annual report 2012

2Executive Officers (from left): Martin Byrne, Chief Executive Officer; Parke Pittar, Chief Commercial Officer;

Digby Kynaston, Port Logistics Manager; Matt McDonald, Infrastructure Manager; Melisa Kappely, Employee Relations Manager.

visionvisionBecome the Benchmark – through continuous improvement

The six pillars of our vision appear on the photo pages

throughout this report.

To operate Port Nelson as a successful business providing cost efficient, effective and competitive services and facilities for port

users and shippers.

To provide for the present and future needs of Port Nelson in ways that are sensitive to people, use resources wisely, and are in

harmony with the environment of an export port.

To facilitate regional prosperity

• To operate as a successful business.

• To be a good employer.

• The debt equity ratio not to exceed 66.67% (40/60).

• To aim to grow the business through stimulation of throughput, added value services and related business activities, so leading to

increased revenue.

• To achieve a commercially acceptable rate of return on shareholders’ funds in accordance with meeting the objectives herein.

• To ensure that port development takes place which meets the needs of the region.

• To ensure that high environmental standards are maintained.

• To strive for continuous improvement in everything that we do.

mission

purpose

content

objectives

Directors’ Report ............................................................................................................................................................................................................................................5

CEO’s Report ....................................................................................................................................................................................................................................................6

Community ......................................................................................................................................................................................................................................................9

Governance .....................................................................................................................................................................................................................................................9

Environment................................................................................................................................................................................................................................................. 10

Port People ................................................................................................................................................................................................................................................... 13

Directors ........................................................................................................................................................................................................................................................ 14

Financial Report .......................................................................................................................................................................................................................................... 15

Auditor’s Report .......................................................................................................................................................................................................................................... 16

Statutory Information ............................................................................................................................................................................................................................... 17

Statement of Corporate Intent .............................................................................................................................................................................................................. 19

Statement of Comprehensive Income ............................................................................................................................................................................................... 20

Statement of Movements in Equity ..................................................................................................................................................................................................... 20

Balance Sheet .............................................................................................................................................................................................................................................. 21

Statement of Cash Flows ......................................................................................................................................................................................................................... 22

Summary of Significant Accounting Policies ................................................................................................................................................................................... 24

Notes to the Accounts .............................................................................................................................................................................................................................. 28

Directory ........................................................................................................................................................................................................................................................ 40

3

4

performance 2012 2011 2010 2009 2008OperationsTrade (millions of cargo tonnes) 2.65 2.71 2.75 2.76 2.68Container throughput (TEUs) 86,178 83,800 85,735 82,272 77,561Vessel arrivals (over 100GT) 733 850 835 921 921Total Vessel GT calling (millions) 6.9 7.9 8.1 8.3 8.3Employees (FTEs) 135 136 141 148 137

Financial ($ millions)Revenue* $38.8 $38.3 $37.9 $38.0 $36.2EBITDA** $19.1 $16.9 $16.7 $14.8 $17.8Earnings before interest and taxation (EBIT) $14.4 $12.6 $12.5 $10.7 $13.9Net interest expense $2.5 $2.7 $2.7 $3.1 $3.3Taxation $1.6 $3.4 $6.3 $2.7 $3.2Net surplus after taxation $10.4 $6.6 $3.4 $4.9 $7.5Dividends declared $12.2 $4.2 $4.1 $4.0 $3.8Capital Expenditure $3.3 $10.3 $4.1 $8.5 $10.1Net interest bearing debt $39.9 $39.3 $36.5 $43.0 $41.0Total non-current tangible assets $185.6 $186.8 $181.4 $182.8 $152.3

Shareholder return metricsEarnings per share (cents) 40.8 25.9 13.5 19.4 29.5Dividend per share (cents) 48.0 16.5 16.1 15.7 15.0Net assets per share $5.27 $5.38 $5.27 $5.26 $5.29Equity 69.9% 70.6% 71.2% 69.6% 71.2%Return on average equity 7.7% 4.9% 2.6% 3.7% 6.1%Return on average assets 7.5% 6.6% 6.5% 5.6% 8.0%

* Revenue includes investment property revaluations

** Earnings before interest, tax, depreciation and amortisation

p e r f o r m a n c e r e v i e w - P o r t N e l s o n L i m i t e d

visionprocessesAn efficient and consistent approach to the way we do things

• Embed a culture of continuous improvement

• Ensure the integrity of source data

• Provide for an accurate flow of information between systems

• Streamline processes to achieve zero wastage

• Standardise, document and train in what we do

directors’ reportbuildings and sites from Port Nelson. Long term, these were not seen as

being of operational use to us and this sale fits in with the council plan

to further connect the city to the sea.

The performance of the partly Port Nelson-owned Unimar Limited

has been a highlight of the last 12 months, with the company heavily

involved in the salvage of cargo from the stricken vessel Rena off the

coast of Tauranga. As the New Zealand representative for UK-based

Braemar Howells, Unimar has been intricately involved in a large amount

of recovery work. This has seen the fortunes of the business change

significantly from only 12 months earlier, and it has been pleasing to see

a Nelson-based company at the forefront of the salvage project.

This year’s net surplus after tax, significantly inflated by the one-off

effect of the Unimar work on the Rena and the aforementioned tax

adjustments, resulted in an average return of shareholders’ funds of 7.7

per cent, and dividends declared for the full year of $12.2 million.

These dividends were made up of the normal annual dividend plus

an additional special dividend of a further $8 million that the Board

also declared. This put the total dividends paid out to shareholders

since Port Nelson Limited was formed in 1988 in the region of $122

million. The special dividend was paid after the Board undertook a

comprehensive review of the company’s position.

As the financial year came to an end, the main focus was on the continued

uncertainty over container shipping services and the challenges this

brings to regional ports in particular. After much speculation and

considerable lobbying by a number of key Nelson exporters and others

including Port Nelson, Maersk made the decision to retain a Nelson

call, with the introduction of calls from their NZ1 service from early

August. While this announcement was pleasing for all concerned, the

uncertainty that the service changes created only served to emphasise

the vulnerability of regional ports in retaining ongoing services, a

continued concern for us all.

As we head into another financial year, it is clear that 2012/13 will be a

difficult one, with cargo volumes predicted to remain static and costs

such as insurance and electricity continuing to rise. Port Nelson is

committed to continuing to work hard to provide our customers with

the most efficient service we can offer, recognising this is an ongoing

process as customer expectations continue to increase.

In closing, I would like to thank our management team and all our

staff for their efforts over the last year. I would also like to extend our

continued appreciation to our customers, whether they be importers,

exporters or shipping lines, for their continued custom. We also value

and appreciate the ongoing contribution from our two shareholders

Tasman District Council and Nelson City Council. Finally, my thanks go

out to my fellow directors for their contribution over the previous 12

months.

Nick Patterson

Chairman, Port Nelson Limited.

As Chairman of Port Nelson Limited (Port Nelson), it gives me great

pleasure to report on a good year for the company, particularly when

taking into account the ongoing challenging conditions in the wider

economy.

Port Nelson has produced another strong financial result, with earnings

before interest and tax of $14.4 million, some $1.4 million above budget.

One of the main influences on the result was the strong performance of

the Unimar business over the last 12 months, as mentioned below.

Operating revenue for the last 12 months was marginally under budget,

but was compensated for by lower-than-budgeted operating expenses

and by maintenance costs coming in around $600,000 lower than

anticipated.

The main points to note regarding the revenue and expenses figures

are as follows:

• Cargo volumes were 131,000 tonnes lower than budgeted, due

mainly to the drop off in log exports to China

• Container volumes at 86,178 TEU* were just above the previous

record figure of two years ago

• Maintenance costs were well contained for the year, with dredging

expenses in particular not as high as had been expected

• Tax expense was significantly reduced due to the recognition of

buildings and building fit outs previously not depreciable now

being depreciable for tax purposes. This adjustment resulted in

a reduction in tax expense of $0.65 million. Additionally a further

$0.35 million tax expense reduction was recognised due to a

previous period adjustment.

Total cargo for 2011/12 was 2.65 million tonnes, down very slightly on

the previous year and also below what had been budgeted. The main

reason for this, as mentioned above, was the reduction in log exports to

China from the region, from the middle of 2011 onwards.

MDF, fish and wine volumes were all above budget during this period,

with sawn timber and fruit being at slightly lower levels than had been

expected.

We have continued our ongoing programme of maintaining, and where

necessary upgrading, equipment and facilities to ensure the business is

sustainable and reliable for the long term. Major items this year included

purchase of a new Empty Container Handler (ECH), and pavement

upgrading in sections of the container yard and log storage area. We

also completed the camera installation project around the port area,

resulting in vastly improved coverage with operational and security

benefits.

From a property-holding perspective, the major development we

undertook in the last year was the upgrading of the Steel and Tube

leased property. This meant lesees could consolidate two sites they

had around the wider Nelson area into one within the port precinct. As

the commercial property market in Nelson picks up, it is hoped we can

attract more such tenants to the port area, with the advantages that it

can offer.

While still on the subject of property, during the year, Nelson City

Council purchased the former Reliance Engineering and Four Seasons

*TEU = Twenty-foot Equivalent Container Unit.

5

chief executive officer’s reportsee Gary Rae from Incite Ltd and Nelson City Council jointly win the

New Zealand Planning Institute Award for the implementation of the

Port Noise Variation. While not a direct recipient of the award itself,

PNL staff undertook much of the work that went on behind the scenes

to make the Variation workable, and it was very satisfying to see this

recognised at a national level.

Noise complaints for the year were down to eight, which remains

encouraging, and is a testament both to the efforts of our staff and also

to the ongoing assistance and understanding of Port Hills’ residents,

including the representatives on the Noise Liaison Committee.

We take this opportunity to thank the members of the Environmental

Consultative Committee for their ongoing work as well.

In the wider community, earlier this year, we commenced monthly

visits to the port from school groups and community groups such as

Probus and Rotary Clubs. This programme has proven very popular and

we currently have bookings right through until the end of this year. In

the past, we have run open days every three to four years, but this new

initiative gives us an additional regular opportunity to interact with a

wide range of people and to show them exactly what goes on within

our port confines. Feedback to date has been tremendous.

Internally, much of our focus at present is around what we term our

Journey to Excellence (J2E) which has a major emphasis on reducing

wastage and increasing efficiency and productivity through utilising

the ideas of our people. Part of this wider process has been working

through our Vision, which is based around the six pillars of our

business, which are people, processes, customers, financial results,

the community and the environment. These are tied into our Purpose,

which we clearly see as being to help facilitate regional prosperity.

Clearly, in the current economic climate, achieving that is challenging,

but I am convinced that we have the people within our organisation to

drive the business forward.

In closing, I would like to once again express my thanks to our Board

of Directors for their support over the last 12 months, and my sincere

appreciation to our staff without whom this business would not

function. I would also like to thank the importers and exporters of

Nelson-Tasman and Marlborough who put cargo over our wharves and

support us through many challenges such as the Maersk service review

mentioned above. That process proved the influence that all of us can

have when working together as a cohesive unit. We wish you all the

best for a successful 2012/13.

Martin Byrne

Chief Executive Officer, Port Nelson Limited.

The financial year just ended has been a further challenging 12 months

for us, on the back of a drop-off in some cargo volumes, continuing

reviews of shipping services and the ongoing financial challenges

faced in many markets served by exporters from the region.

On the cargo side, log volumes for the year were around 636,000

tonnes, well down on the 723,000 handled in the previous year and

even further below the expected budget. The softening of the Chinese

market in particular has been very apparent to exporters in the Nelson-

Tasman area, and it appears the current volumes are likely to be the

reality for some time to come.

Apple volumes were also lower than the previous year, due to a

combination of a smaller crop and fruit being later this year following

a cooler-than-usual summer. On a more positive note, at the time

of preparing this report, pipfruit prices in major overseas markets

seemed to be more robust than in recent years, which is a positive for

the horticultural industry.

Fish volumes have also held up well this year after a good hoki season,

and it is hoped, with continued good catches and the addressing of

some storage issues for diesel supplies on the reclamation that fish

volumes will continue to grow in the coming years.

Processed wood volumes were in line with expectations, wine volumes

remained strong and fertiliser and gypsum imports were also at

pleasing levels.

On the container side, while the figures for the year were slightly below

budget, at 86,178 TEU, this was the highest number of containers

handled annually through the port to date.

Vessel visits, at 733, were well down on the previous year’s total of

850. This was partly due to the withdrawal of Strait Shipping’s weekly

Nelson-to-Wellington service in June 2011, and the absence of extra

loader vessels calling during the export fruit season this year.

