Chairman’s Address Page 2 of 3 Tourism Holdings Limited Annual Meeting - 11Nov08
Embargoed release 1.30pm Tuesday, 11th November 2008
Chairman’s Address Annual Shareholders’ Meeting Tuesday, 11 November 2008
Welcome, ladies and gentlemen to the 22nd Annual Meeting of Tourism Holdings Limited. I am your chairman, Keith Smith.
I am joined by my fellow directors Graeme Bowker, Rick Christie, Deepak Gupta and Graeme Wong – and also by our chief
executive officer Trevor Hall, chief financial officer Ian Lewington and financial controller/board secretary Kevin
Hoare.
In the last 12 months THL has undertaken a major strategic repositioning and as a consequence is now in a strong
position to meet the challenges of the future. These, of course, include the effects on tourism markets of what can
truly be called turmoil in the financial sector worldwide.
THL’s focus is now on growing its core rental business over numerous market segments, returning the CI Munro business
back to full productivity and developing the potential of the Waitomo Caves activities.
In the next few minutes I will: • Briefly review the trading results for the previous year • Review the position of the
company • Comment on the outlook
The 2008 year saw record revenues again being achieved by the Australian rental business and a reduction in earnings
from the continuing businesses in the former Tourism Leisure Group. The year ended with declining visitor numbers from
key markets.
Ci Munro had substantial disruption to its business due to the relocation from Otorohanga to Hamilton as well as
supplier and skill shortages. These affected its ability to bring new designs to market while achieving the anticipated
productivity improvements from the new factory.
There were a number of changes in the operating base of the company. These included sales of non-core assets and the
creation of a strong market position in the first year of operations of the Explore More Rentals unit, targeted at the
youth/adventure and discount sector.
The group result, including non-recurring items, was a seven per cent increase in the net surplus after tax to $14.3
million. Net trading profit after tax on continuing operations, excluding associates, was down 13 per cent from the
previous year. The company has paid a final dividend of six cents a share and the total dividend for the year was 11
cents a share, fully imputed. This is the same rate as for the 2006 and 2007 financial years.
During the past 12 months to June 2008 a complete strategic repositioning of the company has been undertaken. In spite
of the difficult economic conditions, good prices have been achieved for the non-core assets sold and all transactions
completed, with the last two being finalised, as agreed, in September. This has realised $69 million from the sale of
the coaching businesses, Kelly Tarlton’s Antarctic Encounter & Underwater world, all Milford Sound assets and the Discover New Zealand tour wholesale operation. The net proceeds have
been used to reduce debt.
Further, industry rationalisation led to the formation of the joint venture InterCity Holdings Limited with THL owning a
49% shareholding. Preliminary work was progressed during the year for construction of a world-class visitor centre for
the Waitomo Glowworm Caves attractions. Once final approvals and building consents are obtained construction will
commence with a completion date likely late 2009.
In the coming weeks, the extensive changes to our information and communications infrastructure will be actioned,
enabling the launch of new and improved online trading and business-to-business capability.
The strategic refocusing and debt reduction of the past 12 months means the company is well resourced to endure the
shift in global consumer confidence now having a direct impact on the tourism industry. In that regard, the board has
deemed it prudent to suspend market investigation of expansion into further geographical markets for the rentals
business, and into the United States in particular.
That said, THL is in a sound position to take advantage of any attractive opportunities that may arise to expand its
core competencies, systems, brands or other key aspects of the business platform.
The outlook is challenging. Governments around the world are making strenuous efforts to shore-up the financial system
so as to limit the impact of the fallout from the credit crisis on economic growth. It is not yet clear how successful
these moves will be.
Already there are signs of consumers cutting back on discretionary spending – and this is creating stress in some
sectors of the tourism industry. Based on current booking trends and the weak first quarter we expect to report a small
trading loss for the six months which is down on last year’s result and includes continuing losses at Ci Munro over this
period. We expect a very challenging second six months as well but are unable to fully quantify the impact on the year
end at this point however reported NPAT for the year will be well below last years $14.3m. The chief executive will
discuss current trading conditions in his address.
For New Zealand, there are some positives. There will be a significant increase in seating capacity from the
introduction of new, wide bodied aircraft early next year, and airlines can be expected to undertake strenuous promotion
to fill those seats. The low levels to which the New Zealand dollar has fallen against leading northern hemisphere
currencies will assist this traffic. As mentioned previously the asset sell down has left THL with a strong balance
sheet.
Credit for the strong position of the company must go largely to our chief executive Trevor Hall who, as previously
announced, will step down at the end of December.
On behalf of shareholders, I thank Trevor for his significant impact on reshaping THL. Undertaking a major change
process is never easy and the task has been accomplished skilfully so that company that can face the future with
confidence.
Trevor, thank you for a job well done.
[pause] As in every annual meeting, one of the formal items on the agenda is the election of directors.
Graeme Wong was appointed the Board in November and therefore now seeks re-election as a non-executive director.
Graeme has a background in stockbroking, capital markets and investments. He has extensive experience as a director as
Executive Chairman of Southern Capital which evolved into Hirequip New Zealand. Previous directorships include Sealord
Group, Tasman Agriculture, Magnum Corporation, At Work Insurance and Air New Zealand. Graeme is currently Chairman of
Clocktower Games, Director NZ Farming Systems Uruguay and a member of the Management Board of Samuel Marsden Collegiate
School.
Also retiring, by rotation, and seeking re-lection to the board is Graeme Bowker Graeme has been a Non Executive
Director since 2003. He is currently chairman of Southern Cross Railway Station Holdings, a director of the National
Stroke Foundation and Bluestone Mortgage Group. Graeme is the former Victorian Managing Partner for Deloitte Touche
Tohmatsu and prior to this, was country Managing Partner in New Zealand. Graeme Wong and Graeme Bowker will speak
briefly when the relevant motions are under consideration.
[Pause] At this point I want to take the opportunity to record the board’s gratitude for the continuing focus and hard
work of the management group – and indeed all staff of the company – during what has been a year of major change.
I’m sure I speak for shareholders as well as the board when I say that their efforts are very much appreciated.
It is now time to hand over to Trevor for his final comprehensive run down on the year. Trevor, over to you.
ends