Tourism Holdings Limited (THL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the 39th Annual Meeting of Tourism Holdings Limited. I'm Cathy Quinn, your Chair. I've been advised that we have a quorum and it's now 10:00 a.m., I'm pleased to declare the annual meeting officially open. We're pleased to welcome our shareholders here in person at our new Rentals Sales and head office location in Auckland. Those of you here today will have the opportunity for a guided site tour, for which I'll provide more information at the end of the meeting. For those joining online, you can vote and ask questions through the virtual meeting platform. [Operator Instructions] To help us manage the flow of questions, I encourage online attendees to submit those questions now, so we can address them as we go. If you run into technical issues, please refer to the online portal guide or call the helpline 0-800-200-220 if you're in New Zealand or 1-800 990-363 if you're in Australia. For those of you in the room, we have microphones available. When the time comes for questions, please hold up your admittance card and someone will bring a mic to you. When speaking, please let us know your name and whether you're a shareholder or a proxy holder. And finally, a small housekeeping matter. If a fire alarm goes off, please follow the instructions from the THL crew, who will guide you to the appropriate fire exit and the assembly point in the car park outside. I'm pleased to be joined here in the room by my fellow Directors, Rob Baker, Rob Hamilton, Sophie Mitchell and Grainne Troute; as well as our Managing Director and CEO, Grant Webster. Joining us online from Australia is Executive Director, Luke Trouchet. Also with us in person are our Chief Financial Officer, Ollie Farnsworth; and our Company Secretary, Amir Ansari. I'd also like to acknowledge and welcome the rest of our Auckland-based executive team, Jo Hilson, Matt Harvey and Steven Hall who are here with us today, and several of our overseas-based executives are joining online. We also have representatives from our auditors, EY; and MinterEllisonRuddWatts, our solicitors. As indicated on the screen, we've received 94.4 million valid proxies and postal votes, representing 42.7% of the ordinary shares on issue. Of those 82.7 million have appointed me as Chair of the meeting as proxy. I intend to vote all discretionary proxies I've received in favor of the 2 resolutions set out in the Notice of Meeting. During today's meeting, I'll start with an overview of the company's position, including a brief video showcasing the site you're visiting today. I'll then hand over to Grant for the CEO's address, after which we'll proceed to the formal parts of the meeting, including the resolutions outlined in the Notice of Meeting. We'll wrap up with an open Q&A, where you're welcome to ask general questions about the business or the year that's been. Before I start, we have a short video about the development of the site that we'd like to present. We are fortunate to have found an existing site that meets our needs for our rental sales, servicing and office space. This opportunity allowed us to secure a facility that exceeded what we could have achieved with a new build. It's a place we're proud to call thl's new home, and we look forward to welcoming our crew, guests and shareholders for many years to come. [Presentation]