As mentioned in the Directors’ Report on the previous page, the

decision of Maersk to review their Nelson weekly service caused

considerable consternation in the export community during the

month of June. While the final result of Nelson receiving a regular

call on the NZ1 service was a positive one, the decision of Maersk to

withdraw their Timaru service further emphasised the continual state

of change prevalent in the industry.

We firmly believe that the wide and varied cargo base available for

shipping lines in this region is a major point of difference from some

other regional ports, and is one that the lines themselves acknowledge.

The continuining increase in container vessel sizes is of ongoing

concern to us, given the physical limitations of Port Nelson and the

unrealistic cost of deepening beyond our present limitations. That

having been said, we remain firmly of the opinion that cargo moving

over our wharves, whether by the use of feeder or direct services, and

probably a combination of both, is the logical means for the bulk of

Nelson export cargo to make its way to overseas destinations.

The last year has seen us make further positive steps in continuing to

enhance our environmental credentials within the region and in the

wider port industry. Recertification of our ISO 14001 management

system was a positive sign that we continue to perform well

environmentally, and an endorsement of the work undertaken by our

Environmental Officer Thomas Marchant. It was also very pleasing to

6

visionfinancial resultsA sustainable business delivering value to our shareholders

• Consistently meet our agreed targets

• Minimise reliance on one off events

• Minimise waste to reduce our costs

• Identify new opportunities to grow our revenue

• Reduce business risk through diversity

visioncommunityA sense of great pride in the role we play in our community

• Have a sponsorship programme that supports our local region

• Make opportunities for our people to volunteer in

our community

• Provide access for the community to the Port

• Deliver external communications that inform and engage

community governance

supPORTing our region

Whether it’s buying petrol, eating seafood, picking fruit or sitting on

the lawn enjoying summer jazz, Port Nelson touches the lives of most

people in the Nelson region most days.

The Port Company is the region’s gateway to the world, and its role in

the region’s export-led economy is vital. Nelson’s exports provide jobs

in forestry and wood processing, fishing and aquaculture, orchards

and coolstores and in the research and marketing associated with

these key industries. Port Nelson is also active at a lesser level in

tourism, and this year led an initiative to market Nelson offshore to the

lucrative luxury yacht sector.

We are also privileged and proud to be able to support a range of

groups and projects, and maintained our spend of $150,000 on

sponsorships this year. This is particularly noteworthy, and very

much appreciated by the organisations we support, given that the

current tough economic climate has seen many other businesses

slashing their sponsorship budgets. We aim to cover a spectrum with

this funding, setting a balance between sports, charitable groups,

community projects and the business sector.

We broadened our focus on support for youth catchments of major

winter codes by continuing as the major sponsor of the Tasman

Makos’ Rugby Academy, and picking up a three-year commitment

as a cornerstone sponsor of FC Nelson. This support has supplied

equipment and kept participation free for after-school weekday

football. At the other end of the age spectrum, we backed the South

Island Masters Games held in Nelson in October. Our support for the

Summer Sea Swim Series is now in its sixth year and has been key to

the growth in participation and status of these events.

In line with our own environmental endeavours, we continued to

support the Sustainable Business Network, and picked up local

support of Paper4trees, an initiative that encourages children to

recycle paper through providing green bins for classrooms, with

native trees for school grounds as a reward. This year’s proceeds from

our Nelson Port and Transport Industry Charity Golf Tournament went

to the Jack Inglis Friendship Hospital in Motueka.

The Finance and Risk Committee and the Remuneration Committee

met as required by their respective Terms of Reference and have been

effective in dealing with matters that may not warrant full Board

attention. Both committees report to the Board.

dire c tor c hanges

Mr Patterson and Mr Lough both retired by rotation and were

reappointed for a further three years in September 2011.

board and sub commit te e comp osit ion as at 30 june 2012

Board

Nick Patterson (Chair) Phil Lough (Deputy Chair)

Tim King (Director) Paul Le Gros (Director)

Bronwyn Monopoli (Director) Peter Schuyt (Director)

Finance and Risk Committee

Peter Schuyt (Chair) Bronwyn Monopoli (Director)

Tim King (Director)

Remuneration Committee

Nick Patterson (Chair) Phil Lough (Director)

Paul Le Gros (Director)

Meeting attendance

fur t he r gove rnance mat te rs

Port Nelson operates under Port Nelson’s Corporate Governance

Code of Practice. The Code specifies matters such as:

• Ethical Standards

• Role of the Board

• Composition and Performance of the Board

• Directors (duties and responsibilities)

• Committees of the Board

• Finance and Risk

• Role of the Chairperson

• Role of the CEO

• Shareholder Relations and Statement of Corporate Intent

• Reporting and Disclosure.

Both sub-committees have undertaken a review of their respective

terms of reference in the last 12 months. The full Board has also

undertaken a self review in the period. The Port Nelson sub-

committees and full Board have been active in reviewing Port Nelson

policies and amending where deemed appropriate. The Board

continuously monitors for conflicts of interest.

Some of our sponsorships include:

Sports: FC Nelson, multi-sports events PNL Blokes Day Out

and PNL Kauri Kids, Beach Volleyball, Port Nelson

Street Races

Community: Richmond Santa Parade, Nelson Film Society, Blessing

of the Fleet

Charitable: Life Education Trust, Lions International, Relay for

Life, Fifeshire Foundation

Business: Nelson Tasman Chamber of Commerce Cornerstone

Sponsorship and Business Awards, Port Nelson

Fisherman’s Association, Sealord Marine Rescue

Centre.

highlights

Meeting type

Board Finance & Risk Remuneration

Meetings held 12 4 2

T King 11 3 -

P Le Gros 12 - 2

P Lough 10 - 2

B Monopoli 11 4 -

N Patterson 12 - 2

P Schuyt 11 4 -

9

Aspect Indicator Baseline: 2009/10 2010/11 2011/12

Fuel Fuel use (litres) per TEU* of cargo handled 7.13 (613,459) 7.23 (606,047) 7.05 (607,774)

Power Electricity use (kw hours) per TEU of cargo handled 48.39 (4,163,012) 55.43 (4,645,683) 55.39 (4,775,071)

Waste Waste generated per FTE employee** (m3) 3.56 (501) 4.35 (592) 3.9 (534)

Methyl Bromide Quantity of methyl bromide used at Port Nelson (tonnes) 4.0 3.7 3.4

Noise Number of noise complaints 29 9 8

Oil Spills Number of oil spills when bunkering 0 0 1

Dust Number of dust complaints 1 2 0

Codes of Practice Number of audit reports completed 4 7 13

Number of non-conformances identified 2 4 13

Number of non-conformances resolved 2 4 5

Continuous improvement Number of targets reported on 15 15 15

Number of new initiatives 20 15 12

Water Water use (m3) per TEU (site use excluding ships) 0.29 (24,961) 0.22 (19,113) 0.21 (18,402)

* Twenty-foot equivalent container units for 2011/12 = 86,200. ** Full-time equivalent employees for 2011/12 = 135.

Indicators of Environmental Performance

environmentAlthough we have been operating as though the Variation was operative

for a number of years, the ratification of the Variation means that Port

Nelson now has certainty with regards to our obligations for noise

generated at the port. The preparation of the Variation commenced in

the mid-2000s and its development has required signficant input from

not only Port Nelson but also NCC and our respective noise, planning

and legal consultants. There has also been significant input from the

local community. This hard work and the success of the Variation as an

approach for noise management was recognised during the year with

the awarding of a New Zealand Planning Institute Best Practice Award

to NCC and its planning consultant Gary Rae.

calwell slipway basin contamination

The Calwell Slipway Basin is an area of the port that has become

contaminated from vessel repair activites in and around the basin

since the development of the slipway in the 1970s. The ongoing

shallowing of the basin has resulted in the need to dredge the area;

however, the contaminated sediments are unable to be disposed of at

our usual site for dredge spoil in Tasman Bay.

In a joint application with NCC, we have successfully obtained funding

from the MFE Contaminated Sites Remediation Fund to identify

the preferred option for the remediation of the site. The work is

being funded 50/50 by Port Nelson/MFE, with NCC providing in-kind

support. We intend to have that work completed by the end of the

2012 calendar year. It is then hoped that a further application can

be made to the fund, to support the completion of the preferred

remediation option. We are positive that this project is an opportunity

to remediate an area of historic contamination and improve the

marine environment at the port.

indicators of environmental performance

Our performance indicators are provided in both actual units and in

TEU to provide a measure of the improvements in efficiency. Most

indicators are showing that PNL is making good progress in reducing

its environmental footprint.

environmental issues register 2011/12

In total, 26 incidents were recorded, a significant decrease on last

year. This is mainly due to the drop in the number of noise complaints,

thanks to the continued emphasis on the management of port noise.

The past year has seen us continue to take a wider view of our

approach to environmental management and, in particular to focus

on the environmental sustainability of the business. The inclusion

of ‘Environment’ in our Vision is a clear indication of this and of our

intention to be a leader in sustainable environmental management in

the New Zealand port industry.

Port Nelson has continued its involvement with the Mayoral Taskforce

for Sustainability, which is overseeing the development of the

Community Sustainability Strategy for Nelson. Engaging effectively

with our local community around our environmental issues will

continue to be an important obligation for Port Nelson to meet both

in the short and long term.

At an operational level, our Environmental Management System was

re-certified as meeting the requirements of ISO 14001. This system

continues to drive our day-to-day environmental management. We

have continued our focus on our most significant environmental

aspect, which is port noise, and we are pleased that we have continued

to make progress in this area.

port noise variation

The past year has seen the acheive-

ment of a major milestone with

Nelson City Council (NCC) ratifying

the Port Noise Variation. The Variation

has three key elements: a committee

comprising representatives from

both Port Nelson and the local

community; a Noise Management

Plan, which describes how we manage

noise at the port; and a Noise Mitigation Plan, which describes how we

carry out the noise insulation of affected properties on the Port Hills.

10

• Port Noise Variation now ratified and operative

• Recognition for the implementation of the Port Noise Variation

through a New Zealand Planning Institute Best Practice Award

• Continued reduction in the number of noise complaints

• Obtaining Ministry for the Environment (MFE) funding for

remediation planning for the Calwell Slipway Basin contamination.

highlights

2006/7 2007/8 2008/9 2009/10 2010/11 2011/12

Environmental Issues

visionenvironmentA leader in sustainable environmental management in the NZ

Port industry

• Implement best practice environmental management

• Minimise the impact of our operations

• Integrate sustainability into what we do

• Raise environmental awareness

• Measure, report and improve our performance

Photo: Nelson Mail

visionpeopleAn engaged and highly capable team at Port Nelson

• Increase the engagement of our people

• Provide opportunities for ongoing training and learning

• Drive a culture of zero harm

• Maximise career options

• Increase the utilisation of our talent

• Provide opportunities for our families to see what we do

port people

The graph provides a clear indication of the impact our random

testing programme has had on our results.

training

Our training processes, trainer competency and module development

have been the focus for the last year. In the past 12 months, we have

developed and implemented 16 new Learner Guides for operational

positions across Stevedoring, Marine and Logistics, that need to be

completed before the trainee is deemed competent to work safely

and efficiently alongside their fellow crew members.

Our training team has increased in size by four people, as we’ve

identified new trainers from Marine, Stevedoring, Logistics and

Quaypack. All of our trainers have upskilled by attending training

sessions on: How Adults Learn, Giving Trainees Effective Feedback

and Creating Interest in Training.

We have four staff that are 90 per cent through their National

Certificate in Stevedoring and Ports, Level 3 with a completion date

of December 2012. Our intention is that more staff will acquire this

qualification.

The Vault software system is now well established as our way of

storing all company training information, and we are now entering all

Health and Safety, personal protective equipment, lifting equipment

registers and contractor details into the system.

employee survey

In late 2011, we reported on the results of our Employee Survey, which

was carried out by an independent survey company, JRA. The survey

measures overall engagement levels and benchmarks the results

against the best workplaces in New Zealand. We have an excellent

response rate with 84 per cent of employees completing the survey.

In terms of engagement, our results on employees who are prepared

to ‘go the extra mile’ were similar to other companies. The survey

confirmed that there is a general sense that our people enjoy

the teamwork they experience in their roles. In addition, there

were pleasing results around the priority placed on safety, the

understanding and belief in our ASPIRE values, the expectations

of a high level of performance, and awareness of how each role

contributes to the success of the organisation.

