Tourism : 28Feb2020 - thl FY20 Interim Results

INTERIM REPORT 2020

our view today

goes on forever

01 Highlights

02 Chairman and CEO report

04 Consolidated income statement

05 Consolidated statement of comprehensive income

06 Consolidated statement of changes in equity

08 Consolidated statement of financial position

1. Consolidated statement of cash flows
2. Notes to the consolidated financial statements

28 Corporate information

Highlights

As at 31 December 2019

REVENUE

$207M 0%

(December 2018: $207M)

OPERATING PROFIT BEFORE FINANCE COSTS AND TAX (EBIT)2

$31.0M -11%

(December 2018: $34.7M)

NET PROFIT AFTER TAX (NPAT)2

$13.1M -25%

(December 2018: $17.5M)

INTERIM DIVIDEND1

10CPS -23%

(December 2018 - 13 CPS)

EBIT PRIOR TO IFRS 16 LEASES ADOPTION

$29.5M -15%

(December 2018: $34.7M)

INVESTMENT IN TOGO GROUP3

$7.3M

(December 2018: $5.4M)

1 Fully imputed in 2020 financial year; 50% in 2019 financial year.

2 EBIT and NPAT inclusive of IFRS 16 lease adoption adjustments. 3 Represents thl's share of NPBT losses.

01

CHAIRMAN AND CEO REPORT

Dear Shareholders

thl's performance in the first half of FY20 was down on the prior year, with NPAT of $13.1M down 25%. Our core rentals businesses delivered another strong performance, but our overall result reflects the tough market conditions in the USA vehicle sales market and further investment in Togo Group in this period.

FY20 Outlook

On 5 February, we provided a market update noting that our expectation for thl's FY20 NPAT was that it would be around NZ$24M. There has been no change to our expectation since that date.

That expectation factored in a forecast reduction in Chinese inbound customers from February through to April 2020 due to the Covid-19 containment measures. The global situation with Covid-19 continues to remain uncertain, however at this stage we do not consider there to be any additional information that causes any change to our assumptions. The impact of this event has been greatest in the Waitomo business.

The Australian bush fires did create cancellations in late January and February, but the greater concern was the lower forward bookings from the long-haul markets. We have since experienced a rebound and do not expect the impact to be material to the total business in the remainder of this financial year.

We will provide a further update to the market prior to our FY20 annual results announcement in August.

Dividend

We have declared a fully imputed interim dividend of 10cps, compared to our prior year interim dividend of 13cps, which was partially imputed to 50%. Compared to the pcp, our dividend per share reflects the greater number of shares on issue. In determining our interim FY20 dividend, we have continued to exclude our investment in Togo Group. Our interim dividend will be paid in May to better align with thl's working capital requirements and to better manage debt facilities.

The Dividend Reinvestment Plan will not be operative for this dividend payment.

Business Update

Revenue for the period was $207M - in line with the prior corresponding period (pcp). Within that performance, we had a 3% increase in our rentals and services revenue to $148M, with our rental revenue increasing across New Zealand and Australia, and remaining flat in the USA. This growth was offset by a reduction in vehicle sales revenue of 6% to $59M.

Operating profit before interest and tax (EBIT) was $31.0M, down 11%, and NPAT of $13.1M was down 25% on the pcp. These results reflect our USA vehicle sales performance and, in respect of NPAT, also reflects our greater investment in Togo Group compared to the prior year.

New Zealand rentals and sales The EBIT for New Zealand rentals and sales was $7.5M - up 6% on the pcp result of $7.0M. New Zealand is experiencing another positive year with growth in both rentals and vehicle sales.

Rental revenue of $40.5M is up 5% on the prior year, with growth in hire days and yield. Vehicle sales revenue increased by 14% to $25.8M, with growth in sales volumes as well as margins.

02 thl Interim Report 2020

Australian rentals and sales

The EBIT result for Australia was

AU$8.2M - up 7% on the pcp result of AU$7.6M. Rental income grew by 4%, to AU$35.6M, with strong growth in hire days offsetting a small reduction in yield due to increased competitive pricing. Vehicle sales revenue fell 9%, to AU$7.2M, due to a shift in the mix of vehicles sold towards smaller RVs. Total vehicle sales contribution improved on the pcp due to growth in average sales margins on consistent vehicle sales volumes.

We expect the majority of the impact from the Australian bush fires to be in the second half of the year. As a result, H2 FY20 rental revenue is expected to be below H2 FY19.

USA rentals and sales

The EBIT result for USA was US$8.0M for the half - down 35% on the pcp result of US$12.4M. In NZD terms, rental revenue was 4% up, to $52.4M, due to favourable movements in the NZD:USD exchange rate. However, at the USD level, rental revenue remained in line with the pcp at US$33.9M. An improvement in hire days was offset by a decline in average yield.

Vehicle sales revenue declined by 23%, to US$16.1M. The decline was driven by a 37% drop in average sales margin, which is partly due to a greater number of vehicles being sold through wholesale channels. The total number of vehicles sold in the half was 351, down 12% on the pcp number of 400.

