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ANNUAL REPORT 2014

MISSION statement

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.

Featured on front cover are Geoff Cross (left) and Matt Conyers.

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performancE

chairman / ceo reporT

Environment

People

Community

Governance

Directors

Financial HIGHLIGHTS

Financial Report

independent Auditor’s Report

Statutory Information

Statement Of Corporate Intent

statement of comprehensive income

Statement Of Movements In Equity

Balance Sheet

Statement Of Cash flows

Summary Of Significant Accounting Policies

Notes To The Accounts

THE SIX PILLARS OF PORT NELSON’S VISION

DIRECTORY

3port nelson annual report 2014

performance

port nelson annual report 20144

PERFORMANCE We are privileged to have such a fine group of people working towards one of our key aims of helping to facilitate regional prosperity.

2014 2013 2012 2011 2010

OperationsTrade (Millions of Cargo Tonnes) 2.7 2.6 2.7 2.7 2.8

Container Throughput (TEUs) 87,462 83,380 86,200 83,800 85,735

Vessel Arrivals (Over 100GT) 786 730 733 850 835

Total Vessel GT Calling (Millions) 8.6 7.8 6.9 7.9 8.1

Employees (FTEs) 143 136 135 136 141

Financial ($ millions)Revenue* $43.3 $39.6 $38.8 $38.3 $37.9

EBITDA** $18.5 $16.9 $19.1 $16.9 $16.7

Earnings Before Interest and Taxation (EBIT) $13.0 $12.1 $14.4 $12.6 $12.5

Net Interest Expense $2.2 $2.5 $2.5 $2.7 $2.7

Taxation $3.3 $2.5 $1.6 $3.4 $6.3

$7.6 $7.1 $10.4 $6.6 $3.4

Dividends Declared $4.2 $4.2 $12.2 $4.2 $4.1

Capital Expenditure $2.0 $4.7 $3.3 $10.3 $4.1

Net Interest Bearing Debt $27.0 $35.4 $39.9 $39.3 $36.5

Total Non-Current Tangible Assets $182.7 $190.5 $185.6 $186.8 $181.4

Shareholder return metricsEarnings Per Share (cents) 29.9 27.9 40.8 25.9 13.5

Dividend Per Share (cents) 16.5 16.5 48.0 16.5 16.1

Net Assets Per Share $5.78 $5.64 $5.27 $5.38 $5.27

Equity 77.2% 72.7% 69.9% 70.6% 71.2%

Return on Average Shareholders’ Funds 5.2% 5.1% 7.7% 4.9% 2.6%

Return on Average Assets 6.7% 6.2% 7.5% 6.6% 6.5%

* Revenue includes property revaluations ** Earnings before interest, tax, depreciation and amortisation

port nelson annual report 2014 5

that could come our way in the years to come. Our sheltered waters, reliable weather and access to skilled marine engineers are all attractions for companies working in the oil industry sector and we will continue to push the case for Nelson as a real alternative to the traditional base of Taranaki for this work.

Of the major cargoes that we handle through the Port, log volumes were once again steady as demand from China continued. The apple industry also enjoyed another strong season.

As reported last year, in June 2013 we took over full ownership of the Calwell Slipway and that has operated well during the last 12 months. We have worked to integrate its day-to-day operations into our systems and procedures. The slipway bookings

A positive yearIt is very satisfying for all of us associated with Port Nelson to look back on what has been a successful and productive last 12 months.

by the visit of the FPSO Raroa and the associated challenges of handling a vessel of that size. At 257 metres in length this was by some margin the largest vessel to ever enter the Port. Its length and the fact that it had no working engine made for a spectacular sight when the vessel entered the Cut on the morning of Labour Day

The refurbishment project that the vessel undertook while in Port was very

a number of oil industry related projects

CHAIRMAN / CEO REPORT

Port Nelson Limited Chairman Nick Patterson and Chief Executive Martin Byrne are very pleased to

have generally been steady and we look forward to developing that business further throughout the coming year.

in three years and it was great to see so many people once again taking the opportunity to visit the Port and to learn about the role we play in helping to facilitate regional prosperity.

Financial PerformancePort Nelson recorded a pleasing result for the year with earnings before interest and tax of $13.0 million, as against the budget of $11.2 million.

A number of one-off items this year have

As part of our ongoing process of reviewing any buildings that could be earthquake

Nick Patterson – Chairman of Directors FPSO Raroa



prone we have made the decision to demolish a number of buildings in the near future. As a result, we have this year recognised some impairment of these assets against the net surplus.

On the other side of the equation, during the year we sold two properties and as a result we have recognised a gain on sale.

Taking all of this into account our net surplus after tax for the year was $7.6

$6.3 million.

Cargo throughputOnce again, cargo volumes for the full year were in line with budgeted expectations. Continued demand for New Zealand logs, particularly from China, meant we handled 633,000 tonnes, in line with the 636,000 tonnes handled during each of the previous two years. Processed wood tonnages were lower than budgeted but similar to the levels of the previous year, as were fruit exports.

Wine volumes continue to grow and this year we handled just on 160,000 tonnes of wine, well up on the 143,000 tonnes handled in 2013. Fish volumes were also steady and added to a consistent performance across the myriad of cargoes that we handle through the Port.

the year, container volumes during the January – June period were very steady. As a result we handled 87,462 TEU (twenty

Port Nelson recorded a pleasing result for the year with earnings before interest and tax of $13.0 million, as against the budget of $11.2 million.

Liz looks after Port Nelson’s leased land, setting up and managing contracts and dealing with tenants. Around 40 percent of the 65 hectares of Port land is leased out to a range of businesses including primary industries such as seafood and petroleum and service industries such as cold storage, transport, steel and engineering. There are 66 tenants at the Port with more than 115 leases and licences.

“My job is to achieve a fair commercial rent and strive for maximum occupancy of our leased land,” says Liz. “I enjoy the variety of the work and dealing with people, both internally within Port Nelson and with tenants.”

Turning an initial enquiry into an active

One particular example she cites is setting up the lease agreement with Plant and Food Research for its site at the Port, and its contribution to the reputation of Nelson as a research centre and the provision of local employment opportunities.

family on their boat, which they take to the Marlborough Sounds. She lives on a one-hectare lifestyle block in Redwood Valley with her husband Nathan and their two teenage daughters.

anaginaging contract

foot equivalent units), some 4,000 TEU ahead of last year and also ahead of the record 86,200 we handled in 2012.

Apple volumes were ahead of budget as were wine containers. This, combined with the strong Marlborough grape harvest in March – April of this year, bodes well for continued good growth in wine handling in 2015.

ShippingContainer line visits during the last 12 months were very steady. The weekly

and the fortnightly Swires Shipping service were all well supported. Regular visits of the Toyofuji Shipping vessels to discharge vehicles and load MDF for Japan also continued along with regular log vessel visits, fuel tanker calls, fertiliser discharges and various other callers.

The Raroa project also brought with it a number of visits by ancillary vessels. The success of the project also led to an increase in visits by other oil industry related tender vessels later in the year. This contributed to a total number of vessel visits over 100 GRT of 784, well up on the 729 of the previous year.

The cruise side of our business continues to grow slowly but steadily. Forward bookings for the next few years are encouraging as vessel operators continue to explore additional ports of call outside their traditional destinations.

PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEELiz Versteeg


Jeremy has worked at the Port for six years, following 25 years driving linehaul trucks. The Port had always been a destination when he was driving trucks so he’d had the opportunity to think about what it might be like to work there and about the contribution the Port makes to the region as a whole.

Jeremy’s current role is foreman for QuayPack, the Port’s on-site cargo consolidation service. Jeremy plans the week’s work, working closely with customers, shipping companies and staff to get all product packed/unpacked to meet customer requirements and shipping companies’ cut offs.

Current boss Mark Smith is full of praise for Jeremy. “He builds trust and has a very good relationship with everyone he comes into contact with. His passion and enthusiasm shine through.”

“I knew the Port was a great place to work and the hours are certainly more family-friendly,” says Jeremy. “I don’t see myself as going anywhere else until I retire.”

One of the key points that Jeremy appreciates about the Port is its leadership team, particularly CEO Martin Byrne. “He leads by example and was another reason for me to come here. What starts at the

their employees. My boss Mark is very supportive of his staff and our loyalty is repaid tenfold. He has the best interests of the staff and the Port at heart. It’s a great place with great people.”

Outside of work Jeremy is a rugby coach and coordinates junior rugby in Richmond. In the summer he is keen on playing softball.


InfrastructureWe continue to invest in the ongoing replacement and upgrading of our rolling plant and also in resurfacing within our container terminal and log storage areas. The refurbishment programme of our two older Liebherr LHM 400 cranes continued. In addition to the newer LHM 500 unit, the refurbishment of the LHM 400 cranes is designed to ensure that we continue to have the required crane capacity to handle the callers through the Port.

On the property side of things we continue to work through the challenges presented by the earthquake-prone buildings issue which has also affected many business operators in the wider community, along with our own shareholders.

Our property master plan was a major focus during the year. The plan was adopted by the Board in January and has helped us to clarify our strategic approach to our operational and investment property holdings.

relocating our stevedoring staff outside of our security area into a building adjacent to the main administration facility. We will be adopting the use of portable smoko rooms when providing stevedoring services for vessels. This is common practice in many other New Zealand ports and overseas and will help reduce the interaction between staff and large machinery. We will also be working to reduce storage of logs outside of our core operational areas.

We hope to have logs off the area adjacent to Nelmac and QEII Drive by the end of this calendar year.

Interest in a number of potential property developments is also good at this point and it is hoped that consolidation of cargo into our core operational area will free up additional land for other development.