The survey also identified areas we can improve on, including

providing more development opportunities, dealing effectively with

poor performance, and better utilising our talent.

our vision

This year we set out defining our Vision and Purpose. In order to

ensure that we captured input from all our people, we held company-

wide workshops and asked the fundamental questions of ‘why are we

here?’ and ‘where are we going?’.

The result was that our Purpose is clearly defined as ‘To facilitate

regional prosperity’ and our Vision is to ‘Be the Benchmark – through

continuous improvement’ with both encapsulating a strong part of

our history and focus for the future.

The Vision is underpinned by six pillars and a brief statement about

what we want to achieve in these key areas over the next five years, as

detailed throughout this report.

developing capabilities

New staff joining us, and increasing Port Nelson’s expertise, include:

• Rob Hawkes, our new Customer Relations and Business Development

Manager, brings a wealth of logistics experience in both marine and

shore-based environments.

• Our new Health and Safety Advisor, Lee-anne Ricketts, has been

working with a wide range of the PNL team to identify future

initiatives towards ‘zero harm’.

• Nevin Price transferred from a marine role into project management

and is working to progress our ‘Journey to Excellence’ (J2E) programme,

identifying improvements to reduce waste using the team’s own ideas.

Also joining us in permanent positions were Barry Cross, Workshop;

Josef Beyer-Rieger, Security; Odile Gibbs, Finance and Administration;

and Mike Cresswell, Stevedoring.

health and safety training

Continuing with the development of our Health and Safety (H&S)

representatives, congratulations to both Paul Stent from Quaypack and

Peter Moore from Stevedoring who attended Level 1 H&S representative

training in May. Additionally, we rolled out our first tailored fall arrest

systems on building and construction sites to our stevedores in August.

Overall, the feedback from the course attendees was positive and all

gained further skills in working safely at heights. Congratulations to all

ten course attendees in achieving the unit standard.

lost time injury

We had seven LTIs this year, yielding an LTI Frequency Rate of 2.48

compared to 3.89 in June 2011 and 2.75 in June 2010. While it is positive

to see this reducing, there have still been seven of our people who have

sustained an injury serious enough to require time off work. Reducing

our accident rate to zero requires the ongoing focus of everyone in the

prevention of accidents through proactive hazard management, being

aware and alert on our safety-sensitive site, acting safely and watching

out for each other. ‘Good Safety is Good Business’.

random testing

The random drug and alcohol testing programme is now well

implemented at Port Nelson, having been in place since March 2011.

The programme is an important monitoring tool for ensuring that

our people are coming to the workplace fit for work. The following

graph has been created using data from the last three financial years,

with the information being split into pre and post-implementation of

random testing.

13

4.5%

4.0%

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

.5%

0%

Pre-implementationof Random Testing

Post-implementationof Random Testing

Percentage of Positives

directors

14

2012 financial highlights

T i m K i n g

Tim is Deputy Mayor of the Tasman District Council and chairs its Corporate Services Committee. He farms on the Waimea Plains

and has governance roles on a range of community organisations, including the Waimea Rural Fire Authority and the Wakefield and Community Health Centre Trust.

Pe t e r S c h u y t

Peter is a professional director and holds directorships in a number of organisations across a range of different business sectors. He

has previously been Chief Financial Officer of several major New Zealand companies.

P h i l L o u g h

Phil is currently Chair of Methven Ltd and Quotable Value Ltd, and also holds directorships with a range of other New Zealand companies.

He was previously CEO of the Sealord Group and is based in Nelson.

N i c k Pa t t e r s o n

Nick is the Managing Director of Wai-West Horticulture Ltd, an integrated horticulture company with extensive

plantings and post-harvest investments in the Nelson district. Nick is a director of Cold Storage Nelson Ltd, Freshco Nelson Ltd and other associated companies.

Pa u l L e G r o s

Paul used to be a partner with Duncan Cotterill, and is now a consultant with that firm. He holds other business and board appointments. Over

the past 30 years, Paul has been extensively involved with the YMCA movement, in Nelson, nationally and internationally.

B r o nw y n M o n o p o l i

Bronwyn is a Chartered Accountant, with her Richmond-based practice providing specialist accounting and financial advice

to mainly rural businesses. She is also a director of the Animal Health Board and a trustee of several arts-related organisations.

Fi n a n c i a l H i g h l i g h t s 2012 2011 2010 2009 2008

Revenue (millions) $38.8 $38.3 $37.9 $38.0 $36.2Net surplus after taxation* (millions) $10.4 $6.6 $3.4 $4.9 $7.5Dividend (millions) $12.2 $4.2 $4.1 $4.0 $3.8Basic earnings per ordinary share (cents) 40.8 25.9 13.5 19.4 29.5Return on average shareholders’ funds 7.7% 4.9% 2.6% 3.7% 6.1%Net asset backing per share $5.27 $5.38 $5.27 $5.26 $5.29Dividend – recommended per share (cents) 48.0 16.5 16.1 15.7 15.0Return on average total assets** 7.5% 6.6% 6.5% 5.6% 8.0%Ratio of shareholders’ funds to total assets 69.9% 70.6% 71.2% 69.6% 71.2%

Tr a d e H i g h l i g h t s 2012 2011 2010 2009 2008

Cargo tonnes (millions) 2.65 2.71 2.75 2.78 2.68Vessel arrivals 733 850 835 921 921Container throughput (TEUs) 86,178 83,800 85,735 82,272 77,561

* Net Surplus is prior to Other Comprehensive Income

** Based on EBIT

visioncustomersAn organisation that delivers real value to its customers

• Understand our customers and their needs

• Continually engage with our customers

• Deliver consistent service

• Develop active and engaged working groups

• Build strategic alliances with our key customers

• Grow the business through attracting new customers

2012 financial report

audi

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16

INdEPENdENT AudITOR’S REPORTTO THE REAdERS OF PORT NELSON LIMITEd’S FINANCIAL STATEMENTS FOR THE yEAR ENdEd 30 JuNE 2012

The Auditor-General is the auditor of Port Nelson Limited (Port Nelson). The Auditor-General has appointed me, Julian Tan, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements of Port Nelson on her behalf. We have audited the financial statements of Port Nelson on pages 20 to 39, that comprise the balance sheet as at 30 June 2012, the statement of comprehensive income, statement of changes in equity, statement of cash flows and the summary of significant accounting policies for the year ended on that date and the notes to the financial statements that include other explanatory information.

OPINION

Financial statements• In our opinion the financial statements of Port Nelson on pages 20 to 39: • comply with generally accepted accounting practice in New Zealand; • give a true and fair view of Port Nelson’s: • financial position as at 30 June 2012; and • financial performance and cash flows for the year ended on that date.

Other legal requirementsIn accordance with the Financial Reporting Act 1993 we report that, in our opinion, proper accounting records have been kept by Port Nelson as far as appears from an examination of those records.Our audit was completed on 28 September 2012. This is the date at which our opinion is expressed.The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and our responsibilities, and explain our independence.

Basis of opinionWe carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including our assessment of risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation of Port Nelson’s financial statements that give a true and fair view of the matters to which they relate. We consider internal control in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of Port Nelson’s internal control.

An audit also involves evaluating:• the appropriateness of accounting policies used and whether they have been consistently applied;• the reasonableness of the significant accounting estimates and judgements made by the Board of Directors;• the adequacy of all disclosures in the financial statements; and• the overall presentation of the financial statements.We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements. In accordance with the Financial Reporting Act 1993, we report that we have obtained all the information and explanations we have required. We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Responsibilities of the Board of directorsThe Board of Directors is responsible for preparing financial statements that:• comply with generally accepted accounting practice in New Zealand; • give a true and fair view of Port Nelson’s financial position, financial performance and cash flows.The Board of Directors is also responsible for such internal control as it determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.The Board of Directors’ responsibilities arise from the Financial Reporting Act 1993 and the Port Companies Act 1988.

Responsibilities of the AuditorWe are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001and section 19 of the Port Companies Act 1988.

IndependenceWhen carrying out the audit, we followed the independence requirements of the AuditorGeneral, which incorporate the independence requirements of the New Zealand Institute of Chartered Accountants.Other than the audit, we have no relationship with or interests in Port Nelson.

Julian TanAudit New ZealandOn behalf of the AuditorGeneralChristchurch, New Zealand

statutory information

17

p r i n c i p a l a c t i v i t i e s

Port Nelson is primarily engaged in the commercial operation of the port of Nelson. There has been no significant change in the

nature of Port Nelson’s business during the year.

r ev i e w o f a c t i v i t i e s

A review of the year’s operations is contained in the Chairman’s Report and the Chief Executive Officer’s Review.

r ev i e w o f o p e r a t i o n s

The net surplus for Port Nelson for the year was $10.367 million (2011 $6.584 million).

d i v i d e n d s

Dividends of $12,200,000 were recognised in the 2012 financial year ($1,000,000 interim dividend, $8,000,000 special dividend and

a provision for $3,200,000 final dividend for the 2012 financial year). Dividends of $12,200,000 were paid during the 2012 financial

year ($3,200,000 final dividend for the 2011 financial year, $1,000,000 interim dividend and $8,000,000 special dividend for the 2012

financial year).

d i r e c t o r s

In accordance with Port Nelson’s constitution Messrs P M Schuyt and B A Monopoli will retire by rotation at the AGM in September 2012.

r e m u n e r a t i o n o f d i r e c t o r s

Fees paid to Directors during the year were as follows:

A O Patterson $60,800

P D Le Gros* $38,800

T B King $32,200

P V Lough $31,300

B A Monopoli $32,200

P M Schuyt $32,200

TOTAL $227,500

P D Le Gros was paid an additional $7,500 in director’s fees as recognition for services rendered on behalf of the board dealing with

an ad-hoc commercial matter that required board input. Without the additional fee, the amount paid to P D Le Gros fees would be

$31,300 and total director fees $220,000.

d i r e c t o r s ’ i n s u r a n c e

Port Nelson has arranged policies of Directors’ Liability Insurance to ensure that as far as possible Directors will not personally incur

any monetary loss as a result of actions undertaken by them as Directors. Certain actions are specifically excluded, for example the

incurring of penalties and fines that may be imposed in respect of breaches of the law.

d i r e c t o r s ’ i n t e r e s t

The following notices have been received from Directors disclosing their interests in other companies with whom the group may have

transactions. All transactions with these companies are conducted on normal commercial terms.

• Ms B A Monopoli has the following entries in the Register of Directors’ Interests: Director of the Animal Health Board Inc. Trusteeships;

Chairman of Nelson Millennium Centre Trust, Trustee of Wearable Arts Development Charitable Trust, Trustee of New Zealand International

Arts Festival Trust, Trustee of the Wellington Jazz Festival Trust. Other; Principal of Bronwyn Monopoli Chartered Accountant.

• Mr A O Patterson has the following entries in the Register of Directors’ Interests: Directorships; Director of Cold Storage Nelson Ltd,

Director of Freshco Nelson Ltd, Chairman of Wai-West Horticulture Ltd, Director of Wai-West Farms Ltd, Director of Nayland Road

Cool Storage Ltd, Chairman of Saxton Fruit Limited, Chairman of Tasman Rugby Union. Trusteeships; Nil. Other; Nil.

• Mr P M Schuyt has the following entries in the Register of Directors’ Interests: Directorships; Director of Dairy Investment Fund Ltd,

Director of Golden Bay Fruit 2008 Ltd, Director of Landcare Research Ltd, Director of Tatua Co-operative Dairy Company Ltd, Chairman

of carbonZero Ltd. Trusteeships; Trustee of World Wildlife Fund, Trustee of Wellington College. Other; Councillor of Waikato University.

• Mr P V Lough has the following entries in the Register of Directors’ Interests: Directorships; Director of LIC Ltd, Director od Fisher

and Paykel Appliances Ltd, Chairman of Methven Limited, Chairman of Quotable Value Limited. Trusteeships; Nil. Other; Nil.

• Mr P d Le Gros has the following entries in the Register of Directors’ Interests: Directorships; Director of Unimar Limited, Director

of Fico Finance Limited, Director of Duncan Cotterill Nelson Trustees (2008) Limited, Director of Nelson Electricity Limited, Director

of Building Connexion Limited. Trusteeships; Trustee of Nelson YMCA. Other; Nil.