I'd like to thank Matt Harvey and all our crew involved in this project for the efforts in getting it across the line. I'll now move on to reflections for the year that's been. It's been well publicized that the RV industry had a very challenging 12 months on a global basis and many industry operators are making a loss. We have been clearly impacted by that. However, we remain fortunate relative to many in that we have a strong balance sheet, a resilient business model, and importantly, a positive tourism outlook, which is the core of our business. Within this context, we recognize FY '25 was a challenging year for thl. We are well aware that we did not achieve our targeted 15% return on funds employed target and have acted accordingly. Our underlying net profit after tax was $28.7 million, representing a 45% decline on the prior year. The statutory net loss after tax of $25.8 million was driven by several one-off items, which are detailed in our investor presentation. The most significant headwind remains the subdued global consumer demand for purchasing RVs, which has had a material impact on our performance, both in FY '25 and the prior year. Shifting consumer sentiment, uncertainty around global tariffs and fluctuating expectations on interest rates further compounded what was already a complex operating environment. Balancing those conditions, thl is fortunate to benefit from the positive tailwinds and RV rentals, driven by the recovery in international tourism. Canada, Australia and New Zealand, all have governments that we believe are strongly aligned with tourism growth. They recognize the opportunities tourism brings to their economies and are implementing supportive policies and investment. We're seeing the benefit of these actions, and we share the industry's view that this momentum and growth will continue for several years to come. We had strong -- areas of strong performance within the group, with our New Zealand Rentals & Sales and our New Zealand Tourism businesses, both delivering record EBIT results. Australia delivered a strong performance in RV rentals, offset by the weakness in the Australian Retail Dealerships division. In the United States, our high season rental performance was impacted by the decline in sentiment for inbound international travel. While there has been some substitution benefit from the U.S. to Canada, that was not meaningful enough to offset the decline in the U.S. Recognizing the operating conditions and acknowledging the financial performance was not adequate, the Board and management acted and have consolidated and released funds where appropriate. The company has shown the ability to challenge past decisions, step back where necessary and refocus towards markets with more certain growth. Throughout 2025, we were engaged in the work that ultimately led to the strategic initiatives we announced in August. These initiatives involve our operations in the U.K. & Ireland, the Australian Retail network, Australian Manufacturing and North America. We are progressing well with each of the initiatives, and we'll provide updates as developments occur. The planning we've done throughout this year culminated in the release of our growth road map in August, as part of which the Board and management have reset the goal to deliver $100 million in annualized net profit after tax in the next 3 to 4 years. We recognize that achieving this goal involves risk, and that setting an aspirational goal does not take away the global uncertainty and challenging macroeconomic conditions we continue to face. The risk of an extended economic downturn remains, inflationary pressures, sorry -- inflationary pressures continue to be persisting. And although that tariff landscape in North America has settled for the time being, that could always change. Focusing on New Zealand for a moment. In recent weeks, there seems to have been a marked increase in recognition of the severity of the current downturn. It's something we've been seeing in the leisure sector and talking about for well over a year. All types of businesses, including those selling RVs, boats, bikes and other high-value discretionary items have had it extremely tough. As a result of this recognition, expectations around central bank action in New Zealand have also accelerated with the recent 0.5 percentage point cut and the expected low point of this easing cycle having potentially moved even lower. In Australia, the U.S. and Canada, market participants are expecting further rate cuts through late 2025 and into the first half of 2026. This reaffirms our view that both thl and the wider industry are turning the corner. We believe we've moved past our peak in net debt and have returned to generating positive operating cash flows in FY '25. We believe that the actions we're taking today will secure long-term value for thl, its shareholders and our crew. Looking ahead, we're confident about the return to growth in FY '26, supported by the continued recovery in international tourism and rental revenue, alongside the significant capital investment we've made in expanding our fleet in recent years. As you'll be aware, in June, we received a non-binding indicative offer to acquire thl from a consortium comprising BGH and the Trouchet family interests. In fulfilling our duties as Directors to act in the best interest of shareholders, the Board commenced a thorough process to inform our response to this offer. We formed a Takeover Committee who, with the support of financial and legal advisers, undertook a comprehensive assessment of the consortium's proposal relative to our view on thl's outlook, earnings capacity and valuation. Because the planning of our strategic initiatives was well advanced, the Board had a clear steer on thl's future direction. The conclusion of this process ultimately saw the Board decline the offer of $2.30 per share on 4th August on the basis that it significantly undervalued the company. We provided an indication of our value at well north of $3 and also indicated that we remain open to engagement in an event of a significantly improved offer from the BGH consortium or other potential bidders. We've not had any communication from BGH since that response was provided in early August. We know it's critical that the Board and management remain focused on executing our strategic plan and delivering on the growth road map we have set out. Before handing over to Grant, I'd like to take a moment to acknowledge and thank our broader crew for their contributions during the challenging year across many regions. On behalf of the Board, we appreciate your combined efforts and commitment to strengthen our core business and the focus of thl. I'll now hand over to Grant to take you through the results. Following that, we'll move to the formal business of the meeting, after which there will be an opportunity for general Q&A.

