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Annual Report 2011
Lyttelton Port Company Limited
Outstanding Achievements in a Memorable Year
2
ContentsWelcome to Lyttelton Port of Christchurch ...................................4
Organisational Structure .......................................................................5
Performance ...............................................................................................6
Highlights of the Year ............................................................................8
A Time of Major Seismic Shocks ..................................................... 10
Resilient Port, Resilient People........................................................ 12
Report from the Chairman................................................................. 16
Report from the Chief Executive .................................................... 18
Trade Review .......................................................................................... 20
Portfolios - Management ................................................................... 24
Our People ............................................................................................... 26
Supporting Our Community .............................................................. 30
Supporting Our Environment ........................................................... 32
Investor Relations ................................................................................. 34
Corporate Governance ........................................................................ 36
Portfolios - Directors ........................................................................... 40
Directors’ Interests ............................................................................... 42
Report from the Directors ................................................................. 44
Reporting Our Financials .................................................................... 49
Statutory Information ......................................................................... 86
Directory .................................................................................................. 87
Glossary .................................................................................................... 88
Thanks to John Rendle, John McCombe and David Alexander
for their photography for this publication.
3
LPC is the major deep-water Port in the
South Island providing a vital New Zealand
link in international trade routes and plays
a key role in the global transport network.
LPC is a crucial player in Canterbury’s
economy. It provides a gateway for almost
all of the region’s trade – both imports and
exports, and this trade is vital to economic
growth in the region.
Our Port prides itself on catering for a
diverse range of trades and offers a full
array of shipping services to exporters and
importers, 24 hours a day, seven days a
week, 365 days a year. In terms of total
tonnage LPC is the largest Port in the South
Island by a substantial margin and the third
largest Port in New Zealand.
On the water we provide full marine
services, including tug boats to manoeuvre
vessels in and out of berths, pilots to guide
ships into and out of the port, staff to assist
with ships’ lines when ships are berthing or
departing, and security.
The Container Terminal provides specialised
cargo handling and stevedoring services for
general cargo and refrigerated containers,
managed via the advanced SPARCS N4
computerised container management system.
Through the tunnel is CityDepot, our inland
Port, providing an extensive container repair,
wash and storage facility.
Our coal facility is the largest in New Zealand
and currently over two million tonnes are
exported each year. Coal is received from the
West Coast, aggregated in the coal yard, and
then loaded onto vessels by Port staff.
Within the Inner Harbour the Company has a
dedicated terminal for handling, processing
and storing motor vehicles. We also offer
facilities for loading and unloading bulk
Welcome to the 2011 Annual Report of Lyttelton Port of Christchurch (LPC). We are proud to
present this overview of what your Port has achieved in the last year, where we excelled, and
how we plan to build on those results in the future.
products such as petroleum, fertiliser,
gypsum, cement, logs, conventional
break-bulk and fish.
We operate the only dry dock in the
South Island. It is booked solidly for vessel
maintenance, repairs and repainting.
Today the Company employs over 420
staff in operational, management and
administration roles. We have approximately
820 Shareholders, with the majority of
shares owned by Christchurch City
Holdings Limited.
Welcome to Lyttelton Port of Christchurch
4
Organisational Structure
Container Terminal stevedoring services and refrigerated container care
CityDepot container depot and repair services
Car Terminal Liquid bulk
terminal for discharge & storage of bulk fuels
Coal stockpiling and coal handling
Log stockpiling Conventional
wharf facilities for containers and bulk cargo
Tugs and pilots to escort ships into and out of the harbour
Dry dock for the maintenance and repair of ships
24/7 security Environmental
issues
Asset Maintenance Engineering
Projects
Accounting Treasury Payroll Taxation Audits Risk Insurance Strategic Planning
Health & Safety Recruitment Training and
Development Remuneration Employee
Relations
Hardware Software Support
Management of Property Portfolio
Customer Relationship Management
Communications
Human Resources
Information Services
Finance PropertyProgramme
Management (Infrastructure)
Operations Marketing
Shareholders Chief ExecutiveBoard of Directors
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Performance
2011 $,000
2010 $,000
Change$,000
Change (%) Favourable/(Unfav)
Total Revenue 91,625 87,327 4,298 4.9%
Operating Costs 59,396 58,086 (1,310) (2.3%)
EBITDA 37,154 29,241 7,913 27.1%
Depreciation and Amortisation 11,564 11,945 381 3.2%
Earthquake Adjusted EBIT 20,665 17,296 3,369 19.5%
Plus Net Earthquake Impacts Recorded in the Financial Statements 4,925 0 4,925 N/A
Net Interest 4,551 3,866 (685) (17.7%)
Net Profit Before Tax (NPBT) 21,039 13,430 7,609 56.7%
Tax Credit (Expense) 3,072 (4,422) 7,494 169.5%
Net Profit After Tax (NPAT) 24,111 9,008 15,103 167.7%
Earnings per share (EPS) 23.6 cents 8.8 cents 14.8 cents 168.2%
Our Financial Results have been prepared in accordance with New Zealand International Financial Reporting Standards (NZ IFRS). They comply with New Zealand
equivalents to International Financial Reporting Standards and other Financial Reporting Standards, as appropriate for profit-oriented entities.
Dividend No dividend has been declared for the year ended 30 June 2011.
Annual Meeting 2011 The 2011 Annual Meeting for Lyttelton Port Company Limited Shareholders will be held at The George Hotel on Thursday 3 November 2011,
commencing at 10.00am.
Annual Report The Board of Directors is pleased to present the Annual Report of Lyttelton Port Company Limited for the year ended 30 June 2011.
For, and on behalf of the Board:
Rodger Fisher
Chairman
25 August 2011
Trevor Burt
Deputy Chairman
25 August 2011
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7
Long-Term Profitability• 34.4% rise in trading profit after tax
(earthquake-adjusted) to $12.1 million
• 7.3% rise in revenues (earthquake-
adjusted) to $93.7 million
• 9.6 million tonnes of cargo through the
port, despite earthquake disruptions
• The Company’s lead insurer has formally
advised that it accepts the earthquake
damage to the Company’s assets is
insured, with $35.7 million received in
payments to 30 June 2011
• Provision for future cargo-storage space
by progressing the Te Awaparahi Bay
reclamation, while saving many millions
of dollars’ expenditure on quarrying rock
• Planning for the longer-term earthquake
recovery programme
Highlights of the Year
Through almost a year of seismic emergencies, disruptions
and damage – all unprecedented in the history of the
Company – our people kept the Port and CityDepot
operating around recovery work and with minimal
downtime. As a result, and with the resilience of the Port
business and infrastructure built up over a number of
years, an outstanding financial and operating performance
has been delivered for the 2011 year. Furthermore, a
milestone in the strategic future-proofing of our Port
was achieved with the opening of the Te Awaparahi
Bay reclamation, which is taking in clean earthquake
demolition hard-fill from the Christchurch CBD.
“I would like to thank and compliment LPC on the clear, timely, informative and professional manner
in which you communicated following February’s terrible earthquake. LPC is a key component for
our business and the Canterbury region as a whole, and I really appreciate your excellent level of
communication.”
Paul Gillett
Financial Controller, SRS New Zealand Ltd
8
Outstanding Customer Service• 3.3% increase in berth productivity
to 55.7 TEUs moved per hour from
53.9 TEUs
• Improvement in the ship exchange rate
to 32.4 TEUs moved per crane per hour,
from 32.2 TEUs
• 6.2% rise in total TEUs to a record
290,842, and 7.4% rise at the Container
Terminal to 271,231
• 5.2% rise in coal exports to 2.1 million
tonnes
• 8.7% increase in log exports to
259,451 tonnes
• Two additional container shipping
services gained for the new year
• Rapid restoration of customer services
following high-magnitude earthquakes
Employer of Choice• 18.5% drop in lost-time injuries (LTIs)
• Zero LTIs at two operations – CityDepot
and Security
• Maintenance of Tertiary status under
the ACC Workplace Safety Management
Programme, demonstrating a high level
of safety and saving insurance costs
• 41 people recruited during the year,
primarily into Container Terminal
operations
• Review of our Management Structure,
with a full team in place at year end
• Level 3 National Certificate in Cargo
Handling achieved by 10 staff
Environmentally and Socially Responsible• Acceptance of clean CBD demolition hard-fill
into the Te Awaparahi Bay reclamation, thus
recycling material that would otherwise
go to landfill, and saving Christchurch
people and businesses over $100 million in
dumping fees
• Ongoing sponsorship and support for
the Otamahua/Quail Island Ecological
Restoration Trust, with over 70,000 plants
carried across on LPC Rescue since 1998
• The environmentally friendly lamella
water treatment plant commissioned at
the coal yard and the old stormwater plant
decommissioned
• Participation in community issues groups
and post-earthquake master planning
sessions
• Sponsorship funding and staff support for
the local Lyttelton community, including
Lyttelton Junior Rugby, Community Watch
and Project Lyttelton (for the Lyttelton Port
of Christchurch Fireworks Extravaganza)
• Sponsorship funding or staff support for
wider causes, including the Canterbury
Youth Development Programme, Champion
Canterbury Awards and Ronald McDonald
House
9
The Port’s historic lighthouse was left on a 15-degree lean
after the earthquakes as the timber roundhead structure
that it sat on was pulled downwards by settlement of land
near the wharf. Eventually it will go back into operation.
The lighthouse is a listed international navigational aid
and was built around 1878.
10
The three biggest quakes will never be
forgotten for their destructive impact on
our Port, as well as on many homes and
communities. In the massive upheaval of
22 February 2011, the town of Lyttelton
was badly hit. While our own people
were found to be safe, more than 180
people died in the Christchurch CBD and
other areas during or after the quake. Our
thoughts remain with everyone who lost
loved ones.
What Was It That Hit Us? • 4.35am, Saturday 4 September 2010 –
7.1 magnitude, epicentre 40km to the
west of the Port at Darfield, at a depth
of 10km
• 12.51pm, Tuesday 22 February 2011
– 6.3 magnitude, epicentre close to
Lyttelton, at a depth of 5km
• 2.20pm Monday 13 June 2011 –
6.3 magnitude, epicentre 10k northeast
of Lyttelton at a depth of 6km;
preceded by a 5.6 magnitude quake at
1.01pm, epicentre 10km northeast of
Lyttelton at a depth of 9km.
On 22 February 2011, the peak ground
acceleration (PGA) near Lyttelton was
2.2 times the acceleration of gravity, the
highest recorded in New Zealand and one
of the highest recorded in the world. The
vertical jolting was particularly severe.
The state of national emergency declared
by the Government remained in force until
30 April 2011.
Rapid Emergency Response The September 2010 earthquake struck
in the small hours of a Saturday morning
when operations were relatively quiet. But
the February and June 2011 earthquakes
occurred on busy working days. In each
case, our Emergency Procedures went into
immediate force, and staff were quickly
accounted for and found to be safe.
Emergency Team operations were set up
at the Lyttelton Container Terminal (LCT)
building. Assessments and reassessments
of infrastructure, facilities and electrical
grids were undertaken following
earthquakes of a significant magnitude.
In February, we remained under
Emergency status for three weeks. In June,
our Emergency status was lifted after
24 hours.
Customer Services Up and Running Quickly Customer services were up and running as
soon as possible after each major quake.
Our concern was to keep cargoes moving
safely through the Port, particularly
essential supplies for earthquake-hit areas.
On 22 February 2011, the cruise ship
Europa was in Port when the earthquake
hit and it is credit to everyone involved
that all passengers were returned safely to
the vessel, which sailed that evening.
A Time of Major Seismic ShocksBetween 4 September 2010 and the end of the financial year, we experienced 28 earthquakes
of magnitude 5.0 or over, as well as many thousands of smaller jolts.
That day too, all reefer points were powered
up using generators.
Within 96 hours of the February quake, core
services were up and running for limited
operations. The first container exchange and
discharge of petroleum were completed on day
six. On day seven the receival and delivery of
containers by truck began at the Port and at
CityDepot. The first Fonterra train arrived at
CityDepot on day eight, and the first coal train
arrived at the Port on day 12.
Cumulative Impacts Over 10 Months At the Port, the wharves moved seawards,
and the seawalls and landward ends slumped.
Piles, beams and tiebacks fractured, and paved
container-handling areas suffered extensive
damage. At Cashin Quay, the container cranes
were jolted off their rails, and berth pockets
in-filled. The breakwater at the seaward end
slumped. On Z Berth, which was severely
impacted, the foundations of the Independent
Fisheries coolstore were destroyed.
At CityDepot, paving cracked and buildings
were structurally damaged.
As a result of the massive damage, we face a
recovery programme of probably four to five
years, or longer. It is thanks to the resilience
of Port infrastructure, and foresight in disaster
modelling and preventative measures, that the
situation is not worse.
“We pay tribute to the Lyttelton Port team for keeping the port operating in the face of so many huge challenges since September last year: a prime example of the resilience and determination shown by people throughout the entire province. Lyttelton Port’s development plans exemplify the company’s desire to improve the links between South Island businesses and their many markets around the world. We’re excited by the potential to increase efficiencies and streamline the supply chain, and look forward to further developing a working relationship we value highly.”
Julian Bevis
Managing Director, Maersk New Zealand Ltd
11
Resilient PortResilient People
Civil MaintenanceCivil Maintenance is responsible for the Port’s
structures and infrastructure. The team has
had to move to portable offices beside their
two-storey building, which is on a lean due to
the slumping of the seawall after
the earthquakes.
Civil Asset and Project Manager Tristan
Williams was on Level 3 of the Administration
Building when the 22 February quake hit.
“Your first thoughts are survival, and then
to make sure everyone is alright. That was
my first instinct, having worked with the
Fire Service and Westpac Rescue.” He helped
get staff from the building, checked on his
Civil Maintenance team in the Port, and then
went out to check on damage, particularly
the wharves and watermains. He was a key
member of the Port’s emergency response
team, and camped at the Lyttelton Fire Station
then at his parents’ place in Lyttelton to be
close by.
“Resilience is the key when thinking about
those challenging times,” says Tristan. “We
thought we were on the mend at the Port
after February and then June came along,
but what we’d learned in February helped us
through June.”
It is the people of Lyttelton Port of Christchurch who, with our technical advisors, were able to reinstate critical Port services quickly after each major earthquake or aftershock so that essential supplies could get through to earthquake-hit areas of Christchurch and Canterbury. This was a tremendous effort, particularly when many people were coping with difficult situations at home. Over 40 of our people lost their homes entirely and more were displaced due to temporary damage.
There are many more instances of dedication and hard work than we are able to represent here, and in this edition of the Lyttelton Port of Christchurch Annual Report we acknowledge the efforts of everyone. Some people were able to come back onboard immediately after the worst quakes, others came in later after seeing to serious issues at home or after serving in emergency volunteer roles in their communities. On these pages are some of our stories.
Personally it was a difficult time for Tristan.
After the February quake, his wife Paula went
to pick up the children from school but what
should have been a quick drive took nearly
four hours due to road damage, liquefaction
and rock falls. All this time Tristan did not
know if his children were safe. The Williams’
house was severely damaged.
EngineeringAfter the early-morning quake on
4 September, Neil received a call from Mark
Morgan, Coal and Plant Manager, to say
that the seawall behind Cashin Quay 1 had
slumped. “I knew then it was a big event for
Lyttelton,” Neil says. Before light he drove
to the Port from Sumner over Evans Pass,
weaving past boulders in the dark.
After initial inspections, there was a lot of
follow-up work with technical advisors. Opus
and McManus GeoTech ran computer models
of Port structures using the 4 September
earthquake record, allowing the engineers to
calibrate the wharf structure models against a
significant local earthquake for the first time.
Neil was in the Administration Building when
the February quake occurred. “We all dived
or fell under desks. There was a huge amount
of destruction, and a lot more concern for
family members and staff,” he says.
In the mid-1990s, No.7 Wharf was upgraded
to provide a lifeline link to Christchurch and
Canterbury in the case of an earthquake and
because of that investment the wharf held
up. “We can be proud of that,” Neil says, “As
a result we were able to give the Navy the
green light within an hour and a half of the
quake to unload equipment and personnel
carriers to assist earthquake-struck areas of
Christchurch.”
Another important factor has been having
highly regarded engineering advisors with
experience in earthquake-damaged ports
in Japan and western USA overseeing
our designs.
“Our structures have performed
exceptionally. While there has been
significant damage, we were able to get
critical services operating within hours or
days on the structures built or modified
since around 1970. This is despite seismic
forces being up to five times larger than
anticipated, due to the February and June
events occurring virtually underneath
Lyttelton.”
Neil McLennan, LPC Engineering Manager, and Gary Chalmers, Principal Engineer for Opus.
Damage at Cashin Quay.
12
Mechanical and Electrical MaintenanceThe Maintenance team includes fitters,
boilermakers, mechanics, electricians and
carpenters, and is responsible for keeping
the heavy machinery, electrical grid and
facilities running smoothly. Many team
members work in a challenging environment,
working at heights and in tight spaces,
and now also working around earthquake
damage on the Port.
On 4 September, Mechanic Eric Ward
was one of three on the midnight shift.
Eric says: “The noise in the workshop
was unbelievable. We were plunged into
darkness and had to feel our way down the
stairs and out to the yard.”
For the 22 February earthquake, a large
team was at work, in the workshop and
around the Port. Dennis Berghan, Mechanical
Maintenance Foreman, says: “The power
went off, and the place was rattling and
banging. I was the last one out of the
workshop and checked that everyone was
alright. People began texting home. Slips
were coming down the hill at the back of
the port and the whole side came off the
Timeball Station. The next day the team
started getting back onboard although some
members were helping with emergency
volunteer services, and many had issues
at home. With the continuing shakes,
earthquakes are always at the back of
our minds.”
Mechanic Norm Eyre was up at the top
of the coal shiploader on a platform that
overhung the water at Cashin Quay 1. With
him were Craig Rees and Steve Gray, and a
fourth maintenance man, Clinton Collins, was
in the control booth. “The platform shook
violently,” says Norm. “I thought it was
better to stay on the platform than try and
get down, and held Craig and Steve there.
Then 1200mm long steel rollers fell from
the shiploader boom to where we would
have been if we’d gone down. It was nerve
wracking. We looked around the hills and
there was dust everywhere. The side of
Quail Island fell off.”
Norm walked and jogged home over the
Bridle Path to Opawa. “A lot of people were
walking home from town in their office
clothes; people having asthma attacks
and other difficulties.” Luckily Norm’s
house was all right but Craig’s house was
badly damaged.
Steve Ellery Electrical Foreman
Steve was awarded a “Working Wonder”
award in a campaign organised by the
Department of Labour and Newstalk
ZB to recognise Canterbury workers
who went above and beyond the call
of duty following the September 2010
earthquake. Steve, who has worked at
the Port for nearly 35 years, said “It was
a humbling experience to be recognised
for just doing my job.” Steve arrived
at work after the quake to find the Port
had a complete power outage and got to
work with his team of electricians and
apprentices to get the power back on.
Chief Executive Peter Davie nominated
Steve for the award. “I thought, we’ve
got some people who have done some
fantastic work over this period and Steve
was one who came to mind.” He thanked
Steve and other Port staff for their hard
work. Steve received his award from the
Hon. Kate Wilkinson, Minister of Labour.
Steve said: “I was very surprised and
pleased, although not half as pleased as
my mother!”
Some of the mechanics, fitters and boilermakers from the Workshop team: Mike Leigh and Norm Eyre (front); and Ray Flanagan (Foreman), Nick Gould, Murray Holmwood, Peter Hodgson, Joel Alyward, Steve Gray, Lindsay Talbot (obscured), and Brett Hartley.
