Tourism : 18Sep2020 - thl FY20 Annual Results Presentation

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.

Important notes

• All financials are in NZ dollars unless stated otherwise (throughout presentation).
• All comparisons are against the prior corresponding period (pcp).
• The average NZD:AUD cross-rate (average of the 12 month rates) for FY20 was 0.9480 (FY19 - 0.9383).
• The average NZD:USD cross-rate (average of the 12 month rates) for FY20 was 0.6369 (FY19 - 0.6720).
• 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. Lease liabilities resulting from IFRS 16 are not considered in determining 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.
• Net debt refers to bank borrowings less cash and cash equivalents.
• The balance sheet is converted at the closing rate as at 30 June 2020. The USD cross-rate used was 0.6426 (FY19 - 0.6694), the AUD cross-rate used was 0.9340 (FY19 - 0.9561) and the GBP cross-rate used was 0.5220 (FY19 - 0.5284).
• The 2020 financial year includes the following non-recurring items:
• • the partial Togo exit undertaken in March 2020 which resulted in a one-off gain of $9.3M including tax and foreign exchange benefits;
  • a tax benefit of $1.1M in the USA; and
  • the write-off of $3.1M of goodwill attributed to Kiwi Experience.
• The 2019 financial year includes the full-year result for Togo Group and a non-recurring gain of $1.9M relating to a deferred tax benefit in the USA.

IFRS 16 | Leases

thl's FY20 results include changes in financial disclosures resulting from the adoption of IFRS 16:

• Right-of-useassets of $69.6M as at 30 June 2020 and lease liabilities of $81.9M as at 30 June 2020 have been recognised on the thl balance sheet, increasing total assets and total liabilities.
• Opening retained earnings as at 1 July 2019 has been adjusted downwards by $7.2M, net of tax.
• FY19 amounts in the financial statements remain as previously reported.
• The impact on thl's FY20 income statement is a negative impact of $1.0M on NPAT, a positive impact of $2.6M on EBIT, and a positive impact of $10.4M on EBITDA. These have resulted from a change in lease expense classification, from operating expenses of $10.4M to:
• • Financing costs of $4.0M; and
  • Depreciation of $7.8M.
• The impact on thl's FY20 cash flow statement is that operating lease payments of $10.4M have now been recognised as:
• • Interest expense of $4.0M in operating activities; and
  • Lease liability principal repayment of $6.4M in financing activities.
• thl's banking covenants are calculated on a frozen GAAP basis.