29 April 2016 Disclaimer This document contains summary information - - PowerPoint PPT Presentation

thl Investors Melbourne Site Visit

29 April 2016

Disclaimer

This document contains summary information about Tourism Holdings Limited (thl) as at 29 April 2016. The information is subject to change without notice and does not purport to be complete or comprehensive. It should be read in conjunction with thl’s other periodic and continuous disclosure announcements lodged with the NZX, which are available at www.nzx.com The information in this document has been obtained from or based on sources believed by thl to be reliable. To the maximum extent permitted by law, thl, its affiliates, officers, employees, agents and advisors do not make any warranty, express or implied, as to the currency, accuracy, reliability or completeness of the information in this document and disclaim all responsibility and liability for the information (including, without limitation, liability for negligence). This document is not an offer or an invitation to acquire thl’s shares or any other financial products and is not a prospectus, product disclosure statement

• r other offering document under New Zealand law or any other law. It is for information purposes only. The information contained in this document is

not investment or financial advice or a recommendation to acquire thl’s securities. It has been prepared without taking into account any investor's

• bjectives, financial decision, situation or needs.

This document contains "forward looking" statements. The words "anticipated", "expected", "projections", "forecast", "estimates", "could", "may", "target", "consider", and "will" and other similar expressions are intended to identify forward looking statements. Forward looking statements, opinions and estimates are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Forward-looking statements including projections, indications or guidance on future earnings or financial position and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future

• performance. There can be no assurance that actual outcomes will not differ materially from the statements.

Past performance information given in this document is given for illustration purposes only and should not be relied upon as (and is not) an indication of future performance. Actual results could differ materially from those referred to in this document.

thl operates in a sector with strong growth prospects

Country Estimated size of market Travel and Tourism spend growth FY15F – FY20F Annual visitor arrivals, FY15F – FY20F Last 12 Months Growth New Zealand

NZ$9.0 billion 5.2% CAGR ↑ 3.9% CAGR ↑ 10% Arrivals

Australia

AU$42.8 billion 3.4% CAGR ↑ 4.4% CAGR ↑ 8% Arrivals

United States

US$458.0 billion 3.5% CAGR ↑ 4.5% CAGR ↑ ~ 5% Arrivals

United Kingdom

£61.9 billion 3.7% CAGR ↑ 2.8% CAGR ↑ 5% Arrivals

Data sources: Market size - Based on tourism direct contribution to GDP 2014 per World Travel and Tourism Council (WTTC). Spend growth - NZ based on Ministry of Business, Innovation and Employment forecast. Other -WTTC forecast growth in direct contribution to GDP Visitor arrivals growth forecast - MBIE, Tourism Research Australia, US Department of Commerce, VisitBritain Actual visitor arrivals – NZ Department of Statistics, Australian Bureau of Statistics, USA – thl estimate, VisitBritain

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Vehicle sales market dynamics are also positive

• NZ Motor Caravan Association 57,000 members - growing

at ~ 10% pa.

• AU motorhome registrations 2010-15 CAGR 4%.
• USA 2015 new RV shipments up 5% - Jan/Feb 2016

shipments up over 10%. Demand Drivers Trends

• Baby boomer segment is the dominant buyer group.
• Growing segment with discretionary spend and time.
• Bach/holiday home alternative.

Market Estimated market Rental market Private market NZ 4,500 25,000 Australia 4,000 54,000 USA 6,500 ~1M UK 1,000 ~200,000

Data sources: Trends: NZMCA, Australian Bureau of Statistics, US Recreation Vehicle Association Private Market: NZTA, Australian Bureau of Statistics, US Recreation Vehicle Association (motorized RV’s), European Caravan Federation Rental market based on thl estimates of pure rental operators

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Our Vision

TO SUSTAINABLY CONNECT MILLIONS WITH PERSONALISED EXPERIENCES LEVERAGING OUR EXPERIENCE IN RV'S GLOBALLY

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thl is your access point to the tourism industry; globally

New Zealand Australia United States United Kingdom

• SEATTLE

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Where our profits come from – FY15 statistics

