port taranaki limited annual report 2015 · 2015-09-24 · university of wellington, and a board...

PORT TARANAKI L IMITED ANNuAL REPORT 2015

PORT TARANAKI LIMITED REPORT 2015

2

CONTENTS 3 Our Vision

5 Our Mission

6 Highlights

7 Chairman’s Report

8 Directors

10 Chief Executive's Report

19 Our Values

20 Environmental Report

22 Social Report

24 Statement of Corporate Intent

25 Financial Statements

54 Independent Auditor's Report

55 Comparative Review

57 Directory


1


2

OUR VISIONTO MAKE A

REAL DIFFERENCE

TO THE

TARANAKI ECONOMY

“

”


3

OUR VISION


4

TO PROVIDE

WORLD CLASS LOGISTICS

FOR PORT TARANAKI

CUSTOMERS

“

”


5

OUR MISSION


6

PORT TARANAKI HIGHLIGHTS

REVENUE

$49.4m

10%

UP1.7%

TOTAL TRADE VOLUMES

9.3%RETURN ON

EQUITY

9%

VESSEL ARRIVALS

DOWN

$18.4mCASH FLOWS FROM

OPERATIONS

NET PROFIT AFTER TAX

DIV

IDEN

DS

72%Work-related injuries

DOWNUP

75.1%EQUITY RATIO

$11.4m

It was a year of consolidation for Port Taranaki Limited.

The 2015 year has seen the Company consolidate its performance with trade growth of 1.7% when our customers experienced volatility in commodity prices and we needed to be adaptable and flexible. The Board has supported the Executive Leadership Team in strengthening the Company’s ability to meet such changing demands.

The newly constituted Health and Safety Governance Committee, a sub-committee of the Board, embraced a new safety vision to ensure it is “Safely home every day for everyone involved in our business”. Our philosophy is to ensure we lead a positive safety culture, there is continuous

improvement, and a focus on preventative actions. Implementation of random drug and alcohol testing along with clear minimum standards of entry to the Port assisted in delivering this philosophy.

As we conclude the year, it is heartening to see the strategic investment in the former New Plymouth Power Station site entering a new phase. The partial demolition of plant and buildings will be completed by October 2015 and this will enable customers to store bulk feed in the former Turbine Hall. Other opportunities for this valuable site are under consideration.

During the year, Roy Weaver retired as Chief Executive. He served the Port very ably in this role for 14 years during which time he developed strong relationships with customers, the community, and staff. The Board was pleased to appoint Guy Roper as his successor.

I also note the retirement of Captain John Ireland as Marine Services Manager and Harbourmaster. John served the Company for 32 years and was always committed to ensuring that all aspects of our marine service were carried out professionally and safely.

It was pleasing to welcome Maritime New Zealand back to New Plymouth, after an absence of five years, to reinforce safety standards on our coastline. As the hub for New Zealand’s offshore petroleum industry, it is imperative that there is regulatory compliance to support a safe, secure, and clean marine environment.

The contribution of all our dedicated staff in delivering the successful outcome for 2015 is appreciated by the Board.

I extend appreciation to my fellow Board members for their deliberations and contributions in another milestone year. I also acknowledge the contribution by Craig Norgate to the Board for his valued years of service. The Board was saddened by his untimely death.

JOHN AuLD Chairman

CHAIRMAN’S REPORT


7

DIRECTORS


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JOHN AULD LLB Chairman

John was appointed to the Board in 1994 and has been Chairman since September 2010.

He is a retired lawyer and practised in New Plymouth. John specialised in the energy sector, particularly in the development of Taranaki’s petroleum industry.

He is a Director of a number of companies and Chairman of the Real Estate Agents Authority.

DAVID MACLEOD JP

David was raised on a dairy farm before training as an electrician and establishing an electrical contracting business.

He was appointed to the Board in December 2001.

David is Chairman of Taranaki Regional Council and his directorships include Fonterra Co-operative Group, PKW Farms GP Limited, PKWF 2013 Limited, and A J Greaves Electrical Limited.

RICHARD KROGH BE(Hons) Electrical

Richard is a professional Director and consultant. He has extensive experience in the infrastructure and energy sectors both in New Zealand and overseas including being the former Chief Executive of Powerco Limited.

He joined the Board in June 2012.

Richard is currently a Director of Energia Limited and Top Energy Limited.

He is a Chartered member of the Institute of Directors in New Zealand and a member of the Institute of Professional Engineers of New Zealand.

ROGER TAYLOR BA, MCom, CA, MNZM

Roger was a former partner of Ernst & Young and now provides corporate financial consulting and litigation support.

He was appointed a Director in September 2009.

