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THL back in the black, but looking to improve further

Fuseworks Media
Fuseworks Media

Wellington, Aug 26 NZPA - Tourism Holdings Ltd (THL) has turned itself around from loss to profit and improved its balance sheet, but given itself a "must-do-better report" today.

Net profit before tax from continuing businesses rose 288 percent to $6.0 million in the year ended June 30, from a prior year loss of $3.2m, on 8 percent higher revenue of $182.3m.

After one-off tax adjustments, profit from continuing businesses was $5.0m -- a 457 percent turnaround on its $1.4m loss the previous year.

Net debt was down to $36.5m from $57.8m, providing an equity ratio of 62 percent..

Chairman Keith Smith said THL directors and management noted that the result represented a "pleasing gain in profitability and a focus on business fundamentals. Moving forward, the business is still below long-term expectations given the funds employed".

A final dividend of 2 cents per share brought the year's total to 4cps, from nil the previous year.

The dividend represented 80 percent of the year's continuing businesses net profit after tax (npat). Company policy was for dividends to equate to 60 percent of Npat, but the directors declared the dividend "considering the operating cashflow for the year and the strong equity position of the company".

The company improved earnings in all its business units except Rentals New Zealand.

Current performance and booking trends saw a softening of the backpacker and UK markets, in particular.

The strength of the New Zealand and Australian dollars was also contributing to lower on-the-ground spend once visitors arrived.

The 2011 financial year was expected to show minimal rental revenue and visitor growth, Mr Smith said.

With the period to October 31 being a key booking period for rentals operations, THL was not in a position to provide appropriate earnings guidance for the year. An update on the first six months would be provided at the annual meeting in November.

Revenue for the rentals business, excluding fleet sales, was up 3 percent to $118m for the year ended June 30, but dipped in the second half by 5 percent. Rentals earnings before interest and tax (ebit) was down 1 percent to $9.3m, but this included a new recharge of $2.7m in information technology costs.

Rentals New Zealand ebit was down 58 percent to $1.9m while Ebit for Rentals Australia grew by 51 percent to $7.4m.

The year-end loss of $1.9m for the CI Munro manufacturing business was an improvement from the loss of $3.6m in the prior year.

THL's tourism businesses (Waitomo, Kiwi Experience and in Fiji), with ebit of $6.1m, delivered an increase of $2.2m on the prior year.

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