Good afternoon, everyone, and welcome to the 40th annual meeting of Tourism Holdings Limited. I'm Cathy Quinn, your Chair. I've been advised we have a quorum, and as it's now 12:00 P.M., I'm pleased to declare the meeting open. We're pleased to welcome our shareholders again here at Waitomokia. It's been over a year now since we opened our new rentals, sales, and head office location here in Auckland. For those of you here today, you will have the opportunity for a guided tour site following the meeting if you wish. For those of you who have followed the process in the notice of meeting to join online, you can vote and ask questions through the virtual meeting platform. Just click Ask a Question, select the item of business, type your question, and click Submit.
I'd encourage you to send your questions through now so we can work through them as we go. If you run into technical issues, please refer to the online portal guide or call the helpline, 0800-200-220 in New Zealand or 1-800-990-363 in Australia. For those in the room, when it's time for questions, please hold up your admittance card, and someone will bring a microphone to you.
Please tell us your name and whether you're a shareholder, proxy holder, or corporate representative. A matter of housekeeping, if the fire alarm sounds, please follow the instructions of our crew, who will guide you to the nearest assembly point outside. I'm pleased to be joined by my fellow Directors, Rob Baker, Barbara Chapman, Rob Hamilton, and Sophie Mitchell, together with our Managing Director and CEO, Grant Webster.
Also with us are our Chief Financial Officer, Ollie Farnsworth, and our Company Secretary, Amir Ansari. I'd also like to welcome members of our executive team here online and present in the room, and representatives from our auditors, EY, our banking partners, ANZ, Westpac, and ASB, Royal Bank of Canada joining online, and our solicitors, MinterEllisonRuddWatts. As shown on the screen, we've received 98.7 million valid proxies and postal votes, representing 44.6% of the ordinary shares on issue. Of those, 84.2 million have appointed the Chair of the meeting as proxy. I'll begin with some reflections on the year and the board's perspective. I'll then hand over to Grant for the CEO's address before we move to the formal business and resolutions. We'll finish with an open question-and-answer session. Before we begin, I'd like to provide an update on the recent non-binding proposals received by Tourism Holdings.
As you know, we have been progressing a comprehensive due diligence process with both bidders, BGH Consortium and Indie Campers. I can confirm that the due diligence process has now largely concluded, and THL has received non-binding proposals from both parties. The board is reviewing those proposals and is engaging with both parties regarding their terms. I recognize that shareholders may want an update, particularly on pricing. However, those discussions remain confidential, and while we are negotiating with two parties in a competitive process, the board does not believe it is in the best interest of you as shareholders to publicly disclose those terms at this stage. You can be assured that the board's focus throughout this process is in what is in the best interest of THL shareholders. Both proposals remain non-binding and subject to conditions.
There's no certainty that either will result in a transaction, and shareholders do not need to do anything at this time. The board will continue to keep the market informed in accordance with our continuous disclosure obligations. Meanwhile, Grant and the team have continued to focus on running the business for the long term, and we've continued to make investments in our products, people, and properties. I want to recognize the extra load this has placed on the THL team, alongside running the business and delivering multiple major strategic initiatives. Today is THL's 40th meeting, its annual meeting. It's a milestone worth pausing on and a good vantage point from which to look at where we are today and the year we've just had. There's no denying that the world today is in a difficult place. Geopolitics has moved from the background of business to the foreground.
Conflict in the Middle East has pushed up fuel prices significantly and impacted on international travel. Interest rates and confidence continue to weigh on large household purchases, including motor homes. Global shocks are happening faster and more frequently than before, often with little warning. The board's view is that this volatility is no longer a passing phase, and it's our responsibility to see THL is built to perform through it rather than waiting for more stable conditions. Against that backdrop, we see FY 2026 as a strong year for THL, and that we did what we said we would. 12 months ago, we acknowledged that THL's performance was simply not good enough. We just released our growth roadmap, built around four strategic initiatives, and we expected THL to return to profit again in FY 2026. Over the past 12 months, we have decisively executed against all four initiatives.
We sold the U.K. and Ireland business for around NZD 57 million. We closed our Brisbane factory and consolidated manufacturing in Hamilton. We exited two loss-making dealerships in Australia, and across North America, we delivered fleet, labor, and procurement synergies. Each of these decisions impacted our crew, and I want to acknowledge both the care with which the team managed those changes and the professionalism of our crew throughout. The performance for FY 2026 reflects this decisiveness. On a continuing operations basis, underlying net profit after tax rose 34% to NZD 46.1 million, while statutory profit was NZD 39.9 million compared with a loss in the prior year. Rental revenue reached a record NZD 517.5 million, operation cash flow increased by 67%, and net debt reduced from NZD 492- 436 million.
