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Investors not keen on Skyline listing

By Chris Hutching

Friday 29th August 2003

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Investors were heartened by a long overdue rebound in fortunes by listed Tourism Holdings and Shotover Jet this week but one of the most successful companies in the sector is resisting overtures to list.

Skyline Enterprises has been wooed by Stock Exchange executives to consider listing but its chairman Barry Thomas doubts shareholders would be interested judging from soundings at last year's annual meeting. Skyline's next annual meeting is tomorrow in Queenstown where some of the 700-odd shareholders may have a chance to give their views again.

But Mr Thomas cites the costs and amount of executive time taken up in Stock Exchange compliance issues as a major disincentive and in any case shareholders had tended to hold their shares, valued at around $5, rather than trade them. Some commentators suggest Skyline is the best tourism investment available if the shares can be obtained.

A listing seems unlikely to benefit Skyline's financial performance after six successive years of record profits, with no debt and $7 million in the bank, and no need to seek capital.

Under the chairmanship of Mr Thomas, a fellow of the Institute of Directors which has praised the governance of Skyline, the $165 million company recently posted a net operating surplus of $11.4 million ($9.6million last year) for the year ended March on revenue from all sources of $36 million ($31 million) from its gondola at Queenstown, property developments and accommodation income and its stake in the Christchurch and Dunedin casinos.

Shotover Jet posted an improvement in pretax profit to June 2003 of $4.5 million ($4.3 million previously) on turnover of $25.4 million ($21.6 million) but it was hit by returning to a fully taxable regime which reduced the final surplus to $3.2 million ($4 million).

It remains unclear how long Shotover will remain listed after major shareholder Ngai Tahu lifted its stake to 88.3% on a takeover bid last year at 70c a share compared to an independent appraisal report that put the estimated value range between 82c and 94c a share (the current price is 79c).

Directors have passed on paying a dividend for the past two reporting periods but the 768 minority holders have retained their stakes. If Ngai Tahu achieves the 90% compulsory buyout level it will be required to offer buy out minorities at recent prices or a level set by arbitration.

Partly as a result of retaining dividends, shareholders' equity stands at $24,277,000, 12% ahead of last year and net assets per share improved from 50c to 56c a share. The return on funds employed has risen to 19%, which the board considers a satisfactory rate of return given the risk profile of the business.

In addition, $2,258,000 was invested in the businesses in the group. Shotover plans to use Franz Josef glacier Guides, which it bought for $2 million recently, as a joint venture vehicle for growth in West Coast tourism.

In June, Shotover also acquired 100% of the Hollyford Valley Walking Track for $850,000. Meanwhile, Tourism Holdings' bounce back top profit after tax of $8.7 million ($300,000 last year) on turnover of $165 million ($181 million) saw the share jump to $1.44 compared to a low of 85c in April.

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