Health and safety 2014 has been another busy year for health and safety. Planned new legislation due to be passed by Parliament early in 2015 will only increase expectations on businesses such as ours, particularly with the challenges we face with so many third parties operating in our common user areas.

Our membership of the Business Leaders Health and Safety Forum continues to be valuable for us and we were happy to host a breakfast session on ‘Sharing Safety Leadership Practice’ in early April.

We also hosted a number of staff training workshops with industry expert Ross Gilmour on subjects including handling fatigue, making safety messages safe, developing safe subconscious actions and taking personal responsibility for safety.

It has been pleasing to see the work that has been done in this area. Staff focus on health and safety has seen our

,s drivindriving linehaul

PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEEJeremy Salton


LTI (Lost Time Incident) rate drop to around 1.64 for this year. This is the lowest rate for some time but there is certainly further work to be done.

EnvironmentOur business has had a productive and satisfying year in terms of ongoing environmental practices and this is a

had in this area for a number of years now. The Raroa visit also presented a number of new environmental challenges including getting the necessary systems in place to paint the vessel while alongside. We responded to these challenges well.

The noise liaison committee continues to work constructively in conjunction with resident representatives. The number of noise complaints remains low, however each issue raised gives us the opportunity to take a good look at our operations and to identify what we can improve.

The interim audit on our ISO14001:2004 accreditation went well and showed continuing improvement. This is important so that we can ensure we are not standing still or falling behind the standards expected in other industries.

CommunityAs mentioned earlier the highlight of our community interaction during the past 12 months was without doubt the Open Day in early March. An estimated 2000 people took the opportunity to come through our gates to learn more about what happens in the Port.

We also held a staff and family event on the preceding day. This was very rewarding and gave the families of our staff members a chance to see where their family members work and to get an insight into the type of equipment that we use.

We continued to run the very popular monthly school and community group tours during the year and have also hosted various

industry groups during the last 12 months including Federated Farmers and the Customs Brokers and Freight Forwarders (CBAFF) annual conference.

The year ahead

year several industry events emphasised that we remain in a period of change.

The recent announcement by Port of Tauranga, Kotahi and Maersk regarding closer collaboration through both Tauranga and Timaru is certainly something of a change from the practice of recent years.

has been moving through Lyttelton in the

principally for trans-shipment through to Tauranga. Announcements such as this have the potential to alter some existing services and shipping patterns.

In the long term these decisions support the wishes of the Shippers’ Council for the



Viv has worked at Port Nelson for 11 months. Prior to this, she was a busy stay at home Mum running her own business designing and manufacturing merino and organic cotton clothing for children.

Viv’s previous experience is weighted heavily in the airline industry. Working predominantly at Auckland International Airport and also Chek Lap Kok Airport in Hong Kong, she has held various customer-oriented roles. Viv sees a number of similarities between the airline

customers travelling on and off aircraft

Viv is part of the logistics team at the Port, working with customers via RT, phone and the Jade Cargo Management system to supply and receive full and empty containers and ensure customers’ needs are met.

“The role is multifaceted and involves problem solving, multi-tasking and working as a team to ensure the many tasks of the day are completed well and in a timely fashion,” says Viv. “The Jade Cargo Management system is our key work tool. It is a fully comprehensive system that provides us with all the information we need to ensure the logistics department runs smoothly.” Jade has an identical mirror system, which is the ‘test’ system. This allows the team to explore and learn the system individually without going live.

Viv thrives in the busy work environment and enjoys learning new things. “The Port provides an ideal environment as there is always something different happening.”

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PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEEViv Williams Gate/Yard Operator

potential introduction of larger 6000 TEU vessels into New Zealand coastal waters, probably sometime from 2016 onwards. At this stage, existing service providers

will continue to work with local shippers to try and ensure they have the services they require.

end, prices for export logs, particularly from China, were declining from the highs that exporters had enjoyed for a sustained period. In some cases, the reported reduction in prices was as much as 20 – 30 percent lower than the peak they had been reaching. As a result we are likely to see some reduction in log exports from Q4 of 2014 to Q1 of 2015 while stock levels in China in particular drop back to normal levels.

The excellent grape harvest in March and April of this year should see a sustained increase in wine volumes through the Port and we continue to work with major exporters to try and offer value-added services such as our QuayPack operation.

Potential property developments, as mentioned earlier in this report, are also an exciting opportunity for us and it is hoped that some of these can develop further in the coming year.

With a successful 2014 behind us, we would once again like to extend our appreciation to all the importers and exporters within the wider Nelson, Tasman and Marlborough regions who move their

cargo through our facilities and to the service operators who provide the vessels on which to move this cargo.

Our sincere thanks go to our staff for another strong contribution during the past year. We are privileged to have

towards one of our key aims of helping to facilitate regional prosperity. We truly believe that Port Nelson, as our tagline suggests, is ‘the region’s gateway to the world’. It is critical for our region

functional as it can be, while also delivering a strong return to the shareholders of the region.

Finally, we would like to thank our shareholders for their ongoing support and wish everyone a prosperous 2015.

Nick Patterson

Martin Byrne



Environment

Environmental indicatorsOur environmental indicators are provided in both actual units and in TEU (twenty foot equivalent unit) to provide a measurement

of recycled water for dust suppression has seen a decline in overall water usage, and electricity use has also reduced compared with the previous period.

Noise contour map gets an updatePort Nelson is currently updating its noise contour map for the Nelson City Council.

that are eligible for a contribution towards acoustic treatment from Port Nelson. “Reviewing the contour map involves an acoustic engineer monitoring the sound levels from all of the Port’s plant and activities, and using a modelling programme to predict the level of sound coming from the Port,” says Port Nelson’s Environmental

time in 10 years that the map has been reviewed. “We have worked really hard to reduce the levels of sound coming from the Port, which I am sure that the residents closest to us will acknowledge. Continual staff training and awareness programmes and advances in technology have all had an effect. We are very aware of our potential impact on our neighbours and I would like to thank and acknowledge them for their ongoing support.”

Recycling and waste MANAGEMENTThis year we have changed the way that waste and used materials are managed at the Port. We have worked closely with our contractor, Waste Management Ltd. Waste Management Ltd offer a great service and

recently installed a ‘Commercial Combo’ service where anything that is recyclable

can go into one large container. Waste Management then takes these items away and sorts through the material at its new custom-made premises. Previously we had a separate bin for each type of recyclable item. This system was proving to be onerous and took up a lot more space. We have seen a growing awareness amongst staff about the different waste streams, and a Port-wide waste management plan has recently been adopted.

FPSO RaroaThe visit of the Raroa presented an opportunity for the Port to test its responsiveness, problem-solving and technical abilities. The Port ensured that marine biosecurity was protected and the vessel did not introduce anything invasive into the local marine environment.

The Raroa was subject to survey while in Port and diving work was undertaken


ENVIRONMENT We have worked really hard to reduce the levels of sound coming from the Port, which I am sure that the residents closest to us will acknowledge.

Thomas is passionate about the Port’s environmental standards and says there is an environmental component to nearly every Port activity. He’s pleased with the Port’s record on the environment.

“All of our people work hard to maintain good systems and high standards and

New Zealand port with ISO14001:2004 accreditation,” says Thomas.

“We are committed to continuous improvement and we are always looking for ways to responsibly and effectively manage the environment in which we operate.”

Every day is different for Thomas as he deals with a huge range of environmental topics including waste management, noise monitoring, dust reduction, dredging and environmentally safe fumigation processes.

Local residents, industry and stakeholders are able to get involved through the Post Nelson Environmental Consultative Committee, which Thomas chairs.

Thomas has worked as an environmental professional for the last eight years after a previous career in the outdoor and snow industry. He is busy at home helping wife Bridget bring up their three children. In his spare time, Thomas likes to get out into the mountains, saying it’s a great brain tonic that puts everything into perspective.

andarddards and says

PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEEThomas Marchant

to ensure that all risks were minimised and there was a plan in place to deal with anything that might have been found. This

before any work was undertaken.

Consultation with local iwi was a very important part of managing environmental aspects of the Raroa project. As a result of that consultation, the decision was taken to purchase oil booms which were kept on the wharf ready for immediate deployment if required.

The Port communicated directly with its neighbours to let them know about the project and to provide them with

contact details so they had someone that they could reach 24 hours a day. No neighbours made contact during the Raroa’s visit to express any concerns.

Once the vessel was in Port the decision was made to paint its hull. The hull had to be prepared and painted in compliance with strict local council regulations – including the requirement that there be no discharge to air, water or land.

The Port worked with a contractor who had the necessary equipment and who already had the global consent needed to comply with the Nelson City Council’s regulations. The contractor’s ‘hydro cat’, an incredibly high-powered waterblasting device, was operated via remote control and was vacuum and magnetically sealed to the hull to ensure zero discharge. Nelson City

to approve the use of the equipment.

The work was undertaken using leading-edge technology and processes and was completed without incident.


Aspect Indicator 2014 2013 2012

Fuel Fuel use (litres) per TEU of cargo handled 8.15 (712,719)

7.49 (624,598)

7.05 (607,774)

Power Electricity use (kw hours) per TEU of cargo handled

44.06 (3,853,575)

49.55 (4,131,353.77)

55.39 (4,775.071)

Waste Waste generated per FTE** employee (m3) 3.60 (515) 3.25 (443) 3.9 (534)

Water Water use (m3) per TEU (site use excluding ships)

0.18 (16,254) 0.33 (27,539) 0.21 (18,402)

Waste recycled 42% 54% No data collected

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

3.0 4.3 3.4

Noise Number of noise complaints 12 19 8

Oil spills Number of oil spills when bunkering 0 0 1

Dust Number of dust complaints 1 1 0

Codes of practice Number of audit reports completed 13 13 13

2 6 13

Number of non-conformances resolved 2 6 5

Continuous improvement

Number of targets reported on 15 15 15

Number of new initiatives 19 12 12

ENVIRONMENT

Indicators of environmental performance

Our performance indicators are provided in both actual units and in TEU* to provide a measure of the

* 20 ft equivalent unit. ** Full-time equivalent.