Shareholders have shared in that growth with a full-year dividend of NZD 0.105 per share, up 62% from the full year FY 2025 dividend, and at the midpoint of our payout ratio. These are meaningful steps in the right direction, but THL still remains some way from our 15% return on funds employed target, and the board is focused on seeing continued growth to progress towards that. North America is the largest strategic priority for the board and management. Canada is performing very well, and the U.S. has improved year-on-year, but it's a long way from where it needs to be. Against that backdrop, the board is actively exploring alternative strategic options for the North American business. We are clear that the return on funds employed in the U.S. needs to improve, and any continued capital allocation must be supported by a reasonable outlook for improved returns.
I'd now like to touch on our goal of NZD 100 million in underlying net profit after tax. We continue to see this goal as the right ambition for THL, despite the fact of the changes that have taken place in the world. We believe the building blocks are in place. First, growing our rental fleet in markets where international tourism continues to grow, alongside an improvement in utilization and rental yields. Second, manufacturing and procurement benefits as lower-cost vehicles progressively rotate through our rental fleet. Third, building on cost savings already achieved, with further initiatives underway. Finally, RV sales. We expect part of the RV sales market to recover over time, although we're not expecting a return to previous market conditions. We communicated this goal more than 12 months ago. Since then, we've had the conflict in the Middle East driving up fuel prices and disrupting travel.
The RV sales market was also expected to further recover, though, through its recovery by now. These factors affect the timing and shape of the journey, and some of the growth we expected in FY 2027 is now likely to come later. Ultimately, the opportunity is reliant on an overall macroeconomic improvement. But achievement of the goal with our original timeline, being FY 2029, is still possible, and as an organization, THL remains focused on achieving it.
Before I hand over to Grant, I'd like to acknowledge some changes around our board table. On behalf of the board, I'm pleased to welcome Barbara Chapman, who brings significant governance and experience to the board and stands for election today. Today also marks Sophie Mitchell's final meeting as a THL director. Sophie joined the board in 2022 following the merger with Apollo, having previously chaired Apollo through its global expansion and an IPO.
Sophie, on behalf of the board, thank you very much for your contribution to THL's governance over the past four years, and in particular, your leadership of the remuneration committee. Lastly, I want to thank our people around the world. FY 2026 was a demanding year, with significant volatility across the globe, change in our business, and uncertainty, and additional workload created by the takeover processes. Throughout that, our crew continued to focus on looking after our guests so that THL continues to be that leader in the RV rentals industry. So, on behalf of the board, thank you for your continued commitment to THL. I'll now hand over to Grant.
The obligatory moving up of the microphone. Thanks very much, Cathy. Good afternoon, everyone. I want to pick up where Cathy left off with the world we're operating in. I don't think anyone in this room needs convincing that it's a challenging one, but it may always be that way, or at least for some time, so we will act accordingly. When I stood here a year ago, the big unknown was the ongoing impact of tariffs. This year, it's a war. When the conflict in the Middle East escalated in March, fuel prices spiked, flight networks were disrupted, and travelers around the world hit pause. Last month, I joined a business forum here in Auckland, and the message from almost every speaker was the same. Volatility isn't just an interruption in the operating environment, it is the operating environment.
I agree, and I think the changes, the questions that shareholders should ask today from managers is no longer, "Did you predict the shock?" But it should be, the better question is, "Do you know your business well enough to respond accordingly when it arrives?" That's the test I think we should apply to THL. FY 2026 was a year of decisive execution. We returned to profit growth, grew the dividend, expanded the rental fleet, delivered record rental revenue, executed cost-out initiatives, and reduced net debt. All of that is done, and it's the reason I believe THL is a sharper, more focused business than it was 12 months ago. Our return on funds employed remains below target, and the reasons are clear: our U.S. business, our Australian retail sales business, and vehicle sales more broadly on a global basis.
Understandably, there's a lot of noise around the state of the RV sales industry, and I will touch on our views on the future of this market shortly. However, it's important to take a moment to focus on what THL actually is. We are, at our heart, an RV and tourism business with rentals as its core engine. Although we have RV sales and dealerships and we sell brand-new vehicles, the primary reason we're in RV sales is to rotate and sell our RV rental fleet. Rentals is the biggest contributor to our earnings and is the engine that is performing. Not only did we grow the rental fleet by over 11%, we did that whilst getting more revenue out of each rental vehicle, despite the disruption late in the financial year.
That's the business doing what it should be doing, putting more vehicles on the road and earning more from each one of those vehicles. The demand for RV rentals is real. Before the conflict in the Middle East escalated, forward rental revenue in New Zealand, Australia, and Canada were each running around 20% or more ahead of the year before. Then customers paused. Many of them simply waited to see what would happen before committing to book and travel. We've always read that as a confidence and travel cost issue, not a structural change in how people want to travel, and the evidence since then has backed up that proposition. When we reported our result in August, the recent booking intake trends we communicated validated that a proportion of that demand was deferred, not lost.