Arthur Sands, Facilities Coordinator (left), and Tristan Williams, Civil Asset and Project Manager. Ingenuity – a temporary navigation light.
13
Lyttelton Container Terminal TimekeepersBased at the Container Terminal, the
timekeeping team of Clint Harsent, Peter
Kerr and Les Thurlow is responsible for
ensuring that the required labour is in place
for each shift to operate the straddle carriers
and cranes, and cover other container-
related work.
Clint Harsent says: “In the February
earthquake I felt a wham. It was much more
violent than in September. There was a big
uplift and I felt the force coming up through
the soles of my feet.”
They knew that much of Lyttelton township
had been demolished, seeing dust rise to
100 feet in the air and rocks falling off the
side of the hill out the window. A boulder
fell on the Security van near the Port gate.
About 6pm the container yard was checked
and straddles straightened some of the
containers which had moved. Paving on the
yard was badly cracked. “We were amazed at
how much the ground had slumped and how
far the wharf had been pushed out,” says
Peter Kerr.
Staff stayed on past their shifts or came in
Marine and Security The Marine team provides pilots, tugs and
other essential resources required for
vessels visiting the Port, while the Security
team ensures that the Port is secure.
The February earthquake provided many
heart-stopping moments for both teams.
The Marine and General Cargo Manager,
George Philips, and Security Manager Paula
Allen were attending a lunch meeting with
the Maritime New Zealand Security Advisors
when the February quake hit.
After eventually making it safely back to
Port, George Philips established that the
cruise ship Europa, which was in Port at the
time, was missing some 200 passengers.
Reports began filtering in that most
passengers had been located and tour buses
managed to transport them back to the Port.
All passengers were eventually accounted
for and the vessel was made ready to sail at
approximately 8:30pm.
With many of the Marine crew being
unavailable for regular duties immediately
following the earthquake, alternative
measures were taken to sail the cruise ship.
Pilot Joanne Laing, who lives in Lyttelton,
to help although they weren’t rostered on.
In the days that followed, the timekeepers
rang all their labour pool to check if people
were all right and to organise staff for
emergency work.
“The cargo handlers and Management all
worked in well together. A lot of the guys
went out of their way to help. Some had
major problems at home and made the
effort to come in. The vast majority of
guys were resilient. And if they needed to
get home, Management were more than
accommodating,” Peter and Clint said.
Peter, a volunteer fireman at the Sumner
Fire Station, went to help out there for
several days although he was rostered off
to go on a golfing holiday to Blenheim.
After the earthquake, the timekeepers, like
others, suffered communication delays and
were concerned for their families. When
Peter eventually left for home later in
the evening he saw a strange sight: “With
Lyttelton blitzed, there was an armoured
vehicle by the Tunnel Road. It was bizarre,
like a war zone.” He had to wait half an
hour while a digger moved a big rock off
Dyers Road. “But time didn’t mean much at
that stage.”
1
2
3
4
14
agreed to sail the Europa despite being off
work with an injured foot. Other Marine,
Port Services, and Security staff were
enlisted to help with letting go the
ship’s lines.
A number of vessels were berthed in the
Inner Harbour on 22 February. HMNZS
Canterbury was there and Navy divers
helped to check the integrity of the
wharves. Navy and Army personnel also
assisted the Lyttelton community with food
and water, medical assistance and other
essential supplies. Military vehicles that had
been loaded on HMNZS Canterbury were
unloaded and dispatched to locations around
Christchurch, including Lyttelton.
CityDepot CityDepot, LPC’s inland port located through
the tunnel at Woolston, provides a container
receival and delivery service, as well as a
storage, clean and repair service.
In the February earthquake, full and
empty containers fell from the stacks, and
customers’ product spilled onto the yard.
“There must have been a hell of a noise
but no one in the office heard it because
of the rattling and shaking going on,” says
Customer Liaison Officer Abbie Mounce.
Everyone congregated in the yard and
after ascertaining that everyone was safe,
Container Manager Martin Ferriss released
his staff to go and check their homes
and families. In the following days staff
inspected and righted the containers, and
tidied up the mess.
“People pitched in as they could, even
with the aftershocks going on. They had
to concentrate so hard on what they were
doing, it was nerve wracking for them. Even
now earthquakes are always at the back
of our minds when we’re working around
containers. The team keeps working and I
take my hat off to all of them.” A number
of CityDepot people had to move out of their
homes, including Martin whose house was
flooded with liquefaction. Others had no
water or power.
After February, empty containers were
suddenly in big demand. Some were taken
from CityDepot up to the Tunnel Road to
protect against rock falls, to the Army, and
to Urban Search and Rescue. Containers were
also used to hold bladders of water for use
out in communities. Shipping line customers
have been all too willing to assist with lending
containers. Maersk in particular have been
very generous, lending out a large number of
containers many of which are still guarding
the community from rock falls in Redcliffs and
Sumner. “They’ve been fantastic,” says Abbie.
“I wish to acknowledge the efforts of the management and staff of
Lyttelton Port Company to ensure the port returned to operation
and that shipping services resumed in swift time after the natural
disasters. Everyone at LPC worked hard towards a quick recovery. I
could not imagine what the import-export season would have been
without the port up and running.”
Martyn Prestidge National Sales Manager, NYK New Zealand
1 LCT Timekeepers: Les Thurlow,
Clint Harsent and Peter Kerr.
2 Some of the LCT Logistics team:
Randal Thomson, Kevin McCreanor,
Bobby Murray and John Franklin.
3 Security Supervisor Sione Lea, Port
Service Supervisor Kore Uri-Ke, Marine
Administrator Shelley Ross (back), Launch
Master Bryan Shankland, and Marine and
Security Manager George Philips.
4 Pilot Joanne Laing.
5 The team at CityDepot, LPC’s inland port.
6 When the NYK Lyttelton made an
inaugural visit to the Port in May 2011,
three cranes worked the vessel despite
the ongoing earthquake-recovery paving
works happening close by. NYK Line
chartered the vessel after the February
quake and the shipping line’s staff
renamed the vessel in recognition of the
impact of the earthquakes on the Port and
community, the hard work by everyone to
quickly get onto a path of recovery, and
the fact that Lyttelton has been a regular
port in NYK’s weekly service.
7 CityDepot in action.
5
6 7
15
For a full 10 months of the 2011 financial
year, Lyttelton Port of Christchurch was in
emergency or recovery mode after a series
of severe earthquakes and aftershocks.
Report from the ChairmanRodger Fisher
16
Thanks to the resilience of the Port business
and infrastructure, built up over a number
of years, and the commitment of its people,
the Port and our inland port CityDepot kept
operating with minimal downtime. After
each major earthquake event, critical Port
services were substantially restored within 96
hours. This is a fantastic achievement given
the magnitude of destruction throughout
Canterbury.
On behalf of the Board, I extend my heartfelt
thanks to the Chief Executive and every
member of staff for outstanding commitment
and teamwork in getting the Port back on its
feet so quickly despite personal difficulties and
concerns at home.
Sincere thanks also go to our customers for
their patience and support through these
difficult months.
Solid Financial Result It is my great pleasure to advise that despite
the most destructive events in the history of
the Port, the Company achieved an earthquake-
adjusted profit after tax of $12.1 million for the
year ended June 2011. This is compared with
$9.0 million the previous year, an increase
of 34.4%.
The after-tax result is proof of the underlying
strength of the business and reflects solid
business growth, particularly in container and
coal volumes.
Earthquake-adjusted revenues totalled
$93.7 million, up 7.3% from $87.3 million the
previous year.
The statutory consolidated result, which
includes earthquake effects such as additional
costs, insurance proceeds and revenues lost,
is an after-tax profit of $24.1 million, with
revenues of $91.6 million.
Write-downs of Port assets following the
September 2010 and February and June 2011
earthquakes total $29 million.
A total of $33 million has so far been approved
by the Board to enable urgent repair and
remediation works from the 22 February 2011
and 13 June 2011 earthquakes. These urgent
temporary repairs are ensuring that the Port
remains operative. There will be significant
further expenditure required to rebuild the
infrastructure over a number of years.
Dividend At the Half Year, the Directors resolved to
defer the payment of dividends until further
insurance proceeds are received.
While some insurance payments have been
received, matters with our insurers are not
yet finalised and the total financial impact
of the earthquake damage remains unclear.
The payment of dividends therefore remains
deferred, although we see no reason why we
would not revert back to our dividend policy
once the claims have been resolved.
Insurance Update Up to 1 July 2011, LPC carried significant
insurance cover for restoring and reinstating
assets to current standards as a result of
events such as earthquakes, along with
business interruption insurance.
The Company has been formally advised
by its lead insurer that it accepts the
earthquake damage to the Company’s
assets is insured. To date the Company
has received progress payments of
$35.7 million for both business interruption
and material damage expenditure as a result
of the earthquakes, and has made a further
progress claim of $18 million.
LPC continues to work with its lead insurer
on damage assessments and the appropriate
next steps for reinstatement of the damaged
structures. It is the Company’s view that the
total insurance claims will be significant and
will materially impact on future financial
statements.
The Company has been successful in
obtaining limited insurance cover for the
Port going forward, with 100% of the cover
required for assets under its material
damage policy being provided except for
wharves, breakwaters, pavements and other
assets which are already more than 50%
damaged. However, this excludes cover
for natural disasters including earthquakes.
The Port has been unable to secure business
interruption cover. LPC is continuing to work
with its brokers and insurers to build on
this position.
All other policies have been renewed.
Governance The Board has worked together well over
the past year in supporting Management
and ensuring that resources are available
to progress the earthquake recovery
programme and build future growth. It has
been a privilege to lead this capable, focused
team during such an eventful year.
Mr Alan Grant, a Director for 10 years,
retires at the Annual Meeting on
3 November 2011. Mr Bill Luff, a Director
for seven years, resigned as at 31 May
2011, after accepting a senior management
role with Solid Energy NZ Limited. Both
Directors have made a major contribution
to the Company and I express my sincere
appreciation on behalf of the Board
and Management.
Two new Directors were welcomed.
Lindsay Crossen joined the Board on
28 October 2010. He comes from a civil
engineering background and was previously
Acting CEO of Fulton Hogan Australia. Brian
Wood joined as at 1 June 2011 to replace
Mr Luff as an Independent Director. He
was previously Managing Director, Asia
Pacific of global engineering consultancy
MWH Limited.
Outlook We will continue to work with our lead
insurer to finalise the claims for earthquake
damage suffered in the year to 30 June
2011. Significant resources have been
and will continue to be committed to this
key task.
The 2012 financial year will be a year of
recovery, and significant repair and rebuild,
as well as further business growth.
With solid business fundamentals and
committed, able people, Lyttelton Port
of Christchurch has a very positive
future indeed.
Financial Growth
79,257
28,068
10,465
2006
76,374
26,888
9,641
2007
83,442
30,888
10,345
2008
84,427
29,567
10,056
2009
91,
625
37,1
54
24
,111
2011
87,327
29,241
9,008
2010
($000)
Revenue
EBITDA
NPAT
17
We have achieved one of our best
business years and a greatly improved
safety performance despite the severe
damage caused by the seismic events
of September 2010, and February and
June 2011.
Report from the Chief ExecutivePeter Davie
18
Looking back, I can say that we achieved
these excellent results while being tested
beyond anything we could have imagined.
A huge thank you to our hardworking,
can-do staff – our first thoughts were for
your safety. A huge thank you also to our
customers, and our suppliers and technical
contractors.
Resilient Port, Resilient People Lyttelton Port of Christchurch was down
for only hours at a time after the high-
magnitude earthquakes and aftershocks,
with individual operations coming back
on-stream rapidly, proving the Port’s
resilience in terms of people, facilities and
infrastructure.
Our focus, after the safety of our people,
was to keep customer services operating.
Our concern was also to ensure essential
supplies such as water, food and fuel got
through to Christchurch and Canterbury.
Only coal exports were out for more than 96
hours, because of the extensive damage to
the coal berth and the ship-loading system.
In addition, the cruise season was brought to
an early end due to berth damage.
Working for a Full Recovery The Port is now running as efficiently as
possible considering the ongoing repair
works and damage yet to be addressed.
Our staff continue to work consistently
well in sometimes trying and hazardous
circumstances, many while still coping with
significant earthquake-related issues and
uncertainties at home.
Engineering, maintenance and electrical
assessments were undertaken after each
major seismic event. After each, additional
damage was discovered to wharves,
breakwaters, quays and pavements. Pile
damage, seawall subsidence, and upheaval
of pavement areas have worsened with
successive aftershocks.
To date several structures have had to be
demolished, including the Independent
Fisheries coolstore, and, regrettably, the
historic Pump House and Forbes Building,
both Category One listed buildings.
A programme of temporary works is
underway to stabilise Port structures.
Space is at a premium at present as the
works programme is rolled out through the
Port, and we are allocating space to trades
according to customer needs.
We are now in the planning stage of
what will probably be a four to five-year
reinstatement programme.
Business Growth Continues Record Trade Results
Record volumes were achieved during
the year for containers, and coal and log
exports. Total container volumes rose 6.2%
to 290,842 TEUs, while containers moved
through the Container Terminal rose 7.4%.
Coal exports rose 5.2% to over 2.1 million
tonnes. Log exports grew 8.7% compared to
the previous year.
CityDepot, our inland port located in
Woolston, handled record numbers of empty
containers, with a corresponding increase in
services such as surveys, repairs, wash, pre-
trip inspections and storage. MSC is using
CityDepot as their sole container-service
provider in Christchurch, and we expect
increased volumes from other shipping lines
as well.
Good Progress On Reclamation
With the need for additional paved and
hard stand areas in the Port, we applied for
and obtained emergency consents for the
10-hectare Te Awaparahi Bay Reclamation
to the east of Cashin Quay.
The project is providing an environmentally
sensible disposal area for clean demolition
hard-fill that would otherwise go to
landfill. This solution is saving Christchurch
people and businesses over $100 million
in dumping fees, and is saving the Port
many millions of dollars on quarrying and
transporting rock.
The new land is now larger than a football
field. It will be completed in four stages over
two years, and we expect the first stage
to be ready for vehicles and logs, at least,
within a year. The new land will need
time to settle before it can be used for
container storage.
Initial problems with containment were
rectified with an improved boom system.
Our active clean-up programme left
harbour beaches in a better state than they
were before. Under current consents, the
reclamation cannot be used for coal, and at
present our coal facility expansion plans are
on hold.
Further Solutions Underway
We are investigating with Solid Energy
and the Oil Users Group respectively
the reinstatement of the coal berth and
shiploading system, and the oil berth
facilities. We are also working with
Independent Fisheries on a replacement
coolstore and wharf, to be located on the
site of the old cattle jetty in the southwest
corner of the Inner Harbour.
The lamella water treatment plant at
the coalyard was completed and the old
stormwater plant decommissioned. The land
will be used for additional coal storage.
A Quality Team Our success this financial year is thanks to
our people, who have done a sterling job.
We are pleased to say that there were no
injuries on the Port during the earthquakes
and aftershocks. However, 40 of our staff
lost their homes. Others suffered damage
and liquefaction issues. A number of staff
assistance measures are in place.
Despite the dangerous conditions, our
people achieved an 18.5% drop in lost-
time injuries (LTIs). Educational efforts are
continuing to promote safety.
The management structure was reviewed
during the year and, to support the rebuild
of the Port, a Programme Management
Office and Manager added. With a new
Operations Manager and Marketing Manager,
we now have a full senior team that is
focused on the recovery of the Port and
the long-term strategy of the Company. Our
team is featured on page 24.
Working With the Community During the year, senior managers
participated in the Lyttelton Harbour Issues
Group, as well as community master-
planning for Lyttelton. A Port Community
Forum was hosted by the Company.
While community support is strong, there
is increasing interest in harbour access, and
our aim, as we have previously stated, is to
move east as we expand the reclamation,
and begin to free up parts of the Inner
Harbour to facilitate reinstatement of our
damaged facilities and for long-term public
and light marine commercial use.
A Positive Outlook The Company is well placed for growth
while improving our customer service,
productivity and safety performance. Going
into the new financial year, we have two
new container shipping services beginning,
which is a significant expression of support
into the future. Exports of dairy and coal are
expected to remain strong.
Over the next year we expect to see good
growth in cargo volumes, operational
improvements and a commencement of the
reinstatement programme.
19
In total LPC moved 9.6 million tonnes of
cargo through the Port compared to last
year’s 9.8 million tonnes.
Containers Total container volumes rose 6.2% to a
record 290,842 TEUs from 273,789TEUs
the previous year. Total throughput at
the Container Terminal increased to
271,231TEUs, a major improvement of 7.4%
over last year’s volume of 252,539 TEUs.
Total export containers rose 12.0%, with full
export volumes rising 8.9%. Reefer export
volumes were on a par with last year. The
ongoing commercial contract with Fonterra
resulted in a further increase in dairy export
volumes. This sector is expected to remain
strong in the coming year.
Full import volumes rose 5.8%.
Two new container-line services are coming
on stream at the Container Terminal for the
2011-2012 year. The new Maersk-MISC
tranship service via South East Asia began in
August 2011, and the new CMA CGM service
was announced to offer a tranship service
via South East Asia and a direct service to
the Pacific Islands and North Asia.
Coal Export coal volumes rose 5.2% on last year’s
2,012,010 tonnes to 2,117,040 tonnes.
We expect a continuation of this strong
performance, with the signing in June 2011
of a cooperation agreement between Solid
Energy and Bathurst Resources Ltd to export
Bathurst’s Denniston coal through Lyttelton.
We received an average of 4.4 trains
per day compared with 4.8 trains the
previous year.
Trade Review
Fuel This year we imported 961,698 tonnes of
fuel in total, down 9.2% compared with
1,041,399 tonnes last year.
Motor Vehicles The motor vehicle trade experienced a
small decrease in units of 1.9% during the
year, after a resurgence during 2010.
Dry Bulk Although we saw a strong increase last
year, Dry Bulk volumes fell 4.1% to
497,606 tonnes, driven primarily by
a drop in cement of 17.7% to 78,438
tonnes. Fertiliser countered the drop
to some extent by increasing 3.1% to
320,590 tonnes.
After weathering difficult economic conditions in the previous year, the Company achieved
another excellent trade result in the year to June 2011, this time against a backdrop of
earthquake damage and periodic disruption to shipping.
20
Trade Breakdown
Containers
Coal
Bulk Fuels
Dry Bulk
Other
Logs
Cars
56%
22%
10%
5%
3%
3%
1%
Total Volumes Through the Port
2011
2010
2009
2008
2007
9,608,681 tonnes
9,834,494 tonnes
9,465,767 tonnes
9,775,772 tonnes
8,928,212 tonnes
Total Container Volumes
2011
2010
2009
2008
2007
290,842 TEUs
273,789 TEUs
259,933 TEUs
250,657 TEUs
228,284 TEUs
Coal Volumes
2011
2010
2009
2008
2007
2,117,040 tonnes
2,012,010 tonnes
2,067,827 tonnes
2,246,342 tonnes
2,170,773 tonnes
Chris Russell, General Manager Group Logistics, Solid Energy NZ Ltd, and Peter Davie, Chief Executive, LPC.
21
Logs We enjoyed another record year for log
exports with a rise of 8.7% to 259,451
tonnes compared with 238,584 tonnes
exported last year. Some softness is
expected over the next six to 12 months as
a result of the high New Zealand dollar.