PEOPLE

HEALTH AND SAFETYDriving a culture of zero harmA continued focus on safety at the Port has seen the lost time injury rate drop to around 1.64 during the last 12 months. The reduction in injuries is due to a number of initiatives such as those in leadership roles making their support for zero harm highly visible, training and teams’ engagement in the process and putting forward ideas for improvement.

An independent audit of Port operations was commissioned by the Board and undertaken early in 2014. The primary

has “robust, well-controlled and effective health and safety management processes in place”.

Introduction of Golden RulesThe introduction of the Golden Rules has been a key initiative in 2014. The Golden Rules are a set of behaviours that should

be followed at all times at the Port and were developed by reviewing incidents that had occurred and identifying the actions that would have prevented those incidents. The Golden Rules are:

1. Keep your workplace clean and tidy

2. Have the right tools for the job

3. Be trained and capable in what you are about to do

4. Stay alert

5. Correct PPE (personal protective equipment), worn right

6. Stop, think and ask

7. Obey the site rules

8. Report to improve

These rules have been developed into a handbook and are being provided to all Port users. Each rule is supported by a photo illustrating the rule that has been used on branded posters displayed in work areas around the Port. The poster itself has been developed by the wider Port team.

DEVELOPING CAPABILITIESNew people joining us and increasing our expertise in 2014 include:

Ian Harvey

Ian joined the Workshop Team in the role of Mechanical Engineer. Ian completed his trade training in Fitting, Turning and Machining with Nalder & Biddle before gaining his First Class Diesel Trawlers Engineer’s ticket following a period at sea with Amaltal. He also spent seven years as Slip Master when the Calwell Slipway was owned by Nelson Ship Repair Group. He brings a valuable skillset to the workshop team.

Mark Ditzel

Mark joined the Security Team in the role of Port Security Operator. Mark is very familiar with the Port environment as a result of having more than 20 years

Customs.

Jacqui McLeod, Paul Weaver and Odile Gibbs Ian Harvey


PEOPLE

Erin Symes Karen BarnettMark Ditzel


PEOPLE

SAFETYSafety has been a key focus in 2014. The Port hosted a series of workshops on “Applying Solution Thinking to Safety, Sleep and your Private Life”, facilitated by organisational psychologist Ross Gilmour. These workshops focused on assisting people to think and act in a safe manner by making safety messages safe, developing safe subconscious actions and taking personal responsibility for safety.

LEADERSHIPA First Line Supervisor programme has also been developed to grow the capabilities of our frontline leaders. The programme consists of a series of modules including leadership, safety, and communication and involves classroom exercises, assignments and on-the-job activities.

His interest in the waterfront was a key motivator for his application. His public-facing and regulatory experience within Customs made him the ideal candidate for the role.

Erin Symes

Erin joined the Logistics Team in the role of Gate/Yard Operator. Originally from Christchurch, Erin moved to Nelson from Wellington for the lifestyle and is glad to be back in the South Island and closer to home. Erin’s professional background is in administration and customer service. In her most recent position she worked as a Case Co-ordinator with ACC.

TRAININGWe continued our investment in training during the 2014 year. A large number of employees completed training in skills such as tanker watch, communicating positively, fatigue management and train the trainers. We also had a number

Stevedoring in Ports Level 3. The Port’s Health & Safety Advisor, Lee-anne Ricketts, recently completed the internationally recognised National Examination Board in Occupational Safety and Health (NEBOSH) Health & Safety

A continued focus on safety at the Port has seen the lost time injury rate drop to around 1.64 percent during the last 12 months.

Mike has worked at the Port for 32 years having started with the Harbour Board as wharf carpenter. After the Port reform in 1989 (which was part of a wider reform of local government), Port Nelson was formed and Mike moved into stevedoring for a time before returning to the workshop.

Mike’s main tasks involve maintenance on the Port’s buildings and its lease buildings but he is also responsible for maintaining everything under the wharves.

The Port’s tidal conditions dictate his work schedule to an extent, particularly when it comes to working under the wharves. “We can’t work on the high or low tide or if a ship is there so it does take a lot of planning.”

Mike’s role extends to general construction work and driving wooden and steel piles into the seabed around the harbour for the Port’s navigation beacons. He also operates cranes as required and looks after Maritime New Zealand’s marine oil spill equipment that is stored at the Port. Mike is also one of the local people trained in marine oil spill response.

Mike enjoys the mixture of trades that work alongside each other in the workshop. “The trades knit together really well and it’s

Fishing and whitebaiting are Mike’s main leisure pursuits, and until recently, he enjoyed being on call as a deckhand on pilot boat Waimea II.

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the Harbour B

PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEEMike Renwick


COMMUNITY

Daryl Wehner (left) and Charlie Osmond

Bob Huggins (far left) and Port Nelson contractor Kevin Skelton (second from right)

Big Brothers Big Sisters of Nelson celebrates its 500th match of mentor and young people


Mark has been working in the port industry since 1980, when he spent time as a stevedore. He joined Port Nelson in 1998, and relished the opportunity to take on his current role as Logistics Supervisor in 2012. This job includes oversight of QuayPack. “I’m interested in the receiving and delivery of cargo and the variety of work within my role at the Port,” says Mark.

Mark is a father of three with one son still living at home, but saw an opportunity to make a contribution to the lives of other children and teens who need a male mentor through his involvement with Big Brothers Big Sisters. “It’s as rewarding for me as it is for them. I can’t change the world but an hour out of your week is not a lot to try and help someone.”

Mark likes to get the boys he mentors into sport and the outdoors. “I believe that’s where all your values come from. Sport has certainly had a big bearing on my life. Everyone needs to be given that opportunity.

“It’s the simple, low-cost things that seem to work – just kicking a ball around outside

together – even taking a dog for a walk. The key thing is being reliable and doing what you say you will do.”

Big Brothers Big Sisters works closely with mentors, children and teens to make sure matches work for all involved. More than 140 children in the Nelson region are currently matched with mentors like Mark. There are 50 children currently on the waiting list for a mentor.

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PPPPPRRRRROOOOOFFFFFIIIIILLLLLEEEEE

HIGHLIGHTS

SportsFC Nelson, Summer Swim Series, Tasman Volleyball Association, Transport and Shipping Golf Tournament

EnvironmentSeaWeek, Paper4trees

CommunityThe Blessing of the Fleet, Sealord Marine Rescue Centre, Purple Heart Day, the Mission to Seafarers, CACTUS

ArtsArt Expo Nelson

BusinessNelson Tasman Chamber of Commerce Cornerstone Sponsor and Sponsor of 2013 Westpac Chamber of Commerce Business Awards, EDA, IOD, Port Nelson Fishermen’s Association, Pipfruit NZ, Exporters’ breakfasts

Mark Smith

Supporting young peopleDuring the 2014 year the Port has worked closely with Big Brothers Big Sisters of

organisation and to raise money in support of its activities. The $2400 raised from gold coin donations at the Port's Open Day in March 2014 went to Big Brothers Big Sisters of Nelson.

Big Brothers Big Sisters of Nelson provides young people aged six to 18 with adult and teenage mentors. The volunteer mentors spend an hour or two each week with their young person, doing things they both enjoy.

The aim is to build a supportive, long-lasting friendship and help the young person realise their potential.

The programme is supported by Nelson Police and is one of 16 operating under the Big Brothers Big Sisters umbrella nationally. Port Nelson became a key sponsor of the Nelson programme in July 2013.

Some staff have taken the commitment a step further and become Big Brothers Big Sisters mentors. Port Logistics Supervisor Mark Smith is one such person.


COMMUNITY

Director changesMr P Le Gros and Mr T King both retired by rotation and were reappointed for a further three years in September 2013.

Board and sub-committee composition as at 30 June 2014Board Nick Patterson (Chair) Phil Lough (Deputy Chair) Peter Schuyt (Director) Tim King (Director) Paul Le Gros (Director) Bronwyn Monopoli (Director)

Finance and Risk Committee Peter Schuyt (Chair) Bronwyn Monopoli (Director) Tim King (Director)

Remuneration and Appointments Committee Nick Patterson (Chair) Phil Lough (Director) Paul Le Gros (Director)

governance

Meeting attendance BOARDFINANCE

& RISKREMUNERATION

& APPOINTMENTS

Meetings held 11 2 1

N Patterson 11 - 1

P Lough 11 - 1

P Schuyt 9 2 -

T King 9 2 -

P Le Gros 10 - 1

B Monopoli 11 2 -

Remuneration and Appointments committee

Further governance mattersPort Nelson operates under the Port Nelson Corporate Governance

Both sub-committees undertook a review of their respective terms of reference in the last 12 months. The full Board also undertook a self-review during that period. The Port Nelson sub-committees and full Board have been active in reviewing Port Nelson policies and amending them where deemed appropriate. The Board continuously monitors for

• 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

• Health and Safety

Rob Webber


Peter SchuytPeter is a professional Director and holds directorships in a number of organisations across a range of different business sectors. He previously worked as a Chief Financial

DIRECTORS

Nick PattersonNick 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.

