Healthy profit for tourism giant that collected govt Covid cash
Skyline Enterprises recorded a healthy profit during a year in which it took millions of dollars in taxpayer funded support, and laid off half its staff globally.
CEO Geoff McDonald said it was a challenging year, and Skyline met the requirements for government support which were necessary for it to remain viable as an employer of hundreds across the country.
The tourism operator, which has luge businesses in New Zealand, Canada, South Korea and Singapore and owns Blue Peaks apartments in Queenstown and the Christchurch casino, delivered a profit of $72.7m for the year ending March 31.
The company collected $11.4m in wage subsidies from the countries it operates in, $7.9m of which were from the New Zealand government.
It also got $1m from the government’s controversial Strategic Tourism Assets Protection Programme (STAPP).
In its Preliminary Profit Announcement document, Chair Jan Hunt says “given the unpredictable and constantly changing operating environment the Skyline Board are pleased with the result.”
McDonald said the 2021 profit wasn’t a “landmark performance year” in the context of Skyline’s recent annual performances.
“It was actually a really challenging year and that delivery doesn’t really rate if you look at the history of the last 5-6 years.
“People close to the organisation know how challenging and difficult it’s been.”
In 2020 Skyline delivered a $23.7m profit, in 2019 a $76.1m profit and in 2018 a $59.5m profit.
The low result in 2020 was a result of Skyline downgrading its property valuations by $36.4m on the assumption that Covid would reduce these values.
Instead, property prices increased so Skyline revalued them this year by $38.6m.
If the revaluations were removed, this year's profit result would be $36.3 million, while last year's would be $60m.
McDonald said Skyline went through a rigorous process to determine whether it qualified for the central government help.
“We followed all the instructions and followed all the rules and we believe that any support that we've received from the government that we've qualified for,” he said.
“Like a lot of organisations we did have to let go of staff and with the wage subsidy support we're able to keep staff and we’ve been able to put them on as we've had to scale up for the various peaks.”
McDonald said Skyline would not have taken support it did not need.
"I think everyone can see from the events of the past week, just when there was hope with winter and the Australian bubble... There is ongoing pressure on all operators."
He said Skyline contributes to the economy by providing roughly 300 jobs in Queenstown at peak times, as well as the jobs in its Rotorua operations and its casino in Christchurch which add up to around 1200.
“So we think it's important for us to be viable.”
Though the pause in Trans Tasman travel was disappointing, Skyline’s business hasn’t been too affected yet, McDonald says.
“For some operators that's a challenge, we're probably a little bigger, maybe a little bit more resilient and we've certainly had a view that it was going to take quite some time to ride this out.”
He accepts Jacinda Ardern’s position that tourism businesses struggling as a result of the pause won’t be getting government help.
“There’s got to be a point where they have got to say they can’t keep digging into their pockets and delivering handouts.”
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John Hilhorst : 30/06/2021, 9:43 am (21 months ago)
We have for decades been proud Skyline shareholders. But today, I am deeply embarrassed that Skyline chooses not to return the $8.9 million New Zealand taxpayer support it no longer needs.
The executive and directors have done an outstanding job safeguarding business value, though sadly at the cost of many jobs and workers’ livelihoods. To achieve a solid profit in this challenging year is a credit to the leadership team’s effort and skill.
Covid has been a tough deal, and there’s no question that the company was right to seek government assistance during the crisis. But to then declare a $72.7 million profit while not returning the $8.9 million is unconscionable on many levels.
First, there are many struggling businesses in our district still in need of government support. Such support will be less forthcoming as the government and the rest of New Zealand see previous assistance gold plating companies’ profits.
Affluent shareholders shouldn’t be the end beneficiary of workers’ wage subsidies. When I occasionally hear complaints of freeloading welfare beneficiaries, it is particularly galling to see the champions of free enterprise lock their hands in the lolly jar.
Taxpayer money isn’t a bottomless well. It’s a debt on our children and grandchildren. The retained $8.9 million is 280 hip replacements not done or 178 fewer teachers in South Auckland schools.
I sincerely hope the team at Skyline will review their decision and return the unneeded money, as Briscoe’s and others have. I encourage other shareholders to express their views.