Roger is a Director of Miti Partners Limited, a Council Member for Victoria university of Wellington, and a Board Member of New Zealand Law Foundation and the New Zealand Symphony Orchestra.

He is a member of the Chartered Accountants of Australia and New Zealand.


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PETER HORTON CA

Peter was appointed to the Board in December 2007.

He is a former managing partner of PwC New Plymouth. He consults to a range of businesses specialising in corporate governance, strategy and planning, and succession planning.

Peter is an elected member of the Taranaki Regional Council, Chairman of the Yarrow Stadium Joint Committee, a Board member of the Pukeiti Rhododendron Trust, and Chairman of Divisional Holdings Inc.

He is a member of the Chartered Accountants of Australia and New Zealand and the Institute of Directors in New Zealand.

GRAEME MARSHALL

Graeme has worked in the port industry since 1978 and held senior management roles at Port of Napier Limited and Ports of Tauranga Limited and consulted to Timaru Container Terminal Limited and PrimePort Timaru Limited.

He was appointed to the Board in April 2014.

Graeme was a Board Member and Chairman of Cruise New Zealand from 2005 to 2014. He is currently Chairman of the Biosecurity Ministerial Advisory Committee and a Board Member of Bay of Connections and FACE Nepal.

CRAIG NORGATE OBITUARY

We were saddened at the passing of Craig in early July 2015. His contribution and foresight as a Board member has been significant. Craig joined the Board in 2004 and from 2010 served as Deputy Chairman and Chairman of the Audit and Risk Committee where his professional skill and expertise guided and shaped the Company.

Craig’s strategic vision and belief in the Taranaki region underpinned his desire to ensure that the Port was more than just a gateway for product – his desire was to make a real difference to the Taranaki economy as a whole. His energy and involvement in Taranaki extended beyond the Port to dairy, professional business advice, and, of course, to his passionate support for rugby.

John Auld Chairman

CHIEF EXECUTIVE’S REPORT


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A successful year foreshadows a time of challenge and change for Port Taranaki Limited.

I am very pleased to present my first report as Chief Executive of Port Taranaki Limited. It is an honour to take over the reins held by Roy Weaver and to shape the organisation for the challenges ahead. Roy’s team built a solid base from which we can expand and grow as we seek a better understanding of our customer’s needs.

It is pleasing to report a further lift in trade this year with good growth in both bulk liquid and dry bulk sectors.

Further changes in the New Zealand supply chain sector and challenging commodity markets saw significant reductions in the container trade and log volumes. The Company has already responded to such challenges and will continue to adapt in the drive to provide world class logistics for our customers.

A new leadership team is in place with the desire to lift our performance in three focus areas: Customer Intimacy, Maximising the Utilisation of our Assets, and Delivery of Service Excellence. All are designed in tandem with strong leadership in health and safety to enhance the outcomes for our business. A set of initiatives in support of each area commenced in the last quarter of 2014/2015.

FINANCIAL PERFORMANCETotal revenue decreased from last year’s record turnover to $49.36m. The drop primarily reflects reduced activity associated with offshore exploration and the loss of container services at the Port. Despite this fall in revenue, the current year’s revenue is the second highest in the Company’s history.

Operating expenses were well controlled enabling the Company to deliver a net profit before tax of $15.98m.

Customer Intimacy

Maximum Asset Utilisation

Service Excellence


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Dividends of $4.07m were paid to the Taranaki Regional Council in line with the commitment to lift distributions each year.

Debt levels reduced to $30m and with the strong year-end equity ratio of 75.10% this will enable the Company to advance growth plans with investments that support additional trade.

The return on equity (net profit after tax divided by shareholder’s funds at the end of the period) was a very satisfactory 9.26% for the current financial period.

Cash flows from operations amounted to $18.37m. Although this is 2.3% lower than the previous year it is a favourable result.

The Company invested $11.75m in fixed assets in the year. The most significant was $5.90m for demolition and subsequent redevelopment of the Power Station site.

The biennial maintenance dredging took place this year at a cost of $1.97m.

Work-in-progress included the first two sets of two ShoreTension™ units that were delivered in May, a major upgrade to Hutchen Place, and strengthening work on the Blyde 3 wharf.

RevenueNet Profit After Tax

REVENUE AND NET PROFIT AFTER TAX 2011-2015

20152014201320122011

$39.3m

$3.1m

$41.3m

$4.4m

$45m

$7.5m

$55.3m

$11.7m

$49.4m

$11.4m

TOTAL TRADE VOLUMES 2011-2015

6,000

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

(000

s ton

nes)

20152014201320122011

REVENUE BY BUSINESS SECTOR 2015

3%Logs

36%Bulk Liquids 25%

Marine

13%Offshore

Dry Bulk

11%7%Property Land

5%Container Facilities


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EXECUTIVE LEADERSHIP TEAM From left to right: John Lehman (Business Services Manager), Neil Armitage (Marine Services Manager), Guy Roper (Chief Executive), Delys Tansley (Head of HR and Safety), Alistair Simmers (Operations and Infrastructure Manager), and Allan Melhuish (Commercial Manager).

