Thunderbird Resorts Inc.
FRANKFURT : 4TR
EURONEXT AMSTERDAM : TBIRD

Thunderbird Resorts Inc.

August 31, 2016 21:26 ET

Thunderbird Resorts 2016 Half-Year Report Filed

PANAMA, REPUBLIC OF PANAMA--(Marketwired - Aug. 31, 2016) - Thunderbird Resorts Inc. ("Thunderbird") (FRANKFURT:4TR)(EURONEXT AMSTERDAM:TBIRD) is pleased to announce that its 2016 Half-year report has been filed with the Euronext ("Euronext Amsterdam") and the Netherlands Authority for Financial Markets ("AFM"). As a Designated Foreign Issuer with respect to Canadian securities regulations, the Half-year report is intended to comply with the rules and regulations set forth by the AFM and the Euronext Amsterdam.

Copies of the Half-year report in the English language will be available at no cost at the Group's website at www.thunderbirdresorts.com. Copies in the English language are available at no cost at the Group's operational office in Panama and at the offices of our local paying agent ING Commercial Banking, Paying Agency Services, Location Code TRC 01.013, Foppingadreef 7, 1102 BD Amsterdam, the Netherlands (tel: +31 20 563 6619, fax: +31 20 563 6959, email: iss.pas@ing.nl). Copies are also available on SEDAR at www.SEDAR.com.

Below are certain material excerpts from the full 2016 Half-year Report the entirety of which can be found on our website at www.thunderbirdresorts.com.

LETTER FROM THE CEO

Dear Shareholders and Investors:

While we always give considerable thought to the Letter from the CEO, the letter in this 2016 Half-year Report is of particular importance, with a four-part agenda as follows. Sections 2 and 3 below are of particular relevance for shareholders who wish more insight into the Special Resolution that has been sent for consideration at our September 21, 2016 Annual General and Special Shareholders' Meeting.

  1. Summarize progress through the 2016 Half-year period against our previously-stated goals.
  1. Describe the rationale for the special resolution that has been sent to shareholders for consideration at our September 21, 2016 Annual General and Special Shareholders' Meeting. The resolution referred to is a Special Resolution that the Company may post-sale of its assets: Pay a liquidating distribution to shareholders and formally liquidate and dissolve the company.
  1. Describe those factors that could impact the net value of the Group's assets as compared to its current market capitalization. Those items discussed herein are: i) Valuation metrics commonly used in our markets for the acquisition of gaming cash flows and for commercial real estate; and ii) Valuation adjustments that are most typical in these types of transactions such as asset transfer tax, capital gains tax, contingencies, escrows, potential litigation liabilities or assets and such working capital items as cash and cash equivalents, pre-paid expenses and deposits and borrowings.
  1. Summarize our conclusions and offer key notes for consideration.

Please refer to the section entitled "Forward Looking Statement" on page 2 which contains all of the admonitions concerning reliance on the information we provide to you. In summary, none of the information described in points 2 and 3 in this letter should be relied on in your analysis of the net liquidation value of the Group. Rather, we would expect you as a shareholder to perform and rely on your own research and on the publicly available financial information provided by the Group in 2016 and in previous years. Any and all "metric" information provided in points 2 and 3 of this letter should not be relied upon by potential acquirers of our assets as the Group will seek to sell assets at values that protect the interests of our shareholders. Any final pricing of any Group asset will be based on numerous factors, including the number of bidders, the terms of the particular transaction, the time-value and other considerations that the Group deems relevant to setting the final terms of a specific transaction.

  1. PERFORMANCE UNDER OUR PREVIOUSLY-STATED GOALS

In the CEO Letter to Shareholders published in the 2015 Annual Report, the Group stated certain goals that support achieving profitability and building a healthy company. A detailed update can be found in the remaining chapters of this report. Below is a summary update on our progress through June 30, 2016.