Rentals NZ 38% Rentals Aus 28% Rentals USA 21% Tourism Group 13%

Revenue

Rentals NZ 35% Rentals Aus 17% Rentals USA 26% Tourism Group 22%

EBIT before Group Support Services Costs

0% 5% 10% 15% 20% 25% 30% 35% 40%

Rentals NZ Rentals Aus Rentals USA Tourism Group

Return on Funds Employed

thl Total

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Our business model today – tourism products and services

Build / Rent / Sell

• Global scale
• Design-led
• Cost-out focus
• ROFE improvements

have been achieved, still more to achieve

RV and tourism physical products (owned)

Build / Buy/ Rent / Sell

• Mighway sharing

platform

• Flex fleet initiatives
• Sales and service

centre offers

RV products (flexible ownership)

Experience Seeker focused services

• GeoZone products
• In-vehicle tablets
• Tourism businesses
• Total Customer

Experience projects (TCEx)

RV and tourism services (low / no capital)

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The “core fleet” business model – build / buy - rent – sell

New Zealand Australia United States Build / Buy

Build well designed vehicles to robust rental standards

• Buy from Action Manufacturing

JV

• Example retail sale price new

NZ$149,000 (incl. GST)

• Buy 50% from Action

Manufacturing JV and 50% Melbourne based owned factory

• Example retail sale price new

AU$120,000 (incl. GST)

• 100% purchased in USA.
• Example retail sale price new

US$59,000- US$69,000 (excl. tax)

• Rental rebate and freight

advantage gained under this model relative to new purchase

Rent

Maximise the rental returns from the vehicle fleet

• Rent for up to 6 years
• Average EBIT per vehicle of

~NZ$7,000 (including sale margin)

• Real depreciation rate ~7.0%1
• Rent for up to 5 years on

average

• Average EBIT per vehicle of

~AU$4,000 (including sale margin)

• Real depreciation rate ~10.5%
• Rent for up to 2 years
• Average EBIT per vehicle of

~US$12,000 (including sale margin)2

• Real depreciation rate ~0%

Sell

Create further value in the

• wnership market with strong

sales networks and dedicated products

• Sell 90% retail on own retail

sites

• Margin covers sale costs
• Sell at all stages of life including

new and trade-in’s

• Historically have sold 100%

wholesale

• Exclusive dealer network
• Margin covers sale costs
• New thl owned retail site opened

Sept 2015 in Melbourne

• Sell 98% wholesale across North

America

1 Real depreciation = (vehicle original cost – sales proceeds) / years on fleet as % original cost 2 Based on vehicles at year end

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Reduce capital intensity, increase flexibility

Just Go Fleet to New Zealand

• One season in the UK
• One season in NZ
• Sold

“Pod” Concept

• Minivan conversion

product

• Pods last up to five

years

• Vans all gone within 12

months or less

• Sharing economy
• Platform launched late

2015

• Separated start up

business

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

| | | | | | | 1 2 3 4 5 6

Long term debt versus working capital

Buy Sell Buy Sell

Traditional Flex Fleet

Core debt Working capital

Years Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell

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Organic Growth

• FY14 & FY15 growth in rentals EBIT in Rentals NZ and AU has been mainly driven by

fleet rationalisation.

• FY16 Rentals NZ and AU rental fleet has been essentially flat on FY15, with higher flex

fleet offsetting lower core fleet. Growth has been driven by improved utilisation and yield lift in NZ (and latterly AU).

• FY17 rental growth is anticipated from both yield and flex fleet increases. The market

dynamics support yield growth in FY17, particularly in NZ. Growth by Acquisition

• We remain focused on growth opportunities on a global basis.
• We are cognisant of ensuring any acquisition fits the financial requirements of thl

including the delivery of revenue growth, EBIT growth and an acceptable ROFE.

Revenue and EBIT growth outlook

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• Late June and July 2017.
• Expected Lions tour visitor numbers of circa 20,000 to New Zealand.
• Different to the Rugby World Cup in 2011 in that there are less provincial games (less

touring).

• We will not increase fleet for this period and believe we can fulfill demand with our core

feet (excluding flex fleet).