HEALTH AND SAFETY

SAfE WORkINg

For the year ended 30 June 2015, the Company incurred seven work-related accidents of which one resulted in lost time of five days.

SAfETy CULTURE

The focus for the year has been on improving culture to deliver on the safety vision and getting employees to more clearly identify hazards.

The Health and Safety Committee was more active this year with an enhanced focus on training and leadership in each work area.

The Port users Group has engaged well and agreed with the new standards including those of minimum site entry standards.

HEALTH AND SAfETy REfORM LEgISLATION

The new health and safety legislation was introduced into the house in late July 2015. The intent of the legislation is to lift the bar in all aspects of health and safety nationwide. During the course of the year, a new Health and Safety Management System was established to guide the development of all policies and procedures to meet this lift in standards.

PERSONNELLEADERSHIP TEAMS

A new Executive Leadership Team has been established to take the business forward. Three new senior executives have joined the team.


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Delys Tansley has provided an impetus in the area of safety and culture in her role as Head of HR and Safety since August 2014. Delys came to the Port with experience in employment relations and change roles from Turners and Growers Limited and Orica New Zealand.

Alistair Simmers joined the Port from Liquigas Limited in February 2015 and assumed leadership of the Operations and Infrastructure Department from May 2015. This role includes all of the landside activities encompassing cargo operations, security, and the civil and engineering support functions associated with planning and maintaining infrastructure.

Allan Melhuish commenced shortly after the end of the period as Commercial Manager responsible for the interface with our customers and business development. Allan has experience in the energy sector having held senior roles with Genesis Energy Limited including General Manager of the Fuel Development Business unit.

Captain Neil Armitage was appointed to the role of Marine Services Manager late in the year following the retirement of Captain John Ireland. As an Executive Pilot with 18 years of service, Neil has been the Port’s key customer support for the offshore and oil and gas business.

A programme is underway to lift the engagement of senior leaders behind a set of common goals. Regular communication of business priorities is seeking to advance the delivery of service excellence.

OUR PEOPLE

The number of permanent full-time employees stood at 116 at the end of the financial year. In addition, there were five permanent part-timers and seven fixed-term employees.

A number of long serving staff retired during the year and their valued contribution was formally recognised.

Captain John Ireland retired in June 2015. Starting at Port Taranaki in 1983 as Pilot/Relieving Officer, John went on to become Marine Services Manager and was also appointed Harbourmaster for the Taranaki Regional Council in 2009.

John’s strong focus on safety saw him target a reduction in risk associated with mooring and maintaining vessels in port during adverse


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weather. Most recently he was instrumental in introducing the new ShoreTension™ system to negate the impact of long period waves. John stated in his farewell speech that he had great comfort knowing “this technology will overcome the problem”. He was also responsible for the project that saw the design and acquisition of the new pilot launch ‘Mikotahi’.

John’s dedication, commitment, and innovative thinking has been significant for the Port and we thank him for his outstanding contribution.

BUILDINg OUR BASE

A number of initiatives have been introduced this year in support of strengthening our business fundamentals.

Most notable was the implementation of a new financial system. The new Dynamics NAV system is already offering greater functionality and integration than other unsupported packages.

Over the next year, a programme to use this higher quality information will be featured as we roll out enhanced business intelligence reporting.

A new approach was taken to deliver a hosted payroll service with improved access and automated functionality for staff.

A company-wide Risk Manager system has been implemented and refined to allow the recording of events and follow-up actions. This system supports staff training and competencies as well as catering for the logging of safety information from near miss reporting, hazard management and safety observations. All staff have visibility within the system to track progress and the achievement of goals. This is particularly relevant to provide lead indicators to make the site safe.

The Marine Services team updated all operating processes for the marine fleet to comply with the Marine Operator Safety Systems (MOSS) requirements introduced by Maritime New Zealand. The Marine Transport Operators Plan has been subject to audit and is awaiting approval by Maritime New Zealand.


15

MARINE

This year has yielded a positive outcome in the challenge to overcome the impacts of long period waves that have become a significant issue in providing berth availability to our customers.

The Marine team has spent a number of years investigating ways to mitigate these potentially damaging and harmful waves and the investment made in trialling ShoreTension™ hydraulic rams is looking very promising. These units dampen the motion of the vessel while berthed, enabling the Port to raise the threshold level before initiating the only viable solution of excluding vessels.