Fishing This year we landed 28,355 tonnes of wet
fish, down 26.4% on the 38,525 tonnes
of last year. This was a result of damage
to the Coolstore in the September 2010
earthquake, as well as trade movements.
Ship Visits Total ship visits were down to 925, a fall
of 17.1% from last year’s 1,116. The largest
contributor was a 6.0% drop in cruise ships,
to 47 from last year’s 50, when a halt was
caused to the cruise season as a result of
the February 2011 earthquake. Coal ships
dropped 4.8%, mostly as a result of a delay
in vessel visits due to earthquake damage to
the loading system.
Container ship visits held up well, with a
drop of just 1.6%. A small number of calls
were lost to other ports immediately after
the February 2011 earthquake because of
damage at Cashin Quay. Car ship visits also
dropped 1.6%.
“Coastal Oil Logistics wish to congratulate Lyttelton Port on your management of the port and facilities
through the earthquake events. Through the port’s endeavours, and those of local oil industry personnel,
we have minimised disruption to fuel supplies to the Canterbury region. Fuel supplies were essential in
the response to this tragic event. Coastal Oil Logistics wish you well on the road to recovery.”
John Gloag
Chief Executive Officer, Coastal Oil Logistics Ltd
TRADE REVIEWcontinued
22
Coal Loading Rate
2011
2010
2009
2008
2007
21,899 tonnes
25,837 tonnes
25,243 tonnes
25,775 tonnes
23,911 tonnes
The average loading rate of coal to vessel per day
(excluding specialist coals)
Ship Exchange Rate
2011
2010
2009
2008
2007
32.4 TEUs
32.2 TEUs
31.4 TEUs
30.0 TEUs
28.6 TEUs
The average number of TEUs moved per crane per hour
“In a year like no other for disruptions
to communities in Canterbury and the
West Coast, the support we’ve had from
our customers, suppliers and colleagues
has been amazing. I’d like to single out
in particular our export supply chain
partners, Lyttelton Port of Christchurch
and KiwiRail who both worked tirelessly
with our staff to minimise the delays
to our export shipments despite severe
damage in the earthquakes.”
Dr Don Elder
Chief Executive Officer, Solid Energy NZ Ltd
Berth Productivity
2011
2010
2009
2008
2007
55.7 TEUs
53.9 TEUs
48.8 TEUs
48.7 TEUs
45.9 TEUs
The average number of TEUs moved over the berth per hour23
Peter Davie Chief Executive Peter joined LPC as Chief Executive in 2003.
Prior to that Peter worked for seven years
in Australia as Chief Executive of the Port
of Portland. He was also involved in the
development of a new container terminal
in Brisbane (with CSX World Terminals)
and as a Director of the Adelaide Container
Terminal. Through these roles Peter has
gained valuable insights into trends in
international trade and port practices and
developments. Peter is a Council Member
of Business New Zealand, President of
the Canterbury Employers Chamber of
Commerce, a Director of the Canterbury
Business Recovery Group, and a Director of
Port of Portland (Australia).
Kathy Meads Corporate Services Manager and Chief Financial Officer Kathy joined LPC in October 2004. She
has extensive senior financial experience,
gained in CFO roles across a broad range
of business sectors including Ngai Tahu
Holdings Corporation Limited, Telecom NZ
Limited and Powermark NZ Limited. Through
these roles Kathy has gained a breadth of
experience in financial reporting, investment
analysis, treasury management, risk, project
management and governance which are
invaluable as LPC continues to develop and
face new challenges. Kathy’s role has been
extended during the year to incorporate
the Corporate Services functions of Human
Resources and Information Services.
Portfolios24
Paul Monk Operations Manager Paul joined LPC in June 2011. He brings
a wealth of experience in operational
and change management in businesses
that operate 24/7 over 365 days a year.
Former roles include senior operational
management positions at the District Health
Board, managing Christchurch Hospital and
Diagnostic Services across all Christchurch
hospitals, and management of a number of
prisons, which was a challenging role with
a strong focus on improving core operating
systems and performance. Having worked at
the Port previously, Paul has some hands-on
operational experience.
Paul Keleghan Programme Manager Paul joined LPC in January 2011. He joined
the UK Army’s artillery division in 1986
and served in the parachute and armoured
brigades on operations in Northern Ireland
and Kuwait. His last military role was as the
IT Services’ Director within the UK’s Cabinet
Office, following which he undertook a
series of senior IT strategy and programme
delivery roles in the Home Office and
Transport for London. On migrating to New
Zealand, Paul has worked as the head of
delivery at Jade Software Corporation and
was the acting IT Director at the University
of Canterbury.
Charlotte Mayne Marketing Manager Charlotte joined LPC in May 2011. She
brings a wealth of experience in business
development and commercial environments
within marketing, sales and communications,
leading strategic marketing direction. She
has spent time in the government sector
in a commercial setting, working with New
Zealand companies to grow exports and the
China-New Zealand Free Trade Agreement.
More recent roles include Director of
Marketing and Communications at Lincoln
University, and Marketing and Management
positions at New Zealand Trade and
Enterprise.
25
Our People
Despite massive damage, our people had
the Port up and running quickly after
each quake so that essential supplies
and customers’ goods could get through.
They worked diligently while coping with
earthquake problems at home in many
cases. Many of our staff lost their homes,
and others suffered damage and liquefaction
issues, as well as the inconvenience of
the loss of power, sanitary facilities and
running water.
We were hugely relieved that none of our
people were injured in the earthquakes
and that no-one suffered the loss of a close
family member or loved one.
To support our people throughout this
difficult time, we provided, among other
things, hot meals, showering facilities,
bottled water and port-a-loos. We also
provided financial seminars for those
impacted by the earthquake zones,
employee assistance and workplace
support to staff and their immediate
families, and, most importantly, time
away from work to deal with family and
housing issues.
Safety Comes First Safety was foremost in people’s minds
throughout the year. The heightened
awareness and greater focus on looking
after one another following each
earthquake was evident and heartening.
Our lost-time injuries (LTIs) reduced by
18.5% from the previous year and two
operational areas went the full
12 months with no LTIs. This was an
excellent achievement, particularly with
10 months of seismic events and new
hazards related to damage and ongoing
repair work.
We’re also pleased to report that we
maintained our Tertiary status under the ACC
Workplace Safety Management Programme,
which means we save costs by qualifying for a
20% discount on our ACC Workplace Cover levy.
Our independent audit was conducted just two
months after the September 2010 earthquake.
Training and Development Despite the turmoil during the year, we
continued to train our staff. Fifteen of our
newest Cargo Handlers completed their Level
2 National Certificate in Cargo Handling and
a further 12 staff completed their Level 3
Certificate. Other training included manual
handling, mooring line refresher training and
crane driver training.
One of our apprentices passed his National
Certificate in Automotive Heavy Engineering
and is planning to work towards the
advanced level.
The resilience and commitment of our people came strongly to the fore during the year in
response to 10 months of seismic shocks and resulting workplace disruptions and unusually
hazardous conditions throughout the Port.
1
26
Recruitment for Growth During the year, 41 people joined the
Company, with just under half supporting
the Container Terminal operations. The
new focus on rebuilding the Port provided
the opportunity to review the management
structure, and a Programme Management
Office was created to manage the rebuild.
Keeping Our People Many of our people have worked at the
Port for much of their career. Three of our
long-serving staff retired, having worked
for the Port for approximately 40 years.
We continue to celebrate the loyalty and
commitment of our long-serving staff,
and during the year we celebrated six
40-year service tenures and one 30-year
service tenure.
While our staff turnover was slightly
higher, this is mostly due to a number of
staff moving away from the Canterbury
region for family reasons following the
most serious quakes. Overall, our turnover
sits at 9.0%.
Average Age of Employees
15-20
21-30
31-40
41-50
51-60
61-70
3
30
69
107
153
62
0-5
6-10
11-15
16-20
21-25
26-30
31-35
36-40
41-45
46-50
Tenure (Years)
169
115
27
16
3
21
41
18
12
2
1 Linesmen at work.
2 Mechanic Kevin Fitzgibbon and
Cargo Handler Bryce Parratt.
3 The IT team – IT Support Dominec
Ciancarelli and Stephen Chadfield,
Senior IT Infrastructure Engineer
Treyton Maddock, IT Support Rod
O’Brien, IS Manager Campbell
Botting and Business Analyst Pip
Truscott.
4 Shelley Ross, Marine Administrator,
was awarded a Certificate of
Appreciation from the Fire Service,
for working with other Sumner
Lifeboat volunteers to provide
operational and logistical support.
The Sumner Fire Service became
a hub for the community in the
absence of community services after
the February quake. Shelley was
among the people chosen by the Fire
Service to meet Prince William when
he visited Sumner in March 2011 for
the National Christchurch Memorial
Service.
5 Keith Rodel (left) and Nick Cornwall
(right) of Port of Napier presenting
Peter Davie with a cheque in
support of earthquake relief.
2
3
4
5
27
Close Communications Throughout the year we maintained a
high level of staff communications. Staff
notices were sent out in the hours after the
major quakes, and updates were conveyed
regularly to inform people of available
assistance, progress on operations and
workplace hazards.
In addition to close communications on the
job, we ensure regular staff updates through
the following:
• Weekly newsletter, which is emailed,
mailed to homes and put up on the
intranet
• Staff notices on arising matters, often
several per week
• Port Talk, our community newsletter
which is mailed to staff at home.
Working with Unions Our industrial relations environment
continues to be relatively settled with
five collective agreements in place. This year
we successfully negotiated the CityDepot
Collective.
It was with sadness that we recorded the
passing of Brian Cronin, Organiser for the
Rail and Maritime Transport Union based
here in Lyttelton. Brian was well respected
by all who knew and worked with him.
OUR PEOPLEcontinued
1 Kim Kelleher, Environmental Manager.
2 Human Resources Advisor Sally Williams, Executive Secretary
Jocelyn Patel, and Executive Secretary Cath Kerr.
3 Payroll Manager Gaynor Stevenson, Senior Pay Clerk Pam Simon,
and Pay Clerk Janet Gebbie.
1 3
2
28
We are proud to have again achieved the Tertiary standard of the ACC Workplace
Safety Management Practices.
Auditor Sue Teng of ACC Workplace Incentive Programmes wrote in her notification
letter: “Congratulations! You have passed the independent audit of your workplace.
We commend you on your commitment to health and safety in your workplace.
Thank you for your ongoing efforts in making your workplace safer. We encourage
you to continue in your efforts to improve your health and safety systems.”
Nick Gould Mechanic Nick was awarded his National
Certificate in Automotive Heavy
Engineering during the year. He also
rebuilt the Port’s Omega forklift,
which was damaged by fire in 2007,
as a project in his own time. “This is
a huge achievement,” says his boss,
Mechanical Maintenance Foreman
Ray Flanagan. Nick stripped the
forklift to a bare chassis, repainted
the body and cab, rebuilt the motor
and installed all new hydraulics and
an air conditioning unit. The cab has
been refurbished and the electrical
system rewired. The project took
about 15 months to complete and
the Mechanical team assisted Nick
with the rebuild. The Omega has a
WOF and is back in operation. Nick
is now planning to work towards the
advanced level.
“After each catastrophic earthquake, LPC showed great determination and spirit to keep
the port open under extremely trying circumstances. It has performed outstandingly
to maintain throughput of emergency supplies for the stricken Canterbury region. As a
ship operator and transport and logistics specialist, we recognise the huge efforts by
LPC to keep ships moving and ensure the supply chain remained open for business.”
Steven Chapman Chief Executive, Pacifica
29
Supporting Our Community
One of our key objectives is to maintain
strong links and regard for the community
we share, and proactively manage the
effects of our activities. Outlined below are
some of the ways in which we work to make
that objective a reality.
Contributing to Economic Wellbeing The Port is a major factor in the livelihoods
of people throughout Canterbury and the
South Island. Over 90% of the region’s
exports and imports flow through the
Port, along with cargoes from all over the
South Island.
During 2011, LPC collected $91.6 million
in revenue from operations; provided 425
jobs, a number of them to Lyttelton harbour
residents; paid $36.5 million in salaries and
wages; and spent $22.9 million on goods
and services, much of this going to local
suppliers. In addition, equity returns flow to
the city through our majority shareholder,
Christchurch City Holdings Limited.
Engaging with the Community Open dialogue is maintained with
community stakeholders and we provide
regular Port news updates.
Earthquake communications include:
• Customer notices
• Website updates
• Letter to residents regarding use of
the inner berths because of damage to
Cashin Quay
• Paid advertising updates in mainstream
print media as well as local newspapers.
During the year, the Company participated
in the Lyttelton Harbour Issues Group; and
the community Master Plan sessions run
by the Christchurch City Council, which
includes actions for shorter-term rebuild
and recovery after the earthquakes, and
a longer-term vision for Lyttelton. In
addition, presentations were made to the
Lyttelton-Mt Herbert Community Board
and the Diamond Harbour Community
Association.
Our communications during the year
included two editions of our Port Talk
community newsletter, regular contribution
of news items to local newsletters and
media, and regular updates on our
website, which includes contact details for
community feedback and comment to
the Company.
Our popular public harbour cruises, which
are an ideal way to provide access to
the Port and allow the public to see how
their Port operates, were halted after the
February 2011 earthquake. We will reinstate
these tours in the future.
The Port has been at the heart of our local and wider community for approximately 160 years.
This central location means that the Port’s business inevitably impacts on our local neighbours.
30
Helping through Sponsorship We maintained a number of partnerships
during the year with community and
business groups:
• Bluelight Canterbury Youth Development
Programme
• Lyttelton Community Watch
• Lyttelton Junior Rugby
• Project Lyttelton, for the Summer Street
Party and the winter Lyttelton Harbour
Festival of Lights, which includes our
Lyttelton Port of Christchurch Fireworks
Extravaganza
• Otamahua/Quail Island Ecological
Restoration Trust
• Champion Canterbury Awards
• Export New Zealand, Canterbury division.
In addition, we have a close relationship
with Cholmondeley Children’s Home
and Ronald McDonald House, both of
which benefit from staff support through
fundraising activities.
“Lyttelton Rugby Club gratefully acknowledges Lyttelton Port of Christchurch support to
our junior section during this challenging 2011 season. The local community as a whole
benefits from this, and it’s been fantastic to see our young people enjoying their sport
and experience encouragement from supporters and friends. Thank you LPC, despite
reduced numbers and many interruptions it’s been a very rewarding year for Lyttelton
junior rugby.”
Clinton Norris President, Lyttelton Rugby Club
“LPC and the Lyttelton community live and work side by side. It is a symbiotic relationship.
The community appreciates the developing relationship between town and Port and
welcomes the chance to do things together with LPC so enhancing our collective space
and our experience of it. Sponsored events like the LPC Fireworks give great pleasure
to the community as do the opportunities to establish clear communications such as at
LPC’s organisation of externally facilitated public meetings. Project Lyttelton appreciates
the growing relationship with LPC staff and being able to work alongside one another on
certain projects.”
Margaret Jefferies
Chairperson, Project Lyttelton
From a letter of thanks to the Chief Executive: “Thank you for providing communication
tools for the new car for the City to Sumner Community Watch. The support of both
yourself and your Company has been very helpful to the Watch in getting the new car
fitted out and ready to start patrols. The publicity associated with the new car has meant
that we have received five new applications to join, all from the Lyttelton/Bays area.”
Alan Christie, Secretary
City to Sumner Community Watch
LPC Administration Support Julie McHardy presents the proceeds from a staff fundraiser to local Lyttelton Community Watch Patrol member Paul Dahl, watched by Police Sergeant Gary Manch.
31
Committed to the EnvironmentLyttelton Port of Christchurch is located in
a picturesque natural environment that is
treasured by harbour communities, and the
wider city and Canterbury region.
The Company is deeply aware of its
environmental obligations, and carefully
balances commercial initiatives with
the responsibilities of a good corporate
citizen. We work co-operatively with other
harbour users to ensure our valued local
environment is well cared for.
Environmental LeadershipLPC has an Environmental Manager who is
responsible for overseeing environmental
management, resource management and
planning, implementation of mitigation
measures, and regulatory compliance.
The Environmental Manager chairs a number
of community-engagement forums, the main
agenda items of which are noise, traffic and
dust issues.
The Port Liaison Committee, based in
Lyttelton, comprises members of the
Lyttelton Residents Association, Christchurch
City Council, Environment Canterbury
and LPC, as well as individual Lyttelton
residents. In particular, the Committee
addresses the issue of port noise and
oversees the Company’s acoustic treatment
programme.
Under our Port Noise Mitigation Plan, each
year we fund the acoustic treatment of
approximately three houses located close
to port operations. Because of earthquake
issues only one house was completed.
The CityDepot Liaison Group provides
a regular opportunity to engage with
residential and commercial neighbours of
our inland container depot in Woolston.
A meeting of environmental professionals
from the South Island Environmental
Professionals Group was hosted in
November 2010. This sort of activity
ensures that the Company is up with
best practice.
Te Awaparahi Bay ReclamationAs a result of the major earthquakes during
the year, emergency resource consents
were approved by the Government under
emergency powers in June 2011 for the Te
Awaparahi Bay Reclamation.
Supporting Our Environment
The project is a sustainable solution for
disposal of clean earthquake demolition
rubble for Canterbury, taking millions of
tonnes of waste which would otherwise
become a massive environmental liability
as landfill.
The Assessment of Environmental Effects
(AEE) and the resulting consents capture
concerns expressed in a series of meetings
with residents’ associations, the Lyttelton-
Mt Herbert Community Board, Te Runanga o
Ngai Tahu, Department of Conservation, the
Historic Places Trust, Maritime New Zealand,
and other groups.
Rigorous best-practice environmental
measures put in place include stringent
criteria and monitoring controls to ensure that
only clean fill is placed into the reclamation.
The construction methodology ensures
minimal disruption of the seabed and reduces
the possibility of significant mud waves and
associated sediment plumes. A purpose-
built containment system is in place. Initial
problems with containment were rectified
and an active clean-up programme left
harbour beaches in a better state than they
were before.
32
“LPC has been helping the trust transport our plants from the DOC nursery at Motukarara to Otamahua/
Quail Island since the restoration project started in 1998, and over 70,000 plants, as well as weed
matting and building materials have been carried across on LPC Rescue. The bush cover is now clearly
visible from Lyttelton. Already the numbers of native birds and insects has increased. With the
assistance of donors such as LPC, the restoration work on the island will continue to contribute to the
indigenous biodiversity of the Harbour basin.”
Ian McLennan
Acting Chairman, Otamahua/Quail Island Ecological Restoration Trust
The AEE, management plans and consents
can be found on our website, www.lpc.co.nz.
Public Access for Trail NetworkIn February 2011, we agreed with CCC
to grant public access to Company land
above Lyttelton. A bike and walking trail
network similar to that on the adjoining
Urumau Reserve will be created, along with
links through CCC, LPC and Department of
Conservation land. Work will begin once
hillside rocks have been stabilised.
Our Environmental Principles Committed to minimising any adverse effects of its activities and facilities on the
environment, the Company will:
• Advocate environmentally sustainable principles in Port operations
• Avoid, remedy or mitigate adverse effects of its operations on the environment
• Where appropriate, pro-actively consult with the community on environmental issues
• Identify priorities for environmental improvement
• Implement and maintain systems and procedures for continually improving environmental
performance
• Monitor, document and report on environmental performance to the Board, senior
management and staff.
