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Edited Transcript of ATL.AX earnings conference call or presentation 28-Aug-19 11:00pm GMT

Full Year 2019 Apollo Tourism & Leisure Ltd Earnings Call

Sep 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Apollo Tourism & Leisure Ltd earnings conference call or presentation Wednesday, August 28, 2019 at 11:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Karl Trouchet

Apollo Tourism & Leisure Ltd - CFO, Executive Director of Strategy & Special Projects and Executive Director

* Luke Trouchet

Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director

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Conference Call Participants

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* Andrew James Bowley

Forsyth Barr Group Ltd., Research Division - Head of Research

* Josephine Little

Morgans Financial Limited, Research Division - Senior Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by and welcome to the Apollo Tourism & Leisure Full Year Results Conference Call. (Operator Instructions)

Joining us on today's call, we have Luke Trouchet, CEO and Managing Director; and Karl Trouchet, CFO and Executive Director. (Operator Instructions) Please be advised that this conference is being recorded today.

I would now like to hand the conference over to your first speaker, Luke Trouchet. Thank you. Please go ahead.

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [2]

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Thank you, and good morning, everyone. My name is Luke, and I'm the CEO and Managing Director of Apollo. I would like to thank you all for joining in on today's call. I'll begin the presentation by providing a high-level summary of our results and then hand over to our CFO, Karl Trouchet, who'll run through the financial performance. I'll then return and give an overview of our progress in each segment as well outline our FY '20 outlook, and then we'll finish the call with a Q&A session.

Firstly, I just wanted to start by saying that the Board and management are disappointed with the financial results that we delivered in FY '19. It's been a challenging period and we've learned a lot, but there have also been a number of positives, and moving forward, we have a strong foundation to now deliver from. In my presentation, I'll provide a detailed review of what went right, what went wrong and most importantly, what we are doing about it.

Before I get into the details, let's follow along and move to Slide 4 of our presentation. So our vision at Apollo is to be the global RV solution. And to fulfill that goal, we've acquired a number of businesses around the globe. To bring these acquisitions under the Apollo family, we invested in the last year in a rebranding process. All the businesses within the group will now include the tagline, Driven by Apollo. We also introduced one set of core values across all divisions of the global group. The Apollo team came up with the core values of: be happy to lead the way and enjoy the ride.

Moving forward to Slide 5, you'll see that our business model which is to craft, rent and sell. Simply put, we buy or build RVs, rent them to our guests and finally sell the RV. Each individual market dynamic will determine whether we build or buy the RV and for how long we keep it on the rental fleet before finally selling it. In Australia, we also retail a lot of new and used RVs.

So with that introduction, let's move forward to Slide 8. We can see the key points which summarize the year. The stat NPAT for the year was $4.7 million, which included noncash impairments of goodwill and intangible assets of $11 million. Underlying NPAT was $14.7 million, which is 25% down on the prior year. I repeat that we're disappointed with this result and are focused on committing to addressing the issues that arose. The main challenge that we faced was primarily caused by soft RV sales markets globally. However, RV rentals continue to be our core business and showed strong growth with all regions achieving record rental bookings in days and in revenue.

It's certainly been a busy year for us across the globe, with opening new locations in Anchorage and Miami; upgrading our facilities in Toronto and Halifax; relocating our Melbourne and Auckland branches; plus we achieved a major milestone, which was opening new branches in Germany and France, representing our first venture into Mainland Europe. Despite these wins, the overall financial performance of the company was hampered.

I'll now go into more detail on the key hits and misses. So if you can please follow along on Slide 9. So a big win, as previously mentioned, was our global rental business. We had record rental revenues and booking days in all regions. This performance was driven by demand fulfilled by our larger fleet sizes, enhancements to our reservations and fleet management system as well as concerted focus on improving guest experience.

The miss, Australian retail sales. Unfortunately, in a challenging retail environment, the sales volumes and margins we achieved were not in line with the group's capabilities and expectations. This was particularly evident in the second half of FY '19 as the federal election impacted consumer sentiment due to the uncertainties surrounding pricing credits and negative gearing. Promisingly, it appears that sentiment post-election has rebounded and we've experienced improved sales volumes in the final weeks of FY '19 that have carried through into the new year.

During FY '19, we introduced the Coromal and Windsor caravan brands into our retail offering. We've actually started production of Coromal caravans in our Brisbane factory, with Windsor caravans soon to follow. While they're not to our initial expectations, the acquisition of these brands helps bring some consolidation to a fragmented caravan industry, and the future is very promising.