Over the past two years more than a dozen vessels per year were required to vacate a berth and long period waves were prevalent for approximately 6-7% of the time. The deployment of Shoretension™ in the first few months has been very successful and once additional units are acquired a significantly lower exclusion frequency is targeted.

Customer feedback has been very positive with the Master of a regular visitor, the ‘Pacific Ranger’, reporting:-

We have not had any issues with the ShoreTension™ system, even during the recent “event”. This has easily allowed us to continue with our schedule without interruption. In my opinion, this is an excellent product.

BULK LIQUIDSBulk liquids trade grew by 0.2m freight tonnes, reflecting a 5% increase over the previous financial year. A total of 4.52m freight tonnes were exchanged via Newton King Tanker Terminal (NKTT), accounting for 81% of the total trade through the Port.

The NKTT team managed greater operating demands and utilisation of the wharf in tandem with a range of maintenance and upgrade projects.

OFFSHOREThe main offshore activity for the year was the servicing of the ‘Skandi Emerald’ and ‘Skandi Pacific’ vessels supporting the Ensco 107 rig in her multiple campaigns off the Taranaki coast.

Offshore operators OMV New Zealand Limited, AWE New Zealand PTY Limited, Shell Todd Oil Services Limited, and Origin Energy Resources (Kupe) Limited, continued to draw support from land and vessel services for their offshore production facilities.

BULK LIQUIDS 2011-2015

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

(000

s ton

nes)

20152014201320122011

BULK LIQUID VOLUMES BY PRODUCT 2015

3%Other

34%Crude Oils

58%Methanol

5%LPG


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DRY BULKBulk dry imports recorded an impressive increase from the previous year’s record high, rising over 20% to 0.72m freight tonnes. This was despite a falling milk price and challenging times for the dairy sector. There has been strong demand for poultry feed and we have strong engagement with Tegel Foods Limited, a key business within our region. The provision of additional bulk storage within the Port boundary is a key initiative to further satisfy customer needs.

LOGSLog volumes exported from the Port totalled 209k JAS, well down on the previous year. The first half of the year was particularly slow with lower demand and pricing from the Chinese market having a pronounced impact. There was a mild recovery during the summer period when we saw an additional exporter become established on site. An initiative to assist efficiency for customers was put in place to optimise the use of the Blyde wharf.

Optimisation of log storage yards was possible following the completion of the yard sealing programme. This has worked well with the support of C3 Limited during what has been a challenging year.

CONTAINERSIn October 2014, Pacifica Shipping Limited ceased their weekly coastal container service linking New Plymouth to Auckland and Tauranga. The combination of the ‘Spirit of Independence’ being returned to her owners and a fall-off in container exchange saw a decision taken not to seek alternative schedules. The importance of this service to importers and exporters has been emphasised in the final few months of the year. The alternatives for Taranaki businesses come at a cost and inconvenience. A concerted effort is being undertaken to see a resumption of this critical coastal connection. It will be imperative that the service is cost effective and supported by customers across the region for it to be a permanent part of our logistics solution.

GOVERNANCEAt the annual meeting on 25 September 2014, Richard Krogh and David MacLeod were re-elected as Directors of the Company. Following this meeting, John Auld and Craig Norgate were re-elected Chairman and Deputy Chairman respectively. Nine meetings of the Board were held during the year.

The Audit and Risk Committee comprised Craig Norgate (Chairman), Peter Horton, and Roger Taylor. They met on three occasions.


17

The Board’s Personnel Committee held two meetings during the year. John Auld (Chairman), Richard Krogh, David MacLeod, and Craig Norgate comprised the Committee.

Due to the focus on health and safety, the Board established a Health and Safety Governance Committee in September 2014. The inaugural meeting was held in December 2014 and a further meeting in April 2015. The Committee comprised Richard Krogh (Chairman), Graeme Marshall, and David MacLeod.

As provided by section 42 of the Company’s Constitution, Peter Horton and Roger Taylor retire by rotation at the upcoming twenty-seventh annual meeting of the Company and, being eligible, offer themselves for re-election.

With the passing of Craig Norgate the composition of the governance structure will be reviewed in conjunction with the Shareholder.

OUTLOOKThe outlook for 2015/2016 is for softer and more challenging trading conditions. The prospects for offshore exploration and its related support activity is markedly reduced following completion of the 2015 Taranaki drilling programme undertaken with the Ensco 107. Although the rig is in Port undergoing refurbishment, the current economic environment of low oil prices means that the offshore programme for the summer

of 2016 is yet to be confirmed. Of note is the prospect that deferred investment by explorers in the current year could lead to reduced oil and gas volumes for the next two years.

Lower growth in the Chinese market still presents challenges for log exporters with an expectation that volumes will remain below the 2014 peak level.