Bronwyn MonopoliBronwyn is Associate Principal of Crowe Horwath, specialising in rural business accounting services, taxation and business advice. She brings a wealth of governance experience to her role and is currently a Director of several companies and trusts. Bronwyn has an Honorary Doctorate in Commerce from Massey University and is a fellow of the College of Chartered Accountants. Awarded an MBO (Civil Division) for services to business management, she has been inducted into the Nelson Tasman Chamber of Commerce Hall of Fame.

Paul Le Gros

holds other business and board appointments. Over the past 30 years, Paul has been extensively involved with the YMCA movement in Nelson at a national and international level.

Tim KingTim is Deputy Mayor of the Tasman District Council and chairs its Corporate Services Committee. He farms on the Waimea Plains and has governance roles within a range of

and Community Health Centre Trust.

Phil LoughPhil is currently Chair of Methven Ltd and Quotable Value Ltd and holds directorships with a range of other New Zealand companies. He was previously employed as the Chief Executive

NZ Order of Merit and is a fellow of the Institute of Directors (IOD).


Financial Highlights 2014 2013 2012 2011 2010

Revenue (Millions) $43.3 $39.6 $38.8 $38.3 $37.9

$7.6 $7.1 $10.4 $6.6 $3.4

Dividend (Millions) $4.2 $4.2 $12.2 $4.2 $4.1

Earnings Per Share (Cents) 29.9 27.9 40.8 25.9 13.5

Return on Average Shareholders’ Funds 5.2% 5.1% 7.7% 4.9% 2.6%

Net Asset Backing Per Share $5.78 $5.64 $5.27 $5.38 $5.27

Dividend – Recommended Per Share (Cents) 16.5 16.5 48.0 16.5 16.1

Return on Average Total Assets** 6.7% 6.2% 7.5% 6.6% 6.5%

Ratio of Shareholders’ Funds to Total Assets 77.2% 72.7% 69.9% 70.6% 71.2%

TRADE Highlights

Cargo Tonnes (Millions) 2.7 2.6 2.7 2.7 2.8

Vessel Arrivals 786 730 733 850 835

Container Throughput (TEUs) 87,462 83,380 86,178 83,800 85,735

** Based on EBIT

FINANCIAL HIGHLIGHTS


FINANCIAL REPORT 2014

Mason Robinson (left) and Daryl Wehner


independent auditor’s report

year ended 30 June 2014

The Auditor-General is the auditor of Port Nelson Limited (Port Nelson). The Auditor-General has appointed me, Julian Tan, using the staff and

statements of Port Nelson on her behalf.

28 to 53, that comprise the balance sheet as at 30 June 2014, the statement of comprehensive income, statement of movements in

policies and other explanatory information.

OpinionFinancial statements

28 to 53:

• comply with generally accepted accounting practice in New Zealand;

• give a true and fair view of Port Nelson’s:

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 29 August 2014. 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

free from material misstatement.

Material misstatements are differences or omissions of amounts and

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

The procedures selected depend on our judgement, including

statements whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the preparation

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;

• judgements made by the Board of Directors;

•

•

We did not examine every transaction, nor do we guarantee complete

statements.

In accordance with the Financial Reporting Act 1993, we report that we have obtained all the information and explanations we have

audit evidence to provide a basis for our audit opinion.

Responsibilities of the Board of Directors

statements that:

• comply with generally accepted accounting practice in New Zealand; and

•

The Board of Directors is responsible for such internal control as

statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is also responsible for

electronic form.

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

audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and section 19 of the Port Companies Act 1988.

IndependenceWhen carrying out the audit, we followed the independence requirements of the Auditor General, which incorporate the independence requirements of the External Reporting Board.

Other than the audit, we have no relationship with or interests in Port Nelson.

Julian Tan Audit New Zealand On behalf of the Auditor General Christchurch, New Zealand

Independent Auditor’s Report


principal activitiesPort Nelson is primarily engaged in the commercial operation of the

of Port Nelson’s business during the year.

review of activitiesA review of the year’s operations is contained in the joint Chairman / CEO Report.

review of operations

(2013 $7.1 million).

dividends

directorsIn accordance with Port Nelson’s constitution Messrs A O Patterson and P V Lough will retire by rotation at the AGM in September 2014.

remuneration of directorsFees paid to Directors during the year were as follows:

directors’ insurance

Liability Insurance to ensure that as far as possible Directors will not personally incur any monetary loss as a result of actions

statutory informationto the shareholders, on the affairs of port nelson limited for the year ended 30 june 2014

be imposed in respect of breaches of the law.

directors’ interestThe following notices have been received from Directors disclosing their interests in other companies with whom Port Nelson 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: Trusteeships; Trustee 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 and Director of Thames Farming Enterprises New Zealand Group Limited and Director of Thames Dairy Limited. Other; Associate Principal of Crowe Horwath (NZ) Limited.

Mr A O Patterson has the following entries in the Register of Directors’ Interests: Directorships; Director of Cold Storage Nelson Limited, Director of Freshco Nelson Limited, Director of Wai-West Horticulture Limited and Chairman of Saxton Fruit Limited.

Mr P M Schuyt has the following entries in the Register of Directors’ Interests: Directorships; Chairman of Dairy Investments Fund Limited, Chairman of Landcare Research Limited, Director of Tatua Co-operative Dairy Company Limited, Director of Pumpkin Patch Limited, Chairman of Tax Management New Zealand Limited, Director of Foodstuffs North Island Limited and Director of DairyNZ Limited.

Mr P V Lough has the following entries in the Register of Directors’ Interests: Directorships; Director of LIC Limited, Director of Fisher and Paykel Appliances Limited, Chairman of Methven Limited, Chairman of Quotable Value Limited. Director of Darroch Limited.

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, Chairman of Nelson Electricity Limited, Chairman of Building Connexion Limited and Chairman of Nelson Honey Limited. Director of HealthPost Limited.

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

A O Patterson $63,718

P V Lough $32,802

P M Schuyt $33,746

T B King $33,746

P D Le Gros $32,802

B A Monopoli $33,746

TOTAL $230,560


RemunerationNUMBER OF EMPLOYEES

$100,001 to $110,000 1

$120,001 to $130,000 2

$140,001 to $150,000 2

$150,001 to $160,000 1

$160,001 to $170,000 1

$190,001 to $200,000 1

$200,001 to $210,000 1

$360,001 to $370,000 1

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

employee remunerationPort Nelson has remunerated employees in excess of $100,000

payments made during the year and exclude any ‘at risk’ payments that were paid after balance date.

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 member of the Fire Services Commission (FSC) Sub-Committee.

directors’ loansThere were no loans by Port Nelson to Directors.

shareholding by directorsNo Directors hold shares in Port Nelson.

use of company informationDuring 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.

committees of the boardThe 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 and Appointments Committee.

auditorUnder 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 her behalf. Fees paid to the Auditors are disclosed in the Financial Statements.

performance indicatorsAs required under Section 16 of the Port Companies Act 1988, performance indicators in the Statement of Corporate Intent are provided on page 27.

Nick Patterson

Date: 29 August 2014

Peter Schuyt

changes in accounting policiesThere have been no changes in accounting policies during the


statutory information

mission statement

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.

objectives

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

measure of performance against objectives Target 2014 2013 2012 OUTCOME

Lost Time Injury Frequency Rate <1.50 1.64 4.95 2.50 Not achieved

Net Debt/Equity Ratio <45.0% 16.8% 24.2% 29.8% Achieved

Dividends Declared $4.2m $4.2m $4.2m $12.2m Achieved

Cargo Throughput (Cargo Tonnes) 2.7m 2.7m 2.6m 2.7m Achieved

Shipping Tonnes (Gross Registered Tonnes) 7.8m 8.6m 7.7m 6.9m Achieved

Ship Visits 695 786 730 733 Achieved

Revenue $38.0m $43.3m $39.6m $38.8m Achieved

Return on Average Shareholders’ Funds** 4.3% 5.2% 5.1% 7.7% Achieved

Return on Funds Employed 6.3% 7.5% 6.9% 8.2% Achieved

Capital Expenditure <$3.5m $2.0m $4.7m $3.3m Achieved

Incidents Leading to Pollution of Harbour Nil Nil Nil 3 Achieved

Compliance with all Resource Consent Conditions Full 99% Full Full Not achieved

Compliance with NZ Maritime Safety Standards Full Full Full Full Achieved

statement of corporate intent

* LTI frequency rate: lost time injuries divided by hours worked in period multiplied by 100,000.


statement of comprehensive income

2014 2013

BALANCE AT 1 JULY 143,318 133,873

Total Comprehensive Income for the Period 7,868 13,645

Dividends 7b (4,200) (4,200)

BALANCE AT 30 JUNE 146,986 143,318

statement of movements in equityfor the year ended 30 june 2014

NOTES 2014 2013

$000 $000

revenueOperating 36,841 32,725

Property 6,435 6,887

TOTAL REVENUE 1 43,276 39,612

expensesEmployee Wages and Related Expenses 10,748 9,550

Depreciation and Amortisation 5,481 4,803

Other Operational and Property Expenses 2 13,811 13,695

Expenses from Operating & Property Activities 30,040 28,048

13,236 11,564

Finance Income 14 8

Finance Expenses 2,169 2,546

Net Financing Costs 2,155 2,538

11,081 9,026

Expenses Associated with Noise Mitigation 19 24 13

11,057 9,013

6 (181) 578

PROFIT BEFORE INCOME TAX 10,876 9,591

Income Tax 3 3,286 2,508

NET PROFIT 7,590 7,083

other comprehensive incomeMovements in Revaluation Reserves 7 (768) 7,365

Movements in Deferred Tax 7 30 (1,988)