• �Mr T B King has the following entries in the Register of Directors’ Interests: Directorships; Waimea Rural Fire Authority. Trusteeships;

Trustee of Kaiteriteri Recreation Reserve Board. Other; Deputy Mayor of Tasman District Council, which is a shareholder of Port

Nelson, member of the Waimea Water Augmentation Committee and National Rural Fire Authority.

statutor y informationto the shareholders, on the af fa i rs of por t nelson l imited for the year ended 30 june 2012

stat

utor

y in

form

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18

d i r e c t o r s ’ l o a n s

There were no loans by Port Nelson to Directors.

s h a r e h o l d i n g by d i r e c t o r s

No Directors hold shares in Port Nelson.

u s e o f c o m p a ny i n f o r m a t i o n

During the year the Board received no notices from Directors requesting to use Company information received in their capacity as

Directors that would not otherwise have been available to them.

c o m m i t t e e s o f t h e b o a r d

The Board has established a Finance and Risk Committee to assist the Board in carrying out its responsibilities under the Companies

Act 1993 and the Financial Reporting Act 1993 and a Remuneration Committee.

a u d i t o r s

Under section 14 of the Public Audit Act 2001 and section 19 of the Port Companies Act 1988, the Auditor-General is the Auditor of

Port Nelson. The Auditor-General has appointed Audit New Zealand to undertake the audit on its behalf. Fees paid to the Auditors

are disclosed in the Financial Statements.

p e r f o r m a n c e i n d i c a t o r s

As required under Section 16 of the Port Companies Act 1988, performance indicators in the Statement of Corporate Intent are given

on page 19.

d o n a t i o n s

Donations made during the year are disclosed in the Financial Statements.

e m p l oye e r e m u n e r a t i o n

Port Nelson has remunerated employees in excess of $100,000 per annum in the following bands:

Remuneration Number of employees Number of employees

2012 2011 2012 2011

$100,000 to $110,000 1 1 $170,000 to $180,000 1 2

$110,000 to $120,000 1 - $180,000 to $190,000 1 1

$120,000 to $130,000 - 2* $190,000 to $200,000 1 -

$130,000 to $140,000 2 2 $210,000 to $220,000 - 1

$140,000 to $150,000 1 - $220,000 to $230,000 1 -

$150,000 to $160,000 - - $320,000 to $330,000 - 1

$160,000 to $170,000 - - $340,000 to $350,000 1 -

* Includes employment cessation payments.

c h a n g e s i n a c c o u n t i n g p o l i c i e s

FRS-44 New Zealand Additional Disclosures and Amendments to NZ IFRS was adopted during the year to harmonise with source

IFRS and Australian Accounting Standards (Harmonisation Amendments). The purpose being to eliminate many of the differences

between the accounting standards in each jurisdiction. Apart from this additional policy adoption there have been no other changes

in accounting policies during the financial year disclosed in the Financial Statements.

Nick Patterson Peter Schuyt

Chairman of Directors Director

For and on behalf of the Board

Date: 28 September 2012

statutor y informationto the shareholders, on the af fa i rs of por t nelson l imited for the year ended 30 june 2012

corporate intent

19

m i s s i o n s t a t e m e n t

• To operate Port Nelson as a successful business providing cost efficient, effective and competitive services and facilities for port

users and shippers.

• To provide for the present and future needs of Port Nelson in ways that are sensitive to people, use resources wisely, and are in

harmony with the environment of an export port.

o b j e c t i ve s

1. To operate as a successful business.

2. To be a good employer.

3. The debt equity ratio not to exceed 45.0% (31/69).

4. To aim to grow the business through stimulation of throughput, added value services and related business activities, so leading

to increased revenue.

5. To achieve a commercially acceptable rate of return on shareholders’ funds in accordance with meeting the objectives herein.

6. To ensure that port development takes place which meets the needs of the region.

7. To ensure that high environmental standards are maintained.

8. To strive for continuous improvement in everything that we do.

m e a s u r e o f p e r f o r m a n c e a g a i n s t o b j e c t i ve s

Target 2012 2011 2010 Target Met?

Lost Time Injury Frequency Rate * <1.5 2.5 3.9 2.8 No

Net Debt / Equity Ratio <45.0% 29.8% 28.4% 27.1% Yes

Dividends Declared $4.2m $12.2m $4.2m $4.1m Yes

Cargo Throughput (Cargo Tonnes) 2.79m 2.65m 2.71m 2.75m No

Shipping Tonnes (Gross Registered Tonnes) 8.2m 6.9m 7.9m 8.1m No

Ships Visits 864 733 850 835 No

Revenue $39.5m $38.8m $38.3m $37.9m No

Return on Average Shareholders’ Funds** 6.0% 7.7% 4.9% 2.6% Yes

Return on Funds Employed 9.0% 8.2% 7.3% 7.2% No

Capital Expenditure <$3.6m $3.3m $10.3m $4.1m Yes

Incidents Leading to Pollution of Harbour Nil 3 Nil Nil No

Compliance with all Resource Consent Conditions Full Full Full Full Yes

Compliance with NZ Maritime Safety Standards Full Full Full Full Yes

* Lost Time Injury Frequency Rate = Lost Time Injuries

Hours Worked in Period x 100,000

** The Return on Average Shareholders’ Funds is based on the Net Surplus earnings figure prior to Other Comprehensive Income

statement of corp orate intent

statement of comprehensive incomefor the year ended 30 june 2012

head

2 0

inco

me

and

equi

ty

statement of movements in equit yfor the year ended 30 june 2012

The Summary of Significant Accounting Policies and Notes to the Accounts on pages 24 to 39 form part of these Financial Statements.

Notes 2012 2011 $000 $000

r eve n u e

Operations 32,833 32,371

Property 5,974 5,937

OPERATING REVENUE 1 38,807 38,308

e x p e n s e s

Employee Wages and Related Expenses 9,337 9,130

Depreciation and Amortisation 4,677 4,234

Other Operational and Property Expenses 2 12,455 12,206

Total Expenses from Operating and Property Activities 26,469 25,570

Results from Operating and Property Activities 12,338 12,738

Finance Income 58 18

Finance Expenses 2,524 2,664

Net Finance Costs 2,466 2,646

Profit after Financing Costs 9,872 10,092

Expenses Associated with Noise Mitigation 21 85 (37)

Profit before Share of Associate Loss 9,787 10,129

Share of Profit / (Loss) from Associate 7 1,881 (149)

Gain on Convertible Notes from Associate 7 272 -

2,153 (149)

NET SURPLUS BEFORE TAXATION 11,940 9,980

Less Taxation Expense 3 1,573 3,396

NET SuRPLuS (ATTRIBuTABLE TO OwNERS) 10,367 6,584

o t h e r c o m p r e h e n s i ve i n c o m e

First Time Recognition of Infrastructural Assets 9b - 1,554

Movements in Deferred Tax 6 (435)

Movements in Hedging Reserve 9h (1,014) (87)

Movements in Revaluation Reserve - Unimar 7 (34) (606)

TOTAL COMPREHENSIVE INCOME (ATTRIBuTABLE TO OwNERS) 9,325 7,010

2012 2011 $000 $000

BALANCE AT 1 JuLy 136,751 133,935

Total Comprehensive Income Attributable to Owners 9,325 7,010

Dividends 9b (12,200) (4,200)

Deferred Tax Adjustment 9b (3) 6

BALANCE AT 30 JuNE 133,873 136,751

2 0

balance sheetas at 30 june 2012

head

21

balance

The Summary of Significant Accounting Policies and Notes to the Accounts on pages 24 to 39 form part of these Financial Statements.

Notes 2012 2011 $000 $000

c u r r e n t a s s e t s

Cash and Cash Equivalents 10 - 504

Trade and Other Receivables 11 4,705 4,455

Inventories 12 306 365

Prepayments and Accruals 295 131

Advance to Associate 8 - 611

Properties Intended for Sale 6 - -

Hedging Asset 16 - 37

5,306 6,103

l e s s c u r r e n t l i a b i l i t i e s

Bank Overdraft 10 46 -

Trade and Other Payables 13 2,229 1,749

Employee Benefit Liabilities 20 1,083 967

Tax Payable 1,220 1,361

Dividend Payable 9b 3,200 3,200

Hedging Liability Current Portion 16 144 -

Noise Mitigation Current Portion 21 54 97

7,976 7,374

w o r k i n g c a p i t a l (2,670) (1,271)

n o n - c u r r e n t a s s e t s

Property, Plant and Equipment 14 169,613 173,422

Intangible Assets 15 728 799

Investment Properties 5 12,527 12,682

Investments in Associates 7 3,477 693

186,345 187,596

n o n - c u r r e n t l i a b i l i t i e s

Employee Benefit Liabilities 20 163 110

Deferred Tax Liability 4 6,038 7,674

Term Loan 16 39,900 39,300

Hedging Liability Non-Current Portion 16 3,152 1,979

Noise Mitigation Non-Current Portion 21 549 511

49,802 49,574

TOTAL NET ASSETS 133,873 136,751

s h a r e h o l d e r s ’ f u n d s

Issued Capital 9a 6,046 6,046

Retained Earnings 9b 40,487 41,247

Asset Revaluation Reserves 9f 89,562 90,631

Other Reserves 9g 151 186

Hedging Reserve 9h (2,373) (1,359)

TOTAL SHAREHOLdERS’ FuNdS 133,873 136,751

Nick Patterson Peter Schuyt

Chairman of Directors Director

For and on behalf of the Board

Date: 28 September 2012

21

cash

flow

s

22 The Summary of Significant Accounting Policies and Notes to the Accounts on pages 26 to 39 form part of these Financial Statements.

2012 2011 $000 $000

c a s h f l ow s f r o m o p e r a t i n g a c t i v i t i e s

Cash was provided from:

Receipts from Customers 32,457 32,304

Rent Received 5,956 5,731

Interest Received 5 18

38,418 38,053

Cash was applied to:

Payments to Suppliers and Employees (21,518) (21,007)

Interest Paid (2,584) (2,607)

Taxes Paid (3,001) (3,071)

Net GST (Paid)/Received 483 (566)

(26,620) (27,251)

Net Cash In Flows from Operating Activities 11,798 10,802

c a s h f l ow s f r o m i nve s t i n g a c t i v i t i e s

Cash was provided from:

Property Plant and Equipment Sold 2,553 1,159

Cash was applied to:

Purchase of Property Plant and Equipment (3,018) (9,548)

Purchase of Intangibles (283) (142)

Purchase of Investment - (611)

(3,301) (10,301)

Net Cash Out Flows from Investing Activities (748) (9,142)

c a s h f l ow s f r o m f i n a n c i n g a c t i v i t i e s

Cash was provided from:

Loans Raised 600 2,800

Cash was applied to:

Dividend Paid (12,200) (4,100)

Net Cash Out Flows from Financing Activities (11,600) (1,300)

Net Increase/(Decrease) in Cash Held (550) 360

Cash at 1 July 504 144

CASH AT 30 JuNE (46) 504

Represented by:

Cash at Bank - 504

Call Advance (Overdraft) (46) -

CASH AT 30 JuNE (46) 504

The GST (net) component of operating activities reflects the net GST paid and received with the Inland Revenue Department. The

GST (net) component has been presented on a net basis, as the gross amounts do not provide meaningful information for financial

statement purposes.

statement of c ash f lowsfor the year ended 30 june 2012

cashflows

2 3The Summary of Significant Accounting Policies and Notes to the Accounts on pages 26 to 39 form part of these Financial Statements.

2012 2011 $000 $000

r e c o n c i l i a t i o n w i t h n e t s u r p l u s

Net Surplus 10,367 6,584

Add Non Cash Items:

Depreciation and Amortisation 4,677 4,234

Increase (Decrease) in Deferred Tax (1,275) 35

Less:

Noise Mitigation Provision (5) (92)

3,397 4,177

Add (Less) Movements in Other Working Capital Items:

(Increase)/Decrease in Accounts Receivable (250) (338)

(Increase)/Decrease in Inventory 59 28

(Increase)/Decrease in Prepayments and Accruals (164) (31)

Increase/(Decrease) in Accounts Payable (excluding Assets Payable) 480 (861)

Increase/(Decrease) in Current Employee Benefit Liabilities 116 (83)

Increase/(Decrease) in Tax Payable (141) 244

100 (1,041)

Add (Less) Items Classified as Investing Activities:

Movement in Employee Benefit Liabilities Non-Current 53 (57)

Net (Profit) Loss on Sale of Assets including Investing Activities 67 142

Impairment of Investment Property 155 415

Movement in Capital Creditors (135) 175

Accrued Interest on Notes Capitalised (53) -

Gain on Conversion of Notes (272) -

Share of (Gain)/Loss from Investment in Associate (1,881) 149

Writedown of Goodwill - 258

(2,066) 1,082

NET CASH INFLOw FROM OPERATING ACTIVITIES 11,798 10,802

statement of c ash f lowsfor the year ended 30 june 2012

polic

ies

2 4

r e p o r t i n g e n t i t y

Port Nelson Limited (Port Nelson) is registered under the Companies Act 1993 and created pursuant to the Port Companies Act 1988.