Although a lower NZD is providing some relief for New Zealand exporters, the low and volatile commodity prices has the potential to restrain volumes in the second half of the new year. Lower cash flows in the dairy industry are proving very challenging and the prospect of a milk price in the $3.85 - $4.40 range for a second year may directly impact our bulk dry sector. Similarly, in a lower inflationary environment the ability to enhance performance will come from efficiency measures and concluding new business opportunities.

Profitability is forecast to be down from the record levels achieved in the last two years. By leading a united team who are passionate to sharpen our performance focus and celebrate success, I look forward to the year ahead with confidence.

Guy Roper Chief Executive CA


18

New Shoretension™ technology in use at Blyde Wharf is overcoming the impact of long period waves.


19

OUR VALUES

in touchTHE PORT IS MORE THAN A PLACE TO WORK – IT’S A TEAM, A FAMILY AND A COMMUNITY. STAYING IN CLOSE TOUCH WITH OUR COLLEAGUES, OUR

COMMUNITY AND OUR CUSTOMERS IS ESSENTIAL TO OUR SUCCESS.

pioneering spiritPIONEERING SPIRIT IS ABOUT WEIGHING UP WHAT IS POSSIBLE AND HOW OUR BUSINESS AND OUR LIVES CAN BE MADE BETTER. WE

HAVE THE COURAGE TO PUT NEW IDEAS INTO PRACTICE AND WHEN THINGS DON’T WORK OUT

WE ARE RESILENT AND WE LEARN.

job well doneWE CHALLENGE OURSELVES AND STRIVE FOR EXCELLENCE, TAKING PRIDE IN DOING EACH JOB AS WELL AS WE CAN. A JOB WELL DONE

MEANS WE SET HIGH STANDARDS AND WE GO HOME SAFE. IT MEANS CUSTOMERS ARE HAPPY

WITH US AND WE GROW OUR BUSINESS.

ENVIRONMENTAL REPORT


20

ENVIRONMENTAL POLICYPort Taranaki places a high value on the quality and long term sustainability of the environment in which it operates. Accordingly, we give a commitment to our stakeholders ensuring that our activities are conducted in a manner that will avoid, remedy, or mitigate, to the most practical extent, any adverse effect on the environment.

IMPROVEMENTS IN 2014/2015Last year we made a commitment to:

• Workwithourcustomerstoimprovetheenvironmental performance of our facilities and operations within the Port.

• CompleteareviewoftheEnvironmentalManagement Plan and start to implement the recommendations.

Good progress has been made on both initiatives with the following improvements.

CUSTOMER/OPERATIONENVIRONMENTAL

MANAgEMENT PLAN RECOMMENDATION

IMPROVEMENT

Bulk product unloading Reduce amount spilled Increased use of environmental hoppers that have a dust collection system installed. On wharf compressed air system for truck cleaning.Grabs can be more accurately operated with the implementation of ShoreTension™ which reduces ship movement.

Log storage Implement a Stormwater Management Plan

A Stormwater Management Plan has been written and is being applied across the whole Port area. All log storage areas now have vortex treatment.A procedure for log yard cleaning has been introduced and a sweeping contract is in place.

Power Station re-development

Include in Port Environmental Management Plan

Port resource consents are being updated to allow for the Power Station re-development.

All Port operations Ensure all required consents are in place.

Consents held by Port customers have been reviewed and their facilities checked for compliance.

Photo courtesy of Lisa Dennis.


21

KEY PERFORMANCE INDICATORSThe Port’s environmental performance is monitored by the Taranaki Regional Council (TRC), through sampling and environmental surveys.

In 2013-2014, the TRC rated the Port’s environmental performance as “good”, improving on the 2012-2013 rating of “improvement required’.

The rating remained “good” for 2014/2015, as measured by the following key performance indicators (KPIs):

The three marine pollution incidents logged by the TRC were minor. One was a spill of drilling mud from a berthed vessel, another was a base oil spill from a berthed vessel, and the third was notification of a sewage spill from a vessel at sea that, on investigation, was found not to have occurred.

The two stormwater pollution incidents logged by the TRC were also minor and no further action was required. One incident was for exceeding the resource consent’s total suspended solids limit. This was due to back-to-back log ships making the upstream log yard catchment dirty but unsafe to sweep at the time of sampling.

A further incident was orange water being discharged through the outfall at the southern end of Ngamotu Beach, causing discolouration of the sea. This is due to ferric oxide or ‘natural rust’ in the groundwater being washed out of the stormwater system when it rains. This occurs naturally because of the ironsand in the Port area, and is therefore not considered to be pollution. A sign will be installed at the Ngamotu Beach outfall to explain this phenomenon.