In the second half, we appointed Chris Rusden as our global COO of group's global retail, boosting our leadership in this important part of our business. A full strategic review of the retail business model is ongoing, covering product development, positioning promotion and value creation.

We are also rationalizing our existing product range to higher margin units as well as introducing some new product categories targeted at key niches, for example, off-road and luxury.

Lastly, we're implementing a new dealer management system across the entire dealer network.

Moving forward to North American ex-fleet sales. Overall, our performance was dampened by the result there with 342 less units being sold than the prior year. The decline in volume was attributable to an oversupply of new vehicles in the market, which placed downward pressure on used vehicle demand and achievable margins. This, in turn, resulted in a higher volume of ex-fleet stock being held in the final months of the year, which increased holding costs. To offset the impact of these increased costs, a number of surplus vehicles have been retained on fleet for the current summer season, which helped reduce the new fleet purchasing requirements for the season. We're working hard to establish infrastructure in the region that will allow us to sell higher volumes of vehicles moving forward, irrespective of the prevailing market conditions. Such initiatives include the expansion of our wholesale partner network and the establishment of new retail stores at our existing retail branches.

Moving to the U.K. ex-fleet sales. A very similar story to what we experienced in North America. The uncertainty surrounding Brexit greatly reduced consumer sentiment and suppressed discretionary spending, the result of which was an inability to move a large volume of ex-fleet vehicles that had previously been forecast. This once, again, increased the associated holding cost. To mitigate this, we're looking at cementing our Birmingham dealership as a super retail store in a similar model to what we're doing now in Melbourne and Auckland. Overall, refinement of fleet mix and life cycle through our Northern Hemisphere fleet is a key focus for FY '20 to ensure we achieve maximum yield and utilization.

Moving to our Australian manufacturing. We had planned -- we had to reduce planned production volumes in our Brisbane facility in the second half of the year as vehicle sale volumes slowed. This was detrimental to the performance of the business due to reduced absorption of fixed overheads. We're now exploring other avenues to utilize the factory's capacity and improve our overall production output.

At OpEx and CapEx, the final point when looking at last year's performance is the significant investments we made in people, systems and infrastructure to support our global growth strategy. In a challenging market, we are very cognizant that certain investments did not generate the corresponding earnings growth that we had initially anticipated. Cost reduction measures are being implemented across the group to ensure our earnings return to an acceptable level.

With that high-level review, I will now hand over the call over to Karl and then I will return later.

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Karl Trouchet, Apollo Tourism & Leisure Ltd - CFO, Executive Director of Strategy & Special Projects and Executive Director [3]

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Thank you, Luke, and good morning, everyone. My name is Karl Trouchet, and I'm Apollo's CFO.

So we're on to Slide 11 here. You'll see the consolidated revenues were $365 million for the year, a small increase of 2.7% primarily driven by the strong performance of the rental business. Unfortunately, this growth in rental performance did not translate into corresponding earnings growth due to the impact of soft RV sales markets in the second half of the year and increased investment in growth initiatives. The downturn in retail performance has been reflected in our conservative future cash flow forecast and increased risk premiums. This has resulted in a $9.5 million noncash impairment of intangible assets and goodwill being recorded in the Australian segment and a $1.5 million impairment being recorded in the European segment during the year. The impact of these impairment was for a significant reduction in statutory net profit after tax from FY '18. It's down to $4.7 million compared to $19.2 million last year. Given this result, the Board has decided there will be no final dividend declared for FY '19, and this is in accordance with our dividend policy.

On to Slide 12 there, you can see our historical and forecast rental fleet sales proceeds and capital expenditure numbers. Fleet sales proceeds were down on FY '18 due to the reduced ex-fleet sales throughout the year. With the initiatives we are currently implementing to improve our global vehicle sales strategy and infrastructure, we expect volumes to be higher in FY '20. This is reflected in our increased fleet sales forecast. The increase in fleet CapEx over the previous year was a result of an increase in fleet sales across the group and the new fleet acquired for the German and French branches opened in April 2019. We have updated the fleet life cycle for FY '20 and this is expected to result in a decrease in fleet purchases for FY '20 resulting in a decrease in forecast fleet CapEx.