The disruption has nevertheless had a real impact on what FY 2027 could have been, particularly the first quarter. Even with this impact, in August, international visitor arrivals to New Zealand were up 8% on a year earlier and back to 99% of the pre-COVID levels, with record August arrivals from Australia. I believe there is a real reason why, amidst such global uncertainty, that the tourism outlook has shown particular resilience. In a less certain world, the freedom to go where you want, at your own pace, in your own space, has real appeal. And the countries we operate in are simply beautiful places to visit in an RV. That's why we keep coming back to RV rentals as the core of the THL model. It's also why our build, rent, and sell model really matters.
We design and build vehicles for rental, we earn money through their rental life, and we earn again when we sell them. When one part of that cycle is under pressure, the others give us options. Even in one of the toughest RV sales markets in decades, our ex-rental vehicles in Australia and New Zealand still sold at margins of around 30%. That says a lot about the quality of our fleet and the care that our team take in looking after them. The tougher part of the story of the industry that we're in is RV sales. The industry and ourselves expected a better recovery to begin in FY 2026, and it didn't come to the degree that we expected. Our revenue from the sale of goods, primarily RV sales, fell 22% in the last financial year.
In the U.S., wholesale RV shipments have been running well below the prior year, and a number of industry forecasters have cut their outlooks several times across this calendar year. Interest rates, fuel costs, soft consumer confidence are all weighing on people's willingness to make one of those big discretionary purchases. Until recently, the industry described this as a cyclical downturn that would come back once interest rates started to fall. However, that's likely part of the market, but over the last five years, we've seen cumulative inflation push the price of a new RV up faster than many household incomes have moved. And for some customers, affordability has become an issue when looking at new RVs. Some of that demand will absolutely come back as rates fall, fuel costs ease, but some of it may not. Industry analysts are saying much the same thing.
The important question is, what does that mean for THL? Our view is simple. We're actually in a better place than most in the RV industry to adjust to it. THL is fundamentally different from traditional RV manufacturers and dealers. Selling RVs is the last step in the vehicle life, not the main reason we own it, and this gives us flexibility that other parts of the industry don't have. If the retail market will take fewer vehicles each year, we plan around selling fewer, buying and building fewer, and keeping vehicles on fleet for longer. As such, we manage the age and stage and mix of our rental fleet so that what we have on offer for both renters and buyers is what they want and what they can afford at different price points. We're already doing this.
Our fleet rotation this last year was the lowest in some time, and we did that whilst growing the rental fleet and reducing debt. A well-maintained, lower-priced ex-rental vehicle is exactly what we think a cost-conscious buyer is looking for. We're not waiting for a quick rebound in the sales market to where it was. We've reshaped our retail business and manufacturing capacity to the market that we have today, whilst keeping the flexibility to step up when some of that demand comes back. Moving on to the United States. It's the world's largest RV market, and it's also our largest opportunity for improvement. I said that last year, and it's still true. As Cathy mentioned, improving returns in the United States is the largest strategic priority for management and the board, and this includes us exploring all appropriate strategic options. But we've taken action in FY 2026 as well.
We've cut average funds employed in that country by around NZD 60 million. We've taken cost out. We've brought our U.S. and Canadian teams closer together and shifted fleet to where the demand is. We also opened up more domestic channels for rentals and non-tourism channels. It's not all negative in North America. Canada is actually performing really well and delivered a record rental summer. However, as we know, the U.S. is at the other end of the spectrum. International visitation to the U.S. was severely impacted for the entire year, and while our North American business saw some improvement year-on-year, it's a long way away from where it needs to be. While we've been tightening up in some areas, we've kept investing where the returns are proven, particularly in New Zealand and Australia. I'm pleased to show on the slide here our new Queenstown site, Paeraki.
It opened on the 17th of August. Queenstown is one of our most in-demand destinations in the country, and our previous site was, to be honest, just simply too small. We were turning away rental demand, so the new site gives us the capacity to better serve that market. It also includes an expanded RV Super Centre, the showroom, and a service center, allowing us to sell and service vehicles across the South Island just as well as we rent them. The additional space has enabled us to build greater efficiency into the operation, including integrating things like an automated wash system. It has a similar look and feel to here at Waitomokia and represents the kind of modern, efficient facility we want to see across our network.
Even though we've now been at Waitomokia for over a year, it would be unfair to talk about THL's investment on this site without really mentioning some of the benefits. We feel really fortunate to call Waitomokia home, and we're now seeing a number of the benefits come through in greater operational efficiency, easier vehicle movements, and less reliance on overflow parking on other sites. Importantly, the scale of the site has given us the capacity to take operations to the next level. One of our biggest days over the last 12 months saw us process more than 80 customer pickups and a similar number of drop-offs in one day. Across our peak pickup window during the day, that's a vehicle being processed and heading out with a customer roughly every three and a half minutes. We're making similar investments in outside New Zealand.