DREDGINGThe Port completed its two-yearly dredging campaign in the summer of 2014/2015 with 210,000m3 of sand being removed, most of which was deposited in a zone where it will be carried along the coast and feed New Plymouth’s northern beaches.

The TRC rates the Port’s environmental performance for dredging at its top rating of ‘high’.

MARINE ECOLOGYPort Taranaki and the harbour at Ngamotu Beach provide a deep and sheltered habitat for marine life which is rare on the Taranaki coast. Crayfish, seahorses, and jewel anemones are abundant and there are populations of rays, reef fish, and john dory in the harbour.

Local schoolchildren had the opportunity to explore the marine environment during “Seaweek” which is organised by the Department of Conservation and Nga Motu Marine Reserve Society. Port Taranaki sponsors this annual event.

Every six months, NIWA carries out a survey for invasive species in the wharf area and wider harbour. No new invasive weeds or marine species were found during the 2014/2015 surveys, however, undaria and grateloupia are still present in the Port.

ENVIRONMENTAL INITIATIVESIn 2015/2016, Port Taranaki plans to:

• FinaliseandimplementtheEnvironmentalManagement Plan.

• IntegratethePowerStationre-developmentinto the Port’s environmental systems.

• Continuetoimproveourenvironmentalperformance (as measured by the KPIs) and work with our customers to improve their environmental performance.

KEY PERFORMANCE INDICATOR

OUTCOME

Non-compliance notices for Port Taranaki’s activities

Nil

Ngamotu beach water quality

Full compliance with bathing water quality standards

Marine pollution incidents – Port Taranaki responsible

Nil

Marine pollution incidents – customers responsible

Three

Stormwater pollution incidents

Two

SOCIAL HIGHLIGHTS

SPONSORED

Deloitte’s Energy Excellence Awards – Overall Energy Company of the Year

Supported the development of Ngati Te Whiti

hapu’s urban marae

SPONSORED

Westpac Chamber of Commerce Business Awards – Energy Excellence Award

HOSTEDNew Plymouth ITU Triathlon World Cup

$4.07MILLIONDividends to Taranaki Regional Council


22

The Company continued to support its major stakeholders.

COMMUNITY• ProvidedpeppercornleaserentaltoNew

Plymouth District Council for Ngamotu Beach and the Coastal walkway.

• Providedfreeaccesstorecreationalareasfora range of activities and events including the Sunday markets.

• Providedlawn-mowingservicesatWaitapuCemetery, Bayly Road.

• Conductedporttoursandmadepresentationsto community groups.

• Twocruisesarescheduledforearly2016andwe will work with Venture Taranaki Trust to co-ordinate activities across the region.

CUSTOMERS• Hostedforumsfordiscussiononport-related

matters including environmental, health and safety, and security.

• RevampedtheCompanymagazine‘Portal’andpublished three issues which were distributed to customers.

• CompanywasrepresentedontheEngineeringTaranaki Consortium and the Oil and Gas Specialist Technologies Group.

• HostedcustomerstorugbyatYarrowStadium– most notably to see Taranaki winning the ITM Cup.

• Conductedporttoursandmadepresentationsto customers.

EMPLOYEES

• Publishedtheweeklystaffnewsletter,‘PortTalk’.

• Conductedastaffengagementsurvey “Best Workplaces”.

• ContinuedtheavailabilityofEAPServicesLimited to staff and their families and offered group medical insurance schemes.

• Continuedtoprovidesubsidisedretirementsavings through a group superannuation scheme.

SOCIAL REPORT


23

• Offeredinfluenzainjectionstoallstaff.

• Continuedtoprovidearangeofactivities for staff and their families through the Social Club.

• ProvidedSocialClubfacilitiesandan onsite gymnasium.

• Acknowledgedstaffwithfour‘SealofSafety’awards.

SPONSORSHIPS

Port Taranaki’s presence in the broader community is shown through direct sponsorship support.

Our philosophy is to assist our region with contributions spread between three areas as shown below for 2014/2015.

16%Business and Community Related

61%Taranaki Rugby Football Union

23%Marine Related Sport and Activities

STATEMENT OF CORPORATE INTENT


24

A comparison of the performance targets in the Statement of Corporate Intent for the period 1 July 2014 to 30 June 2017 against the actuals for 2014/2015 as required by Section 16(4)(a)of the Port Companies Act 1998 is shown below.

