SKYLINE Skyline Enterprises Ltd

Chairman's report

Revenue was up at $52m ($46.8m) and profit before tax was a record $19m ($16m). After providing for tax of $5m ($4m) the net operating surplus for the group is $14m ($12m) for the year ended 31 st March 2007.

Our major businesses in Queenstown and Rotorua performed very well. The new development in Singapore has made a real contribution, and all subsidiaries traded profitably. The company’s operating results for the year ended 31 st March 2007 is summarised as follows:

2007 2006

$ $

Revenue 52,243,912 46,881,262

Expenses 3 ,204,254 3 0,917,594

Operating Surplus

Before Tax 1 9,039,658 1 5,963,668

Tax 4,969,699 3 ,807,160

Operating Surplus

After Tax 1 4,069,959 1 2,156,508

Final Dividend

Proposed 25 c 8,436,957 7,417,922

Net Cashflow from

Operating Activities 1 8,431 ,752 1 4,887,043

Actual Tax Payments 3 ,544,822 4,231 ,354

The star performer this year was the Queenstown Skyline Gondola, Restaurant and Luge with excellent profitability, record gondola numbers and substantial luge rides. Skyrides Rotorua also had a very good year but with increased depreciation as a result of the new gondola installation and other overhead costs associated with setting up the new facilities, profitability was similar to last year. Our Sentosa Luge in Singapore produced a pre-tax profit of over $1m and at such an early stage of its development this is very pleasing. The Canadian operation North Sky Luge at Tremblant had its best year yet.

Investments

Christchurch Casinos Limited

This Casino had a good profit result considering the new regulations the business has had to deal with over the last three years. Because of timing the dividends received by Skyline were about $1m less than usual. The trend this year is on a par with last year and the board has some major plans for renovation and new design in certain areas of the Casino. This will take time and be reasonably expensive but with any facilities that have very high patronage, this is inevitable.

The Christchurch Casino has had a very unfortunate experience with two apparently aggrieved senior managers who left early this year. Their actions and allegations are extremely hard to attribute any serious rationale to. The directors of Christchurch Casino and senior management have taken every action and scrutiny that is possible to make sure the business is well conducted and remains a great facility for entertainment and enjoyment for our many patrons. Following a directive from the Minister it is appropriate to advise that the preliminary report from the Department of Internal Affairs suggests that the Casino is properly controlled and managed consistent with the Casino Act, and that no improper matters have emerged from their review.

Incidentally it is pleasing to note that on one night in early July, being a Thursday, the Casino was so busy we had to close our doors to additional patrons. Over 2,400 people were in the Casino and we had an excellent revenue night. A new chief executive was appointed in early July and has commenced his task of taking the business forward.

Dunedin Casinos Limited

New management at Dunedin Casino have made quite a few changes and the business is making good progress. Unfortunately it is taking somewhat longer to put in place some new entertainment facilities but this is being actively pursued by the directors.

Skycity Queenstown Casino

This business remains cash positive, and while we would be keen to see dividends, that is not likely at this stage. New signage and other upgrades have been undertaken, and constant attention is being applied to the best entertainment options.

Christchurch Hotels Limited

Crowne Plaza Hotel has had a very good year, with high occupancy and good profitability. The Hotel has very good management and excellent staff morale. Refurbishment of a number of bedrooms will be reviewed in the near future.

Dividends

The directors are very pleased to increase the dividend to 25c per share (22c per share) requiring $8.4m which is about $1m more than last year. We look forward to being able to maintain this dividend and if profit continues to improve, consider further increases.

CHAIRMAN’S REPORT

_____________________________________________________________________________________________

Annual Report Skyline Enterprises Limited

Forty Years – and Looking Forward

Skyline has been in business for 40 years. In many ways we have grown and developed in the same way as the New Zealand tourism industry has expanded. The New Zealand tourism industry is now one of the largest industries in the economy and is a very significant employer. As a company we have managed to diversify both location and the type of tourism assets we have invested in. New Zealand, being such a small country makes it difficult to replicate many of the types of attractions we have established so successfully.

This is why we have gone overseas to start new luge developments and we have been fortunate this has been worth while. We will continue to seek other appropriate sites, but great care needs to be taken to make sure we get the mix of capital and logistics correct.

The company has been blessed with a number of entrepreneurs who have been instrumental in establishing such ventures as our gondolas, luge, casinos and accommodation. We have also had excellent backup in finance and management. In all, a combination and blend of talent which has been successful. We have every intention of concentrating on tourism and we see a great future.

