Tourism firm eyes asset sales……………

A NZ Herald report says that Tourism Holdings is considering further asset sales with a strong full-year profit thanks to a good performance at its rental business.

The tourism operator reported a net profit in the year to June 30 of $13.4 million, up 22 per cent on the previous year’s $11 million, with the growth boosted by Tourism Holdings’ core Australian and New Zealand vehicle rental division, whose revenue grew from $103.3 million to $107.9 million.

Tourism Holdings chief executive Trevor Hall said the company’s attractions and leisure businesses – which make up its Tourism Leisure Group division – had also managed a “good strong turnaround”.

However, he said that since the failure of a takeover bid by Queensland’s MFS Living and Leisure, the company had been approached by a number of parties interested in its Tourism and Leisure Group assets.

“We’ve had a number of parties express interest to us”. “Now we’re working through these other options and it will take a number of weeks or months before anything else comes to fruition,” he said.

Chairman Keith Smith said the board was examining “a range of proposals relating to the acquisition, disposal or partnering of businesses within the group”.

“We’ll work through those if attractive prices are forthcoming. If not it’s business as usual – we’ve no problem about those assets.”

Attractions and leisure businesses such as Kelly Tarlton’s Underwater World and Waitomo Glowworm Caves, which were combined into the Tourism Leisure Group, have performed poorly over the past few years.

Hall said acquisitions, including overseas targets, were also an option. “We’re also looking to acquire. We’re looking to be a growth company.”

News of the discussions follows Tourism Holdings’ decision to sell two-thirds of Johnston’s Coachlines to a joint venture, freeing up $11 million for the tourism operator.

Smith described it as “a very good deal for all parties” but said there was nothing certain about the others under discussion.

Forsyth Barr analyst Rob Mercer said the coachlines deal indicated Tourism Holdings was following the “master plan” laid out in the independent adviser’s report to unlock value from underperforming businesses and redeploy that capital on rentals.

“There’s a business that was earning less than the cost of capital.”

Mercer said rentals were Tourism Holdings’s profit driver and that he understood the assets under discussion related only to the Tourism Leisure Group.

He said it was encouraging to see that the board was looking at a number of options, they’ve got to assess how best they can unlock value in those businesses.

Hall denied Tourism Holdings’s good profit result was a vindication for the minority of shareholders which prevented MFS’s $2.80 a share takeover from succeeding. Shares in the company closed down 1c at $2.17 yesterday.

The company said first quarter trading for the current year met expectations, but conditions were softer, especially in the inbound market for Asian tourists.

However, bookings in the rental division were up due to discounting initiatives. Increasing operating costs due to interest rate rises were also likely to have an impact on the company’s performance.

Report by The Mole