  1. Increase our EBITDA(1): Adjusted EBITDA (after deducting Corporate-level expenses) reduced by $333 thousand or 18.1% on a USD basis as compared to Half-year 2015. However, under a currency neutral analysis (in which the same exchange rate would be applied to both periods), the Group's Adjusted EBITDA decreased by only $31 thousand or 2.0% as compared to 2015. The $333 thousand reduction of Adjusted EBITDA was driven by $1.5 million in decreased revenues for the Group, meaning that the Group has also made corresponding cuts in expense to offset the revenue loss as reported in US dollars. Moreover, under a currency neutral analysis (in which the same exchange rate would be applied to both periods), Group revenue would actually have reduced by only $37 thousand, meaning that a reduction in revenue was in fact primarily an issue of foreign exchange.
  1. Improve our Profit / (Loss): Our Loss from Continuing Operations improved by $906 thousand or 38.8%. The improvement is the result of reduced interest and financing costs and higher Other gains as compared to Half-year 2015. Other gains are mainly related to the sale of the office building in Panama.
  1. Reduce our borrowings: Gross debt2 has been reduced to $30.3 million on June 30, 2016 as compared to $32.1 million on December 31, 2015. Net debt (gross debt less cash and cash equivalents) has been reduced to $28.2 million on June 30, 2016 as compared to $29.3 million on December 31, 2015.
  1. SPECIAL RESOLUTION PROVIDED TO SHAREHOLDERS FOR CONSIDERATION

On August 25, 2016, the Group sent to shareholders the supporting materials for our September 21, 2016 Annual General and Special Shareholders' Meeting. Included within those materials was a Special Resolution requesting that the Company's shareholders approve the following:

BE IT RESOLVED THAT:

  1. The Board of Directors of the Corporation is hereby authorized, at a time to be determined by the Board of Directors of the Corporation, to voluntarily dissolve the Corporation pursuant to the BVI Business Corporate Act of 2004, which winding up process and dissolution application shall be commenced and implemented at such time as determined by the Board in their sole discretion;
  2. The Board of Directors of the Corporation is hereby authorized to make provision for and to discharge all liabilities of the Corporation in conjunction with the winding up and dissolution of the Corporation and in connection with such winding up and dissolution, is authorized to make a pro rata distribution to shareholders of the net proceeds available to the Corporation (after adjusting for carrying costs and other winding up and dissolution related expenses) from the sale of any or all remaining assets of the Corporation in such amounts and at such times as determined by the Board of Directors;
  3. Any one director or officer of the Corporation be and is hereby authorized and directed to do all such things and to execute and deliver all documents and instruments as may be necessary or desirable to carry out the terms of this resolution, including but not limited to the filing of articles of dissolution under the BVI Business Corporations Act; and
  4. The directors of the Corporation may, in their discretion, without further approval of the shareholders, revoke this special resolution at any time before the filing of articles of dissolution under the Business Corporation Act (BVI) in respect of the foregoing.

Granting the Board of Directors the right to voluntarily dissolve the Corporation does not mean that the same will occur. Approval of shareholders in advance allows the Board the flexibility to undertake the same should the Board deem it to be in the best interest of shareholders based on the circumstances at the time, without the risk of delay of approval of specific transactions or the expense of calling another shareholder meeting to specifically approve such matter. In the event that the Company proceeds with its plan to liquidate and dissolve, the company in due course intends to delist from the Euronext Amsterdam in accordance with the rules and procedures of the Euronext Amsterdam.

Also included within the materials for the Annual General and Special Shareholders' Meeting was a rationale for this Special Resolution, which we summarize immediately below.

As published in the Corporation's 2014 Half-year Report, 2014 Annual Report, 2015 Half-year Report, the Q3 2015 Interim Management Statement, and the 2015 Annual Report, the Board of Directors and Management both believe that the market capitalization of Thunderbird Resorts Inc. is less than its intrinsic value, which we define as:

The net proceeds which the Group could achieve through liquidating all operating and real estate assets; plus the net proceeds achievable from completing all tax and non-tax litigations and fulfilling all escrow periods for escrows; and less carrying costs to manage process and operations while the Group remains a publicly-traded company.

Moreover, the Board of Directors and Management believe that it is increasingly difficult to finance growth and to achieve accretive value for the following reasons:

  1. The lack of liquidity in our stock means that we cannot use our stock as currency to acquire cash flow.
  1. Banks are increasingly reticent and many now even prohibit working with gaming companies, which means that access to competitively priced debt and amortization schedules is now virtually impossible to achieve, and therefore bank financing is not a mechanism for investment in growth.
  1. The Group has historically relied on high-yield bonds, but this market has dried up for two reasons: i) The stage of development of gaming in our markets has matured in recent years, meaning that the gaming sector in these markets is experiencing relatively moderate growth and can no longer afford the double-digit interest rates and single-digit loan periods that are standard requirements of high-yield bonds; and ii) Even if the Group could afford to service high-yield bonds, since the financial crisis bond investors are exceedingly more cautious about investing and there are far fewer of them.
  1. Our geographic markets have large concentrations of wealth in few hands, which means that the number of acquirers for our real estate assets are small and the time to sell at a competitive price can be exceedingly long, which means we are not able to generate proceeds from real estate asset sales on a timely basis to invest in growing our operating assets.