The Company’s Environmental Policy is a commitment to address all environmental issues
in the Port such as noise and discharge of contaminants to air, land and water. The Resource
Management Act 1991 provides the legal framework, together with statutory policy
statements, plans and regulations prepared under the Act.
33
NZX50 Index NZ40 Index Lyttelton Port Company
Gro
ss R
etur
n (re
base
d to
100
, NZX
50 re
base
d to
NZ4
0 cl
ose)
Source: GSJBW Research estimates, NZX Stock Exchange
Jul 96 Jul 97 Jul 98 Jul 99 Jul 00 Jul 01 Jul 02 Jul 03 Jul 04 Jul 05 Jul 06 Jul 07 Jul 08
100
150
250
200
300
400
350
450
500
550
Jul 09 Jul 10
50
Jul 11
Correspondence with the New Zealand Stock ExchangeDuring the course of the year we have kept open dialogue but had no formal correspondence with the Exchange.
Market Announcements to the New Zealand Stock Exchange Since the announcement of the 2010 financial results there have been 43 announcements released through the Exchange. These comprised:
• Three with respect to the Annual Meeting and presentations
• Four on Company results
• Two on the Annual and Interim Reports
• Five relating to nominations, resignations and independence of Directors
• One Substantial Security Holder Notice from Christchurch City Holdings Limited
• One regarding the multi-million dollar investment in a new Cruise Berth
• Five with respect to insurance matters
• 20 notices on operational updates post earthquakes
• One regarding the 2011-2012 cruise season update
• One regarding the halting of merger discussions with Port Otago Limited
Lyttelton Port vs NZ40 Index and NZX50 Index
Investor Relations34
Released Headline
9 Aug 2011, 4:08pm Insurance Update
9 Aug 2011, 4:05pm LPC Nominations For Directors
6 Jul 2011, 2:21pm Coal Exports Are Now Underway
1 Jul 2011, 5:00pm Insurance Update
30 Jun 2011, 8:30am Insurance Update - LPC
22 Jun 2011, 5:30pm LPC Operational Status
22 Jun 2011, 5:26pm LPC Update Wednesday 22 June 2011
21 Jun 2011, 11:03am Customer Notice
17 Jun 2011, 5:11pm Return To Service After 96 Hours
16 Jun 2011, 5:21pm LPC Operational Status
14 Jun 2011, 4:37pm LPC Operational Status
2 Jun 2011, 10:24am Appointment Of New Director
31 May 2011, 5:01pm 2011 – 2012 Cruise Season Update
24 May 2011, 5:02pm Lyttelton Port Of Christchurch Revises Profit Forecast
18 May 2011, 12:27pm SSH - (Christchurch City Holdings Ltd)
15 Apr 2011, 4:13pm Resignation Of Director
15 Apr 2011, 4:09pm (LPC) Insurers Confirm Insurance Claims Covered
30 Mar 2011, 10:20am Interim Report For The 6 Months Ended 31 December 2010
15 Mar 2011, 5:02pm Emergency Status Lifted At Lyttelton Port Of Christchurch
11 Mar 2011, 5:14pm LPC Lifts Force Majeure On Solid Energy
2 Mar 2011, 4:34pm Strong Trading Result Highlight Of First Six Months
1 Mar 2011, 5:04pm Customer Notice
28 Feb 2011, 5:02pm NZX Market Supervision - LPC - Waiver Listing Rule 10.4.1
28 Feb 2011, 12:58pm Solid Energy Force Majeure
28 Feb 2011, 8:30am LPC Operational Status
25 Feb 2011, 8:30am Customer Notice
24 Feb 2011, 8:30am LPC Operational Status
23 Feb 2011, 3:26pm Lyttelton Port Of Christchurch
22 Dec 2010, 10:44am LPC - Experiences Strong Volume Growth
21 Dec 2010, 1:45pm Director Independence Determination
21 Dec 2010, 1:43pm Directors Resignation
20 Dec 2010, 5:11pm Multi-Million-Dollar Investment In New Cruise Berth
3 Dec 2010, 9:44am LPC Market Update
28 Oct 2010, 12:32pm Resolutions From LPC Annual Meeting Held 28 October 2010
28 Oct 2010, 12:29pm Chairmans Address From LPC Annual Meeting
21 Oct 2010, 11:06am Notice Of Annual Meeting And Proxy Form 2010
8 Oct 2010, 12:09pm Customer Notice Review On LPC’s Operational Status
1 Oct 2010, 9:38am Announcement From LPC and Port Otago Limited
29 Sep 2010, 4:51pm Solid Energy Force Majeure Lifted
29 Sep 2010, 9:36am Annual Report 2010
8 Sep 2010, 3:33pm Solid Energy Force Majeure
6 Sep 2010, 12:01pm Lyttelton Port Of Christchurch - Operational Status
6 Sep 2010, 11:01am Lyttelton Port Of Christchurch - Operational Status
35
CorporateGovernanceWe continue to strive for best
practice in corporate governance.
Role of the BoardThe Board is elected by Shareholders to
create value and have overall responsibility
for management of the Company.
The Board carries out its responsibilities by
setting the Company’s strategic direction,
providing leadership to put this into effect,
appointing a Chief Executive, agreeing
targets and objectives, and monitoring
performance. The Chief Executive has been
delegated responsibility for the day-to-day
management of the Company. He has an
executive team of four to assist him.
Corporate decisions are made at
Shareholder, Director or Management level,
depending on statutory requirements,
New Zealand Stock Exchange Listing Rules
or Board Policy relating to the value of
transactions.
Board CompositionThe Company’s Constitution provides that
the Board will consist of not less than
six and not more than seven Directors.
Shareholders nominate Directors and
appoint them by way of ordinary resolution.
This requires a simple majority of votes. At
least two of the Directors must be ordinarily
resident in New Zealand, and not more than
two of them can be members or employees
of a territorial local authority, regional
council, united council or harbour board that
owns shares or other forms of equity in the
Company. The constitution provides for the
appointment of a Managing Director by the
Board. If such an appointment is made, the
Managing Director is an additional Director
to the six or seven ordinary Directors and
practice is that the role incorporates that of
Chief Executive.
At least two of the six or three of the eight
Directors must be independent.
One third of the ordinary Directors retire
by rotation at each Annual Meeting. The
basis for determining which Directors retire
by rotation is length of service in office
since last election or appointment. Retiring
Directors are eligible for re-election.
The Directors elect a Chairman from among
those non-executive Directors at the first
Board Meeting following the Annual Meeting.
The composition of Board Committees is
determined at the same time.
Ethical StandardsDirectors observe and foster high ethical
standards.
Conflicts of InterestsAt each of our 12 scheduled Board meetings,
the first matter of business to address is
the Directors’ Declaration of Interests, the
details of which are referred to later in this
section. This seeks to ensure that there are
no conflicts of interest between the Director
and the Company. In the event of an actual
or potential conflict, Board practice is that a
Director declares his/her interest at the time
of the discussion and absents him/herself
from voting on the issue.
In the year under review no decisions
were made at Board level that required an
interested Director to abstain from voting.
Fair Dealing with Customers, Clients, Employees, Suppliers, Competitors and Other StakeholdersDirectors value the relationships that
the Company has with its officers and
employees, and through them with
customers, suppliers, competitors and
36
other stakeholders, and is committed to
professional and fair dealing with them.
Giving and Receiving of Gifts, Facilitation Payments and BribesCompany policy is to keep a gift register
where all gifts of a cash or non-cash
value over $50 received by a Director or
employee, by virtue of their relationship
with the Company, are recorded in a
register. This is reviewed monthly by the
Chief Executive and at least annually by the
Chairman. The Company does not condone
the payment of ‘bribes’ or ‘facilitation
payments’ in any form in any circumstances.
Use of Company Property and Information All Directors are Non-executive Directors
and only receive Directors’ fees and
reimbursement of actual expenses incurred
whilst on Company business. Directors
have no rights to any Company property or
information other than in their capacity as
a Director.
Compliance with Laws and Regulations It is the intent that all Directors and
employees of the Company comply with
laws and regulations. A statement is
provided six-monthly from Management
to Directors certifying that, to the best of
their knowledge, they comply with all laws
and regulations. These declarations are
supported by internal risk management
processes.
Reporting of Unethical Decision Making and/or Behaviour (and Consequences) Directors strive to ensure ethical behaviour
is maintained throughout the Company,
by setting expectations of conduct of the
Company’s personnel. In the event of a
significant contentious matter, Directors
require that it be brought to the Board for
their consideration.
Management has adopted a process of
reporting any unethical or potentially
unethical activity, identifying the issue,
the parties involved and the magnitude
of the issue if quantifiable. Directors have
the power to take disciplinary steps in
accordance with relevant labour legislation
and, if appropriate, take remedial action for
or with the third parties involved.
Board Meetings Each year there are 12 scheduled Directors’
meetings. The Board is able to meet at other
times if there is business to be conducted.
Any two Directors have the power to
summon a meeting of the Board and a
quorum is three Directors.
To enable the Board to function effectively,
Management provides formal Board papers
one week in advance of Board meetings.
These papers may be for information or
proposing a recommendation in accordance
with authorisation levels.
Committees of the Board The Directors have established two standing
Committees of the Board: Audit and Finance,
and Remuneration. The terms of reference
for each of the Committees and the need
for Committees are reviewed regularly
by Directors.
The Committees make recommendations
to the Board and only exercise the Board’s
decision-making powers when they have
been specifically delegated authority to do
so. A quorum for the purposes of Committee
meetings is three Directors.
37
• Audit and Finance Committee
The Committee reviews the Company’s
financial statements and announcements.
It also liaises with the external auditors
on behalf of the Board and reviews the
Company’s accounting policies, internal
controls and related matters.
The Committee also reviews and considers
issues relating to risk involving the
protection of people and property in the
achievement of the Company’s business
goals and impact on profitability. This
includes considering the placement of
an annual insurance programme and
making appropriate recommendations to
the Board.
• Remuneration Committee
The Committee reviews the terms and
conditions of company-wide employment
contracts, the performance and
remuneration of the Chief Executive and
senior executives, and the design and
operation of the incentive programme,
and makes appropriate recommendations
to the Board.
Remuneration Policy The remuneration of Directors and
executives is transparent, fair and
reasonable. Shareholders by ordinary
resolution from time to time set a total
maximum amount payable for annual
Directors’ fees. These are divided amongst
the Directors, as they consider appropriate.
The process by which this is done is that
each year Directors review the results of
an independent professional Directors’
Remuneration Survey against which to
benchmark their fees. At such time as the
Directors deem it appropriate, a proposal is
put to Shareholders at the Annual Meeting
for their consideration.
The Directors have established the position
of Deputy Chairman.
There is no provision in the Company’s
Constitution to allow additional
remuneration beyond that approved
by Shareholders to Directors for work
undertaken in the capacity of a Director.
However, it does allow the Board to award
additional remuneration if a Director
provides any special services or otherwise
in the interests of the Company. It is
Company policy not to make retirement
payments to Directors without Shareholder
approval.
Should a Managing Director be appointed,
his/her remuneration is that of an executive
of the Company and he/she is not entitled
to additional payment as a Director. A
proportion of the Managing Director/Chief
Executive’s annual remuneration comprises an
incentive-related payment dependent on the
performance of the Company and attainment
of agreed objectives.
Board Performance Directors meet at least annually to review
their collective performance at a meeting
without Management present.
Directors’ Training Directors are offered the opportunity and
encouraged to attend Institute of Directors
New Zealand and other relevant training
courses. On completion, they are required
to report back to the Board on the courses’
content.
Board Interaction with Management Most contact is with the Chief Executive,
whom the Directors hold accountable for the
operational performance of the Company.
In addition, Board Policy is to make site
visits to view Company operations and to
familiarise Directors with issues associated
with the business. These visits usually
involve interaction between Directors and
Management and direct access to employees
when their particular area of expertise is
required.
Directors’ Obligations A Directors’ Interests Register is maintained
CORPORATE GOVERNANCE continued
38
and reviewed at each Board meeting. It
records the following information:
• Directors’ Interests
Particulars of notices given by Directors
in regard to positions held in other
companies.
• Interested Transactions
For each Director, a notice has been
received to the effect that he/she is to
be regarded as having an interest in
any transaction between Lyttelton Port
Company and any company in which he/
she has declared an interest.
• Share Dealing by Directors
We have adopted a Securities
Commission-approved share trading
procedure to ensure that no Director or
employee, who has inside information
about the Company, uses that information
in selling or buying shares in the Company
for personal gain. Directors’ interests are
disclosed in the Annual Report and details
of any share trading are reported as they
occur through the New Zealand Stock
Exchange.
Directors’ Insurance and Indemnity The Company has arranged Directors’
Liability Insurance that, together with a
Deed of Indemnity, ensures that generally
Directors will incur no monetary loss as a
result of actions undertaken by them as
Directors. Certain actions are specifically
excluded, for example, criminal acts and
the incurring of penalties and fines, which
may be imposed in respect of breaches of
the law.
Financial Results Directors receive and review financial
reports monthly and the Company
prepares formal Financial Statements to
Shareholders twice annually. The first is
included within the Interim Report for
the six months to 31 December. These
Interim Reports are subject to a limited
scope review by external auditors. The
Full Year Financial Statements to 30 June
and a report from the external auditor are
included in this Report.
Before signing the formal financial
statements to Shareholders, the Chief
Executive and Chief Financial Officer
are required to certify that the financial
statements comply with NZ International
Financial Reporting Standards and
present a true and fair view of the
financial affairs of the Company. Directors
then make certain representations to
the Auditors as to compliance. The
representations are based on a suite of
internal representations by Management and
individual Directors.
External Auditor The Board ensures the quality and
independence of the external audit process.
Sections 19 of the Port Companies Act 1988,
and 15 of the Public Audit Act 2001, provide
that the Auditor General is the auditor of
port companies and their subsidiaries.
Under Section 6 of the Port Companies
Amendment Act 1990, this requirement
remains until such time as at least 50% of
the Company’s equity is held by entities
other than harbour boards, regional councils,
territorial authorities and/or local body
trading enterprises. The Auditor General
may choose to delegate this authority, and
has done so in the case of Lyttelton Port
Company. KPMG has been contracted by
the Auditor General to undertake the audit
of the Company on her behalf for the year
ended 30 June 2011.
It is Board policy to meet with the external
auditor at least twice a year independent of
management to discuss any areas of concern
or recommendations for improvement.
39
Rodger Fisher Chairman Rodger Fisher is a management consultant
based in Auckland. Prior to this he spent
more than 10 years as Managing Director
of Owens Group Limited. Rodger is a Fellow
of the Chartered Institute of Secretaries, the
Chartered Institute of Transport, the Institute
of Directors and the New Zealand Institute of
Management. He is currently the Chairman
of Eurotech Group Limited and of Ultrafast
Broadband Limited and is a Director of Tenon
Limited and The Property Group Limited.
Rodger has been a Director of LPC since
February 2003. He is an ex-officio member
of the Audit and Finance Committee and
Chairman of the Remuneration Committee.
Rodger was elected Chairman of the LPC
Board in November 2007.
Dr Rod Carr Dr Carr hails from a commercial banking
background and is currently the Vice-
Chancellor of the University of Canterbury.
Previously he was Managing Director at Jade
Software Corporation. Rod has extensive
experience with government bodies, including
five years as Deputy Governor of the Reserve
Bank of New Zealand. Rod chairs the National
Infrastructure Advisory Board and is a
member of the International Business Forum.
He is a Director of the Canterbury Employers’
Chamber of Commerce. Rod is a Trustee of the
Christchurch Earthquake Appeal Trust and The
Christchurch Arts Festival Trust. He is also a
Director of Joint Research Consultants (NZ)
Ltd, Taranaki Investment Management Ltd and
Waingawa Forest Corporation Ltd. Rod is a
member of the Remuneration Committee.
Trevor Burt Deputy Chairman Trevor Burt has recently returned from
overseas following a career with the global
industrial gas company The BOC Group.
Trevor held a number of senior leadership
roles with BOC in Australia, China and the
USA. Following the acquisition of BOC by
the German global engineering company
Linde AG Trevor joined the executive Board
of Linde. He has extensive experience in
strategic leadership in large organisations
and since returning to New Zealand has taken
up a number of governance roles including
Chair of Ngai Tahu Holdings Corporation and
directorships of Mainpower NZ Ltd and Silver
Fern Farms Ltd. Trevor is a member of the
Institute of Directors and the Chairman of the
Audit and Finance Committee.
Portfolios40
Alan Grant Alan Grant comes from Winchmore, near
Ashburton, and has been a Director of
LPC since October 2001. He is Managing
Director and majority shareholder of
Craigellachie Dairy Farms Limited which
operates three farms milking 1,950 cows.
Alan is a Fellow of the New Zealand Institute
of Directors and is a member of LPC’s Audit
and Finance Committee.
Brian Wood Brian Wood has had a career in senior
leadership roles in both the public and private
sectors and latterly consulting. His consulting
roles included a period with the International
Monetary Fund. He was previously Managing
Director Asia Pacific of global civil engineering
consultancy MWH Inc, and was responsible for
overall leadership in New Zealand, Australia,
Singapore, China, Taiwan, Vietnam and Brunei.
Since stepping down from his role with
MWH, he has a number of directorships and
undertakes consulting assignments for several
clients. He is currently Chair of Buller Holdings
Ltd, Canterbury Laundry Services Ltd and
Abley Transportation Consultants Ltd. Brian is
an accredited company director with the New
Zealand Institute of Directors. He is a member
of the Audit and Finance Committee.
Lindsay Crossen Lindsay Crossen comes from a civil
engineering background and is currently the
Group Civil Engineer for Fulton Hogan Ltd.
He has had a leadership role in engineering
contracting over the last two decades and
is a Distinguished Fellow of IPENZ and
a Fellow of NZIM. In 2009 Lindsay was
appointed to the National Infrastructure
Advisory Board. He is also a Director of
InfraTrain NZ Ltd and Chair of the New
Zealand Board for Engineering Diplomas.
Lindsay is a member of the Remuneration
Committee.
41
Directors’ InterestsFor each Director, a general notice has been
received to the effect that he/she is to be
regarded as having an interest in
any transaction between Lyttelton Port
Company Limited and that in which he/she
has declared an interest as employee
or Director.
Directors’ fees in total were revised and
approved by Shareholders at the November
2010 Annual Meeting.
All six Directors at 30 June 2011 were
independent Directors.
42
Rodger Fisher ChairmanAppointed to the Board in February 2003, and as Chairman in
November 2007. Chairman of Remuneration Committee and Ex-Officio
member of Audit and Finance Committee.
Interests
• Tenon Ltd – Director
• The Property Group Ltd – Director
• Eurotech Group Ltd – Chairman
• Rodger Fisher Consulting Ltd – Director
• Fisher Family Trust – Trustee
• Ultrafast Broadband Limited (UBL) – Independent Chairman
(from 01 April 2011)
Directors’ fees paid: $75,000
Trevor Burt Deputy ChairmanAppointed to the Board in November 2008. Member of Audit and
Finance Committee, and Committee Chairman from 31 August 2010.
Interests
• MainPower NZ Ltd – Director
• Breakaway Investments Ltd – Director
• Hossack Station Ltd – Director
• Canterbury Fresh Ltd (In Liquidation) – Director
• Canterbury Fresh Processing Ltd (In Liquidation) – Director
• Burt Family Trust – Trustee
• Ngai Tahu Holdings Corporation Ltd – Chairman
• NZ Trade and Enterprise New Zealand Beachhead Advisory Board
– Member
• Landpower Holdings Ltd – Director
• Silver Fern Farms Ltd – Director
• Ngai Tahu Capital Ltd – Director
• NZ Lamb Company Ltd – Director
• Canterbury Business Recovery Group Ltd – Director
• Earthquake Commission – Commissioner
Directors’ fees paid: $43,000
Dr Rod CarrAppointed to the Board in November 2006. Member of Remuneration
Committee.