Movements in Hedging Reserve 7h 1,016 1,185

TOTAL COMPREHENSIVE INCOME 7,868 13,645

for the year ended 30 june 2014


NOTES 2014 2013

$000 $000

current assetsCash and Cash Equivalents 8 2,358 747

Trade and Other Receivables 9 4,400 4,688

Inventories 10 459 523

Prepayments and Accruals 138 57

Investment in Associate 6 564 -

Total Current Assets 7,919 6,015

less current liabilitiesTrade and Other Payables 11 2,120 2,226

18 1,346 1,225

Tax Payable 1,969 1,451

Dividend Payable 7b 2,200 3,200

Hedging Liability 14 100 158

Noise Mitigation 19 53 53

Total Current Liabilities 7,788 8,313

WORKING CAPITAL 131 (2,298)

non-current assetsProperty, Plant and Equipment 12 169,014 175,974

Intangible Assets 13 462 715

Investment Properties 5 12,911 13,305

Hedging Asset 14 195 101

Investment in Associate 6 - 1,128

Total Non-Current Assets 182,582 191,223

LESS non-current liabilities18 171 175

Deferred Tax Liability 4 6,824 7,435

Term Loan 14 27,000 35,400

Hedging Liability 14 1,189 2,054

Noise Mitigation 19 543 543

Total Non-Current Liabilities 35,727 45,607

NET ASSETS 146,986 143,318

shareholders’ fundsIssued Capital 7a 6,046 6,046

Retained Earnings 7b 47,548 43,521

Asset Revaluation Reserve 7f 94,180 95,270

Hedging Reserve (788) (1,519)

TOTAL SHAREHOLDERS' FUNDS 146,986 143,318

balance sheetAs AT 30 june 2014

Nick Patterson

Date: 29 August 2014

Peter Schuyt


statement of cash flowsfor the year ended 30 june 2014

NOTEs 2014 2013

$000 $000

cash flows from Operating activitiesCash was provided from:

Receipts from Customers 36,486 32,521

Rent Received 6,435 6,109

Interest Received 14 8

42,935 38,638

Cash was applied to:

Payments to Suppliers and Employees 23,537 22,183

Interest Paid 2,194 2,546

Taxes Paid 3,350 2,884

Net GST Received/(Paid) (68) 44

29,013 27,657

NET CASH INFLOWS FROM OPERATING ACTIVITIES 13,922 10,981

Cash flows from investing activitiesCash was provided from:

Sale of Property, Plant and Equipment 2,932 311

Share Repurchase 6 - 2,439

Dividend Received 6 383 486

3,315 3,236


Purchase of Property, Plant and Equipment 1,957 4,373

Purchase of Intangibles 69 351

2,026 4,724

NET CASH OUTFLOWS FROM INVESTING ACTIVITIES 1,289 (1,488)

cash flows from financing activitiesCash was provided from:

Loans Raised - -

- -


Loans Repaid 8,400 4,500

Dividend Paid 5,200 4,200

13,600 8,700

NET CASH OUTFLOWS FROM FINANCING ACTIVITIES (13,600) (8,700)

Net Increase/(Decrease) in Cash Held 1,611 793

Cash at 1 July 747 (46)

CASH AT 30 JUNE 2,358 747

Represented by:

Cash at Bank 2,358 747

CASH AT 30 JUNE 2,358 747


reconciliation of net profit and net operating cash flows 2014 2013

$000 $000

NET PROFIT 7,590 7,083

Add non-cash items:

Depreciation and Amortisation 5,481 4,803

Decrease in Deferred Tax (611) (607)

Net Decrement of Building and Wharf Revaluation Expense - 1,003

Impairment of Assets 569 172

Less non-cash items:

Noise Mitigation Provision - (7)

5,439 5,364

Add (less) movements in other working capital items:

Decrease in Accounts Receivable 288 17

(Increase)/Decrease in Inventory 64 (217)

(Increase)/Decrease in Prepayments and Accruals (81) 238

Decrease in Accounts Payable (Excluding Assets Payable) (129) (1)

121 142

Increase in Tax Payable 518 231

781 410

(4) 12

Net Gain on Sale of Assets Including Investing Activities (394) (311)

Appreciation of Investment Property (73) (778)

(Increase)/Decrease in Capital Creditors 402 (221)

Share of Loss /(Gain) from Investment in Associate 181 (578)

112 (1,876)

NET CASH INFLOW FROM OPERATING ACTIVITIES 13,922 10,981


statement of cash flows

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

basis of preparation

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

for issue by the Directors on 29 August 2014.

standards and interpretations issued and not yet adoptedThere 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 company has adopted NZ IFRS 13 – Fair Value Measurement with a date of initial application 1 July 2013. NZ IFRS 13 provides a single source of guidance on how fair value is measured and replaces the fair value measurement guidance which was previously dispersed throughout the suite of NZ IFRS standards. NZ IFRS 13 applies when fair value measurement is permitted or required by other NZ IFRS standards. It replaces and expands the disclosure requirements about fair value measurements in other NZ IFRS. In accordance with the transitional provisions of the Standard, the company has applied the new fair value disclosures prospectively and has not provided

not resulted in any material measurement changes. Refer notes 5 and 12.

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

accounting policies

measurement system

summary of significant accounting policies

Effective for the financial year ending

NZ IAS 32 Offsetting Financial Assets and Financial Liabilities 2015

2016


are set out below:

1.1 REVENUE RECOGNITION

reliably measured based on the following:

Cargo and Marine revenue – departure of the vessel. Stevedoring – partial completion of the vessel at balance date. Property lease revenue – on an accrual basis at balance date. Rentals are payable in advance. Interest revenue – on a time proportion basis using the effective interest method.

1.2 PROVISIONS

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

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 2 – 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

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 2013. As at 30 June 2014 Port Nelson engaged TelferYoung, an independent valuer, to complete a fair value assessment. No revaluation was required. 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.

specific accounting policies



Buildingsa market based approach (where evidence can be reliably analysed) or income based approach (where evidence cannot be reliably analysed), validated by a depreciated replacement cost valuation. Additions between valuations are recorded at cost. The buildings’ valuation was completed by Ian McKeage, Registered Valuer, FNZIV, FPINZ of TelferYoung.

Wharvesusing an income based approach (where evidence cannot be reliably analysed). This fair value has been validated by a depreciated replacement cost approach which was prepared by Port Nelson’s engineering staff and reviewed by Ian McKeage, Registered Valuer, FNZIV, FPINZ of TelferYoung. Additions between valuations are recorded at cost.

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.

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

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 note disclosure.

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

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.

specific accounting policies (CONTINUED)



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

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 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

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

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

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

value. The fair value of interest rate swaps is determined by reference to market values. The effective portion of changes in the fair

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

1.19 DIVIDENDS

1.20 CRITICAL JUDGEMENTS

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. There are no

1.21 ASSOCIATES

carrying amount of the investment.

If the share of losses of an associate equals or exceeds its interest in the associate, Port Nelson discontinues recognising its share of further losses. After Port Nelson’s interest is reduced to zero, additional losses 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

share of losses not recognised.




note 1: operating revenue 2014 2013

$000 $000

PORT OPERATIONSOperations 36,676 32,415

Gain on Sale of Assets 165 310

Total Port Operations 36,841 32,725

PROPERTYProperty Leases and Licences 5,041 5,122

Investment Property 953 987

Gain on Sale of Assets 368 -

Fair Value Adjustment of Investment Property 73 778

Total Property 6,435 6,887

TOTAL OPERATING REVENUE 43,276 39,612

note 2: other operational and property expenses 2014 2013

$000 $000

Administration Related 3,196 3,344

Audit Fees – Prior Year - 7

Audit Fees – Current Year 61 61

Directors’ Fees 231 220

Donations/Corporate Sponsorship 92 100

Investment Property Expenses 33 22

Loss on Sale of Assets 139 -

Impairment of Assets 569 172

Net Decrement of Building and Wharf Revaluation Expense - 1,003

Operating Leases 21 22

Other Operating Expenses 9,469 8,744

TOTAL EXPENSES 13,811 13,695

note 3: provision for taxation 2014 2013

$000 $000

Current Tax 3,884 3,075

Prior Year Adjustment - 40

Deferred Tax (598) (607)

TAX EXPENSE 3,286 2,508

10,876 9,591

Tax at 28% 3,045 2,685

Prior Year Adjustment - 41

Non-Deductible Expenses 471 372

Non-Taxable Income (231) (407)

Deferred Tax Movement 1 (183)

TAX EXPENSE 3,286 2,508

NOTES TO THE ACCOUNTS


note 5: investment propertIES 2014 2013

$000 $000

Opening Balance 13,305 12,527

1,260 -

Revaluations 73 778

Properties Sold (1,727) -

CLOSING BALANCE 12,911 13,305

2014 PP&E Provision DerivativesEmployee

EntitlementsIntangible

Assets Total

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

Opening Balance 8,428 (167) (576) (312) 62 7,435

(672) 167 (43) (16) (34) (598)

Charged to Equity (298) - 285 - - (13)

Balance at 28% 7,458 - (334) (328) 28 6,824

2013 PP&E Provision DerivativesEmployee

EntitlementsIntangible

Assets Total

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

Opening Balance 7,333 (169) (923) (320) 117 6,038

(562) 2 - 8 (55) (607)

- - - - - -

Charged to Equity 1,657 - 347 - - 2,004

Balance at 28% 8,428 (167) (576) (312) 62 7,435

(a) Valuation Basis

Investment properties are revalued every year. Investment properties were valued on 30 June 2014 by independent registered valuer Ian McKeage, Independent Registered Valuer, FNZIV, FPINZ of TelferYoung. The valuers have recent experience in the location and category of the item being valued.

