Tourism Holdings to remain listed, use balance sheet to fund acquisitions

Tuesday 4th August 2015

Tourism Holdings, the campervan rental company, will remain listed and says it has the balance sheet strength to take on debt to fund acquisitions.

The announcement comes after the Auckland based company hired First NZ Capital in April to help with a review of its capital structure. Tourism Holdings has improved earnings across its businesses by selling off excess fleet capacity and focusing on margins, and in April lifted its profit guidance for a third time to between $19.5 million and $20 million for the year ended June 30, from $11.1 million the previous year.

The company said today it is targeting profit of at least $30 million in 2019 from existing businesses and will also use its balance sheet flexibility "to focus on value accretive acquisitions, either globally or domestically."

The company also said it will target a dividend payout ratio of 75 percent to 90 percent of annual net profit. "If a situation occurs which will impact NPAT negatively in the short term, operating cash flow will be used to assess the level of dividend pay-out to retain some level of consistency in dividend streams," it said.

Tourism Holdings would use financial ratios "consistent with a Baa/BBB credit rating", it said.

"The company is preparing to announce a number of new operational initiatives at both the annual results release and annual meeting in November," it said. "Whilst still in progress, these initiatives will increase revenue and earnings, selling more services to rentals customers and vehicle sales in the New Zealand market."

Tourism Holdings shares rose 2.1 percent to $1.79.

BusinessDesk.co.nz

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