Mt Hutt trebles its profit

Press, 12 May 1984, Page 23

Mt Hutt trebles its profit

The Mount Hutt Ski and Alpine Tourist Company, Ltd, more than trebled its net profit in the year to December 31, and the company is paying a dividend on the ordinary shares. The net profit rose from $46,734 to $184,183, and the recommended dividend is 10c a share (10 per cent), the annual report shows. In 1981, the company incurred a $89,646 loss, and in 1980 paid a 7c dividend after earning $119,975. The chairman, Mr Peter Yeoman, says that Mount Hutt achieved its 1983 objectives of a profit, paying a dividend, and meeting ail commitments. “Our dividend policy has been achieved and, it is to be hoped, sets the base for higher rates in the next few years.” The 60 per cent growth in patronage since 1980 made it essential that the company review its plans for the development of the mountain. Last December, the contract was let for the first stage of the extension of the day lodge, which will treble cafeteria space, and upgrading and extending the nightstaff quarters. The’ building extensions have a budgeted cost of $898,000 which will be substantially financed by an additional Development

Finance Corporation (DFC) loan. The extensions will enable the company to cater for the expected growth in patronage, particularly for the needs of overseas tourists who do not have the benefit of private vehicles in the car-park. The loan negotiations with the DFC have included a review of existing loans and rates. The older loans (except for lease finance) have been amalgamated, and the interest rate reduced to 15.75 per cent. Annual repayments have been rescheduled over a 10 year period and reduced by $120,900 a year—s49,6oo lower for 1984. Mount Hutt’s growth, measured in skier days,

jumped 26.5 per cent to 163,300. Research by the Tourist and Publicity Department shows that the skifield is highly regarded as a well-run, attractive ski area. The continued growth is also because of the increase in the number of people taking up skiing. There has been a marked increase in numbers from the North Island and a steady increase from overseas. The Northern Hemisphere market, about 4 per cent of total turnover, although small, is significant in relation to the net profit. There is increasing recognition that New Zealand has snow during the Northern

Hemisphere summer, and the increases in the Japanese and European skiers to the skifield provide good reason for Mount Hutt’s involvement with other New Zealand ski operators, the Tourist and Publicity Department, and Air New Zealand in the joint, substantially Government funded, promotion in this area. For every $1 spent by tourist skiers on Mount Hutt, at least $5 is spent elsewhere in the New Zealand tourist industry, and a substantial part of this is attracted to Methven. “The continued growth and success of the Methven tourist enterprise is heartening to the company because it provides the base for further development of

the skifield. “A submission to the Ashburton County Council early this year advanced the proposition that Methven may need to double these facilities within the next eight years to meet the growth rate of Mount Hutt. “Between 100 and 200 beds a year are required to match that growth,” Mr Yeoman says. Revenue rose 25.1 per cent to $2,696,159, although the company was allowed to raise its lift fees late in the season. Total expenses increased 18.8 per cent to $2,583,902. The profit was after providing $25,943 more for depreciation at $238,395, but there was a tax credit of $71,926 ($66,355) from tour-ist-promotion incentives. The recommended dividend of 10c a share takes $82,300, and it is covered 1.9 times by the profit after allowing for the preference dividends. Shareholders’ funds increased $75,333 to $1,267,682, including SIM in paid-up capital. The working-capital deficit increased $33,645 to $190,795. Mount Hutt has 1522 shareholders, but the company is not listed on the New Zealand Stock Exchange.