retract thl’s FY20 NPAT
market guidance given the growing uncertainties in the
environment. Simultaneously the Board and the CMT
commenced modelling of various scenarios to quantify
the potential immediate and medium-term financial
impacts on thl from the travel restrictions, as well as to
understand any potential risk of non-compliance
with thl’s banking covenants. As the severity of the
circumstances became clearer over the following days,
the exercise helped inform business decisions on cash
preservation and expenditure reduction. A number of
measures were implemented, including the cancellation
of thl’s previously declared FY20 interim dividend and
a temporary reduction in Directors’ fees and Executive
team salaries.
This impromptu Board reporting and meeting framework
was maintained during the second half of March 2020,
with six Board meetings and conference calls being held
over a two week period. As each of the matters requiring
an immediate response were addressed, the frequency of
meetings moved to weekly while management updates
continued to be provided as matters arose.
From a health and safety perspective, the growing
likelihood of a more severe outbreak of COVID-19
prompted a further assessment of thl’s standard
operating procedures to ensure the risk of COVID-19
exposure for staff and customers was minimised.
thl’s governance in the time of an unprecedented crisis
has provided valuable lessons in crisis management and
illustrated that despite risk management and planning, to
some extent the response to significant shocks
will develop naturally. These lessons have shown what
works well, what processes we could look to implement
and how we could do better in future. Given that it seems
the risk of second waves of COVID-19 is likely to remain
until a vaccine is found, the experience taken from the
initial response means we are better equipped to deal
with similar issues.
Strategic planning and budgeting in the context of COVID-19
Through input from the Board and Executive team, changes were made to thl’s annual
strategic planning and budget process usually undertaken in June each year.
Acknowledging the uncertainty in the market and that the priority should be to address
and respond to current circumstances rather than to review pre-COVID-19 financial
performance, a simplified process was adopted focusing on three questions all
considered in the context of COVID-19:
What have we learnt?
Where are we at currently?
Where are we going and what do we need to do to get there?
A version of this can be found in the divisional reports.
The Sustainability and Risk Committee was
implemented in 2019 and met three times in FY20.
The standard agenda of the committee covers top
strategic risks and Future-Fit challenges, as well as
deep dive sessions into special topics as appropriate,
which this year included the spread of COVID-19 and
its impacts, slowing tourism numbers (pre-COVID-19),
climate change and over-tourism.
Board
meeting
Audit
committee
meeting
Remuneration
and nomination
committee
meeting
Disclosure
committee
meeting
Marketing and
customer
experience
committee
meeting
Sustainability
and risk
committee
meeting
Rob Campbell22342433
Debbie Birch2234–33
Cathy Quinn22342433
Gráinne Troute2234–33
Rob Hamilton
1
22341333
Guorong Qian
2
1522–32
Kay Howe
3
511–11
Graeme Wong
3
4111111
1 Rob Hamilton joined the Disclosure Committee on 1 November 2019.
2 Guorong Qian joined the Remuneration & Nomination Committee on 1 November 2019.
3 Kay Howe and Graeme Wong retired as Directors with effect from 31 October 2019.
The Enterprise Risk Steering Committee oversees the
Risk Management and meets every two months. The
Enterprise Risk management system, ecoPortal, contains
all our Board and operational risks which get monitored
on a weekly basis by the project manager – Enterprise
Risk, with workflows controlling regular reviews by the
risk owners.
A mandatory Enterprise Risk awareness training module
for all crew has been developed and will be rolled out in
September 2020.
Risk Governance
thl Integrated Annual Report 20203839
Whilst our Risk register contains a specific pandemic risk, for the
second part of FY20 we have applied a COVID-19 lens over all
related risks and how this impacts our value creation. This involves
a more regular risk review for those risks tackling key
considerations and questions and building new controls around:
Compliance and Legal, Fleet, Finance and Planning, Reputation,
Competitors, IT, People and H&S.
Here is our updated range of key risks that impact thl short-term
and/or long-term through a COVID-19 lens. They are grouped by
key themes and linked back to our overall capital outcomes.
Enterprise risk through a COVID-19 lens
RiskDetailImpactRisk controlsLink to outcomes
Short-term
Health and Safety
Being an essential service provider and also
with domestic tourism offerings available,
whilst COVID-19 is not fully controlled, it has
exposed our crew and customers to
additional Health and Safety risks.
If our operation was no longer regarded as
safe, we would face major impacts on our
operating model, as well as fines, law suits
and significant reputational damage.
Continue to embed Health and Safety culture
and strong processes in all parts of the
business.
Ensure knowledge sharing across jurisdictions
to continually improve SOPs.
Cyber security
External malicious activity causing loss of key
systems and data breaches. There have been
increased requirements for securing remote
workers as Working from Home has added
additional complexity in managing this risk.
Increase in fraudulent activity due to
COVID-19.
Loss of key systems causing operational
disruption, ransom, funds. Reduction in
EBIT. Reputational impact.
Continued user awareness training.
Implemented a Privacy Impact Assessment on
high risk systems, as well as further focus on
best practice systems security and compliance
with the latest local and international data
protection regulations.
Key systems failure
One of thl’s key strengths, strong innovation
using technology, is also a key risk when these
systems or part of the execution of these
systems would fail.
Significant customer and revenue
disruption. Loss of reputation.
Benefits of projects delayed.
thl digital now 100% thl owned. Well-developed
operational back up, deployment and
contingency processes and monitoring.
Short and Medium
Compliance and Legal
• Operational compliance: Continuous and
fast changing Governmental regulations.
• Increased risk on HR compliance and
Payroll errors: the amount of different new
Government packages and amount of
people changes that have to be processed
in a short amount of time, increase the
risk of exposure to error.
• Employee health negatively impacted.
• Operational delivery negatively
impacted.
• Exposure to litigation.
Daily monitoring of legal policy and compliance
changes to ensure that our operations continue
to comply. Examples of these policy changes
are definition of essential services, work from
home orders and mandates around certain
PPE.
Major market shock
impacts demand
levels (eg: war,
pandemic, terrorism)
The COVID-19 pandemic is showing the
impacts of major global crisis and the effects
on tourism. Reduction in international tourism
reduces demand, affects profitability and
ROFE.
Reduced customer demand level.
Competitive behaviour reduction in rental
customers, revenue and earnings. Reliance
on alternative revenue streams to maintain
business during extended lockdown
periods with little revenue from traditional
streams.
Continued focus on domestic tourism, vehicle
sales and alternative revenue streams.
Strong cost control.
HUMAN CAPITAL
Enabling people to develop, grow and do well
HUMAN CAPITAL
Enabling people to develop, grow and do well
SOCIAL CAPITAL
Respecting our communities
INTELLECTUAL CAPITAL
Leading the way in innovation
HUMAN CAPITAL
Enabling people to develop, grow and do well
INTELLECTUAL CAPITAL
Leading the way with new innovation
MANUFACTURED CAPITAL
Optimising efficiency
FINANCIAL CAPITAL
FINANCIAL CAPITAL
Loss of revenue, penalties
FINANCIAL CAPITAL
Shareholder value
MANUFACTURED CAPITAL
Reputation and process
MANUFACTURED CAPITAL
Optimising efficiency
INTELLECTUAL CAPITAL
Leading the way with new innovation
thl Integrated Annual Report 20204041
Medium to long-term
Climate change /
Climate action
Climate change poses a great risk to all
aspects of a business and is increasingly
viewed as a key financial risk by investors,
lenders, and insurance underwriters.
Operational disruption as we saw through
the impact of the Australian bushfires in
FY20.
Additional compliance requirements as
increasing regulations to control
environmental impacts.
Limited recovery of international travel after
COVID-19 due to increased awareness.
Adapt business model towards zero emissions
and monitor and adapt to climate related
events.
Our long-term key mitigation planning is
through the implementation of the Future-Fit
methodology, specifically goals:
• BE01 Using energy from renewable sources
and actively encouraging suppliers to do
the same.
• BE04 Procurement of goods and services
does not hinder progress.
• BE06 Eliminating operational greenhouse
gas emissions and actively encouraging
suppliers to do the same.
• BE08 Ensuring operations do not encroach
on ecosystems or communities and actively
encouraging suppliers to do the same.
• BE18 Eliminating product greenhouse gas
emissions.
• BE23 Investing in assets that do not hinder
progress.
Long-term
World recession and
slow jagged recovery
Economic event i.e. COVID-19 causes
a recession that impacts all markets
and unlikely to have even and fast
recovery patterns.
Significant disruption to the RV market.
Reduction in financial profitability, travel,
demand for used and new vehicles.
Active monitoring of global trends and
economic environment. Plan for agility and
diversification in business models, markets and
fleet. Minimise long-term fixed costs e.g.
property. Minimise long-term commitments
where possible.
SOCIAL CAPITAL
Respecting our communities
FINANCIAL CAPITAL
Shareholder value
MANUFACTURED CAPITAL
Optimising efficiency
INTELLECTUAL CAPITAL
Leading the way with new innovation
NATURAL CAPITAL
Protecting and enhancing our environment
MANUFACTURED CAPITAL
Fleet and process
RiskDetailImpactRisk controlsLink to outcomes
Enterprise risk through a COVID-19 lens - continued
thl Integrated Annual Report 20204243
Where are we at?
The NZ rentals and Vehicle Sales
business achieved an EBIT for FY20
of $30.2M, this was only $1.3M (4%)
below what we achieved in FY19.
The NZ business was tracking
strongly through the first three
quarters when COVID-19 hit which
overnight turned the operations
on its head. From a business
perspective, NZ rentals was
fortunate that the majority of the
peak season revenue had been
taken at the time, and the impact
from April – June was less material.
Vehicle sales for New Zealand
was significantly impacted in the
short-term by COVID-19. Through
Alert Level 4 in March and April,
only one vehicle was delivered.
However, the bounce back coming
out of lockdown did exceed
expectations. The total number
of vehicles sold in FY20 was 575,
53 units short of the prior year
result and a 8% decrease. At a
net contribution level, vehicle
sales was $101k (-2%) down on
the prior year.
Operating costs have been
managed tightly across the year,
and the business adjusted at
speed to the challenges that
were presented when COVID-19
hit to minimise the impact and
reduce costs where possible.
Total operating costs were $4.9M
(7%) down on the prior year.
As COVID-19 restrictions eased,
the business adjusted quickly to
the new world and the reality of
a purely domestic customer base
for the foreseeable future. thl led
the market in its response with the
'get moving, to get New Zealand
moving' campaign which
generated approximately 20,000
bookings and $6M in revenue
for the campaign period.
The campaign saved jobs within
thl and encouraged kiwis to start
travelling again and spending
in our regional communities.
As mentioned, the vehicle sales
market also bounced back strongly
following the lockdown, as people
redirected their discretionary travel
spend, and RV ownership and the
idea of exploring your own back
yard encouraged new entrants
to the RV ownership market.
What have we learnt?
Throughout the COVID-19
crisis, as with all the businesses,
New Zealand rentals showed
exceptional change tolerance. The
‘get moving, to get New Zealand
moving’ campaign has been well
covered within the main body of
this report. The response to that
campaign proved that we do have
the ability to stimulate demand
in the winter season, although
at heavily discounted prices
compared to historical rates.
The category growth and word
of mouth benefit from that
campaign will be seen for some
years to come for the business.
The capability we were able to
keep in the business as a result
and the demand we drove for
regional tourism destinations will
also provide intangible benefits
over time.
The length of hire was up to two
days longer on average than we
had anticipated.
We had a large number of first
timers, with over 85% of customers
surveyed looking to hire again in
the future.
The marketing and operational
teams worked very well together,
responding to the excessive
demand challenges quickly.
Our technology was challenged
and we responded.
Where are we at?
The Australian business had both
the impact of COVID-19 and the
Australian bushfires. Rental
revenue for the first half of the
year was up 4% through growth
in hire days. The third quarter
rental revenue dropped by close
to AU$1M due to the bushfires,
and then a further AU$11M from
COVID-19 related closures in the
fourth quarter.
Vehicle sales has remained positive
with the number of sales up 5% on
the prior year and total proceeds
up 26% on the prior year.
What have we learnt?
Similarly to New Zealand, the
Australian business benefited
from acting quickly and at pace.
The cost control and focus on
vehicle sales protected the
business from the sharp decline
in rental revenue.
The contactless customer
experience developed in response
to the COVID-19 pandemic has
provided a more productive and
efficient service offering.
The alternative revenue streams
activity in Australia was slower
to gain traction than in the US or
NZ, but has the most promising
long-term opportunities. New
channels to the broader tourism
market will benefit the business
in the long-term. There have also
been fruitful discussions with
potential long-term partners on
mobile accommodation provision
for services where motorhomes
had not been previously considered.
Divisional reports
Australian Rentals
& Vehicle Sales
resilient in the face of adversity
RENTAL REVENUE
-
6
%
VEHICLE SALES REVENUE
-
10
%
EBIT
-
4
%
RENTAL REVENUE (AUD)
-
17
%
VEHICLE SALES REVENUE (AUD)
+
26%
EBIT (AUD)
-
22
%
Where are we going?
The key in Australia is to see
interstate travel return. We are
operating with an expectation
that there will be no international
revenue for FY21 and potentially
part of FY22. Given the Australian
business has historically had
approximately 40% of its rentals
customers being domestic, with
international borders closed and
a resilient general economy, we
expect strong domestic demand
once state borders are open.
We are working collaboratively
with national and state Tourism
entities, trade partners and direct
opportunities, and repackaging
our proposition to tailor to the
domestic market.
Vehicle sales revenue will be a
critical focal point. We will continue
to leverage new audiences
resulting from limited overseas
travel options, our significant
domestic hirers and the addition
of SHAREaCAMPER as further
incentive to buy a motorhome.
From a cost perspective, we
continue to optimise our property
leases, tailor our people capacity
and capability to activity with new
and efficient processes, and ensure
cost reductions uncovered due to
the COVID-19 pandemic can be
retained in the new operating
environment.
Where are we going?
The NZ business is re-positioning
for the new world that we find
ourselves in. Rentals is adjusting
to a purely domestic customer
base, and our vehicle sales are
capitalising on the additional
demand in the market. Domestic-
focused ancillary revenue streams
such as servicing and retail are
being expanded, and the
distribution of our fleet across
New Zealand through partnerships
(including with Top 10 holiday
parks) has given us access to the
regions and a wider domestic
customer base.
Prior to the fire at the Māngere
branch, we had pivoted our
offering there to a real focus
on vehicle servicing, retail and
vehicle sales, and had seen
positive initial activity.
The ambitious vehicle sales goal
we have set ourselves as part of
“the Great New Zealand
Motorhome Sale” will see our fleet
look very different at the end of the
year. If we achieve sales near our
targeted levels, we would expect
to replenish our New Zealand fleet
ahead of the FY22 summer season.
We are in a position to succeed in
the domestic world we find
ourselves in, and ready to launch
and grow when the opportunity
presents itself with the wider
international market in the future.
New Zealand Rentals
& Vehicle Sales
accelerating our agile advantage
thl Integrated Annual Report 20204445
see RVs as a safe, ‘socially
distanced’ option for travel.
We delivered the two highest
sales volume months in the history
of the US operation in May and
June, with healthy margins.
Domestic demand for RV rentals
also rapidly increased as customers
looked for alternatives to flying and
hotels. Many were first time RV
renters who found renting from an
established company rather than
P2P reassuring. With international
travel restricted for the foreseeable
future, we expect this demand to
continue as US travellers face a
domestic-only vacation choice.
What have we learnt?
The business learnt to be even more
adaptable and agile. We have to
ensure we have the right products
and services in the right place
and at the right time, to respond
to changing restrictions and
opportunities regionally and locally.
We have to be flexible, support our
crew and maintain an intense safety
focus to operate safely and
effectively in a very challenging
operational environment.
In uncertain times we accelerated
our ability to adapt to rapidly
changing situations to quickly find
the advantages, as demonstrated
by the continuing success of the
community outreach programme
and by gearing up for peak season
at pace.
Where are we going?
The US business has a strong
domestic following and the
category as a whole is experiencing
the greatest growth curve in its
over 50 year history. The demand
for vehicle sales is unprecedented
(using this word in the positive
context is a rarity today).
Where are we at?
The US businesses achieved an
EBIT of US$7M in FY20, only
US$1.6M less than FY19 despite
the major disruption of COVID-19
in the crucial spring/early summer
period in the last quarter of FY20.
We also successfully delivered our
commitment made in May 2019,
to make cost savings and reduce
capital employed by $20M by the
end of FY20.
In the first eight months the
US motorhome sales market
remained highly competitive
following the industry oversupply
from the previous year.
Manufacturer wholesale sales
of motorhomes were down 10%
on the prior year and our sales
volumes saw a similar trend.
The challenging vehicle sales
market resulted in excess fleet
in the rental market, which
suppressed yields. In this difficult
market we grew bookings by 2%
during the first eight month
period, with pleasing growth in
international bookings.
The border closures due to
COVID-19 in March led to the
cancellation of approximately
$12M in forward revenue for FY20
relating to international rental
bookings. We immediately pivoted
to provide a community support
service for Government agencies,
health departments and utilities.
We provided rental services to
over 20 organisations, including
vehicles and support servicing
at camps set up to provide
emergency housing for vulnerable
community members. Revenue
from community rentals during
this period exceeded US$6M.
As COVID-19 restrictions eased
in May, the demand for RV rentals
and sales surged. US consumers
US Rentals &
Vehicle Sales
maximising a strong
RV sales market
At this point in time, the RV
industry more broadly, is expecting
demand to continue to grow into
CY2021 and potentially into 2022,
although that is inherently more
uncertain. The media interest in
the category has been surprising
with our business featuring in
multiple mainstream media events
in a positive manner.
We expect domestic demand
to continue to rise, and as
mentioned in our market update
in July, we see potential to grow
our aggregate booking numbers
compared to a normal pre-COVID
year. However, even if achieved,
we would not expect the same
level of returns due to the lower
yield and generally higher costs
of operating in the domestic-only
market. If international borders
open, we are confident we are in
a very strong position with the
key US wholesalers.
Whatever our customer base, the
US team is highly engaged in
operating in a manner which
protects the health and wellbeing
of crew and customers given we
are operating with wide spread
community transmission across
most of the country.
Tourism Operations
passion remains with
a lot less people
Where are we at?
The Tourism businesses delivered
an EBIT result of $7.1M (excluding
the impact of the write down
of Kiwi Experience goodwill),
which compared to $12.2M in
the prior year. The impact of the
New Zealand border closure was
far more pronounced on these
businesses.
Prior to the border closure, the
Kiwi Experience business was
recovering well, with forward
bookings ahead of the prior year
and positive EBIT momentum,
given good cost control and new
product development.
We currently have the Kiwi
Experience business essentially
in hibernation given the business
was 100% international focussed.
The Waitomo business was first
impacted by the reduction in
tourists from China, then the more
comprehensive New Zealand
border closure. From the first
lockdown period, we have
progressively opened the business
and are operating five days per
week under the current restrictions
and operating environment.
What have we learnt?
Despite only being able to retain a
few crew from Kiwi Experience in
the business (primarily redirected
to other roles), the spirit and
culture of Kiwi Experience has
remained very strong. The team
have remained connected and the
drivers are looking forward to a
return as soon as possible. We have
launched a small domestic
operation and will continue to trial
different options whilst we wait for
a border reopening.
The Waitomo business has also
shown a team and community
with enormous resilience.
We understand that a large
number of the crew that were
made redundant have found
appropriate employment
elsewhere in some manner.
The Waitomo business itself has
been able to adapt to the lower
domestic numbers and provide a
different experience. One that is
more intimate with deeper cultural
heritage and individual stories.
There will be several lessons
from this period which will
shape the future of the product,
and potentially, the direction of
the business.
Where are we going?
From a Waitomo perspective, we
intend to continue to work closely
with the various owner groups in
the region. We want to engage
with the community of Waitomo
to establish a plan to deliver a
recovery that aligns with all
interests.
From a financial perspective, the
interim costs relating to Kiwi
Experience are minimal, yet we are
retaining the essential skills and
knowledge to open with pace once
we are able.
We expect the Waitomo business
will remain in a loss-making
position as long as the New Zealand
border remains closed. We will
continue to develop the domestic
market, ideally beyond the school
holidays and long weekends,
where we have seen strong
demand to date.
The region has a lot to offer
New Zealanders and we are
pivoting our marketing
accordingly.
RENTAL REVENUE (USD)
-
11
%
VEHICLE SALES REVENUE (USD)
+
15%
EBIT (USD)
-
19
%
REVENUE
-
26
%
EBIT*
-
68
%
* Including the impact of the write
down of Kiwi Experience goodwill
thl Integrated Annual Report 20204647
Where are we going?
The Fleet and Insights products
need to be launched throughout
the thl businesses globally.
Beyond that, we continue to
see significant potential for the
software to have several different
use cases throughout the tourism
and automotive vehicle industries
globally. The team has a vision for
expansion and is looking forward
to proving the tangible value of
the developed product over the
coming months.
The peer-to-peer businesses
are focused on achieving a
break-even position and to
expand the SHAREaCAMPER
Australian operation.
Where are we at?
Following the change in the Togo
Joint Venture structure, thl took
certain assets and businesses to
operate with 100% ownership.
Most recently these businesses
have been grouped into a new
division called thl digital.
The Fleet and Insights products
have been continuing to complete
the development required to launch
live in Australia and New Zealand as
a fully integrated system.
The Mighway peer-to-peer rentals
business has been joined by the
recently acquired SHAREaCAMPER
business. The Mighway business
was on track for a break-even
result prior to the border closures.
What have we learnt?
From a Fleet and Insights
perspective, the COVID-19 situation
has only reinforced the core
principles behind the software
development, i.e. a flexible
system designed to scale up
in a secure manner.
The Mighway and SHAREaCAMPER
businesses again showed the ability
to pivot and leverage the domestic
campaign in New Zealand beyond
the locations that thl operates. With
a record number of bookings and
revenue in the winter months, there
is a possibility that these peer-to-
peer businesses will thrive in the
domestic only market.
thl Digital
flexibility designed to scale up
Equity Investments
What have we learnt?
In the last two months as
lockdown restrictions have eased
in the UK, we have seen similar
category growth for motorhome
sales and rentals, as seen in our
other markets globally.
Vehicle sales reached record levels
in July, with the end of summer and
autumn seasons looking promising
compared to the prior year.
The asset finance structure of the
Just go business worked well over
the lockdown period and we have
secured funding for the next round
of fleet purchases.
Like the rest of the business,
the Just go crew have excelled.
Where are we going?
FY21 still holds the same
uncertainties as the rest of the
industry, however we have seen
strong domestic demand which
has led to a positive start to the
financial year.
The fleet strategy for the coming
12-18 months will be critical and is
under constant review by the Just
go Board.
thl remains committed to Just go
and our joint venture partners,
Nick and Sarah Roach.
ACTION MANUFACTURING
Where are we at?
Over the last four years, Action
Manufacturing has been focused
on diversifying away from a sole
reliance on thl for its fortunes and
activity. The acquisition of Fairfax
Industries in 2018 is an example of
this, and has ultimately been a
positive move for the business.
The NPBT result of $1.4M (thl
50% share) was broadly in line
Throughout all aspects of the
business, the last few months
have shown the power of
positive relationships, and
that alignment in values
provides benefits well
beyond any legal document
can ever offer.
We have been both fortunate and
deliberate to have joint venture
partners that understand the needs
of each other and the preparedness
to operate in a manner which is
highly transparent, mutually
beneficial and builds on each
other’s strengths. The response
to the COVID-19 pandemic with
all our joint venture partners has
been exemplary.
JUST GO
Where are we at?
The Just go business was
impacted in a similar manner
to the rest of the business in
the last four months of the year.
The business was fortunate to
be able to manage the calendar
year 2020 fleet acquisition with the
manufacturing partner to stagger
the purchases over a 12 month
period. This had a flow on benefit
for the New Zealand business. This,
along with the breadth of support
from the UK Government, has seen
the business protect its balance
sheet and put it in a positive
position for FY21.
The FY20 loss of $376k (thl 49%
share in NZD) reflected the impact
of COVID-19 and is not seen as any
ongoing concern for the business.
with the prior year and budgeted
expectations. This is a remarkable
effort from the team, given the
shock in the operating environment
and sudden decrease in order
volume from thl.
The Albany site completed a
significant restructuring over Alert
Level 4 in New Zealand, enabling
costs to be reduced in line with
reduced volume.
Action Manufacturing carries
minimal debt, all of which relates
to stock and Work in Progress.
What have we learnt?
The variety of product
manufactured by Action
Manufacturing under Government
contracts, which includes
emergency services vehicles,
provides diversification and
resilience to the business.
The expert design capabilities of
the team at Action Manufacturing
and agile approach to business has
meant that the business has been
able to capture new contracts over
this period of uncertainty.
The Letter of Credit facility
guaranteed by thl supports Action
Manufacturing to continue to work
on thl’s committed motorhome
order for New Zealand and
Australia at an appropriate pace
over the coming 12 months, with
minimal cost to both businesses.
Where are we going?