Brilliant. Thank you very much, Cathy, and thank you, everybody, for attending here today. We find ourselves in an interesting position today where we're emerging from a challenging year, but with a clear sense of direction and growing confidence in what lies ahead. On one hand, our FY '25 group result was disappointing and fell well short of what we expect from thl. A return on funds employed of 6.9% is well below our target of at least 15%. It's not good enough. On the other hand, we continue to undertake a huge amount of work across both our strategic and operational initiatives, giving us confidence in the path forward. As Cathy highlighted, the most significant overarching factor affecting our performance in FY '25 was the soft consumer demand for purchasing RVs, as seen right across the entire RV and broader leisure industry globally. Despite this, our New Zealand Rentals & Sales and New Zealand Tourism divisions delivered record EBIT results and exceeded your ROFE targets, even with international visitor arrivals still lagging behind pre-COVID volumes. These businesses have now achieved record results for 2 years running and with investments, like this site where we're at today, we are confident that we've built the capacity for another record year for these divisions in FY '26. This is a clear reflection of the momentum we're seeing in New Zealand. Looking beyond our shores, our Australian business delivered a ROFE of around 5%, where the higher ROFE from our core rentals business was offset by operating losses in the retail dealerships. North America was also impacted by poor RV sales. Additionally, it had the impact from a decline in international tourism to the U.S. While Canada saw some increase, it wasn't enough to offset the decline in the U.S. Action Manufacturing also had a strong year, significantly exceeding our ROFE target, even though the result was slightly down on a year-on-year basis. Action has gone from strength to strength in its third-party commercial manufacturing operations, having acquired and integrated well several small businesses in recent years. That said, this business is impacted by the capital expenditure cycle of its commercial customers. Freight companies do tend to cut back on their capital spend in times of economic uncertainty. Historically, we've seen this as nothing but a timing issue, with new vehicle purchases delayed rather than sort of permanently canceled. In Australian Manufacturing, we've made a lot of progress this year after bringing the New Zealand and Australian operations under one single leadership team. While there's more work to do, this change has helped identify those opportunities that should improve the manufacturing results across both regions. The U.K. & Ireland division did have a disappointing year where it was once again seriously impacted by delays in the delivery of new vehicles from manufacturers, which resulted in reduced peak season fleet. That's a critical issue for a region that has such a high seasonality from a tourism perspective. It's not an excuse for the performance of the division. It's one area where we know the expected benefits from the merger with Apollo haven't materialized as expected and, in fact, have gone the other way. We have also, though, had significant inflation pressures and cost increases in some areas. We're actively exploring strategic options for this division, including the potential to fully or partially release the funds employed. We can't control the global factors impacting our industry, but we can control how we respond to them. And having just reflected on the year that's been, it won't surprise you where we sit with our 4 key strategic initiatives. We're focused on the U.K. & Ireland business, the Australian Retail division, Australasian Manufacturing and the broader North American business. As a group, as I said, we have some divisions performing exceptionally well. So our focus now is to continue to grow those strong performance while taking decisive action to lift the areas that aren't meeting our expectations. I'd like to take a moment to reflect on some of our key achievements and investment initiatives over the past year. We believe we are the global leader in the RV rental industry, but it's in our DNA to keep challenging ourselves, keep striving for more. And I'm proud of the dedication shown by our crew. We've been driving these activities forward while also maintaining a rentals business that's experienced significant growth, particularly in Australia and New Zealand. While we've highlighted a few outstanding achievements, the list could be much longer, and I'm sure you don't want to hear me go through them all. There is, however, one activity that I really want to highlight, about how our crew navigated uncertainty surrounding the North American tariff regime and its impact on our operations. The operating environment got to a point that almost every day, there was a new development. At one stage, the crew in North America were actively managing 8 different scenarios, all depending on the different reciprocity of the tariffs, the timing of their implementation or removal. Once we've made the call that tariffs were likely to impact our 2025 Canadian purchases, we completely reworked our fleet plan and started relocating around 200 vehicles of our existing fleet from the U.S.A. to Canada, all within just a couple of weeks, and importantly, ahead of the tariffs coming into effect. In a worst-case scenario, had we not made these moves, the tariff developments could have had a significant impact on our performance for the year. It was extremely well managed by the team under the circumstances and enabled a successful 2025 high season in Canada. We've also had another huge year with our digital platform changes. We completed the global rollout of our Fleet Management system with Canada being the final country to come online. With every country now on the same system, we are finding insights that we can apply right across regions and already, we're seeing some great wins. We also successfully rolled out our new HR, Content Management and Enterprise Asset Management systems or back-of-house systems. And while I've just referenced 3 sentences in that one -- 3 systems in that one sentence, each of these were a significant project in their own right and very, very effectively managed by our crew. This milestone actually marks the conclusion of a multiyear digital platform transformation road map, and that's a significant achievement for the business. I also want to acknowledge the cultural transformation we've been driving in health, safety and wellbeing. In 2023, we launched Protect, an internal brand for crew safety engagement. It's now a highly visible and integral part of our operations. And those who are here today and will be joining our site tours will see its presence throughout the business and particularly in our back-of-house areas. Over the year, we had over 500, what we call, Power Ups, which are