Unforgettable experiences. Sustaining success. FY16: Full Year Results Presentation and Shareholder Review 23 August 2016
DISCLAIMER The information in this presentation dated 23 August 2016 may contain forward-looking statements and projections. These reflect thl’ s current expectations, based on what it thinks are reasonable assumptions. However, 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. thl gives no warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX listing rules, thl is not obliged to update this presentation after its release, even if things change materially. This presentation may contain a number of non-GAAP financial measures. Because they are not defined by 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 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 2
OUR BUSINESS IS CONNECTING PEOPLE TO UNFORGETTABLE EXPERIENCES IN UNIQUE AND REMARKABLE PLACES AROUND THE WORLD. In FY16 we have evolved our business to a more sustainable and responsive model. We have balanced growth in our core business with investment in new technology, business models and resource, while continuing to grow Return on Funds Employed*. *Calculated as EBIT/average net funds employed. 3
CHAIRMAN’S INTRODUCTION Overall the result for the year should be seen as positive progress for the company. The performance of the business continues to be enhanced across all activities and markets. This is an ongoing process of improvement in the experiences we provide and the profitability and sustainability of the business. Shareholders can expect continued growth in value and returns from this process. I look forward to engaging with shareholders at the Annual Meeting in October. Regards Rob Campbell 4
CEO’S INTRODUCTION The thl business has changed dramatically over the past few years (it needed to) and yet we still have significant potential and are only starting to unlock the opportunities. The following are some key points of note regarding the last financial year from my perspective: • We have delivered improved EBIT margins (pre group support costs) . • The improvement in ROFE is positive and should continue to grow, albeit likely at the expense of EBIT margin in some parts of the business. • Sustaining dividends at current or higher levels is a key focus for the company. • The balance sheet position is positive given the increase in “flex fleet” in Australia and NZ which should be viewed from an investment perspective as “stock” or working capital. Net Debt at $79M is, in our view, very acceptable. • Sustainability is a word being used more in the business and the context for thl needs to include a focus on improving the customer proposition, tourism and shareholder community. We are doing good work on issues such as freedom camping, tourist driver behaviour and health and safety and we need to ensure we remain proactive in such matters. • There are some gains in the result from exchange rate movements in the translation of earnings, in particular the USA result. These have been detailed in this review. • The increase in group support costs reflects the new initiatives such as Mighway and the increase in senior leadership headcount and capability. 5
CEO’S INTRODUCTION (CONT.) Taking a broader industry and global view, we can see where our competencies can be leveraged for growth, but in a smarter manner than the past. Within this presentation we detail the business model today and how we are adapting for improved future results. We have several key internal themes for the year all starting with the word DELIVER. We know what needs to be achieved and are well on the way. We have improved our accountability focus as an organisation. We continue to improve our resilience, which will deliver a better outcome for all our stakeholders. The presentation that follows is designed to provide the requisite balance of review of the past year, with a higher level overview of where we are going and our operating focus and direction for the coming 12 months. Regards Grant Webster 6
FINANCIAL HIGHLIGHTS REVENUE EARNINGS BEFORE NET PROFIT INTEREST AND TAX AFTER TAX $38.7M $24.4M $279M UP UP UP 20% 21% 18% ROFE (AVERAGE FUNDS)* AVERAGE NET FUNDS EMPLOYED FULL YEAR DIVIDEND 15.1% $256M 19cps (50% imputed) UP FROM UP UP FROM 12.9% $8M 15cps (50% imputed) All financials in NZ Dollars unless stated otherwise (throughout presentation) Dividend split was 9cps in April 2016 and All comparisons are against prior corresponding period 10cps to be paid in October 2016. 7 * ROFE = Return On Funds Employed. Measured as EBIT/average net funds employed.
TRENDS Revenue EBIT EBIT Margin 279 13.9% 39 13.7% 237 225 226 32 10.1% 23 6.5% 15 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 EBITDA Group ROFE NPAT ( average funds) 73.6 15.1% 65.5 24.4 12.9% 58.9 60.3 20.1 8.6% 11.1 5.2% 3.8 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 8
FINANCIAL HIGHLIGHTS • We have achieved a balance of growth in earnings and ROFE from existing NZD $M FY16 FY15 VAR businesses, while investing in new growth initiatives. Operating revenue 278.9 236.6 42.3 • NPAT growth of 21%. Earnings before interest 38.7 32.3 6.4 and tax* • Strong growth in EBIT from NZ businesses: Operating profit before tax 36.5 29.8 6.7 • Rentals NZ growth of $3.2M EBIT, or 26% on the pcp. Profit after tax 24.4 20.1 4.3 • Tourism growth of $2.3M or 30% on the pcp. Growing share of inbound visitors. • Modest growth from Rentals Australia in a tougher domestic economic environment. Good cost containment. • Growth in the underlying US Rentals EBIT of 16% was in line with fleet growth. Translation of earnings movement has increased EBIT in NZ dollars to 40%. • Group and Other costs were up $3.0M, mainly due to investment in innovation and new initiatives, including the launch of Mighway, development of TCEx and executive resource to support current and future growth plans. * EBIT excludes joint venture and associates earnings 9
FY16 NEW INITIATIVE HIGHLIGHTS Flex Fleet Telematics Mighway Launched successfully Rolled out across Australia Launched and operating in in NZ for summer fleet. and small trial in NZ. NZ. Australian 4WD flex model Driver behaviour being Over 200 vehicle owners on expanded with a buy-back positively impacted. the platform. model introduced. Operating cost savings starting to be realised in Australia. Total Customer Waitomo Caves New Seattle Branch Experience Homestead (USA) The in-vehicle tablet has been Opened in Dec 2015 and Opened April 2016. introduced into all vehicles in performing ahead of First year bookings are very NZ and Australia. expectations. positive. Work continues on expanding Has facilitated growth in the content and functionality. visitors through the caves. 10
RETURN ON AVERAGE FUNDS EMPLOYED* FY16 FY15 VAR Rentals NZ 13.0% 10.6% +2.4% Rentals AU 11.6% 10.8% +0.8% Rentals USA 27.7% 23.5% +4.2% Rentals TOTAL 15.6% 13.0% +2.6% Tourism Group 37.1% 30.7% +6.4% Operating divisions TOTAL^ 17.9% 14.9% +3.0% thl Group TOTAL 15.1% 12.9% +2.2% • ROFE was 15.1% against our long term target of over 14%. • Rentals NZ and Rentals AU are still a work in progress, though both have steadily improved over the last 3 years. • ROFE reporting moving forward is based on average net funds employed as a more meaningful measure than year-end funds, with flex fleet resulting in more variation in funds across the year. ROFE measured against year end funds was 15.4% (13.3% FY15). * Calculated as EBIT/average net funds employed. Average net funds employed calculated as average of 12 month end balances. Comparison with year end funds employed is shown in the supporting analysis (page 43). Calculated in NZ dollars. ^ Operating divisions do not include Group Support Services and Other (‘Other’ segment). 11
DIVIDEND • Final dividend of 10 cents FY16 FULL YEAR DIVIDEND per share imputed to 50%. FINAL DIVIDEND 19 cents 10 cents • At upper end of dividend distribution policy of 75% to Per Share – 50% Imputed 90% of NPAT. Per Share – 50% Imputed • The dividend increase is the UP UP 6th successive increase. 27% 25% • Sustaining dividends over the longer term is a key focus for the business. • Key dates: • Ex-date 6 October 2016 • Record date 7 October 2016 • Payment date 14 October 2016 Dividends imputed to 50% from FY14 Final Dividend 12
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