Because the Group believes that shareholders should achieve higher returns through a liquidating distribution as compared to the market cap at the date of publication of this 2016 Half-year Report and as compared to some future market cap given the lack of resources to invest in growth, we recommend that the shareholders carefully consider the Special Resolution as described. We also suggest that shareholders consider the low level of liquidity for the stock of Thunderbird Resorts Inc., and the difficulty that low demand creates for shareholders to achieve an exit via the market.

To view all of the materials for the Annual General and Special Shareholders' Meeting, including a copy of the resolution itself, please click on the following link: http://thunderbirdresorts.com/wp-content/uploads/2016/08/2016-AGM-press-release-aug-25-2016.pdf.

  1. MARKET-BASED VALUATION METRICS

The Group operates in different markets, we have varied ownership levels in our assets, and we operate in sectors ranging from gaming to hospitality to real estate. Because there are many factors that could influence the realizable value of liquidated assets, shareholders may find it challenging to get comfortable with their own analyses of the net value of the Group's assets. By reviewing this section along with the full 2016 Half-year Report, the Information Circular (see link above) and relevant past disclosures, we hope you will have sufficient information to prepare your own analysis. Should you have follow-up questions, please kindly direct them to Albert Atallah, General Counsel via email to aatallah@thunderbirdresorts.com. We will publish any price sensitive information stemming from these questions and answers.

While it is not appropriate for the Board of Directors or Management to forecast net asset values or to forecast the possible ranges of liquidating distributions to shareholders, below we do provide metrics that are commonly used in markets in which we own assets.

  1. Valuation of Gaming Cash Flows: Earnings before Interest, Tax, Depreciation and Amortization ("EBITDA") is widely used in the gaming industry in our markets as a substitute for operating cash flow. To determine the gross value of EBITDA in our markets, acquirers and sellers commonly reach a valuation based on a range of 4.5X to 6.0X historic EBITDA rather than a formula based on the net present value of forecasted future cash flows. Valuations below 5X EBITDA are generally reserved for poorly managed businesses that require material upgrades to sustain revenue. Valuations of 6X are generally reserved for premium locations with demonstrable growth potential. Our gaming EBITDAs for Peru and Nicaragua totaled $5.6 million in 2015 and our unaudited, preliminary gaming EBITDAs through half-year 2016 are approximately $2.5 million. Please remember that the Group is a 100% shareholder of all of its Peru real estate and operating assets and a 55.9% shareholder of all of its Nicaragua real estate and operating assets, so EBITDA multiples should be calculated on a pro rata basis.
  1. Adjustments to the Valuation of Gaming Cash Flows: Common adjustments to the valuation of gaming EBITDA include: i) Add back adjustments for corporate shared services that could be redundant for a buyer, meaning that there could be a discussion of a price increase based on synergistic efficiencies to be passed to a buyer that operates in the market; ii) In the case of an operation sold that is not currently paying a lease because it operates within real estate we own, a lease amount might be negotiated based on cap rates similar to those provided in paragraph 3C below and deducted from the EBITDA calculation used to determine valuation of gaming cash flows as per paragraph 3A above; and iii) Typical working capital adjustments based on balance sheet items.
  1. Valuation of Income-producing Real Estate: The value of income producing real estate in our operating countries and sectors is generally determined by capitalization rates ranging from 9% to 11% depending on the quality of the real estate and whether it supports hospitality, office or gaming operations. Special Note on the Real Estate of Fiesta Hotel & Casino: The Fiesta Hotel & Casino is a mixed-use hotel, office complex and retail real estate property in the heart of Miraflores, Lima in Peru. We are currently in discussions with several qualified investors, all of which are either financial investors or strategic investors who do not operate in the gaming sector. The April 2015 real estate valuation for this property was provided by a well-respected real estate appraisal firm that is commonly used by banks in Peru when evaluating real estate loan transactions. Regardless of the appraised value, final pricing for this asset will most likely be determined by the cash flow sold with the real estate, which most likely will be the hotel cash flows, office leases, parking garage cash flows and a lease to be negotiated for the retail gaming space. Based on the current levels of cash flow and on the practical reality that only a portion of the casino cash flow (via a lease back) would likely be made to a buyer of this real estate, the Group expects that the maximum realizable gross value of this real estate will be no more than $35 million based on the information available today.