structured conversations between location managers and crew focused on health, safety and well-being. I'm proud of the global buy-in to this topic. It's a great initiative across the crew, and we're seeing real tangible results, including a 43% reduction in our lost-time injury frequency rate and FY '26 has started with a further decline. We know that health and safety and well-being is a continuous journey, and we remain really committed to challenging ourselves to continue to do better. Given the close correlation between international tourism volumes and activity in our RV rentals business, it's worth taking a moment to just have a look at the position of international tourism today. So I'll focus on New Zealand, Australia and Canada, which are our 3 markets, where international customers are the larger proportion of our total customer base. The U.K. market is predominantly domestic and that business is currently under strategic view. And while the U.S. market is typically around 50% international customers, the current situation makes it difficult to predict the short-term direction for inbound international travel. So across New Zealand, Australia and Canada, international visitor arrivals are still tracking below pre-COVID levels. But what's encouraging is that each of these countries is actively investing in their tourism recovery and long-term growth. In New Zealand, we've seen the government launch the tourism growth road map, aimed at returning international visitors to at least pre-COVID levels by 2026, and a commitment to invest $35 million this financial year, on top of the previously announced $20 million Tourism Boost investment. In Australia, we're seeing the government forecasting a full recovery to exceed pre-pandemic levels in 2026 and a clear growth plan for the visitor economy in its THRIVE 2030 strategy. In Canada, there's similar initiatives and investment included in Destination Canada's 2030 Tourism Strategy. We welcome the renewed focus from governments on growing tourism and are pleased to see that it's not just about getting back to pre-pandemic levels, but a focus on ongoing growth. Here in New Zealand, we believe the tourism industry can once again be a powerhouse for the economy. Within that, our category of travel can play a key role in getting tourism dollars out of just the urban areas and gateways into the regions where they can make a real difference to the economy. Looking at the data on the screen, you can see that our fleet growth has generally tracked in line with or behind the rebound in international tourism volumes. In New Zealand and Australia, this has allowed us to maximize the utilization of our existing fleet, which was a key strategic rationale behind the Apollo merger. We want to be able to do more with less. Positively, it also highlights the opportunity for further fleet growth as tourism volumes continue to recover. We believe there's real momentum in the Rentals business and that has kicked us into an even higher gear than in 2025. On the bottom right-hand of the screen, you'll see that each of the markets, the growth in our forward book compared to 12 months ago is significantly over-indexing the growth in international arrivals in that period. We do have to be mindful that these figures do represent an earlier booking trend and that it's unlikely that these growth rates will be sustained throughout the entire year, but nonetheless, put us in a very strong positive position heading into the peak season. As part of the growth map, we outlined the 4 key strategic initiatives. The slide on the screen is taken directly from that presentation. And since I've already touched on those initiatives several times this morning, I won't go through them in detail. I will say we're not providing any major updates on these today, as our intention is to inform shareholders when the key decisions are actioned. There is also obviously a commercial sensitivity around the specifics. Earlier this month, we confirmed the exit from 2 stand-alone dealerships in Australia, which forms part of our broader efforts to rationalize products and brands, streamline our organizational structure and further reduce inventory and capital that's employed in that retail division. We've commenced closed down sales at both those sites, and we're progressing a range of different options to manage the exits effectively. Our North American synergy project has been in the works for some time. Unfortunately, the introduction of the tariffs in that market meant we couldn't realize the intended benefits in 2025 and effectively has pushed our time line back by a year. The good news is that we can now acquire RVs for Canada and sell them into the U.S. without tariff impacts. This unlocks now the opportunity for us to accelerate that synergy project. We remain confident that it will be a key driver in improving the profitability of the business in that region. We have made and we continue to make strong progress across all these key strategic initiatives, and we expect to be able to share more with you by the end of this calendar year. When looking at trading and our outlook and thinking about our first quarter results, the trends are very much in line with what we saw in FY '25. With the exception of the U.S., we would have had a -- with the exception of the U.S., we've had a strong start in all other markets on the rental side of the business, with growth in New Zealand, Australia, Canada and U.K./Ireland. Positively, our forward book for the remainder of the financial year for New Zealand, Australia and Canada are sitting around 20% ahead of last year. As I mentioned before, it's unlikely that growth rate will hold all year, but it does reflect the very positive position that we're in. Looking ahead, our focus is threefold: executing the strategic initiatives that we've set out; maximizing the ongoing recovery in international tourism and RV rentals; and continuing to drive cost-out actions. We see FY '26 as a transitional year as we implement these changes against the backdrop of continued weakness in RV sales. The benefits of these changes will be evident in FY '27. Within FY '26, we expect growth in New Zealand Rentals & Sales, Australian Rentals, Canada, U.K./Ireland and the Tourism businesses. However, this is likely partly offset by declines in the U.S., Australian Retail and Manufacturing. We're not providing guidance for FY '26 at this stage, given we're only 3 months into the year, and we have a number of these transformative actions still underway. That said, we remain confident that we've turned a corner and expect a return to NPAT growth in this financial year. Thank you all again for your support of thl. Before I pass back to Cathy, I would again like to acknowledge those shareholders that have come out to Waitomokia today and encourage you to engage with our sales team and have a look at our wonderful vehicles and retail product that you have behind you. Thank you very much. I'll pass back to Cathy.