In Australia, we moved our Perth and Sydney operations to new larger sites. Both previous locations were constrained, and the new sites have given those operations significantly more capacity and efficiency. Alongside investment in sites, we're continuing to invest in our products. Nothing demonstrates our RV expertise more clearly than the vehicles that we design and build. I'm pleased to have some of those vehicles on display here today and encourage any of you here joining in person to have a look at the products afterwards and join us on a site tour. This year, we launched the premium Winnebago range in Australia and New Zealand with nine new layouts across three chassis platforms, led by the wonderful Winnebago Odyssey. Designed by our Action team and built in Hamilton, the range combines premium design, quality, and functionality, representing outstanding value at the premium end of the market.
In my view, I reckon it's one of the strongest, most impressive products we've ever produced. At the other end of the market, we're responding to a more price-conscious consumer with a very different proposition. Action Manufacturing has developed new two-berth high-top and four-berth Voyager vehicles on the Chinese LDV platform for our New Zealand and Australia rental fleets. While these are currently mainly a rental product, we will see them on the sales lots as well. It's a smartly designed vehicle targeted at the more adventurous and value-conscious customers. It's got a fixed internal bed, a pop-top roof with internal access. It easily accommodates a young family of four, and we see it as a highly competitively priced product in a sector that has been attracting more competition, including vehicles that have been manufactured in China.
Our advantage is that we bring decades of experience designing and building RVs for rental use, so customers can have the confidence that their vehicles have been designed and built with an understanding of durability from intense use. So at the value end, we've developed a low-cost, feature-rich product, and at the premium end, we've invested in differentiated flagship products that give our customers a compelling reason to buy. While RVs are at the core of THL, we haven't forgotten where we've come from, which is New Zealand tourism. That heritage is still a strong part of THL today through our Discover Waitomo and Kiwi Experience businesses. We're proud to be the operators of these important businesses in the New Zealand tourism landscape. THL has been part of Waitomo Tourism and has owned and operated Kiwi Experience since the 1990s, and both are absolutely household names in New Zealand.
On a return on funds employed basis, New Zealand tourism has been THL's highest performing division for some time. Both businesses are supported by really dedicated teams with a deep knowledge and history of their respective businesses. From the next financial year, our Waitomo business will take a different structure as the lease for the main Waitomo Glowworm Caves expires in June 2027. We are in discussions with the cave owners about what THL's role in the attraction could look like going forward. The discussions are ongoing. We still will operate our other Waitomo attractions, including the Ruakuri and Aranui Caves, Black Water Rafting Adventures, and the Waitomo Homestead, and we intend to continue to operate these regardless of the outcome of the current discussions.
As part of our growth roadmap last year, we indicated that the expiry of the main Glowworm Caves lease was expected to result in around a 50% reduction in EBIT for that division from FY 2028 onwards. We believe that that remains an appropriate assumption at this point in time. This has been a year of significant change, and change asks a lot of our people and crew. Some of the decisions we've made have frankly been exceptionally difficult and have had a direct impact on some of our very longstanding crew, and we should really acknowledge that.
But ultimately, these decisions we needed to make for the long-term strength of THL. The safety and wellbeing of our crew has remained our first priority. We operate in inherently higher risk environments, and our aim is that every one of our crew, guests, and community members goes home safe every day.
This year, we launched our 10,000 Reasons Why campaign, encouraging the crew right across THL to share their personal reasons why getting home safely means so much to them. We had Marlene in Calgary share that her why is exploring more of Canada with her dog and having new adventures together. Fiona in Brisbane shared that hers is to continue to enjoy her love of performing in theater. The campaign's been hugely successful at making health and safety really personalized and meaningful across the organization. Our multi-year digital transformation is now complete, and the focus has shifted from implementing common systems to extracting value from them through better data and faster decisions. That same focus extends to how customers discover us.
As artificial intelligence changes the way travelers research destinations and brands, we are adopting our content at the same time right across our digital channels, so THL remains a trusted authority in RV travel. Turning to the update on performance in the first quarter and the rental outlook. The operating environment, as we said, remains pretty volatile, and at the moment, there is no clear or consistent booking trend across our markets. We can have weeks that are strong and well ahead of last year, followed by weeks that are flat or behind, and the picture also varies considerably by market and by travel month. The conflict in the Middle East has clearly continued for longer than expected and remains a factor influencing some of the travel patterns.
We're also seeing some softness from Australian consumers, given the current economic environment and consumer confidence in Australia, and that's evident in travel by Australians both within Australia and those traveling to New Zealand. Within that context, though, we are tracking relatively well with underlying net profit after tax in the first quarter broadly in line with last year. Our forward rental revenue for the Southern Hemisphere is currently up about 10% compared to the same time last year, which, given everything that has happened in markets around us, gives us confidence in the underlying demand for RV rentals. Forward rental revenue in the Northern Hemisphere is still very early in the booking window, so it's nothing meaningful to comment on at this point in time.