We consider that Action
Manufacturing has a positive
outlook for FY21, as it looks to pivot
and grow capacity in the non-thl
motorhome space.
In recent months, the Albany
business has been able to
successfully repurpose to provide
operational support to thl in the
thl Integrated Annual Report 20204849
TOGO GROUP
Our managed exit from Togo
Group has been well covered
in the Chair and CEO reports.
The financial statements have a
specific note for the accounting
treatment of the transaction.
A breakdown and explanation
is also included in the thl
Investor Presentation.
thl’s share of the trading loss
for Togo Group to the point of
the transaction was $10.6M,
compared to the full year loss
of $12.8M in FY19.
preparation of motorhomes
moving from the rental fleet to
sales, as well as providing
assistance with service work and
insurance repairs. The support has
been beneficial to both Action
Manufacturing as well as thl,
given the significant preparation
activity associated with the “Great
New Zealand Motorhome Sale”.
Further expansion into Australia is
another opportunity for the
business. As noted in our market
update on 31 July 2020, Action
Manufacturing has had a number
of successful tenders in recent
months, including with the
Queensland Ambulance Service.
We expect that orders from the
Queensland Ambulance Service
will increase in FY21.
thl continues to have a positive
view on the medium and long-
term outlook for Action
Manufacturing.
OUTDORIA / TRIPTECH
On 31 July, each of thl and
Gerry Ryan increased their
existing shareholdings in triptech,
as Discovery Holiday Parks exited
as a shareholder of the company.
This transaction saw triptech’s
shareholder base move from
multiple shareholders to a
two-party joint venture. We see
this as a positive for triptech,
enabling greater clarity in
direction and strong ongoing
shareholder support.
The business is operating
effectively domestically, with
user numbers up on last year
for Australia and New Zealand
prior to the recent second
wave of lockdown activity in
both countries.
Triptech's FY20 loss was smaller
than in the prior year. Despite
the current international travel
restrictions, we still consider that
this business has a positive outlook.
ACTION MANUFACTURING NPBT
$1.4M
JUST GO NPAT
-$
376
K
TOGO NPBT*
-$
10.6M
The Directors of Tourism Holdings Limited (thl) are pleased
to present to shareholders, the Annual Financial Statements
for thl and its controlled entities (together the ‘Group’) for the
year to 30 June 2020.
The Directors are responsible for presenting financial
statements in accordance with New Zealand law and
generally accepted accounting practice, which present fairly,
in all material respects, the financial position of the Group as
at 30 June 2020 and the results of the Group’s operations and
cash flows for the year ended on that date.
The Directors consider the financial statements of the Group
have been prepared using accounting policies which have
been consistently applied and supported by reasonable
judgements and estimates and that all relevant financial
reporting and accounting standards have been followed.
The Directors believe that proper accounting records have
been kept which enable, with reasonable accuracy, the
determination of the financial position of the Group and
facilitate compliance of the financial statements with the
Financial Markets Conduct Act 2013.
The Directors consider that they have taken adequate steps
to safeguard the assets of the Group, and to prevent and
detect fraud and other irregularities.
Internal control procedures are also considered to be sufficient
to provide a reasonable assurance as to the integrity and
reliability of the financial statements.
This document constitutes the 2020 Annual Report
to Shareholders of Tourism Holdings Limited.
This Annual Report is signed on behalf of the Board by:
Rob Campbell Rob Hamilton
Chair
17 September 2020
Directors’
statement
51 Directors’ statement
52 Consolidated income
statement
53 Consolidated statement
of comprehensive income
54 Consolidated statement
of changes in equity
55 Consolidated statement
of financial position
56 Consolidated statement
of cash flows
57 Notes to the consolidated
financial statements
110 Independent auditor’s report
117 Corporate Governance
133 Board of Directors
134 Corporate information
Chair of the Audit Committee
*9 months to 31 March 2020
thl Integrated Annual Report 20205051
NOTES
2020
$000’S
2019
$000’s
Sales of services
2257,437292,199
Sales of goods
2143,493130,805
Total revenue
400,930423,004
Cost of sales
2(125,502)(114,373)
Gross profit
275,428308,631
Administration expenses
4, 5
(44,212)(49,469)
Operating expenses
4, 5(185,685)(197,160)
Other income
33,080141
Operating profit before financing costs*
48,61162,143
Finance income
642787
Finance expenses
7(13,369)(11,289)
Net finance costs
(12,942)(11,202)
Share of (loss)/profit from associates
20(376)246
Share of loss from joint ventures
18, 19(9,151)(11,294)
Profit before tax
26,14239,893
Income tax benefit/(expense)
81,214(10,140)
Profit for the year
27,35629,753
Earnings per share from profit for the year attributable to the equity holders
of the company
9
Basic earnings per share (in cents)
18.623.7
Diluted earnings per share (in cents)
18.623.3
* The consolidated income statement includes one non-GAAP measure (that is, operating profit before financing costs or “EBIT”) which is not a
defined term in New Zealand International Financial Reporting Standards (NZ IFRS). The Directors and management believe that this non-GAAP
financial measure provides useful information to assist readers in understanding the Group’s financial performance. This measure should not be
viewed in isolation and is intended to supplement the NZ GAAP measures, therefore may not be comparable to similarly titled amounts reported
by other companies.
NOTES
2020
$000’S
2019
$000’s
Profit for the year
27,35629,753
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve movement (net of tax)
24(2,624)(2,207)
Cash flow hedge reserve movement (net of tax)
32(2,212)(3,645)
Other comprehensive losses for the year net of tax
(4,836)(5,852)
Total comprehensive income for year attributable to
equity holders of the Company22,52023,901
The accompanying notes form part of, and should be read in conjunction with, these consolidated financial statements.The accompanying notes form part of, and should be read in conjunction with, these consolidated financial statements.
thl Integrated Annual Report 20205253
Consolidated statement of comprehensive income
For the year ended 30 June 2020
Consolidated income statement
For the year ended 30 June 2020
NOTES
SHARE
CAPITAL
$000’S
RETAINED
EARNINGS
$000’S
CASH FLOW
HEDGE
RESERVE
$000’S
OTHER
RESERVES
$000’S
TOTAL
EQUITY
$000’S
Opening balance as at 1 July 2019
217,01256,176(4,483)8,312277,017
Adjustment on adoption of NZ IFRS 16 (net of tax)
13–(7,150)––(7,150)
As at 1 July 2019
217,01249,026(4,483)8,312269,867
Comprehensive income
Net profit for the year ended 30 June 2020
23–27,356––27,356
Other comprehensive income
Cash flow hedge reserve movement (net of tax)
32––(2,212)–(2,212)
Transfer foreign currency gain to income statement in
relation to Togo transaction
24–––(9,066)(9,066)
Foreign currency translation reserve movement (net of tax)
24
–––6,4426,442
Total comprehensive income
–27,356(2,212)(2,624)22,520
Transactions with owners
Dividends on ordinary shares
10–(20,567)––(20,567)
Issue of ordinary shares (net of issue costs)
2252,904–––52,904
Transfer from employee share scheme reserve
2472––(72)–
Employee share scheme reserve
24–––375375
Total transactions with owners
52,976(20,567)–30332,712
Closing balance as at 30 June 2020
269,98855,815(6,695)5,991325,099
For the year ended 30 June 2019
NOTES
SHARE
CAPITAL
$000’s
RETAINED
EARNINGS
$000’s
CASH FLOW
HEDGE
RESERVE
$000’s
OTHER
RESERVES
$000’s
TOTAL
EQUITY
$000’s
Opening balance as at 1 July 2018
180,80659,725(838)10,318250,011
Comprehensive income
Net profit for the year ended 30 June 2019
23–29,753––29,753
Other comprehensive income
Cash flow hedge reserve movement (net of tax)
32––(3,645)–(3,645)
Foreign currency translation reserve movement (net of tax)
24–––(2,207)(2,207)
Total comprehensive income
–29,753(3,645)(2,207)23,901
Transactions with owners
Dividends on ordinary shares
10–(33,385)––(33,385)
Issue of ordinary shares (net of issue costs)
2236,122–––36,122
Transfer from employee share scheme reserve
248483–(167)–
Employee share scheme reserve
24–––368368
Total transactions with owners
36,206(33,302)–2013,105
Closing balance as at 30 June 2019
217,01256,176(4,483)8,312277,017
NOTES
2020
$000’S
2019
$000’s
Assets
Non-current assets
Property, plant and equipment
12359,717407,016
Intangible assets
1750,26744,180
Financial asset recognised at fair value through the income statement
2921,382–
Investment in joint ventures
1910,22451,106
Investment in associates
204,0444,319
Advance to joint venture
19125625
Right-of-use assets
1369,562–
Deferred tax assets
361,656–
Total non-current assets
516,977507,246
Current assets
Cash and cash equivalents
35,5148,837
Trade and other receivables
2728,93028,964
Inventories
1668,48756,219
Advance to joint venture
19530976
Current tax receivables
3,108191
Derivative financial instruments
31640
Total current assets
136,57595,227
Total assets
653,552602,473
Equity
Share capital
22269,988217,012
Other reserves
245,9918,312
Cash flow hedge reserve
32(6,695)(4,483)
Retained earnings
2355,81556,176
Total equity
325,099277,017
Liabilities
Non-current liabilities
Interest bearing loans and borrowings
25163,322210,980
Derivative financial instruments
319,1935,798
Deferred income tax liability
3611,88622,224
Lease liabilities
1374,567–
Total non-current liabilities
258,968239,002
Current liabilities
Interest bearing loans and borrowings
25–46
Trade and other payables
2837,00147,489
Revenue in advance
12,19225,544
Employee benefits
7,2148,400
Derivative financial instruments
31110461
Current tax liabilities
5,6644,514
Lease liabilities
137,304–
Total current liabilities
69,48586,454
Total liabilities
328,453325,456
Total equity and liabilities
653,552602,473
For and on behalf of the Board who authorised the issue of the consolidated financial statements on 17 September 2020.
R J Campbell R D Hamilton
Chair of the Board Chair of the Audit Committee
17 September 2020 17 September 2020
The accompanying notes form part of, and should be read in conjunction with, these consolidated financial statements.
The accompanying notes form part of, and should be read in conjunction with, these consolidated financial statements.
Consolidated statement of changes in equity
For the year ended 30 June 2020
Consolidated statement of financial position
As at 30 June 2020
thl Integrated Annual Report 20205455
NOTES
2020
$000’S
2019
$000’s
Cash flows from operating activities
Receipts from sale of services
248,752298,998
Proceeds from sale of goods
143,493130,805
Interest received
621287
Payments to suppliers and employees
(193,510)(224,119)
Purchase of rental assets
(108,790)(176,075)
Interest paid
(13,584)(11,134)
Taxation paid
(7,484)(8,361)
Net cash flows from operating activities
3569,08910,201
Cash flows from investing activities
Sale of property, plant and equipment
1268
Purchase of property, plant and equipment
(4,125)(3,884)
Advance to joint ventures
18, 19(11,945)(1,500)
Receipts from joint ventures
191,000751
Purchase of intangibles
(432)(407)
Investments in associates and joint ventures
19–(9,589)
Net cash flows used in investing activities
(15,376)(14,621)
Cash flows from financing activities
Payment for lease liability principal
13(6,442)–
Proceeds from borrowings
25101,150164,548
Repayments of borrowings
25(153,938)(166,225)
Dividends paid
10(17,373)(29,429)
Proceeds from share issue (net of issue costs)
2249,28030,798
Net cash flows used in financing activities
(27,323)(308)
Net increase/(decrease) in cash and cash equivalents
26,390(4,728)
Opening cash and cash equivalents
8,83713,534
Exchange gains on cash and cash equivalents
28731
Closing cash and cash equivalents
35,5148,837
Significant non cash transactions:
During the year ended 30 June 2020, the Group received certain assets and liabilities as part of the exit from Togo Group
(refer to note 18).
Index
About this report 58
Section A – Financial performance 62
1 Segment note 62
2 Revenue 64
3 Other operating income, net 65
4 Profit before tax includes the following specific expenses 66
5 Employee benefits expense 66
6 Finance income 67
7 Finance expenses 67
8 Income tax 67
9 Earnings per share 69
10 Dividends 69
11 Imputation credits 69
Section B – Assets used to generate profit 70
12 Property, plant and equipment 70
13 Leases 72
14 Capital commitments 76
15 Operating leases 76
16 Inventories 76
17 Intangible assets 77
Section C – Investments 80
18 Togo exit transaction 80
19 Joint ventures 83
20 Investments in associate 85
21 Subsidiaries 85
Section D – Managing funding 86
22 Share capital 86
23 Retained earnings 87
24 Other reserves 87
25 Borrowings 88
26 Other commitments 90
27 Trade and other receivables 91
28 Trade and other payables 92
29 Financial instruments 92
Section E – Managing risk 94
30 Financial risk management 94
31 Derivative financial instruments 98
32 Cash flow hedge reserve 100
Section F – Other 101
33 Related party transactions 101
34 Share-based payments 103
35 Reconciliation of profit after taxation with cash flows
from operating activities 106
36 Deferred income tax 108
37 Changes in accounting policies and disclosures 109
38 Contingencies 109
39 Events after the reporting period 109
The accompanying notes form part of, and should be read in conjunction with, these consolidated financial statements.
thl Integrated Annual Report 20205657
Notes to the consolidated financial statementsConsolidated statement of cash flows
For the year ended 30 June 2020
About this report
Basis of preparation
The primary operations of Tourism Holdings Limited (the
‘Company’ or ‘Parent’ or ‘thl ’) and its subsidiaries (together the
‘Group’) are the manufacture, rental and sale of motorhomes
and other tourism related activities. The Parent is domiciled in
New Zealand. The registered office is Level 1, 83 Beach Road,
Auckland 1010, New Zealand. Tourism Holdings Limited is a
company registered under the Companies Act 1993 and is an
FMC reporting entity under Part 7 of the Financial Markets
Conduct Act 2013.
The consolidated financial statements (financial statements)
of the Group have been prepared:
• in accordance with Generally Accepted Accounting Practice
(GAAP), and comply with New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS),
as applicable for a “for profit” entity;
• in accordance with the requirements of Part 7 of the
Financial Markets Conduct Act 2013 and the NZX Main
Board Listing Rules;
• under the historical cost convention, as modified by the
revaluation of certain assets and liabilities as identified
in specific accounting policies; and
• in New Zealand dollars with values rounded to thousands
($000’s) unless otherwise stated.
Throughout this document, accounting policies and critical
accounting estimates are identified using the following key:
Key:
= Accounting policy
= Critical accounting estimate
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated
and are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances.
The preparation of consolidated financial statements in
conformity with NZ IFRS requires the use of certain critical
accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are:
• Income tax (note 8)
• Property, plant and equipment (depreciation rates,
residual values and inventory reclassification) (note 12)
• Impairment of non-financial assets which include
investments in associates and joint venture (note 19), and
goodwill arising from business combinations (note 17)
• Assessment of going concern assumption
(refer to paragraph below)
• Togo transaction (valuation of intellectual properties and
residual investment) (note 18).
About this report (continued)
Assessment of going concern and impairment
The Board has considered the impact of COVID-19 on the
financial position of the Group. This is commented on in more
detail below and in the notes to the financial statements.
The Board has also considered the impact of COVID-19 in
relation to the ongoing funding and capital requirements
of the Group. In making these assessments, the Board has
considered cash flow forecasts under a range of potential
scenarios. These include cash flow forecasts for at least 12
months from the date of signing these financial statements
and five year models supporting the impairment assessment
at the cash-generating unit (CGU) levels. Acknowledging
the inherent risks in relation to the unknown future impacts
of COVID-19, these financial statements and the cash flow
forecasts have been prepared based on currently available
information and the Board’s best estimates of the future
circumstances of the Group.
Key assumptions used in the cash flow forecasts include:
• Domestic only tourism throughout FY21, without travel
restrictions within each country;
• Rental yields and hire days estimates for each jurisdiction
reflective of expectations from a domestic only market;
• Vehicle sales volumes throughout FY21 similar to that
of FY19 levels; and
• A re-opening of international borders during FY22.
We note that in particular reference to the impairment testing
there is the potential for a deterioration in macro-economic
conditions and/or longer than anticipated border closures or
travel restrictions which could impact one or a combination
of key sensitivities to a greater degree than provided within.
In this event, it could result in a future impairment of an asset,
particularly where current headroom is low. In particular we
note that the headroom in the Rentals Australia business
and the investment in Action Manufacturing LP (AMLP) is
relatively limited.
Based on the cash flow scenarios that were developed,
the Group secured a committed bank funding facility of
approximately $225M, consisting of a number of tranches
maturing between September 2021 and July 2022 as outlined
in note 25.
As described in note 25, the Group has made, among other
undertakings, certain undertakings to, and has agreed
certain “events of review” with, its banking syndicate in
relation to EBITDA and vehicle sales performance throughout
FY21. As at 31 August 2020, the Group’s net debt position was
$98M ahead of that in the banking case scenario model
supporting the facility agreement. The Group was comfortably
ahead of the required EBITDA and vehicle sales.
Based on this positive trading performance since the scenario
modelling was developed and banking arrangements
finalised, and the future cash flow forecasts as outlined above,
the Board expects that the Group will be able to meet its
undertakings and covenants in relation to the banking facility
and will have sufficient cash to discharge its liabilities as
they fall due, for at least one year from the date the financial
statements are approved.
Having regard to all of the above, the Board’s assessment is
that there is no material uncertainty and concluded that the
going concern assumption is appropriate. Therefore these
financial statements have been prepared on the basis of a
going concern.
An assessment of the impact of COVID-19 on the statement
of financial position is set out below, based on information
available at the time of preparing these financial statements:
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20205859
About this report (continued)About this report (continued)
STATEMENT OF FINANCIAL
POSITION ITEMCOVID-19 ASSESSMENTNOTE
Trade and other receivablesthl has updated the provisions for doubtful debts for the increase in
expected credit losses.27
InventoriesPrimarily consisting of motorhomes held for sale, thl has reviewed the
recoverable value of motorhome assets and concluded that the margins
on sale that are currently being achieved in each jurisdiction supports
the carrying value.12, 16
Advance to and investments
in joint venture and associate
COVID-19 has impacted the performance of Just go and AMLP, thl 's equity
accounted investees. thl performed an impairment assessment over these
investments using value in use calculations to determine their respective
recoverable amounts. The assessment supports no impairment to the
carrying value of these investments.19, 20
Income taxThe decrease in earnings as a result of COVID-19 has resulted in overpaying
provisional tax in New Zealand. A refund has been recorded at the amount
expected to be received. In the United States, a one off tax benefit has arisen
due to an allowance to carry back tax losses to previous tax years. The tax years
that the losses were applied to had a higher tax rate than the losses were
previously valued at.8, 36
Derivative financial instrumentsCOVID-19 has impacted interest rate derivatives through the drop in interest
rates and an increase in thl ‘s own credit risk spread.31
Property, plant and equipmentPrimarily consisting of Motorhomes, thl has reviewed the recoverable value of
motorhome assets and the depreciation rates applied, and concluded that the
recoverable amount was determined to be greater than its carrying amount.
This is further supported by the impairment assessment performed at the CGU
level using a value-in-use calculation.12
Intangible assetsGiven the current and unexpected impact of COVID-19 to the economy and the
current market capitalisation being less than net assets, thl has performed an
impairment assessment of all of its CGUs using value-in-use calculations
to determine each of the CGUs recoverable amount. The assessment supports
no impairment required for all CGUs, apart from Kiwi Experience. Given the
current hibernation of the Kiwi Experience business, combined with the decline
of the UK backpacker market throughout FY19 and FY20, the goodwill in relation
to the Kiwi Experience business has been fully written off.17
Right-of-use assets and liabilitiesthl has assessed its lease portfolio and raised an impairment against the
right-of-use assets in relation to two immaterial leases that are currently not
being used in the Group's tourism businesses. All rentals businesses leases in
relation to the rentals business are still being used and form part of the branch
network in each jurisdiction. A value-in-use calculation has been performed
for each of the rentals business which results in no impairment of the right-of-
use assets. During the year ended 30 June 2020, thl received rent concessions
due to COVID-19 which have not been treated as a lease modification, as a
practical expedient, in accordance with the COVID-19-Related Rent Concessions
amendment to NZ IFRS 16 Leases as issued in May 2020 and approved in New
Zealand in June 2020.13
Financial assets recognised
at fair value
The remaining investment in Togo Group has been recognised at fair value and
there is no indication of impairment at 30 June 2020.31
Trade and other payablesThere were no material accruals or provisions related to COVID-19.28
Revenue in advanceThe majority of revenue received in advance from international customers prior
to COVID-19 has been refunded. The remaining balance primarily relates to
revenue received in advance for domestic travel in each jurisdiction.
Employee benefitsThere was no material impact to the value of employee benefits as a result
of COVID-19.
Interest bearing loans
and borrowings
The loan facility was amended in June 2020 as described in note 25. The net
debt balance has reduced significantly from pre COVID-19 levels, primarily
facilitated by cash flows received from the sale of motorhomes.
25
The Group has included the following amounts within the income statement for the year end 30 June 2020 in relation to the
impacts of COVID-19:
DESCRIPTIONRECOGNITION IN STATEMENT OF COMPREHENSIVE INCOME$000’s
Increase in provision for doubtful debtsOperating expenses
1,099
Restructure and redundancy costsOperating expenses
557
Impairment of right-of-use lease assetsOperating expenses
130
Impairment of Kiwi Experience goodwillOperating expenses
3,126
Wage subsidies receivedNetted off against employee entitlements
5,346
Rent relief receivedOther income
1,030
Summary of significant accounting policies
a) Consolidation
The Group consolidates its subsidiaries, as these are the
entities over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains
on transactions between Group companies are eliminated.
Unrealised losses are also eliminated but considered an
impairment indicator of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group.
Information on the Group’s subsidiaries can be found in
note 21.
b) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in New Zealand dollars, rounded
to the nearest thousand, which is the Company’s functional
and presentation currency.
Translation into presentation currency
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the
presentation currency are translated into the presentation
currency as follows:
(i) Assets and liabilities for each statement of financial
position (‘balance sheet’) presented are translated
at the closing rate at the date of that balance sheet;
(ii) Income and expenses for each income statement are
translated at the average monthly exchange rates; and
(iii) All resulting exchange differences are recognised
as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
Transactions and balances in the functional currency
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and
from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in the income statement, except when deferred
in equity as qualifying cash flow hedges.
At the end of each reporting period:
(a) Foreign currency monetary items are translated using
the closing rate;
(b) Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction; and
(c) Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was measured.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20206061
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 reported from a geographic and service type perspective. They are made up of the following
business operations:
• New Zealand Rentals – Rental of maui, Britz and Mighty motorhomes, and the sale of motorhomes;
• Tourism Group – Kiwi Experience and the Discover Waitomo Caves Group experiences;
• Australia Rentals – Rental of maui, Britz and Mighty motorhomes and 4WD vehicles, and the sale of motorhomes;
• United States Rentals – Rental and sale of Road Bear, Britz, Mighty and El Monte RVs; and
• Other – includes Group Support Services and TH2. TH2 includes Mighway, Togo Fleet and thl’s investment in Outdoria.
The joint ventures and associates are also included in this category.
NEW ZEALAND
2020
RENTALS
$000’s
TOURISM
GROUP
$000’s
AUSTRALIA
RENTALS
$000’s
UNITED STATES
RENTALS
$000’s
OTHER
$000’s
TOTAL
$000’s
Sales of services
91,58030,71057,60177,52620257,437
Sales of goods
45,934–16,79280,767–143,493
Revenue from external customers
137,51430,71074,393158,29320400,930
Depreciation
(22,359)(1,604)(17,144)(20,293)(573)(61,973)
Asset impairment
–(3,256)–––(3,256)
Amortisation
(9)(677)(40)(35)(399)(1,160)
Other costs
(84,908)(21,256)(48,566)(127,072)(4,128)(285,930)
Operating profit/(loss) before interest and tax
30,2383,9178,64310,893(5,080)48,611
Interest income
1––5421427
Interest expense
(1,006)(84)(1,434)(5,361)(5,484)(13,369)
Share of loss from joint ventures and associates
––––(9,527)(9,527)
Operating profit/(loss) before tax
29,2333,8337,2095,537(19,670)26,142
Taxation
(8,254)(1,805)(2,004)(420)13,6971,214
Operating profit/(loss) – after interest and tax
20,9792,0285,2055,117(5,973)27,356
Capital expenditure
52,7791,55220,34636,3281,563112,568
Non-current assets
164,97821,53799,802180,76949,891516,977
Total assets
213,58522,743116,647235,47265,105653,552
Net funds employed
152,38216,87468,734143,75971,160452,909
1. Segment note (continued)
NEW ZEALAND
2019
RENTALS
$000’s
TOURISM
GROUP
$000’s
AUSTRALIA
RENTALS
$000’s
UNITED STATES
RENTALS
$000’s
OTHER
$000’s
TOTAL
$000’s
Sales of services
97,88741,43269,96982,911–292,199
Sales of goods
50,763–13,55366,489–130,805
Revenue from external customers
148,65041,43283,522149,400–423,004
Depreciation
(19,452)(1,521)(14,634)(15,744)(194)(51,545)
Amortisation
(87)(692)(33)(2)(283)(1,097)
Other costs
(97,619)(26,938)(57,536)(120,625)(5,501)(308,219)
Operating profit/(loss) before interest and tax
31,49212,28111,31913,029(5,978)62,143
Interest income
––14106387
Interest expense
(5)–(638)(3,851)(6,795)(11,289)
Share of profit/(loss) from joint ventures
and associates––––(11,048)(11,048)
Operating profit/(loss) before tax
31,48712,28110,6959,188(23,758)39,893
Taxation
(8,947)(3,595)(3,003)(517)5,922(10,140)
Operating profit/(loss) – after interest and tax
22,5408,6867,6928,671(17,836)29,753
Capital expenditure
61,52945127,41292,3861,742183,520
Non-current assets
155,11323,48787,007182,91758,722507,246
Total assets
188,52225,524106,336220,60261,489602,473
Net funds employed
148,37821,87972,205184,29152,453479,206
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.