Always have to do that with, Grant. Thank you, Grant. I'll now move us into the formal part of today's agenda. We'll be conducting a poll for the resolutions today. If you're an eligible shareholder or proxy attending in person, you will have received a voting card. When it's time to vote, please tick the relevant box to indicate whether you're 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. These votes will be counted and collated with postal and online votes. If you're joining us 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 5 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. Dealing with the first resolution, the re-election of Rob Hamilton. In accordance with the requirements of the NZX listing rules and the company's constitution, Rob Hamilton is retiring by rotation this year and being eligible has offered himself for re-election. Rob joined the Board in February 2019 and has chaired the Audit and Risk Committee since November 2019. Rob also serves on the Remuneration and Nomination Committee and the Market Disclosure Committee. I'll now invite Rob to say a few words.

Thanks, Cathy. [Foreign Language] Good morning, everyone. My name is Rob Hamilton, and I'm standing for re-election to the Board. I first joined the Board in early 2019 and was last elected to the Board at the 2022 Annual Meeting. As Cathy said, I'm currently Chair of the Audit and Risk Committee and a member of the Remuneration and Nominations Committee and the Market Disclosure Committee. My background spans over 30 years in New Zealand's capital markets and finance sector, including executive roles as CFO at SkyCity Entertainment Group and as Head of Investment Banking at Jarden. For the past 5 years, I've pursued a career in governance, and also undertaken various consulting roles. In addition to thl, I'm currently a Director on the Boards of Mercury NZ, Westpac New Zealand, Oceania Healthcare and Cyprus Enterprises. I also chair the Auckland Grammar School Foundation Trust, having had a long association with the school. As Cathy and Grant have already outlined, recent conditions in all of our markets have been challenging for thl. However, I believe the Board and management team are navigating these challenges well. As a result, thl is well placed to return to growth in the current financial year. I want to reiterate that the Board is very mindful of thl's weaker performance in the 2025 financial year. As Cathy and Grant have outlined, we are proactively advancing numerous strategic initiatives to address our recent performance challenges and to enhance long-term value for shareholders. The Board was already taking action well before the approach from BGH and the Trouchet family in June. And we are confident that these strategic initiatives, once finalized and successfully delivered, will be positive for long-term shareholder value. Given my background and experience, I believe I can continue to serve thl effectively as a director for the next 3 years. In particular, my capital markets, M&A and corporate finance background means that I have a strong focus on how we allocate our capital and on improving shareholder value. Further, my broad governance and industry experience means that I can bring insights from other companies and sectors for the benefit of thl. Thank you for your consideration of me as a director. I look forward to your support and ask for your vote. Thank you.

Are there any -- so I now propose that Rob Hamilton, 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?

Yes. Can we just wait for a mic to be brought to you and you could just tell us your name, please?

Mr. Hamilton, my name is [ Eva Quiding ]. I'm a shareholder. So in terms of you bringing insights from other Boards that you're on, can you please name 2 things that you haven't brought already that, looking forward, you are planning to bring to thl's Board.