Tourism businesses

Revenue for the Tourism Group was down 4%, to $17.8M. EBIT for the Tourism Group was down 3%, to $4.3M, driven by lower visitor numbers in both Waitomo and Kiwi Experience for the half.

The Kiwi Experience business has improved its EBIT performance over the prior year, despite experiencing a decline in passenger numbers. The small group tours product was launched in late 2019 and to date it has experienced strong demand and forward bookings, and positive customer reviews.

Group support

Costs in group support were $1.8M

• a 47% ($1.6M) reduction on the pcp. The variance is primarily attributable to the transaction costs incurred in the first half of FY19 relating to the discontinued sale of the Tourism businesses and other acquisition opportunities.

Associates and Joint Ventures

Action Manufacturing (50%) Action Manufacturing delivered a positive result compared to the prior half. Our share of profit before tax in the half was $1.4M, compared to $0.6M in the pcp. The prior result included the transaction and integration costs for the Fairfax acquisition as well as other planned expenses relating to new brand and product development.

Just go (49%)

The Just go business had its first six months with the new location (Edinburgh, Scotland) and is in growth mode. We believe uncertainty with Brexit impacted vehicle sales against plan, however recent performance at vehicle sales shows has improved, and the forward bookings for CY2020 in the rentals business is positive.

Togo Group (50%)

We are conscious of the level of investment going into Togo Group, and of its future cash requirements. We are currently reviewing the nature of thl's future investment into Togo Group.

General Business Updates

Future-Fit Initiative

We are underway with our work to understand our current position against each of the Future-Fit goals. These assessments allow us to identify specific areas and actions that we can implement to make a positive difference.

Over the remainder of FY20, the team will continue their work and we will provide an update on where we stand with the release of our full year results.

Capital Structure and Debt

Net debt at 31 December 2019 was $181M, compared to $226M in the pcp. The net debt: EBITDA ratio was 1.7x down from 2.0x in the pcp. This reflects the equity raise in CY2019, offset by the excess fleet over the period in the USA.

With the balance of lower purchases coming through the business in this coming half we expect that net debt will be approximately $135M - $145M at the end of FY20, compared to $202M at the end of FY19.

Capital Expenditure

We have reduced our capital expenditure in the USA to reflect the conditions in that sales market. thl's FY20 capital expenditure is expected to be around $133M, broadly in line with our earlier expectations. New Zealand and Australia will continue to have net capital investment in FY20.

Rob Campbell

Chairman

Grant Webster

CEO

03

Consolidated income statement

For the six months ended 31 December 2019 (Unaudited)

	UNAUDITED	UNAUDITED	AUDITED
	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
NOTES	$000's	$000's	$000's

Sales of services		148,394	144,318	292,199
Sales of goods		59,058	62,935	130,805
Total revenue		207,452	207,253	423,004
Cost of sales		(51,283)	(54,468)	(114,373)
Gross profit		156,169	152,785	308,631
Administration expenses		(24,875)	(26,014)	(49,469)
Operating expenses		(102,015)	(92,301)	(197,160)
Other income/(expenses), net		1,722	261	141
Operating profit before financing costs		31,001	34,731	62,143
Finance income		216	18	87
Finance expenses		(6,816)	(5,188)	(11,289)
Net finance costs		(6,600)	(5,170)	(11,202)
Share of profit/(loss) from associates	8	214	297	246
Share of profit/(loss) from joint ventures	7	(5,887)	(4,883)	(11,294)
Profit before tax		18,728	24,975	39,893
Income tax expense	2	(5,675)	(7,473)	(10,140)
Profit for the period		13,053	17,502	29,753
Earnings per share from profit attributable to the equity
holders of the Company during the period
Basic earnings per share (in cents)		8.9	14.0*	23.7
Diluted earnings per share (in cents)		8.6	13.5*	23.3

• Note: As a result of the Rights Offer which settled in July 2019, 1,404,329 shares have been treated as a bonus issue and have been adjusted in the weighted average number of ordinary shares on issue in 2018 in accordance with NZ IAS 33. The 2018 basic earnings per share has been restated to 14.0 (2018:14.2), and diluted basic earnings per share has been restated to 13.5 (2018:13.7).

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

04 thl Interim Report 2020

Consolidated statement of comprehensive income

For the six months ended 31 December 2019 (Unaudited)

		UNAUDITED	UNAUDITED	AUDITED
		6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
		DEC 2019	DEC 2018	JUN 2019
	NOTES	$000's	$000's	$000's
Profit for the period		13,053	17,502	29,753
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve movement (net of tax)	14	(617)	(1,964)	(2,207)
Cash flow hedge reserve movement (net of tax)		626	(1,130)	(3,645)
Other comprehensive income/(loss) for the period net of tax		9	(3,094)	(5,852)
Total comprehensive income for the period attributable
to equity holders of the Company		13,062	14,408	23,901

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

05

Consolidated statement of changes in equity

For the six months ended 31 December 2019 (Unaudited)

