FY20 FY19 INTERIM RESULTS FULL YEAR RESULTS PRESENTATION PRESENTATION our view today
goes on forever
Disclaimer 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 thl at 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. 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 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 with any purchase of thl securities. thl securities 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. 3 FY20 INTERIM RESULTS PRESENTATION
General notes • All financials are in NZ dollars unless stated otherwise (throughout presentation). • All comparisons are against prior corresponding period. • The average NZD:AUD cross-rate (average of the 6 month rates) for H1 FY20 was 0.9433 (H1 FY19 – 0.9251). • The average NZD:USD cross-rate (average of the 6 month rates) for H1 FY20 was 0.6453 (H1 FY19 – 0.6705). • Return On Funds Employed (ROFE) is a non-GAAP measure that thl uses 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. The lease liability as a result of IFRS 16 is not considered to be part of 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. • The balance sheet is converted at the closing rate as at 31 December 2019. The USD cross-rate used was 0.6735 (H1 FY19 – 0.6713); the AUD cross-rate used was 0.9617 (H1 FY19 – 0.9520) and the GBP cross-rate used was 0.5136 (H1 FY19 – 0.5290). • Our forecast FY20 NPAT of around $24M assumed a NZD:AUD cross-rate of 0.93 and NZD:USD cross- rate of 0.66. 4 FY20 INTERIM RESULTS PRESENTATION
IFRS 16 | Leases thl ’s H1 FY20 results include changes in financial disclosures resulting from the adoption of IFRS 16: • Right-of-use assets ($68.8M as at 31 December 2019) and lease liabilities ($80.5M as at 31 December 2019) have been recognised on the thl balance sheet, grossing up total assets and total liabilities. • Opening retained earnings as at 1 July 2019 has been adjusted downwards by $7.6M, net of tax. • FY19 amounts in the financial statements remain as previously reported. • The impact on thl ’s H1 FY20 income statement is a negative impact of $0.4M on NPAT, a positive impact of $1.5M on EBIT, and a positive impact of $5.1M on EBITDA. These have resulted from a change in lease expense classification from operating expenses of $5.1M to: • Financing costs of $2.0M; • Depreciation of $3.6M; and • Net NPAT impact of negative $0.4M. • The impact on thl ’s H1 FY20 cash flow statement is that operating lease payments ($5.1M) have now been recognised as: • Interest expense ($2.0M) in operating activities; and • Lease liability principal repayment $3.1M in financing activities. • thl ’s banking covenants are calculated on a frozen GAAP basis. 5 FY20 INTERIM RESULTS PRESENTATION
Summary • Net profit after tax of $13.1M – down on the prior period, largely driven by performance in the USA vehicle sales market and investment in Togo Group. • Interim dividend of 10 cents per share declared, fully imputed. Cash dividend yield of 7.8%*. • The global rentals businesses continue to perform well, delivering revenue growth in New Zealand and Australia and stable revenue in the USA. • New Zealand and Australia have had solid performances in vehicle sales from both a volume and margin perspective. • USA vehicle sales remain a key challenge and focus for the remainder of FY20. • Future-Fit implementation team well underway with benchmarking assessments against the FFB goals. • Net debt of $181M as at 31 December 2019 – expected to be $135M to $145M at end of FY20 due to the lag of right sizing of fleet in the USA. • Reviewing the nature of thl ’s future investment into Togo Group. • FY20 NPAT expectation remains at around $24M**. * Based on the closing share price on 26 February 2020 of $2.55 and assumption of 20cps total FY20 dividend. ** Based on the assumed cross-rates noted on page 4. 6 FY20 INTERIM RESULTS PRESENTATION FY20 INTERIM RESULTS PRESENTATION
Half year in review As at 31 December 2019 REVENUE (RENTALS & SERVICES) REVENUE (VEHICLE SALES) INTERIM DIVIDEND 1 $ 148.4 M $59.1 M 10 CPS +3% -6% -23% ( H1 2019 - $144.3 M ) (H1 2019 - $62.9 M ) (H1 2019 - 13 CPS ) NET PROFIT AFTER TAX (NPAT) OPERATING PROFIT BEFORE EBIT EXCLUDING IMPACT OF IFRS 16 FINANCING COSTS AND TAX (EBIT) $ 29.5 M $13.1 M $31.0 M -25% -11% -15% ( H1 2019 - $34.7 M ) (H1 2019 - $17.5 M ) (H1 2019 - $34.7 M ) NET DEBT 2 INVESTMENT IN TOGO GROUP 3 $ 7.3 M $181 M -20% 1 100% imputed in H1 2020; 50% imputed in H1 2019. ( H1 2019 - $5.4 M ) (H1 2019 - $226 M ) 2 As at 31 December. 3 Represents thl ’s share of NPBT losses. 7 FY20 INTERIM RESULTS PRESENTATION FY20 INTERIM RESULTS PRESENTATION
NZD $M Dec-19 Dec-18 VAR % Financial Operating revenue 207.5 207.3 0.2 0% highlights Earnings before interest and 31.0 34.7 (3.7) (11%) tax (1) Operating profit before tax (2) 18.7 25.0 (6.2) (25%) • Revenue of $207.5M, up $0.2M. Profit after tax 13.1 17.5 (4.4) (25%) • EBIT of $31.0M, down 11%. (1) H1 FY20 includes a $1.5M benefit relating to the adoption of IFRS 16. (2) H1 FY20 includes a $0.5M expense relating to the adoption of IFRS 16 . • NPAT of $13.1M, down 25%. • EBIT growth for the Rentals New Zealand and Rentals Australia businesses. OPERATING PROFIT BEFORE TAX $M 35.0 • Excluding the impact of IFRS 16, interest 0.4 30.0 expense was down $0.4M as a result of (6.1) 0.4 1.6 lower debt across the half year. 25.0 (1.1) (1.4) (0.1) 20.0 NZ$m 15.0 25.0 10.0 18.7 5.0 – Profit Before Tax Rentals NZ Rentals AU Rentals USA Tourism Group Group Services & JV & Associates Net Interest * Profit Before Tax H1 FY19 H1 FY20 Other * Includes additional $2.0M expense relating to the adoption of IFRS 16. 8 FY20 INTERIM RESULTS PRESENTATION
Net debt Net debt:EBITDA* Balance sheet $181M 1.7x Last year Last year • Net debt as at 31 December 2019 was $181M. $226M 2.0x • The key factors impacting net debt in H1 FY20 were the $50M received from the thl rights offer, investment in Togo Group and new fleet capital expenditure. Net debt • Our Net debt:EBITDA was 1.7x, down on the prior year 250 3.0 primarily due to the equity raise completed in July 2019. 2.5 200 Net debt:EBITDA (x) • We consider that our current Net debt:EBITDA ratio provides 2.0 NZD ($M) 2.0 150 1.9 1.9 us with capacity for acquisitions and growth initiatives. 1.7 1.7 1.5 226 100 202 199 • Net debt at the end of FY20 is expected to be in the range of 181 178 1.0 $135M to $145M, in line with our previous expectations. 50 0.5 • Our review of existing borrowing sources and target capital – – structure is underway and will be completed prior to year Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 end. Net debt LOC Net debt: EBITDA * Net debt:EBITDA is calculated using a 12 month EBITDA on a frozen GAAP basis. Net debt used for the calculation includes LOC and derivatives balance. Note: Net debt and Net debt:EBITDA do not include lease liabilities relating to the adoption of IFRS 16. 9 FY20 INTERIM RESULTS PRESENTATION FY20 INTERIM RESULTS PRESENTATION
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