Skyline delivers profit boost

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Queenstown’s Skyline Enterprises has shrugged off the global financial blues to deliver a 25 per cent boost in profit.
 
The tourism, casino and property conglomerate has announced an unaudited after-tax bottom line of $20.9 million for the March 31 year – $4.2m up on its previous audited profit of $16.7m after tax. 

Chairman Ken Matthews says his board will recommend a six per cent dividend boost at a September 29 annual shareholders meeting. 

With Skyline’s share price at $6.30, the recommended dividend of 34 cents per share would yield an attractive 5.4 per cent.
 
This week’s preliminary profit announcement also reveals a substantial payback of borrowings.
 
“Our operational cashflows have been strong, enabling a significant reduction of debt incurred through capital improvements and acquisitions,” Matthews says.
 
Skyline’s announcement indicates solid results across almost all profit centres.
 
While Queenstown gondola patronage was down five per cent, earnings increased thanks to higher food and beverage sales together with more luge and mountain bike rides.
 
At Rotorua, gondola and luge revenues were flat yet overall earnings also jumped eight per cent after tight cost control and reduced depreciation, Matthews reports.
 
The commercial property arm likewise hiked its contribution to group coffers, as a result of minimal vacancies and small rent increases at its prime Queenstown CBD buildings.
 
The two casinos Skyline co-owns with SkyCity Enter­tainment produced understandably mixed results.
 
After years of barely breaking even, Matthews notes the Queenstown casino “achieved an improvement in profitability”.
 
The Christchurch casino is a different story – weekend trading, while down, is satisfactory but patronage during the week is light, he says.
 
Matthews notes Totally Tourism’s extensive collection of small-to-medium-size operations is already beginning to repay its purchase price after just seven months of Skyline ownership.
 
The Rugby World Cup aided Dunedin’s Mercure Leisure Lodge yet only resulted in a same-again contribution from Queenstown’s Blue Peaks Lodge, Matthews reports.
 
Offshore luges remain paramount on Skyline’s growth horizon.
 
While Quebec in Canada had a flat year, the Singapore luge racked up more than 1.1m rides which, along with good cost control, resulted in yet another profit increase, Matthews says.
 
As previously announced, two more offshore luges are in the offing – the Canada Olympic Park operation in Calgary is scheduled to open in late-September, while Skyline will begin construction on its virgin South Korean venture by mid-2013, Matthews hopes. 

Disclosure: The writer is one of 820 small shareholders in Skyline.