The company has traded on the unlisted platform successfully for some years. There may come a time when it is desirable to move to a main listing. This would put a much closer spotlight on the company from analysts, investors and the public at large. The cost would be reasonably heavy and it may change the nature of the company. There does not appear to be any immediate necessity for such change and capital raising has never been a problem for Skyline. Indeed we are probably in the solid position of being able to make a substantial investment within our existing resources. We have always maintained a sound balance sheet.

The Directors recognise the major contribution made by a very good team of managers and their respective staff. The competence in this area has been gradually improving over the years and we have some very experienced and capable people. The Directors are always looking at improvements throughout the company and continually seeking out new investment opportunities. More capital will be required for an additional chairlift in Rotorua and we are investigating upgrading the carrying capacity of the Queenstown Skyline Gondola, along with ongoing upgrading of our various properties which is always necessary.

We are encouraged by the strength of New Zealand Tourism and even though there have been trends that have not worked entirely to the industry’s favour, overall business has remained exceptionally good. We look forward to a bright future and the attendance of Shareholders at the annual meeting to review the company’s progress.

Barry Thomas

Chairman

27th July 2007

v2 Report - Additional Information Supplement SKYLINE Skyline Enterprises Ltd	IPOs and Investment Opportunities
Press releases
Chairman's report Revenue was up at $52m ($46.8m) and profit before tax was a record $19m ($16m). After providing for tax of $5m ($4m) the net operating surplus for the group is $14m ($12m) for the year ended 31 st March 2007. Our major businesses in Queenstown and Rotorua performed very well. The new development in Singapore has made a real contribution, and all subsidiaries traded profitably. The company’s operating results for the year ended 31 st March 2007 is summarised as follows: 2007 2006 $ $ Revenue 52,243,912 46,881,262 Expenses 3 ,204,254 3 0,917,594 Operating Surplus Before Tax 1 9,039,658 1 5,963,668 Tax 4,969,699 3 ,807,160 Operating Surplus After Tax 1 4,069,959 1 2,156,508 Final Dividend Proposed 25 c 8,436,957 7,417,922 Net Cashflow from Operating Activities 1 8,431 ,752 1 4,887,043 Actual Tax Payments 3 ,544,822 4,231 ,354 The star performer this year was the Queenstown Skyline Gondola, Restaurant and Luge with excellent profitability, record gondola numbers and substantial luge rides. Skyrides Rotorua also had a very good year but with increased depreciation as a result of the new gondola installation and other overhead costs associated with setting up the new facilities, profitability was similar to last year. Our Sentosa Luge in Singapore produced a pre-tax profit of over $1m and at such an early stage of its development this is very pleasing. The Canadian operation North Sky Luge at Tremblant had its best year yet. Investments Christchurch Casinos Limited This Casino had a good profit result considering the new regulations the business has had to deal with over the last three years. Because of timing the dividends received by Skyline were about $1m less than usual. The trend this year is on a par with last year and the board has some major plans for renovation and new design in certain areas of the Casino. This will take time and be reasonably expensive but with any facilities that have very high patronage, this is inevitable. The Christchurch Casino has had a very unfortunate experience with two apparently aggrieved senior managers who left early this year. Their actions and allegations are extremely hard to attribute any serious rationale to. The directors of Christchurch Casino and senior management have taken every action and scrutiny that is possible to make sure the business is well conducted and remains a great facility for entertainment and enjoyment for our many patrons. Following a directive from the Minister it is appropriate to advise that the preliminary report from the Department of Internal Affairs suggests that the Casino is properly controlled and managed consistent with the Casino Act, and that no improper matters have emerged from their review. Incidentally it is pleasing to note that on one night in early July, being a Thursday, the Casino was so busy we had to close our doors to additional patrons. Over 2,400 people were in the Casino and we had an excellent revenue night. A new chief executive was appointed in early July and has commenced his task of taking the business forward. Dunedin Casinos Limited New management at Dunedin Casino have made quite a few changes and the business is making good progress. Unfortunately it is taking somewhat longer to put in place some new entertainment facilities but this is being actively pursued by the directors. Skycity Queenstown Casino This business remains cash positive, and while we would be keen to see dividends, that is not likely at this stage. New signage and other upgrades have been undertaken, and constant attention is being applied to the best entertainment options. Christchurch Hotels Limited Crowne Plaza Hotel has had a very good year, with high occupancy and good profitability. The Hotel has very good management and excellent staff morale. Refurbishment of a number of bedrooms will be reviewed in the near future. Dividends The directors are very pleased to increase the dividend to 25c per share (22c per share) requiring $8.4m