Skyline boosts profits on strong tourist growth

Thursday 30 June 2016 04:57 PM

Skyline boosts profits on strong tourist growth

By Fiona Rotherham

June 30 (BusinessDesk) - Diversified tourism company Skyline Enterprises is to pay shareholders a 50 cent dividend per share for the 2016 financial year along with a one-off bonus of 5 cents per share to celebrate its 50 years in business.

On the back of a national tourism boom, the company has reported a pre-tax profit of $66.8 million, up on $63.3 million the prior year, for the financial year ended March 31, it said in a statement to the Unlisted market.

Skyline operates gondola and luge operations in Queenstown, Rotorua, Singapore, and Canada and is building a sixth site in South Korea. Its other tourism products include helicopter and scenic flights, cruises, rafting, accommodation, and the Christchurch casino.

It reported a $10.1 million in trading profit, which was $200,000 up on the prior year and a rise in the value of the commercial property portfolio to $10.1 million which was below the $16.7 million increase booked in 2015. Once revaluation, amortisation, and tax deferred on building depreciation are taken out, Skyline reported a $44.4 million profit, up $7.7 million on the prior year.

The figures are not broken down by individual operation in the preliminary results, which are still to be audited. Chairman Mark Quickfall said underlying net trading profit had increased 64 percent in the past two years owing to New Zealand’s strong tourism growth, along with the company’s “reinvestment and new initiatives providing strong returns”.

He said while investor demands in the financial markets for increased dividends are understandable, retaining funds is important to Skyline’s long-term growth strategy to take advantage of potential acquisitions and to manage any unexpected industry downturn.

Chief executive Jeff Staniland said the tourism group had a strong balance sheet, low debt, and high cash flow of more than $50 million a year, which meant it could fund growth without any need to go to shareholders or the market for extra cash. The group’s two largest shareholders are entities associated with Grant Hensman and Barry Thomas.

Although Skyline’s New Zealand operations were mature and well-established, the strategy was to get growth through revamping the offerings such as the new Stratosphere Restaurant at Rotorua where chefs can cook what customers choose, Staniland said. “They pay a premium for that but it is added value,” he said.

It has also been adding new products such as the Zipline operation and mountain biking park trail in Rotorua and looking for other tourism businesses of scale to acquire in New Zealand.

Skyline is spending $60 million to double the size of its Queenstown gondola operations to cope with peak tourism times.

A couple of new sites in Asia for luge operations are well advanced, though offshore expansion had been hampered by difficulty finding appropriate sites.

The $20 million Tongyeong Luge project in South Korea will be completed by year’s end.

Staniland said they’re still keen to introduce a lower risk and lower capital cost international licensing model of build, own and operate, but hadn’t yet found a suitable partner.

Trading at the Christchurch casino this financial year was consistent with the past few years and plans are advancing for an adjacent hotel to be operated by a third party.

(BusinessDesk)

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