The other CapEx related to our general business fixed asset expenditure on items such as manufacturing equipment, rental branch upgrades, IT infrastructure and systems. FY '19 was higher than normal mainly due to the upgrades of the Toronto and Halifax branches in Canada and we expect that other CapEx will reduce in FY '20 as we realize the benefit of these initiatives.

Turning to our balance sheet on Slide 13. We've provided a detailed outline of the 3 key types of funding lines we utilize in our business, which is: hire purchase funding for our retail fleet vehicles; floor plan finance for our retail sales inventory; and mortgages over a number of properties owned in Canada, on which our rental branches are located.

Each unit in our rental fleet is individually financed via a hire purchase lease on facilities held with a number of financiers in each region. OEM financing, people like Toyota and Mercedes Benz, are the primary source of these funds. Our total hire purchase debt has increased by $40 million over FY '18. This is due to increase in the rental fleet sales globally, in particular, new fleets in Germany and France and the impact of soft global RV fleet sales, which has resulted in higher-than-expected ex-fleet inventory holdings at year-end.

Each vehicle has unrealized equity value, the total of which for the group is approximately $65 million. This equity is realized when the vehicle is sold at the end of its rental life. I'll run through an example of this relationship between rental fleet debt and the underlying vehicle value in the next slide. Furthermore, as at 30 June, we have approximately $83 million of headroom in our hedged hire purchase facilities. This provides us with diversification of financier concentration risk and flexibility to grow fleet sizes, if required.

Floor plan finance operates in a similar manner to the hire purchase debt with each individual retail unit able to be financed up to the available limit of our respective finance facility. However, unlike hire purchase debt, there is no mandated repayment term attached to each vehicle as the stock is generally sold within the year. This provides us with an efficient source of capital to fund our retail operation and expand our retail offering, which we did in FY '19 with the addition of the Coromal brand to our portfolio and the opening of a new site in Newcastle and the new expanded site in Melbourne. As at 30 June, we had circa $10 million of headroom in our floor plan facilities, providing us with diversification of financier concentration risk and flexibility to grow retail inventory, if required. I'd also like to note that since 30 June, we've had an additional $15 million floor plan facility approved.

The bank loans are comprised of mortgages held in Canada over a number of the properties we own where our rental branches are located. The decision to own these properties in Canada was driven by the cost of ownership and the potential capital depreciation outweighing the cost of leasing the property. The increase in mortgage debt over FY '18 is due to the financing of the branch buildings in Toronto and Halifax and a refinancing of the existing property to new lenders with better rates and terms, allowing additional capital to be drawn. You'll also note that on our balance sheet, we have a net current liability position of $138 million. This arises due to the requirements of the accounting standard to classify all floor plan debt and the portion of the HP financing that's due within 12 months as current liabilities, whereas the majority of the underlying vehicles are treated as noncurrent assets under the accounting standards.

As noted in the slide, Apollo has facilities in Canada and one in New Zealand that contain standard financial covenants. All of these were satisfied during the year.

Lastly, we have guided that our debt-to-EBITDA ratio is 5.3 at 30 June. This is an increase from 3.8 last year. This is due to the increase of the debt as discussed previously and the reduced financial performance of the group during the year.

Moving on to Slide 14 there, we've got an example of how we acquire our fleet and the equity that is generated in the vehicle over the term. In this example, you can see a 6 berth motorhome in Australia that we would have acquired and financed for $110,000 and that debt is paid off in full over the vehicle's 5-year rental life cycle. The real depreciation for the unit is 11%, and that reflects the rate that is required to achieve the sale price at the end of 5 years, which in this example -- which is the written down value. As you can see, as the vehicle's life progresses, the debt repayments occur at an accelerated rate as compared to the depreciation of the vehicle, creating an increasingly intrinsic unrealized equity value. The end result of which is a realization of the equity equal to almost 50% of the vehicle's original value at the point of sale.

While life cycles and depreciation rates vary amongst our different regions, the underlying principle remains the same. This illustrates that despite the increasing RV holdings that eventuated due to slower ex-fleet sales during the year, the company had approximately $65 million of unrealized equity in our vehicle fleet globally that could be liquidated at reduced sales margins, if required.

On Slide 15, we've got our cash flow. Cash flow continues to be monitored closely and we -- while we undertake our growth strategies and we are comfortable with our cash flow management policies. As at 30 June, we had a healthy cash balance of $34.5 million, and that remains at approximately the same level today.

I will now pass the call back to Luke to continue his comments.