		SHARE	RETAINED	CASH FLOW	OTHER	TOTAL
FOR THE SIX MONTHS ENDED 31 DECEMBER 2019		HEDGE
	CAPITAL	EARNINGS	RESERVE	RESERVES	EQUITY
UNAUDITED	NOTES	$000's	$000's	$000's	$000's	$000's
Opening balance as at 1 July 2019		217,012	56,176	(4,483)	8,312	277,017
Adjustment on adoption of NZ IFRS 16 (net of tax)	5	-	(7,622)	-	-	(7,622)
Opening balance as at 1 July 2019		217,012	48,554	(4,483)	8,312	269,395
Comprehensive income
Net profit for the six months ended 31 December 2019		-	13,053	-	-	13,053
Other comprehensive income
Cash flow hedge reserve movement (net of tax)		-	-	626	-	626
Foreign currency translation reserve movement (net of tax)	14	-	-	-	(617)	(617)
Total comprehensive income		-	13,053	626	(617)	13,062
Transactions with owners
Dividends on ordinary shares	3	-	(20,567)	-	-	(20,567)
Issue of ordinary shares (net of issue costs)	9	52,835	-	-	-	52,835
Transfer from employee share scheme reserve		75	(4)	-	(71)	-
Employee share scheme reserve		-	-	-	181	181
Total transactions with owners		52,910	(20,571)	-	110	32,449
Closing balance as at 31 December 2019		269,922	41,036	(3,857)	7,805	314,906
		SHARE	RETAINED	CASH FLOW	OTHER	TOTAL
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018		HEDGE
	CAPITAL	EARNINGS	RESERVE	RESERVES	EQUITY
UNAUDITED	NOTES	$000's	$000's	$000's	$000's	$000's
Opening balance as at 1 July 2018		180,806	59,725	(838)	10,318	250,011
Comprehensive income
Net profit for the six months ended 31 December 2018		-	17,502	-	-	17,502
Other comprehensive income
Cash flow hedge reserve movement (net of tax)		-	-	(1,130)	-	(1,130)
Foreign currency translation reserve movement (net of tax)	14	-	-	-	(1,964)	(1,964)
Total comprehensive income		-	17,502	(1,130)	(1,964)	14,408
Transactions with owners
Dividends on ordinary shares	3	-	(17,243)	-	-	(17,243)
Issue of ordinary shares (net of issue costs)	9	3,297	-	-	-	3,297
Transfer from employee share scheme reserve		6	-	-	(6)	-
Employee share scheme reserve		-	-	-	185	185
Total transactions with owners		3,303	(17,243)	-	179	(13,761)
Closing balance as at 31 December 2018		184,109	59,984	(1,968)	8,533	250,658

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

06 thl Interim Report 2020

Consolidated statement of changes in equity (continued)

For the six months ended 31 December 2019 (Unaudited)

		SHARE	RETAINED	CASH FLOW	OTHER	TOTAL
FOR THE YEAR ENDED 30 JUNE 2019		HEDGE
	CAPITAL	EARNINGS	RESERVE	RESERVES	EQUITY
AUDITED	NOTES	$000's	$000's	$000's	$000's	$000's
Opening balance as at 1 July 2018		180,806	59,725	(838)	10,318	250,011
Comprehensive income
Net profit for the year ended 30 June 2019		-	29,753	-	-	29,753
Other comprehensive income
Cash flow hedge reserve movement (net of tax)		-	-	(3,645)	-	(3,645)
Foreign currency translation reserve movement (net of tax)	14	-	-	-	(2,207)	(2,207)
Total comprehensive income		-	29,753	(3,645)	(2,207)	23,901
Transactions with owners
Dividends on ordinary shares	3	-	(33,385)	-	-	(33,385)
Issue of ordinary shares (net of issue costs)	9	36,122	-	-	-	36,122
Transfer from employee share scheme reserve		84	83	-	(167)	-
Employee share scheme reserve		-	-	-	368	368
Total transactions with owners		36,206	(33,302)	-	201	3,105
Closing balance as at 30 June 2019		217,012	56,176	(4,483)	8,312	277,017

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

07

Consolidated statement of financial position

As at 31 December 2019 (Unaudited)

		UNAUDITED	UNAUDITED	AUDITED
		DEC 2019	DEC 2018	JUN 2019
	NOTES	$000's	$000's	$000's
Assets
Non-current assets
Property, plant and equipment	4	403,596	379,094	407,016
Right-of-use assets	5	68,820	-	-
Intangible assets		43,612	44,239	44,180
Derivative financial instruments	12	-	664	-
Investments in joint ventures	7	45,274	52,449	51,106
Investments in associates	8	4,691	4,366	4,319
Advance to joint venture	7	8,100	-	625
Total non-current assets		574,093	480,812	507,246
Current assets
Cash and cash equivalents		5,713	4,720	8,837
Trade and other receivables		31,467	32,206	28,964
Inventories		55,244	49,440	56,219
Advance to joint ventures	7	894	578	976
Current tax receivables		2,628	4,947	191
Derivative financial instruments	12	101	39	40
Total current assets		96,047	91,930	95,227
Total assets		670,140	572,742	602,473
Equity
Share capital	9	269,922	184,109	217,012
Other reserves		7,805	8,533	8,312
Cash flow hedge reserve		(3,857)	(1,968)	(4,483)
Retained earnings		41,036	59,984	56,176
Total equity		314,906	250,658	277,017
Liabilities
Non-current liabilities
Interest bearing loans and borrowings	10	186,681	211,198	210,980
Derivative financial instruments	12	5,228	3,246	5,798
Lease liabilities	5	74,286	-	-
Deferred income tax liability		17,636	32,554	22,224
Total non-current liabilities		283,831	246,998	239,002
Current liabilities
Interest bearing loans and borrowings	10	7	19,078	46
Trade and other payables		26,153	23,073	47,489
Revenue in advance		25,552	24,469	25,544
Employee benefits		7,339	6,874	8,400
Derivative financial instruments	12	217	153	461
Lease liabilities	5	6,200	-	-
Current tax liabilities		5,935	1,439	4,514
Total current liabilities		71,403	75,086	86,454
Total liabilities		355,234	322,084	325,456
Total equity and liabilities		670,140	572,742	602,473