Interests
• Joint Research Consultants (NZ) Ltd – Director
• Waingawa Forest Corporation Ltd – Director
• Waingawa Forest Corporation Ltd – Shareholder
• Waingawa Forestry Partners – Partner
• Waingawa Land Company – Partner
• Taranaki Investment Management Ltd – Director
• CECC – Director
• Marshall Carr Family Trust – Trustee
• Home Trust – Trustee
• Wellington Drive Ltd – Shareholder
• NZ Oil and Gas – Shareholder
• National Infrastructure Advisory Board – Chairman
• University of Canterbury Trust Funds– Vice Chancellor
• University of Canterbury Holdings Ltd – Director
• Canterprise Ltd – Director
• Te Tapuae O Rehua Ltd – Director
• The Shark Factory Ltd – Shareholder
• IP Investors Ltd – Shareholder
• Canterbury Arts Festival – Trustee
• International Business Forum – Member
• Motu Research Foundation – Trustee (until June 2011)
• Christchurch Earthquake Appeal Trust – Trustee (until June 2011)
• Canterbury Business Leaders Group – Member
• Future Christchurch Network – Member
• Christchurch Earthquake Appeal Trust – Trustee
Directors’ fees paid: $41,000
Alan GrantAppointed to the Board in October 2001. Chairman of Audit and
Finance Committee until 31 August 2010, now Committee Member.
Interests
• Craigellachie Dairy Farms Ltd – Managing Director
• ANZCO Foods Ltd – Director
• Alan Grant Trust – Trustee
• Alison Grant Trust – Trustee
• CMP Farmer Nominees Ltd – Director
Directors’ fees paid: $41,000
Lindsay Crossen Appointed to the Board in October 2010. Member of the
Remuneration Committee.
Interests
• Infratrain NZ Ltd – Director
• National Infrastructure Advisory Board – Member
• Ministry for the Environment - RM II Infrastructure Technical _
• Advisory Group – Member
• NZ Board of Engineering Diplomas – Interim Chairman
• LC & JH Crossen Family Trust – Trustee
• Fulton Hogan Ltd – Group Civil Engineer
• Rotary D9970 Board – Director
Directors’ fees paid: $28,000
Brian WoodAppointed to the Board in June 2011. Member of Audit and Finance
Committee.
Interests
• Alpine Energy Ltd – Director (to 1 July 2011)
• Netcon Ltd – Director (to 1 July 2011)
• RockGas Timaru Ltd – Director (to 1 July 2011)
• Olssens Garden Vineyard Ltd – Director
• Buller Holdings Ltd – Chairman
• Westreef Services Ltd – Chairman
• Buller Recreation Ltd – Chairman
• Career Force Innovation Training Trust – Chairman
• Westport Harbour Ltd – Chairman
• Canterbury Laundry Service Ltd – Chairman
• Abley Transportation Consultants Ltd – Chairman
Directors’ fees paid: $4,000
Bill Luff Former Deputy ChairmanRetired from the Board on 31 May 2011.
Interests
• Luff Trading Trust Ltd – Director / Sole Shareholder
• Woodlands Family Trust – Trustee
• Wairau Trout Ltd – Director
• Christchurch Networks Ltd – Chairman
• Canterbury Development Corporation – Chief Executive
• Power House Ventures Ltd – Director
• Canterbury Innovations Ltd – Director
• Geospatial Research Ltd – Director
Directors’ fees paid: $43,000
43
Principal Activities During the year, the Company continued to
be responsible for the overall management
of the Port of Lyttelton. Our principal
activities remain the provision of port
facilities, marine services and the cargo
handling of coal and containers.
There have been no changes in the
Company’s business in the period of review.
Financial Result During the year, the Company had a
27.1% increase in earnings before interest,
taxation, depreciation and amortisation
(EBITDA). EBITDA increased to $37.2 million
from $29.2 million, with net profit after
taxation (NPAT) increasing 167% to
$24.1 million from $9.0 million.
At 30 June 2011, Shareholders’ Funds were
$155 million and the return on average
Shareholders’ Funds for the year was 16.7%.
Changes in Accounting Policies As disclosed in Note 3 (d) (iv) there
has been one additional accounting
policy added this year to account for
the derecognition of assets. Other
than this, there have been no changes
in accounting policies in the current
accounting period.
Changes in Contingencies As disclosed in note 22 we have reported
the Port Noise working agreement as a
contingent liability with an estimated
total maximum liability of $1.3 million
over the next eight years.
We continue to report the seabed issue
as a contingent liability as disclosed in
the financial statements at note 22. An
interim monitoring and management
plan is in place. At this time the Directors
have not determined what liability, if
any, would accrue to the Company.
Auditors KPMG, acting as agent for the Office of the
Auditor General, was the auditor of Lyttelton
Port Company Limited for the year ended
30 June 2011.
The remuneration for Auditors is disclosed in
note 6 to the Financial Statements.
Changes in Capital There have been no changes in capital in the
current period. There are 102,261,279 total
shares on issue.
Dividends No dividend has been declared for the year.
Directors Mr Bill Luff resigned from the Board on
31 May 2011. The Directors appointed Mr
Brian Wood to replace him. Mr Wood will
offer himself for re-election to the Board at
the Annual Meeting. Mr Alan Grant will resign
from the Board at this year’s Annual Meeting.
Your Directors take pleasure in presenting the 2011 Annual Report including the Financial
Statements of the Lyttelton Port Company Limited for the year ended 30 June 2011.
Report from the Directors
44
Year ended 30 June 2011
Total Remuneration ($) Number of Employees
100,000 - 110,000 25
110,001 - 120,000 26
120,001 - 130,000 1
130,001 - 140,000 3
140,001 - 150,000 1
150,001 - 160,000 2
160,001 - 170,000 1
170,001 - 180,000 7
240,001 - 250,000 1
250,001 - 260,000 1
280,001 - 290,000 1
420,001 - 430,000 1
Total 70
Remuneration of Employees Remuneration of staff paid in excess of $100,000.
45
Directors Attendance July 2010 - June 2011
As at 30 June 2011 Annual
Meeting
Scheduled
Meeting
Unscheduled
Meeting
Audit & Finance
Committee Meetings
Remuneration
Committee Meetings
Rodger Fisher 1 11 1 3 2
Bill Luff 1 8 1 1
Barney Sundstrum 1 5 1 1
Trevor Burt 1 12 3 1
Rod Carr 1 11 2 2
Alan Grant 1 12 1 3 2
Lindsay Crossen 1 7 1 2 1
Brian Wood 1 1
Particulars of the Directors’ and Officers’ Transactions in Shares of the CompanyDuring the year the current Directors’ and Officers’ shareholding in the Company has not changed.
As at 30 June 2011 no Director or Officer held shares in the Company.
REPORT FROM THE DIRECTORScontinued
46
Directors’ Loans There were no loans by the Company to the Directors.
Use of Company Information, Assets and Property During the year, the Board did not receive any notices from Directors of the Company requesting the use of Company information received in the
capacity as Directors, which would not otherwise have been available to them.
Directors, in their ordinary course of business, have no cause to and do not use Company assets or property, other than meeting room facilities for
Board and Committee meetings.
“We are impressed at the speed with which you got the port back working after the February quake.
You ensured your people and their families were safe before recommencing operations; ensured
computer links to shipping companies and regulatory agencies were restored for import and export
documentation; liaised with shipping companies on alternative services; coordinated with KiwiRail
and the trucking companies and emergency services on having product moved through the port;
and retrieved our 25 toppled containers loaded with product and assisted us to get them back to
Clandeboye.
As you and your staff rebuild your lives, and in many cases your homes, and your business, I’d like to
say a big, big thanks from all of us at Fonterra – you’re an amazing team and our thoughts are with you.
Garrie Hoddinott GM Supply Chain Optimisation, Fonterra
47
48
FINANCIALS COVER
Financial Calendar
2011
November
Annual meeting
Directors Fees Increase
2012
February
Interim result announcement
March
Publication of Interim Report, and
Interim Dividend payment
June
Financial year end
August
Full Year result announcement
September
Annual Report mailed to Shareholders
Reporting Our Financials
49
The Auditor-General is the auditor of
Lyttelton Port Company Limited (the
company) and group. The Auditor-General has
appointed me, Alex Skinner, using the staff
and resources of KPMG, to carry out the audit
of the financial statements of the company
and group on her behalf.
We have audited the financial statements
of the company and group on pages 52 to
85, that comprise the statement of financial
position as at 30 June 2011, the statement of
comprehensive income, statement of changes
in equity and statement of cash flows for the
year ended on that date and the notes to the
financial statements that include accounting
policies and other explanatory information.
Opinion on the Financial Statements In our opinion the financial statements of the
company and group on pages 52 to 85:
• comply with generally accepted
accounting practice in New Zealand;
• comply with International Financial
Reporting Standards; and
• give a true and fair view of the company
and group’s:
• financial position as at 30 June 2011;
and
• financial performance and cash flows
for the year ended on that date.
Opinion on Other Legal RequirementsIn accordance with the Financial Reporting
Act 1993 we report that, in our opinion,
proper accounting records have been kept
by the company and group as far as appears
from an examination of those records.
Our audit was completed on 25 August 2011.
This is the date at which our opinion is
expressed.
The basis of our opinion is explained
below. In addition, we outline the
responsibilities of the Board of Directors
and our responsibilities, and explain our
independence.
Basis of OpinionWe carried out our audit in accordance
with the Auditor-General’s Auditing
Standards, which incorporate the International
Standards on Auditing (New Zealand). Those
standards require that we comply with ethical
requirements and plan and carry out our audit
to obtain reasonable assurance about whether
the financial statements are free from material
misstatement.
Material misstatements are differences or
omissions of amounts and disclosures that
would affect a reader’s overall understanding
of the financial statements. If we had found
material misstatements that were not
corrected, we would have referred to them in
our opinion.
An audit involves carrying out procedures to
obtain audit evidence about the amounts and
disclosures in the financial statements. The
procedures selected depend on our judgement,
including our assessment of risks of material
misstatement of the financial statements
whether due to fraud or error. In making those
risk assessments, we consider internal control
relevant to the preparation of the company
and group’s financial statements that give a
true and fair view of the matters to which they
relate. We consider internal control in order to
design audit procedures that are appropriate
in the circumstances but not for the purpose of
expressing an opinion on the effectiveness of
the company and group’s internal control.
An audit also involves evaluating:
• the appropriateness of accounting policies
used and whether they have been
consistently applied;
• the reasonableness of the significant
accounting estimates and judgements made
by the Board of Directors;
• the adequacy of all disclosures in the
financial statements; and
• the overall presentation of the financial
statements.
We did not examine every transaction, nor
do we guarantee complete accuracy of the
financial statements. In accordance with the
Financial Reporting Act 1993, we report that
we have obtained all the information and
explanations we have required. We believe
we have obtained sufficient and appropriate
audit evidence to provide a basis for our
audit opinion.
Responsibilities of the Board of DirectorsThe Board of Directors is responsible for
preparing financial statements that:
• comply with generally accepted
accounting practice in New Zealand; and
• give a true and fair view of the company
and group’s financial position, financial
performance and cash flows.
The Board of Directors is also responsible
for such internal control as it determines
is necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to fraud
or error.
The Board of Directors’ responsibilities arise
from the Financial Reporting Act 1993 and
the Port Companies Act 1988.
Responsibilities of the AuditorWe are responsible for expressing an
independent opinion on the financial
statements and reporting that opinion to
you based on our audit. Our responsibility
arises from section 15 of the Public Audit Act
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 New Zealand Institute of
Chartered Accountants.
Other than the audit, we have no relationship
with or interests in the company or any of
its subsidiaries.
Alex Skinner
KPMG
On behalf of the Auditor-General
Christchurch, New Zealand
Audit ReportTo the readers of Lyttelton Port Company Limited and Group’s Financial Statements for the year
ended 30 June 2011.
50
Directors’ Declaration
In the opinion of the Directors of Lyttelton
Port Company Limited, the financial
statements and notes on pages 52 to 85:
• comply with New Zealand generally
accepted accounting practice and give a
true and fair view of the financial position
of the Company and the Group as at
30 June 2011, and the results of their
operations and cash flows for the year
ended on that date; and
• have been prepared using appropriate
accounting policies, which have been
consistently applied and supported by
reasonable judgements and estimates.
The Directors believe that proper accounting
records have been kept which enable, with
reasonable accuracy, the determination
of the financial position of the Company
and the Group, and facilitate compliance of
the financial statements with the Financial
Reporting Act 1993.
The Directors consider that they have taken
adequate steps to safeguard the assets of the
Company and the Group, and to prevent and
detect fraud and other irregularities. Internal
control procedures are also considered to be
sufficient to provide a reasonable assurance
as to the integrity and reliability of the
financial statements.
The Directors are pleased to present the
financial statements of Lyttelton Port
Company Limited for the year ended
30 June 2011.
For and on behalf of the Board of Directors:
Rodger Fisher
Director
25 August 2011
Trevor Burt
Deputy Chairman
25 August 2011
51
Group Company
In thousands of New Zealand dollars Note 2011 2010 2011 2010
Assets
Property, plant and equipment 9 201,361 210,220 180,576 198,683
Intangible assets 10 3,645 3,619 3,570 3,544
Loans and advances 993 741 993 741
Total non-current assets 205,999 214,580 185,139 202,968
Inventories 3,145 2,528 3,145 2,528
Trade and other receivables 12 22,958 12,752 22,786 12,752
Prepayments 803 667 803 667
Cash and cash equivalents 692 168 619 168
Loans and advances 54 1,812 54 1,812
Intercompany account balances 24 - - 20,815 11,695
Income tax receivable 3,261 - 3,303 -
Total current assets 30,913 17,927 51,525 29,622
Total assets 236,912 232,507 236,664 232,590
Equity
Share capital 13 21,457 21,457 21,457 21,457
Hedging reserve 13 (2,763) (2,967) (2,763) (2,967)
Retained earnings 136,509 115,363 136,374 115,597
Total equity 155,203 133,853 155,068 134,087
Liabilities
Loans and borrowings 15 40,752 57,912 40,752 57,912
Derivatives 19 3,914 4,166 3,914 4,166
Deferred lease income 17 4,503 5,370 4,503 5,370
Deferred tax liabilities 11 12,116 14,986 12,037 14,736
Other non current liabilities 136 220 136 220
Total non-current liabilities 61,421 82,654 61,342 82,404
Current tax payable - 1,206 - 1,164
Trade and other payables 18 12,058 8,151 12,023 8,292
Employee entitlements 7,363 5,697 7,364 5,697
Derivatives 19 - 79 - 79
Deferred lease income 17 867 867 867 867
Total current liabilities 20,288 16,000 20,254 16,099
Total liabilities 81,709 98,654 81,596 98,503
Total equity and liabilities 236,912 232,507 236,664 232,590
Statement ofFinancial Positionas at 30 June 2011
52
Statement ofComprehensive Incomefor the year ended 30 June 2011
Group Company
In thousands of New Zealand dollars Note 2011 2010 2011 2010
Continuing operations
Revenue 91,625 87,327 91,254 87,327
Employee expenses (36,507) (34,289) (36,507) (34,289)
Materials and consumables utilised (17,165) (19,216) (17,164) (19,216)
Depreciation and amortisation 5,9,10 (11,564) (11,945) (11,456) (11,808)
Administrative and other expenses 6 (5,724) (4,581) (6,302) (4,730)
Results from operating activities before the impact of the earthquakes 20,665 17,296 19,825 17,284
Effect of Canterbury earthquakes
Additional costs 30 (12,375) - (12,375) -
Insurance proceeds to date 30 46,288 - 46,288 -
Assets written off/derecognised 30 (28,988) - (28,346) -
Net financing expenses 7 (4,551) (3,866) (4,551) (3,866)
Profit before tax for the year 21,039 13,430 20,841 13,418
Income tax credit/(expense) 8 3,072 (4,422) 2,901 (4,129)
Profit for the year 24,111 9,008 23,742 9,289
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges - gross 401 (103) 401 (103)
Income tax on other comprehensive income (197) 31 (197) 31
Total comprehensive income for the period 24,315 8,936 23,946 9,217
Earnings per share from continuing operations
Basic earnings per share (cents) 14 23.6 8.8
Diluted earnings per share (cents) 14 23.6 8.8
53
Statement ofChanges in Equityfor the year ended 30 June 2011
Group Company
In thousands of New Zealand dollars Share capital
Hedging reserve
Retained earnings
Total Share capital
Hedging reserve
Retained earnings
Total
Balance at 1 July 2009 21,457 (2,895) 111,366 129,928 21,457 (2,895) 111,319 129,881
Total comprehensive income for the period
Profit or loss - - 9,008 9,008 - - 9,289 9,289
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges - (72) - (72) - (72) - (72)
Total comprehensive income for the period - (72) 9,008 8,936 - (72) 9,289 9,217
Transactions with owners recorded directly in equity
Dividends to equity holders - - (5,011) (5,011) - - (5,011) (5,011)
Balance at 30 June 2010 21,457 (2,967) 115,363 133,853 21,457 (2,967) 115,597 134,087
Total comprehensive income for the period
Profit or loss - - 24,111 24,111 - 23,742 23,742
Other comprehensive income
Net effective portion of changes in fair value of cash flow hedges - 204 - 204 - 204 - 204
Total comprehensive income for the period - 204 24,111 24,315 - 204 23,742 23,946
Transactions with owners recorded directly in equity
Dividends to equity holders - - (2,965) (2,965) - - (2,965) (2,965)
Balance at 30 June 2011 21,457 (2,763) 136,509 155,203 21,457 (2,763) 136,374 155,068
54
Statement ofCashflowsfor the year ended 30 June 2011
Group Company
In thousands of New Zealand dollars Note 2011 2010 2011 2010
Cash flows from operating activities
Cash receipts from customers 91,086 84,829 90,887 84,829
Cash paid to suppliers and employees (56,988) (56,828) (57,740) (56,828)
Cash generated from operations 34,098 28,001 33,147 28,001
Insurance proceeds from the Canterbury earthquakes 2,000 - 2,000 -
Cash costs as a result of the Canterbury earthquakes (12,375) - (12,375) -
Interest paid (4,815) (4,238) (4,815) (4,238)
Interest received 220 372 220 372
Income tax paid (4,382) (4,333) (4,385) (4,333)
Net cash from operating activities 23 14,746 19,802 13,792 19,802
Cash flows from/(used in) investing activities
Insurance proceeds from the Canterbury earthquakes 33,696 - 33,696 -
Proceeds from sale of property, plant and equipment 135 3 135 3
Acquisition of property, plant and equipment (27,826) (15,147) (26,945) (15,147)
Acquisition of intangible assets (102) (258) (102) (258)
Net cash used in investing activities 5,903 (15,402) 6,784 (15,402)
Cash flows from/(used in) financing activities
(Repayments)/proceeds of borrowings (17,160) 776 (17,160) 776
Dividends paid (2,965) (5,011) (2,965) (5,011)
Net cash from financing activities (20,125) (4,235) (20,125) (4,235)
Net increase/(decrease) in cash and cash equivalents 524 165 451 165
Cash and cash equivalents at 1 July 2010 168 3 168 3
Cash and cash equivalents at 30 June 2011 692 168 619 168
55
Notes to theFinancial Statements
1. Reporting Entity .......................................................................................................................................................................................... 57
2. Basis of Preparation .................................................................................................................................................................................... 57
3. Significant Accounting Policies ............................................................................................................................................................... 58
4. Determination of Fair Values .................................................................................................................................................................. 62
5. Gain/Loss on Sale of Property, Plant and Equipment .................................................................................................................... 63
6. Other Expenses ............................................................................................................................................................................................. 63
7. Finance Income and Expenses ................................................................................................................................................................ 63
8. Income Tax Expense ................................................................................................................................................................................... 64
9. Property, Plant and Equipment .............................................................................................................................................................. 66
10. Intangible Assets .......................................................................................................................................................................................... 68
11. Deferred Tax Assets and Liabilities ...................................................................................................................................................... 70
12. Trade and Other Receivables................................................................................................................................................................... 71
13. Capital and Reserves .................................................................................................................................................................................. 71
14. Earnings per Share ..................................................................................................................................................................................... 72
15. Loans and Borrowings ................................................................................................................................................................................ 72
16. Employee Benefits ....................................................................................................................................................................................... 72
17. Deferred Lease Income .............................................................................................................................................................................. 73
18. Trade and Other Payables ....................................................................................................................................................................... 73
19. Financial Instruments ................................................................................................................................................................................. 74
20. Operating Leases .......................................................................................................................................................................................... 80
21. Capital Commitments .................................................................................................................................................................................. 80
22. Contingencies ................................................................................................................................................................................................. 80
23. Reconciliation of the Profit for the Period with the Net Cash from Operating Activities ............................................... 81
24. Related Parties .............................................................................................................................................................................................. 82
25. Group Entities ................................................................................................................................................................................................ 82
26. Segmental Reporting ................................................................................................................................................................................... 82
27. Port Noise Working Party ......................................................................................................................................................................... 83
28. Memorandum of Understanding ............................................................................................................................................................ 83
29. Acquisition of Business .............................................................................................................................................................................. 83
30. Canterbury Earthquakes ............................................................................................................................................................................ 84
31. Subsequent Events ...................................................................................................................................................................................... 85
56
Notes to theFinancial Statementscontinued
1. Reporting Entity
Lyttelton Port Company Limited (the “Company”) is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on
the New Zealand Stock Exchange (“NZX”). The Company is an issuer in terms of the Financial Reporting Act 1993.
