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Skyline 2013 profit falls 18 percent on Christchurch casino writedown following earthquake

Thursday 11th July 2013

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Skyline Enterprises, the Queenstown-based tourism company whose shares trade on the Unlisted platform, said its so-called distributable profit fell 18 percent in 2013 after it wrote down the value of the Christchurch casino where trading has softened since the earthquakes.

Distributable profit to shareholders was $16.6 million in the year ended March 31, down from $20.3 million in the year earlier period, the company said in a statement to Unlisted. The dividend will increase to 37 cents per share from 34 cents last year, the company said. It gave few other financial details and said the results were subject to audit.

Skyline took an $11.3 million goodwill and amortisation charge in the latest period after acquiring the half stake in Christchurch Casinos that it didn't already own from SkyCity Entertainment Group in December. That compares with a charge of just $300,000 in the year earlier period. Visitor numbers haven't yet returned to pre-earthquake levels although the trend is improving, Chairman Ken Matthews said in the statement. Construction is expected to start in October on a functions facility within the casino's ground level parking area, he said.

Shares in Skyline last traded at $8.80, valuing the company at $299.6 million.

The company's Queenstown gondola business experienced "strong trading conditions" throughout the year with gondola numbers at a record high, Matthews said. Revenue rose 15 percent, driven by dining and luge activity. The company's Rotorua business experienced a similar pattern, he said. Profitability improved as a result of controlling margins, yields and operating expenses, he said.

In its accommodation business, the Mercure Leisure Lodge in Dunedin recorded a small decline in occupancy to 65 percent while net returns from the Blue Peaks Lodge in Queenstown were lower than 2012. Vacancy levels remained low in its other commercial properties with some growth in rentals net returns, the company said.

The first full year of trading from Totally Tourism, acquired in September 2011, was in line with projections although some operational challenges continue in a competitive environment, the company said.

In the company's overseas Luge operations, profit contribution from Sentosa Island in Singapore was in line with the previous year as it competed with other destinations while Mont Tremblant in Canada produced a "sound result" and met expectations with similar visitor numbers as the year earlier.

Plans for a luge in the coastal city of Tongyeong in South Korea will take longer than expected, with a potential start date for construction pushed out to mid-2014 at best, rather than this year. The company's luge at Calgary in Alberta is open following delays and the company is confident it will be a success.

The company made no mention of the sale of its 40 percent stake in Queenstown gaming centre to SkyCity for $5 million.

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