Port Nelson is a reporting entity in terms of the Financial Reporting Act 1993. The financial statements of Port Nelson have been

prepared in accordance with the Financial Reporting Act 1993.

b a s i s o f p r e p a r a t i o n

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’).

They comply with New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’) and other applicable reporting

standards as appropriate for profit-orientated entities.

The financial statements are presented in New Zealand dollars and the functional currency of Port Nelson is New Zealand dollars.

The financial statements were authorised for issue by the directors on 28 September 2012.

s t a n d a r d s a n d i n t e r p r e t a t i o n s i s s u e d a n d n o t ye t a d o p t e d

There are no standards, interpretations and amendments that have been issued, that are not yet effective, and that are relevant to

Port Nelson that Port Nelson has not yet applied except for NZ IFRS 8. NZ IFRS 8 provides guidance on the disclosure requirements

in respect of the operating segments of the entity. Port Nelson is awaiting the outcome of a proposed change in the standard by the

Financial Reporting Standards Board that may result in Port Nelson being outside the scope before assessing the impact.

The amendments to the following standards and interpretations are not relevant to Port Nelson’s operations and are not expected to

have any significant impact:

Effective for the

financial year ending:

NZ IFRS 7 Disclosures – Transfers of Financial Assets (Amendments) 2013

NZ IAS 12 Income Taxes – Deferred Tax Recovery of Underlying Assets (Amendments) 2013

NZ IAS 1 Presentation of Items of Other Comprehensive Income – Amendment to NZ IAS 1 2014

NZ IAS 19 Employee Benefits (Revised) 2014

NZ IAS 28 Investments in Associates and Joint Ventures 2014

NZ IFRS 12 Disclosure of Interests in Other Entities 2014

NZ IFRS 13 Fair Value Measurement 2014

NZ IFRS 9 Financial Instruments – Classification and Measurement 2016

a c c o u n t i n g p o l i c i e s

FRS-44 New Zealand Additional Disclosures and Amendments to NZ IFRS was adopted during the year to harmonise with source

IFRS and Australian Accounting Standards (Harmonisation Amendments). The purpose being to eliminate many of the differences

between the accounting standards in each jurisdiction. Apart from this additional policy adoption there have been no other changes

in accounting policies during the financial year disclosed in the Financial Statements.

m e a s u r e m e n t s y s t e m

Those accounting principles considered appropriate for the measurement and reporting of results and financial position under the

historical cost method, modified by the revaluation of land, buildings, wharves, offshore vessels and investment property, have been

followed.

r o u n d i n g o f a m o u n t s

Amounts in this report have, unless otherwise indicated, been rounded to the nearest 1,000 dollars.

s p e c i f i c a c c o u n t i n g p o l i c i e s

The accounting policies adopted in the financial statements which have a significant effect on the result and the financial position

disclosed are set out below:

1.1 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to Port Nelson and that revenue

can be reliably measured as follows:

Cargo and Marine revenue – is recognised based on departure of the vessel.

Stevedoring – is recognised based on partial completion of the vessel at balance date.

Property lease revenue – is recognised on an accrual basis at balance date. Rentals are payable in advance.

Interest revenue – is recognised on a time proportion basis using the effective interest method.

1.2 Provisions

Provisions are recognised when a present obligation exists as a result of a past event, the future sacrifice of economic benefits

summar y of s ignif ic ant accounting p olicies

policies

2 5

is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best

estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and

uncertainties surrounding the obligation.

1.3 Property Plant and Equipment and depreciation

Property, Plant and Equipment, except land, buildings, wharves and offshore capable floating plant are stated at valuation

taken over from the Nelson Harbour Board on 1 October 1988 and subsequent additions at cost. Depreciation is written off

depreciable assets on a straight line basis over the estimated economic lives of the assets, ranging as follows:

years years

Wharves, Quays and Berths 20-72 Software 5

Vessels (inshore) 20 Buildings 50-100

Vessels (offshore capable) 20 Cranes 15-20

Forklifts 15-25 Tractors and Vehicles 10

Sundry Plant and Equipment 5-20 Navigation and Pilot Equipment 3-40

Office Equipment 5-15 Hard Standing 50

Infrastructural Assets 50-80 Building Fit-out 10

Capital dredging is not amortised. The cost of maintaining the dredged depth is expensed.

Land is valued at least every three years. Land is included at the valuation as at 30 June 2008. As at 30 June 2012, Port

Nelson engaged TelferYoung, an independent valuer to complete a fair value assessment, which indicated no revaluation

was required. The carrying value reflects the fair value. Land owned and leased to third parties is valued at the market value

of the lessor’s interests. Non leased land is recorded at market value. Additions between valuations are recorded at cost. The

land valuation was completed by Ian McKeage, Registered Valuer, FNZIV, FPINZ of TelferYoung. Land will be revalued at 30

June 2013.

Buildings are stated at fair value. Fair value was determined as at 30 June 2008 using either a market-based approach (where

evidence can be reliably analysed) or optimised depreciated replacement cost. Additions between valuations are recorded

at cost. Buildings are valued at least every five years. The buildings’ valuation was completed by Ian McKeage, Registered

Valuer, FNZIV, FPINZ of TelferYoung. Buildings will be revalued at 30 June 2013.

Wharves are stated at fair value as determined by Port Nelson’s engineering staff and reviewed by Ian McKeage, Registered

Valuer, FNZIV, FPINZ of TelferYoung. Fair value was determined as at 30 June 2008 using optimised depreciated replacement

cost. Wharves are valued at least every five years. Additions between valuations are recorded at cost. Wharves will be

revalued at 30 June 2013.

Infrastructural assets include stormwater, sewerage and water reticulation located underground.

The asset classes that are subject to revaluation are assessed at each balance date to ensure that the values are not materially

different from fair value. Where the carrying value is materially different from fair value a revaluation is undertaken. Gains

and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses

are included in the Statement of Comprehensive Income. When revalued assets are sold, the amounts included in asset

revaluation reserves in respect of those assets are transferred to retained earnings.

Cost incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service

potential associated with the item will flow to Port Nelson and the cost of the item can be reliably measured.

1.4 Investment Properties

Investment Property which is property held to earn rentals and/or capital appreciation is measured at its fair value at the

reporting date. Gains or losses from changes in the fair value of investment property are included in the profit or loss in the

period in which they arise. Investment Properties are not depreciated.

1.5 Properties Intended for Sale

At each reporting date, Port Nelson reviews the carrying amount of any Properties Intended for Sale to determine whether

there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable

amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Properties Intended for Sale

are not depreciated. Properties are actively marketed and there is probable sale within one year.

1.6 Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments, net of

outstanding bank overdrafts. Bank overdrafts are disclosed separately in current liabilities in the balance sheet.

summar y of s ignif ic ant accounting p olicies

26

1.7 Trade and Other Receivables

Trade and Other Receivables are valued at fair value and subsequently measured at amortised cost using the effective

interest method, less any provision for impairment.

A provision for the impairment of receivables is established when there is objective evidence that all amounts due will not be

able to be collected as per the original terms of the receivables. The amount of the provision is the difference between the

asset’s carrying amount and the present value of estimated future cash flows, discounted using the effective interest method.

1.8 Inventories

Inventory is valued at the lower of cost using the weighted average method and net realisable value. Full provision has been

made for obsolescence where applicable. Inventory is held for internal maintenance and construction work only.

1.9 Intangible Assets

Intangible assets are limited to computer software. On acquisition they are capitalised at cost which equates to fair value.

The computer software will have a finite life. Amortisation is to be charged to the Statement of Comprehensive Income

based on the finite life of the asset. Software is amortised on a straight line basis over five years. Intangible assets will be

tested for impairment where an indicator of impairment exists and useful lives will be assessed on an annual basis.

1.10 Impairment of Assets

At each reporting date, Port Nelson reviews the carrying amount of its tangible and intangible assets to determine whether

there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable

amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Where the carrying amount of the asset exceeds its recoverable amount the asset is considered impaired and is written

down to its recoverable amount. For revalued assets the impairment loss is recognised against the revaluation reserve for

that class of asset. Where that results in a debit balance in the revaluation reserve, the balance is recognised in the Statement

of Comprehensive Income. For assets not carried at a revalued amount the impairment loss is recognised in the Statement

of Comprehensive Income.

The reversal of an impairment loss on a revalued asset is credited to the revaluation reserve. However, to the extent that

an impairment loss for that class of asset was previously recognised in the Statement of Comprehensive Income, a reversal

of the impairment loss is also recognised in the Statement of Comprehensive Income. For assets not carried at a revalued

amount, the total impairment loss is recognised in the Statement of Comprehensive Income.

1.11 Goods and Services Tax

All items in the financial statements are exclusive of goods and services tax (GST) with the exception of receivables and

payables which are stated with the GST included. Where GST is not recoverable as an input tax then it is recognised as part

of the related asset or expense.

The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of

receivables or payables in the Balance Sheet.

The net GST paid to or received from the IRD, including the GST relating to investing and financing activities, is classified as

an operating cash flow in the Statement of Cash Flows. Commitments and contingencies are disclosed exclusive of GST.

1.12 Income Tax

The income tax expense for the period is the tax payable on the current period’s taxable income based on the income tax

rate and adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax

bases of assets and liabilities and their carrying amounts in the financial statements and for unused tax losses (if any).

Deferred tax assets and liabilities are recognised for temporary differences at the rate expected to apply when the assets are

recovered or liabilities are settled. The tax rate is applied to the cumulative amounts of deductible and taxable temporary

differences to measure the deferred tax asset or liability.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that

future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax is charged or credited to the Statement of Comprehensive Income, except where it relates to items charged or

credited directly to equity, in which case the tax is dealt with in other comprehensive income.

1.13 Borrowings

Borrowings are initially recognised at their fair value. After initial recognition, all borrowings are measured at amortised cost

using the effective interest method where this differs from face value.

1.14 derivative Financial Instruments

Port Nelson uses derivative financial instruments such as interest rate swaps to hedge against interest rate fluctuations. Port

Nelson does not hold or issue derivative financial instruments for trading purposes. Such derivative financial instruments are

stated at fair value. The fair value of interest rate swaps is determined by reference to market values. The effective portion

polic

ies

summar y of s ignif ic ant accounting p olicies

27

of changes in the fair value of the derivative financial instruments that are designated and qualify as cash flow hedges are

deferred in equity.

If a hedging instrument is sold, terminated, revoked or no longer meets the criteria for hedge accounting, the cumulative

gain or loss that remains recognised directly in equity from the period when the hedge was effective will be recognised in

the Statement of Comprehensive Income.

1.15 Financing Costs

Finance costs are recognised as an expense when incurred. Financing costs directly attributable to the acquisition, construction

or production of qualifying assets, which are assets that take a substantial period of time to get ready for their intended use,

are added to the cost of those assets until such a time as the assets are substantially ready for their intended use.

1.16 Employee Entitlements

Provision is made in respect of Port Nelson’s liability for annual leave, long service leave and retirement gratuities. Annual

leave and long service leave have been calculated on an actual entitlement basis at current rates of pay and retirement

gratuities calculated at current rates of pay assuming the payment will be made upon retirement.

1.17 Foreign Exchange Transactions

Transactions in foreign currencies are converted at the New Zealand rate of exchange ruling at the date of the transaction.

Capital items are converted at the exchange rate ruling at balance date or the forward exchange contract rate where

applicable.

1.18 Leases

Leases of plant and equipment are classified as operating leases. Operating lease payments are charged as an expense in

the period in which they are incurred, as this represents the pattern of benefits derived from the leased assets.

1.19 dividends

Provision is made for the amount of any dividend declared on or before the end of the financial year but not distributed at

balance date.

1.20 Critical Judgements

In preparing these financial statements Port Nelson has made estimates and assumptions concerning the future. These

estimates and assumptions may differ from the subsequent actual results and are continually being evaluated based on

historical experience and other factors, including expectations or future events that are expected to be reasonable under

the circumstances. The estimates and assumptions that have a risk of causing a significant adjustment to the carrying

amounts of assets and liabilities within the next financial year are the provision for noise mitigation and the carrying value

of the investment in associate.

The provision for noise mitigation is based on a number of variables such as the costs to mitigate, number of houses requiring

mitigation, and period over which mitigation will occur. The provision is Port Nelson’s best estimate at this point in time, and

will be updated as more information is obtained.