Offsetting that positivity, vehicle sales remains challenging relative to the prior period, particularly in North America, which frankly is as expected and very much in line with broad industry commentary. Our priorities for the year ahead are clear. First, grow rentals. We are aiming to efficiently manage fleet utilization and yield and capture demand as deferred questions from customers comes back and confidence returns. Second, we must lift returns in the U.S. with clear discipline on capital allocation while actively exploring other strategic alternatives.
Third, we want to keep our sales business focused, invest in our own products, and be ready as the market turns. Fourth, bank the benefits of what we've already done, manufacturing consolidation, North American integration, our global systems, and our cost-out program. Fifth, keep our balance sheet strong. Return on funds employed remains our key measure. 15% return on funds employed remains our key target.
Sixth, progress the Waitomo arrangements and confirm its position beyond next year. As always, keep our people safe. Thank you for your support. I will now hand back to Cathy.
Thank you, Grant. I will now move into the formal part of today's agenda. We will be conducting a poll vote for the resolutions today. If you are an eligible shareholder, proxy, or corporate representative attending in person, you should have received a voting card. When it is time to vote, please tick the relevant box to indicate whether you are voting for, against, or abstaining from the resolution.
Once the resolutions have been presented, MUFG representatives will collect the voting cards before we move into general business. The votes will be counted and collated with postal and online votes. If you are voting online, you can vote by clicking the Get Voting Card button. There are step-by-step instructions available in the online portal guide if you need help. Voting will remain open until five minutes after the meeting ends, and results will be announced on both the NZX and ASX.
The resolutions set out in the notice of meeting are being considered as ordinary resolutions. This means they need a simple majority of votes cast by shareholders entitled to vote and voting on the resolution. As the first resolution relates to my own re-election, I will ask Rob Hamilton to take the chair for this resolution.
Thank you, Cathy. In accordance with the requirements of the NZX Listing Rules and the company's constitution, Cathy Quinn is retiring by rotation this year, and being eligible, has offered herself for re-election. Before we put the resolution to shareholders, I will invite Cathy to say a few words.
Thanks, Rob. I have been on the board since 2017 and Chair since 2022. I bring to the role over 30 years' experience as a corporate lawyer and substantial experience as Director across a number of companies. I am currently also a Director of Fonterra, Fletcher Building, Rangatira, and serve on the Council of University of Auckland. Tourism Holdings is in a period of uncertainty as we manage our responses to the approaches from BGH and Indie Campers. The board's approach is to work through these proposals in your best interests and govern the company regardless of any transaction. My skills and experience as a corporate lawyer and a Director are valuable as we manage this process. We also need continuity and stability on the board at this time. Regardless of the current process with BGH and Indie, I believe Tourism Holdings has a bright future.
We have a fantastic product and attractive tourism destinations, and are the crew that are focused on giving every customer a positive and memorable travel experience. Please cast your vote in favor of my re-election.
Thank you, Cathy. I now propose that Cathy Quinn, who retires by rotation and is eligible for re-election, be re-elected as a Director of the company. Are there any questions from the floor? Are there any questions online?
Yes, we have a question from Stephen Mayne.
Oh, sorry.
My question is, you have quite a few roles, and how much time does each role take up?
The question Sorry, is that working? The question was, I have quite a few roles, how much time does each role take up? Yes, I do have quite a few roles. It really depends on what's going on in each company, so I can't tell you what each individual one takes up. But I'm sure my colleagues can rest assured you that my commitment and dedication to Tourism Holdings is unwavering, and I'm always available. Grant Webster is one of the few people that we can talk at any time. Grant's one of those people, unfortunately, you can text at 4:00 A.M or 5:00 A.M in the morning, and he's still working, which is possibly not a positive attribute, actually.
I can reassure you from a director point of view, Cathy is very dedicated, committed, and always available. Any other questions from the floor? No, I don't see any. Amir Ansari, any questions online?
Yes, one from Stephen Mayne. At last year's AGM, the Chair indicated that some NZ institutional shareholders had urged the company not to put up an Australian-style remuneration report resolution for vote. Stephen asks whether they could be named. He also asks whether THL had any discussions this year about offering a remuneration report vote, and notes that the answer to this question could influence how Stephen votes in respect of the Chair's re-election today.
Thanks, Amir. Thanks, Stephen, for the question. No, I can't tell you which shareholders asked us to think about putting up a resolution last year, although I believe you didn't indicate it with your question last year. Yes, we did consider it, and we decided we wouldn't do so this year. We have actually given a very comprehensive breakdown on Grant's remuneration. We're also always happy to look at if there's additional helpful information that we can give shareholders relating to the CEO REM, so you can be satisfied that it's fair to the CEO, the company, and shareholders. We certainly believe it is, and we seek to do that. In New Zealand, THL is mostly owned by New Zealand shareholders. There are very few Australian institutional or other shareholders.