which is about $1m more than last year. We look forward to being able to maintain this dividend and if profit continues to improve, consider further increases. CHAIRMAN’S REPORT _____________________________________________________________________________________________ Annual Report Skyline Enterprises Limited Forty Years – and Looking Forward Skyline has been in business for 40 years. In many ways we have grown and developed in the same way as the New Zealand tourism industry has expanded. The New Zealand tourism industry is now one of the largest industries in the economy and is a very significant employer. As a company we have managed to diversify both location and the type of tourism assets we have invested in. New Zealand, being such a small country makes it difficult to replicate many of the types of attractions we have established so successfully. This is why we have gone overseas to start new luge developments and we have been fortunate this has been worth while. We will continue to seek other appropriate sites, but great care needs to be taken to make sure we get the mix of capital and logistics correct. The company has been blessed with a number of entrepreneurs who have been instrumental in establishing such ventures as our gondolas, luge, casinos and accommodation. We have also had excellent backup in finance and management. In all, a combination and blend of talent which has been successful. We have every intention of concentrating on tourism and we see a great future. The company has traded on the unlisted platform successfully for some years. There may come a time when it is desirable to move to a main listing. This would put a much closer spotlight on the company from analysts, investors and the public at large. The cost would be reasonably heavy and it may change the nature of the company. There does not appear to be any immediate necessity for such change and capital raising has never been a problem for Skyline. Indeed we are probably in the solid position of being able to make a substantial investment within our existing resources. We have always maintained a sound balance sheet. The Directors recognise the major contribution made by a very good team of managers and their respective staff. The competence in this area has been gradually improving over the years and we have some very experienced and capable people. The Directors are always looking at improvements throughout the company and continually seeking out new investment opportunities. More capital will be required for an additional chairlift in Rotorua and we are investigating upgrading the carrying capacity of the Queenstown Skyline Gondola, along with ongoing upgrading of our various properties which is always necessary. We are encouraged by the strength of New Zealand Tourism and even though there have been trends that have not worked entirely to the industry’s favour, overall business has remained exceptionally good. We look forward to a bright future and the attendance of Shareholders at the annual meeting to review the company’s progress. Barry Thomas Chairman 27th July 2007
Director's Report Your Directors have pleasure in submitting their report together with the financial accounts of the Company for the year ended 31 March 2007. Results and Distributions Operating surplus attributable to the Group for the financial year 14,069,959 From this will be deducted – Your Directors’ recommendation of the payment of a dividend of 25 cents 8,436,957 ------------ Increase in Group retained earnings to be carried forward to reserves of $5,633 ,002 ------------ Dividend Having considered the solvency of the parent Company and group, the Directors recommend that a dividend of 25 cents per share (imputated at 33 %) be paid on the capital of 33 ,747,829 shares on 13 th September 2007 to Shareholders on the register at 5.00 p.m. on 3rd September 2007. A solvency certificate has been completed in support of the dividend declaration. Directors Mr Phillip J Hensman and Mr Grant H Hensman retire by rotation and, being eligible, offer themselves for re-election. Auditors The Company’s Auditors, Messrs WHK Cook Adam Ward Wilson, are automatically reappointed in terms of Section 200 of the Companies Act 1993. Share Capital On 31 March 2007 the Company issued 40,000 ordinary shares to holders of 2004 staff convertible notes. The issued capital as at 31 March 2007 was 33 ,787,829 ordinary shares. Company’s State of Affairs and Significant Changes The Directors consider the state of the Company’s affairs to be satisfactory. Details of the year under review, including any material changes in the nature of the business of the Company or any of its subsidiaries or future prospects are included in the Chairman’s Report and the financial statements of the Company published herewith. Activities The luge on Sentosa Island Singapore traded profitably for the 2007 financial year being its first full year of operation as compared to eight months trading in the prior year. Otherwise the activities of the Company and its subsidiaries remained principally unchanged during the period. Associated companies Christchurch Casinos Limited and Queenstown Casinos Limited operate predominantly in the Casino Industry. These companies have not been equity accounted. Associated Company Christchurch Hotels Limited has an investment in Premier Hotels Christchurch Limited, a Company operating predominantly in the Hotel Industry. This Annual Report has been prepared in accordance with Section 211 of the Companies Act 1993 and is signed on behalf of the Board by: B C Thomas Director P J Hensman Director Dated this 27th July 2007.	Investment Centre
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