'Book keeping' matter leads to Invercargill Licensing Trust posting $280k deficit

Wednesday, 28 August 2019

Invercargill Licensing Trust chief executive Chris Ramsay.

The Invercargill Licensing Trust has posted a $280k deficit, although it has been put down to a write-off of inner city building assets.

Trust chief executive Chris Ramsay outlined the financial performance for the year ending March 31 on Wednesday night at the annual general meeting.

The after tax surplus for 2019 was $8.1m; down from the $9.9m posted last year.

The decrease was largely put down to the $2.45m write-off of inner city building assets which have been demolished to make way for the construction of the Langlands Hotel on the corner of Don and Dee Sts.

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Higher level of project maintenance work, including refurbishments at the Kelvin and Ascot Park hotels, was also factored in.

Ramsay said the building write-off was a book keeping matter and he was encouraged by the ILT's financial performance on the back of increased sales.

'We've actually managed to increase comparable profit by 2.9 percent,' he said.

Both the ILT and ILT Foundation's operating profits increased year-on-year for the first time since 2016.

Bar, restaurant, and accommodation sales have been boosted by $600,000, while the bottle store/distribution sales increased by $300,000.

The boost was despite the closure of two businesses - Barluca and The Kiln - in December.

'You don't want to get to ahead of yourself but the board and I and are very pleased with the result. The hospitality market is very tough and competitive to operate in.

'There is a good reason why 80 percent of hospitality businesses fail in the first year, it is tough,' Ramsay said.

Ramsay pointed to various one off events in the city as to how it had been able to boost sales.

It included a national quarry conference at Stadium Southland in July and different conferences held at the Ascot Park Hotel.

Ramsay said the ILT was on track for another good year after producing encouraging financial results from April through to June.

He said ILT's before tax profit was up 19 percent, well above expectations.

The ILT maintained its level of community funding for the year ending March 31 with $8.3m again returned to the community.

The breakdown of the distribution of that money was: Sport (44.1 percent), education (16.9 percent), community events and recreation (13.3 percent), community facilities (9.8 percent), health and welfare (9.4 percent), and arts and culture (6.5 percent).

Over $5m of that $8.3m total funding again came from the ILT Foundation which generated its money from its 163 gaming machines throughout Invercargill.

The ILT Foundation increased its profits by $93,000 on the back of a small increase in revenue and lower operating expenses.

The ILT has $30m in cash reserves which will be put towards its $40m Langlands Hotel project.

They will go into debt to cover the remainder of the finances needed to complete the hotel.