Shotover Jet Ltd - Half Yearly Statement

Shotover Jet Ltd

Half Yearly Statement

For immediate release
23 February 2000

Shotover Jet Ltd has recorded an after-tax profit of $211,000 for the six months ending 31 December 1999. This compares with a profit for the same period in the previous year of $1.255 million (including a foreign exchange gain of $260,000) on which no tax was payable.

At the time of the company's Annual General Meeting in September 1999, Directors advised that Shotover Jet Ltd was trading comfortably ahead of the current year's budgets and the previous financial year. That situation continued until early November. Since that time, three unforeseen and significant events have impacted negatively on the company's half-year result:

1. The extensive floods in the Queenstown area in November (the effects of which carried over to December) adversely restricted operations at the company's Queenstown-based subsidiaries (Shotover Jet Queenstown, Dart River Jet Safaris and Goldfields Jet). While some recovery has been achieved from a loss of profits insurance claim for the Dart operation, the inability to operate in flooded conditions, disruption to operations afterwards and the generally negative effect on the tourism market in Queenstown as a result of the floods, has cost the company an estimated $500,000 in profit contributions from these subsidiaries.

2. The accident at Shotover Jet Queenstown in November had a direct cost to the group in excess of $300,000. In addition, the accident reduced capacity at Shotover Jet Queenstown for a substantial period which also affected earnings.

3. The traditionally busy domestic season over Christmas/New Year was disappointingly quiet. The company attributes this to concerns by the travelling public over Y2K issues and a substantial trend by domestic and international markets to choose to spend the Millennium New Year "at home".

These isolated and unforeseen events cost the company in excess of $1 million in lost profit contributions over the half-year. The Directors therefore consider that the half-year financial results are exceptional and are not indicative of future trading periods. In these circumstances the company will not pay an interim dividend.

While early January trading in the second half of the financial year was quieter than in previous years, business volumes have since picked up substantially and as a result, Directors believe the company will trade satisfactorily in the second six months.

Directors consider the medium and longer term outlook for the company is positive with the tourism industry continuing to benefit from favourable foreign exchange rates and the ongoing strong growth in visitor arrivals.

Considerable progress has been made during the year towards the renewal of the company's concession for Shotover Jet Queenstown which expires in 2004. The Board looks forward to a successful conclusion later this year.

Satisfactory performances have been recorded in the main by operations outside Queenstown.

The Board is also pleased to announce the appointment of an additional Director, Mr Ross Keenan. Mr Keenan has specialist expertise in the tourism sector, which Directors believe will be of significant value to the company as it takes full advantage of the current upturn in the tourism industry.

In addition to a number of other directorships, Mr Keenan has held senior management positions in Air New Zealand and Qantas, and was Managing Director of Newman's Group. Most recently, he was Qantas Regional Director for the UK and Ireland.

In summary, this has been a six-month period in which the company has had to deal with a series of unprecedented one-off events. These have fully tested the company's management, its marketing programme and its administration systems. The company has responded to the events of the past six months with a high degree of professionalism in each instance, proving the quality of its management and staff, the benefits of prior planning and the overall strength of the organisation.

The company, management and staff are well placed to extract maximum benefit from the growing number of tourists visiting New Zealand. Shotover Jet will continue to provide its unique high quality experience to the growing number of tourists visiting New Zealand.

For further information please contact:
James Boult
Managing Director
Telephone: 0-3-442 7087

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