Financial statements for the Company (separate financial statements) and consolidated financial statements are presented. The consolidated
financial statements of Lyttelton Port Company Limited as at and for the year ended 30 June 2011 comprise the Company and its subsidiaries
(together referred to as the “Group”).
Lyttelton Port Company is involved in providing and managing port services and cargo handling facilities.
2. Basis of Preparation
(a) Statement of Compliance
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (“NZ GAAP”). They
comply with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”), and other applicable Financial Reporting
Standards, as appropriate for profit-oriented entities. The Financial statements also comply with International Financial Reporting Standards
(“IFRS”).
The financial statements were approved by the Board of Directors on 25th August 2011.
(b) Basis of Measurement
The financial statements have been prepared on the historical cost basis except for the following:
• derivative financial instruments are measured at fair value.
The methods used to measure fair values are discussed further in note 4.
(c) Functional and Presentation Currency
These financial statements are presented in New Zealand dollars ($), which is the Company’s functional currency. All financial information
presented in New Zealand dollars has been rounded to the nearest thousand unless indicated otherwise.
(d) Use of Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and in any future periods affected. Areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on amounts recognised in the financial statements are as detailed below:
• note 3 (e) iv) – amortisation of intangibles
• note 3 (d) (iii) – depreciation rates and estimation of useful economic lives
• note 9 – carrying value of land, buildings and harbour structures
• note 22 – contingencies
57
Notes to theFinancial Statementscontinued
3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements. The accounting policies
have been applied consistently by Group entities.
(a) Basis of Consolidation
( i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken
into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
(ii) Transactions Eliminated On Consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
(iii) Investments In Equity Securities
Investments in equity securities of subsidiaries are measured at cost in the separate financial statements of the company.
(b) Foreign Currency
(i) Foreign Currency Transactions
Transactions in foreign currencies are translated to the functional currency of the Group (NZD) at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency
at the exchange rate at that date.
(c) Financial Instruments
(i) Non-Derivative Financial Instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, trade and other
payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any
directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described
below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are
derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the group transfers the financial assets to
another party without retaining control or substantially all risks and rewards of the asset. Purchases and sales of financial assets are accounted
for at trade date, i.e., the date that the group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s
obligations specified in the contract expire or are discharged or cancelled.
Loans and Borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part
of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cashflows.
Trade and Other Receivables
Trade and other receivables are stated at their cost less impairment losses.
Trade and Other Payables
Trade and other payables are stated at cost.
Other
Subsequent to initial recognition, other non-derivative financial instruments are measured at amortised cost using the effective interest
method, less any impairment losses.
58
Notes to theFinancial Statementscontinued
(ii) Derivative Financial Instruments
The Group uses derivative financial instruments to hedge its exposure to foreign exchange, commodity price and interest rate risks arising
from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative
financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading
instruments.
Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately. Subsequent to
initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognised
immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on
the nature of the hedging relationship (see below).
Cash Flow Hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent
that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting
is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs.
When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it
is recognised. In other cases the amount recognised in equity is transferred to profit or loss in the same period that the hedged item affects
profit or loss.
(d) Property, Plant and Equipment
(i) Recognition and Measurement
Items of property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses.
Subsequent additions are recorded at cost which includes expenditures that are directly attributable to the acquisition of the asset including
financing costs. The cost of self-constructed assets includes the cost of materials and direct labour, borrowing costs on qualifying assets, any
other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing
the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is
capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
(ii) Subsequent Costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the
future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day
servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant
and equipment except for capital work in progress. Leased assets are depreciated over the shorter of the lease term and their useful lives.
Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
• buildings 5-50 years
• harbour structures and land improvements 3-50 years
• container cranes 30 years
• plant equipment and vehicles 3-30 years
• vessels 5-25 years
• seawalls 100 years
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
(iv) Derecognition
In the event that an asset or part of an asset is damaged and not expected to be able to be used to generate future economic benefits, then it
is derecognised as an asset and the carrying value, or part thereof, is charged to profit or loss as ‘assets written off’.
59
Notes to theFinancial Statementscontinued
(e) Intangible Assets
(i) Resource Consents and Easements
Resource consents and easements over land provide an enduring benefit for the Company and the Group’s operations. These are recorded at
cost and are amortised to profit or loss on a straight line basis over periods of 5-10 years (being the periods of assessed benefit). Resource
consents and easements are stated at cost less amortisation provided to date.
(ii) Other Intangible Assets
Other intangible assets including software that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated
amortisation and accumulated impairment losses.
(iii) Subsequent Expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All
other expenditure is recognised in profit or loss when incurred.
(iv) Amortisation
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of finite intangible assets, from the date that
they are available for use. The estimated useful lives for the current and comparative periods are as follows:
• computer software 3-10 years
• resource consents and easements 5-10 years
(f) Leased Assets
(i) Group as Lessee
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon
initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease
payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and the leased assets are not recognised on the Group’s balance sheet.
(ii) Group as Lessor
Assets leased under operating leases are recorded as Property, Plant and Equipment.
(g) Inventories
Inventories, consisting of fuel stocks, maintenance parts and consumable supplies are measured at the lower of cost and net realisable value.
The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories and bringing
them to their existing location and condition. Net realisable value is the estimated replacement cost in the ordinary course of business.
(h) Impairment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any objective evidence of
impairment.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses directly reduce
the carrying amount of assets and are recognised in profit or loss.
(i) Impairment of Receivables
The recoverable amount of the Group’s receivables carried at amortised cost is calculated as the present value of expected future cash flows.
Receivables with a short duration are not discounted.
Impairment losses on an individual basis are determined by an evaluation of the exposures on each individual receivable. All receivables that
are considered significant are subject to this approach.
(ii) Non-financial Assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For
intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-
generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are used to reduce the
carrying amount of the other assets in the unit (group of units) on a pro rata basis.
60
Notes to theFinancial Statementscontinued
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognised.
(i) Employee Benefits
Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss when they are due. The Group
is party to a multi-employer defined benefit pension plan in respect of certain individuals. As sufficient information is not available for the
Group to account for this plan as a defined benefit plan, it is accounted for as a defined contribution plan, with obligations for contributions
recognised as an expense in profit or loss when they are due. See note 16 for additional information.
(i) Long-Term Employee Benefits
The Group’s net obligation in respect of long term employee benefits other than pension plans is the amount of future benefit that employees
have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount
rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations.
(ii) Short-Term Benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present
legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated
reliably.
(j) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability.
(k) Revenue
Revenue is measured at the fair value of the consideration received or receivable, net of allowances, trade discounts and volume rebates.
(i) Services
Revenue from services is recognised in profit or loss when the service is performed. Where services are in progress at the reporting date,
revenue is recognised in profit or loss in proportion to the stage of completion of the service at that date.
(ii) Rental Income
Rental income from property is recognised in profit or loss on a straight-line basis over the term of the lease.
(iii) Deferred Lease Income
Deferred lease income is revenue received in advance which is recorded as a liability and amortised to income on a straight line basis over the
period to which the lease income relates.
(l) Insurance Claim Recoveries
Insurance claim recoveries are recognised when received or when there is virtual certainty of receipt.
(m) Lease Payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives
received are recognised as an integral part of the total lease expense, over the term of the lease.
(n) Finance Income and Expenses
Finance income comprises interest income on funds invested and gains on derivative instruments that are recognised in profit or loss. Interest
income is recognised as it accrues, using the effective interest method.
61
Notes to theFinancial Statementscontinued
Finance expenses comprise interest expense on borrowings and the ineffective portion of derivative instruments that are recognised in profit
or loss. All borrowing costs are recognised in profit or loss using the effective interest method, except with regards to borrowing costs on
qualifying assets which are capitalised as part of the cost of those assets, as required by NZ IAS 23 Borrowing Costs.
(o) Dredging Costs
Maintenance dredging costs are recorded as a prepayment and expensed over the period of benefit, which has been assessed as one to
five years.
(p) Income Tax Expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following
temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit; and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they
probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary
differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
(q) Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or
loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders with the average number of ordinary shares
outstanding, for the effects of all dilutive potential ordinary shares.
(r) Segment Reporting
As of 1 July 2009 the Group determines its operating segments based on the information provided to the Board of Directors who are the
Group’s chief operating decision maker.
The Group has one reportable business segment providing and managing port and associated facilities in Christchurch, New Zealand.
(s) New Standards and Interpretations Not Yet Adopted
A number of new standards and interpretations are not yet effective for the year ended 30 June 2011, and have not been applied in preparing
these consolidated financial statements.
NZIFRS 9 Financial Instruments: Classification and Measurement will supersede NZIAS 39 and specifies how an entity should classify and
measure financial assets. The standard is effective for the year ended 30 June 2014. The Group has not yet determined the potential impact of
this standard. In addition NZIFRS 7 Financial Instruments: Disclosures will become effective for the year ended 30 June 2012.
The following new standards and interpretations are not expected to have a material impact on the Group’s financial statements when they
become effective:
• NZIFRS 10: Consolidated Financial Statements – effective year ended 30 June 2014
• NZIFRS 12: Disclosures of Interests in other Entities – effective year ended 30 June 2014
• NZIFRS 13: Fair Value Measurement – effective year ended 30 June 2014
• NZIAS 24: Related Party Disclosures (revised 2009) – effective year ended 30 June 2012
4. Determination of Fair Values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets
and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable,
further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
62
Notes to theFinancial Statementscontinued
(a) Derivatives
The fair value of forward exchange contracts is based on broker quotes if available. If a broker quote is not available, then fair value is
estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the
contract using a risk-free interest rate (based on government bonds).
The fair value of interest rate swaps and fuel hedges are based on broker quotes.
(b) Non-derivative Financial Liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date.
5. Gain/(Loss) on Sale of Property, Plant and Equipment
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Net gain/(loss) on sale of property, plant and equipment (included in depreciation and amortisation) (323) 2 (323) 2
6. Other Expenses
The following items of expenditure are included in administrative expenses:
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Auditor’s remuneration to KPMG comprises:
Audit of financial statements 90 70 90 70
Other audit-related services - 49 - 49
Total auditor’s remuneration 90 119 90 119
Other audit-related services include assistance with due-diligence investigations.
7. Finance Income and Expenses
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Interest income on bank deposits - - - -
Interest income on other investments 220 372 220 372
Interest paid on bank advances (4,948) (4,678) (4,948) (4,678)
Less interest capitalised to property, plant and equipment 177 440 177 440
Net finance expenses (4,551) (3,866) (4,551) (3,866)
See note 15 for the average effective interest rates on capitalised interest.
63
Notes to theFinancial Statementscontinued
8. Income Tax Expense
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Current tax expense
Current period - 4,189 - 4,152
Adjustment for prior periods (5) (3) (5) (3)
(5) 4,186 (5) 4,149
Deferred tax expense
Origination and reversal of temporary differences (3,643) 1,485 (3,472) 1,229
Deferred tax rate adjustment 576 (1,249) 576 (1,249)
(3,067) 236 (2,896) (20)
Income tax expense from continuing operations (3,072) 4,422 (2,901) 4,129
Total income tax (credit)/expense (3,072) 4,422 (2,901) 4,129
Income tax has been calculated based on the tax rates and tax laws enacted or substantively enacted at balance date. Changes to tax law have been
introduced to parliament subsequent to Balance Date which may have an effect on the tax treatment.
Reconciliation of effective tax rate - Group
In thousands of New Zealand dollars 2011 Rate 2011 Amount 2010 Rate 2010 Amount
Profit after tax 24,111 9,008
Total income tax expense (3,072) 4,422
Profit before tax 21,039 13,430
Income tax using the Company’s domestic tax rate 30.0% 6,312 30.0% 4,029
Non-deductible expenses 0.9% 190 1.4% 189
Tax exempt income (47.1%) (9,915) 0.0% -
Non-deductible tax depreciation on buildings (1.1%) (230) 10.8% 1,456
Deferred tax rate adjustment 2.7% 576 (9.3%) (1,249)
(Over)/under provided in prior periods 0.0% (5) 0.0% (3)
Total income tax (credit)/expense (14.6%) (3,072) 32.9% 4,422
64
Notes to theFinancial Statementscontinued
Reconciliation of effective tax rate - Company
In thousands of New Zealand dollars 2011 Rate 2011 Amount 2010 Rate 2010 Amount
Profit for the period 23,741 9,289
Total income tax expense (2,901) 4,129
Profit excluding income tax 20,840 13,418
Income tax using the Company’s tax rate 30.0% 6,253 30.0% 4,025
Non-deductible expenses 0.9% 190 1.1% 152
Tax exempt income (47.6%) (9,915) 0.0% -
Non-deductible tax depreciation on buildings 0.0% - 9.0% 1,204
Deferred tax rate adjustment 2.8% 576 (9.3%) (1,249)
(Over)/under provided in prior periods 0.0% (5) 0.0% (3)
Total income tax (credit)/expense (13.9%) (2,901) 30.8% 4,129
Income tax recognised in equity Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Derivatives (197) 31 (197) 31
Total income tax recognised directly in equity (note 11) (197) 31 (197) 31
Imputation credits Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Imputation credits at 1 July 20,441 18,513 20,441 18,513
New Zealand tax payments, net of refunds 4,458 4,395 4,458 4,395
Imputation credits attached to dividends paid (1,271) (2,467) (1,271) (2,467)
Imputation credits at 30 June 23,628 20,441 23,628 20,441
The imputation credits are available to shareholders of the Company:
Through the Company 23,628 20,441 23,628 20,441
Through subsidiaries - - - -
8. Income Tax Expense continued
65
Notes to theFinancial Statementscontinued
Group
In thousands of New Zealand dollars Freehold land Buildings Land improvements
& harbour structures
Plant, equipment &
vehicles
Total
Gross carrying amount
Balance at 1 July 2009 53,461 7,718 89,054 125,353 275,586
Additions - 378 8,455 5,896 14,729
Disposals - - - (723) (723)
Balance at 30 June 2010 53,461 8,096 97,509 130,526 289,592
Additions 10,124 1,321 13,285 6,450 31,180
Disposals - (299) (1,129) (818) (2,246)
Balance at 30 June 2011 63,585 9,118 109,665 136,158 318,526
Accumulated depreciation
Balance at 1 July 2009 - (1,716) (14,220) (52,637) (68,573)
Disposals - - - 671 671
Depreciation expense - (518) (3,885) (7,067) (11,470)
Balance at 30 June 2010 - (2,234) (18,105) (59,033) (79,372)
Disposals - 101 1,518 399 2,018
Derecognition - (1,571) (26,691) (726) (28,988)
Depreciation expense - (498) (3,029) (7,296) (10,823)
Balance at 30 June 2011 - (4,202) (46,307) (66,656) (117,165)
Carrying amounts
Net book value as at 30 June 2010 53,461 5,862 79,404 71,493 210,220
Net book value as at 30 June 2011 63,585 4,916 63,358 69,502 201,361
9. Property, Plant and Equipment
Included in the reconciliation above is “capital work in progress” of $21,187,026 (2010: $10,008,798).
Assets or partial assets with a cost of $49,364,944 and book value of $28,988,481 have been derecognised in accordance with accounting policy 3
(d) (iv) as a result of the Canterbury earthquakes.
During the course of the 2011 year the Company and Group, in accordance with note 3 (d) (iii) of these financial statements, reviewed the useful
economic lives of major items of property, plant and equipment. As a consequence the useful life of a number of these assets were amended. The
impact of this in the current and future periods is as below.
2011 2012 2013 2014 Later
Increase/(decrease) in depreciation expense 486 1,078 1,078 1,078 (3,720)
66
Notes to theFinancial Statementscontinued
9. Property, Plant and Equipment continued
Company
In thousands of New Zealand dollars Freehold land Buildings Land improvements
& harbour structures
Plant, equipment &
vehicles
Total
Gross carrying amount
Balance at 1 July 2009 43,217 6,467 88,522 125,352 263,558
Additions - 378 8,455 5,896 14,729
Disposals - - - (723) (723)
Balance at 30 June 2010 43,217 6,845 96,977 130,525 277,564
Additions 124 1,321 13,285 6,450 21,180
Disposals - (166) (1,129) (818) (2,113)
Balance at 30 June 2011 43,341 8,000 109,133 136,157 296,631
Accumulated depreciation
Balance at 1 July 2009 - (1,435) (14,149) (52,636) (68,220)
Disposals - - - 671 671
Depreciation expense - (403) (3,862) (7,067) (11,332)
Balance at 30 June 2010 - (1,838) (18,011) (59,032) (78,881)
Disposals - 100 1,387 399 1,886
Derecognitions - (926) (26,691) (726) (28,343)
Depreciation expense - (403) (3,018) (7,296) (10,717)
Balance at 30 June 2011 - (3,067) (46,333) (66,655) (116,055)
Carrying amounts
Net book value as at 30 June 2010 43,217 5,007 78,966 71,493 198,683
Net book value as at 30 June 2011 43,341 4,933 62,800 69,502 180,576
Included in the reconciliation above is “capital work in progress” of $21,187,026 (2010: $10,008,798).