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

08 thl Interim Report 2020

Consolidated statement of cash flows

For the six months ended 31 December 2019 (Unaudited)

		UNAUDITED	UNAUDITED	AUDITED
		6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
		DEC 2019	DEC 2018	JUN 2019
	NOTES	$000's	$000's	$000's
Cash flows from operating activities
Receipts from sale of services		150,550	137,125	298,998
Proceeds from sale of goods		59,058	62,935	130,805
Interest received		60	18	87
Payments to suppliers and employees		(112,681)	(105,268)	(224,119)
Purchase of rental assets		(81,032)	(88,834)	(176,075)
Interest paid		(6,770)	(5,188)	(11,134)
Taxation paid		(8,247)	(7,926)	(8,361)
Net cash flows from/(used in) operating activities		938	(7,138)	10,201
Cash flows from investing activities
Sale of property, plant and equipment	4	10	-	8
Advance to joint ventures	7	(7,783)	(1,500)	(1,500)
Receipts from joint ventures	7	250	397	751
Purchase of property, plant and equipment	4	(1,808)	(1,194)	(3,884)
Purchase of intangibles		-	(18)	(407)
Investments in associates and joint ventures		-	(3,279)	(9,589)
Net cash used in investing activities		(9,331)	(5,594)	(14,621)
Cash flows from financing activities
Payment for lease liability principal	5	(3,143)	-	-
Net proceeds from borrowings	10	(23,453)	17,942	(1,677)
Dividends paid	3	(17,373)	(14,120)	(29,429)
Proceeds from share issue (net of issue costs)	9	49,281	100	30,798
Net cash flows from/(used in) financing activities		5,312	3,922	(308)
Net (decrease) in cash and cash equivalents		(3,081)	(8,810)	(4,728)
Opening cash and cash equivalents		8,837	13,534	13,534
Exchange gains on cash and cash equivalents		(43)	(4)	31
Closing cash and cash equivalents		5,713	4,720	8,837

The accompanying notes form part of, and should be read in conjunction with, these financial statements.

09

Notes to the consolidated financial statements

Index to notes to the consolidated financial statements

	About this report	11
	Section A - Financial performance	12
1	Segment note	12
2	Income tax expense	14
3	Dividends	14
	Section B - Assets used to generate profit	15

• Property, plant and equipment acquired and

	sold during the six month period	15
5	Leases	16
6	Capital commitment	19
	Section C - Investments	20
7	Joint ventures	20
8	Investments in associate	22
	Section D - Managing funding and risk	23
9	Share capital	23
10	Borrowings	23
11	Seasonality of business	24
12	Financial risk management	24
	Section E - Other	25
13	Related party transactions	25
14	Foreign currency translation reserve	27
15	Contingencies	27
16	Events after the reporting period	27

10 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

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 interim consolidated financial statements of the Group have been prepared:

• in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with NZ IAS 34 Interim Financial Reporting and consequently do not include all the information required for full financial statements. These condensed Group interim financial statements should be read in conjunction with the annual report for the year ended 30 June 2019;
• in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and the NZX 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.

These condensed interim financial statements were approved for issue on 27 February 2020.

These condensed interim financial statements have not been audited.

Throughout most months during the financial year,

the Group has net current liabilities excluding assets held for sale. This arises mainly from the revenue in advance liability that reflects the collection of rental income from customers prior to the month of travel. This liability is recognised as revenue in future months, and does not represent a future outward cash flow.

Critical accounting estimates and judgement

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The estimates used in the preparation of these interim financial statements are consistent with those used in the 30 June 2019 annual financial statements.

Changes in accounting policies

The accounting policies used in the preparation of these interim financial statements are consistent with those used in the 30 June 2019 annual financial statements except as disclosed below.

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 5.

11

Notes to the consolidated financial statements (continued)

Section A - Financial performance

In this section

This section explains the financial performance of thl, providing additional information about individual items in the income statement, including segmental information, certain expenses and dividend distribution information.