Operating profit/(loss) before interest and tax is the main financial measure used by the CODM to review the Group’s
performance.
Inter-segment transactions such as Group Support Services recharges 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 and liabilities are measured in the same way as in the
financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location
for assets.
Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating
cash. The investments and derivatives designated as hedges of borrowings are allocated to “Other segment’. Net funds
employed are non-GAAP measures that are not defined in NZ IFRS. The Directors and management believe that these
non-GAAP financial measures provide useful information to assist readers in understanding the Group’s financial performance.
These measures should not be viewed in isolation and are intended to supplement the NZ GAAP measures, therefore may not
be comparable to similarly titled amounts reported by other companies. The net funds employed are segment total assets less
segment non-interest-bearing liabilities and cash on hand. The lease liability as a result of NZ IFRS 16 is not considered to be
part of funds employed.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20206263
2. Revenue
NZ IFRS 15 ‘Revenue from contracts with customers’
Effective 1 July 2018, the Group adopted NZ IFRS 15 ‘Revenue from Contracts with Customers’ on a modified retrospective
basis. On adoption the Group reassessed the revenue policies and concluded that in regards to the rental of motorhomes,
a lease component has been identified and accordingly this portion of revenue is recognised under NZ IAS 17 for the
comparative year (prior to adoption of NZ IFRS 16 on 1 July 2019) as opposed to under NZ IFRS 15. This does not have
any impact on revenue recognition, however this does affect the disclosure thereof. Refer to the Rental Income
paragraph below.
Revenue recognition processes and accounting policies have been amended to ensure that the five-step method, as
defined in NZ IFRS 15, is applied consistently to revenue recognition across the Group.
The revenue earned by the Group is derived f rom the satisfaction of one or more performance obligations, which are
satisfied at or over a similar period.
(i) Sales of services
Sales of services comprises rental income and service revenue.
Rental income
Rental income 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.
Service revenue
Service revenue comprises various performance obligations (rental add-ons such as accessories and customer liability
reduction) in which satisfaction in most cases occurs evenly over the rental period and is recognised accordingly.
The Group recognises this revenue over time, as the customer simultaneously receives and consumes the benefits
provided by the entity’s performance.
Sales from tourism services are recognised when the service is rendered to the customer and are recognised in the
accounting period in which the performance obligation is satisfied, being when the customer obtains the benefit
f rom the service. It relates to the satisfaction of a number of performance obligations at a point in time; the contract
price that is determined for any single performance obligation is based with reference to the stand alone price and
no significant financing components exist, as the transaction is settled within 12 months from the transaction date.
There are no costs to obtain or fulfil the contract.
The Group prices its services on a fixed basis and the pricing is fixed and determinable when the duly executed
arrangement is finalised. It has also been determined that there are no significant financing components as part
of the Group’s sale of services arrangements. The Group does not provide for returns or refunds in the contracts
with its customers.
Revenue f rom these sales is recognised 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.
The Group recognises the contract liability which represents the Group’s obligation to transfer goods or services to
a customer for which the Group has received consideration f rom the customer. It relates to the payments and
deposits from the customers and are disclosed as Revenue in Advance in the consolidated statement of financial
position. The average timing of satisfaction of performance obligations in relation to the payment of the contract
liability is between 1-6 months.
(ii) Sales of goods
The Group sells a range of motorhomes, accessories and other 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. It relates to the satisfaction of a single performance obligation at a point in time; the
contract price is determined and no significant financing components exist as the transaction is settled within
12 months from the transaction date and no costs to obtain or fulfil the contract.
2. Revenue (continued)
Sales of services
Sales of services includes revenue from rental of motorhomes, Wi-Fi, accessories and additional services relating to the rental
of motorhomes and the sale of tourism experiences (for Kiwi Experience and Waitomo).
2020
$000’S
2019
$000’s
Rental revenue
180,797197,210
Service revenue
76,64094,989
Total sales of services
257,437292,199
Future minimum rental revenue under non-cancellable operating leases.
2020
$000’S
2019
$000’s
Within one year
4,1187,244
Within one to two years
–7
Total
4,1187,251
Sales of goods
• Cost of goods includes the net book value of ex-rental fleet sold and the purchase price of new vehicles, trade-ins and
retail goods sold.
• Vehicle selling expenses consists primarily of amounts paid by thl to third party warranty providers, and costs incurred
under warranty claims.
2020
$000’S
2019
$000’s
Sales of goods
143,493130,805
Cost of goods
(124,302)(113,176)
Vehicle selling expenses
(1,200)(1,197)
Cost of sales
(125,502)(114,373)
Gross profit
17,99116,432
3. Other operating income, net
2020
$000’S
2019
$000’s
Net loss on disposals of non-fleet assets
(110)(2)
Loss on Togo exit transaction (note 18)
(8,383)–
Foreign currency translation gain on Togo exit transaction (note 18)
9,066–
Other income*
2,507143
Other operating income
3,080141
* Included within other income is $1M rent relief received as a result of COVID-19.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20206465
4. Profit before tax includes the following specific expenses
NOTES
2020
$000’S
2019
$000’s
Donations
389
Depreciation
12, 1361,97351,545
Impairment of goodwill
173,126–
Amortisation of intangible assets
171,1601,097
Rental and operating lease costs
1,94112,204
Raw materials and consumables
1,2851,532
Repairs and maintenance including damage repairs
24,16927,643
Internal audit fees
185165
Net foreign exchange losses/(gains)
(260)20
Audit fees – PricewaterhouseCoopers New Zealand
Audit of financial statements
i
564475
Audit of implementation of new accounting standards
–38
Other fees – PricewaterhouseCoopers New Zealand
Remuneration benchmarking
ii
–31
Treasury services
iii
2015
Agreed upon procedures
iv
3019
Other services
v
–20
Total fees paid to PricewaterhouseCoopers New Zealand
614598
Notes on fees paid to auditor:
i. The fee includes the fees for the annual audit of the consolidated financial statements of thl.
ii. Remuneration benchmarking in 2019 is in relation to providing market remuneration data for certain senior management
roles and Directors.
iii. Treasury services in 2019 and 2020 are in relation to financial markets risk analysis and commentary.
iv. Agreed upon procedures in 2019 and 2020 are in relation to Waitomo lease compliance, the interim financial statements
and proxy vote scrutineering in the annual meeting.
v. Other services in 2019 include an assurance engagement for the interim financial statements and assistance with the
compilation of subsidiary financial statements.
PricewaterhouseCoopers New Zealand was also engaged after the balance date to perform agreed upon procedures on the
quarterly banking compliance certificate and on holiday pay calculation remediation and COVID-19 payroll changes assessment.
5. Employee benefits expense
Employee entitlements to salaries and wages and annual leave to be settled within 12 months of the reporting
date represent present obligations resulting f rom employees’ services provided up to the reporting date. These are
calculated at undiscounted amounts based on remuneration rates that the Group expects to pay.
2020
$000’S
2019
$000’s
Wages and salaries
71,31880,548
Share-based payment costs (note 34)
375368
Other employee benefits
2,0052,636
Total employee remuneration
73,69883,552
Wages and salaries include redundancy costs of $557k, offset by the benefits received in relation to NZ COVID-19 Wage Subsidy
of $3,979k and Australian Jobkeeper scheme of $1,367k.
6. Finance income
2020
$000’S
2019
$000’s
Interest income
42787
Total finance income
42787
7. Finance expenses
2020
$000’S
2019
$000’s
Interest on bank borrowings
9,42411,284
Interest on finance leases
3,9455
Total interest expense
13,36911,289
8. Income tax
The Group is subject to income taxes in multiple jurisdictions. Significant judgement is required in determining
the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax
audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters
is different f rom the amounts that were initially recorded, such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
Current and deferred income tax
Income tax expenses comprises current tax and deferred tax.
Current tax is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments
to income tax payable in respect of prior years. Current tax is calculated using rates that have been enacted or
substantially enacted by balance date.
Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences
and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available, against which the deductible temporary
differences or tax losses can be utilised.
Deferred tax is not recognised if the temporary difference arises f rom the initial recognition of goodwill or f rom the
initial recognition of an asset and liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither accounting profit nor taxable profit.
Deferred tax is recognised on taxable temporary differences arising on investments in subsidiaries and associates,
except where the company can control the reversal of the temporary difference and it is probable that the temporary
difference will not be reversed in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised, using tax rates that have been enacted or substantially enacted by balance date.
Current tax and deferred tax are charged or credited to the income statement, except when it relates to items charged
or credited directly to equity, in which case the tax is classified within equity.
Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20206667
Notes to the consolidated financial statements (continued)
NOTES
2020
$000’S
2019
$000’s
Current tax
9,46213,095
Deferred tax
36(10,676)(2,955)
Income tax (benefit)/expense
(1,214)10,140
The Group shall offset current tax assets and current tax liabilities if, and only if, the Group has a legal enforceable right to set off
the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
The tax on the profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
applicable to profits of the consolidated companies as follows:
2020
$000’S
2019
$000’s
Profit before tax
26,14239,893
Tax calculated at domestic rates applicable to profits in the respective countries
8,14311,287
Non-assessable income
(1)
(10,037)(63)
Expenses not deductible for tax purposes
1,827784
Adjustment for US tax losses carried back
(2)
(1,147)(1,868)
Income tax (benefit)/expense
(1,214)10,140
(1) As explained in note 18 during the year ended 30 June 2020, the Group made a loss of $8.4M in relation to the disposal of its investment
in Togo Group. This consisted of a taxable loss of $38.1M in relation to the USA tax jurisdiction; offset by non-taxable Group consolidation
gain of $29.7M.
(2) The adjustments for US tax losses carried back include a tax benefit in relation to an allowance under the tax code to carry back tax losses to
previous tax years. The tax years that the losses were applied to had a higher tax rate than the losses were previously valued at (refer to note 36).
As a result, the weighted average effective tax rate was -5% (2019: 25%).
8. Income tax (continued)9. Earnings per share
20202019
Profit attributable to the equity holders of the Parent ($000's)
27,35629,753
Weighted average number of ordinary shares on issue (000's)*
146,753125,801
Basic earnings per share (in cents)
18.623.7
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares arising from the employee share scheme (refer to note 34).
20202019
Weighted average number of ordinary shares on issue (000's)*
146,753125,801
Dilutive redeemable shares and options if exercised (000's)
1991,998
Total shares (000's)
146,952127,799
Diluted earnings per share (in cents)
18.623.3
* An additional 14,667,436 shares from the pro rata 1 for 9 rights offer (the Rights Offer) were issued in July 2019 (refer to note 22). The issue price
of $3.40 per share under the Rights Offer represented a 9.6% discount to the theoretical ex rights price on the record date. As a result, 1,404,329
shares issued as part of the Rights Offer were treated as a bonus issue which have been adjusted in the weighted average number of ordinary
shares on issue in 2019 in accordance with NZ IAS 33 Earnings per Share.
10. Dividends
The 2020 interim dividend was cancelled and there is no 2020 final dividend. The 2019 final dividend paid in the year ended
30 June 2020 was $20,567k (14 cents per share). The final and interim dividends paid in the year ended 30 June 2019 were
$17,243k (14 cents per share) and $16,142k (13 cents per share) respectively.
Dividend distributions to the Company’s shareholders are recognised as a liability in the Group’s financial statements
in the period in which the dividends are approved by the Company’s Directors.
11. Imputation credits
2020
$000’S
2019
$000’s
The amount of imputation credits available for use in subsequent reporting periods
4,4915,671
The above amounts represent the balance of the imputation credit account as at the year end adjusted for:
• Imputation credits that will arise from the payment of the amount of the provision for income tax;
• Imputation debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
• Imputation credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20206869
In this section
This section describes the assets thl uses in the business to generate profit, including:
• Property, plant and equipment
The most significant component is the motorhome fleet. Premises, in general, are leased, however significant buildings
are the Waitomo Caves Visitor Centre and the Waitomo Caves Homestead.
• Leased assets
The most significant leased assets relate to the premises in New Zealand, Australia and the United States.
• Inventory
The most significant inventory items are the ex-rental motorhome fleet assets that are held for sale. Other inventory
items include spare parts, living equipment used inside rental motorhomes, and retail stock.
• Intangible assets
Intangible assets include:
– Goodwill arising from the purchase of the Road Bear RV, El Monte RV businesses and Kiwi Experience;
– The cost of the Waitomo Caves leases;
– Software;
– Brands; and
– Trademarks, leases and licenses.
12. Property, plant and equipment
Property, plant and equipment are made up of the following assets:
• Motorhomes - this comprises the rental fleet of the Rentals New Zealand, Rentals Australia and Rentals United States
businesses. Motorhomes that are held for sale are reclassified from property, plant and equipment to inventory (as shown
in the table below);
• Motor vehicles - this comprises vehicles owned by the business, including shuttles and company cars;
• Land and buildings - this comprises owned land and buildings in Waitomo;
• Other plant and equipment - this comprises office equipment, furniture, and other plant used to operate the business; and
• Capital work in progress - this represents capital purchases and projects that are not yet in service. The most significant
work in progress relates to the motorhome fleet built for the next season.
Land and buildings are shown at historical cost, less subsequent accumulated depreciation for buildings. Land is
not depreciated. All other property, plant and equipment are stated at historical cost less accumulated depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are charged to the income statement during the
financial period in which they are incurred.
Section B – Assets used to generate profit
12. Property, plant and equipment (continued)
The Group estimates the residual values of the fleet in order to depreciate motorhome assets using the straight-line
method. This estimate of the useful life and the residual value of the vehicle is based on when it is expected to be taken
out of the rental fleet. The residual value is influenced by its condition, the mileage on the motorhome and the consumer
demand within the relevant resale market. The Group also considers the market conditions and the impact any changes
could have on the estimates as part of the overall fleet management program. The Group completes an annual review
of the appropriateness of the residual values and useful lives that have been used by reviewing the gains/losses made
on recent sales, and forecasts, of similar motorhomes. The estimated useful lives of motorhomes on the rental fleet
are 1 - 6 years. This results in annual depreciation rates as a percentage of the original costs of between 5% and 15% for
motorhomes. If the depreciation rate increases/(decreases) by 1% for motorhomes, the depreciation expense will increase/
(decrease) by approximately $5.0M for the year.
Depreciation on other assets is calculated using the straight-line method to allocate their cost amounts to their
residual values over their estimated useful lives as follows:
Buildings & leasehold improvements 7 - 40 years
Vehicles (non-fleet) 5 - 10 years
Other plant & equipment 3 - 20 years
The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount (note 17).
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included
in the income statement.
MOTORHOMES
$000’S
MOTOR
VEHICLES
$000’S
LAND AND
BUILDINGS
$000’S
OTHER
PLANT AND
EQUIPMENT
$000’S
CAPITAL
WORK IN
PROGRESS
$000’S
TOTAL
$000’S
Year ended 30 June 2020
At 1 July 2019
401,39669814,1546,41326,717449,378
Additions and transfers from work in progress (net)
119,9812941,4031,708(10,818)112,568
Disposals
(101,625)(39)–(465)–(102,129)
Exchange differences
7,17315842631017,636
Depreciation charge
(50,077)(197)(1,695)(2,197)–(54,166)
Closing net book amount
376,84877113,9465,72216,000413,287
As at 30 June 2020
Cost
494,6172,05229,15621,29216,000563,117
Accumulated depreciation
(117,769)(1,281)(15,210)(15,570)-(149,830)
Net book amount
376,84877113,9465,72216,000413,287
Less reclassification of motorhomes to inventory
at balance date
Cost
68,038––––68,038
Accumulated depreciation
(14,468)––––(14,468)
Net book amount reclassified
53,570––––53,570
Closing net book amount post reclassification
323,27877113,9465,72216,000359,717
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20207071
12. Property, plant and equipment (continued)
MOTORHOMES
$000’s
MOTOR
VEHICLES
$000’s
LAND AND
BUILDINGS
$000’s
OTHER
PLANT AND
EQUIPMENT
$000’s
CAPITAL
WORK IN
PROGRESS
$000’s
TOTAL
$000’s
Year ended 30 June 2019
At 1 July 2018
362,80086615,2318,15629,007416,060
Additions and transfers from work in progress (net)
183,586406411,549(2,296)183,520
Disposals
(95,301)(9)(6)(178)–(95,494)
Exchange differences
(3,022)(2)(51)(94)6(3,163)
Depreciation charge
(46,667)(197)(1,661)(3,020)–(51,545)
Closing net book amount
401,39669814,1546,41326,717449,378
As at 30 June 2019
Cost
504,9941,83627,57821,94026,717583,065
Accumulated depreciation
(103,598)(1,138)(13,424)(15,527)–(133,687)
Net book amount
401,39669814,1546,41326,717449,378
Less reclassification of motorhomes to
inventory at balance date
Cost
56,406––––56,406
Accumulated depreciation
(14,044)––––(14,044)
Net book amount reclassified
42,362––––42,362
Closing net book amount post reclassification
359,03469814,1546,41326,717407,016
13. Leases
Adoption of NZ IFRS 16
The Group has adopted NZ IFRS 16 Leases from 1 July 2019, but has not restated comparatives for the 2019 reporting period,
as permitted under the specific transition provision in the standard. The reclassifications and the adjustments arising from
the new leasing rules are therefore recognised in the opening statement of financial position on 1 July 2019. The net impact
is a reduction in retained earnings on 1 July 2019 of $7.2M. This is a non-cash adjustment and did not impact the Group’s ability
to comply with its debt covenants.
Prior to 1 July 2019, leases of property, plant and equipment were classified as operating leases with an operating lease
expense recognised on a straight-line basis over the term of the leases under NZ IAS 17.
From 1 July 2019, leases are recognised as a right-of-use asset and a lease liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between principal and finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
The Group’s leasing activities
The Group predominantly leases its premises in New Zealand, Australia and the United States under operating lease
agreements. Lease agreements may contain both lease and non-lease components. The Group allocates the consideration
in the agreement to the lease and non-lease components based on their relative stand-alone prices. However, for leases of
real estate for which the Group is a lessee, the Group has elected not to separate lease and non-lease components and
instead accounts for these as a single lease component.
Lease terms are negotiated on an individual basis and contain a wide range of different terms, escalation clauses and
renewal rights. The lease agreements do not impose any covenants other than the security interests in the leased assets
that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
13. Leases (continued)
Lease liabilities have been measured at the present value of the remaining lease payments, discounted using a discount rate
derived from the incremental borrowing rate for each relevant overseas territory on 1 July 2019 when the interest rate implicit
in the lease was not readily available. Incremental borrowing rates applied to lease liabilities range between 4.3% - 5.3%. The
Group is exposed to potential future increases in variable lease payments based on the change of an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect,
the lease liability is reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less any lease incentives received;
• Any initial direct costs; and
• Restoration costs.
The right-of-use asset is depreciated over the shorter of the asset’s useful life and the expected lease term on a straight-line basis.
Short-term and low-value leases
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense
in the income statement. Short-term leases are leases with a lease term of 12 months or less and predominantly relate to
computer equipment.
Extension and termination options are included in a number of property leases across the Group. In determining the lease term,
management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated). The assessment of the lease term is reviewed if a significant event
or a significant change in circumstances occurs which affects this assessment and that is within the control of the Group. The
extension options are only exercisable by the Group and not by the lessor. Where an extension is reasonably certain of being
exercised, that extension period and related costs are recognised on the statement of financial position.
To determine the incremental borrowing rate, the Group uses a build-up approach that starts with a risk-free interest rate
adjusted for credit risk for leases held by the Group and makes adjustments specific to the lease, e.g. term, country, currency
and security.
The statement of financial position impact of NZ IFRS 16
The impact of NZ IFRS 16 on the Group’s opening statement of financial position is as follows:
30 JUNE 2019
$000’s
ADJUSTMENT
$000’s
1 JULY 2019
$000’s
Right-of-use assets
–74,28374,283
Total non-current assets
74,283
Retained earnings
56,176(7,150)49,026
Total equity
(7,150)
Lease liabilities
4,7844,784
Lease incentives
523(523)
Total current liabilities
4,261
Lease liabilities
80,09380,093
Deferred tax liabilities
22,224(2,921)19,303
Total non-current liabilities
77,172
Total equity and liabilities
74,283
Lease liabilities and right-of-use assets recognised as at 1 July 2019 differs to the interim financial statements due to a
re-assessment of the treatment of variable lease payment dependent on an index or a rate and re-assessment of the
extension options for a number of locations. As a result of this, the revised lease liabilities and the right-of-use asset at
1 July 2019 would have been approximately $85M and $74M respectively, an increase of $1.1M for lease liabilities and $1.7M
for right-of-use asset from that previously reported. The impact of the reported lease liabilities interest and rights-of-use
asset depreciation for the period ended 31 December 2019 was $527k.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20207273
13. Leases (continued)
Measurement of lease liabilities
The table below presents the reconciliation from lease commitments in accordance with NZ IAS 17 to the opening balance
of lease liabilities recognised in accordance with NZ IFRS 16:
1 JULY 2019
$000’s
Operating lease commitment disclosed as at 30 June 2019
60,551
Discounted using the Group's incremental borrowing rate at the date of initial application
(30,851)
(Less): short-term leases recognised on a straight-line basis as expense
(89)
Add: adjustments as a result of a different treatment of extension options
55,355
Foreign currency translation differences
(89)
Lease liability recognised as at 1 July 2019
84,877
Maturity of lease liabilities are included in note 30.
Measurement of right-of-use assets
Most of the associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had
always been applied. Some of the right-of-use assets for property leases and other assets were measured at the amount equal
to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the
statement of financial position as at 30 June 2019. There were no right-of-use asset additions for the year ended 30 June 2020.
The right-of-use assets related to the following types of assets:
1 JULY 2019
$000’s
30 JUNE 2020
$000’S
Buildings
74,27369,552
Vehicles and equipment
1010
Total
74,28369,562
The profit impact of NZ IFRS 16
The following table shows the adjustments to profit or loss for the year ended 30 June 2020 as a result of the adoption of
NZ IFRS 16:
PRE NZ IFRS 16
ADOPTION
$000’S
IMPACT OF
NZ IFRS 16
$000’S
REPORTED
RESULTS
$000’S
For the year ended 30 June 2020
Total operating expenses
229,396(2,579)226,817
Rental and lease expenses
11,134(10,386)748
Depreciation and amortisation
55,3267,80763,133
Operating profit before financing costs
46,0322,57948,611
Finance income
427–427
Finance expenses
(9,424)(3,945)(13,369)
Net finance costs
(8,997)(3,945)(12,942)
Share of loss from joint venture and associate
(9,527)–(9,527)
Profit before tax
27,508(1,366)26,142
Tax expense
8134011,214
Profit after tax
28,321(965)27,356
13. Leases (continued)
The profit impact of NZ IFRS 16
The following table shows the adjustments to profit or loss for the year ended 30 June 2020 as a result of the adoption
of NZ IFRS 16:
30 JUNE 2020
$000’S
Depreciation charge of right-of-use assets
Properties
7,798
Equipment
9
7,807
The cash flows presentation impact of NZ IFRS 16
Prior to the adoption of NZ IFRS 16, operating lease payments were included in payments to suppliers within operating
activities. Following the adoption of the NZ IFRS 16, the interest component is allocated to operating cash flow, and the
repayment of the lease liability principal is classified within financing activities.
30 JUNE 2020
$000’S
For the year ended 30 June 2020
Interest paid on leases (operating activities)
3,945
Payments for lease liability principal (financing activities)
6,442
Total cash outflows from lease liabilities
10,387
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
• applying a single discount rate to a portfolio of leases with reasonably similar characteristics
• relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review
– there were no onerous contracts as at 1 July 2019
• accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases
• excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and
• using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the Group relied on its assessment made applying NZ IAS 17
and Interpretation 4 Determining whether an Arrangement contains a Lease.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20207475
Capital commitments relates to the build of the Group’s fleet for the following year.