Two things that I haven't brought already. I'd like to think I have already brought a lot of experience from my Boards. What I would say is that the corporate governance environment is continually changing in New Zealand and around the world. A lot of the companies I'm involved with are obviously New Zealand-based but do have international operations in many cases. So it's really being able to continue to bring insights from other companies as corporate governance issues and business issues and economic issues evolve over the next 3 years, which would be the term of my re-election. So I can't think of anything specifically that I haven't already brought, but I look forward to continuing to bring insights as I have done already in the past, to answer your question.

Rob is a very valuable contributor to the Board of thl. Are there any other questions from the floor? Are there any questions online for Rob?

We do have one question in relation to this resolution specifically. So this question comes from [ Stephen Mayne ], a shareholder, who asks thl-appointed Jarden and Minters as the respective financial and legal takeover defense advisers. Stephen then notes that Cathy Quinn is former Chair of MinterEllison and Rob Hamilton is former Managing Director of Jarden. Stephen asks whether the appointments were put to a competitive tender. And if not, he asks why? He also asks how much has been spent on the takeover defense so far and also whether the BGH consortium has voted their combined 19.9% stake in favor of Rob's re-election today?

Thanks. I'll deal with that question. I think Stephen noted, I'm not the current Chair of MinterEllison. I was a former Chair of MinterEllison some time ago. MinterEllison have been thl's legal advisers well before I joined the Board. In fact, they've been thl's legal advisers for decades. Similarly, Jarden has been thl's financial advisers well before Rob joined the Board. Both those advisers know our business extremely well as a result. They are our trusted advisers. Practically, having people in that position are the best to advise you on something so important as a potential takeover offer and able to provide us the sort of insight and support we needed urgently. We are completely comfortable that the terms of our engagement with both those advisers are market standard. As to whether the consortium has voted on the resolutions today, they haven't yet voted, they're, of course, free to vote during the course of this meeting, and I don't know the outcome of that. As to how much we've spent so far, that is a matter of commercial sensitivity, which we won't be disclosing today. Are there any other questions online for Rob?

No.

Thank you. So we'll now -- please cast your vote on the voting card on/or online in relation to Resolution 1. [Voting]

The next resolution relates to the Director setting the remuneration of our auditors. EY New Zealand was thl's auditor for FY '25. I propose that the Directors are authorized to fix the remuneration of the auditors for the ensuing year. Are there any questions on this from the floor? Are there any questions online?

No questions online.

Accordingly, please cast your vote on this matter on the voting card if you're in the room or online in relation to Resolution 2. [Voting]

That concludes the formal part of today's meeting. For those of you here in the room, representatives from MUFG will now come around and collect your voting cards. For those joining us online, please make sure your votes have been submitted. Thank you. I'd now like to share the outcome of the proxy votes that were lodged for these resolutions. You'll see the results displayed on the screen. We'll now move into the general Q&A session. I'd like to open the floor to any questions from those here in the room and also invite questions from those joining us online. [Operator Instructions] Are there any questions online, Amir?

Yes, we do have quite a few questions. The first one is from the NZSA. They note that the annual report includes a composite skills metrics. They're pleased to note that after their comments last year, the skill set elements were expanded to include more industry-based segments. However, their preference is to see skill sets attributed to individual Directors to demonstrate how they contribute to the governance of the company. They ask whether we will see a change in this regard.

Thanks. And we are aware of the NZSA's view. That's something that we'll consider as we prepare for next year. Other questions?

Yes. So another one from NZSA. They note that thl doesn't participate in the IoD Future Director program. Their expectation is to see NZX 50 companies participate as part of their responsibility to develop and mentor the next generation of Directors. They've asked us to comment on this.

Yes, I'm aware of NZSA's view, and there's a difference of approach amongst New Zealand companies as to whether they participate in that program. The short point is that thl has had a lot on for the last few years. And actually, we think we've been better off working as a tight team. We actually got a bunch of new Directors when we did the Apollo merger and we're sort of focused as working on a team at this point. It's not something we'll rule out in the future. We just don't think it's been appropriate given the things that we've had on in the current and recent times. Any other questions?

Yes. So this one is just a comment from NZSA to balance out the prior questions. They're just noting that they believe the Board composition indicates a commitment to thoughtful, experiential and social diversity with relevant experience for thl and they thank us for this.

Thank you. Other questions online?