The fair value of Investment Property has been determined in accordance with Australia and New Zealand Valuation and Property Standards, in particular Valuation Guidance Note NZVGN 1 – Valuations for Use in New Zealand Financial Reports and IVS 300 Valuations for Financial Reporting.

The fair value of the investment property at 30 June 2014 is $12.911 million (2013: $13.305 million). The fair values of the assets represent the estimated price for which a property could be sold on the date of valuation in an orderly transaction between market participants.

At each reporting date, the valuation reports are provided to both the CEO and CFO and are also internally reviewed by the management team. The review focuses on checking material movements and ensuring all additions and disposals are captured. A summary report on valuation movements is provided to the Board and full copies of the valuer’s reports are available to Directors.

Total net gains on investment property for the period amount to $73,000 (2013: 778,000). Gains were recognised in property revenue,

Note 4: deferred tax (assets) and liabilities



Valuation approach Description of the valuation approach

Adjusted Sales Comparison Approach A valuation methodology whereby the subject property is compared to recently sold properties of a similar value with fair value determined through the application of positive and negative adjustments for their differing attributes

Asset classification and description

Valuation approach

Significant unobservable

inputs

Range of unobservable

inputs

Relationship of unobservable input

to fair value

IP – Land Subject to Ground Leases

Adjusted sales comparison

approach

Freehold land value per s/m

$177 – $568 The higher the price per s/m the higher the fair value

Ground rental rate 6.25% – 6.75% The higher the market rental rate versus the contract rent, the lower the fair value

Discount rate to calculate PV of rent

loss

8.0% The higher the discount rate the lower the effect on the fair value

Lessors interest discount

5% terminating lease – 7.5%

(perpetual lease)

The higher the discount the lower the fair value

IP Freehold Adjusted sales comparison

approach

Freehold land price per s/m


note 5: investment propertIES (CONTINUED)

The fair value of Investment Property is determined with reference to a fair value hierarchy of inputs as described in Note 12. This hierarchy

Investment property measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers of investment properties between levels of the fair value hierarchy.

The Company’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

The following tables summarise the valuation approach and key assumptions used by the valuers to arrive at fair value.

Properties Sold

During the year Port Nelson signed a conditional sale and purchase arrangement for the sale of an investment property. The sale has been recognised in the current year. The conditional agreement requires the purchaser to complete certain developments. Title does not necessarily transfer until the conditions are met by the purchaser. Further, Port Nelson has the ability to cancel the agreement if the conditions are not met.



note 7: equity 2014 2013

$000 $000

(a) Share CapitalOpening Balance 6,046 6,046

Redeemed During the Year - -

BALANCE AT 30 JUNE 6,046 6,046

(b) Retained EarningsRetained Earnings 43,521 40,487

7,590 7,083

Dividends Paid (2,000) (1,000)

Transfer to Dividend Payable (2,200) (3,200)

Transfer to (from) Revaluations Reserve – Properties Sold 581 -

Transfer to (from) Revaluation Reserve 54 -

Transfer Share of Associate Revaluation Reserve - 151

RETAINED EARNINGS AT 30 JUNE 47,548 43,521

At 30 June 2014 Port Nelson has 25,415,404 ordinary shares. All shares are fully paid and have no par value. All shares carry equal voting

2014

Unimar had a trading loss of $227,000. Port Nelson has disclosed its investment in the Unimar group as a current asset in 2014 as it is expected that the investment will be realised within 12 months of balance date.

2013

note 6: investment in associate 2014 2013

$000 $000

Investment in Unimar group 564 1,128

Movements in the carrying amount of investment in associate:

Opening Balance 1,128 3,477

Share Re-purchase - (2,439)

Dividends Received (383) (487)

Share of Recognised Revenues and Expenses (181) 578

CLOSING BALANCE 564 1,128

Assets 1,389 3,299

Liabilities 101 (721)

Revenues 1,609 16,679

(227) 1,311

Port Nelson Interest 44% 44%



note 7: equity (CONTINUED) 2014 2013

$000 $000

(c) Asset Revaluation Reserve (Land and Improvements)Opening Balance 78,768 77,319

Revaluation Movement - 1,449

Transfer to Retained Earnings – Properties Sold (284) -


(d) Asset Revaluation Reserve (Wharves)Opening Balance 12,388 10,246





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

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.

(e) Asset Revaluation Reserve (Buildings)Opening Balance 4,114 1,997


Impairment Recognised (822) -



(f) Asset Revaluation SummaryOpening Balance 95,270 89,562


Impairment Recognised (822) -


Deferred Tax Movement 313 (1,657)


(g) Fair value through other comprehensive income resERveOpening Balance - 151

Transfer to Retained Earnings – Assets Sold - (151)

CLOSING BALANCE - -

(h) Hedging ReserveOpening Balance (1,519) (2,373)

Fair Value Movement 1,016 1,185

Deferred Tax Movement (285) (331)

CLOSING BALANCE (788) (1,519)



NOTE 10: inventories 2014 2013

$000 $000

Opening Balance 523 306

Purchases 532 648

Expensed (596) (431)

CLOSING BALANCE 459 523

NOTE 9: trade and other receivables 2014 2013

$000 $000

Trade Receivables 4,402 4,653

Related Party Receivables 10 35

Less Provision for Impairment in Receivables (12) -

TOTAL 4,400 4,688

The status of the receivables as at 30 June 2014 are detailed below:

Not Past Due 3,439 3,090

Past Due 1 – 31 Days 817 1,306

Past Due 32 – 61 Days 106 258

Past Due 62 – 92 Days 17 -

Past Due > 92 Days 33 34

TOTAL 4,412 4,688

NOTE 11: TRADE AND OTHER PAYABLES 2014 2013

$000 $000

Accruals 672 485

GST Payable 419 336

ACC Payable 237 233

Trade Payables 784 1,164

Related Party Payables 8 8


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

NOTE 8: CASH AND CASH EQUIVALENTS 2014 2013

$000 $000

Cash on Hand 1 6

Cast at Bank 2,357 741

TOTAL 2,358 747



2014 Assets Class ($000)

Cost /Revaluation

01/07/13

Accumulated Depreciation

and Impairment

Charges 01/07/13

Carrying Amount

01/07/13

Current Year

Additions / Transfers

Current Year

Disposals

Current Year

Impairment Charges

Current Year

Depreciation Charges

Revaluation Surplus

Cost /Revaluation

30/06/14


and Impairment

Charges 30/06/14

Carrying Amount

30/06/14

Mobile Plant 26,641 (12,875) 13,766 884 (44) - (1,591) - 27,011 (13,996) 13,015

Floating Plant 5,830 (4,336) 1,494 348 - - (293) - 5,987 (4,437) 1,550

Wharves and Berths 22,320 - 22,320 7 - - (891) - 22,326 (891) 21,435

Wharves Leased 3,286 - 3,286 - (432) - (224) - 2,832 (201) 2,631

Plant, Furniture and Fittings 14,021 (8,777) 5,244 304 - - (626) - 14,516 (9,595) 4,921

Infrastructural Assets 1,557 (156) 1,401 - - - (78) - 1,557 (234) 1,323

IT Equipment 2,199 (1,568) 631 137 - - (217) - 2,335 (1,785) 550

Hardstanding and Roadways 9,925 (1,890) 8,035 325 - - (212) - 10,250 (2,102) 8,148

Dredging 2,192 - 2,192 22 - - - - 2,215 - 2,215

Buildings 8,597 - 8,597 - - (869) (442) - 7,728 (442) 7,286

Building Fit-Out 1,927 (529) 1,398 (1) - - (187) - 1,927 (716) 1,211

Buildings Leased 6,519 - 6,519 1 - (467) (399) - 6,052 (399) 5,653

Land 55,518 - 55,518 (62) (106) - - - 55,351 - 55,351

Land Leased 45,005 - 45,005 (1,198) (229) - - - 43,578 - 43,578

Work in Progress 568 - 568 (421) - - - - 146 - 146

206,105 (30,131) 175,974 346 (811) (1,336) (5,160) - 203,811 (34,798) 169,013


Cost /Revaluation

01/07/12


and Impairment

Charges 01/07/12

Carrying Amount

01/07/12

Current Year


Current Year

Disposals

Current Year

Impairment Charges

Current Year

Depreciation Charges

Revaluation Surplus

Cost /Revaluation

30/06/13


and Impairment

Charges 30/06/13

Carrying Amount

30/06/13

Mobile Plant 25,826 (12,670) 13,156 2,064 - - (1,454) - 26,641 (12,875) 13,766

Floating Plant 5,830 (4,180) 1,650 - - - (156) - 5,830 (4,336) 1,494

Wharves and Berths 25,546 (3,632) 21,914 48 - - (891) 1,249 22,320 - 22,320

Wharves Leased 3,021 (899) 2,122 - - - (217) 1,381 3,286 - 3,286

Plant, Furniture and Fittings 12,705 (8,064) 4,641 1,315 - - (712) - 14,021 (8,777) 5,244

Infrastructural Assets 1,557 (78) 1,479 - - - (78) - 1,557 (156) 1,401

IT Equipment 1,751 (1,359) 392 448 - - (209) - 2,199 (1,568) 631

Hardstanding and Roadways 9,341 (1,687) 7,654 584 - - (203) - 9,925 (1,890) 8,035

Dredging 2,117 - 2,117 75 - - - - 2,192 - 2,192

Buildings 8,321 (913) 7,408 62 - - (215) 1,342 8,597 - 8,597

Building Fit-Out 1,449 (385) 1,064 478 - - (144) - 1,927 (529) 1,398

Buildings Leased 6,246 (618) 5,628 109 - - (160) 941 6,519 - 6,519

Land 55,350 - 55,350 - - (172) - 340 55,518 - 55,518

Land Leased 43,897 - 43,897 - - - - 1,108 45,005 - 45,005

Work in Progress 1,141 - 1,141 (573) - - - - 568 - 568

204,098 (34,485) 169,613 4,610 - (172) (4,439) 6,361 206,105 (30,131) 175,974

Note 12: PROPERTY, PLANT AND EQUIPMENT

Land, buildings and wharves are carried at fair value in the balance sheet. The carrying amount of land, buildings and wharves, as recognised under the cost model are as follows:



The Calwell Slipway basin, land owned by Port Nelson, contains contaminated seabed sediments. The remediation costs are expected to be greater than the land value therefore the land asset has been fully impaired.