Capital expenditure contracted for at balance date but not yet incurred is as follows:
2020
$000’S
2019
$000’s
Property, plant and equipment
27,16065,387
15. Operating leases
The Group predominantly leases its premises in New Zealand, Australia and the United States under operating lease
arrangements. The leases have varying terms, escalation clauses and renewal rights. The significant portion of the risks
and rewards of ownership are retained by the lessor and, therefore, they are classified as operating leases. Payments
made under operating leases (net of any incentives received f rom the lessor) are charged to the income statement on
a straight-line basis over the period of the lease.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
2020
$000’S
2019
$000’s
Within one year
8910,702
One to five years
–31,521
Beyond five years
–18,328
8960,551
From 1 July 2019, the Group has recognised right-of-use assets for these leases, except for short term and low-value leases, see
note 13 for further information.
16. Inventories
Inventories are made up of the following categories:
• Raw materials – this comprises parts, factory and workshop stock;
• Motorhomes held for sale - this mainly comprises ex-rental fleet which are now on the sale yard and also includes
new fleet and trade-ins for sale;
• Finished goods - this comprises living equipment to be used in motorhomes and retail shop stock; and
• Inventory provision - a provision is created to allow for the value of inventory which is no longer useable or to recognise
the net realisable value when it is lower than cost.
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out
(FIFO) method. The cost of finished goods and work in progress comprises design costs, raw materials, direct labour,
other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing
costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable
selling expenses.
Rental assets held for sale at balance date have been reclassified as inventory.
14. Capital commitments16. Inventories (continued)
2020
$000’S
2019
$000’s
Raw materials
4,5505,117
Motorhomes held for sale
59,16447,172
Finished goods
5,0184,123
Provision for obsolescence
(245)(193)
68,48756,219
17. Intangible assets
Intangible assets of the Group comprise:
• Brands – the brand value acquired relates to the Road Bear RV brand of the United States’ rentals business;
• Goodwill – this relates to the Kiwi Experience, Road Bear and El Monte RV business combinations;
• Trademarks, leases and licences – thl has a licence to operate the Waitomo Glowworm Caves until 2027, and licences to
operate other caves in the Waitomo region, with licence terms expiring in 2032, 2033 and 2039; and
• Other intangibles – this relates to acquired software licences and software development costs.
Brands
The Road Bear RV brand acquired in the United States rentals business combination was valued using the relief from
royalty method and is recognised at fair value at the acquisition date. The brand value is included in the net assets of
the CGU. The brand is deemed to have an indefinite life as the Group has determined that there is no foreseeable limit
to the period over which the brand is expected to generate net cash in-flows for the entity. The brand is tested annually
for impairment and is carried at cost less any accumulated impairment losses.
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net
identifiable assets of the acquired subsidiary at the date of acquisition. Separately recognised goodwill is tested
annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the
entity sold.
Goodwill is considered to have an indefinite useful life. Based on an analysis of all the relevant factors, there is no
foreseeable limit to the period over which the asset is expected to generate net cash flows for the entity.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination
in which the goodwill arose. These CGUs are monitored for internal management purposes, being the operating
segment with the Tourism Group made up of two CGUs – Kiwi Experience and the Discover Waitomo Caves Group
(note 1).
Trademarks, leases and licences
Trademarks, leases and licences are shown at historical cost of acquisition by the Group less amortisation.
Amortisation of trademarks, leases and licences are calculated using the straight-line method over the life of the
underlying assets.
Other intangibles
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over their estimated useful lives (three to fifteen years).
Costs associated with maintaining computer software programmes are recognised as an expense, as incurred.
Costs that are directly associated with the production of identifiable and unique software products controlled by
the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised
as intangible assets. Direct costs include the software development employee costs and an appropriate portion of
relevant overheads.
Computer software development costs are recognised as assets and are amortised over their estimated useful lives
(three to five years).
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20207677
BRAND VALUE
ACQUIRED
$000’S
GOODWILL
$000’S
TRADEMARKS,
LEASES AND
LICENSES
$000’S
OTHER
INTANGIBLES
$000’S
TOTAL
$000’S
Year ended 30 June 2020
At 1 July 2019
84134,8907,4361,01344,180
Exchange differences
351,323(608)6756
Additions
–1899,1772599,625
Impairment
–(3,126)––(3,126)
Disposal
–––(8)(8)
Amortisation charge
––(642)(518)(1,160)
Closing net book amount
87633,27615,36375250,267
As at 30 June 2020
Cost
87682,70031,44314,419129,438
Accumulated amortisation and impairment
–(49,424)(16,080)(13,667)(79,171)
Net book amount
87633,27615,36375250,267
As a result of the international border closures in response to COVID-19, the Kiwi Experience CGU is currently in a hibernation
phase (currently not operating) and as a result, all of its associated goodwill of $3.1M has been impaired. The impairment is
recognised in operating expense within the consolidated income statement.
Year ended 30 June 2019
At 1 July 2018
83534,6688,0971,04744,647
Exchange differences
6222–(5)223
Additions
–––407407
Amortisation charge
––(661)(436)(1,097)
Closing net book amount
84134,8907,4361,01344,180
As at 30 June 2019
Cost
84181,18822,87414,162119,065
Accumulated amortisation and impairment
–(46,298)(15,438)(13,149)(74,885)
Net book amount
84134,8907,4361,01344,180
Impairment of non-financial assets
The Group tests whether goodwill and brands have suffered any impairment on an annual basis, in accordance with
the accounting policy stated below. The recoverable amount of an asset or CGU is the greater of its value-in-use and
its fair value less costs of disposal. The Group has estimated the recoverable amount of its CGUs on a value-in-use basis
and determined that there is no impairment, other than the Kiwi Experience goodwill as noted above.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
17. Intangible assets (continued)
The table below details the cash-generating units that goodwill and brands are attributable to:
RENTALS
$000’s
TOURISM GROUP
$000’s
TOTAL
$000’s
2020
New Zealand – goodwill
–189189
United States of America – goodwill
33,087–33,087
United States of America – brands
876–876
33,96318934,152
2019
New Zealand – goodwill
–3,1263,126
United States of America – goodwill
31,764–31,764
United States of America – brands
841–841
32,6053,12635,731
The Directors have assessed at balance date whether any impairment indicators exist. In making this assessment, the Directors
have taken into consideration the impact of COVID-19 on the business as well as the market capitalisation value of the Group
being less than the carrying value of the Group’s net assets on the statement of financial position at 30 June 2020.
The recoverable amount of a cash-generating unit is determined on value-in-use calculations. These calculations use cash flow
projections based on financial budgets approved by the Board covering a five year period plus a terminal value calculation.
These annual free cash flows are then discounted by a country specific pre-tax discount rate to arrive at a recoverable amount
(enterprise value) of the CGU which is compared to the carrying book value. In addition, carrying values are also assessed using
alternative valuation metrics, in particular EBIT multiples for similar industry groupings.
The CGU value in use models used by thl to generate the cash flow projections incorporate the expected growth rates from
markets the businesses operate in, which are compared to Ministry of Business, Innovation and Employment (NZ) and United
States Department of Commerce Office of Travel and Tourism Industries’ forecasts for reasonableness. Capital expenditure
and disposal proceeds are projected forward based on current build or purchase costs, realisable sale values and expected fleet
rotation by vehicle type (for the rentals operations).
The following table shows the sensitivity analysis for the value-in-use calculations:
CGUKEY ASSUMPTIONSCHANGE IN KEY ASSUMPTION
REDUCTION IN
RECOVERABLE
AMOUNT
($M’S)
INCREASE IN
RECOVERABLE
AMOUNT
($M’S)
WOULD THE
INDICATED
SENSITIVITY
RESULT IN
IMPAIRMENT
United States
of America
Discount rate: 10.6%Discount rate (+/- 1.0%)
1922No
Terminal growth rate: 1.25%Terminal growth rate (+/- 0.25%)
55No
FY19 discount rate: 10.6%Hire days (+/- 5.0%)
1211No
FY19 Terminal growth
rate: 2%
International travel recovery in FY23 v FY22
11–No
New ZealandDiscount rate: 9.8%Discount rate (+/- 1.0%)
2024No
Terminal growth rate: 1.0%Terminal growth rate (+/- 0.25%)
55No
Hire days (+/- 5.0%)
1919No
International travel recovery in FY23 v FY22
29–No
AustraliaDiscount rate: 8.0%Discount rate (+/- 1.0%)
1723No
Terminal growth rate: 1.5%Terminal growth rate (+/- 0.25%)
54No
Hire days (+/- 5.0%)
1919No
International travel recovery in FY23 v FY22
22–No
We note that while the sensitivity of key assumptions provided in the above table would not on their own result in an
impairment in each case, it is possible that they could occur in combination. Should a deterioration in macroeconomic
conditions or a further delay in international tourism recovery occur then this may adversely impact a combination of the key
assumptions and result in an impairment. We note that there is currently less headroom in the Rentals Australia CGU than in
either of New Zealand or the USA.
17. Intangible assets (continued)
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20207879
Section C – Investments
In this section
thl ’s investments comprise subsidiaries, associate and joint ventures. This section explains the investments held by thl,
providing additional information, including:
a) Accounting policies, judgements and estimates that are relevant for measuring the investments; and
b) Analysis of thl ’s associate and joint ventures.
thl ’s investments include a 50% interest in AMLP, a business that manufactures motorhomes for the Group’s New Zealand
and Australian business segments and other speciality vehicles for external customers. thl previously had 50% joint venture
investment in Togo Group which was disposed of in March 2020. Other investments is a 49% interest in Just go, a motorhome
rental operation in the United Kingdom.
18. Togo exit transaction
The acquisition method of accounting is used to account for all business combinations, regardless of whether
equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
• Fair values of the assets transferred;
• Liabilities incurred to the former owners of the acquired business;
• Equity interests issued by the Group;
• Fair value of any asset or liability resulting from a contingent consideration arrangement; and
• Fair value of any pre-existing equity interest in the acquiree.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired
entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share
of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the
business acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to
their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and
conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
18. Togo exit transaction (continued)
Togo Group
In February 2018, the Group entered into agreements to contribute its investment in Roadtrippers USA and Roadtrippers
Australasia, its Mighway business, the Togo Fleet rental and RV industry platform, certain other intangible assets and cash to
form a joint venture, Togo Group, with Thor Industries (“Thor”), a motorhome manufacturer in the United States. Each partner
owned 50% of Togo Group. Due to the nature of the contractual rights and obligations, Togo Group was classified as a joint
venture for accounting purposes and accounted for using the equity method.
Since then, Togo Group has provided digital services to RV owners and operators (Togo Fleet), and has operated the Mighway
and Roadtrippers businesses.
On 2 April 2020, the Group entered into an agreement with Thor (the “2020 Agreement”) to undertake a managed exit from
Togo Group in favour of a digital strategy focusing on New Zealand and Australia and more closely aligned with thl’s core RV
rentals business. The 2020 Agreement had an effective date of 23 March 2020.
As part of the 2020 Agreement, the rights to Togo Fleet (thl’s fleet management and booking system), the New Zealand and
Australian operations of Mighway (a peer-to-peer RV rentals platform), Togo Insights (a telematics and data insights platform),
and Togo’s shareholding in Outdoria were distributed to thl, including a cash consideration of USD6M. In exchange, thl reduced
its shareholding in Togo Group from 50% of the ordinary shares to 20.18% of class B preference shares. As a result, the Group
no longer meets the requirements to account for its investment in Togo Group as a joint venture. Accordingly, thl has equity
accounted its interests in Togo Group up to 23 March 2020 and recognised the disposal of the interest at that date, and the
remaining interest has been recognised as a financial asset recognised at fair value through the income statement. There were
no significant changes that occurred between 23 March 2020 and 2 April 2020.
The following table summarise the equity accounted investment in Togo up to the date of disposal:
PERIOD TO
23 MARCH 2020
$000’S
12 MONTHS TO
30 JUNE 2019
$000’S
Investment in Togo Group, beginning balance
42,30945,148
Subsequent investment in Togo Group
–9,589
Share of losses recognised against the investment balance during the year
(10,578)(12,829)
Foreign exchange revaluation gain during the year
3,381401
Investment in Togo Group, ending balance
35,11242,309
Advance opening balance
457819
Net cash advances/(repayment) during the period
12,858(362)
Advance closing balance
13,315457
Net interest in Togo Group
48,42742,766
The assets acquired from Togo as part of this exit transaction constitute a “business” under NZ IFRS 3 Business Combinations.
Step acquisition accounting is applied because these businesses were 100% owned by Togo and in which the Group only had
joint control prior to the exit transaction.
The table below summarises the fair value of the assets and liabilities received by the Group in exchange for disposing of its
investment in Togo Group:
PERIOD TO
23 MARCH 2020
$000’S
Net interest in Togo Group at date of disposal
48,427
Consideration received in exchange for the disposal
Cash receivable (net of working capital settlement)
9,053
Intellectual property rights
9,177
Class B preference shares in Togo Group
22,911
Property, plant and equipment
249
Trade payable and employee benefits
(1,346)
Total
40,044
Loss on disposal recognised in the income statement
8,383
Foreign currency translation gain recognised in the income statement
(9,066)
Net gain on the Togo exit transaction
(683)
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20208081
18. Togo exit transaction (continued)
The fair value of these assets and liabilities are determined as follow:
• Cash receivable (net of working capital settlement) - thl received the payment of USD6M, offset by working capital
settlement, from Thor in August 2020.
• Intellectual property rights – The intellectual property rights were valued by reference to the expected cost of replacement
of the assets, determined using approximately the net book value of Togo Fleet and Mighway. The intellectual property rights
are assumed to have a useful life of 15 years and will be amortised on a straight line basis.
• Class B preference shares in Togo Group – The Class B preference shares have a face value of USD20.2M and entitle thl to a
3% annual cash dividend for a four year period. Thor has a call option relative to the Class B preference shares which is
exercisable over a four year period, after which time, if the option has not been exercised, the Class B shareholding will
convert to 26.49% of the ordinary shares in Togo Group. The fair value of the Class B preference shares was determined by
an independent valuer utilising the reference to the face value of the preference shares, and deducting the value of the call
option determined using the Black-Scholes option pricing model. The Group made certain assumptions, including, but not
limited to, expected volatility and dividend yield (refer to note 31). The Class B preference shares are a financial asset and are
measured at fair value through the income statement.
• Property, plant and equipment – The net book value of $249k was recognised as fair value.
• Trade payable and other employee benefits – The carrying value of ($1,346k) was recognised as fair value.
The above net fair value also represents the fair value of the Group’s previously-held equity interest in Togo Group immediately
prior to the effective date of the 2020 Agreement. The Group therefore has recognised a loss of $8.4M as a result of re-measuring
to fair value its previously-held equity interest in Togo, which had a carrying value of $48.4M prior to disposal.
Furthermore, the Group transferred a foreign currency gain of $9.1M from the foreign currency translation reserve to the income
statement in relation to disposing of its investment in the foreign joint venture.
The tables below provide summarised financial information for Togo Group:
23 MARCH 2020
$000’S
30 JUNE 2019
$000’s
Revenue
5,4866,145
Expenses
(26,917)(32,110)
Loss before income tax
(21,431)(25,965)
The Group’s share in losses for the 10 months period ended 23 March 2020 is $10.6M (12 months ended 30 June 2019: $12.8M).
The difference between 50% of the loss before income tax of Togo Group and equity share recognised by thl is due to the
deferred consideration elimination adjustments between thl and Togo Group.
For comparative reporting purposes, the assets and liabilities of Togo Group at 30 June 2019 are:
2019
$000’s
Assets
Total non-current assets including partner advances
138,914
Current assets
3,555
142,469
Liabilities
Non-current liabilities
–
Current liabilities
4,276
4,276
Net assets
138,193
The Group's 50% share of Togo Group net assets
69,097
Total advance to and investment in Togo Group
2019
$000’s
Non-current
42,309
Current
457
42,766
19. Joint ventures
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the
statement of financial position.
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the Group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable f rom associates and joint ventures are recognised as a reduction in the carrying amount of
the investment.
When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent
of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed
where necessary to ensure consistency with the policies adopted by the Group.
After application of the equity method, including recognising a joint venture’s profits/losses in accordance with the
accounting policies above, the Group determines whether there is any objective evidence that its net investment in
a joint venture is impaired. The net investment in a joint venture is impaired and impairment losses are incurred if,
and only if, there is an objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the net investment (a ‘loss event’) and that loss event (or events) has an impact on the estimated future
cash flows from the net investment that can be reliably estimated. The carrying amount of the investment is tested
for impairment in accordance with NZ IAS 36 as a single asset, by comparing its recoverable amount (higher of value
in use and fair value less costs to sell) with its carrying amount.
The Group applies the simplified approach permitted by NZ IFRS 9, which requires expected lifetime losses to be
recognised f rom initial recognition of the receivables. To measure the expected credit losses, advances to joint ventures
have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based
on the historical credit losses experienced. Where appropriate, the historical loss rates are adjusted to reflect current
and forward-looking information.
Action Manufacturing LP (AMLP)
thl has a 50% joint venture partner in AMLP, a vehicle manufacturer based in New Zealand. The other 50% partner is Alpine
Bird Manufacturing Limited, which is owned by Grant Brady (refer to note 33). Due to the nature of the contractual rights and
obligations, AMLP is classified as a joint venture for accounting purposes and accounted for using the equity method.
AMLP manufactures motorhomes for the Group’s New Zealand and Australian business segments, and other speciality vehicles
for external customers.
The following amounts represent the sales and results, and assets and liabilities of 100% of AMLP:
2020
$000’S
2019
$000’s
Revenue
64,14774,896
Expenses
(61,293)(71,826)
Profit before income tax
2,8543,070
The profit before income tax of AMLP includes depreciation expense of $2,365k (2019: $818k) and net finance costs of $761k
(2019: $662k). thl ’s share of profit before tax from AMLP has been included in thl ’s tax calculation.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20208283
19. Joint ventures (continued)
Analysis of AMLP
2020
$000’S
2019
$000’s
Assets
Non-current assets
10,5996,054
Cash and cash equivalents
6,3094,814
Current assets
29,71838,991
46,62649,859
Liabilities
Non-current liabilities including partner advances
4,478–
Current liabilities
21,70032,265
26,17832,265
Net assets
20,44817,594
The Group's 50% share of AMLP net assets/(liabilities)
10,2248,797
There are no contingent liabilities relating to the Group’s interest in AMLP, and no contingent liabilities in the venture itself.
The contractual property lease commitment of AMLP is $nil due to the adoption of NZ IFRS 16 (2019: $2,624k).
The Group’s recognised interest in AMLP
The following table sets out the Group’s interest in AMLP:
2020
$000’S
2019
$000’s
Investment in AMLP, beginning balance
8,7977,262
Share of profits recognised against the investment balance during the year
1,4271,535
Investment in AMLP, ending balance
10,2248,797
Advance opening balance
1,14431
Net cash advances/(repayment) during the year
(489)1,113
Advance closing balance
6551,144
Net interest in AMLP
10,8799,941
2020
$000’S
2019
$000’s
Non-current
10,3499,422
Current
530519
10,8799,941
The impairment testing of the investment in AMLP does not result in an impairment of the carrying value, however there is very
limited headroom. There are a range of downside scenarios which could result in an impairment of the investment.
20. Investments in associate
Associates
Associates are all entities over which the Group has significant influence, but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the
equity method of accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition
profits or losses is recognised in the income statement.
In March 2015, the Group acquired a shareholding of 49.0% in Skewbald Limited (trading as Just go) for GBP £1,744k. Just go is
a motorhome rental business operating in the United Kingdom. The investment has been accounted for as an investment in
associate, and the Group’s share of associate’s profits have been recognised with the Group’s investment.
The carrying amounts recognised in the balance sheet are as follows:
2020
$000’S
2019
$000’s
Just go
4,0444,319
Total
4,0444,319
The share of profits/(losses) recognised in the income statement are as follows:
2020
$000’S
2019
$000’s
Just go
(376)246
Total
(376)246
21. Subsidiaries
The principal activities of the Parent company and trading subsidiaries are motorhome rental (Tourism Holdings Australia Pty
Limited, JJ Motorcars Inc and El Monte Rents Inc) and attractions (Waitomo Caves Limited). All subsidiaries are 100% owned and
therefore the Group is deemed to have control and have been fully consolidated from the date which control has been attained
(30 June 2019: 100%). All subsidiaries have 30 June balance dates. Material subsidiary companies at 30 June 2020 and 2019 are:
NAMECOUNTRY OF INCORPORATION
Tourism Holdings Australia Pty LimitedAustralia
Waitomo Caves LimitedNew Zealand
JJ Motorcars IncUnited States of America
El Monte Rents Inc United States of America
Tourism Holdings USA IncUnited States of America
TH2connect GP Limited (from Togo transaction)New Zealand
thl Integrated Annual Report 2020848585
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
Section D – Managing funding
In this section
This section explains how thl manages its capital structure and working capital, the various funding sources and distributions
to shareholders. In this section of the notes there is information about:
a) Equity;
b) Debt;
c) Receivables and payables; and
d) Financial instruments.
22. Share capital
2020
SHARES
000’S
2019
SHARES
000’s
2020
$000’S
2019
$000’s
Ordinary shares
Opening balance
132,036123,136217,012180,806
Issue of ordinary shares – redeemable ordinary shares converted
3774036581,031
Transfer from employee share scheme reserve for redeemable shares converted
––7284
Issue of ordinary shares – in lieu of Directors’ fees
8033160161
Ordinary shares to be issued – in lieu of Directors’ fees accrued at 30 June
––(24)9
Ordinary shares Issued under Dividend Reinvestment Plan
8551,0013,4845,154
Ordinary shares issued – rights offer
14,667–49,869–
Ordinary shares Issued – placement to HB Holdings
–7,463–30,000
Less transaction cost arising on shares issued
––(1,243)(233)
Closing balance
148,015
132,036
269,988217,012
The total authorised number of ordinary shares is 148,014,900 shares (2019: 132,035,883) and these are classified as equity.
The shares have no par value. All ordinary shares are issued and fully paid. All ordinary shares rank equally with one vote
attached to each fully paid ordinary share.
There are 1,478,830 redeemable ordinary shares on issue that are convertible on a 1:1 basis to ordinary shares (2019: 1,855,496).
If these convert to ordinary shares per the terms outlined in note 34, total shares on issue will be 149,493,730 (2019: 133,891,379).
In the current year redeemable ordinary shares were converted to ordinary shares in August 2019 (176,666) and November 2019
(200,000). There were no cancellations of redeemable ordinary shares and issues of redeemable ordinary shares in the current
year, as the 2009 Executive Long Term Incentive Scheme was replaced with a new options scheme in 2017 (see note Share-
based payments).
In the prior year redeemable ordinary shares were converted to ordinary shares in December 2018 (33,333) and April 2019
(369,999). 100,000 redeemable ordinary shares were cancelled in January 2019.
Ordinary shares were issued to Directors in lieu of Directors’ fees per the terms outlined in note 33. Shares were issued in
October 2019 (20,188) and April 2020 (59,645). In the prior year shares were issued to Directors in lieu of Directors fees in October
2018 (13,615) and April 2019 (18,305). At 30 June 2020 share capital includes an accrual for shares to be issued in lieu of Directors’
fees of $21,000 (2019: $45,000).
In the current year 855,082 ordinary shares were issued in October 2019 at an issue price of $4.069 per share to shareholders who
elected to participate in the Dividend Reinvestment Plan.
22. Share capital (continued)
In the prior year 590,065 ordinary shares were issued in October 2018 at an issue price of $5.283 per share and 411,397 ordinary
shares were issued in April 2019 at an issue price of $4.926 per share to shareholders who elected to participate in the Dividend
Reinvestment Plan.
In June 2019, the Group announced a placement and pro rata rights offer capital raise. The capital raise comprised an upfront
placement of $30M to HB Holdings (a wholly owned subsidiary of the CITIC Capital International Tourism Fund), issuing an
additional 7,462,686 shares at a price of $4.02 per share, which settled on 24 June 2019, followed by an approximately $50M fully
underwritten pro rata 1 for 9 rights offer at $3.40 per share, which settled in July 2019 resulting in the issuance of an additional
14,667,436 shares. Incremental directly attributable issue costs of $233k were incurred from the placement and have been
netted off against the proceeds of the capital raising at 30 June 2019. Incremental directly attributable issue costs of $1.243M
were incurred from the rights offer that was settled in July 2019.
23. Retained earnings
2020
$000’S
2019
$000’s
Balance at beginning of the year
56,17659,725
Adjustment on adoption of NZ IFRS 16 (net of tax)
(7,150)–
Profit for the year
27,35629,753
Dividends on ordinary shares
(20,567)(33,385)
Transfer from employee share scheme reserve
–83
55,81556,176
24. Other reserves
Foreign currency translation reserve
Exchange differences arising on the translation of foreign operations are taken to the foreign currency translation reserve.
When any net investment is disposed of, the related component of the reserve is recognised in the income statement as part
of the gain or loss on disposal.
The closing exchange rates used to translate the statement of financial position are as follows:
20202019
NZD/AUD
0.93400.9561
NZD/USD
0.64260.6694
NZD/GBP
0.52200.5284
Employee share scheme
The employee share scheme reserve is used to recognise the accumulated value of redeemable shares granted which have
been recognised in the income statement. In accordance with the Group’s accounting policy, amounts accumulated in the
executive share scheme reserve have been transferred to share capital on the exercise of the options or to retained earnings
when they have been forfeited (refer to note 34).