    Other Valuation Inputs: As referenced in the third bullet at the very top of this letter, it is important to take into account valuation adjustments that are most typical in these transactions such as asset transfer tax, capital gains tax, contingencies, escrows, potential litigation liabilities or assets and such working capital items as cash and cash equivalents, pre-paid expenses and deposits and borrowings. The point of this paragraph is to help the reader to better understand the impact of each of these items when evaluating the net liquidation value of the Group. Real estate and share transfer taxes, as well as capital gains taxes, should be available online through multiple sources. For information regarding Group escrows that could possibly be partially or wholly recovered, please refer to our 2015 Annual Report and specifically to Note 11 and to Chapter 2, "Other Group Updates." For information regarding tax contingencies, pre-paid taxes in cases that continue under dispute and litigation "liabilities / assets," please refer to the Notes 17 and 22 in the 2015 Annual Report. For information on Group debt, please kindly review this 2016 Half-year Report. Finally, we believe it is important to measure and understand the carrying costs of the Group, which we have referenced in Chapter 2, "Other Group Updates" of this 2016 Half-year Report. At this time, we cannot estimate: i) The number of months or possibly even years it could take for the Group to complete implementation of the Special Resolution should in fact it be approved and fully implemented; and ii) Which assets might be sold first and, if the Special Resolution is fully implemented, when it would be likely to make a liquidating distribution. Finally, the number of issued and outstanding shares of Thunderbird Resorts Inc. as of the publication of the 2016 Half-year Report is 25,054,371. In regards to the number of issued and outstanding shares, it is important to note that Officers are materially discounting their salaries so as to preserve Group cash, and it is possible that this discount could be re-paid in shares of the Group as described in Chapter 2 "Other Group Updates" of this 2016 Half-year Report.
  1. CONCLUSIONS AND KEY NOTES FOR CONSIDERATION

We recognize that this is an unusual Letter from the CEO, but we strongly believe that shareholders should have the opportunity to learn about valuation metrics that are commonly used in our operating markets. Regardless, it is the responsibility of the shareholder to perform their own analysis of the market and of our reporting and to reach their own conclusions on the net liquidation value of the Group as compared to its current market capitalization. We offer the following conclusions and key notes for your consideration.

  1. The Board of Directors and Management believe, but cannot be certain, that the intrinsic value as defined herein should be greater than the average market capitalization of the Group in the months leading up to this publication. For this reason, we are presenting to shareholders the Special Resolution to distribute from the sale of the Group's assets followed by the formal liquidation of company assets and dissolution of the company. Regardless, there can be no assurances whatsoever that any liquidating distribution, if paid (see next paragraph), will exceed the current market capitalization.
  1. Should a Special Resolution be approved, it is possible that the Board of Directors and Management might not actually implement the Special Resolution if there were a change in circumstance that made it in the best interests of shareholders to postpone or cancel its implementation. For example, if the Group were able to sell a material portion of its real estate by early 2017, it is possible that the Group could become virtually debt free and could start to generate regular, material cash flows; in which case, it might at that point be in the interest of shareholders for the Group to spend time building accretive value and cancel or postpone the implementation of the Special Resolution. On the other hand, if the Group is not able to sell a material portion of its real estate by early 2017, then it would likely be in the interest of shareholders that the Group also pursue sales of its operating assets and fully implement the Special Resolution.
  1. In the meantime, shareholders may choose to exit at prices set by the market at any time or retain their shareholding positions in order to benefit from a potential distribution should in fact shareholders approve the Special Resolution and should in fact the Group fully implement the Special Resolution.

We will keep you informed as there are material events and progress.

Salomon Guggenheim, Chief Executive Officer and President

August 31, 2016

1. "EBITDA" is not an accounting term under IFRS, and refers to earnings before net interest expense, income taxes, depreciation and amortization, equity in earnings of affiliates, minority interests, development costs, other gains and losses, and discontinued operations. "Property EBITDA" is equal to EBITDA at the country level(s). "Adjusted EBITDA" is equal to property EBITDA less "Corporate expenses," which are the expenses of operating the parent company and its non-operating subsidiaries and affiliates.

2. Gross debt equals total borrowings and finance lease obligations.

GROUP OVERVIEW

Below is our consolidated profit / (loss) summary for our continuing operations for the six months ended June 30, 2016 as compared with the same period of 2015. In summary, Group revenue and adjusted EBITDA have reduced on a USD basis (see "Forex" note below), despite lower country-level operating expenses and reduced corporate expenses. See notes on certain key items below.