• Pricing will be less than peak season for touring customers (substitute pricing of car /

motel limits the price).

• Some increased costs in FY17 will be incurred to prepare the fleet.

Lions tour NZ 2017

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• FY16 has seen the introduction of flex fleet, offsetting reduction in core fleet.
• FY17 market demand indicators are positive.
• Growth in substitute yields (hotels, motels) supports FY17 yield growth.
• Flex fleet will be lifted as demand is proven.
• Overall margins expected to improve.

NZ Rentals outlook

Rentals NZ FY16 FY17

Market dynamic Positive Positive Core fleet Reduced Marginal increase Flex fleet Introduced Increased Yield Growth Growth Utilisation Growth Stable Costs % rev Stable Stable Margins Improved Improved

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• FY16 included introduction of 4WD flex fleet and reduction in 4WD core fleet.
• FY17 market demand indicators to date are positive.
• Flex fleet will be introduced for summer as demand is proven.
• Overall margins expected to improve.

AU Rentals outlook

Rentals AU FY16 FY17

Market dynamic Positive Positive Core fleet Reduced Stable Flex fleet Introduced Increased Yield Some growth Some growth Utilisation Growth Stable Costs % rev Stable Stable Margins Stable Improved

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• FY16 included increase in fleet of circa 10% for summer 2015.
• Fleet for summer 2016 increased by circa 10%.
• Demand for summer 2016 is positive. Bookings from new Seattle branch are strong.
• Need to increase investment in resourcing and infrastructure in FY17 to support current

and future growth. This will lower the margin.

USA Rentals outlook

Rentals USA FY16 FY17

Market dynamic Positive Positive Core fleet n/a – all flex Flex fleet Increased Increased Yield Some growth Some growth Utilisation Stable Stable Costs % revenue Stable Increasing Margins Stable Reduced

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Tourism group

Waitomo Homestead Kiwi Experience Glamping Waitomo

• Increased visitors above international

arrivals, i.e. growing share.

• Strong growth from Asian markets.
• Homestead working well to provide much

needed capacity for F&B. Kiwi Experience

• Continuing to grow.
• Positive outlook to FY17.
• Dealing with constraints in accommodation

and activities.

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Mighway

• Mighway launched in November 2015.
• Based on the sharing economy, Mighway focuses on providing customers with a vehicle

that is owned within the private market.

• We are focused on ensuring we achieve appropriate returns for the owners, the managed

partners and ourselves, whilst delivering a new and exciting customer experience.

• With the first season complete, we are increasing our investment in people and

infrastructure to ensure we have a model that works with some scale in New Zealand.

• We will explore other countries for expansion (likely the USA or Australia) over the

coming 12 months.

• All aspects of the model are working as planned to date.
• There are competitors in this space globally and in New Zealand, notably

SHAREaCAMPER, RVshare, Outdoorsy and Campanda.

• There have been positive shared lessons between Mighway and the traditional thl rentals

and sales businesses.

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Just Go

• We remain focused on working with our JV partner to increase the size of this business

from both a rental and sales perspective.

• There are circa 35% of customers that travel to Europe from the Just Go business

which provides future opportunities.

• We will grow the number of vehicles we bring to NZ and AU from Just Go without

limiting the UK sales opportunities. Action Manufacturing

• The business remains focused on maximising the cost reduction opportunities for thl in

motorhomes, whilst expanding the emergency service vehicle opportunities globally.

• Reducing thl debt remains on track and returns remain above expectations.

Joint ventures

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Total customer experience

• Combining the GeoZone business with some internal crew, we are isolating some new

initiatives from the core business to explore a new model for services to our customers.

• The costs of these initiatives are within our current forecasts for the business.
• The business will focus on providing services to customers from the Experience Seeker

market with an RV bias.

Location Based Deals Data

Authentic Guides and Tools

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Capital spend - flexibility

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

• USA fleet, turned over in 9-18

months.

• NZ flex fleet – trialled in NZ for

FY16 summer period, turned over in under 9 months.