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20208687
24. Other reserves (continued)
2020
$000’S
2019
$000’s
Foreign currency translation reserve
Balance at beginning of the year
7,5499,756
Currency translation differences (net of tax)
6,442(2,207)
Foreign currency gain transferred to income statement in relation to Togo transaction
(9,066)–
Balance at year end
4,9257,549
Employee share scheme reserve
Balance at beginning of the year
763562
Value of employee services charged to the income statement
375368
Transfer to retained earnings
–(83)
Transfer to share capital
(72)(84)
Balance at year end
1,066763
Total other reserves
5,9918,312
25. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value
is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities, unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance date.
Borrowing costs are recognised as an expense in the period in which they are incurred, except for borrowing costs
directly attributable to the acquisition, construction or production of a qualifying asset, which are capitalised.
Qualifying assets are those assets that necessarily take an extended period of time (six months or more) to get ready
for their intended use.
2020
$000’S
2019
$000’s
Non-current
Bank borrowings
163,322210,979
Finance lease obligations
–1
163,322210,980
Current
Finance lease obligations
–46
Total borrowings
163,322211,026
25. Borrowings (continued)
2020
$000’S
2019
$000’s
Maturity of non-current portion
Bank loans
One to two years
87,84682,773
Two to three years
75,47655,006
Three to five years
–73,200
163,322210,979
Finance lease obligations
One to two years
–1
Two to three years
––
–1
2020
$000’s
2019
$000’s
Finance lease liabilities – minimum lease payments
No later than one year
–48
Minimum lease payments
–48
Future finance charges on finance leases
–(1)
Present value of finance lease liabilities
–47
Interest rates (excluding line fees) applicable at 30 June 2020 on the bank term loans ranged from 1.0% to 4.8% p.a. (2019: 2.1%
to 5.3% p.a.).
The Group received USD1M from the US Paycheck Protection Program (“PPP”) in May 2020 in relation to payroll costs during the
last quarter of the FY2020. The Group is yet to apply for loan forgiveness but has not established its eligibility for loan forgiveness
at balance date, hence the amount received has been treated as borrowing as at 30 June 2020. The PPP loan has a maturity of
two years with an interest rate of 1%. No collateral or guarantees are required.
The guaranteeing group, consisting of Tourism Holdings Limited and all New Zealand, Australian and USA 100% owned
subsidiaries, had, at balance date, multi-currency revolving cash advance facilities with Westpac Banking Corporation, Westpac
New Zealand Limited, ANZ Bank New Zealand Limited, Australia and New Zealand Banking Group Limited, The Hong Kong and
Shanghai Banking Corporation (acting through its New Zealand branch) HSBC Australia Limited, an interchangeable working
capital facility with ANZ Bank New Zealand Limited and a short term loan facility with Westpac New Zealand Limited and
Westpac Banking Corporation. The Group has provided a composite first ranking debenture over the assets and undertakings
of the Group in New Zealand, Australia and the USA in favour of its banks.
The facility agreement was amended on 26 June 2020. The amended agreement includes committed facilities for debt
funding of approximately $225M (including the interchangeable facility), consisting of a number of tranches maturing between
September 2021 and July 2022, with total commitment to be reduced to $180M by 30 September 2021.
In particular, the facility agreement also includes:
• A requirement for consent from the Group’s banking partners for any distribution to shareholders or capital expenditure
beyond a prescribed amount, during the term of the facilities;
• That the Group’s existing earnings-based covenants (leverage ratio and interest coverage ratio) will not be tested until
1 July 2022, however other existing covenants (equity ratio and guaranteeing group ratio) remain applicable;
• New covenants relating to minimum shareholder funds, and a cumulative EBITDA requirement (tested quarterly) from the
quarter ending 30 September 2021; and
• New requirements that quarterly EBITDA and vehicle sales performance are not greater than 15% below forecast in a banking
case scenario, that was based on the Group’s expectations in April 2020. If these levels are not met then an ‘event of review’
will occur.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20208889
25. Borrowings (continued)
Having considered the qualitative factors surrounding the changes to the terms in the facility agreement, the Group assessed
that the changes were considered substantial. As a result, the amendment was treated as an extinguishment of the existing
liability followed by a recognition of a new liability in accordance with the Group’s accounting policy and NZ IFRS 9 Financial
Instruments. The new bank borrowing is recognised at its face value in accordance with initial recognition requirements, which
is consistent with the carrying value of the existing borrowings. The Group also incurred $452k of transaction costs in connection
with the amendment and the extinguishment of the existing facility and therefore has recognised this as bank charges in the
income statement.
The Working Capital facility is interchangeable between overdraft, trade finance loan and documentary letter of credit.
The documentary letter of credit facility is utilised for the purchase of fleet from AMLP.
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
2020
$000’s
2019
$000’s
New Zealand dollar
37,21846,623
Australian dollar
5,8898,577
United States American dollar
116,873152,525
Pounds sterling
3,3423,301
163,322211,026
The Group has the following undrawn borrowing facilities:
2020
$000’s
2019
$000’s
Floating rate
– Expiring beyond one year
49,85862,478
No borrowing costs were capitalised in 2020 (2019: nil).
26. Other commitments
As at 30 June 2020, the Group has a $30M Documentary Letter of Credit facility as part of the interchangeable working capital
facility. The amount drawn at 30 June 2020 was $14,429k (2019: $10,689k).
The outstanding documents are in favour of AMLP (refer to note 19) and are due for payment within 12 months. This is
recognised within ‘trade and other payables’.
27. Trade and other receivables
Trade and other receivables are recognised initially at fair value plus transaction costs and subsequently measured at
amortised cost using the effective interest method, less provision for impairment. From 1 July 2018, the Group assesses
on a forward looking basis the expected credit losses associated with its trade and other receivables which are carried
at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in
credit risk.
The Group applies the simplified approach permitted by NZ IFRS 9, which requires expected lifetime losses to
be recognised f rom initial recognition of the receivables. To measure the expected credit losses, trade and other
receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss
rates are based on the historical credit losses experienced. Where appropriate, the historical loss rates are adjusted
to reflect current and forward-looking information.
2020
$000’s
2019
$000’s
Trade receivables
14,08312,342
Less provision for impairment of receivables
(2,106)(1,007)
Trade receivables – net
11,97711,335
Prepayments
4,4394,780
Other receivables
12,4835,356
Receivable under buy-back arrangement
317,493
Total trade and other receivables
28,93028,964
At June 2020 trade and other receivables includes an amount of $31k (June 2019: $7,493k) relating to vehicles purchased under
a short term buy-back arrangement. This agreement involves purchasing vehicles to be used in the fleet for a period less than
12 months and then sold back to the supplier. On initial recognition, thl recognised the cash paid for the vehicles, the price
expected to be received upon resale, and the balancing amount of the two is considered the lease expense. The transaction is
accounted for as a short-term lease on the basis that:
• thl have an economic incentive to exercise their put option (selling the vehicles back to the supplier);
• thl have the right to use the vehicles for a fixed period at a predetermined price; and
• The vehicles do not meet the definition of property plant and equipment.
Due to low risk of the counterparties for these arrangements, the assessed expected credit losses are immaterial.
There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers,
internationally dispersed.
The Group has recognised an increase of $1,099k (2019: $487k increase) in the provision for the impairment of its trade
receivables which has been included in other operating expenses. The Group has written off, to other operating expenses,
$154k (2019: $39k) of balances of receivables during the year ended 30 June 2020.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20209091
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business
from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value net of transaction costs and subsequently measured at amortised
cost using the effective interest method.
2020
$000’s
2019
$000’s
Trade payables
20,56629,467
Accrued expenses and other payables
16,43518,022
37,00147,489
29. Financial instruments
Classification of financial assets
The Group classifies its financial assets in the following measurement categories:
• Those to be measured subsequently at fair value (either through Other Comprehensive Income (OCI) or through
profit or loss); and
• Those to be measured at amortised cost.
The classification depends on the business model for managing the financial assets and the contractual terms of the
cash flows.
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Measurement of financial assets
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its
debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and
losses. Impairment losses are presented as separate line item in the statement of profit or loss.
FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and
foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial assets is included in finance income using the effective interest
rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are
presented as separate line item in the statement of profit or loss.
28. Trade and other payables29. Financial instruments (continued)
FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/
(losses) in the period in which it arises.
The interest rate swaps in place as at 30 June 2019 and 30 June 2020 qualified as cash flow hedges under NZ IFRS 9.
The Group’s risk management strategies and hedge documentation are aligned with the requirements of NZ IFRS 9
and these relationships are therefore treated as hedges.
The table below represents the measurement categories of the financial instruments:
20202019
FINANCIAL
ASSETS AT
AMORTISED COST
$000’s
FINANCIAL
ASSETS VALUE
THROUGH
PROFIT OR
LOSS
$000’s
DERIVATIVES
USED FOR
HEDGING
$000’s
TOTAL
$000’s
FINANCIAL
ASSETS AT
AMORTISED COST
$000’s
DERIVATIVES
USED FOR
HEDGING
$000’s
TOTAL
$000’s
Assets
Advance to joint venture
655––6551,601–1,601
Total cash and cash equivalents
35,514––35,5148,837–8,837
Retained interest in Togo (note 18)
–21,382–21,382–––
Total trade and other receivables
24,491––24,49124,184–24,184
Derivative financial instruments
––66–4040
20202019
MEASURED AT
AMORTISED COST
$000’s
MEASURED AT
FAIR VALUE
THROUGH
PROFIT OR
LOSS
$000’s
DERIVATIVES
USED FOR
HEDGING
$000’s
TOTAL
$000’s
MEASURED AT
AMORTISED COST
$000’s
DERIVATIVES
USED FOR
HEDGING
$000’s
TOTAL
$000’s
Liabilities
Interest bearing loans and
borrowings
163,322––163,322211,026–211,026
Derivative financial instruments
––9,3039,303–6,5296,529
Trade and other payables
33,646––33,64645,669–45,669
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20209293
Section E – Managing risk
In this section
This section explains the financial risks thl faces, how these risks affect thl’s financial position and performance, and how thl
manages these risks. In this section of the notes there is information:
a) Outlining thl ’s approach to financial risk management; and
b) Analysing financial (hedging) instruments used to manage risk.
In the normal course of business the Group is exposed to a variety of financial risks including foreign currency, interest rate,
credit and liquidity risks. To manage this risk the Group’s treasury activities are performed by a central treasury function and are
governed by Group policies approved by the Board of Directors.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance. The Group does not enter into derivative financial instruments
for trading or speculative purposes.
30. Financial risk management
Currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the Australian dollar and the United States dollar. Foreign exchange risk arises when future commercial
transactions are in currencies other than functional currency.
Foreign exchange exposures on future commercial transactions incurred by operations in currencies other than their functional
currency are managed by using forward currency contracts in accordance with the Group’s treasury policy.
The Parent makes purchases in foreign currency and is exposed to foreign currency risk. This is managed by utilisation of
forward currency contracts from time to time in accordance with the Group’s treasury policy.
Exchange rate sensitivity
The following table shows the impact of a 5 cent movement up or down in the New Zealand dollar vs the Australian dollar and
United States dollar and the impact that this exchange rate change has on reported net profit after tax and equity. The table
shows the post-tax impact on reported profit and equity in relation to currency risk, as described above, and does not include
the impact of translation risk, as described in note 24. A 5 cent change is considered a reasonable possible change based on
prior year movements.
2020
$000’S
2019
$000’s
Post-tax impact on reported profit and equity of:
A 5 cent increase in the NZ dollar vs the AU dollar
03
A 5 cent increase in the NZ dollar vs the US dollar
(9)(10)
A 5 cent decrease in the NZ dollar vs the AU dollar
0(3)
A 5 cent decrease in the NZ dollar vs the US dollar
910
Interest rate risk
The Group’s interest rate risk primarily arises from long-term borrowings, cash and cash equivalents and the advance to AMLP.
Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the
Group to fair value interest rate risk.
The Group manages its cash flow interest rate risk by using floating to fixed interest rate derivative contracts. Such interest rate
derivative contracts have the economic effect of converting borrowings from floating rates to fixed rates. Generally the Group
raises long term borrowings at floating rates that are lower than those available if the Group borrowed at fixed rates directly.
Under the interest rate derivative contracts, the Group agrees with other parties to exchange, at specified intervals (mainly
quarterly), the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed
notional principal amounts.
30. Financial risk management (continued)
The Group maintains cash on overnight deposit in interest bearing bank accounts.
The following tables set out the interest rate repricing profile and current interest rate of the interest bearing financial assets
and liabilities:
EFFECTIVE
INTEREST
RATE
FLOATING
$000’s
FIXED UP
TO 1 YEAR
$000’s
FIXED
1-2 YEARS
$000’s
FIXED
2-5 YEARS
$000’s
FIXED
>5 YEARS
$000’s
TOTAL
$000’s
As at 30 June 2020
Assets
Advance to joint venture
3.6%655––––655
Cash and cash equivalents
0.0%35,514––––35,514
36,169––––36,169
Liabilities
Bank borrowings*
5.6%–163,322–––163,322
–163,322–––163,322
Interest rate derivative contracts**
3.0%–20,90819,45268,93012,449121,739
The effective interest rate of Group borrowings is 5.6% including the impact of the interest rate swaps and line fees on facilities.
EFFECTIVE
INTEREST
RATE
FLOATING
$000’s
FIXED UP
TO 1 YEAR
$000’s
FIXED
1-2 YEARS
$000’s
FIXED
2-5 YEARS
$000’s
FIXED
>5 YEARS
$000’s
TOTAL
$000’s
As at 30 June 2019
Assets
Advance to joint venture
5.0%1,601––––1,601
Cash and cash equivalents
0.2%8,837––––8,837
10,438––––10,438
Liabilities
Bank borrowings*
5.2%1,000209,979–––210,979
Finance lease obligations
4.5%–47–––47
1,000210,026–––211,026
Interest rate derivative contracts**
3.0%–27,49120,50951,85046,029145,879
* Bank borrowing interest rates profile is shown prior to the impact of the interest rate swaps.
** Notional contract amounts and include forward starting interest rate swaps.
Interest rate sensitivity
At year-end the floating bank borrowings and cash deposits were subject to interest rate sensitivity risk. The remaining
borrowings are fixed using interest rate derivative contracts. If the Group’s floating borrowings and deposits year end balances
remained the same throughout the year and interest rates moved by 1.0% then the impact on profitability and equity is as follows:
2020
$000’S
2019
$000’s
Pre-tax impact of:
An increase in interest rates of 1.0%
(653)(984)
A decrease in interest rates of 1.0%
653984
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20209495
At year-end the value of interest rate derivative contracts used as cash flow hedges were subject to interest rate risk in relation
to the value recognised in equity. If interest rates moved by 1.0% across the yield curve then the impact on the fair value of the
swaps on equity is shown in the following table. A movement of 1.0%, or 100bps, is considered by management as a reasonable
estimate of a possible shift in interest rates for the year based on historic movements. As the interest rate swaps were effective
as at 30 June 2020, there is no impact on the income statement in relation to the valuation of the interest rate swaps.
2020
$000’S
2019
$000’s
Post tax impact on equity of a 1.0% move in interest rates
An increase in interest rates of 1.0% across the yield curve
2,4672,982
A decrease in interest rates of 1.0% across the yield curve
(2,529)(3,131)
Credit risk
The Group has a concentration of credit risk in respect of the amount outstanding from the buy-back arrangement and
the other receivables. The Group has no other significant concentrations of credit risk. Policies are in place to ensure that
wholesale sales of products and other receivables arising are made to customers with an appropriate credit history. Sales to
retail customers are made in cash or via major credit cards. Derivative contract counterparties and cash on deposit are limited
to high credit rated quality financial institutions.
The Group considers its maximum exposure to credit risk as follows:
2020
$000’S
2019
$000’s
Bank balances
35,5148,837
Advance to joint ventures
6551,601
Trade receivables (net of impairment provision)
10,16411,335
Other receivables
14,2965,356
Receivable under buy-back arrangement
317,493
60,66034,622
The Group has numerous credit terms for various customers. The terms vary from cash, monthly and greater depending on
the service and goods provided and the customer relationship. Collateral is not normally required. All trade receivables are
individually reviewed regularly for impairment as part of normal operating procedures and, where appropriate, a provision is
made. Trade receivables less than three months overdue are not considered impaired. Overdue amounts that have not been
provided for relate to customers that have a reliable trading credit history and no recent history of default.
NOTES
2020
$000’S
2019
$000’s
Trade receivable analysis
Debtors past due
7,6217,729
Impairment provision
(2,106)(1,007)
Debtors past due but not impaired
5,5156,722
Debtors current
6,4624,613
Total trade debtors
2711,97711,335
30. Financial risk management (continued)30. Financial risk management (continued)
2020
$000’S
2019
$000’s
Ageing of debtors past due
1-30 days
1,6055,969
31-60 days
624660
61-90 days
1,92237
91+ days
3,4701,063
Total debtors past due
7,6217,729
There is no overdue balance in advances to joint ventures, other receivables and receivables under buy-back arrangement as at
30 June 2020 (2019: nil).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of credit facilities and the ability to close out market positions. Due to the dynamic nature of the
underlying businesses, Group Treasury aims to maintain flexibility in funding by rolling the draw downs on a short term basis
and keeping credit lines available.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date.
The amounts disclosed are the contractual undiscounted cash flows.
UP TO
1 YEAR
$000’s
BETWEEN
1-2 YEARS
$000’s
BETWEEN
2-5 YEARS
$000’s
GREATER
THAN 5
YEARS
$000’s
TOTAL
$000’s
CARRYING
VALUE
$000’s
Year ended 30 June 2020
Trade and other payables
33,646–––33,64633,646
Bank borrowings
5,76592,71677,219–175,700163,322
Lease liabilities
10,9709,91825,79163,465110,14481,871
Interest rate and foreign currency derivative contracts*
2,1551,9473,7774578,3369,303
52,536104,581106,78763,922327,826288,142
UP TO
1 YEAR
$000’s
BETWEEN
1-2 YEARS
$000’s
BETWEEN
2-5 YEARS
$000’s
GREATER
THAN 5
YEARS
$000’s
TOTAL
$000’s
CARRYING
VALUE
$000’s
Year ended 30 June 2019
Trade and other payables
45,669–––45,66945,669
Bank borrowings
9,63990,576134,007–234,222210,979
Lease liabilities
47–––4747
Interest rate and foreign currency derivative contracts*
8426681,6733563,5396,259
56,19791,244135,680356283,477262,954
* The amounts expected to be payable on a net basis in relation to the interest rate swaps have been estimated using forward interest rates
applicable at the reporting date.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20209697
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and maintain an optimal capital structure to reduce
the cost of capital. The Group considers capital to be share capital and interest bearing debt. To maintain or alter the capital
structure the Group has the ability to review the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, reduce or increase debt or sell assets.
There are a number of externally imposed bank covenants required as part of seasonal and term debt facilities. These covenants
are calculated monthly and reported to banks quarterly. The most significant covenants relating to capital management are
Net Interest Bearing Debt to EBITDA ratio, and an Equity to Total Assets ratio (net of intangible assets) (note 25). There have been
no breaches or events of review for the current or prior period.
Seasonality
The tourism industry is subject to seasonal fluctuations with peak demand for tourism attractions and transportation over
the summer months. The operating revenue and profits of the Group’s segments are disclosed in note 1. New Zealand and
Australia’s profits are typically generated over the southern hemisphere summer months and the United States of America’s
profits are typically generated over the northern hemisphere summer months. Due to the seasonal nature of the businesses,
the risk profile at year end is not representative of all risks faced during the year.
31. Derivative financial instruments
Derivative financial instruments and hedging activities
The Group enters into interest rate swaps and other derivatives to hedge interest rate risk.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at their fair value at the end of each reporting period. The method of recognising the resulting gain or loss depends
on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The Group
designates certain derivatives as hedges of a particular risk associated with a recognised asset or liability or a highly probable
forecast transaction (cash flow hedge).
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items,
as well as its risk management objectives and strategy for undertaking various hedge transactions. The Group also documents
its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair value or cash flows of hedged items.
Movements on the hedging reserve in shareholders’ equity are shown in the notes. The full fair value of hedging derivatives
is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a
current asset or liability if the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified
as a current asset or liability.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement.
(The gain or loss relating to the interest rate swaps are recognised in interest expenses).
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or
loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest
rate swaps hedging variable rate borrowings is recognised in the income statement within ‘finance expenses’. The gain or
loss relating to the effective portion of forward foreign exchange contracts hedging export sales is recognised in the income
statement within ‘sales’. However, when the forecast transaction that is hedged results in the recognition of a non-financial
asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity are transferred from
equity and included in the initial measurement of the cost of the asset or liability.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement.
30. Financial risk management (continued)
2020
ASSETS
000’S
2020
LIABILITIES
000’S
2019
ASSETS
$000’s
2019
LIABILITIES
$000’s
Interest rate swaps – current portion
–11013148
Foreign currency swaps – current portion
6–27313
Cash flow hedges – total current portion
611040461
Interest rate swaps – non current portion
–9,193–5,798
Cash flow hedges – total non current portion
–9,193–5,798
Total cash flow hedges
69,303406,259
The cash flow hedges are fully effective therefore the ineffective portion recognised in the income statement that arises from
cash flow hedges in 2020 amounts to nil (2019: nil).
Interest rate swaps
The notional principal amounts of the outstanding interest rate swap contracts at 30 June 2020 were $110,958k (2019: $124,928k).
At 30 June 2020, the fixed interest rates vary from 1.07% to 5.0% (2019: 1.83% to 5.78%).
The liquidity table in note 30 identifies the periods in which the cash flows are expected to occur. The periods in which the cash
flows are expected to impact the profit or loss are materially the same.
Fair values
The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values:
• Derivative financial instruments are carried at fair value as discussed below.
• Receivables and payables are short term in nature and, therefore, approximate fair value.
• Interest bearing liabilities re-price at least every 90 days and, therefore, approximate fair value.
Financial instruments of the Group that are measured in the statement of financial position at fair value are classified by level
under the following fair value measurement hierarchy:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).
Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of
the lowest input to the fair value measurement. If a fair value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, the measurement is a Level 3 measurement.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the date of the event or
change in circumstances that caused the transfer.
As at 30 June 2020, the Group’s assets and liabilities measured at fair values are derivative financial instruments which are
classified within Level 2 of the fair value hierarchy (2019: Level 2), and the Class B preference shares in Togo Group (note 18)
are classified within Level 3 of the fair value hierarchy.
The methods used in determining fair value are as follows:
Derivative financial instruments
The fair value of derivative financial instruments is calculated using quoted prices. Where such prices are not available,
use is made of discounted cash flow analysis using the applicable yield curve or available forward price data for the duration
of the instruments.
31. Derivative financial instruments (continued)
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 20209899
31. Derivative financial instruments (continued)
The following inputs are used for fair value calculations of derivatives:
• Interest rate forward price curve – Published market swap rates
• Foreign exchange forward prices – Published spot foreign exchange rates and interest rate
differentials
• Discount rate for valuing interest rate derivatives – The discount rates used to value interest rate derivatives are
published market interest rates as applicable to the remaining
life of the instrument
• Discount rate for valuing forward foreign exchange contracts – The discount rates used to value interest rate derivatives are
published market interest rates as applicable to the remaining
life of the instrument
There were no changes to these valuation techniques during the period. There were no transfers of derivative financial
instruments between levels of the fair value hierarchy during the year.
Class B preference shares in Togo Group
The valuation technique to calculate the fair value of class B preference shares in Togo Group has been disclosed in note 18.
The following unobservable inputs are used for the fair value of class B preference shares in Togo Group:
UNOBSERVABLE
INPUTS
SOURCE
OF INPUTSINPUT ADOPTED
REASONABLE
POSSIBLE SHIFT
+/- (ABSOLUTE
VALUE)
CHANGE IN
VALUATION +/-
• Face value of class A shares
in Togo
- The 2020 Agreement between thl and ThorUSD20.18M
Nil*Nil*
• Preferred dividend yield- The 2020 Agreement between thl and Thor3%
Nil*Nil*
• Share price return volatility
of Togo
- Historical volatility estimates of listed
comparator companies
40%
5%+/- USD0.7M
*The input value is stated in the 2020 Agreement between thl and Thor.
32. Cash flow hedge reserve
2020
$000’S
2019
$000’s
Balance at beginning of year
(4,483)(838)
Fair value loss
(3,074)(5,056)
Deferred tax on fair value loss
8621,411
(6,695)(4,483)
The cash flow hedge reserve is used to record gains or losses on hedging instruments that are recognised directly in equity.
The hedging instruments are used to manage interest rate risk. Amounts are recognised in the income statement when the
associated hedged transaction affects profit and loss.
Section F – Other
In this section
This section includes the remaining information relating to thl ’s financial statements which is required to comply with financial
reporting standards.