2014/2015 TARGET

2014/2015 ACTuAL

2014/2015 ACHIEVED

Return on average total assets (NPAT/ATA) 6.7% 7.0% Yes

Return on average shareholder’s funds (NPAT/ASF) 8.9% 9.5% Yes

NPAT – Net Profit After Tax ATA – Average Total Assets ASF – Average Shareholder’s Funds

FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015

Contents

Page

1 Statement of Profit or Loss and Other Comprehensive Income 26

2 Statement of Changes in Equity 26

3 Statement of Financial Position 27

4 Statement of Cash Flows 28

5 Statement of Accounting Policies 29-35

6 Notes to the Financial Statements 36-53

7 Independent Auditor’s Report 54

25PORT TARANAKI LIMITED REPORT 2015

Statement of Profit or Loss and Other Comprehensive Income

Statement of Changes in Equity


NOTE 2015 NZ$ 2014 NZ$ Revenue from operations 2 49,272,106 55,247,174 Operating expenses 2 (32,000,861) (36,949,522) Operating profit before finance income and expenses 17,271,245 18,297,652 Finance income 2 92,703 12,726 Finance expenses 2 (1,387,235) (1,938,376) Net finance expense (1,294,532) (1,925,650) Profit Before Taxation 15,976,713 16,372,002 Income tax expense 3 (4,610,498) (4,627,257) Profit for the period (attributable to owners of the company) 11,366,215 11,744,745 Other comprehensive income (items that may be reclassified subsequently to profit or loss when specific conditions are met) Change in cash flow hedge reserve 18 (1,807,026) 666,875 Other comprehensive income for the period, net of income tax (1,807,026) 666,875 Total comprehensive income for the period (attributable to owners of the company) 9,559,189 12,411,620

Issued Retained Revaluation Cash Flow Hedge Total Note Capital $NZ Earnings $NZ Reserve $NZ Reserve $NZ Equity $NZ

As at 1 July 2014 26,000,000 32,948,586 48,976,802 634,366 108,559,754 Changes in Equity for 2014 Profit and total comprehensive income for the period - 11,744,745 - 666,875 12,411,620 Dividends 17 - (3,700,000) - - (3,700,000) As at 30 June 2014 26,000,000 40,993,331 48,976,802 1,301,241 117,271,374 Changes in Equity for 2015 Profit and total comprehensive income for the period - 11,366,215 - (1,807,026) 9,559,189 Dividends 17 - (4,070,000) - - (4,070,000) As at 30 June 2015 26,000,000 48,289,546 48,976,802 (505,785) 122,760,563


26 The accompanying notes form part of these financial statements


27

The accompanying notes form part of these financial statements

NOTE 2015 NZ$ 2014 NZ$ Current Assets Cash and cash equivalents 6 1,269,750 19,098 Trade and other receivables 7 4,456,809 7,696,119 Inventories 8 668,672 680,700 6,395,231 8,395,917 Non Current Assets Other intangible assets 10 776,181 508,494 Property, plant and equipment 9 155,618,435 151,545,851 Derivative financial instruments 18 - 1,301,241 Deferred tax asset 5 665,129 567,778 157,059,745 153,923,364 Total Assets 163,454,976 162,319,281 Current Liabilities Trade and other payables 11 5,620,491 7,129,083 Provisions 12 1,791,701 1,692,419 Borrowings 13 23,474 153,597 Taxation payable 4 1,404,807 2,655,315 8,840,473 11,630,414 Non Current Liabilities Derivative financial instruments 18 505,785 - Borrowings 13 29,978,155 31,868,493 Trade and other payables 11 461,000 590,000 Provisions 12 909,000 959,000 31,853,940 33,417,493 Equity Issued capital 14 26,000,000 26,000,000 Asset revaluation reserve 15 48,976,802 48,976,802 Cash flow hedge reserve 18 (505,785) 1,301,241 Retained earnings 16 48,289,546 40,993,331 122,760,563 117,271,374 Total Equity and Liabilities 163,454,976 162,319,281

For and on behalf of the Board

Director Director

Dated: 13 August 2015

Statement of financial Position

FINANCIAL STATEMENTS

As at 30 June 2015


28 The accompanying notes form part of these financial statements

NOTE 2015 NZ$ 2014 NZ$ Cash Flows From Operating Activities Receipts from customers 59,981,826 59,928,850 Interest received 92,625 12,669 Income tax refund 49,467 - 60,123,918 59,941,519 Payments to suppliers and employees (34,354,448) (34,745,153) Interest paid (1,388,928) (1,957,647) Income tax paid (6,007,824) (4,433,986) (41,751,200) (41,136,786) Net cash provided by operating activities 19 18,372,718 18,804,733 Cash Flows From Investing Activities Sale of property, plant and equipment and software (net of disposal costs) 310,810 17,558 310,810 17,558 Purchase of property, plant and equipment and software (11,000,132) (10,878,218) Capitalised interest on purchase of property, plant and equipment (343,976) (84,000) (11,344,108) (10,962,218) Net cash (used in)/provided by investing activities (11,033,298) (10,944,660) Cash Flows From Financing Activities Repayment of borrowings (2,018,768) (4,671,827) Interim dividend (2,035,000) (1,850,000) Final dividend (2,035,000) (1,850,000) Net cash (used in)/provided by financing activities (6,088,768) (8,371,827) Net Increase/(Decrease) in Cash and Cash Equivalents 1,250,652 (511,754) Cash and Cash Equivalents at the Beginning of Year 19,098 530,852 Cash and Cash Equivalents at the End of the Year 6 1,269,750 19,098