(In thousands, proportional consolidation)
Six months ended
June 30
2016 2015 Variance % change
Net gaming wins $ 16,124 $ 17,209 $ (1,085 ) -6.3 %
Food and beverage sales 1,429 1,501 (72 ) -4.8 %
Hospitality and other sales 1,923 2,313 (390 ) -16.9 %
Total revenues 19,476 21,023 (1,547 ) -7.4 %
Promotional allowances 2,474 2,282 192 8.4 %
Property, marketing and administration 13,777 14,724 (947 ) -6.4 %
Property EBITDA 3,225 4,017 (792 ) -19.7 %
Corporate Expenses 1,723 2,182 (459 ) -21.0 %
Adjusted EBITDA 1,502 1,835 (333 ) -18.1 %
Property EBITDA as a percentage of revenues 7.7 % 8.7 %
Depreciation and amortization 1,514 1,836 (322 ) -17.5 %
Interest and financing costs, net 1,697 2,124 (427 ) -20.1 %
Management fee attributable to non-controlling interest 2 - 2 0.0 %
Project development - 48 (48 ) -100.0 %
Foreign exchange (gain) / loss 294 466 (172 ) -36.9 %
Other (gains) / losses (716 ) (470 ) (246 ) 52.3 %
Income taxes 143 169 (26 ) -15.4 %
Loss for the period from continuing operations (1,432 ) (2,338 ) 906 -38.8 %

Forex: The strengthening of the US dollar versus our operating currencies continues to have a material impact on our business as compared to the same period in 2015. Under a currency neutral analysis (in which the same exchange rate would be applied to both periods), Group revenue would have decreased by only $37 thousand or 0.2% (virtually no change), while adjusted EBITDA would have reduced by just $31 thousand or 2.0%.

Group Debt: Below is the Group's Gross debt and Net debt on June 30, 2016.

(In thousands)
Jun-16 Mar-16 Dec-15
Borrowings $ 29,247 $ 29,417 $ 30,701
Obligations under leases and hire purchase contracts 1,038 1,150 1,432
Gross Debt $ 30,285 $ 30,568 $ 32,133
Less: cash and cash equivalents (excludes restricted cash) 2,092 2,138 2,869
Net Debt $ 28,193 $ 28,429 $ 29,264

Note: Gross debt above is presented net of debt issuance costs (costs of debt at time of issuance, which are currently non-cash and amortize over time) which is why there is an approximate $186 thousand variance with the total principal balance below.

The Group estimates its debt as follows starting in July 2016:

Principal Payment 2016 2017 2018 2019 2020 Thereafter Total
Corporate $ 5,798,892 $ 5,177,458 $ 2,207,631 $ 1,375,026 $ 1,534,143 $ 1,862,962 $ 17,956,112
Peru 1,213,286 1,749,279 1,420,385 6,497,237 - - 10,880,187
Nicaragua 125,742 269,561 294,885 673,863 175,462 95,073 1,634,586
Total $ 7,137,920 $ 7,196,298 $ 3,922,901 $ 8,546,126 $ 1,709,605 $ 1,958,035 $ 30,470,885
Interest Payment 2016 2017 2018 2019 2020 Thereafter Total
Corporate $ 843,977 $ 931,841 $ 623,971 $ 456,979 $ 297,863 $ 121,721 $ 3,276,352
Peru 491,414 803,430 595,615 213,110 - - 2,103,569
Nicaragua 83,121 145,765 120,441 92,985 24,205 6,675 473,192
Total $ 1,418,512 $ 1,881,036 $ 1,340,027 $ 763,074 $ 322,068 $ 128,396 $ 5,853,113

RISK MANAGEMENT

For more detail on Risk Factors, see Chapter 5 of the 2016 Half-year Report.

MANAGEMENT STATEMENT ON "GOING CONCERN"

Management routinely plans future activities including forecasting future cash flows. Management has reviewed their plan with the Directors and has collectively formed a judgment that the Group has adequate resources to continue as a going concern for the foreseeable future, which Management and the Directors have defined as being at least the next 12 months from the filing of our 2015 Annual Report. In arriving at this judgment, Management has prepared the cash flow projections of the Group, which incorporates a 5-year rolling forecast and detailed cash flow modeling through the current financial year. Directors have reviewed this information provided by Management and have considered the information in relation to the financing uncertainties in the current economic climate, the Group's existing commitments and the financial resources available to the Group. The expected cash flows have been modeled based on anticipated revenue and profit streams with debt funding programmed into the model and reducing over time. The model assumes no new construction projects during the forecast period. The model assumes a stable regulatory environment in all countries with existing operations. Sensitivities have been applied to this model in relation to revenues not achieving anticipated levels.