33. Related party transactions
Key management compensation
2020
$000’S
2019
$000’s
Salaries and other short term employee benefits
4,4615,674
Share based payments benefits
375368
Total positions included in the executive team are 15 (2019: 14).
Executive management do not receive any Directors’ fees as Directors of subsidiary companies.
Directors’ fees
2020
$000’S
2019
$000’s
Directors’ fees
618653
Shares issued in lieu of cash
At the 2013 Annual Meeting of shareholders, shareholder approval was obtained for thl to issue shares in whole or in part
payment of Directors’ remuneration. Currently, Rob Campbell and Rob Hamilton have elected to receive 50% of their Director
fees in shares, and Debbie Birch has elected to receive 33% of her Director fees in shares. Shares issued in lieu of Directors’ fees
are as follows:
SHARES 000’sVALUE $000’s
20202019 20202019
Shares issued in lieu of cash
8032160161
Shares to be issued to Directors at 30 June
––2145
Kay Howe (Previous Non-executive Director)
Supreme Motorhome Manufacturing Limited (Supreme) is owned by entities associated with thl Director Kay Howe.
Supreme has provided caravans, parts, and service work to thl. Kay Howe retired as a Director in October 2019.
2020
$000’S
2019
$000’s
Payments to Supreme including purchase of motorhomes and caravans
122
Sales of motorhomes to Supreme
26357
Grant Brady (Managing Director of AMLP)
Grant Brady, Managing Director of AMLP, is a minority shareholder and Director of Bush Road Enterprises Limited. thl subleases
a property in Bush Road which is owned by Bush Road Enterprises Limited. The lease on this property was renewed for a further
term of six years in April 2015. The cost of the sublease and operating expenses are set out in the table below:
2020
$000’S
2019
$000’s
Cost of sublease and operating expenses
486660
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 2020100101
33. Related party transactions (continued)
Action Manufacturing LP
Grant Brady is a shareholder in another entity, Alpine Bird Manufacturing Limited, that owns 50% of Action Manufacturing
Limited Partnership (“AMLP”) that was set up in March 2012. AMLP manufactures the motorhomes and campervans used
by Rentals New Zealand, manufactures motorhomes and parts for Rentals Australia, and manufactures specialty vehicles for
external customers. Pricing is based on the cost of manufacture plus an agreed margin set out in the Limited Partnership
Agreement. During the year, the Group sold certain ex-rental vehicles to AMLP to repurpose and resell. AMLP also subleases part
of the Bush Road property described above.
2020
$000’S
2019
$000’s
Purchase of motorhomes by the Group from the joint venture
44,17149,726
Sales of vehicles by the Group to the joint venture
1,1771,518
Interest charged to the joint venture
3717
Net interest in AMLP (note 19)
10,8799,941
Management of Mighway vehicles
5–
Just go
In the year ended 30 June 2020 the Group purchased motorhomes from Just go with a value of $13,096k (June 2019: $12,040k).
As at 30 June 2020, the Group had no commitment to purchase motorhomes from Just go (2019: $11,240k).
Schork Family
As part of the consideration for the acquisition of El Monte Rents Inc, the Group issued 3,384,266 ordinary shares to entities
associated with the Schork family. An entity associated with the Schork family provides warranties to customers of El Monte
Rents Inc - the total amount paid by customers during 2020 was $300k (June 2019: $330k). At the time of the acquisition, the
Group entered into a number of property lease agreements with entities associated with the Schork family. The leases are in
relation to branches used by El Monte RV. The cost of the leases are set out in the table below:
2020
$000’S
2019
$000’s
Total lease payments
3,2263,255
Cathy Quinn
Cathy Quinn was appointed to the Board of Directors in September 2017. Cathy is a consultant and former partner at
MinterEllisonRuddWatts (MinterEllison). MinterEllison has provided legal services to thl. The amounts paid for the legal services
are set out in the table below:
2020
$000’S
2019
$000’s
Legal services
577677
Togo Group
As part of the investment in Togo Group (refer to note 18), thl had an obligation to complete certain parts of the Togo Fleet RV
industry platform development. thl also provides finance, payroll and administrative support services to Togo Group. These have
been charged to Togo Group on a monthly basis until the 23 March 2020.
MAR 2020
$000’S
JUN 2019
$000’s
Togo Fleet development costs charged by Togo Group
–573
Support services provided by thl
128277
Net interest in Togo Group (note 18)
–42,766
Revenue from Togo Group for providing Mighway Managed option
154410
Payments to Togo Group for IT hardware (in vehicle tablets)
1,34334
34. Share-based payments
Employee benefits
Share scheme
Share scheme 2009-16
From the 2009 financial year the Group has operated an equity-settled, share-based long term incentive plan for
the Chief Executive and other senior executives under which the Group receives services f rom the executives as
consideration for redeemable ordinary shares of the Group. The fair value of the employee services received in
exchange for the grant of the redeemable shares is recognised as an expense in the income statement. The total
amount expensed is determined by reference to the fair value of the redeemable shares granted.
Amounts accumulated in the employee share scheme reserve are transferred to share capital on redemption of the
redeemable shares or to retained earnings where they are forfeited. At the end of each reporting period, the Group
revises its estimates of the number of redeemable shares that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a
corresponding adjustment to the employee share scheme reserve.
The terms of the scheme are contained in a trust deed, with the following main terms:
1. Redeemable shares are issued and held by THL Corporate Trustee Limited on behalf of the executive.
2. Prior to April 2015 the issue price of the redeemable shares was set based on the volume weighted average price of
Tourism Holdings Limited ordinary shares over the 10 days leading up to the issue date. From April 2015 the issue price
was calculated over a 20 day period leading up to the issue date, to align with the calculation of shares issued to Directors’
in lieu of Directors fees.
3. One cent is payable on acceptance of the redeemable shares.
4. The redeemable shares are able to be converted to ordinary shares at the election of the executive after a minimum of two
years at a rate of one third of the issue per year. The exercise price payable by the executive is the issue price plus a cost of
equity adjustment for two years, less dividends paid for two years.
5. The redeemable shares are entitled to dividends only to the extent that they are paid up.
6. The maximum period that the redeemable shares can be on issue is six years.
7. Valuation of the redeemable shares for accounting purposes is done by KPMG using the Binomial Option Pricing Model.
The assessed value is charged to the income statement over the life of the scheme/option with a corresponding credit
to the employee share scheme reserve.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 2020102103
34. Share-based payments (continued)
Movements in the number of redeemable shares outstanding and their related weighted average exercise prices under the
2009 scheme are as follows:
AVERAGE
EXERCISE
PRICE*2016 GRANT2015 GRANT2014 GRANT
TOTAL
REDEEMABLE
SHARES
At 30 June 2018
$2.351,488,962669,866200,0002,358,828
FY2019 transactions
Redeemable shares exercised
$2.56(303,332)(100,000)–(403,332)
Redeemable shares cancelled/forfeited
$2.79(100,000)––(100,000)
At 30 June 2019
$2.291,085,630569,866200,0001,855,496
FY2020 transactions
Redeemable shares exercised
$1.79(100,000)(76,666)(200,000)(376,666)
At 30 June 2020
985,630493,200–1,478,830
* Exercise price is issue price, less 1 cent paid, less dividends paid for two years, plus a cost of equity adjustment for two years.
Convertible shares at 30 June 2020 were 1,478,830 (2019: 1,493,619).
Redeemable shares outstanding at year end have the following expiry dates and exercise prices:
EXPIRY DATE
EXERCISE
PRICE*
2020
REDEEMABLE
SHARES
2019
REDEEMABLE
SHARES
March 2020
$1.17–200,000
October 2020
$1.47193,200193,200
March 2021
$1.84300,000376,666
April 2022
$2.79985,6301,085,630
Redeemable shares outstanding
$2.291,478,8301,855,496
Valuation of redeemable shares
301,766374,749
The value of the redeemable shares calculated using the Binomial Option Pricing Model is being amortised over the life of the
redeemable share rights. The 2020 expense of $15k (2019: $130k) will accumulate in the employee share scheme reserve.
In arriving at the value of the redeemable share rights under the Binomial Option Pricing Model the following inputs have
been used:
201620152014
Issue price$2.57
$1.41
& $1.78$1.14
Forecast dividend yield over the life of the transfer rights
6.1%8.9%6.0%
Risk free rate of interest over the exercise period of the share
transfer rights
3.40%3.30%4.63%
Volatility of Tourism Holdings Limited share price returns
mid point
23.0%26.0%32.5%
Cost of equity adjustment p.a.
12.30%11.50%13.20%
Note: the exercise prices above are adjusted for any dividends paid to date, but make no assumption about future dividends,
which will be deducted from the exercise price.
34. Share-based payments (continued)
Share scheme 2017
In the 2017 financial year the Group introduced an equity-settled, share-based long term incentive plan for the Chief
Executive and other senior executives under which the Group receives services f rom the executives as consideration for
Options to purchase ordinary shares of the Group. The fair value of the employee services received in exchange for the
grant of the Options is recognised as an expense in the income statement with a corresponding increase in equity.
The total amount to be expensed is determined by reference to the fair value of the Options granted.
Amounts accumulated in the employee share scheme reserve are transferred to share capital on the exercise of the
Options or to retained earnings where they are forfeited or not exercised after the vesting date. At the end of each
reporting period, the Group revises its estimates of the number of Options that are expected to vest based on the
non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to the employee share scheme reserve.
The terms of the 2017 scheme are contained in a document entitled ‘The Rules of the Tourism Holdings Long Term Incentive
Scheme 2017’.
1. Options to purchase ordinary shares are issued to executives by the Board.
2. The option price is set based on the volume weighted average price of Tourism Holdings Limited ordinary shares over the
20 days leading up to the grant date.
3. The options can be exercised at the election of the employee after a minimum of two years from the grant date. A maximum
of one third of the options can be exercised after two years, two thirds after three years and all options can be exercised after
five years. After six years, the options lapse and there is no further right to exercise. The exercise price payable by the executive
is the option price plus a cost of equity adjustment for two years, less dividends paid for two years.
4. The participants holding options have no interest in the ordinary shares that are the subject of the options, until the options
are exercised and ordinary shares issued.
5. Valuation of the options for accounting purposes is done by KPMG using the Binomial Option Pricing Model. The assessed
value is charged to the income statement over the life of the scheme/option with a corresponding credit to the employee
share scheme reserve.
Movements in options granted under the 2017 scheme are as follows:
ISSUED PRICE2020 GRANT2019 GRANT 2018 GRANT2017 GRANTTOTAL OPTIONS
At 30 June 2018
980,0001,040,0002,020,000
FY2019 transactions
Options granted
$4.81–1,220,000––1,220,000
Options exercised
––––––
Options cancelled / forfeited
––(60,000)(193,334)(146,667)(400,001)
At 30 June 2019
–1,160,000786,666893,3332,839,999
FY2020 transactions
Options granted
$1.291,440,000–––1,440,000
At 30 June 2020
1,440,0001,160,000786,666893,3334,279,999
The exercise price will be calculated as the issue price less dividends paid for two years, plus a cost of equity adjustment for
two years.
The value of the share transfer rights is calculated using the Binomial Option Pricing Model and is being amortised over the
life of the share transfer rights. The 2020 expense of $360k (2019: 238k) will accumulate in the employee share scheme reserve.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 2020104105
34. Share-based payments (continued)
In arriving at the value of the share transfer rights under the Binomial Option Pricing Model the following inputs have been used:
202020192018
Issue price
$1.29$4.81$6.08
Forecast dividend yield over the life of the transfer rights
9.20%5.91%3.8%
Risk free rate of interest over the exercise period of the share transfer rights
1.17%2.33%2.9%
Volatility of Tourism Holdings Limited share price returns mid point
32.3%21.0%21.0%
Cost of equity adjustment
11.0%11.9%12.0%
35. Reconciliation of profit after taxation with cash flows from operating activities
In accordance with NZ IAS 7 the Group classifies cash flows from the sale and purchase of rental assets as operating cash
flows. Where the timing of receipts and payments is of a short term nature, the cash flows are presented on a net basis.
NOTES
2020
$000’S
2019
$000’s
Net profit after tax
27,35629,753
Plus/(less) non-cash items:
Depreciation of property, plant and equipment
1254,16651,546
Depreciation of right-of-use assets
137,807–
Amortisation of fixed term intangibles
171,1601,097
Amortisation of executive share scheme
34375368
Movement in deferred taxation
(7,431)1,021
Increase in provision for doubtful debts
1,125486
Interest
(214)155
Impairment of assets
173,256–
Share of loss from joint ventures and associates
19, 209,52611,048
Non-cash Director's remuneration
136171
Total non-cash items
69,90665,892
Plus/(less) items classified as investing activities:
Net loss on sale of property, plant and equipment
31102
Net gain recognised in relation to the Togo Group transaction
18(683)–
Total items classified as investing activities
(573)2
Reclassification of cash flows associated with rental assets
Net book value of rental assets sold
100,92395,414
Purchase of rental assets
(108,790)(176,075)
Total cash flows associated with rental assets
(7,867)(80,661)
Trading cash flow
88,82214,986
35. Reconciliation of profit after taxation with cash flows from operating activities (continued)
NOTES
2020
$000’S
2019
$000’s
Plus/(less) movements in working capital:
Decrease in trade payables excluding rental assets
(4,598)(4,617)
(Decrease)/increase in revenue received in advance
(14,141)1,143
(Decrease)/increase in provision for taxation
(1,477)757
(Decrease)/increase in employee benefits
(1,317)54
Decrease/(increase) in trade and other receivables
1,823(5,878)
(Increase)/decrease in inventories
(23)3,756
Total movements in working capital
(19,733)(4,785)
Net cash flows from operating activities
69,08910,201
Net debt reconciliation
This section sets out an analysis of net debt and the movements in the net debt.
2020
$000’S
2019
$000’s
Cash and cash equivalents
35,5148,837
Total cash and cash equivalents
35,5148,837
Borrowings, short-term
–(46)
Borrowings, long-term
(163,322)(210,980)
Lease liabilities, short-term
(7,304)–
Lease liabilities, long-term
(74,567)–
Net debt
(209,679)(202,189)
Cash and cash equivalents
35,5148,837
Gross debt – variable interest rates
–(1,000)
Gross debt – fixed interest rates
(245,193)(210,026)
Net debt
(209,679)(202,189)
Cash and cash equivalents includes cash on hand, cheques, deposits held at call with financial institutions and bank overdrafts.
There is no restricted cash as at 30 June 2020 (2019: nil).
ASSETSLIABILITIES FROM FINANCING ACTIVITIES
CASH/BANK
OVERDRAFT
BORROWINGS
DUE WITHIN
ONE YEAR
BORROWINGS
DUE AFTER
ONE YEARTOTAL
Balance at 1 July 2018
13,534(221)(212,102)(198,789)
Cash flow
(4,728)1751,502(3,051)
Foreign exchange adjustment
31–(380)(349)
Net debt at 30 June 2019
8,837(46)(210,980)(202,189)
Balance at 1 July 2019
8,837(46)(210,980)(202,189)
Cash flow
26,3904652,74279,178
Foreign exchange adjustment
287–(5,084)(4,797)
Non-cash movement – lease liabilities
–(7,304)(74,567)(81,871)
Net debt at 30 June 2020
35,514(7,304)(237,889)(209,679)
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 2020106107
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax
benefit through the future taxable profits is probable.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current liabilities and when the deferred income tax relate to the same fiscal authority.
The gross movement on the deferred income tax account is as follows:
2020
$000’S
2019
$000’s
Beginning of the year
22,22423,053
Income statement charge – provision
(2,577)(366)
Income statement charge – property plant and equipment
(2,858)456
Tax losses
2
(4,156)(1,620)
Losses to utilise to generate cash refund
2,8353,487
Adjustment for US tax losses carried back
1
(1,085)(1,425)
Adjustment on adoption of NZ IFRS 16
(3,504)(1,361)
Tax charged to equity-derivative
(649)–
End of the year
10,23022,224
2020
$000’S
2019
$000’s
Amounts recognised in income statement
Provisions
(4,395)(1,818)
Property, plant and equipment
41,94644,804
Tax losses
2
(19,711)(18,390)
Tax credits
1
(2,510)(1,425)
Leases
(3,504)–
Amounts recognised directly in equity
Derivative financial instruments
(1,596)(947)
Net deferred tax liability
10,23022,224
1
Tax credits include tax losses in the US which were rolled back to previous tax years prior to the rate change where tax had been filed at the
higher rate.
2
The above comparative disclosure has been reclassified for consistency with current year presentation. This reclassification did not change the
comparative balance of deferred tax but instead discloses the temporary differences attributable to provision, property plan and equipment and
tax losses separately.
36. Deferred income tax37. Changes in accounting policies and disclosures
Issued standards and amendments effective from 1 July 2019
NZ IFRS 16 Leases was adopted using the modified retrospective approach, with no restatement of comparative information.
The cumulative effect of adopting NZ IFRS 16 was recognised in the opening balance sheet as at 1 July 2019. Further details of
the adoption of NZ IFRS 16 and the new accounting policy are disclosed in note 13.
During the year ended 30 June 2020, thl received rent concessions due to COVID-19. The Group did not assess whether the rent
concessions qualify as lease modifications, as a practical expedient, in accordance with the COVID-19-Related Rent Concessions
amendment to NZ IFRS 16 Leases as issued in May 2020 and approved in New Zealand in June 2020.
38. Contingencies
As at 30 June 2020 the Group has bank guarantees of $1,113k in place. Predominantly these are in lieu of bonds paid relating to
leased assets (2019: $1,089k).
39. Events after the reporting period
Fire in Auckland, New Zealand
On 3 September 2020 a fire broke out at the Group’s rental branch in Mangere, Auckland. As a result of the fire, the Mangere
branch is unusable, and a temporary rentals branch has been established to enable the continuation of normal rental
operations. Due to the recent nature of this event, the financial impact is yet to be assessed and quantified. The Mangere
branch is a leased premise. The book value of the leasehold improvements and inventory at the Mangere branch at 30 June
2020 was $1.1M. In addition to the building becoming unusable, there are 19 motorhomes with a book value of $1.2M that were
also damaged beyond repair. The cost of repairs to other damaged vehicles is yet to be assessed. The Group has insurance
policies in relation to material damages and fleet, and insurance assessments are currently in progress.
COVID-19
The global impact of COVID-19 is ongoing, and continues to have a financial impact on the Group. Subsequent to 30 June 2020,
there have been varying degrees of border restrictions and lock-down requirements in each of the jurisdictions that the Group
operates in. The Group restructured its operations and funding arrangements during the 2020 financial year following the initial
COVID-19 outbreak, and has not required any further significant restructuring since then.
Notes to the consolidated financial statements (continued)Notes to the consolidated financial statements (continued)
thl Integrated Annual Report 2020108109
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Funding requirements and forecast compliance with loan
facility undertakings and covenants, including the impact
of COVID-19
As disclosed in the Assessment of going concern and
impairment note on page 59 of the Group’s consolidated
financial statements, the Board of Directors (the Board) has
considered the ongoing funding and capital requirements
of the Group given the impact of COVID-19.
The Group developed cash flow forecasts (forecasts) under
a range of potential scenarios. Based on the scenarios,
the Group has secured an amended bank funding facility
with certain new undertakings and covenant requirements
as set out in note 25 of the consolidated financial statements.
The Board is of the view that the Group will be able to meet
these undertakings and covenants and will have sufficient
cash to discharge its liabilities as they fall due.
We consider this area as a key audit matter because forecasts
are inherently subjective with key assumptions based on
estimates and judgements, coupled with the uncertainties of
the ongoing effect of COVID-19 on the Group’s performance.
We held discussions with management to understand:
• the Group’s overall strategy in navigating through the
impact of COVID-19;
• the current performance of each business unit and its
forecast outlook; and
• the Group’s funding requirement relative to its strategy.
We read the amended bank funding facility agreement and
understood the new required undertakings and covenants.
We obtained the Group’s Board approved forecasts, including
the forecast calculations to assess compliance against
relevant undertakings and covenants for the next 12 months
from the date of approval of the consolidated financial
statements, and performed the following procedures:
• understood management’s forecasting process and the
basis for determining the key assumptions;
• assessed management’s historical forecasting reliability
by comparing the Group’s actual results against the
forecasts over the last three years. Where actual results
deviated from historical forecast results, we understood the
underlying reasons and considered the potential impact on
the reliability of the forecasts prepared in the current year;
• tested the mathematical accuracy of the forecasts;
• assessed the reasonableness of the key assumptions
incorporated in the forecasts;
• reviewed the forecasts’ sensitivity analysis performed by
management and overlaid this with our own assessment
of forecasting risk, including consideration of the impact
of COVID-19;
• reperformed the forecast covenant compliance calculations
at the calculation dates for the next 12 months from the date
of approval of the consolidated financial statements; and
• considered the adequacy of disclosures in the Assessment
of going concern and impairment note and note 25.
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
111
We have audited the consolidated financial statements which comprise:
• the consolidated statement of financial position as at 30 June 2020;
• the consolidated income statement for the year then ended;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include significant accounting policies.
Our opinion
In our opinion, the accompanying consolidated financial statements of Tourism Holdings Limited (the Company), including its
subsidiaries (the Group), present fairly, in all material respects, the financial position of the Group as at 30 June 2020, its financial
performance and its cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial
Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) and International
Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for
Assurance Practitioners (including International Independence Standards) (New Zealand) (PES 1) issued by the New Zealand
Auditing and Assurance Standards Board and the International Code of Ethics for Professional Accountants (including
International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code),
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of treasury advisory, agreed upon procedures in relation to:
Waitomo lease compliance, the interim financial statements, proxy vote scrutineering at the annual meeting, quarterly banking
compliance certificate and holiday pay calculation remediation and COVID-19 payroll changes assessment. The provision of
these other services has not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current year. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent auditor’s report
To the shareholders of Tourism Holdings Limited
thl Integrated Annual Report 2020110
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
thl Integrated Annual Report 2020112113
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Residual values and depreciation rates for motorhomes
The Group generates revenue from motorhomes through
both rental income and the sale of motorhomes from its
ex-rental fleet that have been reclassified to inventory.
As disclosed in note 12 of the consolidated financial
statements, the value of motorhomes at 30 June 2020
was $377 million, net of $50 million depreciation charged
for the year. The net book value of motorhomes reclassified
to inventory was $54 million. As disclosed in note 2 of
the consolidated financial statements, the Group sold
motorhomes for $143 million at a total cost of motorhomes
of $124 million.
The method of estimating the depreciation rate, which
includes an estimation of residual values, is detailed in
note 12 of the consolidated financial statements.
The estimation of an appropriate depreciation rate for
motorhomes directly affects both depreciation expense
and the net book value of ex-rental fleet reclassified to
inventory, and can therefore have a significant impact
on the profit of the Group, which is why we have given
this area specific audit focus and attention.
We performed the following audit procedures to assess the
judgements made by management in determining the
residual values and depreciation rates for motorhomes:
• updated our understanding of the relevant business
processes and management’s annual assessment of
motorhome residual values and depreciation rates;
• for a sample of motorhomes sold during the year,
compared the sales proceeds to the carrying amount
(i.e. the depreciated net book value of the ex-rental fleet
reclassified to inventory) and recalculated the profit or
loss on sale;
• compared the actual sales achieved during the year to
historical and forecasted results. Where actual results
deviated from historical and/or forecasted results, we
understood the underlying reasons and considered the
potential impact on current and future depreciation rates.
This provided evidence to support management’s ability to
reliably forecast the expected useful life and residual values
of the motorhome fleet;
• recalculated the depreciation charge for the year; and
• assessed whether depreciation rates applied were
consistent with the accounting policy.
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Impairment risk for non-financial assets, including the
impact of COVID-19
As disclosed in note 17 of the consolidated financial
statements, the Group tests intangible assets with indefinite
useful lives annually for impairment and tests other non-
financial assets for impairment whenever there are indicators
that the carrying amount may not be recoverable.
The economic impact of COVID-19 on the tourism industry,
as well as the current market capitalisation of the Group
being lower than the net assets at 30 June 2020, are
indicators of impairment.
The Board has performed an impairment assessment by
determining the recoverable amounts of the relevant cash
generating units (CGUs) and the Group’s equity accounted
investments in Action Manufacturing LP (AMLP) (note
19) and Just Go (note 20) on a value-in-use basis using
discounted cash flow models. In preparing the impairment
assessments, the Board took into account the current
profitability of the Group and the impact of COVID-19 on the
Group’s operations. The key assumptions in the discounted
cash flow model (impairment model) for each of the CGUs
and the results of the Board’s assessment, including the
impact of reasonably possible changes in assumptions, are
disclosed in Assessment of going concern and impairment
note on page 59 and note 17 of the consolidated financial
statements.
The Board also assessed each material asset for impairment.
As a result of the assessment performed, an impairment of
$3.1 million of goodwill in relation to Kiwi Experience
was recognised.
The impairment assessment was a key focus area of our audit
due to the inherent judgement in assessing impairments
and the impacts of COVID-19 on the assumptions that the
Board’s assessment is based on.