For comparative purposes, judgements for the investment in associate has been assessed considering past financial

performance and future financial forecasts underpinned by such factors as vessel valuations (based on likely realisation),

vessel utilisation and foreign exchange rates which are subject to sensitivity of assumptions. The forecasts indicate that the

carrying value in the financial statements is appropriate. Any difference in the future profitability of the associate compared

to that forecast will result in Port Nelson needing to reassess the carrying value.

1.21 Associates

Port Nelson’s associate investment is accounted for in the financial statements using the equity method. An associate is an

entity over which Port Nelson has significant influence and that is neither a subsidiary nor an interest in a joint venture. The

investment in an associate is initially recognised at cost and the carrying amount in the financial statements is increased or

decreased to recognise Port Nelson’s share of the surplus or deficit of the associate after the date of acquisition. Distributions

received from an associate reduce the carrying amount of the investment.

If the share of deficits of an associate equals or exceeds its interest in the associate, Port Nelson discontinues recognising its

share of further deficits. After Port Nelson’s interest is reduced to zero, additional deficits are provided for, and a liability is

recognised, only to the extent that Port Nelson has incurred legal or constructive obligations or made payments on behalf

of the associate. If the associate subsequently reports surpluses, Port Nelson will resume recognising its share of those

surpluses only after its share of the surpluses equals the share of deficits not recognised.

Where Port Nelson transacts with an associate, surplus or deficits are eliminated to the extent of Port Nelson’s interest in the

associate. Dilution gains or losses arising from investments in associates are recognised in the surplus or deficit.

policiessummar y of s ignif ic ant accounting p olicies

note

s

2 8

n o t e 1 : o p e rat i n g r eve n u e

2012 2011Includes the following revenue: $000 $000

p o r t o p e r a t i o n s

Port Operations 32,815 32,368

Gain on Sale of Assets 18 3

Total Port Operations 32,833 32,371

p r o p e r t y

Property Leases and Licences 4,996 4,910

Investment Property 978 1,027

Total Property 5,974 5,937

TOTAL OPERATING REVENuE 38,807 38,308

All revenue relates to continuing operations.

n o t e 2 : o t h e r o p e rat i o n a l a n d p r o p e r t y e x p e n s e s

2012 2011Includes the following expense: $000 $000

Administration Related 3,206 2,323

Audit Fees - Prior Year - 10

Audit Fees - Current Year 58 57

Bad Debts Written Off 5 13

Directors’ Fees 228 216

Donations/Corporate Sponsorship 151 146

Net Fair Value Write-Down on Investment Property 155 415

Goodwill Write-down in Associate - 258

Investment Property Expenses 15 17

Loss on Sale of Assets 85 145

Operating Leases 18 22

Other Operating Expenses 8,533 8,584

TOTAL ExPENSE 12,455 12,206

All expenses relate to continuing operations.

n o t e 3 : p r ov i s i o n f o r t a xat i o n

2012 2011 $000 $000

Current Tax 3,200 3,361

Prior Year Adjustment (351) 35

Deferred Tax (622) (134)

Deferred Tax Adjustment for Reduction in Tax Rate - 20

Deferred Tax Adjustment for Reinstatement of Tax Depreciation on Buildings (654) 114

TAx ExPENSE 1,573 3,396

Profit from Continuing Operations 11,940 9,980

Tax at 28% (2011: 30%) 3,343 2,994

Prior Year Adjustment (351) 35

Non Deductible Expenses 108 268

Non Taxable Income (633) (35)

Deferred Tax Adjustment for Reduction in Tax Rate - 20

Deferred Tax Movement (240) -

Deferred Tax Adjustment for Reinstatement of Tax Depreciation on Buildings (654) 114

TAx ExPENSE 1,573 3,396

notes to the accounts

notes

2 9

n o t e 4 : d e f e r r e d t a x ( a s s e t s ) a n d l i a b i l i t i e s

Employee Intangible PP&E Provision Derivatives Entitlements Assets Total2012 $000 $000 $000 $000 $000 $000

Opening Balance 8,549 (168) (544) (304) 141 7,674

Charged to Profit and Loss (581) (1) - (16) (24) (622)

Building tax change to Profit and Loss (654) - - - - (654)

Charged to Equity 19 - (379) - - (360)

BALANCE AT 28% 7,333 (169) (923) (320) 117 6,038

2011

Opening Balance 8,237 (272) (546) (357) 140 7,202

Charged to Profit and Loss (272) 104 - 33 1 (134)

Building tax change to Profit and Loss 114 - - - - 114

Charged to Equity 435 - (37) - - 398

BALANCE AT 28% 8,549 (168) (583) (324) 141 7,615

Tax rate adjustment

Charged to Profit and Loss - - - 20 - 20

Charged to Equity - - 39 - - 39

CLOSING BALANCE 8,549 (168) (544) (304) 141 7,674

n o t e 5 : i nve s t m e nt p r o p e r t y

2012 2011 $000 $000

Opening Balance 12,682 13,097

Additions - -

Revaluations (155) (415)

Reclassification - -

Properties Intended for Sale - -

Properties Sold - -

CLOSING BALANCE 12,527 12,682

Basis of Valuation

Investment Property is stated at fair value. Fair value was determined as at 30 June 2012 being the market value of the lessor’s interests

as at 30 June 2012, and is valued annually. Valuation was completed by Ian McKeage, Independent Registered Valuer, FNZIV, FPINZ of

TelferYoung.

n o t e 6 : p r o p e r t i e s i nt e n d e d f o r s a l e

2012 2011 $000 $000

Opening Balance - 1,073

Additions - -

Disposals - (1,073)

Impairment - -

CLOSING BALANCE - -

Properties Intended for sale

Port Nelson was required to purchase three properties in the 2009 financial year as part of its obligation in respect of the Nelson City

Council Resource Management Plan Noise Variation. Subsequent remedial noise mitigation work has been undertaken on the three

houses. Two of these properties were sold in 2010. The third property was sold in 2011. An additional property not associated with the

Noise Variation was held at the 30 June 2010 balance date as Intended for Sale. This property was also disposed of in the 2011 year.

notes to the accounts

3 0

n o t e 7: i nve s t m e nt i n a s s o c i at e s

2012 2011 $000 $000Investment in unimar Group

TOTAL 3,477 693

Movements in the Carrying Amount of Investment in Associate

Opening Balance 693 1,707

New Investments 666 -

Disposal of Investments - -

Share in Revaluation Reserve Movement (35) (606)

Goodwill Write-off - (259)

Gain on conversion of notes 272 -

Share of recognised revenues and expenses 1,881 (149)

CLOSING BALANCE 3,477 693

Summarised Financial Information of Associate Company

Assets 15,039 19,100

Liabilities 7,094 16,649

Revenues 50,899 13,221

Surplus (deficit) for 2012 4,298 (596)

Port Nelson Interest 44% 25%

2012

Unimar had a trading surplus of $4,298,000. Additionally during the year the vessel Marsol Pride was sold realising the equity portion

invested via the financial lease on the vessel. Port Nelson also exercised its conversion rights on the convertible notes realising a gain

on conversion of $272,000.

2011

Unimar had a trading deficit of $595,637. Unimar undertook a Convertible Notes issue in 2010 to assist with funding operations. The

vessel leased by Unimar has a conditional back to back purchase and sales contract on it which will see Unimar realise the investment

in the vessel accrued from the time of lease to date of sale. The funds realised will allow Unimar to continue operating and provide

for the repayment of the Convertible Notes.

n o t e 8 : a d v a n ce t o a s s o c i a t e

2012 2011 $000 $000Advance to unimar Group

TOTAL - 611

Movements in Advance to Associate

Opening Balance 611 -

Capitalisation of interest 53 -

Conversion of notes (664) -

Advance - 611

CLOSING BALANCE - 611

2012

On the 9th December 2011 Port Nelson converted the first tranche of convertible notes at an exercise price of $0.75 per share. The amount

converted consisted of $333,000 advance and $53,645 interest receivable capitalised resulting in the issuing of 515,527 shares and taking Port

Nelson’s shareholding to 39.69%. On the 31st May 2012 Port Nelson converted the second tranche at an exercise price of $0.75 per share. The

amount converted was $277,778 resulting in the issuing of a further 370,371 shares and taking Port Nelson’s shareholding to 43.76%.

2011

Advances were made to Unimar totalling $610,778 by way of two tranches. These were made on the 15th October 2010 ($333,000) and

the 31st March 2011 ($277,778). The advances are in the form of Convertible Notes. The Convertible Notes have an exercise price of $0.75c

per share and attract an interest rate of 14.0% per annum. The Convertible Notes are convertible at the option of the note holder. It is not

anticipated that any further advances will have to be made.

note

snotes to the accounts

31

n o t e 9 : e q u i t y

2012 2011(a) Share Capital $000 $000

Opening Balance 6,046 6,046

Redeemed During the Year - -

BALANCE AT 30 JuNE 6,046 6,046

At 30 June 2012 Port Nelson has 25,415,404 ordinary shares. All shares are fully paid and have no par value. All shares carry equal voting

rights and the right to share in any surplus on winding up of the company. None of the shares carry fixed dividend rights.

(b) Retained Earnings

Retained Earnings 41,247 37,413

Net Surplus 10,367 6,584

Dividends Paid (9,000) (1,000)

Transfer to Dividend Payable (3,200) (3,200)

Infrastructural Assets Recognised for the First Time - 1,554

Deferred Tax - Prior Period 3 6

Deferred Tax - Infrastructural Assets (6) (435)

Transfer – Revaluation Reserve 18 -

Transfer - Revaluation Reserve Properties Sold 1,058 325

RETAINEd EARNINGS AT 30 JuNE 40,487 41,247

(c) Asset Revaluation Reserve (Land and Improvements)

Opening Balance 78,376 78,701

Revaluation Movement - -

Transfer to Retained Earnings - Properties Sold (1,058) (325)

Deferred Tax Movement - -

Transfer to Retained Earnings - -

CLOSING BALANCE 77,319 78,376

d) Asset Revaluation Reserve (wharves)

Opening Balance 10,246 10,248

Revaluation Movement - -

Revaluation Movement - Wharf Reclassification - -

Deferred Tax Movement - -

Transfer to Retained Earnings - (2)

CLOSING BALANCE 10,246 10,246

(e) Asset Revaluation Reserve (Buildings)

Opening Balance 2,009 2,009

Revaluation Movement (19) -

Deferred Tax Movement 6 -

Transfer to Retained Earnings - -

CLOSING BALANCE 1,997 2,009

(f) Asset Revaluation Summary

Opening Balance 90,631 90,957

Revaluation Movement (19) -

Transfer to Retained Earnings - Properties Sold (1,058) (325)

Deferred Tax Movement 6 -

Transfer to Retained Earnings 2 (1)

CLOSING BALANCE 89,562 90,631

notesnotes to the accounts

32

n o t e 9 : e q u i t y ( . . . co nt i n u e d ) 2012 2011(g) Associate’s Revaluation Reserve $000 $000

Opening Balance 186 793

Revaluation Movement (35) (607)

Deferred Tax Movement - -

Transfer to Retained Earnings - -

CLOSING BALANCE 151 186

(h) Hedging Reserve

Opening Balance (1,359) (1,274)

Fair Value Movement (1,354) (122)

Deferred Tax Movement 340 37

CLOSING BALANCE (2,373) (1,359)

The Revaluation Reserves relate to the revaluation of land, wharves, buildings and Port Nelson’s associate.

The Hedging Reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related

to hedged transactions that have not yet occurred.