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [4]

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Thank you, Karl. So moving forward to Slide 17, you'll see a snapshot of our global footprint. We're covering all the key regions in the Western continent. Our global fleet now is approximately 5,500 vehicles.

Moving forward to Slide 18. You can see the revenue and underlying EBIT position in each of our segments, and I'll give you a rundown now on how each of those areas has performed. If I've covered some of these previously, I'll try not to double up.

So moving forward to the Australian segment on Slide 19. After a strong FY '18, the Australian segment experienced a sharp decline in underlying earnings as a result of suppressed retail sales margins and a significant cost incurred in building up our global growth infrastructure. Despite the subdued financial performance, there are a number of positives for the segment that will hold us in good stead as we head into FY '20 and into the years ahead.

Rental performance for Australia remains particularly strong and we had record guest days and rental revenues, despite lower-than-expected last-minute bookings in Q4. From a retail sales perspective, overall new vehicle sales and trading volumes were up on the prior year. However, the margins and volumes were well below our expectations for the year. The implementation of the strategic initiatives I mentioned earlier has the segment well placed to capitalize on the improving retail sentiment currently being experienced.

Another contributing factor for the decline in EBIT for the segment was the significant increase in costs. While these costs such as the appointment of new key management personnel and enhancements to systems and IT are for the global benefit, the majority of the costs are retained within Australia due to the primary corporate service functions being provided there.

Moving forward to Slide 20 for the New Zealand segment. You can see that the rental performance continues to perform strongly as our brand presence increases and our sales and marketing strategies generate solid returns. Growing retail sales in New Zealand is a primary focus for this year, following the opening of a new larger rental and retail branch in Auckland. With moving to the new Auckland facility, this will help generate increased earnings in future periods but the upfront costs incurred to establish the site, which included rent overlap with the old site and to make good, combined with a drop in expected last-minute bookings in Q4, ultimately contributed to a decrease -- small decrease in EBIT from the prior year.

Moving forward to the North American segment. Performance in North America was really a case of 2 contrasting stories with record rental performance in the region largely being offset by poor ex-fleet sales that were well below expectations. Rental nights for the U.S.A. and Canada combined were up 10% on the prior period, underpinned by the opening of new and upgraded locations.

CanaDream's ongoing management of the U.S.A. operation continues to help improve performance as we leverage their established expertise in the region. The impact of an oversupply of new vehicles to the market has placed downward pressure on used vehicle demand and margins in the region as previously discussed. This has also had the flow-on effect of increased holding costs as our stock levels were inflated over the quieter winter months. We applied higher price discounts in order to accelerate sales. However, we did reduce our U.S.A. fleet order as we were able to utilize a number of unsold RVs for the summer season.

The region did, however, have a $4.3 million reduction in costs year-on-year, which was attributable to the corresponding reduction in the cost of vehicles sold and the alignment of Canada's written down value fleet calculations to those of the group. This adjustment, however, reduces the profit achieved on ex-fleet sales. We are in the process of expanding our regional wholesale partners to capture new volume and margin opportunities. We are also working to establish a retail distribution network, utilizing our existing rental branch real estate to gain a different distribution and higher margin.

Moving forward to Slide 22 for the Europe and U.K. segment. It must be noted for comparative purposes, the segment represents only 3 months of Camperco's operations compared to the full 12 months for FY '19. The new operations in Germany and France, which commenced in April, are also reflected in the current year's results. Camperco's rental performance was up on a like-for-like basis due to an expanded fleet size and synergies gained from leveraging Apollo's existing travel partner network. Additionally, our VIBE reservations and fleet management system was implemented during the year. This helped improve utilization as well as pricing strategies, which have generated additional growth. However, as with other regions, the overall performance of Camperco was hampered by subdued ex-fleet sales due to ongoing uncertainty surrounding Brexit, which creates consumer sentiment. This, again, resulted in increased holding costs. However, we are able to use some of that fleet over the summer peak period. The positive performance of our new locations in Germany and France provided solid foundation for additional expansion in Europe.

Moving forward to Camplify. Our investment in Camplify is going well. We own 25% of that business. And I'm happy to report that they continue to grow and are now operating in the U.K. and in NZ. FY '19 was a big year for Camplify with the company raising an additional $5.2 million from existing and new investors, of which ATL invested a further $1.3 million, maintaining our share. Camplify was valued at $18 million, which doubles the value of our initial capital investment.