In considering the impairment assessments for each CGU,
we performed the following:
• obtained the Group’s impairment assessment and models
and held discussions with management to understand:
– the Group’s overall strategy in navigating through the
impact of COVID-19;
– the current performance of each CGU and the Group’s
equity accounted investees (AMLP and Just go) and
their forecast outlook; and
– the basis for determining the key assumptions in
preparing the impairment models.
• considered whether the methodology applied was
appropriate and tested the mathematical accuracy
of the impairment models;
• compared actual results to forecast performance for
the past three financial years, understood reasons for
deviations, analysed key trends and considered the
impact on our assessment of forecast earnings;
• engaged our auditor’s valuation expert to:
– assess and challenge the key cash flow assumptions,
including hire days, international travel recovery, the
discount rate and the terminal growth rates, including
benchmarking these to external data where relevant;
and
– assist us in developing our own point estimate based
on our independent assessment of the key assumptions
(developed with reference to historical performance,
industry and other external market evidence, where
relevant) which we used to consider the reasonableness
of management’s estimate; .
• assessed the adequacy of disclosures, in particular the
sensitivity disclosures in Assessment of going concern
and impairment note and in note 17 of the consolidated
financial statements.
In considering the results of the Board’s assessment of
impairment on an individual asset basis, we considered
the following:
• the value of recoverability of ex-rental motorhomes through
sale and whether there is an indication of impairment;
• the impact of onerous leases to the right-of-use assets; and
• the impact to individual assets of Kiwi Experience,
including the write-off of its full goodwill balance. We
obtained management’s assessment, held discussions with
management and the Board to understand the rationale of
the impairment of goodwill in Kiwi Experience, and formed
our independent assessment based on our knowledge of
the business and its current hibernation state (currently not
operating), including its historical limited profitability and
the absence of a clear business plan for Kiwi Experience
once the border reopens.
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial statements are free from
material misstatement.
Overall Group materiality: $1.6 million, which was based on operating profit before financing costs.
We chose this benchmark because, in our view, it provides a more stable measure and better reflects
the performance of the Group.
As reported above, we have four key audit matters, being:
• Funding requirements and forecast compliance with loan facility undertakings and covenants,
including the impact of COVID-19
• Impairment risk for non-financial assets, including the impact of COVID-19
• Residual values and depreciation rates for motorhomes
• Accounting for the managed exit from Togo Group.
Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall
Group materiality for the consolidated financial statements as a whole as set out above. These, together with qualitative
considerations, helped us to determine the scope of our audit, the nature, timing and extent of our audit procedures and to
evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial statements as a whole.
Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial statements and our
application of materiality. As in all of our audits, we also addressed the risk of management override of internal controls
including among other matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated
financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and
the industry in which the Group operates.
We identified four subsidiaries that, due to their financially significant contribution as well as strategic importance to the
Group’s overall results, required a full-scope audit. In addition, we also performed specific audit procedures on certain balances
and transactions of other subsidiaries. Audits of each subsidiary are performed at a materiality level calculated with reference
to a proportion of the Group materiality relative to the financial significance of the business concerned.
Our Group audit scope focused on the major operating locations. In aggregate, the locations selected for a full scope audit
contribute 98% of the Group’s revenue and 99% of the Group’s operating profit before financing costs.
Information other than the consolidated financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial statements does not
cover the other information included in the annual report and we do not express any form of assurance conclusion on
the other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed
on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
thl Integrated Annual Report 2020114115
DESCRIPTION OF THE KEY AUDIT MATTERHOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Accounting for the managed exit from Togo Group
The Group entered into an agreement with Thor Industries,
Inc. (joint venture partner) to undertake a managed exit
from Togo Group. The transaction involved a reduction of the
Group’s shareholding in Togo Group from 50% of the ordinary
shares to 20.18% of class B preference shares in exchange for
certain assets and liabilities from Togo Group, which are set
out in note 18 to the consolidated financial statements.
This transaction was complex with respect to determining the
appropriate accounting treatment for the managed exit and
valuing the intellectual properties acquired and the remaining
investment in Togo Group. We have therefore considered this
to be a key audit matter.
We have performed the following audit procedures:
• obtained an understanding of the transaction and the
accounting treatment applied through:
– discussions with management;
– review of management’s assessment, including the
external accounting advice management obtained
and the determination of the effective date; and
– review of the exit agreement between the Group
and the joint venture partner;
• engaged our valuation expert to assess the methodology
and key assumptions adopted by management in the
valuation of the intellectual properties acquired by the
Group as part of this transaction;
• held discussions with the Group’s external valuation
expert, together with our valuation expert, to assess the
methodology and key assumptions used in the valuation
of the retained interest in class B preference shares;
• tested the relevant data inputs in the valuation to
underlying accounting records and supporting documents;
• on a sample basis, tested material movements in the
account balances, revenue and expenses of Togo Group
from 1 July 2019 to the effective date of the exit transaction;
• inspected the receipt of the cash consideration for the 6%
share, which was remitted by Thor in August 2020;
• reperformed the reconciliation of the Group’s investment
in Togo Group to ensure the investment amount
derecognised at the effective date was materially accurate;
• recalculated the loss on disposal and the cumulative
translation reserve recycled to the consolidated income
statement; and
• considered the appropriateness of disclosures in note 3
and 18 of the consolidated financial statements.
Independent auditor’s report (continued)
To the shareholders of Tourism Holdings Limited
thl Integrated Annual Report 2020116117
Corporate governance
For the year ended 30 June 2020
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated financial
statements in accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary to enable
the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
(NZ) and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the
External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might
state those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
shareholders, as a body, for our audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Lisa Crooke.
For and on behalf of:
Chartered Accountants
17 September 2020 Auckland
PricewaterhouseCoopers, 15 Customs Street West, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
Tourism Holdings Limited (‘thl ’s) operates under a set of corporate governance principles designed to ensure that thl is
effectively managed. The Board is committed to the continued development of thl ’s corporate governance practices by
review and develop its corporate governance policies and monitor developments to keep abreast of corporate governance
best practice.
thl ’s corporate governance framework includes:
• The constitution of thl, which describes the ‘rules’ under which the company operates, including issue and other share
transactions, distributions, shareholder meetings, Director appointment, remuneration and powers, and the conduct of
Board and shareholder meetings.
• The Board Charter and subcommittee charters, which set out the roles and responsibilities of the Directors.
• The Code of Ethics, which outlines the standards of ethical behaviour expected of Directors, staff and contractors.
• The Market Disclosure Policy, which outlines the policy around disclosure of company information, including the
commitment to compliance with continuous disclosure requirements.
• The Securities Trading Policy, which outlines policy and guidelines around trading in thl securities by Directors,
officers and staff.
• The Diversity Policy, which outlines the commitment to diversity in Board, Executive and Staff appointments.
• The Delegated Authority Policy, which outlines the delegation of authority by the Board to management, and the
authorisation levels at which Board approval is required.
thl ’s governance practices have been reviewed against the recommendations of the NZX Corporate Governance Code
2019 (‘Code’). The Board considers that the thl governance framework and practices for the year ended 30 June 2020
are in compliance with the recommendations of the Code, except in respect of the setting of measurable objectives for
diversity, as further noted on page 120. The information in this Governance Report is current as at 30 June 2020 and has
been approved by the thl Board.
thl ’s corporate governance policies and charters are available on its website at www.thlonline.com.
Principle 1 – Ethical behaviour
“Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable
for these standards being following throughout the organisation.”
thl is committed to being a good corporate citizen. The Company expects Directors, employees and contractors to practise
high ethical standards in the performance of their duties, to comply with all applicable laws and regulations, co-operate with
all regulatory bodies and government agencies, and use Company assets and resources only for the legitimate and ethical
achievement of its objectives.
thl has adopted a Code of Ethics to ensure it maintains such high ethical standards and reinforces thl ’s commitment to the
community. The Code of Ethics addresses the areas of ethical business practices, insider trading, conflicts of interest and use
of Company property, amongst other matters. The Code of Ethics was most recently updated on 31 May 2019 and is available
at www.thlonline.com.
Securities Trading Policy
thl has in place a formal Securities Trading Policy and guidelines which applies to all Directors, officers and employees of thl
and its subsidiaries who intend to trade in thl listed securities.
All individuals defined as “restricted persons” under that policy must notify thl of their intention to trade and obtain approval
from the Board before trading in thl ’s shares. No trading in shares is permitted in ‘blackout periods’ from 1 June each year until
48 hours after the release of the full year results and from 1 December each year until 48 hours after the release of the half year
results, except in exceptional circumstances.
thl Integrated Annual Report 2020118119
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
Roles and responsibilities of the Board
The Board is committed to managing thl in an ethical and professional manner, and in the best interests of the company
and its shareholders. Specific responsibilities of the Board, as set out in the Board Charter, include the following:
• Oversight of thl, including its control and accountability procedures and systems;
• Appointment, performance and removal of the Chief Executive Officer;
• Confirmation of the appointment and removal of the senior executive group (being the direct reports to the
Chief Executive Officer);
• Setting the remuneration of the Chief Executive Officer and Chief Financial Officer, approval of the remuneration
of the senior executive group, and the adoption of thl ’s remuneration policy;
• Overseeing the development, adoption and communication of the corporate strategy and objectives and oversight
of the adequacy of thl ’s resources required to achieve the strategic objectives;
• Approval of and monitoring of actual results against the annual business plan and budget (including the capital
expenditure plan);
• Review and ratification of thl ’s risk management framework, internal compliance and control, codes of conduct,
and legal compliance;
• Approval and monitoring of the progress of capital expenditures, capital management initiatives, and acquisitions
and divestments;
• Overseeing accounting and reporting systems and thl ’s compliance with its continuous disclosure obligations;
• Approval of the annual and half-year financial statements;
• Setting measurable objectives for achieving diversity with the organisation; and
• Adopting and reviewing thl ’s risk management framework.
Board performance evaluation and training
On an annual basis the Chair conducts a review of Board performance. A review using an independent external facilitator
is conducted bi-annually. Board committees review performance against their Charters on an annual basis. The Remuneration
& Nomination Committee is responsible for ensuring Directors remain up to date with relevant training.
Director appointment
The policy for appointment and retirement of Directors is contained within thl ’s constitution and Board Charter. In accordance
with the NZX Listing Rules, Directors must not hold office (without re-election) past the third Annual Meeting following their
appointment or 3 years, whichever is longer.
Cathy Quinn and Gráinne Troute shall retire by rotation at the 2020 Annual Meeting and, being eligible, will offer themselves for
re-election.
Director independence
The criteria to determine whether Directors are independent is set out in the Board Charter. All the Directors holding office
on 30 June 2020, with the exception of Guorong Qian, are considered to be independent. Directors are required to inform the
Board of any relevant information that may impact independence. The Remuneration and Nomination Committee Charter
reviews the independence of Directors on behalf of the Board.
Principle 2 – Board composition and performance (continued)Principle 1 – Ethical behaviour (continued)
Trading is permitted outside the blackout periods, provided the restricted person confirms that they do not hold any material
information and that they are not aware of any reason that would prohibit them from trading. Any trading must be completed
within 10 trading days of approval being given. Restricted persons are defined in the policy as:
• All Directors;
• The Chief Executive Officer (CEO);
• All members of the senior management team and their direct reports;
• The administrative staff of the senior management team;
• All employees in the finance department;
• Trusts and companies controlled by such persons;
• Anyone notified by the CFO from time to time; and
• Anyone participating in the Long Term Incentive Scheme.
The Securities Trading Policy was most recently updated on 31 May 2019 and is available at www.thlonline.com.
Principle 2 – Board composition and performance
“To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.”
Board skills and expertise
thl ’s Board is comprised of Directors who have a mix of skills, knowledge, experience and diversity to adequately meet and
discharge its responsibilities and to add value to the company through efficient and effective governance and leadership.
The current Directors have a varied and balanced mix of skills, including extensive operational experience, knowledge of the
tourism industry, as well as extensive experience in capital markets, growth and global transactions.
Below is a summary of the key skills and expertise held by the Board, which are considered most relevant to effectively
fulfilling the Board’s current objectives:
• Corporate governance experience, including publicly listed company experience;
• Global business experience in multi-site operations;
• Tourism industry experience;
• Experience in development and execution of growth strategies;
• Experience with digital innovation;
• Sustained positive people leadership;
• Community and Iwi engagement;
• Focus on deployment and management of capital for a strong return on funds employed;
• Investment banking, capital markets and M&A transaction experience;
• Legal and regulatory expertise;
• Financial governance and audit oversight;
• Health and safety governance and management experience;
• Treasury and funding expertise;
• Economics – global and local New Zealand expertise; and
• International business leadership and CEO and CFO experience.
Individual Director profiles are set out in the Board of Directors (page 133).
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020120121
Corporate governance (continued)
For the year ended 30 June 2020
Remuneration & Nomination Committee
The Remuneration & Nomination Committee is comprised of at least three Non-Executive Directors of the Board, a majority
of whom must be independent Directors.
The Committee meets a minimum of two times each year. The Remuneration & Nomination Committee supports the Board
on matters relating to human resources and remuneration. It assesses the role and responsibilities, composition, training and
membership requirements and remuneration for the Board, including recommendations for the appointment and removal
of Directors.
The current composition of the Remuneration & Nomination Committee is Gráinne Troute (Chair), Rob Campbell, Rob Hamilton
and Guorong Qian.
Market Disclosure Committee
The Market Disclosure Committee is comprised of the Chair of the Board, the Chair of the Audit Committee and Cathy Quinn.
The Committee monitors compliance with the Group’s Market Disclosure Policy which covers compliance with NZX Listing
Rules, the Companies Act 1993, the Financial Markets Conduct Act 2013 and other guidelines issued by the Financial Markets
Authority
and the NZX.
The Committee meets if required outside of normal Board meetings to approve market disclosures.
Marketing & Customer Experience Committee
The Marketing & Customer Experience Committee is comprised of at least two Non-Executive Directors of the Board.
The current composition of the Marketing & Customer Experience Committee is Debbie Birch (Chair), Gráinne Troute,
Cathy Quinn and Rob Campbell. The Committee supports the Board and management on strategy around brand, marketing
and customer experience. The Committee meets as required.
Sustainability & Risk Committee
The Sustainability & Risk Committee is comprised of at least two Non-Executive Directors of the Board. The current composition
of the Sustainability & Risk Committee is Cathy Quinn (Chair), Rob Campbell, Gráinne Troute and Debbie Birch. The Committee
supports the Board and management on sustainability policies and practices and strategic risk management. The Committee
meets as required.
Other Committees
The thl Board establishes other temporary committees from time to time when required for a specific purpose. This includes
committees for the governance of capital raising processes or for the progression of acquisition opportunities. Membership of
these committees is assessed on a case by case basis.
Takeover protocols
thl has a written protocol that describes the process to be followed in the event of a takeover offer. The protocol includes the
appointment of a subcommittee of independent Directors.
Principle 4 – Reporting and disclosure
“The Board should demand integrity in financial and non-financial reporting, and in the timeliness and balance of
corporate disclosures.”
The Board is committed to ensuring that shareholders and the market are provided with complete and timely information
about the activities of the business to allow proper accountability between thl and shareholders, employees and other
stakeholders. The Board has overall responsibility for ensuring the integrity of thl ’s reporting and disclosure.
Continuous disclosure
thl ’s obligations under the NZX Listing Rules require it to advise the market about any material events promptly and without
delay once the Company becomes aware of such information. The Board has in place a Market Disclosure Policy in order to
ensure that the Company is able to comply with its continuous disclosure obligations.
The Market Disclosure Policy contains a procedure for the escalation of potential material information to the Market Disclosure
Committee, in order to allow the Committee to determine whether the information is material and whether an announcement
is required. The Market Disclosure Policy is provided to all thl staff and is also available on www.thlonline.com. Additionally, thl
provides training regarding its continuous disclosure obligations to all staff and monitors compliance on an ongoing basis.
Principle 3 – Board committees (continued)
Board Diversity Policy
The thl Diversity Policy endorses and supports diversity in Board, Executive and staff appointments, encompassing differences
including but not limited to gender, ethnicity, race, marital status, sexual orientation, age, employment status, religious belief,
ethical belief or political opinion. When making appointments, the Board and management is committed to considering
diversity as well as the mix of skills and experience needed to expand the perspective and capability of the Board and the
management team as a whole.
The thl Diversity Policy was most recently updated on 31 May 2019 and is available at www.thlonline.com. It requires the Board
to consider the diversity position of thl annually and whether to set any measurable objectives, which may be numerical and
non-numerical.
A global staff engagement survey commenced in 2020 to generate benchmark data for the assessment of thl’s diversity
position globally. The survey was suspended once the impact of COVID-19 and subsequent organisational changes occurred.
thl intends to re-commence this process in the upcoming financial year. Once completed, the thl Board will be reviewing the
findings and setting measurable objectives, with progress against those objectives being reported in future annual reporting.
The Board considers that it currently has the appropriate mix of skills, experience and diversity to fulfill its responsibilities under
the NZX Listing Rules and the thl Diversity Policy.
Principle 3 – Board committees
“The Board should use committees where this will enhance its effectiveness in key areas, while still retaining
Board responsibility.”
There are five standing committees described below, each of which operates under a written charter. The performance of
the standing committees is reviewed annually against the charters.
Each Committee is authorised to deal with matters as set out in its charter or falling within its mandate. Where the Board has
delegated decision-making authority to a Committee, that Committee is entitled to make decisions on such matters, otherwise
the Committee is to submit recommendations to the Board for consideration. From time to time, the Board delegates specific
matters to the appropriate Committee in order to ensure that a detailed review and analysis is undertaken. The Committee then
reports back to the Board regarding their findings and recommendations.
The Audit Committee
The Audit Committee is comprised solely of Non-Executive Directors of the Board, a majority of whom must be independent
Directors.
The Committee meets a minimum of three times each year. The Audit Committee has oversight of, and assists the Board to
fulfil its responsibilities in the areas of financial reporting, audit functions, and risk management and control.
The Audit Committee oversees thl ’s internal audit work programme based on thl ’s risk management framework. An internal
audit work plan is developed each year, with internal audit assignments completed by EY, supplemented with review work
completed by the internal finance function. No audit assignments were completed by EY during FY20. The business has a
separate health and safety function, with regular reporting to Board and management.
The current composition of the Audit Committee is Rob Hamilton (Chair), Debbie Birch, Rob Campbell, Cathy Quinn
and Gráinne Troute.
Principle 2 – Board composition and performance (continued)
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020122123
The thl long term incentive (LTI) scheme is designed to align the interests of the Executives with those of the shareholders.
Executives are rewarded for long-term increases in shareholder value. Executives are invited to participate in the long term
incentive plan by the Board on an annual basis, and participating Executives are awarded share options at the discretion of the
Board. The awarding of options is based on a percentage of fixed remuneration, based on a valuation of the options carried out
each year by KPMG. Details of the schemes and the status of options issued under the schemes is included in note 34 to the
Financial Statements.
Further detail regarding CEO remuneration for the year ended 30 June 2020 is set out in the CEO remuneration note below.
Staff remuneration
Decisions concerning remuneration of other thl staff require approval on a “one-up” basis. This means that no person may make
decisions on the remuneration of any person reporting to them without the approval of the person to whom they report.
The number of thl staff which received remuneration exceeding $100,000 in the year ending 30 June 2020 is set out in the
employee remuneration section.
Principle 6 – Risk management
“Directors should have a sound understanding of the material risks faced by the issuer and how to manage them.
The Board should regularly verify that the issuer has appropriate processes that identify and manage potential
and material risks.”
thl maintains a framework for the identification, assessment, monitoring and management of material risks to thl ’s business.
The thl Board has ultimate responsibility for reviewing thl ’s risk management framework, however the ongoing oversight
is delegated to the Sustainability & Risk Committee in respect of strategic risk management, and to the Audit Committee in
respect of financial risk management. The two Committees report to the Board and to each other in respect of potential issues
or risks that require further consideration and response.
Strategic risk management
The responsibility of the Sustainability & Risk Committee is to consider, assess and respond to long-term strategic risks to thl ’s
business, and to ensure that thl maintains sustainable business practices. This includes oversight and management of thl ’s
risk register and risk contingency plans. The thl Board considers that the sustainable business practices are fundamental to
ensuring that thl can continue to deliver value to its shareholders over the long-term.
Financial risk management
The Audit Committee is responsible for ensuring that thl has appropriate control and systems in place to manage any financial
risks and to protect thl ’s assets. This involves reviewing thl ’s risk management system, business policies and practices and
internal control framework.
The Committee is also responsible for ensuring that thl maintains up to date risk registers, business continuity and disaster
recovery plans, and insurance coverage which ensures that earnings are well protected from potential adverse circumstances.
thl management maintains the material risk register and reports to the Board every second month on such risks. Management
monitors risks on an ongoing basis to identify any new risks as well as any potential changes to the threat posed to thl ’s
business from previously identified risks.
Further information regarding the material risks faced by thl ’s business and how these are being managed is set out in
the notes of the financial statements.
Health and safety
The Sustainability & Risk Committee is responsible for monitoring matters relating to occupational health and safety, and
physical and mental well-being of thl staff, and report to the Board on such matters.
The Committee works with management to identify and maintain a register of workplace hazards, and to ensure that thl has
in place and appropriately documents its health and safety policies and procedures.
thl management report to the Board on any health and safety incidents, including implementation of responses to prevent
further incidents, on a monthly basis.
Principle 5 – Remuneration (continued)Principle 4 – Reporting and disclosure (continued)
Financial reporting
The Audit Committee is responsible to the thl Board in relation to financial reporting. It reviews the interim and annual financial
statements and reports to the Board regarding compliance with relevant laws and recognised accounting policies. It is also
responsible for ensuring that thl retains accurate financial and accounting records, and that all financial reporting is done in
an accurate and timely manner.
Non-financial reporting
thl has adopted the internationally recognised Integrated Reporting guidelines in order to ensure its disclosure of non-financial
reporting is balanced, transparent, connected to the financial, social and environmental performance, and easily comparable to
other companies.
Principle 5 – Remuneration
“The remuneration of Directors and executives should be transparent, fair and reasonable.”
thl is committed to a fair approach to remuneration which ensures alignment between remuneration levels and business
needs. A clear set of boundaries and process to guide thl ’s philosophy for remuneration has been set by the Remuneration
& Nomination Committee in the thl Remuneration Policy.
The thl Remuneration Policy was most recently reviewed by the Remuneration & Nomination Committee on 31 May 2019
and is available on thl ’s website at www.thlonline.com.
Director remuneration
The fees payable to Directors is set by the Board, usually with the advice of independent consultants, in line with the thl
Remuneration Policy. Director remuneration is to be appropriate to the market and reflect the time commitment and
responsibilities of the role. As thl does not have any Executive Directors, its Director remuneration policy is applicable only
to Non-Executive Directors.
The total fee pool approved by the shareholders for Director remuneration at the 2018 Annual Meeting is $750,000. The annual
fees currently paid to Directors is $175,000 for the Chairperson, $87,500 for each Director, plus $15,000 for the Chairperson of the
Audit Committee and $10,000 for the Chairperson of each other Committee. Total Directors’ remuneration received, or due and
receivable during the year ended 30 June 2020 is set out on page 126 in the Director remuneration note below.
thl also has in place a fixed share plan under which Directors may elect to receive ordinary shares in thl in lieu of their Director
fees (either in whole or in part). This share plan was previously approved by thl shareholders.
CEO and Executive remuneration
Decisions concerning the remuneration of the CEO require approval from the Board, unless specifically delegated to the
Remuneration & Nomination Committee. Decisions concerning the remuneration of any other C-level positions, General
Managers or similar require approval from the Chair of the Remuneration & Nomination Committee.
thl is committed to ensuring that its Executives are fairly and equitably remunerated, and appropriately rewarded for excellent
performance and achievement. In addition, thl uses a remuneration structure to ensure that the interests of the CEO and
Executive team are aligned with the interests of shareholders.
The CEO and Executive remuneration generally consists of a fixed base salary and allowances, annual performance-based
incentives and long-term equity-based incentives. The fixed base salary of the CEO and Executive team is reviewed once every
two years and benchmarked against the median of the market.
Annual performance-based incentives are linked to financial and individual targets.
The Board elected to suspend the short-term performance-based incentive scheme for the financial year ended 30 June 2020,
due to the substantial shock to the Company and the tourism industry relating to COVID-19. Ordinarily, the CEO and CFO
annual incentive is based 90% on Company financial performance (Net profit after tax, and Return on funds employed), and
10% on individual performance against specific targets (such as acquisitions and investor relations). The annual incentives of
other Executives are based 40% on Company financial performance and 40% on other financial targets, and 20% on individual
performance against specific targets. Other senior staff have annual incentives based 60% on financial performance and 40%
on individual performance against specific targets.
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020124125
thl ’s constitution allows no less than three and up to ten Directors. As at 30 June 2020, the Board of Directors comprised seven
Directors, all of whom are Non-executive Directors.