1. Segment note

The operating segments of thl are 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 of Road Bear, Britz, Mighty and El Monte RVs and the sale of RVs
• Other - includes Group Support Services. The joint ventures and associates are also included in this category

	NEW ZEALAND
	RENTALS	TOURISM	AUSTRALIA	UNITED STATES	OTHER	TOTAL
SIX MONTHS TO DECEMBER 2019	GROUP	RENTALS	RENTALS
$000's	$000's	$000's	$000's	$000's	$000's
Sales of services	40,498	17,785	37,706	52,405	-	148,394
Sales of goods	25,808	-	7,578	25,672	-	59,058
Revenue from external customers	66,306	17,785	45,284	78,077	-	207,452
Depreciation	(10,739)	(813)	(8,440)	(10,333)	(249)	(30,574)
Amortisation	(4)	(339)	(16)	(14)	(139)	(512)
Other costs	(48,075)	(12,316)	(28,227)	(55,342)	(1,405)	(145,365)
Operating profit/(loss) before interest and tax	7,488	4,317	8,601	12,388	(1,793)	31,001
Interest income	-	-	-	5	211	216
Interest expense	(535)	(47)	(752)	(2,634)	(2,848)	(6,816)
Share of profit/(loss) from joint ventures
and associates	-	-	-	-	(5,673)	(5,673)
Operating profit/(loss) before tax	6,953	4,270	7,849	9,759	(10,103)	18,728
Taxation	(1,948)	(1,265)	(2,355)	(2,636)	2,529	(5,675)
Operating profit/(loss) - after interest and tax	5,005	3,005	5,494	7,123	(7,574)	13,053
Capital expenditure	39,194	727	17,509	3,796	277	61,503
Total non-current assets	197,167	25,061	105,273	186,206	60,386	574,093
Total assets	231,000	28,822	127,910	217,864	64,544	670,140
Net funds employed	176,479	19,801	76,274	165,073	58,254	495,881

12 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

1. Segment note (continued)

	NEW ZEALAND
	RENTALS	TOURISM	AUSTRALIA	UNITED STATES	OTHER	TOTAL
SIX MONTHS TO DECEMBER 2018	GROUP	RENTALS	RENTALS
$000's	$000's	$000's	$000's	$000's	$000's
Sales of services	38,470	18,438	36,968	50,442	-	144,318
Sales of goods	22,695	-	8,509	31,731	-	62,935
Revenue from external customers	61,165	18,438	45,477	82,173	-	207,253
Depreciation	(9,276)	(765)	(7,378)	(7,221)	(89)	(24,729)
Amortisation	(50)	(344)	(17)	1	(145)	(555)
Other costs	(44,795)	(12,884)	(29,899)	(56,514)	(3,146)	(147,238)
Operating profit/(loss) before interest and tax	7,044	4,445	8,183	18,439	(3,380)	34,731
Interest income	-	-	7	5	6	18
Interest expense	(4)	-	(393)	(1,268)	(3,523)	(5,188)
Share of profit/(loss) from joint ventures
and associates	-	-	-	-	(4,586)	(4,586)
Operating profit/(loss) before tax	7,040	4,445	7,797	17,176	(11,483)	24,975
Taxation	(1,971)	(1,311)	(2,340)	(4,976)	3,125	(7,473)
Operating profit/(loss) - after interest and tax	5,069	3,134	5,457	12,200	(8,358)	17,502
Capital expenditure	42,654	241	17,495	5,561	71	66,022
Total non-current assets	175,248	24,358	89,386	133,100	58,720	480,812
Total assets	203,974	27,929	109,170	166,825	64,844	572,742
Net funds employed	173,354	20,523	79,704	143,336	59,297	476,214

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. Interest income and expenditure are not included in the result for each operating segment that is reviewed by the CODM.

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 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 total assets less segment non-interest-bearing liabilities and cash on hand.

13

Notes to the consolidated financial statements (continued)

2. Income tax expense

Income tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year.

3. Dividends

During the six months ended 31 December 2019 the Group paid dividends of $20,567k (14 cents per share). The 2018 final and 2019 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.

Under the Dividend Reinvestment Plan, 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 scheme. 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 scheme.

14 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

Section B - Assets used to generate profit

In this section

This section describes the assets thl uses in the business to generate profit, including:

Property, plant and equipment

The most significant component is the motorhome fleet. Premises in general are leased, however significant owned properties are the Waitomo Caves Visitor Centre and the Waitomo Caves Homestead.

