Skyline Enterprises defying the downturn

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Trading results at Queens-town’s Skyline Enterprises are down a tad but property revaluations mean increased profits and unchanged dividends. 

Skyline chairman Ken Matthews – announcing the local conglomerate’s unaudited March 31 year-end figures – reports after-tax profits of $20.4 million, up 34 per cent. 

The board plans to pay out $10.8m of that to shareholders – confidently maintaining last year’s dividend of 32 cents a share. 

Matthews carefully points out that after-tax profit from trading and equity earnings is actually down $1.6m – despite property valuations boosting the overall result. 

Last year saw Skyline’s huge Queenstown property portfolio devalued by $6.4m, contrasted this year by a $500,000 positive revaluation. 

The jump in property values may arise from what Matthews calls “a moderate increase in rentals [and] minimal vacancy levels”. 

Both the Queenstown and Rotorua gondola, luge and dining complexes had slightly increased visitor numbers – extra diners plus new mountain-biking trails saw Queenstown post a higher average spend. 

Singapore’s Sentosa Island luge is again singled out by Matthews, who notes one million rides were achieved for the first time in its five years. 

Matthews also signals an infrastructure upgrade at Sentosa “in the order of $5-$6m to capitalise on trading opportunities”. 

Results were mixed from the three South Island casinos in which Skyline has a stake. 

Returns from Christchurch were hurt by the earthquakes – although property damage isn’t thought to be significant and the building is fully insured, Matthews says. Dunedin Casino improved its bottom line but SkyCity 
Queenstown recorded more red ink. 

Queenstown’s Blue Peaks Lodge suffered an occupancy decline while Dunedin’s Mercure Leisure Lodge held steady. 

Matthews describes the business environment as “challenging”, saying trading since March 31 has been “patchy”. 

“It’s difficult to get a real trend but we seem to be holding in there,” he says. 

Matthews cautiously paints both sides of the picture to shareholders. 

Market pundits warn of “a reduction in international arrivals … with no potential signs of recovery until later in 2012”, Matthews says. 

Yet “previous international events over recent years haven’t produced the effects contemplated”, he adds. 

Nevertheless, current events could impact on future earnings, Matthews warns. 

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