• AU flex fleet – 4WD vehicles

purchased under a buy-back arrangement for the 2016 winter season, turned over in under 9 months.

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Dividend

1 2 3 4 5 6 7 8 9 10 FY14 Interim* FY14 Final FY15 Interim FY15 Final FY16 Interim

Dividend cps

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

• 50% imputation, due to approximately 50% of profits before tax being derived from NZ.
• Dividend policy is payout ratio of 75%-90% of NPAT.
• We are confident we can maintain a dividend payout ratio at the higher end of the

policy ~ 90% given the current capital expenditure profile.

FY14 FY15 Payout ratio % NPAT 110% 85%

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Outlook

FY15 Actual FY16 Forecast FY18 Forecast (previously FY19)

NPAT $20M $24M $30M

Based on the current controllable initiatives, demand profile and fleet outlook we have moved the previous high level guidance goal of $30M NPAT to FY18 (from FY19). This is pre any growth acquisitions and allows for current new initiatives.

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• thl provides exposure to the positive international travel trend.
• Positive outlook for key ‘experience seeker’ customers:
• Renters / tourism visitors.
• Buyers of vehicles.
• Geographical spread – NZ, Australia, USA, UK.
• There has been a shift to more flexible fleet capital management that lifts ROFE.
• Market dynamics and increased fleet support FY17 growth.
• Ongoing investment in innovation around services and the customer experience.
• On track for $24M NPAT guidance for FY16.
• $30M target now expected in FY18.

Summary

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Bios – New Leaders

JO ALLISON - COO

• Jo holds a Bachelor of Arts, double major

(Economics/Psychology) and Post Graduate Diploma in Business (both Auckland University).

• 25 years in the Telecommunications and IT industry

(Spark New Zealand and Virgin Media UK).

• 5 months in the Tourism industry with thl.
• Jo has held general management/COO positions for 10

years, across marketing, strategy, operations functions.

• Accountable for NZ, Australia and USA motorhome

rentals, tourism business (Waitomo & Kiwi Experience), marketing, sales and HR. What am I focused on today? Learning about the business and listening to the crew – understanding how to maximise yield and drive operational efficiencies to improve the bottom line. What excites me about thl tomorrow? Being part of an organisation focused on providing new experiences and practical information so our customers have the holiday of a lifetime.

PAUL SHALE – GM TCEx

• Paul has over 20 years marketing, start-up and digital

innovation experience primarily in New Zealand, Australia and the USA. He has worked across many industries including airlines, airports, travel agents, and regional tourism projects.

• Paul has held country management roles within the

Publicis and Saatchi marketing networks and has founded and managed his own start-ups for the past 13 years.

• Paul holds a B.Com / L.L.B. (Hons) from Auckland

University. What am I focused on today? Paul joined thl in April 2016 and is responsible for the development of our customer experience initiatives including Like a Local and GeoZone. What excites me about thl tomorrow? I’m excited to be part of the thl team, especially the

• pportunity to achieve profitable growth by using

technology and data to deliver exceptional customer experiences.

DAVE SIMMONS – COO NEW BUSINESS DEVELOPMENT

• Dave has spent 20 years working in the travel &

tourism industry for businesses in Europe, USA, Asia and Australasia. Dave’s experience ranges from start- ups to large corporates and spans many facets of the industry from travel agencies & tour operators, to airlines and online price comparison websites.

• Dave has held a range of senior roles, including MD of

Quest Travel, Sales and Marketing Director of SilverJet (Dave was part of the team that lead the IPO

• n the London AIM market), CEO of Global Travel

Market, GM Online & Leisure at Air NZ and VP Global Markets at Les Mills International.

• Dave holds a BCom (Hons), MCom from Otago

University What am I focused on today? Dave joined thl in July 2015 and is responsible for the development of new business with a primary focus on the development of Mighway, thl’s peer-to-peer strategy. What excites me about thl tomorrow? I’m excited to be part of the thl team as I firmly believe that thl has the potential to continue its current journey and become a significant online global tourism and services business that delivers exceptional experiences to our customers and in doing so delivers robust profitable growth for our stakeholders.

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