4. Property, plant and equipment acquired and sold during the six month period

		OTHER	CAPITAL
	MOTORHOMES	PLANT AND	WORK IN	TOTAL
	EQUIPMENT	PROGRESS
	$000's	$000's	$000's	$000's
Period ended 31 December 2019
At 1 July 2019	401,396	21,265	26,717	449,378
Additions and transfers from work in progress (net)	72,693	1,010	(12,200)	61,503
Disposals	(43,242)	(112)	-	(43,354)
Exchange differences	(1,175)	(17)	(4)	(1,196)
Depreciation charge	(24,818)	(2,109)	-	(26,927)
Closing net book amount	404,854	20,037	14,513	439,404
As at 31 December 2019
Cost	516,475	50,354	14,513	581,342
Accumulated depreciation	(111,621)	(30,317)	-	(141,938)
Net book amount	404,854	20,037	14,513	439,404
Reclassification of motorhomes to inventory at balance date
Cost	49,248	-	-	49,248
Accumulated depreciation	(13,440)	-	-	(13,440)
Net book amount	35,808	-	-	35,808
Closing net book amount post reclassification	369,046	20,037	14,513	403,596
		OTHER	CAPITAL
	MOTORHOMES	PLANT AND	WORK IN	TOTAL
	EQUIPMENT	PROGRESS
	$000's	$000's	$000's	$000's
Period ended 31 December 2018
At 1 July 2018	362,800	24,253	29,007	416,060
Additions and transfers from work in progress (net)	80,281	1,032	(15,291)	66,022
Disposals	(45,136)	(154)	-	(45,290)
Exchange differences	(2,527)	(17)	-	(2,544)
Depreciation charge	(22,139)	(2,590)	-	(24,729)
Closing net book amount	373,279	22,524	13,716	409,519
As at 31 December 2018
Cost	470,299	51,214	13,716	535,229
Accumulated depreciation	(97,020)	(28,690)	-	(125,710)
Net book amount	373,279	22,524	13,716	409,519
Reclassification of motorhomes to inventory at balance date
Cost	42,467	-	-	42,467
Accumulated depreciation	(12,042)	-	-	(12,042)
Net book amount	30,425	-	-	30,425
Closing net book amount post reclassification	342,854	22,524	13,716	379,094

15

Notes to the consolidated financial statements (continued)

5. 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 beginning balance sheet on 1 July 2019. The reduction in retained earnings on 1 July 2019 was $7.6M. 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 corresponding 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.

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 balance sheet.

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.

16 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

5. Leases (continued)

The balance sheet impact of NZ IFRS 16

The impact of NZ IFRS 16 on the Group's opening balance sheet is as follows:

	AUDITED	UNAUDITED	UNAUDITED
	30 JUN 2019	ADJUSTMENT	1 JUL 2019
	$000's	$000's	$000's
Right-of-use assets	-	72,589	72,589
Total non-current assets		72,589
Retained earnings	56,176	(7,622)	48,554
Total equity		(7,622)
Lease liabilities	-	6,247	6,247
Lease incentives	523	(523)	-
Total current liabilities		5,724
Lease liabilities	-	77,544	77,544
Deferred tax liabilities	22,224	(3,057)	19,167
Total non-current liabilities		74,487
Total equity and liabilities		72,589

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.

	UNAUDITED
	1 JUL 2019
	$000's
Operating lease commitment disclosed as at 30 June 2019 (audited)	60,551
Discounted using the Group's incremental borrowing rate at the date of initial application	(31,177)
(Less): short-term leases recognised on a straight-line basis as expense	(313)
Add/(less): adjustments as a result of a different treatment of extension options	54,816
Foreign currency translation differences	(86)
Lease liability recognised as at 1 July 2019	83,791

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 balance sheet as at 30 June 2019. The right-of-use assets related to the following types of assets:

	UNAUDITED	UNAUDITED
	6 MONTHS TO
	1 JUL 2019	DEC 2019
	$000's	$000's
Buildings	72,580	68,815
Vehicles and equipment	9	5
Total	72,589	68,820

17

Notes to the consolidated financial statements (continued)

5. Leases (continued)

The profit impact of NZ IFRS 16

The following table shows the adjustments to profit or loss for the period ended 31 December 2019 as a result of the adoption of NZ IFRS 16:

	UNAUDITED	UNAUDITED	UNAUDITED
	PRIOR TO	IMPACT OF	REPORTED
	ADOPTION 2019	NZ IFRS 16	RESULTS
	$000's	$000's	$000's
For the period ended 31 December 2019
Total operating expenses	103,485	(1,470)	102,015
Rental and lease expenses	5,682	(5,117)	565
Depreciation and amortisation	27,439	3,647	31,086
Operating profit before financing costs	29,531	1,470	31,001
Finance income	216	-	216
Finance expenses	(4,842)	(1,974)	(6,816)
Net finance costs	(4,626)	(1,974)	(6,600)
Share of loss from joint ventures and associates	(5,673)	-	(5,673)
Profit before tax	19,232	(504)	18,728
Tax expenses	(5,814)	139	(5,675)
Profit after tax	13,418	(365)	13,053
			UNAUDITED
			6 MONTHS TO
			DEC 2019
			$000's
Depreciation charge of right-of-use-assets
Properties			3,642
Equipment			5
Others			-
Total			3,647

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 cashflow, and the repayment of the lease liability principal is classified within financing activities.