I'll now discuss our strategy and outlook for FY '20 and beyond. On Slide 25, you'll see some of the key digital initiatives that we have in the works to improve guest and customer experience and the overall operational performance of the business. Our ApolloConnect app, which we launched early calendar year 2018, continues to evolve, and during the year, we implemented a number of content improvements such as the introduction of safety videos, how-to guides and also self check-in and check-out for our guests. We also introduced during the year vehicle telemetry, which helps improve fleet management, on-road servicing and provides a focus on driver behavior through the management of excessive speeding and geofencing of restricted areas. We're also planning on launching a retail app during the year to provide increased customer support and interaction for our customers who buy units from us.

Moving to Slide 26. This outlines our global rental strategy, which is focused on the 3 key pillars of experience, expansion and efficiency. FY '20 is a year of concerted focus on generating efficiencies across the group to drive down costs and improve our return on funds employed.

On Slide 27, I previously mentioned the significant initiatives that we're implementing in an effort to strengthen our global retail sales network as we look to rebound from the performance of FY '19.

Moving forward to Slide 28. Looking at the outlook for tourism and the RV industry around the globe, we note that the markets in all regions remain cautiously positive, that we are cognizant of the impact of geopolitical issues and also negative media cycles and the impact that this can have on consumer sentiment. We closely monitor that.

Finally, looking at FY '20 outlook. We appreciate that our performance in FY '19 was well below expectations, but we're 100% committed to improving. We do believe that our significant investments that we have made to support our global business will profoundly improve our outlook as we move forward into FY '20 into the years beyond.

Forward rental bookings are up in all regions today. We've got double-digit growth in North America, in the U.K. and Europe, in New Zealand, and Australia is mid-single-digit growth. So it's all looking quite promising there. And we've had a good performance in France and Germany, which will give us the springboard to expand into Mainland Europe.

To note, we're in the advanced stages of global recruitment for our group CFO, which will bring additional financial expertise and oversight to the group's operation.

With that, I'll wrap up my comments for today. Thanks very much for your time. I'll now turn the line back to the operator for any questions that you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Jo Little from Morgans.

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Josephine Little, Morgans Financial Limited, Research Division - Senior Analyst [2]

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Just a couple of questions. Can you give us a bit of help, I guess, on the expectations of fleet sizes, I guess, expectations into FY '20 year-end?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [3]

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Thanks, Jo. Good question. So we're looking at maintaining our fleet sizes in all regions, aside from the U.K. and Europe where we're opening a couple of more locations for the summer period of FY '21. So there'll be a small increase of probably circa 100 units in that market.

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Josephine Little, Morgans Financial Limited, Research Division - Senior Analyst [4]

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And I think at your last update, you were doing a strategic review of your global RV sales strategy, which I guess was potentially -- meaning you were looking at maybe lengthening your fleet holding periods. What has that yielded today? Is there anything you can share with us, please?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [5]

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Sure. That process is ongoing, although we have had some initiatives that we're already implementing, for example, in North America. Rather than just wholesaling the fleet in the U.S.A., we're opening up retail shops at the existing rental branches. With our life cycles, we always review the market dynamics at the time to see when is the best time to sell our fleet in North America. It doesn't make sense in the current environment to turn over as much fleet as quickly as we have been at the moment, so we're extending the average season out longer than what it currently is. So rather than selling approximately 80%, we'll now be probably selling around 30% to 40%. But we have flexibility in the model. So if we perform better than we hoped or than we expected, we'll sell more. But it really depends on the market dynamics at the time.

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Josephine Little, Morgans Financial Limited, Research Division - Senior Analyst [6]

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Okay. And just on North America a bit more. I mean you made a few comments there around economic conditions, but can we just talk more about the state, I guess, of the industry post the glut of stock, and your opinion on the market at the moment, and how should we think about your business in FY '20, given what happened in the back end of last half and holding costs? And yes, I guess that churn rate is going up, too.

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [7]

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Yes. You know what, I think, firstly, I would say that the market of the new vehicles, whilst the wholesale shipments from the manufacturers have certainly reduced, there still appears to be downward pressure on pricing. For us, there's no issue about being able to sell the fleet but it's about being able to sell the fleet for the right price. So we're taking a very cautious approach in North America as being able to sell the numbers that we want at the price that we want. Therefore, we're rightsizing the fleet by running it a bit longer. The units get to depreciate longer, so we can sell them into a different part of the market. And then moving forward into the following year, we'll be closely looking at our CapEx to make sure that we've got the appropriately sized fleet come that summer period next year.