The few companies in New Zealand that tend to put up their remuneration report for a vote are those that have significant Australian shareholding base. We don't have that. So that's about that. I'm certainly happy that we could continue to look at it, if we remain listed following this process with BGH and Indie Campers.
Thanks, Cathy. Amir, any further questions online?
No.
Right. We have no more questions, so please cast your vote on the voting card or online in relation to resolution one. I will now pass the chair back to Cathy. Thank you.
Thanks very much, Rob. The next resolution relates to the re-election of Rob Baker as a Director of the company. In accordance with the requirements of the NZX Listing Rules and the company's constitution, Rob Baker is retiring by rotation this year, and being eligible, has offered himself for re-election. I will now invite Rob to speak.
Thank you very much, Cathy. Thanks very much, Cathy, and good afternoon, everyone. Rob Baker is my name. I live in Brisbane, over in Australia. I first became involved with this business through being appointed to the Apollo board in January of 2020. Some of you may remember that by March 2020, COVID was a thing, and governments were shutting down their borders all around the world, which meant it basically shut down the travel and tourism industry.
So if any shareholder wishes to put forward the view that I have got a lousy sense of timing, you are probably right on that. I then became involved with THL. As you know, Apollo and THL, through their boards and management, both successfully navigated that very difficult COVID period, and the businesses came together in November 2022, and I was invited to join the THL board.
My career started in 1979 in a professional services business known as Price Waterhouse, now known as PricewaterhouseCoopers, PwC, and I stayed there until 2014. My professional expertise covered areas such as buy and sell-side due diligence, it covered capital raisings and IPOs, covered external audit and financial reporting, and internal audit. So a broad range of expertise which I was able to assist businesses across, some in specific industries, and of course, more broadly across other industries. Some of my partners would say that perhaps I was not that great at professional services because more and more the business asked me to get involved in running parts of their business, which is what I ended up doing. So I have both that professional expertise and the role of being responsible for running businesses. I retired in 2014.
In 2013, the Flight Centre Travel Group contacted me to see if I would be interested in joining their board, specifically to take on the role of the chair in the audit risk committee, which I still have today. For those who are not familiar, Flight Centre Travel Group is a global business. We operate in 22 countries, travel and tourism businesses. My wife did not want me to spend too much time at home when I retired from PwC in 2014, so I accepted some other board roles. I chair two small companies. One is involved in financial wealth management, and another is an IT software development company.
Just to make sure I didn't spend too much time at home, I also agreed to do pro bono or volunteer roles on the boards of businesses that are involved in things like aged care, social services, a university, and treasury and investment. My professional career was a portfolio career, my director career is a portfolio career, and what I love about that is it lets me see a broad range of issues across a broad range of industries, and I think it makes me a better participant in decisions that need to be made. I've been delighted to be part of the THL board, and I'd be delighted to continue to be part of the THL board.
Thanks, Rob. I now propose that Rob Baker, who retires by rotation and is eligible for re-election, be re-elected as a director of the company. Are there any questions on this matter from the floor? Are there any questions online?
There are not.
Okay. Please cast your vote on the voting card or online in relation to resolution two. The next resolution relates to the re-election of Grant Webster as a Director of the company. In accordance with the requirements of the NZX Listing Rules and the company's constitution, Grant Webster is retiring by rotation this year, and being eligible, has offered himself for re-election. I will now invite Grant to speak.
I think people have probably heard enough from me today, but I will just make a couple of comments. I would just really like to thank shareholders for the considerable support that I have had over the many years that I have been with THL. I have been very fortunate to have a large part of my career with THL, and it has given me a really strong depth of knowledge of our business, of our people, our markets, as well as strong relationships in both global tourism and RV industry. We are at an important point of the company's development, and I do believe that my experience, global connections, and understanding of the business can continue to add real value as we address what is still some big outstanding opportunities and developments ahead of us.
It does remain a real privilege to be part of THL and part of the Board, and to represent you as shareholders. So if re-elected and if you choose to vote for me, I look forward to continuing to serve you and help THL realize that potential.
Thanks, Grant. Are there any questions from the floor for Grant? Are there any questions online?
We don't have any.
Excellent. Please cast your vote on the voting card or online in relation to resolution three. The next resolution relates to the election of Barbara Chapman as a Director of the company. In accordance with requirements of the NZX Listing Rules and the company's constitution, Barbara Chapman was appointed by the Board during the year, retires, and being eligible, has offered herself for election. I will now invite Barbara to speak.
Thanks very much, Cathy. I am delighted to be here today, and thank you for the opportunity to present myself for election to the THL Board. As Cathy said, my name is Barbara Chapman, and I am new to THL, having been appointed by my fellow Directors in late May. I am currently the Chair of Genesis Energy and Asteron Life Insurance. I am the Deputy Chair of the New Zealand Initiative and a Director of BNZ. I am the former Managing Director and CEO of ASB Bank, and in my executive career, have worked largely in banking and insurance in Australia and in New Zealand. Right now, the key focus of our Board is on the potential acquisition, as others have outlined. But putting that to one side, as shareholders, you should rightly challenge what every Director brings to the table.