	UNAUDITED
	6 MONTHS TO
	DEC 2019
	$000's
For the period ended 31 December 2019
Interest paid on leases (operating activities)	1,974
Payments for lease liability principal (financing activities)	3,143
Total cash outflows from lease liabilities	5,117

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
• 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

18 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

6. Capital commitment

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:

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Property, plant and equipment	122,016	150,642	65,387

19

Notes to the consolidated financial statements (continued)

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:

1. Accounting policies, judgements and estimates that are relevant for measuring the investments; and
2. Analysis of thl 's associate and joint ventures.

thl 's investments include a 50% interest in Action Manufacturing, a business that manufactures motorhomes for the Group's New Zealand and Australian business segments and other speciality vehicles for external customers; and a 50% joint venture investment in Togo Group. Togo Group is based in the United States and provides digital services to RV owners and operators, and operates the Mighway and Roadtrippers businesses, and also has a 46% interest in Outdoria. Other investment includes a 49% interest in Just go, a motorhome rental operation in the United Kingdom.

7. Joint ventures

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, a motorhome manufacturer in the United States. Each partner owns 50% of Togo Group. Due to the nature of the contractual rights and obligations, Togo Group is classified as a joint venture for accounting purposes and accounted for using the equity method.

Togo Group provides digital services to RV owners and operators (Togo Fleet), and operates the Mighway and Roadtrippers businesses. -

Within the business case, the Group expected losses for the period ended 31 December 2019. The Group's share of losses from Togo Group for the six months ended 31 December 2019 was $7,301k. In the six months ended 31 December 2019, thl and Thor advanced a loan of USD$5,103k each to Togo Group. Interest is payable on the advance at a rate of 5.5%.

The Group's recognised interest in Togo Group

The following table sets out the Group's interest in Togo Group:

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Fair value of investment in Togo Group initially recognised	38,976	38,976	38,976
Subsequent investment in Togo Group	14,781	8,471	14,781
Profit/(losses) recognised against the investment balance	(22,802)	(8,118)	(15,501)
Foreign exchange revaluation gain	4,108	3,920	4,053
Net investment recognised	35,063	43,249	42,309
Advance opening balance	457	819	819
Net cash advances/(repayment) during the period	7,656	(255)	(362)
Advance closing balance	8,113	564	457
Net interest in Togo Group	43,176	43,813	42,766
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Non-current	42,788	43,249	42,309
Current	388	564	457
	43,176	43,813	42,766

20 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

7. Joint ventures (continued)

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 13). 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 Group's recognised interest in AMLP

The following table sets out the Group's interest in AMLP:

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Fair value of investment in AMLP initially recognised	250	250	250
Profits recognised against the investment balance	10,211	7,825	8,797
Distribution received from accumulated earnings	(250)	(250)	(250)
Net investment recognised	10,211	7,825	8,797
Advance opening balance	1,144	31	31
Net cash advances/(repayment) during the period	(263)	1,358	1,113
Advance closing balance	881	1,389	1,144
Net interest in AMLP	11,092	9,214	9,941
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Non-current	10,586	9,200	9,422
Current	506	14	519
	11,092	9,214	9,941
Interest is payable on the advance at a rate of 4.59%.
Total advance to and investments in joint ventures
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Non-current	53,374	52,449	51,731
Current	894	578	976
	54,268	53,027	52,707

21

Notes to the consolidated financial statements (continued)

8. Investments in associate

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 associates profits have been recognised with the Group's investment.

The carrying amounts recognised in the balance sheet are as follows:

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Just go	4,691	4,366	4,319
Total	4,691	4,366	4,319
The share of profits/(losses) recognised in the income statement are as follows:
	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Just go	214	297	246
Total	214	297	246

22 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

Section D - Managing funding and risk

In this section

This section summarises thl 's funding sources and financial risks.

9. Share capital

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Ordinary shares
Opening balance	217,012	180,806	180,806
Issue of ordinary shares - redeemable ordinary shares converted	654	94	1,031
Transfer from employee share scheme reserve for redeemable	75	6	84
shares converted
Issue of ordinary shares - in lieu of directors' fees	82	74	161
Ordinary shares to be issued - in lieu of directors' fees accrued at 30 June	(11)	7	9
Ordinary shares issued under Dividend Reinvestment Plan	3,484	3,122	5,154
Ordinary shares issued	49,869	-	30,000
Less transaction costs arising on shares issued	(1,243)	-	(233)
Closing balance	269,922	184,109	217,012

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 NZ$50 million fully underwritten pro rata 1 for 9 rights offer at NZ$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 $1,243k were incurred on the rights offer that was settled in July.

10. Borrowings

	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Non-current	186,681	211,198	210,980
Current	7	19,078	46
	186,688	230,276	211,026
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
The Group has the following undrawn borrowing facilities:
Expiring within one year	50,000	11,000	-
Expiring beyond one year	66,911	42,722	62,478
	116,911	53,722	62,478

The Group has sufficient working capital and undrawn financing facilities to service its operating activities and ongoing investment in rental motorhomes. The Group has met all banking covenant requirements in the current period.

No borrowing costs were capitalised in 2019 (2018: nil).

23

Notes to the consolidated financial statements (continued)

10. Borrowings (continued)

MATURITY OF DEBT FACILITIES

January 2020	NZ$10M
May 2020	NZ$10M
July 2020	NZ$30M
February 2021	NZ$82M
September 2021	NZ$30M
June 2022	NZ$70M
July 2022	NZ$74M
Total	NZ$306M

11. Seasonality of business

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 31 December 2019 is not representative of all risks faced during the year.