The Associate’s Revaluation Reserve relates to Port Nelson’s share of the associate’s equity reserve balances.

n o t e 10 : c a s h a n d c a s h e q u i v a l e nt s 2012 2011 $000 $000

Cash On Hand 2 2

General Account (48) 502

TOTAL (46) 504

n o t e 11 : t ra d e a n d o t h e r r e ce i v a b l e s 2012 2011 $000 $000

GST Receivable - 173

Trade Receivables 4,700 4,226

Related Party Receivables 5 56

TOTAL 4,705 4,455

The status of the receivables as at 30 June are detailed below:

Not Past Due 3,055 2,809

Past Due 1-31 Days 1,409 1,309

Past Due 32-61 Days 110 112

Past Due 62-92 Days 88 9

Past Due > 92 Days 43 43

TOTAL 4,705 4,282

n o t e 12 : i nve nt o ri e s 2012 2011 $000 $000

Opening Balance 365 383

Purchases 603 768

Expensed (662) (796)

CLOSING BALANCE 306 365

No inventories are pledged as security for liabilities nor are any inventories subject to retention of title clauses.

n o t e 13 : t ra d e a n d o t h e r p ay a b l e s 2012 2011 $000 $000

Accruals 628 783

GST Payable 322 -

ACC Payable 244 216

Trade Payables 1,020 740

Related Party Payables 15 10

CLOSING BALANCE 2,229 1,749

note

snotes to the accounts

33

n o t e 14 : p r o p e r t y p l a nt a n d e q u i p m e nt

Accumulated Accumulated

Depreciation Current Current Depreciation

and Current Year Year Cost/ and

Cost/ Impairment Carrying Year Current Impair- Depre- Revalu- Revalu- Impairment Carrying

Revaluation Charges Amount Additions/ Year ment ciation ation ation Charges Amt

1/07/11 1/07/11 1/07/11 Transfers Disposals Charges Charges Surplus 30/6/12 30/6/12 30/6/12

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000

2012 asset class

Mobile Plant 19,687 (11,716) 7,971 6,667 (120) - (1,362) - 25,826 (12,670) 13,156

Floating Plant 5,819 (4,113) 1,706 97 - - (153) - 5,830 (4,180) 1,650

Wharves & Berths 25,464 (2,744) 22,720 83 - - (889) - 25,546 (3,632) 21,914

Wharves Leased 3,021 (683) 2,338 - - - (216) - 3,021 (899) 2,122

Plant, Furniture & Fittings 12,627 (7,488) 5,139 260 (16) - (742) - 12,705 (8,064) 4,641

Infrastructural Assets 1,554 - 1,554 3 - - (78) - 1,557 (78) 1,479

IT Equipment 1,593 (1,221) 372 158 - - (138) - 1,751 (1,359) 392

Hardstanding & Roadways 8,713 (1,498) 7,215 629 (1) - (191) - 9,341 (1,687) 7,654

Dredging 2,105 - 2,105 12 - - - - 2,117 - 2,117

Buildings 9,595 (743) 8,852 (1,077) (130) - (237) - 8,321 (913) 7,408

Building Fit-Out - - - 1,160 - - (96) - 1,449 (385) 1,064

Buildings Leased 7,657 (608) 7,049 (44) (1,155) - (222) - 6,246 (618) 5,628

Land 55,321 - 55,321 29 - - - - 55,350 - 55,350

Land Leased 45,097 - 45,097 - (1,200) - - - 43,897 - 43,897

Work in Progress 5,983 - 5,983 (4,842) - - - - 1,141 - 1,141

204,236 (30,814) 173,422 3,135 (2,620) - (4,324) - 204,098 (34,485) 169,613

2011 asset class

Mobile Plant 19,252 (11,317) 7,935 1,370 (226) - (1,108) - 19,687 (11,716) 7,971

Floating Plant 5,434 (3,983) 1,451 385 - - (130) - 5,819 (4,113) 1,706

Wharves & Berths 25,464 (1,857) 23,607 - - - (887) - 25,464 (2,744) 22,720

Wharves Leased 3,021 (456) 2,565 - - - (227) - 3,021 (683) 2,338

Plant, Furniture & Fittings 12,095 (6,728) 5,367 542 - - (770) - 12,627 (7,488) 5,139

Infrastructural Assets* - - - 1,554 - - - - 1,554 - 1,554

IT Equipment 1,474 (1,089) 385 124 (2) - (135) - 1,593 (1,221) 372

Hardstanding & Roadways 7,988 (1,318) 6,670 724 - - (179) - 8,713 (1,498) 7,215

Dredging 2,105 - 2,105 - - - - - 2,105 - 2,105

Buildings 9,595 (497) 9,098 - - - (246) - 9,595 (743) 8,852

Buildings Leased 7,241 (402) 6,839 416 - - (206) - 7,657 (608) 7,049

Land 55,321 - 55,321 - - - - - 55,321 - 55,321

Land Leased 44,704 - 44,704 393 - - - - 45,097 - 45,097

Work in Progress 409 - 409 5,574 - - - - 5,983 - 5,983

194,103 (27,647) 166,456 11,082 (228) - (3,888) - 204,236 (30,814) 173,422

Note: All assets are held primarily for the operating of port facilities.

Land, buildings and wharves were valued as at 30 June 2008. As at 30 June 2012, Port Nelson engaged TelferYoung, an independent valuer to

complete a fair value assessment, which indicated no revaluation was required. The carrying value reflects the fair value.

Port Nelson is required to undertake seismic assessments of some of its buildings in accordance with the Building Act and Nelson City Council’s

Policy for Earthquake Prone, Dangerous and Insanitary Buildings. These assessments are being undertaken by independent consultants. It is

likely that some buildings will be assessed as Earthquake Prone. Buildings assessed as Earthquake Prone will either require seismic strengthening

or demolition in the longer term. Port Nelson therefore expects that these seismic assessments will lead to the impairment of some buildings in

coming years. Port Nelson expects that the programme to complete all of the required assessments will extend over a number of years.

* Infrastructural Assets, including stormwater, sewerage and water reticulation assets located underground have been recognised for the first

time in 2011. The valuation performed by an independent valuer, Darroch Limited, brings into account assets previously owned by the former

Nelson Harbour Board, that did not get recognised on the formation of Port Nelson Limited on the 1st October 1988. The valuation method

used for recording cost is depreciated replacement cost. The amounts recognised are deemed to be cost and no subsequent valuations will

be performed. There has been no tax deductibility allowed for any additional depreciation associated with the infrastructural assets being

recognised.

notesnotes to the accounts

3 4

n o t e 15 : i nt a n g i b l e a s s e t s

Accumulated Accumulated

Ammortisation Current Current Ammortisation

and Current Year Year Cost/ and

Cost/ Impairment Carrying Year Current Impair- Ammort- Revalu- Impairment Carrying

Revaluation Charges Amount Additions/ Year ment isation ation Charges Amt

1/07/11 1/07/11 1/07/11 Transfers Disposals Charges Charges 30/6/12 30/6/12 30/6/12

$000 $000 $000 $000 $000 $000 $000 $000 $000 $000

2012 asset class

Software 3,525 (2,726) 799 283 - - (354) 3,808 (3,080) 728

3,525 (2,726) 799 283 - - (354) 3,808 (3,080) 728

2011 asset class

Software 3,383 (2,381) 1,002 142 - - (345) 3,525 (2,726) 799

3,383 (2,381) 1,002 142 - - (345) 3,525 (2726) 799

All Intangible Assets are externally generated.

n o t e 16 : f i n a n c i a l i n s t r u m e nt s

Financial Risk Management Objectives

Port Nelson does not enter into or trade financial instruments, including derivative financial instruments for speculative purposes. Treasury

functions are governed by a Treasury Policy approved by the Board of Directors. Approved instruments include:

• Forward rate agreements • Interest rate swaps

• Options on a swap • Interest rate options

• Interest rate collars • Spot and forward foreign exchange

Fixed rate hedging parameters are as follows:

Term Minimum Fixed Rate Amount Maximum Fixed Rate Amount

Less than 1 year 50% 100%

1 year to 4 years 30% 70%

5 years to 10 years 0% 50%

Market Risk

Currency Risk

Port Nelson purchases plant and equipment from time to time from overseas which require it to enter into forward foreign exchange

contracts to hedge the foreign currency risk exposure. This means that Port Nelson is able to fix the New Zealand dollar amount payable

prior to delivery of the plant and equipment from overseas. As at balance date Port Nelson had NIL currency risk exposure.

Cash flow interest rate risk

Cash flow interest rate risk is the risk that the cash flows from a financial instrument will fluctuate due to changes in market interest rates.

Borrowings issued at variable interest rates expose Port Nelson to cash flow interest rate risk.

Port Nelson’s Treasury Policy is to maintain a portion of its borrowings using interest rate swap instruments within the parameters as set

out in the Hedging Parameter table disclosed under the Financial Risk Management Objectives section. Under the interest rate swaps, Port

Nelson agrees with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating-rate interest

amounts calculated by reference to the agreed notional principle amounts.

Credit Risk

Port Nelson is exposed to credit risk from the possibility of counter-parties failing to perform their obligations.

Credit risk exposure on financial assets other than cash at bank and at call has been recognised in the balance sheet net of any provision for

doubtful debts. Principally any risk is in respect of cash and bank, and accounts receivable.

The major components of debtor exposure are to shipping companies and forestry exporters. Terms of trade are either payment on the 20th

of the month following or 7 working days. The majority of debtors are major international companies with extensive histories of payment.

There are no major concentrations of credit risk with respect to accounts receivable and any single debtor.

note

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n o t e 16 : f i n a n c i a l i n s t r u m e nt s ( . . . co nt i n u e d )

Maximum exposures to credit risk at balance date are: 2012 2011 $000 $000

Cash and Cash Equivalents - 504

Trade and Other Receivables 4,705 4,455

Advance to Associate - 611

TOTAL CREdIT RISK 4,705 5,570

The above maximum exposures are net of any recognised provision for losses on these financial instruments. No collateral is held on the

above accounts.

The Directors do not consider there is any significant exposure to interest rate risk on its investments.

Credit Quality of Financial Assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to Standard and Poor’s credit rating

(if available) or to historical information about counterparty default rates: 2012 2011 $000 $000

Cash and Cash Equivalents

AA - 504

Debtors and receivables arise in the ordinary course of Port Nelson’s business. There are no procedures in place to monitor or report the

credit quality of debtors and other receivables with reference to internal or external credit ratings. Port Nelson does instigate a credit check

on new debtors prior to providing business on Port Nelson Standard Terms and Conditions.

Liquidity Risk

Management of liquidity risk

Liquidity risk is the risk that Port Nelson will encounter ‘difficulty’ raising funds to meet commitments as they fall due. Prudent liquidity risk

management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and

the ability to close out market positions. Port Nelson aims to maintain flexibility in funding by keeping committed credit lines available.

Port Nelson has financing arrangements with Westpac Banking Corporation. The total facility is $50,000,000 for a term of 2 years. (2011:

$50,000,000 for a term of 2 years).

Security for the multi-option credit facility is by a first and exclusive debenture charge over the assets and undertakings of Port Nelson.

The following table details the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting

date.

Note: Swaps expiring within 12 months are treated as core debt and will be replaced with another approved instrument.

2012 (at balance date) Notional Amount Fair Value Interest 0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 6 to 7 8 to 9 9 to 10 ($000’s) gain/(loss) rate %* year years years years years years years years

$4,000 Swap (144) 6.95 4,000 - - - - - - -

Total Current (144) 4,000 - - - - - - -

$9,000 Swap (412) 6.19 - 9,000 - - - - - -

$4,000 Swap (252) 6.34 - - 4,000 - - - - -

$5,000 Swap (434) 6.50 - - - - 5,000 - - -

$6,000 Swap (819) 6.49 - - - - 6,000 - - -

$5,000 Swap (170) 5.70 - - - - - 5,000 - -

$5,000 Swap (747) 5.99 - - - - - 5,000 - -

$4,000 Swap (212) 5.90 - - - - - - 4,000 -

$5,000 Swap (56) 5.35 - - - - - - - 5,000

$4,000 Swap (49) 3.99 - - - - - - - 4,000

Total Non-Current (3,151) - - - - - - - - -

2012 TOTAL (3,295) - 4,000 9,000 4,000 - 11,000 10,000 4,000 9,000

2011 TOTAL (1,942) - - 4,000 9,000 4,000 - 11,000 - 10,000

*Interest rate is exclusive of margin and line of credit fee.

All interest rate options and interest swap options are on 90 day roll-over terms.

The following table summarises the Port Nelson exposure to interest rate risk as at 30 June 2012.

notesnotes to the accounts

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n o t e 16 : f i n a n c i a l i n s t r u m e nt s ( . . . co nt i n u e d )

2012(000’s) Weighted Fixed Maturity Dates Average Non Financial Effective Floating 0 to 1 1 to 5 5+ InterestInstruments Interest Rate Interest Year Years Years Bearing Total

financial assets

Loans and Receivables:

Cash and Cash Equivalents - - - - - - -

Trade and Other Receivables - - - - - 4,705 4,705

TOTAL LOANS ANd OTHER RECEIVABLES - - - - 4,705 4,705

financial liabilities

Financial Liabilities at amortised Cost:

Bank Overdraft 5.70% 46 -

Borrowings 6.38% 11,946 4,000 15,000 9,000 - 39,946

Trade and Other Payables - - - - - 2,229 2,229

TOTAL FINANCIAL LIABILITIES AT AMORTISEd COST 11,992 4,000 15,000 9,000 2,229 42,175

2 0 1 1(000’s) Weighted Fixed Maturity Dates Average NonFinancial Effective Floating 0 to 1 1 to 5 5+ Interest Instruments Interest Rate Interest Year Years Years Bearing Total

financial assets

Loans and Receivables:

Cash and Cash Equivalents 2.00% 504 - - - - 504

Trade and Other Receivables - - 611 - - 4,455 5,066

TOTAL LOANS ANd OTHER RECEIVABLES 504 611 - - 4,455 5,570

financial liabilities

Financial Liabilities at amortised Cost:

Borrowings 7.03% 15,300 - 13,000 11,000 - 39,300

Trade and Other Payables - - - - - 1,749 1,749

TOTAL FINANCIAL LIABILITIES AT AMORTISEd COST 15,300 - 13,000 11,000 1,749 41,049

Sensitivity Analysis

The following table illustrates the potential profit and loss and equity impact for reasonably possible market movements, with all

other variables held constant, based on Port Nelson’s financial instrument exposure at the balance date.