Assets or partial assets with a cost of $48,480,534 and book value of $28,343,085 have been derecognised in accordance with accounting policy 3
(d) (iv) as a result of the Canterbury earthquakes.
67
Notes to theFinancial Statementscontinued
10. Intangible Assets
Group
In thousands of New Zealand dollars Software Easements & resource
consents
Total
Gross carrying amount
Balance at 1 July 2009 5,780 1,248 7,028
Additions 186 549 735
Disposals (86) - (86)
Balance at 30 June 2010 5,880 1,797 7,677
Additions 186 267 453
Disposals (86) - (86)
Balance at 30 June 2011 5,980 2,064 8,044
Accumulated amortisation
Balance at 1 July 2009 (3,229) (439) (3,668)
Amortisation expense (459) (17) (476)
Disposals 86 - 86
Balance at 30 June 2010 (3,602) (456) (4,058)
Amortisation expense (389) (28) (417)
Disposals 76 - 76
Balance at 30 June 2011 (3,915) (484) (4,399)
Carrying amounts
Net book value as at 30 June 2010 2,278 1,341 3,619
Net book value as at 30 June 2011 2,065 1,580 3,645
Included in the reconciliation above is “capital work in progress” of $1,389,473 (2010: $1,038,353).
68
Notes to theFinancial Statementscontinued
10. Intangible Assets continued
Company
In thousands of New Zealand dollars Software Easements & resource
consents
Total
Gross carrying amount
Balance at 1 July 2009 5,780 1,174 6,954
Additions 186 549 735
Disposals (86) - (86)
Balance at 30 June 2010 5,880 1,723 7,603
Additions 187 266 453
Disposals (86) - (86)
Balance at 30 June 2011 5,981 1,989 7,970
Accumulated amortisation
Balance at 1 July 2009 (3,229) (439) (3,668)
Amortisation expense (459) (18) (477)
Disposals 86 - 86
Balance at 30 June 2010 (3,602) (457) (4,059)
Amortisation expense (389) (28) (417)
Disposals 76 - 76
Balance at 30 June 2011 (3,915) (485) (4,400)
Carrying amounts
Net book value as at 30 June 2010 2,278 1,266 3,544
Net book value as at 30 June 2011 2,066 1,504 3,570
Included in the reconciliation above is “capital work in progress” of $1,389,473 (2010: $1,038,353).
69
Notes to theFinancial Statementscontinued
11. Deferred Tax Assets and Liabilities
Group Assets Liabilities Net
In thousands of New Zealand dollars 2011 2010 2011 2010 2011 2010
Property, plant and equipment - - (12,348) (17,855) (12,348) (17,855)
Employee entitlements 1,483 1,503 - - 1,483 1,503
Derivatives 1,095 1,274 - - 1,095 1,274
Insurance claim receivable - - (3,178) - (3,178) -
Losses 735 - - - 735 -
Other items 97 92 - - 97 92
Tax assets/(liabilities) 3,410 2,869 (15,526) (17,855) (12,116) (14,986)
There are no unrecognised deferred tax assets or liabilities for the Group.
Movement in temporary differences during the year - Group
In thousands of New Zealand dollars Balance 1 July 2009
Recognised in profit
or loss
Recognised in equity
Balance 30 June 2010
Recognised in profit
or loss
Recognised in equity
Balance 30 June 2011
Property, plant and equipment (17,797) (58) - (17,855) 5,507 - (12,348)
Employee entitlements 1,713 (210) - 1,503 (20) - 1,483
Derivatives 1,286 (43) 31 1,274 18 (197) 1,095
Insurance claim receivable - - - - (3,178) - (3,178)
Losses - - - - 735 - 735
Other items 17 75 - 92 5 - 97
Tax assets/(liabilities) (14,781) (236) 31 (14,986) 3,067 (197) (12,116)
Company Assets Liabilities Net
In thousands of New Zealand dollars 2011 2010 2011 2010 2011 2010
Property, plant and equipment - - (12,551) (17,605) (12,551) (17,605)
Employee entitlements 1,483 1,503 - - 1,483 1,503
Derivatives 1,095 1,274 - - 1,095 1,274
Insurance claim receivable - - (3,178) - (3,178) -
Losses 1,017 - - - 1,017 -
Other items 97 92 - - 97 92
Tax assets/(liabilities) 3,692 2,869 (15,729) (17,605) (12,037) (14,736)
There are no unrecognised deferred tax assets or liabilities for the Company.
70
Notes to theFinancial Statementscontinued
Movement in temporary differences during the year - Company
In thousands of New Zealand dollars Balance 1 July 2009
Recognised in profit
or loss
Recognised in equity
Balance 30 June 2010
Recognised in profit
or loss
Recognised in equity
Balance 30 June 2011
Property, plant and equipment (17,803) 198 - (17,605) 5,054 - (12,551)
Employee entitlements 1,713 (210) - 1,503 (20) - 1,483
Derivatives 1,286 (43) 31 1,274 18 (197) 1,095
Insurance claim receivable - - - - (3,178) - (3,178)
Losses - - - - 1,017 - 1,017
Other items 17 75 - 92 5 - 97
Tax assets/(liabilities) (14,787) 20 31 (14,736) 2,896 (197) (12,037)
11. Deferred Tax Assets and Liabilities continued
12. Trade and Other Receivables
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Receivables due from related parties - - - -
Insurance recoveries receivable 10,592 - 10,592 -
Other trade receivables 12,366 12,752 12,194 12,752
22,958 12,752 22,786 12,752
See Note 19 with respect to receivables.
13. Capital and Reserves
Share Capital
At 30 June 2011 there were 102,261,279 shares on issue (2010: 102,261,279). All issued shares are fully paid and have no par value.
The holders of ordinary shares are entitled to receive dividends as declared from time to time by the Directors and are entitled to one vote per
share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Hedging Reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to
hedged transactions that have not yet occurred.
Dividends
In thousands of New Zealand dollars 2011 2010
$0.034 per qualifying ordinary share paid 29 October 2009 - 3,477
$0.015 per qualifying ordinary share paid 26 March 2010 - 1,534
$0.029 per qualifying ordinary share paid 28 October 2010 2,965 -
No dividends were declared and paid by the Group for the year ended 30 June 2011.
71
Notes to theFinancial Statementscontinued
14. Earnings per Share
The calculation of basic earnings per share at 30 June 2011 was based on the number of ordinary shares outstanding of 102,261,279 (2010:
102,261,279) and the profit attributable to ordinary shareholders of $24,111,000 (2010: $9,008,000) for the Group.
There were no ordinary shares issued in the period under review.
There are no dilutive potential ordinary shares (2010: nil).
Earnings per share
2011 2010
Basic earnings per share (cents) 23.6 8.8
Diluted earnings per share (cents) 23.6 8.8
15. Loans and Borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more information about the
Company’s exposure to interest rate and foreign currency risk see note 19.
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Loans and borrowings - term 40,752 57,912 40,752 57,912
Average effective interest rates 6.44% 6.59% 6.44% 6.59%
Bank overdraft and term advances have been raised pursuant to a multi-currency facility agreement with Westpac Banking Corporation. Those
funds have been lent against a negative pledge deed where Westpac ranks equally with other creditors. The facility is in A and B tranches of
$95 million and $55 million respectively with renewal dates of 1 July 2012 and 29 June 2012 respectively. There was no difference between the
face value and carrying amount of these loans and borrowings at 30 June 2011 or 30 June 2010. The current drawings are against Tranche A of
the facility.
16. Employee Benefits
Lyttelton Port Company is a participating employer in the National Provident Fund DBP Contributors Scheme (‘the Scheme’) which is a multi-
employer defined benefit Scheme. If the other participating employers ceased to participate in the Scheme, the employer could be responsible
for the entire deficit of the Scheme (see below.) Similarly, if a number of employers ceased to participate in the Scheme, the employer could be
responsible for an increased share of the deficit. Points to note about this scheme are:
i. The DBP Contributors Scheme (‘the Scheme’) is a multi-employer defined benefit scheme.
ii. Insufficient information is available to use defined benefit accounting as it is not possible to determine, from the terms of the Scheme, the
extent to which the deficit will affect future contributions by employers, as there is no prescribed basis for allocation.
iii. As at 31 March 2010, the scheme had a past service surplus of $43.601 million (18.2% of the liabilities). This amount is exclusive of
Specified Superannuation Contribution Withholding Tax.
iv. This surplus was calculated using a discount rate equal to the expected return on the assets, but otherwise the assumptions and
methodology were consistent with the requirements of NZ IAS 19.
v. The Actuary to the Scheme has recommended the employer contributions are suspended with effect from 1 April 2011.
vi. The Group and Company recognised an expense of $12,000 (2010: $11,000) in the year in respect of contributions made to this scheme.
The expected contribution payable to the scheme by the Group and Company in the year to 30 June 2012 is $Nil.
72
Notes to theFinancial Statementscontinued
17. Deferred Lease Income
On 11 September 2002 shareholders approved entry into a 15-year coal handling agreement with Solid Energy New Zealand Limited which
provided for Lyttelton Port Company to receive a $13 million prepayment of agreement charges. Should Lyttelton Port Company fail to meet its
material obligations in respect of the agreement and Solid Energy exercises its right of termination then the Company would be required to repay
to Solid Energy a proportion of the value of its agreement charge prepayment up to a maximum of $13 million. Deferred lease income received is
recognised in the Statement of Comprehensive Income on a straight line basis over the 15 year term of the agreement.
Group and Company
In thousands of New Zealand dollars 2011 2010
Balance at start of year 6,237 7,104
Deferred lease income recognised (867) (867)
Balance at end of year 5,370 6,237
Recognised as follows:
Current 867 867
Non current 4,503 5,370
5,370 6,237
18. Trade and Other Payables
At balance date payables denominated in currencies other than the functional currency were as detailed in note 19.
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Payables due to subsidiary - - 150 150
Interest accrued 296 341 296 341
Other accruals 5,988 1,563 5,803 1,563
Other trade payables 5,774 6,247 5,774 6,238
12,058 8,151 12,023 8,292
73
Notes to theFinancial Statementscontinued
19. Financial Instruments
Exposure to credit, liquidity, and market risks arise in the normal course of the Group’s business.
Credit Risk
Credit risk is the risk that the counterparty to an arrangement does not meet its obligations under the arrangement.
Management has a credit policy in place under which each new customer is individually analysed for credit worthiness and assigned a purchase
limit before the standard payment and trading terms and conditions are offered. Purchase limits are reviewed on a regular basis.
In order to determine which customers are classified as having payment difficulties the Group considers duration and frequency of default and
makes provision for specific balances considered to be impaired. The Group does not require collateral in respect of trade and other receivables.
The Group’s exposure to credit risk is reflective of its customer base. As such it is concentrated to the default risk of its customers’ industries. No
more than 15 percent of the Group’s revenue results from transactions with any one customer. Geographically there is no significant credit risk
concentration outside of New Zealand.
Cash handling and derivative transactions are only carried out with counterparties that have an investment grade credit rating.
Liquidity Risk
Liquidity risk represents the Group’s ability to meet its contractual obligations. The Group evaluates its liquidity requirements on an ongoing basis.
In general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and has
credit lines in place to cover potential shortfalls and meet capital expenditure requirements.
Market Risk
Market risk is the risk that a movement in market prices impacts on the financial viability of the Group’s business.
In accordance with its treasury policy the Group may enter into derivative arrangements in the ordinary course of business to manage foreign
currency, interest rate and fuel price risks. A treasury management committee, made up of senior management supported by an independent
advisor, provides oversight for risk management and derivative activities.
Foreign Currency Risk
The Group is exposed to foreign currency risk on purchases of capital equipment, operational supplies and bank accounts that are denominated in
a currency other than the Company’s functional currency, New Zealand dollars ($), which is the presentation currency of the Group. The foreign
currencies in which transactions are primarily denominated are Australian dollars (AUD), U.S. dollars (USD) and Euro (EUR). The Group uses forward
exchange contracts to hedge major foreign currency risk arising from payables or commitments in accordance with its policies. All of the forward
exchange contracts have maturities of less than one year at the balance sheet date. The Group’s revenues are billed in NZD.
Interest Rate Risk
The Group’s treasury policy requires that term borrowings are hedged within pre-approved thresholds by fixing the rates of interest in order to
provide greater certainty. The Group uses interest rate swaps to manage these exposures.
Fuel Price Risk
The Group’s treasury policy requires that fuel price exposures are assessed on a quarterly basis and may be hedged within pre-approved
thresholds by fixing prices in order to provide greater certainty. The Group uses swaps to manage these exposures.
Quantitative Disclosures
Credit Risk
The carrying amount of financial assets represents the Group’s maximum credit exposure.
The Group has not renegotiated the terms of any financial assets which would result in the carrying amount no longer being past due, or to avoid a
possible past due status.
The majority of the Group’s customers are New Zealand based agents or branches of international shipping lines servicing New Zealand importers
and exporters. As such there are no concentrations of geographical risk outside New Zealand.
74
Notes to theFinancial Statementscontinued
The status of trade receivables at the reporting date is as follows:
In thousands of New Zealand dollars Gross receivable
2011
Individually impaired
2011
Gross receivable
2010
Individually impaired
2010
Trade receivables
Not past due 19,660 - 10,058 -
Past due 1-30 days 2,078 - 2,139 -
Past due 31-90 days 651 80 496 23
Past due more than 90 days 649 - 82 -
Total 23,038 80 12,775 23
The table above shows the Group position at 30 June 2011. The same analysis for the Company at 30 June 2011 would differ only in that trade
receivables not past due are $19,488,000. There were no differences in 2010.
19. Financial Instruments continued
Liquidity Risk
The following table sets out the undiscounted contractual cash flows for all financial liabilities.
In thousands of New Zealand dollars Carrying value
Contractual cash flows
6 months or less
6-12 months
1-2 years 2-5 years More than 5 years
Group 2011
Bank facility 40,752 42,016 632 632 40,752 - -
Trade and other payables 12,058 12,058 12,058 - - - -
Non-derivative liabilities total 52,810 54,074 12,690 632 40,752 - -
Interest rate swaps 3,914 3,914 - - 498 1,469 1,947
Total 56,724 57,988 12,690 632 41,250 1,469 1,947
Group 2010
Bank facility 57,912 59,650 869 869 57,912 - -
Trade and other payables 8,151 8,151 8,151 - - - -
Non-derivative liabilities total 66,063 67,801 9,020 869 57,912 - -
Forward exchange contracts 79 79 68 11 - - -
Interest rate swaps 4,166 4,166 - - 233 648 3,285
Total 70,308 72,046 9,088 880 58,145 648 3,285
Company
The undiscounted contractual cashflows for all financial liabilities differ only in one respect to the table shown above for the Group.
Trade and other payables is $12,023,000 (2010: $8,292,000).
75
Notes to theFinancial Statementscontinued
19. Financial Instruments continued
Market Risk
Foreign Currency Exchange Risk
The Company and Group’s exposure to foreign currency risk can be summarised as follows:
In thousands of New Zealand dollars AUD USD EUR & GBP
2011
Foreign currency risk
Trade payables 1 - 41
Net balance sheet exposure before hedging activity 1 - 41
Estimated forecast purchases
Net cash flow exposure before hedging activity 920 260 825
Total exposure before hedging activity 921 260 866
Forward exchange contracts
Notional amounts - - -
Net unhedged exposure 921 260 866
2010
Foreign currency risk
Trade payables 14 29 476
Net balance sheet exposure before hedging activity 14 - 476
Estimated forecast purchases
Net cash flow exposure before hedging activity 404 349 1,638
Total exposure before hedging activity 418 378 2,114
Forward exchange contracts
Notional amounts - - (1,299)
Net unhedged exposure 418 378 815
Fuel Price Risk
In line with Group Policy with respect to Fuel Price Hedging no hedges were entered into in the last year (2010: Nil).
76
Notes to theFinancial Statementscontinued
19. Financial Instruments continued
Interest Rate Risk – Repricing Analysis
The Group’s exposure to repricing of its interest rate exposure can be summarised as follows:
In thousands of New Zealand dollars Total 5 months or less
6-12 months
1-2 years 2-5 years More than 5 years
Group 2011
Cash and cash equivalents 692 692 - - - -
Variable rate instruments and related derivatives
Bank facility
Tranche A (40,752) (40,752) - - - -
Effect of interest rate swaps - 35,000 - (10,000) (12,000) (13,000)
Total variable rate instruments and related derivatives (40,752) (5,752) - (10,000) (12,000) (13,000)
Total (40,060) (5,060) - (10,000) (12,000) (13,000)
Group 2010
Cash and cash equivalents 168 168 - - - -
Variable rate instruments and related derivatives
Bank facility
Tranche A (57,912) (57,912) - - - -
Effect of interest rate swaps - 45,000 - (10,000) (20,000) (15,000)
Total variable rate instruments and related derivatives (57,912) (12,912) - (10,000) (20,000) (15,000)
Total (57,744) (12,744) - (10,000) (20,000) (15,000)
The Company’s exposure to repricing of its interest rate exposure does not differ to the above tables for the Group.
Capital Management
The Group’s capital includes share capital, reserves and retained earnings.
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development
of the business. The impact of the level of capital on shareholders’ return is also recognised and the Group maintains a balance between the higher
returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Directors.
There have been no material changes in the Group’s management of capital during the period.
Sensitivity Analysis
In managing interest rate, fuel price and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings.
Over the longer-term, however, permanent changes in foreign exchange, fuel prices and interest rates will have an impact on profit.
At 30 June 2011 it is estimated that a general increase of one percentage point in interest rates would, allowing for the impact of interest rate
swaps, decrease the Group’s profit before income tax by approximately $63,000 (2010: $169,000), and increase the value of interest rate swaps by
$1,283,000 (2010: $1,683,000) and increase the hedging reserve by $1,220,000 (2010: $1,514,000).
It is estimated that a general decrease of one percentage point in the value of the New Zealand dollar against other foreign currencies would have
decreased the Group’s profit before income tax by approximately $Nil for the period ended 30 June 2011 (2010: $Nil) in relation to operational
purchases denominated in foreign currencies. The impact on equity would have been $Nil (2010: $Nil). Forward exchange contracts held have been
included in this calculation.
77
Notes to theFinancial Statementscontinued
19. Financial Instruments continued
Interest Rate Hedges
The Group has a policy of hedging its exposure to changes in interest rates on borrowings. Interest rate swaps, denominated in New Zealand
dollars, have been entered into to achieve an appropriate mix of fixed and floating rate exposure within the Group’s policy. The swaps mature over
the next nine years and have fixed swap rates ranging from 6.7 percent to 7.7 percent. At 30 June 2011, the Group had interest rate swaps with a
notional contract amount of $35,000,000 (2010: $45,000,000). The Group classifies interest rate swaps as cash flow hedges.
The net fair value of swaps at 30 June 2011 was $3,914,000 (2010: $4,166,000) comprising assets of $Nil (2010: $Nil) and liabilities of $3,914,000
(2010: $4,166,000).
Forecast Transactions
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges. The net fair value of forward exchange
contracts used as hedges of forecast transactions at 30 June 2011 was $Nil (2010: $79,000 ), comprising assets of $Nil (2010: $Nil) and liabilities
of $Nil (2010: $79,000).