12. Financial risk management

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).

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 period.

Recurring fair value measurements

The following financial instruments are subject to recurring fair value measurements:

	DEC 2019	DEC 2018	JUN 2019
	ASSETS	LIABILITIES	ASSETS	LIABILITIES	ASSETS	LIABILITIES
	$000's	$000's	$000's	$000's	$000's	$000's
Derivative financial instruments (Level 2)	101	5,445	703	3,399	40	6,259

24 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

Section E - 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.

13. Related party transactions

Key management compensation

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Salaries and other short term employee benefits	2,676	3,916	5,674
Share based payments benefits	181	185	368

The above includes the CEO, direct reports to the CEO and direct reports to the COO. Total positions included above are 15 (31 December 2018: 16; 30 June 2019: 14).

Executive management do not receive any directors' fees as directors of subsidiary companies.

Directors' fees (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:

	DEC 2019	DEC 2018	JUN 2019
No. of shares issued in lieu of cash (000's)	14	14	32
Value of shares issued in lieu of cash ($000's)	82	74	161
Accrued value of shares yet to be issued in lieu of cash ($000's)	34	43	45

Kay Howe (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.

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Payments to Supreme including purchase of motorhomes and caravans	1	14	22
Sales of motorhomes to Supreme	263	-	57

Cathy Quinn (Non-executive Director)

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:

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Legal services	185	290	677

25

Notes to the consolidated financial statements (continued)

13. Related party transactions (continued)

Grant Brady (shareholder and Director of Alpine Bird (New Zealand) Limited)

Grant Brady, Managing Director of Action Manufacturing, is a minority shareholder and director of Bush Road Enterprises Limited. thl leases 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 amount of the lease payments are set out in the table below:

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Total lease payments	247	303	660

Action Manufacturing LP

Grant Brady is a shareholder in another entity, Alpine Bird Manufacturing Limited which owns 50% of Action Manufacturing Limited Partnership ("AMLP") that was set up in March 2012. thl owns the other 50%. AMLP manufactures 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. AMLP also leases part of the Bush Road property described above. The transactions between AMLP and thl are set out in the table below:

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Purchase of motorhomes by the Group from the joint venture	30,481	27,878	49,726
Sales of vehicles by the Group to the joint venture	788	457	1,518
Interest charged to the joint venture	24	6	17
Net interest in Action Manufacturing LP (note 7)	11,092	9,214	9,941

At 30 June 2019, $10,689k (June 2018:$15,608k) was outstanding under a Documentary Letter of Credit in favour of AMLP. This amount is included in the purchase of motorhomes shown above, and the outstanding amount is included in 'trade and other payables'. At 31 December 2019 and 31 December 2018 the amounts outstanding were nil.

Just go

During the six months ended 31 December 2019 the Group purchased motorhomes from Just go with a value of $13,057k (six months ended December 2018: $12,027k; year ended 30 June 2019: $12,040k).

Schork Family

As part of the consideration for the acquisition of El Monte Rents Inc in January 2017, 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 the six months ended 31 December 2019 was $133k (six months ended 31 December 2018: $207k; year ended 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:

	6 MONTHS TO	6 MONTHS TO	12 MONTHS TO
	DEC 2019	DEC 2018	JUN 2019
	$000's	$000's	$000's
Total lease payments	1,727	1,599	3,255

Togo Group

As part of the investment in Togo Group, thl had an obligation to complete certain parts of the Togo Fleet RV industry platform development. The relevant development costs were charged by Togo Group to thl on a monthly basis. thl also provides finance, payroll and administrative support services to Togo Group. These have been charged to Togo Group on a monthly basis.

	DEC 2019	DEC 2018	JUN 2019
Togo Fleet development costs charged by Togo Group	-	574	632
Support services provided by thl	88	139	130
Net interest in Togo Group (note 7)	43,176	43,249	45,967
Interest income from advance to Togo Group	156	-	-

26 thl Interim Report 2020

Notes to the consolidated financial statements (continued)

14. 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 profit and loss as part of the gain or loss on disposal.

The closing exchange rates used to translate the balance sheet are as follows:

	DEC 2019	DEC 2018	JUN 2019
NZD/AUD	0.9617	0.9520	0.9561
NZD/USD	0.6735	0.6713	0.6694
NZD/GBP	0.5136	0.5290	0.5284

15. Contingencies

As at 31 December 2019, other than bank guarantees, which are predominantly in lieu of bonds paid relating to leased assets, the Group has no material contingent liabilities.

16. Events after the reporting period

Interim dividend

A dividend was declared after balance date at 10 cents per share, with a record date of 4 May 2020 and payable on 11 May 2020.

End

27

Corporate information

Directors

Rob Campbell

Debbie Birch

Rob Hamilton

Guorong Qian

Cathy Quinn

Gráinne Troute

Executives

Grant Webster - Chief Executive Officer Jennifer Bunbury - Chief Financial Officer Jo Allison - Chief Operating 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: [phone]

Email: [e-mail]

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

Outdoria Group

28 thl Interim Report 2020

INTERIM REPORT 2020