Tourism giant SeaLink Travel Group announced South Australian Government response to contract extension

In reference to the request that tourism company SeaLink Travel Group Limited (ASX:SLK) has made in 2015 to South Australian Government, SeaLink has today notified the response that it has got from SA government.

The request relates to contract extension of SeaLink’s existing arrangements for use of South Australia’s port facilities at Penneshaw and Cape Jervis. However, the current contractual arrangement will expire in July 2024. If South Australian Government approves for contract extension, SeaLink intends to further invest in both vessels and South Australia.

In an announcement to Australian Securities Exchange, SeaLink told that it has been verbally advised by Stephan Knoll, the South Australian Minister for Transport and Planning, that Government has arrived at a final decision in response to the request submitted in 2015 by SeaLink. It has been informed that South Australian Government has decided the use of port infrastructure and facilities will involve a competitive tender to take effect from 1 July 2024 as part of these arrangements.Â

Moreover, the management informed that further discussion relating to the future arrangement are currently in place. SeaLink said that any update on these discussions with the Government will be provided to the market within the due course of time.

SeaLink is an Australia’s leading travel and tourism company. The group offers tourism cruises, ferry services, Resort accommodation, Day tours, Passenger ferry services, travel agency services, holiday packages, tug and barge service. SeaLink and Captain Cook cruises are the two brands that the group operates into.

The group has shown an extensive growth footprint throughout Australia’s tourism industry including day tours and charter operation on Kangaroo Island, Sydney Harbour and other several locations in Queensland, New South Wales, the Northern Territory, Western Australia and South Australia.

The Company recorded a statutory Net Profit after Tax (NPAT) of $19.6 million in FY18 compared to a NPAT of $23.8 million for the previous year ended June 2017. From a comparative perspective, the year ended June 2018 included the after-tax effect of one-off acquisition related expenses of $2.0 million and one-off start-up costs associated with the two new ferry services of $0.3 million.

On the acquisition front, SeaLink has acquired Kingfisher Bay Resort Group on Fraser Island in March 2018, while it secured the competitive tender for the Bruny Island ferry service in Tasmania, which started from September 2018.

In Fiscal 2018 Kangaroo Island SeaLink’s revenue for ferries was up 6.7% on last year reflecting higher contribution from passengers, vehicles and freight. SeaLink Kangaroo Island day touring was slightly down, however, groups and charter revenue continued to grow with a 38% increase on last year and the overall contribution by SeaLink’ South Australia business segment before interest and tax has increased to $15.0 million.

The Annual General Meeting of SeaLink Travel Group Limited is due to be held on 22^nd October 2018.

The Government’s decision based on verbal discussion did not interest the market much as SeaLink Travel was spotted in red in today’s trading session. The stock price of SLK has plunged by 3.606% to last trade at $4.010 on 17 October 2018.

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