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Operator [8]

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Your next question comes from the line of Andy Bowley from Forsyth Barr.

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Andrew James Bowley, Forsyth Barr Group Ltd., Research Division - Head of Research [9]

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I've got a couple questions here. First one around return on funds employed. It's been a challenging year for you, and return on funds employed has come down in each of your markets. Can you tell us what you actually target in terms of return on funds employed? And then in terms of go forward from here, it doesn't sound like funds employed is coming down, at least, in fiscal '20 in the context of fleet sizes being held or maintained at current levels; therefore, we're wholly reliant on pretty big improvement of, I guess, in terms of underlying EBIT. Is that fair to say?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [10]

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Andy, thanks for the question. So we target -- our aim is to get to 15% ROFE. We're not there yet, and particularly after a tough year. With our fleet size staying the way they are, our aim is to increase the earnings thus generating obviously more revenue and controlling our costs.

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Andrew James Bowley, Forsyth Barr Group Ltd., Research Division - Head of Research [11]

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And I guess 15% probably a long shot for fiscal '20. What kind of time horizon do you think you can get there at a group level, notwithstanding there's clearly some strategic growth going on in new markets?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [12]

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Yes. That's certainly not what we're expecting in FY '20. That's a 3- to 5-year vision for the business.

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Andrew James Bowley, Forsyth Barr Group Ltd., Research Division - Head of Research [13]

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And at what stage then Luke do you then start to revisit the dynamic between recovery and profitability and invested capital or funds employed if we're not getting that recovery and profitability? How dynamic can you be in terms of that funds employed and fleet sizes going forward?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [14]

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Well, we have a very good optionality on our fleet, and what we want to do is work the fleet harder, so utilize it better and charge more per day. We feel that we've got an appropriate-sized fleet in the market at the moment for the demand that we're doing. It's really coming down now to selling them at the end-of-life and achieving the margins that we need to at that end.

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Andrew James Bowley, Forsyth Barr Group Ltd., Research Division - Head of Research [15]

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Okay. Lastly for me. Luke, you talked about lower-than-expected last-minute bookings in both New Zealand and Australia over the last period there. Can you talk about that dynamic, what you saw in both markets, is it a domestic issue? Is it last-minute international bookings? What really went on in terms of what you can see from your business?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [16]

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Most of our bookings are long-haul travelers coming from international destinations into all the markets that we operate in. However, we do get last-minute bookings from people in the destinations where we operate, and these are typically domestic travelers and what we call backpacker travelers who are coming here for a longer period. They don't book in advance and they make their mind up last-minute as to whether they're going to travel by car or coach or by campervan.

In the last quarter, the Aussies stopped traveling in campervans. And we put that down to the impact of the federal election that people just kind of held on to the -- kept their purse-strings closed. And then in terms of international backpackers that are in Australia and New Zealand, there's some statistics out there showing that those numbers are down on prior years. Australia and New Zealand are perhaps not as sexy destinations as what they used to be, that's where mum and dad traveled so we're not going to do that. Maybe some environmental reasons -- that it's a long-haul destination. We don't want to pollute the environment, so we'll stay somewhere a bit closer to home or maybe go to Asia where it's perhaps a bit cheaper. So to mitigate that, we believe that the domestic thing was a one-off with the election. So we're trying to fill our capacity earlier rather than waiting for these last-minute bookings, which are typically at a slightly higher yield, but for us, it's safer to have the booking in the tin than waiting for that expectation.

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Andrew James Bowley, Forsyth Barr Group Ltd., Research Division - Head of Research [17]

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And the rationale for the same dynamic in New Zealand?

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [18]

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Exactly the same. Kiwis don't travel much in campervans domestically, whereas there's a lot of Aussies traveling to New Zealand. That didn't happen. And the backpacker market is exactly the same dynamic in New Zealand as Australia. Numbers are down.

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Operator [19]

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(Operator Instructions) There are no further questions from the telephone lines. I would now like to hand the conference back to your presenters. Thank you, and please continue.

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Luke Trouchet, Apollo Tourism & Leisure Ltd - MD, CEO & Executive Director [20]

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Well, thanks, everyone, for joining in today's call. We'll finish up now. We look forward to speaking to many of you during our upcoming road shows. Thanks, and have a great day.

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Operator [21]

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Ladies and gentlemen, that does conclude our conference call for today. Thank you for your attendance. You may now disconnect.