Comment permalink

A shareholder wants major Queenstown tourism business Skyline to pay back the wage subsidy after achieving a healthy profit.

But Skyline's board is not keen, leaked documents shows.

Skyline Enterprises Ltd, which operates the Skyline parks in Queenstown and Rotorua and has multiple other interests, recorded a $56.7 million net profit after tax in the last financial year, which was a difficult year for the tourism sector.

In documents seen by the Otago Daily Times this afternoon, including reports to the company's September AGM, shareholders John Hilhorst and Cath Gilmour have put forward a shareholders motion to pay back the $7.9 million wage subsidy the company took last year.

Ultimately it was a "moral question" for the company, they said.

"But first, would it be financially and reputationally prudent to return the $7.9 million?" the proposal asked.

Despite Covid uncertainty, the company's annual report was "bullish", they said.

"While 600 employees lost their jobs as the company responded to Covid, the wage subsidy has effectively translated into $7.9 million great company profits, and from there into increased equity, to the benefit of the shareholders."

As shareholders they were conscious of their privilege, the pair said.

When contacted Mr Hilhorst said he was encouraging all shareholders to get behind it.

While the operating revenue was cut in half by Covid restrictions, the company retained profitability through a 38% cut in operating expenses and employee benefits.

"There's no question that Skyline was right to seek government assistance at that time. The question is, should it now join the 18,000 companies that have voluntarily returned some $730 million to our public coffers," the proposal said.

However, in an attached document to the motion, Skyline's chairwoman Jan Hunt wrote to shareholders saying the board of directors did not support the proposal.

In these times, the company must keep adequate cash reserves to cover wider costs associated with maintaining the business, she said.
Ms Hunt said, in her letter, that the wage subsidy was only ever used to pay the company's staff "at a time of nil and severely impacted revenue" was intended.

When contacted Ms Hunt confirmed the board's view and said "it was a long and slow journey" for the business to recover from the impacts of the pandemic.