Classification and fair values - Group
In thousands of New Zealand dollars Derivatives Loans and receivables
Other amortised cost
Total carrying amount
2011
Assets
Loans and advances - 993 - 993
Total non-current assets - 993 - 993
Trade and other receivables - 22,958 - 22,958
Loans and advances - 54 - 54
Cash and cash equivalents - 692 - 692
Total current assets - 23,704 - 23,704
Total assets - 24,697 - 24,697
Liabilities
Loans and borrowings - - 40,752 40,752
Derivatives 3,914 - - 3,914
Total non-current liabilities 3,914 - 40,752 44,666
Trade and other payables - - 12,058 -
Total current liabilities - - 12,058 -
Total liabilities 3,914 - 52,810 44,666
The table above shows the Group position at 30 June 2011. The same analysis for the Company at 30 June 2011 would differ only in that trade
and other payables is $12,023,000 (2010: $8,292,000).
The Group considers that there is no material difference between the fair values and the carrying values of items shown in the table above, given
that underlying loans and borrowings are at floating interest rates.
The only financial instrument that the Group and Company carry at fair value is derivatives. These are all value based on level 2 fair value
hierarchy.
78
Notes to theFinancial Statementscontinued
19. Financial Instruments continued
Classification and fair values - Group
In thousands of New Zealand dollars Derivatives Loans and receivables
Other amortised cost
Total carrying amount
2010
Assets
Derivatives - 741 - 741
Loans and advances - - - -
Total non-current assets - 741 - 741
Trade and other receivables - 12,752 - 12,752
Loans and advances - 1,812 - 1,812
Cash and cash equivalents - 168 - 168
Total current assets - 14,732 - 14,732
Total assets - 15,473 - 15,473
Liabilities
Loans and borrowings - - 57,912 57,912
Derivatives 4,166 - - 4,166
Total non-current liabilities 4,166 - 57,912 62,078
Derivatives 79 - - 79
Trade and other payables - - 8,144 8,144
Total current liabilities 79 - 8,144 8,223
Total liabilities 4,245 - 66,056 70,301
Estimation of Fair Values
The methods used in determining the fair values of financial instruments are discussed in note 4.
79
Notes to theFinancial Statementscontinued
20. Operating Leases
Leases as Lessee
Non-cancellable operating lease rentals are payable as follows:
Classification and fair values - Group and Company
In thousands of New Zealand dollars 2011 2010
Less than one year 584 371
Between one and five years 818 234
More than five years - -
Total 1,402 605
During the year ended 30 June 2011 the Group recognised $450,000 as an expense in the Statement of Comprehensive Income in respect of
operating leases (2010: $631,000).
Leases as Lessor
The Group leases a range of land, buildings and equipment to a number of customers. A number of leases include rights of renewal for further
periods including “in perpetuity”. There were no contingent rents recognised as income in the year. The future minimum lease payments under non-
cancellable leases are as follows:
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Less than one year 4,964 5,089 4,964 5,089
Between one and five years 17,591 18,097 17,591 18,097
More than five years 36,970 44,235 36,970 44,235
Total 59,525 67,421 59,525 67,421
21. Capital Commitments
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Commitments for the purchase of property, plant and equipment 7,330 3,917 7,330 3,917
22. Contingencies
Dry Dock Contaminants
Contaminants arising from dry dock and slipway operations have been identified in seabed sediments in that area of the Inner Harbour. The
Company has been working with Environment Canterbury and the Department of Conservation on the issues for a number of years. An interim
monitoring and management plan is in place to manage any adverse effects and to minimise any disturbance of the contaminated sediments
while further investigations are carried out into the environmental risks associated with the contamination. The Ministry for the Environment’s
Contaminated Sites Remediation Fund has contributed to ongoing investigation costs.
At this time the Directors have not determined what liability, if any, would accrue to the Company. In any event the Directors are confident that
any liability attaching to the Company will not be a material liability.
Port Noise Working Agreement
More information about this agreement is detailed in note 27. The Directors have estimated that the maximum amount payable by Lyttelton Port
Company under this agreement would be $1.3 million in total over the next eight years.
80
Notes to theFinancial Statementscontinued
Classification and fair values - Group and Company
In thousands of New Zealand dollars 2011 2010
Less than one year 584 371
Between one and five years 818 234
More than five years - -
Total 1,402 605
23. Reconciliation of the Profit for the Period with the Net Cash from Operating Activities
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Profit for the period 24,111 9,008 23,741 9,289
Adjustments for:
Depreciation 10,824 11,470 10,715 11,333
Amortisation of intangible assets 417 477 417 477
Loss/(gain) on sale of property, plant and equipment 323 (2) 323 (2)
Asset write-offs due to the Canterbury earthquakes 28,988 - 28,346 -
Insurance Proceeds classified as investing activities (33,696) - (33,696) -
Fair Value Adjustment on Derivatives 71 5 71 5
Deferred tax charge (3,351) 236 (2,895) (20)
Deferred revenue (867) (867) (867) (867)
2,709 11,319 2,414 10,926
Add/(less) movements in working capital items
Provision for tax payable (4,184) (154) (4,467) (171)
Change in inventories (617) (168) (617) (168)
Change in trade and other receivables (10,206) (1,631) (10,033) (1,631)
Interest payable - - - -
Change in trade and other payables including employee benefits 2,933 1,428 2,756 1,557
(12,074) (525) (12,361) (413)
Net cash from operating activities 14,746 19,802 13,794 19,802
81
Notes to theFinancial Statementscontinued
24. Related Parties
Parent and Ultimate Controlling Entity
Christchurch City Holdings Limited is the controlling shareholder of Lyttelton Port Company Limited. The ultimate controlling shareholder is
Christchurch City Council.
Transactions with Key Management Personnel
Key management personnel compensation comprised:
Group Company
In thousands of New Zealand dollars 2011 2010 2011 2010
Short-term employee benefits 2,081 1,864 2,081 1,864
Long-term incentives 617 - 617 -
Other payments 95 - 95 -
The Group does not provide any non-cash benefits to Directors and executive officers in addition to their Directors fees or salaries.
Transactions with Subsidiary Companies
In 2011 Lyttelton Port Company Limited was charged an amount of $597,000 for property rentals by subsidiary company New Zealand Express
(2005) Limited, (2010: $150,000). No charges were made by Lyttelton Port Company to its subsidiary New Zealand Express (2005) Limited.
The intercompany amount of $20,815,000 (2010: $11,695,000) represents balances owing from subsidiary companies. The advances are interest
free and with no fixed term of repayment.
Transactions with Controlling Shareholder and Other Companies in the Group
In the normal course of business the Group incurs expenses on an ‘arm’s length’ basis from its controlling shareholder and other companies in
the group.
No charges were made to Christchurch City Holdings Limited in the 2011 year (2010: Nil) nor were any balances outstanding as at 30 June 2011
(30 June 2010: Nil).
Other Related Parties
During the period Port Otago Limited (a shareholder in LPC) provided services to the Group to the value of $1,477,000 (2010: $1,104,000). These
services were provided on an arm’s length basis.
25. Group Entities
Country of Incorporation Interest (%)
In thousands of New Zealand dollars 2011 2010
NZ Express (2005) Limited New Zealand 100 100
Hopper No 4 Pty Limited Australia 100 100
Curries Proprietary Limited New Zealand 100 Nil
Hopper No 4. Pty Limited is non-trading and has no assets or liabilities.
26. Segmental Reporting
The group determines its operating segments based on the information provided to the Board of Directors who are the Group’s chief operating
decision maker.
The Group has one reportable business segment providing and managing port and associated facilities in Christchurch, New Zealand.
The Group has two customers who exceed 10% of the Group’s Revenue, totalling 28.7% of the Group Revenue.
82
Notes to theFinancial Statementscontinued
27. Port Noise Working Party
Lyttelton Port Company Limited is party to a deed, along with Christchurch City Council, Environment Canterbury, Lyttelton Harbour Residents’
Association and other interested parties (collectively the Port Noise Working Party), which committed the various parties to the process of seeking
amendments to the District Plan to reflect the agreements reached between the parties on future port noise levels, future mitigation measures
required on the part of Lyttelton Port Company Limited and land use restrictions on affected areas.
The agreements recognised the need for the Lyttelton Port Company and the community to co-exist and provided for the installation, at the
Company’s expense, of acoustic treatment for identified affected dwellings in accordance with desired District Plan amendments.
The desired District Plan amendments have been made operative provisions through a successful application to the Environment Court under
section 293 of the Resource Management Act.
A port Noise Liaison Committee, composed of representatives of the various parties, has been established to administer the terms of the new
operative provisions in the District Plan.
No liability has been recognised in the financial statements for any future obligations under the agreement as it is considered to be a contingent
liability. The Directors have estimated that the maximum amount payable by Lyttelton Port Company under this agreement would be $1.3 million
in total over the next eight years.
28. Memorandum of Understanding
On 30 October 2008 Lyttelton Port Company Limited (LPC) and Port Otago Limited (POL) signed a Memorandum of Understanding to explore a
merger of their respective port operations.
However, on 1 October 2010, Lyttelton Port Company Limited announced to the New Zealand Exchange that its Board had informed Port Otago
Limited that it was not in a position to continue merger negotiations. The Boards of the two companies reluctantly agreed to call a halt to merger
discussions.
29. Acquisition of Business
On 1 July 2010 the Group acquired 100% of the shares in the property holding company Curries Proprietary Ltd at a price equal to the market
value of the 7.3 hectares of land owned by that company.
This company was acquired to support the Group’s overall logistics strategy.
83
Notes to theFinancial Statementscontinued
30. Canterbury Earthquakes
Canterbury has been hit by a number of large earthquakes in the year to 30 June 2011. As a result of these earthquakes LPC sustained major
damage to the port infrastructure and facilities, as well as the loss of an estimated $2.4 million of revenue. However, all cargoes are being handled
through the port as usual except the cruise trade. Up to 1 July 2011 LPC carried significant insurance cover for restoring and reinstating assets to
current standards as a result of events such as earthquakes, along with business interruption insurance.
The Company has been formally advised by its lead insurer that it accepts the earthquake damage to the Company’s assets is insured. To date
the Company has received progress payments of $35.7 million for both business interruption and material damage expenditure as a result of the
earthquakes, and has made a further progress claim of $18 million. LPC continues to work with its lead insurer on damage assessments and on the
reinstatement plan for the damaged structures. It is the Company’s view that the total insurance claims will be significant and will materially impact
on future financial statements.
The Company has been successful in obtaining limited insurance cover for the Port going forward, with 100% of the cover required under its
material damage policy being provided for assets except wharves, breakwaters, pavements and other assets which are already more than 50%
damaged. However, this excludes cover for natural disasters including earthquakes. The Port has been unable to secure business interruption cover.
LPC is continuing to work with its brokers and insurers to build on this position.
LPC has undergone a thorough process to determine the appropriate accounting treatment for property, plant and equipment damaged in the
earthquakes. Firstly, assets were assessed for whether they were partly or completely damaged and therefore needed to be derecognised as an
asset. This involved an independent technical and engineering assessment of key infrastructure assets in the port and resulted in the write-off of
$28.9 million of property, plant and equipment as follows:
Group
In thousands of New Zealand dollars 30 June 2011 30 June 2010
Asset type
Buildings 1,571 -
Land improvements and harbour structures 26,691 -
Plant, equipment and vehicles 726 -
Total 28,988 -
Company
In thousands of New Zealand dollars 30 June 2011 30 June 2010
Asset type
Buildings 926 -
Land improvements and harbour structures 26,691 -
Plant, equipment and vehicles 726 -
Total 28,343 -
84
Notes to theFinancial Statementscontinued
30. Canterbury Earthquakes continued
Secondly, LPC considered the remaining value of property, plant and equipment (in accordance with accounting policy 3 (d)) to determine whether
there was any impairment. The recoverable amount was determined to be above the book value of assets and therefore no impairment was
required. LPC also reassessed the useful economic life of the remaining assets – refer note 9 for more details.
In addition, during the year, LPC has recorded insurance claims received and receivable as follows:
In thousands of New Zealand dollars 30 June 2011 30 June 2010
Insurance type
Material damage 33,696 -
Business interruption 12,592 -
Total 46,288 -
The additional costs of $12,375,000 shown in The Statement of Comprehensive Income consist of additional labour costs, the use of
sub-contractors and repairs to the infrastructure.
31. Subsequent Events
There have been no subsequent events post 30 June 2011 that require disclosure.
85
Statutory Information
20 Largest Shareholders - The names of the 20 largest Shareholders as at 25 August 2011 are listed below:
Investor Total units % Issued Capital
Christchurch City Holdings Limited 80,981,297 79.191
Port Otago Limited 15,824,477 15.475
Michael Walter Daniel & Nigel Geoffrey Burton & Michael Murray Benjamin 507,600 0.496
Gordon Mervyn Kelly 127,000 0.124
Frank Stewart & Carol Blake Stewart 127,000 0.124
Kim Crawford & Three H Limited & Frederika Elfriede Crawford 120,000 0.117
Custodial Services Limited No. 3 A/C 116,960 0.114
Louise Isabel Gobby & William Alexander Gillespie 112,000 0.110
Guardian Trust Investment Nominees (Rwt) Limited 88,710 0.087
Custodial Services Limited No. 18 A/C 74,633 0.073
Neville Stephen Garrett & Rosemarie Ann Garrett 60,000 0.059
Michael Murray Benjamin 50,000 0.049
NZ Guardian Trust Investment Nominees Limited 49,000 0.048
Custodial Services Limited No. 4 A/C 45,620 0.045
Matthew Charles Goodson 41,924 0.041
Five Talents Limited 38,500 0.038
FNZ Custodians Limited 37,700 0.037
Custodial Services Limited No. 2 A/C 37,068 0.036
Sids Engineering Limited 35,000 0.034
Perfect Meat Solutions NZ Ltd 35,000 0.034
Domicile of Shareholders - The domicile of shareholders as at 25 August 2011 is listed below:
Country of Shareholder Domicile Number of Shareholders Number of Shares Percentage of Shares
New Zealand 794 102,190,669 99.93%
Australia 12 25,950 0.03%
France 1 600 0.00%
United Kingdom 7 14,950 0.02%
Hong Kong 1 5,000 0.01%
Papua New Guinea 1 8,000 0.01%
Singapore 1 4,000 0.00%
United States 7 12,110 0.01%
Spread of Shareholders - The spread of Shareholders as at 25 August 2011 is listed below:
Investor Range Number of Shareholders Number of Shares Percentage of Shares
1 - 1,000 221 158,524 0.16
1,001 - 5,000 376 1,130,652 1.11
5,001 - 10,000 129 1,039,224 1.02
10,001 - 50,000 87 1,705,894 1.67
50,001 - 100,000 2 134,633 0.13
100,001 and Over 9 98,092,352 95.92
Total 824 102,261,279 100.00
86
Directory
Board of DirectorsRodger Fisher, Chairman
Trevor Burt, Deputy Chairman
Rod Carr
Lindsay Crossen
Alan Grant
Brian Wood
Management TeamPeter Davie, Chief Executive
Kathy Meads, Corporate Services Manager
and Chief Financial Officer
Paul Keleghan, Programme Manager
Paul Monk, Operations Manager
Charlotte Mayne, Marketing Manager
Registered OfficeLyttelton Port Company Limited
Cnr Norwich Quay and Dublin Street
Lyttelton, New Zealand
Private Bag 501, Lyttelton 8841
Telephone (03) 328 8198
Facsimile (03) 328 7828
Email [email protected]
Website www.lpc.co.nz
Solicitors Chapman Tripp
Bankers Westpac Banking Corporation
Auditors KPMG, on behalf of the Auditor-General
Share RegistryLink Market Services Limited
PO Box 384
138 Tancred Street, Ashburton
Telephone (03) 308 8887
Facsimile (03) 308 1311
Email [email protected]
87
Glossary
Aggregate (coal)
To blend coal varieties together.
Berth
The space allotted to a vessel at the wharf.
Breakbulk
General cargo, as opposed to cargo in
containers. Also referred to as conventional
cargo. Can include cargo in packages, pallets
or bulk form (dry or liquid).
Bulk
Cargo moved in bulk form, such as coal,
gypsum (dry bulk) or diesel (bulk liquid).
Coastal Services
Shipping service between ports within
New Zealand.
Container
Metal box structure of standard design, used
to carry cargo in units. Containers can be 20
or 40 foot in length. The standard measure
of a container is a TEU (20-foot Equivalent
Unit). Container ships are specially designed
to carry containers in slots or cells.
Containers are stacked and restrained
(lashed) at all four corners by rods. Some
shipping lines charter container slots on
vessels operated by different companies.
Container Crane
Large gantry crane specially designed
to stow (load) and discharge (unload)
containers from a ship.
Container Terminal
Facility designed to handle containers using
special purpose equipment such as container
cranes, straddle carriers and container
stacking areas.
Draught
The depth below the water’s surface of the
lowest part of a ship or boat.
Dry dock
A narrow basin that can be flooded to allow
a vessel to be floated in, then drained to
allow the vessel to rest on a dry platform.
Vessels enter dry dock for maintenance such
as repairs and repainting.
EAM
Enterprise Asset Management. An EAM
system allows for advance planning of asset
maintenance.
Fendering
Fendering facilitates safe berthing of
ships and protection of berthing assets. A
fendering system acts like a shock absorber,
protecting both the ship and wharf structure
during berthing. It also enables berthing
loads to be transferred throughout the
wharf structure to minimise damage.
Hub Port/Service
A practice where shipping lines call at one
port in a country or region, rather than
at several ports. Alternative transport
services (such as road) then carry goods to
other centres.
JAS
Japanese Agriculture Standard. JAS is when
the log is measured from the small end
diameter to the full length of the log so a
geometric centre of the logs taper function
applies. A cylindrical volume.
Lashing
Securing the containers stacked on the
deck of a ship with wires or rods at all four
corners.
LCT
Lyttelton Container Terminal.
Line Handling
The task of securing mooring lines to the
wharf when a vessel berths.
M3
An Enterprise Asset Management and
Finance system implemented at LPC 1 July
2008. M3 provides high level asset planning,
preventive maintenance scheduling and
reporting functionality.
Marine Services
On-water services such as piloting, towing
and line handling for vessels as they arrive,
depart or are moved between berths.
MoU
Memorandum of Understanding – a formal
agreement between parties to work together
to find resolution on an issue.
Navigation
The process of plotting or directing the
course of a vessel. This includes assembling
the required charts, calculating tide and
current, weather, draught, and laying out
track-lines.
Patent Slip
An inclined plane (which extends well into
the water) and a wooden cradle onto which
a boat is attached and hauled out of the
water for repair.
Piloting
Activity where a pilot guides a vessel within
harbour limits to ensure navigational safety.
Provedore
A person or business which provides stores
and supplies – such as food and beverages
– to ships.
Receival and Delivery (R & D)
Cargo receival into or delivery out of the
port.
Reefer Container / Refrigerated Container
Controlled temperature container suitable
for chilled or frozen cargoes.
STEPS
Stop, Talk, Evaluate, Proceed Safely. An
in-house Safe Behaviours programme.
Stevedore
Individual or company employed to load and
unload a vessel.
Straddle Carrier
Large machine that straddles a container,
lifts and moves it within a container yard.
Capable of straddling a single row of
containers three-high.
TEU
Abbreviation for the measurement of a 20-
foot Equivalent Unit. This is the international
standard measure of containers.
Towage
Where a tug tows or manoeuvres a vessel
into or out of a berth.
Turnaround Time
Time taken for a vessel to arrive in port,
unload, reload and depart. Also refers to the
time taken for a truck to arrive in port and
deliver or receive cargo.
88
89
“With solid business fundamentals and
committed, able people, Lyttelton
Port of Christchurch has a very positive
future indeed.”Rodger Fisher – Chairman
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