When I was approached to join this Board, I took stock of what capabilities I could bring that would add value to our shareholders. In doing so, I paid close attention to the THL skills matrix, and while not having experience in the tourism sector, I believe my capabilities strongly align in four areas that are important to the success of this company. In particular, I bring extensive listed company and C-suite leadership and governance experience, deep capital markets and financial and risk management experience, HR and people leadership experience, including the chairmanship of a number of listed company people and rem committees, and experience in navigating digital disruption and the inherent business transformation challenges that this disruption brings. I believe that staying up-to-date and current as a Director is important.
None of us can solely rely on our experiences from our executive careers to navigate the complexities all companies are facing. In that regard, this year, I attended a residential program at Stanford University on AI, as well as a residential program on AI at UC Berkeley. In the six months between those two programs, a lot had changed in AI, and I intend to stay up-to-date in that area and apply that to THL. In my executive career and on all my current boards and prior boards, my attention has firmly centered on competing strongly, operating with urgency, executing well, and providing great experiences for our customers, and I welcome the opportunity to bring that focus to THL. Thank you for considering my candidacy as a director of your company. Thank you.
Thank you, Barbara. I now propose Barbara Chapman be elected as a director of the company. Are there any questions on this matter from the floor? Are there any questions online?
There are not.
Thank you. Please cast your vote on the voting card or online in relation to resolution four. The next resolution relates to the directors setting the fees and expenses of our auditors. EY New Zealand was THL's auditor for FY 2026. I propose that the directors to authorize to fix the fees and expenses of the auditors for the ensuing year. Are there any questions on this matter from the floor? Are there any questions online?
No questions.
Thank you. Please cast your vote on the voting card or online in relation to resolution five. That concludes the formal part of today's meeting. For those of you that are here in the room, representatives from MUFG will now come around to collect your voting cards. For those of us joining online, please make sure your votes have been submitted. I'd now like to share the outcome of the proxy and postal votes lodged for these resolutions before the meeting. You'll see the results displayed on the screen.
We'll now move to shareholder questions and general business. I'd like to open the floor to any questions or matters shareholders would like to raise. We'll start with those in the room here and then come to questions for those joining online. Are there any questions in the room? Sorry, could you just wait? A mic will be brought to you.
Thank you. John Shearer, shareholder. You seem to have turned a corner and be positively heading, which is great. Congratulations. The board here looks very competent indeed. So, why are you still considering offers for takeover?
We've had approaches from those parties in relation to wishing to seek a transaction with us. We have a duty as directors to properly consider that. No decision has been made. If we decide that something, we do think there is a transaction which is in the best interest of shareholders, then the process would be that we would recommend that to shareholders, and then you will get to vote on it. But no decision has been made at this point, but we have a duty to properly consider those proposals in front of us. Are there any other questions in the room? Yes.
Hello, Eva Quidding, I am a shareholder. May I ask why Ms. Sophie Mitchell is not standing for re-election, and may we hear some final words from you upon your departure?
Sophie, would you like to respond? We were much disappointed that Sophie has decided to retire, but Sophie, please feel free to comment.
Thank you very much for the question. My decision was actually based on, I am technically the longest-serving board member. I joined the Apollo board in 2016, it is 10 years, and I believe firmly in board renewal. I think leaving just makes sense at a 10-year anniversary. I contemplated whether it was the right thing to do during the corporate activity we have got underway, but my fellow directors have years of experience in that space, so I do not think I am leaving a gap in that sense. That was my decision-making process. Just comments on my time on the board. It is an extraordinary business. Everybody who works here on the board, the management and everything, are incredibly passionate about the business and the industry that we are in. I think the business has a great future moving forward. It is a wonderful product.
I must confess, I did not know a lot about motorhomes before I joined the Apollo board 10 years ago, but I am now a firm convert. It is a wonderful way to see countries like New Zealand and Australia and Canada, and the States where we operate. It does not suit all countries, but we are in the ones where it definitely works. Thank you for your question.
Thanks, Sophie. Thanks for the question. Yes. There's a lady up here, just wait for the mic if you wouldn't mind.
Hi, I'm Jill Schroeder, a shareholder. I was interested in you, Barbara, and your studies in AI. How do you think this will affect the business long term?
Look, I think the biggest capability all businesses need to learn when dealing with AI is judgment, because AI can do a lot, but you definitely need humans to apply judgment to the outcome of that. We are seeing AI disruption in a lot of sectors where workloads are changing, skills are changing, jobs are not set and forget anymore. There's different components of a job that needs to be worked differently across an organization, and I think we'll face those sorts of challenges here as well.
I see it much more as an opportunity than a threat, and I think that building judgment inside your organization, having great data to work with as you apply yourself to the decisions that you're making in the future, I think there's a lot of potential to get things right and to create a good vision for a company and great jobs for our people.