The Directors have considered the: (i) base of investors and debt lenders historically available to Thunderbird Resorts, Inc.; (ii) global capital markets; (iii) limited trading exposures to our local suppliers and retail customers; (iv) other risks to which the Group is exposed, the most significant of which is considered to be regulatory risk; (v) sources of Group income, including management fees charged to and income distributed from its various operations; (vi) cash generation, debt amortization levels and key debt service coverage ratios; (vii) fundamental trends of the Group's businesses; (viii) extraordinary cash inflows and outflows from one-time events forecasted to occur in the 12-month period following the reporting period of this 2016 Half-year Report; (ix) ability to re-amortize and unsecured lenders; (x) level of probability of refinancing of secured debt; (xi) liquidation of undeveloped and therefore non-performing real estate assets that have been held for sale; and (xii) level of interest by third parties in the acquisition of certain operating assets.

The Directors have also considered certain critical factors that might affect its continuing operations, as follows:

  • Debt Repayment and Cash Flow: Debt service payments for secured bank loans in Peru and secured and unsecured loans at the Corporate-level continue to be a significant part of the Group's outflow. The Group has invested significant time and effort to refinance debt under longer-term amortizations, but the banking industry in Latin America is not easily amenable to financing our gaming operations or real estate that depend on gaming income. The Group may need to sell the majority of its real estate assets in order to pay down virtually all Group debt and revert the Group to positive cash flow.
  • Corporate Expense and Cash Flow: Corporate expense has decreased materially in recent years, and is expected to continue to decrease. Combined with debt reduction, achieving the Group's announced Corporate expense targets is critical to achieving positive cash flow. Progress in this regard includes preliminary, unaudited Corporate expense in half-year 2016 of $1.7 million, and the Group is now targeting a Corporate Expense run rate of less than $2.0 million starting approximately in October 2016.
  • Liquidity and Working Capital: The Group is currently operating with low levels of reserves and working capital. Selling all or virtually all Group real estate and reverting cash flow will be critical to creating a healthy level of working capital reserves.

Considering the above, Management and Directors are satisfied that the consolidated Group has adequate resources to continue as a going concern for at least the 12 months following the reporting period of this 2016 Half-year Report. For these reasons, Management and Directors continue to adopt the going concern basis in preparing the consolidated financial statements.