Yes. We do have one from a shareholder through a custodial account. I'll read it out loud because it's quite long. Recent press has highlighted the entry of LDV's Chinese-manufactured factory-built campervans into Australia available from October 2025. These brand-new campervans are being sold for $90,000 driveway and are the cheapest in the market and have received favorable reviews and media attention. LDV's price is equivalent to the thl price for a 2- to 3-year used vehicle. For example, a used thl 2023 Talvor Euro Mini LDV Campervan with 180,000 kilometers is advertised for a list price of $95,000 and that's built on the same LDV Deliver 9 chassis. Brand-new thl campervan is typically listed at over AUD 150,000. This suggests that sales prices and volumes will come under pressure and also suggest that fleet depreciation rates will need to materially increase. The LDV Chinese-manufactured factory-built campervans are also expected to expand into New Zealand in calendar year 2026. So this shareholder asked us to comment on how this will impact thl's Australian RV sales volumes and prices; the Australian fleet depreciation rates, given the impact on market conditions and estimated residual values; and thl's New Zealand operations when LDV launch the campervan in New Zealand as expected in 2026?

Grant, I think you might like to answer this one.

Well, thank you very much for the question and the detail that sits in behind that. I guess first and foremost, we are aware of the LDV product that's been mentioned in both Australia and New Zealand. We're quite close to the manufacturers of that product, the distributors of that product and the resellers. We have more broadly considered where China manufacturing sits within the RV industry today and into the future. Indeed, we do produce some of our product that we use out of China. And further to that, we have expanded the amount of component parts that we use out of China in our core products that we manufacture as well. So we're engaged in the production, we're engaged in the supply chain. In terms of the product itself, there are a number of nuances that probably aren't worth going into detail here, but relate to the actual volume that has been produced, the volume that's actually on the ground, the pricing, the future expected pricing versus the introductory pricing and the standards and features of those vehicles, they're all quite different in a lot of ways. And what I would say in addition to that, just when comparing to the product that we've had out, the used product, and that's been very much just the test price that we've had out. And those are obviously '22s, '23s, they're not an overly aged vehicle. So we've only had 5 online, and they're just purely being just a test and test on price. In addition to that, we've actually got a new LDV product that we are producing at the moment ourselves that will launch in 2026. And that's being built, very cognizant of the LDV product ex China and the price comparisons within that as well. So when you take all of that into account, as it stands today, we actually don't see that there's going to be a significant impact on our volumes or depreciation rates in both Australia and New Zealand, and again, as I said, we believe we're engaged with Chinese manufacturing appropriately and that we are competing with that product with new product development that's coming through in 2026. Thank you.

Thanks, Grant. I know there's some more questions online, but before we get there, I think we'll give some people in the room opportunity. Are there any questions from the floor? Yes, could you just wait for the mic to come to you?

Eva Quiding, shareholder. First question, is artificial intelligence adopted in thl's way of work? If yes, in what ways? If no, does thl see any benefit in involving AI? Second question. Despite having the confidence in turning the corner in FY '26 and having closed some sales segments that Mr. Webster talked about in his address, does THL have any plan for staff layoff whether in New Zealand or abroad?

Yes. Thank you. In relation to AI, yes, we do use AI in the business and always looking at ways that we can use that for the benefit of the business, including efficiencies and so forth. Grant, do you want to just elaborate in any way on that?

I think just seeing another question, we might be able to cover 2 questions at the same time. So there's another question that's come through asking about AI and the expectations that we have around how many roles that may change. What we're doing with AI at the moment is we're using AI to assist in our marketing and marketing efforts. We're also using it to improve our processes within the business today, and that's the immediate focus. So with over 2,000 full-time equivalents in the business, we don't see any sort of AI-specific related changes to that number. In fact, the number overall of our employees will go up with the activity growth that we've got in New Zealand and Australia. Yes, happy for me to comment on the redundancy situation as well. I mean the simple thing is we've talked about the fact of what our strategic initiatives are. And some of those will create some change in some places, but I don't think it's appropriate for us to talk about whether there's going to be actually any redundancies or not out of that in a public meeting like this, that we've got too much respect for our crew to engage in that, sorry.

Thank you. Thanks for the question. Other questions in the room? Amir, are there more questions online?