Carrying Interest rate amount NZD 000’s -100bp -100bp +100bp +100bpFinancial assets Profit Equity Profit Equity

Cash and Cash Equivalents - - - - -

Derivatives – designated as cash flow hedges - - - - -

Financial liabilities

Borrowings 11,946 119 119 (119) (119)

Derivatives – designated as cash flow hedges 3,296 (1,735) 1,904

Fair Values

Cash and Cash Equivalents are valued as the amount of the deposit or the purchase of the underlying security.

Receivables are carried at the nominal amount due, less any provision for doubtful debts which represents the assessed credit risk.

Liability to trade creditors is recognised on receipt of goods and services at nominal value. Payment would normally occur within 30 days.

The following table details the fair value comparison of the long term borrowings as at 30 June 2012.

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n o t e 16 : f i n a n c i a l i n s t r u m e nt s ( . . . co nt i n u e d )

Carrying Value Fair Value 2012 2011 2012 2011financial liabilities $000 $000 $000 $000

Term Debt 39,900 39,300 39,900 39,300

Fair Value Movement (Net) - - 3,296 1,942

TOTAL FINANCIAL LIABILITIES 39,300 39,300 43,196 41,242

n o t e 17: t e r m l o a n

Interest Rate Contracts:

The notional principal amounts of interest rate contracts outstanding at 30 June 2012 are as follows:

1. $4,000,000 for 4 years @ 6.95% p.a. terminating 31 May 2013

2. $9,000,000 for 2 years @ 6.19% p.a. terminating 29 November 2013

3. $6,000,000 for 9 years @ 6.49% p.a. terminating 30 November 2016

4. $5,000,000 for 10 years @ 5.99% p.a terminating 31 July 2019

5. $4,000,000 for 10 years @ 3.99% p.a terminating 29 April 2022

Swaps expiring within 12 months are treated as core debt and will be replaced with another approved instrument.

n o t e 18 : co m m i t m e nt s

2012 2011The following expenditure was contracted for at balance date: $000 $000

Capital Development 8 598

n o t e 19 : o p e rat i n g l e a s e s

2012 2011Non-cancellable operating leases as lessee $000 $000

Not later than one year 14 14

Later than one year and not later than five years 10 24

TOTAL NON-CANCELLABLE OPERATING LEASE 24 38

Non-cancellable operating leases as lessor

Not later than one year 5,478 4,857

Later than one year and not later than five years 14,992 14,530

Later than five years 7,314 6,975

TOTAL NON-CANCELLABLE OPERATING LEASE 27,784 26,392

n o t e 20 : e m p l oye e b e n e f i t l i a b i l i t i e s 2012 2011 $000 $000

Accrued Pay 182 100

Annual Leave 694 666

Long Service Leave 157 97

Retirement Gratuities 47 47

Other Benefits 166 168

TOTAL EMPLOyEE BENEFIT LIABILITIES 1,246 1,078

Comprising:

Current 1,083 968

Non-current 163 110

TOTAL EMPLOyEE BENEFIT LIABILITIES 1,246 1,078

notesnotes to the accounts

note

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n o t e 21 : n o i s e m i t i g at i o n p r ov i s i o n 2012 2011 $000 $000

Opening Balance 608 700

Additional Provisions Made in the Period 85 -

Decrease to Existing Provisions - (55)

Provision Used (90) (37)

TOTAL NOISE MITIGATION PROVISION 603 608

Comprising:

Current 54 97

Non-current 549 511

TOTAL NOISE MITIGATION PROVISION 603 608

2012Port Nelson reviews its Noise Liability provision each year as the mitigation work is undertaken. The year end provision balance of $603,000 is for Stages One, Two and now also includes Stage Three. Under the Noise Variation which is now operative, Port Nelson has an obligation to Stage Three property owners to provide technical advice, where requested, and to consider providing financial assistance for mitigation works (up to 50 percent of costs). The decision on whether to provide financial assistance will be based on a recommendation made to Port Nelson by the Port Noise Liaison Committee on a case by case basis. Port Nelson has now quantified the costs of this obligation as at 30 June 2012.The Noise Variation within the Nelson City Resource Management Plan was notified with effect on 14 July 2008 and was adopted by the Nelson City Council on the 23rd February 2012. Port Nelson has an obligation to assist with noise mitigation works for noise affected properties adjacent to the Port. These properties are separated into three stages based on the level of Port Noise received. In Stage One (these are houses that are exposed to night time Ldn from port generated noise of 65 dBa or more) Port Nelson is required to make offers to either fully fund noise mitigation work or to purchase the eleven Stage One properties and at 30 June 2012 nine of these eleven properties have had this obligation met. For the properties in the 55 to 59.9 dBa and 60 to 64.9 dBa areas (Stage Two), offers have been made by Port Nelson to owners in these areas to cover 50 percent of the noise mitigation cost. There is no offer for the purchase of these properties required. For properties in Stage Two Port Nelson is required to approach all owners with this offer. For properties in the 55 to 59.9 dBa area (Stage Three) the owners are required to approach Port Nelson and seek approval for this. Offers will include 50 percent of the costs of building work, any professional fees, building consents, preparation of drawings and project management.2011Port Nelson has made a Noise Liability provision of $608,000. The year end provision balance is for Stages One and Two. Stage Three has been recognised as a contingent liability (see note 22). Port Nelson has an obligation to Stage Three property owners to provide technical advice, where requested, and to consider providing financial assistance for mitigation works (50 percent of costs). The decision on whether to provide financial assistance will be based on a recommendation made to Port Nelson by the Port Noise Liaison Committee. Port Nelson cannot currently quantify the cost of this obligation at 30 June 2011.

n o t e 22 : co nt i n g e nt a s s e t s a n d l i a b i l i t i e s

2012The Calwell Slipway basin contains contaminated seabed sediments. Port Nelson has title to this area of seabed. While the marine engineering and vessel coating industries in and around the slipway area are now controlled the historical contamination still persists in the sediments. The on-going sedimentation of the basin now requires dredging to allow for the on-going operation of the slipway. Port Nelson, together with the Nelson City Council, has obtained funding from the Ministry for the Environment (MFE) to undertake Remediation Planning (Phase Three) work to establish a preferred approach for remediation of the contaminated sediments. It is hoped that once Phase Three is successfully completed funding from MFE for Site Remediation (Phase Four) will also be obtained. Phase Three is scheduled to be completed in the 2013 financial year and at that stage Port Nelson hopes to able to quantify any liability associated with the eventual remediation works.

2011Port Nelson continues to have an obligation to Stage 3 property owners to provide technical advice, where requested, and to consider providing financial assistance for mitigation works (50 percent of costs). The decision on whether to provide financial assistance will be based on a recommendation made to Port Nelson by the Port Noise Liaison Committee. Port Nelson cannot currently quantify the cost of this obligation at 30 June 2011. The Noise Variation within the Nelson City Resource Management Plan was notified with effect on 14 July 2008. Port Nelson is required to make offers to either fully fund noise mitigation work or to purchase 11 closest properties in the residential zone adjacent to the port. (These are houses that are exposed to night time Ldn from port generated noise of 65 dBa or more). For the properties in the 55 to 59.9 dBa and 60 to 64.9 dBa areas, offers have been made by Port Nelson to owners in these areas to cover 50 percent of the noise mitigation cost. There is no offer for the purchase of these properties required. For properties in the 60 to 64.9 dBa area Port Nelson is required to approach all owners with this offer. For properties in the 55 to 59.9 dBa area the owners are required to approach Port Nelson and seek approval for this. Offers will include 50 percent of the costs of building work, any professional fees, building consents, preparation of drawings and project management.The contingent asset associated with Unimar in 2010 and the vessel the Marsol Pride was not realised.

notes to the accounts

notes

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n o t e 23 : r e l at e d p a r t y d i s c l o s u r e 2012 2011 $000 $000

Nelson City Council Services Provided by Port Nelson 45 12

Services Provided to Port Nelson 398 433

Accounts Payable by Port Nelson 12 8

Accounts Receivable by Port Nelson 3 2

*Dividends Paid by Port Nelson 6,100 2,050

Tasman District Council Services Provided by Port Nelson 1 1

Accounts Receivable by Port Nelson 1 -

*Dividends paid by Port Nelson 6,100 2,050

Nelmac Services Provided to Port Nelson 53 38

Accounts Payable by Port Nelson 3 2

Unimar Services Provided by Port Nelson 180 144

Accounts Receivable by Port Nelson 2 54

Nelmac - Nelmac is 100% owned by Nelson City Council and is therefore a related party.Unimar Group - The Unimar Group is 44% owned by Port Nelson. Unimar has the following 100% owned subsidiaries, Maritime Services Ltd, Calwell Slipway Nelson Ltd and Maritime and Industrial Ltd. Port Nelson invested in Unimar on the 23rd of December 2008.All Related Parties - There were no NIL or nominal value transactions between Port Nelson and related parties (2011 NIL).No inter-entity debt has been forgiven or written off (2011 NIL).Directors - Mr A O Patterson is a director of Cold Storage Nelson Ltd that leases land from Port Nelson. The amount received from Cold Storage Nelson Ltd was $448,033 for the year (2011 $438,557), and NIL was receivable at year end (2011 NIL). The amount paid to Cold Storage Nelson Ltd was $NIL (2011 $425) for the year, and $NIL was payable at year end (2011 $NIL).Key Management Personnel - Details of compensation paid to key management personnel and directors during the financial year:

2012 2011 $000 $000

Salaries and Other Short-Term Benefits 1,392 1,344

TOTAL 1,392 1,344

n o t e 24 : f i n a n c i a l r e p o r t i n g by s e g m e nt s

Port Nelson operates in one industry and one geographical segment providing and managing port facilities, marine services, cargo handling operations, and investment properties at the port of Nelson.

n o t e 25 : i m p u t at i o n c r e d i t s 2012 2011Imputation credits to shareholders $000 $000

CREdITS AVAILABLE FOR FuTuRE uSE 14,449 16,335

n o t e 26 : eve nt s o cc u r ri n g a f t e r b a l a n ce d at e

2012Unimar declared a dividend for payment on 26 September 2012. Port Nelson will receive $487,172 fully imputed ($676,628 gross) in relation to its share of Unimar. Apart from this, there are no events after balance date that requires adjustment or disclosure in the financial statements.

2011Unimar has entered into a contract to buy the vessel Marsol Pride (previously leased). On the same day (1 July 2011), Unimar entered into an agreement to sell the vessel.

notes to the accounts

www.por tnelson.co.nz

directoryB o a r d o f d i r e c t o r s

Nick Patterson, Chairman

Tim King

Paul Le Gros

Phil Lough, Deputy Chairman and�Chairman Remuneration Committee

Bronwyn Monopoli

Peter Schuyt, Chairman Finance and Risk Committee

S e c r e t a r yParke Pittar

E xe c u t i ve O f f i ce r sMartin Byrne, Chief Executive Officer

Digby Kynaston, Port Logistics Manager

Matt McDonald, Infrastructure Manager

Melisa Kappely, Employee Relations Manager

Parke Pittar, Chief Commercial Officer

R e g i s t e r e d O f f i ce10 Low Street, Port Nelson

PO Box 844, Nelson 7040 New Zealand

Tel. (03) 548 2099, Fax. (03) 546 9015

info@portnelson.co.nz

www.portnelson.co.nz

Au d i t o r sAudit New Zealand, on behalf of the Auditor-General

S o l i c i t o r sPitt & Moore, Barristers and Solicitors, PO Box 42, Nelson 7040

Simpson Grierson, Barristers and Solicitors, PO Box 2402, Wellington 6140

B a n ke r sWestpac Banking Corporation, PO Box 643, Nelson 7040