FINANCIAL STATEMENTS

THUNDERBIRD RESORTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(Expressed in thousands of United States dollars)
As of June 30, 2016 and December 31, 2015
June 30,
2016
December 31,
2015
Assets
Non-current assets
Property, plant and equipment (Note 7) $ 22,673 $ 24,019
Investment accounted for using the equity method (Note 16) 4,341 5,908
Intangible assets 5,947 5,985
Deferred tax asset 439 423
Trade and other receivables 1,736 1,629
Due from related parties (Note 13) 42 42
Total non-current assets 35,178 38,006
Current assets
Trade and other receivables 1,605 1,126
Due from related parties (Note 13) 1,778 2,070
Inventories 460 480
Restricted cash 1,548 1,534
Cash and cash equivalents 2,092 2,869
Total current assets 7,483 8,079
Total assets $ 42,661 $ 46,085
Equity and liabilities
Capital and reserves
Share capital (Note 11) 110,504 110,456
Share option reserve 89 89
Retained earnings (106,511 ) (104,633 )
Translation reserve (4,804 ) (5,209 )
Equity attributable to equity holders of the parent (722 ) 703
Non-controlling interest 2,038 1,911
Total equity 1,316 2,614
Non-current liabilities
Borrowings (Note 9) 17,575 22,966
Obligations under leases and hire purchase contracts (Note 10) 209 441
Deferred tax liabilities 21 22
Provisions 569 616
Trade and other payables 495 1,133
Total non-current liabilities 18,869 25,178
Current liabilities
Trade and other payables 7,606 5,943
Due to related parties (Note 13) 900 983
Borrowings (Note 9) 11,672 7,735
Obligations under leases and hire purchase contracts (Note 10) 829 991
Other financial liabilities 373 379
Current tax liabilities 329 361
Provisions 767 1,901
Total current liabilities 22,476 18,293
Total liabilities 41,345 43,471
Total equity and liabilities $ 42,661 $ 46,085
THUNDERBIRD RESORTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
(Expressed in thousands of United States dollars)
For the six months ended June 30, 2016
Six months ended
June 30 (unaudited)
2016 2015
Net gaming wins $ 16,124 $ 17,209
Food, beverage and hospitality sales 3,352 3,814
Total revenue 19,476 21,023
Cost of goods sold (7,965 ) (7,945 )
Gross profit 11,511 13,078
Other operating costs
Operating, general and administrative (10,011 ) (11,243 )
Project development - (48 )
Depreciation and amortization (1,514 ) (1,836 )
Other gains and (losses) (Note 5) 716 470
Operating profit / (loss) 702 421
Share of loss from equity accounted investments (Note 16) (57 ) (10 )
Financing
Foreign exchange loss) (294 ) (466 )
Financing costs (Note 6) (1,765 ) (2,217 )
Financing income (Note 6) 75 106
Other interest (Note 6) (7 ) (13 )
Finance costs, net (1,991 ) (2,590 )
Loss before tax (1,346 ) (2,179 )
Income taxes expense
Current (143 ) (169 )
Deferred - -
Income taxes expense (143 ) (169 )
Loss for the year from continuing operations $ (1,489 ) $ (2,348 )
Gain / (loss) for the year from discontinued operations (Note 8) (261 ) 6,690
Gain / (loss) for the year $ (1,750 ) $ 4,342
Other comprehensive income (amounts, which will be recycled)
Exchange differences arising on the translation of foreign operations $ 405 $ (1,723 )
Other comprehensive income for the year 405 (1,723 )
Total comprehensive income for the year $ (1,345 ) $ 2,619
Gain / (loss) for the year attributable to:
Owners of the parent (1,878 ) 4,372
Non-controlling interest 128 (30 )
$ (1,750 ) $ 4,342
Total comprehensive income attributable to:
Owners of the parent (1,473 ) 2,649
Non-controlling interest 128 (30 )
$ (1,345 ) $ 2,619
Basic loss per share (in $): (Note 12)
Loss from continuing operations (0.07 ) (0.10 )
Gain / (loss) from discontinued operations (0.01 ) 0.29
Total (0.08 ) 0.19
Diluted loss per share (in $): (Note 12)
Loss from continuing operations (0.07 ) (0.10 )
Gain / (loss) from discontinued operations (0.01 ) 0.29
Total (0.08 ) 0.19
THUNDERBIRD RESORTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Expressed in thousands of United States dollars)
For the six months ended June 30, 2016
Attributable to equity holders of parent
Share
capital
Share
options
reserve
Currency
translation
reserve
Retained
earnings
Total Non-
controlling
interest
Total
equity
Balance at January 1, 2015 $ 110,144 $ 289 $ (1,725 ) $ (106,552 ) $ 2,156 $ 6,404 $ 8,560
Transactions with owners:
Issue of new shares 96 - - - 96 - 96
Options cancellation and expiration - (20 ) - 20 - - -
Costa Rica disposal - - - - - (4,690 ) (4,690 )
$ 96 $ (20 ) $ - $ 20 $ 96 $ (4,690 ) $ (4,594 )
Profit / (loss) for the year - - - 4,373 4,373 (30 ) 4,343
Other comprehensive income
Exchange differences arising on translation of foreign operations - - (1,723 ) - (1,723 ) - (1,723 )
Total comprehensive income for the year (1,723 ) 4,373 2,650 (30 ) 2,620
Balance at June 30, 2015 $ 110,240 $ 269 $ (3,448 ) $ (102,159 ) $ 4,902 $ 1,684 $ 6,586
Transactions with owners:
Issue of new shares 536 - - - 536 - 536
Shares buy-back (320 ) - - - (320 ) - (320 )
Options cancellation and expiration - (180 ) - 180 - - -
Costa Rica disposal - - - - - 57 57
$ 216 $ (180 ) $ - $ 180 $ 216 $ 57 $ 273
Profit / (loss) for the year - - - (3,301 ) (3,301 ) 170 (3,131 )
Other comprehensive income
Exchange differences arising on translation of foreign operations - - (1,761 ) 647 (1,114 ) - (1,114 )
Total comprehensive income for the year - - (1,761 ) (2,654 ) (4,415 ) 170 (4,245 )
Balance at December 31, 2015 $ 110,456 $ 89 $ (5,209 ) $ (104,633 ) $ 703 $ 1,911 $ 2,614
Share
capital
Share
options
reserve
Currency
translation
reserve
Retained
earnings
Total Non-
controlling
interest
Total
equity
Balance at January 1, 2016 $ 110,456 $ 89 $ (5,209 ) $ (104,633 ) $ 703 $ 1,911 $ 2,614
Transactions with owners:
Issue of new shares 48 - - - 48 - 48
$ 48 $ - $ - $ - $ 48 $ - $ 48
Profit / (loss) for the year - - (1,878 ) (1,878 ) 127 (1,751 )
Other comprehensive income
Exchange differences arising on translation of foreign operations - - 405 - 405 - 405
Total comprehensive income for the year - - 405 (1,878 ) (1,473 ) 127 (1,346 )
Balance at June 30, 2016 $ 110,504 $ 89 $ (4,804 ) $ (106,511 ) $ (722 ) $ 2,038 $ 1,316
THUNDERBIRD RESORTS, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Expressed in thousands of United States dollars)
For the six months ended June 30, 2016
Six months ended
June 30 (unaudited)
2016 2015
Cash flow from operating activities
Loss for the year $ (1,489 ) $ (2,348 )
Items not involving cash:
Depreciation and amortization 1,514 1,836
Unrealized foreign exchange (121 ) 466
Decrease in provision (1,186 ) (1,284 )
Other losses / (gains) 8 (470 )
Share based payments 48 96
Finance income (75 ) 2,217
Finance cost 1,765 (106 )
Other interests 7 13
Disposal of Equity accounted investments (1,232 ) -
Results from equity accounted investments 57 10
Tax expenses 143 169
Net change in non-cash working capital items
Decrease in trade, prepaid and other receivables (77 ) (1,605 )
Increase / (decrease) in inventory 23 (48 )
Increase in trade payables and accrued 1,167 642
Cash (used) from operations 552 (412 )
Total tax paid (168 ) (199 )
Net cash generated by continuing operations 384 (611 )
Net cash from discontinued operations - 77
Net cash (used) from operating activities $ 384 $ (534 )
Cash flow from investing activities
Expenditure on property, plant and equipment (226 ) (2,754 )
Proceeds on sale of property, plant and equipment 1,273 44
Proceeds on sale of Costa Rica Joint Venture 1,534 -
Proceeds on sale of Costa Rica operation - 8,077
Cost of sale of Costa Rica operation - (165 )
Interest received 75 106
Net cash used from investing activities $ 2,656 $ 5,308
Cash flow from financing activities
Proceeds from issue of new loans 100 870
Repayment of loans and leases payable (2,642 ) (4,955 )
Interest paid (1,267 ) (1,791 )
Net cash used from financing activities $ (3,809 ) $ (5,876 )
Net change in cash and cash equivalents during the year (769 ) (1,102 )
Cash and cash equivalents, beginning of the year 4,403 6,551
Effect of foreign exchange adjustments 6 3,867
Cash and cash equivalents, end of the year $ 3,640 $ 9,316