Port Nelson is undertaking independent seismic assessments of some of its buildings in accordance with the Building Act and Nelson City Council’s Policy for Earthquake-Prone, Dangerous and Unsanitary Buildings. Buildings assessed as earthquake prone will either require

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

(a) Valuation Basis

Land and buildings were valued on 30 June 2013 by TelferYoung, an independent registered valuer and associate of The New Zealand Institute of Valuers. Further, TelferYoung undertook an external review of methodology and underlying assumptions used in the internal valuation of the wharves completed by Port Nelson on 30 June 2013. The total of the revaluation amounted to $145.281m.

On 30 June 2014, a review of fair value movement was carried out by TelferYoung which concluded there was no material movement in values resulting in no full revaluation being required. TelferYoung have recent experience in the location and category of the items being valued. The fair values of the assets represent the estimated price for which a land could be sold on the date of valuation in an orderly transaction between market participants.

At each reporting date, the valuation reports are provided to both the CEO and CFO and are also internally reviewed by the management team. The review focuses on checking material movements and ensuring all additions and disposals are captured. A summary report on valuation movements is provided to the Board and full copies of the valuer’s reports are available to Directors.

Impairment losses of $1.336m (2013: $0.172m) have been recognised within Other Operational and Property Expenses in the Statement of Comprehensive Income during the period. In 2013, the revaluation surplus net of applicable deferred income taxes are recognised in other comprehensive income and shown in the ‘asset revaluation reserve’ in shareholders’ equity.

The following description analyses the property, plant and equipment carried at fair value, by valuation method. The different levels have

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3)

Land, buildings and wharves measurements are categorised as Level 3 in the fair value hierarchy. During the year there were no transfers between levels of the fair value hierarchy.

The Company’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

The following tables summarise the valuation approach and key assumptions used by the valuers to arrive at fair value.

Note 12: PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Valuation approach Description of the valuation approach

Adjusted Sales Comparison Approach

A valuation methodology whereby the subject property is compared to recently sold properties of a similar value with fair value determined through the application of positive and negative adjustments for their differing attributes

Income Capitalisation Approach

A valuation methodology which determines fair value by capitalising a property's sustainable net income at an appropriate, market derived capitalisation rate with subsequent capital adjustments for near-term events, typically including letting-up allowances for vacancies and pending expiries, expected short-term capital expenditure and the present value of any difference between contract and market rentals

Optimised Depreciated Replacement Cost remaining useful life of the assets (depreciation)



follows:

Note 12: PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Asset classification and description Valuation approach

Significant unobservable

inputs

Range of unobservable

inputs

Relationship of unobservable input

to fair value

Land – Occupied Operational

Adjusted sales comparison approach



Land – Subject to Ground Leases

Adjusted sales comparison approach



Ground rental rate 6.6% – 7.1% The higher the market rental rate versus the contract rent,

the lower the fair value

Discount rate to calculate PV

8.0% The higher the discount rate the lesser the effect

on the fair value

Lessors interest discount

5% (terminating lease) – 7.5%

(perpetual lease)

The higher the discount the lower the fair value

Land – Freehold Adjusted sales comparison approach



BuildingsIncome capitalisation

approach

Rental per s/m $12.50 – $155 The higher the rental per s/m the higher the fair value

Capitalisation rate 7.5% – 9.75% The higher the capitalisation rate the lower the fair value

BuildingsOptimised depreciated

replacement cost

Remaining useful life

2 – 40 The higher the useful life the higher the fair value

Replacement cost per s/m

$219 – $3,499 The higher the replacement cost the higher the fair value depending

on the remaining useful life

Wharves Optimised depreciated

replacement cost

Remaining useful life

1 – 67 years The higher the useful life the higher the fair value

Replacement cost per s/m

$786 – $2,276 The higher the replacement cost the higher the fair value depending

on the remaining useful life




Cost /Revaluation

01/07/12

Accumulated Amortisation

and Impairment

Charges 01/07/12

Carrying Amount

01/07/12

Current Year


Current Year

Disposals

Current Year

Impairment Charges

Current Year

Amortisation Charges

Cost /Revaluation

30/06/13


and Impairment

Charges 30/06/13

Carrying Amount

30/06/13

Software 3,808 (3,080) 728 351 - - (364) 4,159 (3,444) 715

3,808 (3,080) 728 351 - - (364) 4,159 (3,444) 715


Cost /Revaluation

01/07/13


and Impairment

Charges 01/07/13

Carrying Amount

01/07/13

Current Year


Current Year

Disposals

Current Year

Impairment Charges

Current Year

Amortisation Charges

Cost /Revaluation

30/06/14


and Impairment

Charges 30/06/14

Carrying Amount

30/06/14

Software 4,159 (3,444) 715 69 - - (322) 4,229 (3,767) 462

4,159 (3,444) 715 69 - - (322) 4,229 (3,767) 462

Note 13: Intangible Assets

note 14: financial instruments

Financial Risk Management Objectives

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 2 years 50% 100%

3 years to 5 years 25% 80%

6 years to 10 years 0% 60%

Market Risk

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

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

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

amounts calculated by reference to the agreed notional principal amounts.



Credit Risk

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.

Maximum exposures to credit risk at balance date are:

(if available) or to historical information about counterparty default rates:

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

lines available.

2014 2013

$000 $000

Cash and Cash Equivalents 2,358 747

Trade and Other Receivables 4,400 4,688

TOTAL CREDIT RISK 6,758 5,435

2014 2013

$000 $000

Cash and Cash Equivalents - -

AA- 2,358 747

note 14: financial instruments (CONTINUED)




2014Fair Value gain/loss

Interest rate %

0 to 1 year

1 to 2 years

2 to 3 years

3 to 4 years

5 to 6 years

6 to 7 years

7 to 8 years

8 to 9 years

Notional Amount ($000)$4,000 Swap (100) 6.34 4,000 - - - - - - -

Total Current (100) - 4,000 - - - - - - -

$5,000 Swap (271) 6.50 - - 5,000 - - - - -

$6,000 Swap (324) 6.49 - - 6,000 - - - - -

$5,000 Swap (345) 5.99 - - - - 5,000 - - -

$5,000 Swap (98) 5.70 - - - - 5,000 - - -

$4,000 Swap (134) 5.90 - - - - - 4,000 - -

$5,000 Swap (17) 5.35 - - - - - - 5,000 -

$4,000 Swap 195 3.99 - - - - - - 4,000 -

Total Non-Current (994) - - - 11,000 - 10,000 4,000 9,000 -

2014 TOTAL (1,094) - 4,000 - 11,000 - 10,000 4,000 9,000 -

2013 TOTAL (2,111) - 9,000 4,000 - 11,000 10,000 - 4,000 9,000

2014 ($000)

Weighted Average

Effective Interest Rate

Floating Interest 0 to 1 year

1 to 5 years 5+ years

Non Interest Bearing Total

Financial AssetsLoans and receivables:

Cash and Cash Equivalents 2.75% 2,351 - - - 7 2,358

Trade and Other Receivables - - - - - 4,400 4,400

TOTAL LOANS AND OTHER RECEIVABLES 2,351 - - - 4,407 6,758

Financial LiabilitiesFinancial liabilities at amortised cost:

Borrowings 5.69% 3,000 - 24,000 - - 27,000

Trade and Other Payables - - - - - 2,120 2,120

TOTAL FINANCIAL LIABILITIES AT AMORTISED COST 3,000 - 24,000 - 2,120 29,120

FIXED MATURITY DATES

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.



Sensitivity Analysis

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 2014.

CARRYING VALUE FAIR VALUE

2014 2013 2014 2013

$000 $000 $000 $000

Financial Liabilities:Term Debt 27,000 35,400 27,000 35,400

Fair Value Movement (Net) - - 1,094 2,110

TOTAL FINANCIAL LIABILITIES 27,000 35,400 28,094 37,510

Carrying amount NZD -100bp -100bp +100bp +100bp

$000’s PROFIT EQUITY PROFIT EQUITY

Financial AssetsCash and Cash Equivalents 2,358 (24) (24) 24 24

Financial liabilities:Borrowings 3,000 30 30 (30) (30)

Derivatives – Designated as Cash Flow Hedges 1,094 - (1,139) - 1,065

INTEREST RATE

2013 ($000)

Weighted Average

Effective Interest Rate

Floating Interest 0 to 1 year

1 to 5 years 5+ years

Non Interest Bearing Total

Financial Assets

Loans and receivables:

Cash and Cash Equivalents 2.00% 741 - - - 6 747

Trade and Other Receivables - - - - - 4,688 4,688

TOTAL LOANS AND OTHER RECEIVABLES 741 - - - 4,694 5,435

Financial Liabilities

Financial liabilities at amortised cost:

Borrowings 6.56% 7,400 - 28,000 - - 35,400

Trade and Other Payables - - - - - 2,226 2,226

TOTAL FINANCIAL LIABILITIES AT AMORTISED COST 7,400 - 28,000 - 2,226 37,626

FIXED MATURITY DATES




note 16: commitments 2014 2013

$000 $000

The following expenditure was contracted for at balance date:

CAPITAL DEVELOPMENT 120 41

note 15: term loan

Interest Rate Contracts:The notional principal amounts of interest rate contracts outstanding at 30 June 2014 are as follows:

1. $4,000,000 for 2 years @ 6.34% p.a. terminating 29 May 2015

2. $5,000,000 for 3 years @ 6.50% p.a. terminating 30 November 2016

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.