Yes, we do have 3 more. This one is from Stephen Mayne also. Stephen says [ NZ ] is regarded as a governance backwater by some Australian investors for refusing to mandate annual voting on rem reports, which is standard in many countries. Stephen asks whether thl will commit to following the lead of Xero and Fletcher Building to voluntarily offer shareholders a nonbinding rem report at next year's AGM? Stephen notes that last year's AGM for thl was uneventful as there was only the standard auditor rem resolution, and this year, it's the same plus one Director re-election.

Thank you, Stephen, for the question. New Zealand companies take a don't -- there's not a consistent approach to New Zealand companies in terms of who are also dual-listed as to whether or not they put their rem report up for a vote. We actually have considered it -- we've considered it last year and decided not to do so. I'm happy to have a reflection on that and revisit it over the course of the next year. But Stephen, while you may have a view that rem report should be put up for a vote, we have other New Zealand institutional shareholders who give us very strong feedback that they do not support that. They say you are in New Zealand, primarily listed in New Zealand company, and you're subject to the laws in New Zealand. It's not a requirement, and we don't appreciate you taking up that initiative. So happy to look at it, but can't guarantee the outcome. Other -- any other questions?

Yes. We have 2 more from Stephen Mayne also. Stephen says Cathy Quinn has been on the Board since 2017 and Chair since 2022. Is she intending to recontest when her current term expires and does she believe that the next thl Chair is currently on the Board?

Thanks again for the question, Stephen. Neither myself or the Board have made any decisions about my re-election next year or indeed any other Directors who will be up for election. That is a matter we will deal with over the course of the next year under best interest of the company and shareholders. I'm currently very focused on tiering thl and seeing we deliver on our announced targets and strategic initiatives. As to succession, I'm comfortable that we will manage that carefully and also very comfortable with the talent we have on our Board. Any other questions?

Yes. Last one from Stephen. As the former Chair of Apollo, who has known Luke for a long time, could Sophie Mitchell, please comment in regard to what, if anything, she knew about Luke's intentions to team with BGH and launch a hostile privatization bid for the company before it was launched. Did this surprise Sophie and did you know Luke was disaffected with the current arrangements? Also Stephen asks whether the Chair could comment on why Luke hasn't resigned from the Board as opposed to taking a leave of absence?

Cathy, happy with if I respond?

Yes. You can go first, and I'll do the second bit.

Okay. Well, thank you very much for the question, Stephen. I didn't know anything of Luke's intentions prior to a call I received on the Saturday before BGH's offer was made on the Monday, and I do know -- Luke's call to me followed his call to Cathy, which is the order those calls should occur in. So no, I didn't know anything about it. And I wasn't aware that he was disaffected with the existing arrangements. As a Board member, I think Luke shared the Board's concern about where our share price was and also the underperforming parts of the business, but he was parts of those discussions at the Board meeting before he took a leave of absence.

Thank you, Stephen. As to the question that you directed to me for an individual Director to decide whether or not they should resign, the thl Board is perfectly comfortable with what we believe are robust arrangements and protocols we've put in place to manage Luke's conflict of interest. We put those protocols in place following receiving legal advice and promptly following receipt of the nonbinding indicative offer from BGH. They remain in place today. Luke does not have any access to our systems. Luke has limited access to information and participation in Board matters as a result of this conflict. So he gets to deal with things like health and safety, cyber, climate change, modern slavery and so forth. And we're very comfortable that those arrangements are appropriate. And we'll continue to remain in place while he is subject to the cooperation agreement with BGH, which continues, I think, until at least 15th December. Are there any other questions?

No.

Are there any further questions in the room? All right. We'll now move to general business. Were there any further general business matters that shareholders wish to raise from the floor or online?

No.

Well, that brings us to the end of the meeting. I will invite you -- thank you all for those of you who have made the effort to come out to Waitomokia. There will be a light morning tea in Crew Hub 2, which is the building you came through when you walked here from the car park. Before we enjoy our morning tea, our national -- New Zealand National Operations Manager, Jesse, will say a karakia to boost our food. Now Sharon and Haley who are in the pink hi-vis, they're putting them on now, at the back of the room, they will guide you to where morning tea will be. If you are interested in joining the guided tour, please make yourself known because you're very welcome. But we will make sure you get an opportunity to have your morning tea before we do the tour. I'd now like to thank you all for attending and close the meeting. Thank you.