From the 2019/20 Q1 Interim Report, September-November
Winter came early with both cold and snow at all destinations, enabling good snowmaking conditions and an early start to the season and ensuring that our resorts are in fantastic condition for the Christmas and New Year holidays.
Profit after tax for the period fell by SEK 101 million. The main explanation is a decline of SEK 78 million in capital gains from our property development and exploitation business. This should be considered an accrual effect. We see continuing strong demand for land, apartments and Vacation Club shares at our destinations. The capital gain for the period is in line with the expected outcome but is not comparable with the capital gain at the same time in the previous year, when two large projects were sold in Sälen in autumn 2018. Another significant explanation is the unusually favourable weather conditions for snowmaking and other work on preparation of slopes during the pre-season. This has resulted in various costs, mainly related to the earlier snowmaking, but has also meant an early start to the season for our guests. The earnings effect is SEK -10 million in Q1, although there is no change over the entire season.
Bookings, measured as the number of overnight stays booked through SkiStar’s accommodation agency, are in line with the previous year, meaning that almost 80 percent of the season’s estimated accommodation sales are already booked. A strong Christmas and New Year period with high occupancy await us. We can also see an increased trend towards holidays at home in the Swedish market. The favourable Swedish krona has also affected the foreign market, where we can see increased growth in the number of guests, notably from Denmark.
Prior to the season, large investments have been made in our core business. With new slopes, improved snow production and development of existing ski areas, our guests can encounter a fantastic winter experience and ski product at our resorts. Beyond that, we look forward to welcoming the first guests to land at Scandinavian Mountains Airport, located between Sälen and Trysil, which opens for traffic on 22 December with direct flights from five Swedish destinations, two Danish destinations and one UK destination. SkiStar is one of many shareholders in what will become a catalyst for growth in the region.
Also new for this year is that EQPE is our workwear supplier. The outdoor work at our destinations calls for functional, comfortable and durable clothing that can meet and deal with all types of challenges. Previous staff clothing has been donated to a Swedish aid organisation that works to create better conditions for people in vulnerable countries and to ensure fairer distribution of resources.
The new accounting standard for leases, IFRS 16, which replaces IAS 17, has a relatively significant impact on SkiStar. We have many long-term lease agreements, including land leases, which are now reported as a liability in the balance sheet under the new standard. As an effect of this, our total assets have increased by SEK 790 million, which has reduced our equity/assets ratio by six percentage points. More details about the effect of IFRS 16 can be found on page 16 of the report.
We look forward with confidence to another great winter season at our six destinations and I hope to see you on our slopes!
* Appointed acting CEO until Stefan Sjöstrand takes over on 2 March 2020.