Are there any other questions? Thank you, Barbara. Are there any other questions in the room? Yes, Sharon.
May I ask each of the Directors to share, do you own an RV or do you own RVs? And if you do, did you purchase from THL or one of its subsidiaries? Thank you.
Perhaps I could answer that. I may be bold enough to seek to answer that on behalf of my colleagues, and if I get it wrong, they will tell me otherwise. I believe that the only one of the Directors that owns an RV is actually Grant Webster, and he definitely bought it at Tourism Holdings, and he definitely paid an appropriate market price. Thank you. Are there any other questions in the room? One more.
Regarding donations, which charitable organizations does the company donate to?
Grant.
One of the things we do quite often is donations in kind. There will be different events where people need support vehicles for different things. We do a number of those across the world. That could be, National Heart Foundation has done a lot. There have been a number of cancer societies in Australia, around the world. That is a key thing that we do. Here in New Zealand, it is the Graeme Dingle Foundation that we are most closely associated with, and have been for a very long period of time.
Thanks, Grant. Are there any other questions in the room before we move to questions online? Amir, questions online?
Yeah, we have three of them. The first one is from Stephen Mayne, who asks how much THL has paid Jarden and MinterEllisonRuddWatts as the respective financial and legal takeover defense advisors, and whether THL has retained any other external advisors to assist with that process, such as PR advice or proxy solicitation support.
Sure. Thanks for the question, Stephen. I cannot tell you the amount of fees that we have paid Jarden and MinterEllisonRuddWatts. That is commercially sensitive, and the process is continuing. That will be disclosed in due course. I think Grant would always prefer to pay our professional advisors less, but we do need to have professional advisors that help us assess these proposals in your best interest and do so properly, and so we have.
Other advisors that we have used, we have used Baker McKenzie, who are our traditional legal advisors in the U.S., and Deloitte have advised us on tax matters across the globe. We have not had proxy solicitation people, I think you referred to. Yeah, so that has answered his question. The next question, Amir, online?
Yeah, we have a question from Ted Van Geldermansen, who asks, "What are some of the strategic options that are being considered for North America?
I appreciate the question. Is it Ted?
Yes.
Yep. And your curiosity. However, they are commercially sensitive and confidential, so it is not in the best interest of shareholders for me to disclose what those strategic options are. What is the next question, Amir?
We have one more question from Stephen Mayne, who would like to thank Sophie Mitchell for her decade of service to the board. Stephen notes that it is helpful to have some exit perspectives from retiring independent Directors and asks whether Sophie could comment on what she views as the best two decisions during her time and what she might do differently.
Sophie?
Thank you very much for the question, Stephen Mayne. The best two decisions actually aren't hard. They were the decision when I was on chairing the board of Apollo to merge with THL. I think that's benefited both sets of shareholders. It's a bigger, stronger business as a result of that. The other decision's actually more recent. It was around mid-year, I think it was June, when we, as a board, sat down with management and really challenged the business after a difficult year. What came out of that was the strategic roadmap that we're well advanced in executing, but you're all aware of it.
It involved the exit of the U.K. business, the decision to move manufacturing or close manufacturing in Australia and move it all to Hamilton here in New Zealand, the cost-out program, and the one that we were just talking about is the strategy to get North America producing the returns we expect of all our businesses. I think we've seen the benefits in this year's results, and we will continue to see benefits from that, well, it was decisions, but that group of decisions that were made.
A decision I regret, that's harder to think about, but it's probably one I'm more frustrated about and a decision we actually didn't get to make because of the interest in the company from bidders, potential bidders for it. Chairing the remuneration committee, we were aware that our long-term incentive scheme is way out of market.
We did a lot of work with an external advisor to introduce a new scheme and replace what we've got at the moment, which are options for our senior executives, into what's more common market practice these days of performance rights. We had some work to do, which was around getting the detail right on that, and we didn't have the opportunity to put those in place. I will be leaving my successor on that committee that if the corporate activity doesn't result in anything, to introduce those. I think our executives should have the opportunities to be owners of the business. I think they need to have an instrument that works well for them as well as us, and I don't think the options that we've got at the moment are fit for purpose.
Thanks very much, Sophie Mitchell. Are there any other questions online?
Those were all the online questions.
All right then. As there are no further items of business, I would like to thank you all for attending. For those here in person, please join us for a light afternoon tea in Crew Hub 2, which is a building you will have come through when you walked here through the carpark. Before we enjoy our afternoon tea or light lunch, our New Zealand National Operations Manager, Jesse, will say a karakia kai to bless our food.
Sharon and Hayley, who are in pink high-vis, will be able to guide you to Crew Hub 2. And if you are interested in joining one of the guided site tours and product walkthroughs, please make yourself known to them as well. We will allow some time for you to enjoy the light lunch, afternoon tea, before starting the tours. I now declare the meeting closed, and thank you once again for attending.