ABOUT THE COMPANY

We are an international provider of branded casino and hospitality services, focused on markets in Latin America. Our mission is to "create extraordinary experiences for our guests." Additional information about the Group is available at www.thunderbirdresorts.com.

Cautionary Notice: Cautionary Notice: The 2016 Half-year Report referred to in this release contains certain forward-looking statements within the meaning of the securities laws and regulations of various international, federal, and state jurisdictions. All statements, other than statements of historical fact, included in the 2016 Half-year Report, including without limitation, statements regarding potential revenue and future plans and objectives of Thunderbird are forward-looking statements that involve risk and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Thunderbird's forward-looking statements include competitive pressures, unfavorable changes in regulatory structures, and general risks associated with business, all of which are disclosed under the heading "Risk Factors" and elsewhere in Thunderbird's documents filed from time-to-time with the Euronext Amsterdam and other regulatory authorities. Included in the 2016 Half-year Report are certain "non-IFRS financial measures," which are measures of Thunderbird's historical or estimated future performance that are different from measures calculated and presented in accordance with IFRS, within the meaning of applicable Euronext Amsterdam rules, that are useful to investors. These measures include (i) Property EBITDA consists of income from operations before depreciation and amortization, write-downs, reserves and recoveries, project development costs, corporate expenses, corporate management fees, merger and integration costs, income/(losses) on interests in non-consolidated affiliates and amortization of intangible assets. Property EBITDA is a supplemental financial measure we use to evaluate our country-level operations. (ii) Adjusted EBITDA represents net earnings before interest expense, income taxes, depreciation and amortization, equity in earnings of affiliates, minority interests, development costs, and gain on refinancing and discontinued operations. Adjusted EBITDA is a supplemental financial measure we use to evaluate our overall operations. Property EBITDA and Adjusted EBITDA are supplemental financial measures used by management, as well as industry analysts, to evaluate our operations. However, Property and Adjusted EBITDA should not be construed as an alternative to income from operations (as an indicator of our operating performance) or to cash flows from operating activities (as a measure of liquidity) as determined in accordance with generally accepted accounting principles.

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