DIRECTORROLESDIRECTOR SINCEINDEPENDENCE
Rob CampbellChair, Chair Market Disclosure Committee,
Member Audit Committee, Member
Remuneration & Nomination Committee, Member
Marketing & Customer Experience Committee,
Member Sustainability & Risk Committee
May 2013Independent Director
Debbie BirchChair Marketing & Customer Experience
Committee, Member Audit Committee,
Member Sustainability & Risk Committee
September 2016Independent Director
Cathy QuinnChair Sustainability & Risk Committee,
Member Audit Committee, Member Market
Disclosure Committee, Member Marketing
& Customer Experience Committee
September 2017Independent Director
Gráinne TrouteChair Remuneration & Nomination Committee,
Member Audit Committee, Member Marketing
& Customer Experience Committee, Member
Sustainability & Risk Committee
February 2015Independent Director
Rob HamiltonChair Audit Committee, Member Remuneration
& Nomination Committee, Member Market
Disclosure Committee
February 2019Independent Director
Guorong QianMember Remuneration & Nomination CommitteeJuly 2019Non-independent
Director
Table of Board attendance
DIRECTOR
BOARD
MEETING
AUDIT
COMMITTEE
MEETING
REMUNERATION
& NOMINATION
COMMITTEE
MEETING
DISCLOSURE
COMMITTEE
MEETING
MARKETING
& CUSTOMER
EXPERIENCE
COMMITTEE
MEETING
SUSTAINABILITY &
RISK COMMITTEE
MEETING
Rob Campbell
22342433
Debbie Birch
2234–33
Cathy Quinn
22342433
Gráinne Troute
2234–33
Rob Hamilton
1
22341333
Guorong Qian
2
1522–32
Kay Howe
3
511–11
Graeme Wong
3
4111111
1
Rob Hamilton joined the Disclosure Committee on 1 November 2019.
2
Guorong Qian joined the Remuneration & Nomination Committee on 1 November 2019.
3
Kay Howe and Graeme Wong retired as Directors with effect from 31 October 2019.
Director and Officer gender composition
As at 30 June 2020, being the balance date, thl ’s Director and Officer gender composition was as follows:
20202019
MALEFEMALEMALEFEMALE
Directors
3 (50%)3 (50%)3 (43%)4 (57%)
Officers*
3 (60%)2 (40%)3 (60%)2 (40%)
* Pursuant to the NXZ Listing Rules. Refer to page 17 of this report for gender diversity for the wider Executive team.
Board composition
“The Board should ensure the quality and independence of the external audit process.”
The Audit Committee is responsible for recommending the appointment and removal of external auditors, ensuring their
independence and regularly monitoring and reviewing both internal and external audit practices. The Committee closely
monitors thl ’s relationship with the external auditor, including:
• Ensuring the rotation of the external auditor or lead partner and peer review partner at least every five years;
• Obtaining confirmation of the auditor’s independence in writing; and
• Monitoring and approving any other services provided by the external auditor to thl other than in its audit role, and
monitoring total non-audit fees.
The Audit Committee Charter sets out the types of services which the external auditor is prohibited from providing to thl
in order to ensure that their ability to provide audit services is not impaired and that they remain independent.
thl’s current external auditor is PwC New Zealand. PwC was re-appointed by shareholders at the 2019 Annual Meeting. In
accordance with thl ’s Board Charter, PwC New Zealand will attend the 2020 Annual Meeting and be available to answer
questions about the conduct of its audit and the preparation and content of its audit report.
thl has an internal audit function which is based on an annual plan prepared by management, reflecting thl ’s risk management
framework. The Audit Committee receives and reviews reports from the internal audit team, and is responsible for ensuring that
recommendations, actions and timelines for internal audits are agreed and undertaken with management.
Principle 8 – Shareholder rights and relations
“The Board should respect the rights of shareholders and foster constructive relationships with shareholders that
encourage them to engage with the issuer.”
Access to information
The Board aims to ensure that shareholders are able to access up-to-date information regarding thl ’s business and ongoing
developments in an easy-to-access format. thl makes available on its website a description of each of its businesses, historical
interim and annual reports and other shareholder communications, and key corporate governance documents as required
by the Code.
A brief biography of each of thl ’s Directors and key members of the Executive team is available on thl ’s website.
Annual Meetings
The Board encourages all shareholders and stakeholders to attend its Annual Meetings. It aims for all Annual Meetings to be
attended by all Directors as well as the CEO and the CFO, and to ensure that they are available for questions from shareholders.
For shareholders that are unable to attend physically, a live-stream of the Annual Meeting is made available which includes
the ability for shareholders to submit questions online. Minutes of each Annual Meeting are subsequently made available on
thl ’s website.
Principle 7 – Auditors
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020126127
Total remuneration
The total remuneration of the CEO was as follows:
20202019
Base salary
$588,417$578,000
Short-term incentive
–$95,000
Long-term incentive
$242,500$169,150
Total
$830,917$842,150
The contracted CEO base renumeration has been $678,000 since 2018. The CEO has made voluntary reduction in salary in both
FY19 and FY20. The base salary reflected in the table above is the actual paid amount.
Employee remuneration
The number of employees in the Group or former employees (not including Directors) whose remuneration that was paid
in the 2020 financial year (including severance pay) was within the specified bands is as follows:
REMUNERATION
IN $000’s
NUMBER OF
EMPLOYEES
100–10931
110 –11919
120 –12918
130 –13911
140–1494
150 –1593
160 –1696
170 –1793
180 –1894
190 –1995
200 –2091
210 –2193
220 –2292
230 –2392
240–2492
250–2592
260–2691
280–2891
290–2992
300–3091
310–3191
320–3291
330–3391
370–3791
520–5291
960–9691
Total127
CEO remuneration (continued)
Directors’ remuneration received, or due and receivable during the year ending 30 June 2020 is as follows:
20202019
DIRECTORS OF TOURISM HOLDINGS LIMITED
DIRECTOR’S
FEES
OTHER
REMUNERATION
DIRECTOR’S
FEES
OTHER
REMUNERATION
Rob Campbell
153,125–166,667–
Debbie Birch
73,854–83,333–
Kay Howe
3
32,500–92,500–
Rob Hamilton
1
84,688–36,458–
Guorong Qian
2
69,271–––
Cathy Quinn
85,313–84,167–
Gráinne Troute
85,313–92,500–
Graeme Wong
3
34,167–96,667–
618,231–652,292–
1
Rob Hamilton was appointed as a Director with effect from 1 February 2019.
2
Guorong Qian was appointed as a Director with effect from 24 July 2019.
3
Graeme Wong and Kay Howe retired as Directors with effect from 31 October 2019.
Each of Rob Campbell, Debbie Birch, Cathy Quinn, Rob Hamilton and Graeme Wong (former Director) were issued, or are
to be issued, ordinary shares in thl as part of their Director remuneration. Refer to the section titled “Directors’ share dealings”.
All Directors reduced their Director fees by 50% from April to July 2020 as a responsive measure to COVID-19.
CEO remuneration
Fixed remuneration
In 2020 the CEO, Grant Webster, received fixed remuneration including allowances of $588,417 (2019: $578,000).
Short term incentive
The annual short-term incentive of the CEO is set at 40% of fixed remuneration and allowances if all performance targets are
achieved. In addition, a further incentive of up to 28% (2019: 28%) of fixed remuneration and allowances is payable for the over-
achievement of financial and broader business performance targets. In relation to the 2020 financial year, CEO’s base salary
was reduced by 50% from April to July 20 and no payment was made for the CEO annual performance incentive due to the
suspension of the short-term performance-based incentive scheme following the substantial shock to the Company and the
tourism industry relating to COVID-19 (2019, $95,000).
Long term incentive
In 2020 the CEO was granted 630,000 share options under the 2017 Long-Term Incentive Scheme valued at $0.385, giving a total
value of $242,550. In 2019 the CEO was granted 425,000 share options under the 2017 Long-Term Incentive Scheme valued at
$0.398, giving a total value of $169,150.
Under both the 2017 and 2009 long-term incentive schemes, the share rights vest from the second anniversary of the issue,
with one third vesting after the second year, one third after the third year, and the final third after the fourth year. In 2020,
80,000 share options vested under the 2017 Long-Term Incentive Scheme and 84,098 redeemable ordinary shares vested
under the 2009 Long-Term Incentive Plan.
Superannuation
The CEO is a participant in KiwiSaver, and is eligible to receive an employer contribution of 3% of gross taxable earnings.
In 2020 this contribution was $21,107 (2019: $33,573).
Directors’ remuneration
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020128129
AS AT 31 JULY 2020NUMBER OF ORDINARY SHARES
1 HSBC Nominees (New Zealand) Limited
33,170,16422.41%
2 Accident Compensation Corporation
11,440,8297.73%
3 Citibank Nominees (Nz) Ltd
10,239,8376.92%
4 Forsyth Barr Custodians Limited
5,893,6113.98%
5 JPMORGAN Chase Bank
4,340,0182.93%
6 Ngai Tahu Capital Limited
3,968,3042.68%
7 New Zealand Depository Nominee
3,427,0782.32%
8 Kay Jocelyn Howe
2,962,8332.00%
9 Grant Gareth Webster & Stephen David Webster
1
2,222,9631.50%
10 Forsyth Barr Custodians Limited
2,007,3691.36%
11 Bnp Paribas Nominees NZ Limited
1,786,6851.21%
12Custodial Services Limited
1,513,7631.02%
13Dean Neil Edgerton & Nicole Tonnile Edgerton & William Desmond Edgerton
1,421,7810.96%
14Glenn Laurance Howe & Tony Laurance Howe
1,360,4550.92%
15FNZ Custodians Limited
1,247,6420.84%
16 Moon Chul Choi & Keum Sook Choi
1,202,2220.81%
17Alpine Bird (New Zealand) Limited
1,144,7200.77%
18 Custodial Services Limited
1,033,5550.70%
19 Ja Hong Koo & Pyung Keum Koo
1,030,0000.70%
20 National Nominees New Zealand Limited
950,0010.64%
92,363,83062.4%
1
Represents shares beneficially owned by Grant Gareth Webster and Stephen David Webster as trustees of the Denika Family Trust.
The shareholding of New Zealand Central Securities Depository Limited (NZCSD) has been reallocated to the applicable
members of NZCSD.
Directors’ shareholdings
As at 30 June 2020, Directors had relevant interests in ordinary shares in thl as below:
AT 30 JUNE 2020INTERESTSHARES
Rob Campbell
Beneficial
1
806,593
Debbie Birch
Beneficial25,531
Cathy Quinn
Beneficial
2
33,673
Gráinne Troute
Beneficial95,833
Rob Hamilton
Beneficial13,294
Guorong Qian
NilNil
1
Held by Tutanekai Investments Limited, an associated person of Rob Campbell.
2
31,416 of these shares are held by the Sequin Family Trust, an associated person of Cathy Quinn.
Twenty largest shareholders
The following information is provided in compliance with section 293 of the Financial Markets Conduct Act 2013 and records
Substantial Product Holder notices received as at 30 June 2020.
NUMBER OF ORDINARY SHARES IN WHICH
A RELEVANT INTEREST WAS HELD
Accident Compensation Corporation
11,856,697
Morgan Stanley & Co. International plc
6,604,042
HB Holdings Limited
26,789,440
Spread of shareholders
The ordinary shares of Tourism Holdings Limited are listed on the NZX Main Board.
As at 31 July 2020 the total number of voting securities on issue was 148,014,900.
SIZE OF SHAREHOLDINGS
NUMBER OF
HOLDERS
NUMBER OF
SHARES HELD
% OF TOTAL
ISSUED SHARES
1 - 1,000
1,9101,037,6050.70%
1,001 - 5,000
3,4339,108,5476.15%
5,001 - 10,000
1,1208,086,6725.46%
10,001 - 50,000
90717,707,40011.96%
50,001 - 100,000
725,045,5163.41%
100,001 and over
61107,029,16072.32%
7,503148,014,900100.00%
The above shows the spread of shareholders as at 31 July 2020. The shareholding of New Zealand Central Securities Depository
Limited (NZCSD) has been reallocated to the applicable members of NZCSD.
Substantial product holders
Corporate governance (continued)
For the year ended 30 June 2020
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020130131
Details of the Directors’ acquisitions and disposals of relevant interests in the ordinary equity securities issued by the Company
are as follows:
Tutanekai Investments Limited (an entity beneficially associated with Rob Campbell) was issued with 15,000 ordinary shares
in the Company on 23 July 2019 at $3.40 per share, as part of the thl 1 for 9 rights offer. Tutanekai Investments was issued with
10,694 ordinary shares on 1 October 2019 at $4.091 per share, as part of Rob Campbell’s Director remuneration for the six months
ended 30 September 2019, and 34,046 ordinary shares on 1 April 2020 at $1.285 per share as part of his Director remuneration for
the six months ended 31 March 2020. On 25 November 2019, Tutanekai Investments Limited purchased 3,400 ordinary shares
via on-market purchase at $3.05 per share. Additionally, Tutanekai Investments Limited was issued with 20,324 ordinary shares
on 11 October 2019 at $4.069 per share as part of the thl Dividend Reinvestment Plan.
Debbie Birch was issued with 969 ordinary shares in the Company on 23 July 2019 at $3.40 per share, as part of the thl 1 for
9 rights offer. Debbie was also issued with 3,529 ordinary shares on 1 October 2019 at $4.091 per share as part of her Director
remuneration for the six months ended 30 September 2019, and 12,305 ordinary shares in the Company on 1 April 2020 at $1.285
per share as part of her Director remuneration for the six months ended 31 March 2020.
Cathy Quinn (personally and through beneficial ownership in the Sequin Family Trust) was issued with 3,076 ordinary shares
in the Company on 23 July 2019 at $3.40 per share, as part of the thl 1 for 9 rights offer. Cathy was also issued with 1,831 ordinary
shares on 1 October 2019 at $4.091 per share as part of her Director remuneration arrangements for the six months ended
30 September 2019, Cathy Quinn was also issued with 1,069 ordinary shares in the Company on 11 October 2019 at $4.069 per
share as part of the Dividend Reinvestment Plan.
Gráinne Troute was issued with 9,326 ordinary shares in the Company on 23 July 2019 at $3.40 per share, as part of the thl 1 for 9
rights offer. Gráinne was also issued with 2,568 ordinary shares on 11 October 2019 at $4.069 per share as part of the thl Dividend
Reinvestment Plan.
Rob Hamilton was issued with 13,294 ordinary shares in the Company on 1 April 2020 at $1.285 per share as part of his Director
remuneration for the six months ended 31 March 2020.
General notice of Directors’ interest
In addition to the share dealings described above, the following entries were made in the Directors’ interests register during
the year:
Rob Campbell• Appointed as Investment Committee member at NZ Equity Management;
• Appointed as Chair of New Zealand Rural Land Co;
• Appointed as Advisory Board Member to Paua Wealth Management;
• No longer a Director of King Tide Asset Management.
Debbie Birch• Appointed as Director of Birch & Associates Limited;
• Appointed as Chair of Raukawa ki te Tonga AHC Limited;
• No longer a Director of Ruapehu Alpine Lifts Limited;
• No longer a member of Port Nicholson Block Settlements Trust Steering Committee;
• No longer a Director of Portfolio Management Services Limited;
• No longer a Director of LGNZ Independent Assessment Board;
• No longer a member of Te Ohu Kai Moana A&R Committee.
Cathy Quinn• Appointed as Director of Rainbow’s End Theme Park Limited;
• Appointed as Director of New Zealand Experience Limited;
• Appointed as Member of Council of the University of Auckland;
• Appointed as Chair of Fertility Associates Holdings Limited.
Gráinne Troute• Appointed as Chair of Tourism Industry Aotearoa;
• No longer a Director of Evolve Education Group Limited.
Rob Hamilton• Nil
Guorong Qian• Appointed as Vice Chair of CITIC Capital Holdings Limited.
Directors’ share dealingsGeneral notice of Directors’ interest (continued)
The following entries were made in the interests register for Directors of thl ’s subsidiaries during the year:
Grant Webster• Appointed as co-Chair of the New Zealand Tourism Futures Taskforce;
• No longer a Director of TH2connect, LLC.
Jennifer Bunbury• No longer a Director of TH2connect, LLC.
Catherine Meldrum• Appointed as Director of Three Stone Bay Limited.
Rob Campbell is Chair of SkyCity Entertainment Group Limited, Summerset Group Holdings Limited, New Zealand Rural Land
Co, Tutanekai Investments Limited and WEL Networks Limited and is a Director of Precinct Properties New Zealand Limited,
Serica Credit Fund and THL Corporate Trustee Limited.
Debbie Birch is a Director of Ngati Awa Group Holdings Limited, NZ Growth Capital Partners, Taupo Moana Investments
Limited, Raukawa ki te Tonga AHC Limited, Te Puia Tapapa GP Limited, Tuwharetoa Hau Rau GP Limited and White Island
Tours Limited, and trustee of Wellington Free Ambulance Trust.
Cathy Quinn is a Director of Fletcher Building Limited, Fletcher Building Industries Limited and Rainbow’s End Theme Park
Limited, Fertility Associates Holdings Limited and New Zealand Experience Limited.
Gráinne Troute is a Director of Investore Property Limited, Summerset Group Holdings Limited and Chair of Tourism
Industry Aotearoa.
Rob Hamilton is Chief Financial Officer of SkyCity Entertainment Group Limited.
Guorong Qian is Vice Chair at CITIC Capital Holdings Limited.
NZX Waivers
On 27 February 2017 thl obtained a waiver from NZXR from Rule 8.1.7 (which ensures that options may not be subsequently
amended by an issuer in a manner that is detrimental to the interests of the holders of the underlying Equity Securities). The
waiver was granted to the extent that the Rule would otherwise prevent the issue of options under thl ’s long term incentive
scheme for senior executives, introduced in 2017. The ruling allows for a formula to be used for the exercise price of the options,
that will result in a fluctuating exercise price.
On 22 May 2019 thl obtained a waiver from NZXR from Listing Rule 6.5.2 under the revised NZX Listing Rules. This waiver
re-documented the existing waiver received on 27 February 2017 in respect of Rule 8.1.7 under the former NZX Listing Rules.
Directors’ loans
There were no loans by the Group to Directors.
Directors’ insurance
The Group has arranged insurance cover and provided deeds of indemnity for Directors’ and Officers’ liability.
Auditors
In accordance with section 207T of the Companies Act 1993, PricewaterhouseCoopers are appointed as the Group’s auditors.
Auditors’ remuneration is detailed in the notes to the financial statements.
Corporate governance (continued)
For the year ended 30 June 2020
thl Integrated Annual Report 2020132133
Board of Directors
During the financial year ending 30 June 2020, the Directors of thl ’s subsidiary companies are as follows:
THL Motorhomes LimitedGrant Webster
THL Motorhomes UK LimitedGrant Webster and Daniel Schneider
Waitomo Caves LimitedGrant Webster
Waitomo Caves Holdings LimitedGrant Webster
GeoZone LimitedGrant Webster
THL Corporate Trustee LimitedRob Campbell and Kay Howe (ceased to be a Director in October 2019)
Road Bear NZ LimitedGrant Webster
TH2connect GP LimitedGrant Webster and Jennifer Bunbury
Maui Rentals Pty LimitedGrant Webster and Catherine Meldrum
The Green Bus Company Pty LimitedGrant Webster and Catherine Meldrum
THL Oz Pty LimitedGrant Webster and Catherine Meldrum
Tourism Holdings Rental Vehicles Pty LimitedGrant Webster and Catherine Meldrum
World Travel Headquarters Pty LimitedGrant Webster and Catherine Meldrum
Tourism Holdings Australia Pty LimitedRob Campbell, Grant Webster and Catherine Meldrum
THL Group (Australia) Pty LimitedGrant Webster and Catherine Meldrum
El Monte Rents IncGrant Webster, Gordon Hewston (ceased as Director in December 2019)
and Hannes Rosskopf (ceased as Director in July 2019)
JJ Motorcars IncGrant Webster, Gordon Hewston (ceased as Director in December 2019)
and Hannes Rosskopf (ceased as Director in July 2019)
Tourism Holdings USA IncGrant Webster
Subsidiary companies
Rob Campbell (Auckland) Chair
Independent Director appointed in May 2013. Rob Chairs the thl Board (appointed August 2013) and the Market Disclosure
Committee (appointed April 2014), and serves on all of thl’s Board Subcommittees. Rob has over 30 years’ experience in
investment management and corporate governance. Rob is currently Chair of SkyCity Entertainment Group Limited,
Summerset Group Holdings Limited (NZ) and WEL Networks, and is a Director of Precinct Properties. Rob trained as an
economist and has worked in a variety of capital market advisory and governance roles over a long period.
Debbie Birch (Wellington)
Independent Director appointed in September 2016. Debbie Chairs the Marketing & Customer Experience Committee
(appointed November 2019) and serves on the Audit Committee and Sustainability & Risk Committee. Debbie has held various
Director and trustee positions for the last 8 years and is currently Chair of Taupo Moana Investments Limited. Debbie is a board
member of NZ Venture Investment Fund Limited, White Island Tours Limited, Ngati Awa Group Holdings Limited, Raukawa
ki te Tonga AHC Limited, LGNZ Independent Assessment Board, Te Pūia Tāpapa GP Limited and a Trustee of Wellington Free
Ambulance and a Member of the Sustainable Finance Forum Leaders Group. Debbie has significant financial, commercial and
strategic experience gained in Asia, Australia and New Zealand with more than 30 years’ working in global capital markets.
Rob Hamilton (Auckland)
Independent Director appointed in February 2019. Rob Chairs the Audit Committee (appointed November 2019) and serves
on the Remuneration & Nomination Committee and Market Disclosure Committee. Rob is currently Chief Financial Officer at
SkyCity Entertainment Group Limited and also oversees SkyCity’s International Business division and ICT function. Prior to his
role at SkyCity, Rob served as a Managing Director and the Head of Investment Banking at Jarden (formerly First NZ Capital).
Rob is a respected member of the finance community, with more than 20 years’ experience in senior finance roles. Rob is also
a Board of Trustees member for Auckland Grammar School and has previously been a Board member on the New Zealand
Olympic Committee.
Guorong Qian (China)
Non-Independent Director appointed in July 2019. Guorong serves on the Remuneration & Nomination Committee. Guorong is
currently Vice Chair of CITIC Capital Holdings Limited, a global investment management and advisory firm which employs over
320 staff through 7 offices in China, Japan and the United States. Guorong has been with CITIC Capital in various roles since its
founding. He previously worked in various brokerage, asset management and investment roles.
Cathy Quinn (Auckland)
Independent Director appointed in September 2017. Cathy Chairs the Sustainability & Risk Committee (appointed May 2019)
and serves on the Audit Committee, Marketing & Customer Experience Committee and Market Disclosure Committee. Cathy
is a former senior corporate partner at MinterEllisonRuddWatts. She served as the firm’s Chair for eight years and was also a
member of the Australasian MinterEllison Legal Group Executive Board for the period she Chaired the firm. Cathy is a Director
of Fletcher Building Limited, Rangatira Limited and Chairs Fertility Associates. Cathy is a member of the NZ Treasury Board,
Chairs its Audit & Risk Committee and is a member of the Auckland University Council. Cathy is a former member of the NZ
Securities Commission and Capital Markets Development Taskforce. Cathy was made an Officer of the NZ Order of Merit in
2016 for services to law and women.
Gráinne Troute (Auckland)
Independent Director appointed in February 2015. Gráinne Chairs the Remuneration & Nomination Committee (appointed
February 2015) and serves on the Audit Committee, Sustainability & Risk Committee and Marketing & Customer Experience
Committee. Gráinne is a Chartered Member of the Institute of Directors and is also a Director of Summerset Group Holdings
Limited and Investore Property, and is Chair of Tourism Industry Aotearoa. Gráinne is a professional Director with many years’
experience in senior executive roles. Gráinne was General Manager, Corporate Services at SkyCity Entertainment Group and
Managing Director of McDonald’s Restaurants (NZ). Gráinne also held senior management roles with Coopers and Lybrand
(now PwC) and HR Consultancy Right Management. She has also spent many years as a trustee and Chair in the not-for-profit
sector, including having been the Chair of Ronald McDonald House Charities New Zealand for five years.
thl Integrated Annual Report 2020134135
Corporate information
Directors
Rob Campbell
Debbie Birch
Rob Hamilton
Guorong Qian
Cathy Quinn
Gráinne Troute
Executives
Grant Webster – Chief Executive Officer
Nick Judd – Chief Financial Officer
Registered office
Level 1
83 Beach Road
Auckland 1010
New Zealand
Share register
Tourism Holdings Limited shares are listed
on the New Zealand Stock Exchange (NZX)
Share registrar
Link Market Services Limited
PO Box 91976
Auckland
Tel: +64 9 375 5998
Email: enquiries@linkmarketservices.co.nz
Auditors
PricewaterhouseCoopers
Auckland, New Zealand
Solicitors
MinterEllisonRuddWatts
Auckland, New Zealand
Bankers
ANZ Bank New Zealand Limited
Australia and New Zealand Banking
Group Limited
Westpac New Zealand Limited
Westpac Banking Corporation
The Hongkong and Shanghai Banking
Corporation Limited
Notes
thl Integrated Annual Report 2020136
Notes
INTEGRATED
ANNUAL REPORT
2020
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.