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SeaLink reports record sales, despite some choppy waters

Business

Adelaide-based ferry and tour operator SeaLink has reported a record $208 million in sales and six per cent growth in underlying profit, despite disappointing results across several of its divisions.

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Announcing its full-year results on the Australian Stock Exchange this morning, SeaLink revealed underlying net profit after tax reached $23.4 million, up from $22.1 million last year.

Total revenue was up 20 per cent from the previous year, to $251 million.

And the company declared a fully-franked final dividend of 8.5 cents per share – 0.5 cents per share higher than the previous year – to be paid mid next month.

But earnings before interest and taxes (EBIT) made by its South Australian operations were down six per cent – a decline the company attributes mainly to a “challenging year” for Murray River paddle-wheeler, the PS Murray Princess.

SeaLink South Australia – which includes touring, accommodation and holiday packages – achieved a slight increase in revenue during the period, rising from $64.2 million last year to $66 million in 2019.

In a presentation to investors, SeaLink chief financial officer Andrew Muir said fewer passengers had travelled to Kangaroo Island on SeaLink’s ferry during the year.

However, he said the company’s profit margin from its South Australian and Tasmanian operations was expected to return to “normal historical levels” over the next financial year.

Last year, the State Government announced plans to put the Kangaroo Island ferry service out to tender.

The company says it doesn’t expect to see tender documents until 2021/22. Its licence to operate the service expires in 2024.

Managing director and CEO Jeff Ellison told investors slower growth in international tourist numbers had had an impact on the company.

“Some of our key tourism businesses were challenged by slower international visitor growth, a number of unseasonal weather events and consumer uncertainty in the lead-up to the May 2019 federal election,” he said in a statement.

SeaLink’s Western Australian and New South Wales division Captain Cook Cruises recorded a 3.3 per cent decline in sales revenue, and the company has decided to immediately discontinue its Sydney Harbour operations.

The company also had to reduce the recognised value of one of its assets, a mobile app start-up venture, UWAI, by 50 per cent.

The app translates and publishes local business content for Chinese visitors and tourists.

“Although the concept and platform behind this business and opportunities remains sound, the business has not achieved the milestones set out in the initial business / investment case and a decision has been made in consultation with our auditors to impair the carrying value of this asset by 50 per cent,” this morning’s announcement to the stock exchange reads.

Underlying EBIT for SeaLink Queensland was down 8.6 per cent, but sales revenue for SeaLink Northern Territory jumped by 15 per cent – primarily due to the strong performance of its Tiwi Islands service.

Ellison said the company’s acquisition of Kingfisher Bay Resort Group on Fraser Island and its new ferry service to Bruny Island in Tasmania had performed better than expected.

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