Valuation Technique (Level 2) Total

Valuation Technique (Level 2) Total

$000 $000 $000 $000

Financial liabilitiesDerivative instruments:

Borrowings – Interest Rate Swaps 1,094 1,094 2,110 2,110

1,094 1,094 2,110 2,110

20132014


Fair Value of Financial Instruments

their fair values. In accordance with NZ IFRS 13 – Fair Value Measurement, Port Nelson uses various methods in estimating the fair value of

Level 1 – Fair values are calculated using quoted prices in active markets. Quoted market price represents the fair value determined based on quoted prices in active markets as at the reporting date without any deduction for transaction costs. Port Nelson does not have any

Level 2 – Fair values are estimated using inputs other than quoted prices included in level 1 that are observable for each asset or liability, either directly (as prices) or indirectly (derived from prices). Financial instruments that use valuation techniques with only observable market

traded on a recognised exchange. The valuation of interest rate derivatives is derived from the New Zealand Financial Markets Association

Level 3 – Fair values are estimated using inputs for the asset or liability that are not based on observable market data. The fair values of unlisted investments that do not have an active market are based on valuation techniques that use market data that is not observable. Port



note 17: operating leases 2014 2013

$000 $000

Non-cancellable operating leases as lessee:

Not later than one year 17 10

49 -

TOTAL NON-CANCELLABLE OPERATING LEASE 66 10

Non-cancellable operating leases as lessor:

Not later than one year 4,552 4,942

10,749 12,237

3,172 4,441

TOTAL NON-CANCELLABLE OPERATING LEASE 18,473 21,620

NOTE 18: EMPLOYEE BENEFIT LIABILITIES 2014 2013

$000 $000

Accrued Pay 387 393

Annual Leave 716 667

Long Service Leave 162 164

Retirement Gratuities 47 47

205 129

TOTAL EMPLOYEE BENEFIT LIABILITIES 1,517 1,400

Comprising:

Current 1,346 1,225

Non-Current 171 175

TOTAL EMPLOYEE BENEFIT LIABILITIES 1,517 1,400

note 19: noise mitigation provision 2014 2013

$000 $000

Opening Balance 596 603

Additional Provisions Made in the Period 24 13

Decrease to Existing Provisions - -

Provision Used (24) (20)

TOTAL NOISE MITIGATION PROVISION 596 596

Comprising:

Current 53 53

Non-Current 543 543

TOTAL NOISE MITIGATION PROVISION 596 596



note 20: contingent assets and liabilities

The 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 ongoing sedimentation of the basin now requires dredging to allow for the ongoing operation of the slipway. Port Nelson,

remediation works.

During 2013 Port Nelson, together with the Nelson City Council, 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. The work

Remediation Planning (Phase Three) of the Contaminated Sites Remediation Fund project (Ministry for the Environment) is now complete.

note 21: related party disclosure 2014 2013

$000 $000

Nelson City Council Services Provided by Port Nelson 105 97

Services Provided to Port Nelson 554 486

Accounts Payable by Port Nelson 7 7

Accounts Receivable by Port Nelson 9 35

*Dividends Paid by Port Nelson 2,600 2,100

Tasman District Council Services Provided by Port Nelson 1 -

Accounts Receivable by Port Nelson 1 -

*Dividends paid by Port Nelson 2,600 2,100

Nelmac Services Provided to Port Nelson 24 42

Accounts Payable by Port Nelson 1 1

Unimar Services Provided by Port Nelson 3 6

Services Provided to Port Nelson 9 -

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 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 (2013 nil).

note 19: noise mitigation provision (CONTINUED)

Port Nelson reviews its Noise Mitigation provision each year as the mitigation work is undertaken. The year-end provision balance of $596,000 (2013 $596,000) is for Stages One, Two and Three. The Noise Variation within the Nelson City Resource Management Plan

Port Nelson recognises it has an obligation to assist with noise mitigation works for noise-affected properties adjacent to the Port. Noise mitigation costs may include building work, any professional fees, building consents, preparation of drawings and project management. Noise-affected 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 (day/night average sound level) 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 2014 nine of these eleven properties have had this obligation met (2013 Nine). For properties in the 60 to 64.9 dBa area (Stage Two), offers have been made by Port Nelson to owners in these areas to cover 50 percent of the noise mitigation cost. For properties in the 55 to 59.9 dBa area (Stage Three) the owners can request Port Nelson to provide technical advice and a contribution of up to 50 percent of the noise mitigation cost. There is no obligation on Port Nelson to make offers for the purchase of either Stage Two or Stage Three properties.



note 22: financial reporting by segments

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.

note 24: events occurring after balance date

2014 There are no events subsequent to balance date.

2013 There are no events subsequent to balance date.

2014 2013

$000 $000

1,524 1,433

TOTAL 1,524 1,433

note 23: imputation credits 2014 2013

$000 $000

Imputation credits to shareholders:

CREDITS AVAILABLE FOR FUTURE USE 18,138 15,644

No inter-entity debt has been forgiven or written off (2013 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 $449,036 for the year (2013 $449,106), and nil was receivable at year end (2013 nil). The amount paid to Cold Storage Nelson Ltd was $2,351 (2013 $2,064) for the year, and $NIL was payable at year end (2013 $nil).

Mr P Schuyt is a Director of Tax Management New Zealand Ltd (TMNZ) that provides a tax pooling service to Port Nelson. The amount paid to TMNZ was $3,349,774 for the year representing tax payments fully transferred onto the Inland Revenue (2013 $2,917,809) and nil was payable at year end (2013 nil).

Ms B A Monopoli is an Associate Principal of Crowe Horwath (NZ) Limited that provides accounting service to Port Nelson. The amount paid to Crowe Horwath (NZ) Limited was $6,800 (2013 $nil) and nil was payable at year end (2013 nil).

Mr P D Le Gros is the Chairman of Nelson Electricity Limited that used service from Port Nelson. The amount received from Nelson Electricity Limited was $30,036 (2013 $nil) and nil was receivable at year end (2013 nil).

Key Management Personnel

Mr M J Byrne is a Board Member of Big Brothers Big Sisters that receives sponsorship from Port Nelson. The amount paid to Big Brothers Big Sisters was $2,400 (2013 $5,000) and nil was payable at year end (2013 $5,000).

Mr D R Wehner is a Council Member of Nelson Marlborough Institute of Technology that leases land from Port Nelson and provides training courses to Port Nelson. The amount received from Nelson Marlborough Institute of Technology was $1,017 for the year (2013 $1,010), and nil was receivable at year end (2013 nil). The amount paid to Nelson Marlborough Institute of Technology was $3,657 (2013 $257) for the year, and $nil was payable at year end (2013 $nil).

Mr D J Duncan is a Trustee of Sealord Marine Rescue Centre that receives sponsorship from Port Nelson. The amount paid to Sealord Marine Rescue Centre was $2,120 for the year (2013 $2,353), and nil was payable at year end (2013 nil).

note 21: related party disclosure (CONTINUED)



THE SIX PILLARS OF PORT NELSON’S VISION

Financial results“A 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

Community“A sense of 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

Customers“An organisation that delivers real value to its customers”

• Understand our customers and their needs

• Deliver consistent service

• Develop active and engaged working groups

• Build strategic alliances with our key customers

• Grow the business through attracting new customers

Environment“A leader in sustainable environmental management in the New Zealand port industry”

• Implement best practice environmental management

• Minimse the impact of our operations

• Integrate sustainability into what we do

• Raise environmental awareness

• Measure, report and improve our performance

People“An engaged and highly capable team at Port Nelson”

• Increase the engagement of our people

• Provide training 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

Processes

• Embed a culture of continuous improvement

• Ensure the integrity of source data

•

• Streamline processes to achieve zero wastage

• Standardise, document and train in what we do


DIRECTORY

Board of DirectorsNick Patterson (Chairman of Directors) Phil Lough (Deputy Chairman of Directors and Chairman of Remuneration and Appointments Committee) Peter Schuyt (Chairman Finance and Risk Committee) Tim King Paul Le Gros Bronwyn Monopoli

SecretaryDaryl Wehner

The Port Nelson annual report is proudly produced by WaltersPR, Hothouse, Glenn Bisdee Photography and Tim Cuff.

Port Nelson’s management operations team from left to right are: Digby Kynaston, Daryl Wehner, Matt McDonald, Martin Byrne, Dave Duncan, Melisa Kappely and Rob Hawkes

Senior Management

Melisa Kappely (Employee Relations Manager) Matt McDonald (Infrastructure Manager)

Registered Office10 Low Street, Port Nelson PO Box 844, Nelson 7040, New Zealand Tel. (03) 548 2099 Fax. (03) 546 9015 [email protected] www.portnelson.co.nz

AuditorAudit New Zealand (on behalf of the Auditor-General)

SolicitorsPitt & Moore, Barristers and Solicitors, PO Box 42, Nelson 7040

Simpson Grierson, Barristers and Solicitors, PO Box 2402, Wellington 6140

BankersWestpac Banking Corporation, PO Box 643, Nelson 7040

Featured on back cover are Charlie Osmond (left) and Jock Bruce.


annual report 2014 - port nelson · port nelson annual report 2014 3. ... capital expenditure $2.0...

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