Statement of Cash flows


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STATEMENT OF ACCOUNTING POLICIESGENERAL ACCOuNTING POLICIES

Port Taranaki Limited (the “Company”) is a sea port company incorporated under the Companies Act 1993 and domiciled in New Zealand.

The Company’s parent and sole shareholder is the Taranaki Regional Council.

The Company’s registered office is 2 - 8 Bayly Road, Moturoa, New Plymouth 4310.

The financial statements for the Company were authorised for issue by the directors on 13 August 2015.

The principal activities of the port are described in Note 1.

Statement of Compliance

These are the financial statements of the Company presented in accordance with the Port Companies Act 1988 and the Companies Act 1993, prepared in accordance with the Financial Reporting Act 2013, and in accordance with New Zealand generally accepted accounting practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), International Financial Reporting Standards (IFRS) and other applicable Financial Reporting Standards. The Company is a profit oriented entity.

Basis of Preparation

The financial statements are presented in New Zealand dollars, which is the Company’s functional and reporting currency, rounded to the nearest dollar.

They are prepared on the historical cost basis apart from land and derivatives which are stated at their fair value.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

SIGNIFICANT ACCOuNTING POLICIES

(a) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market instruments. Bank overdrafts are shown within current liabilities in the Statement of Financial Position.

(b) Foreign Currency Monetary Balances

Transactions in foreign currencies are converted at the exchange rate ruling at the date of the transaction. At balance date all foreign currency monetary assets and liabilities are translated to New Zealand dollars using the prevailing spot rate of the day. Any gain or loss is recognised in the profit or loss in the reported financial period in which they arise.

(c) Financial Instruments

(c) (i) Derivatives

A derivative is a financial instrument or contract whose value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, credit index or other variable. It requires no or a nominal initial investment and is settled at a later date.

The Company uses derivative financial instruments to hedge its exposure to foreign exchange, commodity and interest rate risks arising from operational, financing and investment activities. The Company does not hold or issue derivative financial instruments for trading purposes. Derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

The Company may enter into foreign currency forward exchange contracts, to hedge foreign currency transactions when purchasing major fixed assets and when payment is denominated in foreign currency. Gains and losses on such contracts are recognised in the profit or loss each year at balance date or date of completion by restating the liability to fair value at balance date or at the time of settlement.

Cash Flow Hedges

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in the equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the profit or loss with finance expenses.

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 the hedging reserve remains there until the forecast transaction occurs. When the hedged item is a nonfinancial asset, the amount recognised in the hedging reserve is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in the hedging reserve is transferred to the profit or loss in the same period that the hedged item affects the profit or loss.

At year end the Company had one derivative financial instrument in place as per note 18 (2014:


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one derivative), as well as 7 short term forward exchange contracts.

(c) (ii) Financial Assets and Liabilities Financial Assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs. Subsequent to initial recognition, investments in associates are accounted for under the equity method in the financial statements. Other financial assets are classified into the following specified categories: financial assets ‘at fair value through the profit or loss’, ‘held to maturity investments’, ‘available for sale’ financial assets, and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial Assets at Fair Value Through Profit or Loss

A financial asset may be designated as at fair value through profit or loss upon initial recognition if:

a) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

b) the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its peak performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

c) it forms part of a contract containing one or more embedded derivatives and NZ IAS 39 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in note 18.

Loans and Receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are

not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Interest is recognised by applying the effective interest rate.

Impairment of Financial Assets

Financial assets, other than those at fair value through profit or loss are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For financial assets, objective evidence of impairment could include:

a) significant financial difficulty of the issuer or counterparty; or

b) default or delinquency in interest or principal payments; or

c) it is becoming probable that the borrower will enter bankruptcy or financial re-organisation.

Certain categories of financial assets, such as trade receivables, that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables includes the Company’s past experience of collecting payments, as well as observable changes in national or local economic conditions that correlate with default on receivables and expected uncollectible items.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited off against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after


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the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

Other Financial Liabilities

Other financial liabilities, including borrowings, and trade and other payables are initially measured at market value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount of the financial liability.

(d) Inventories

Stocks of maintenance materials and supplies are valued at the lower of weighted average cost or net realisable value.

(e) Property, Plant and Equipment

Owned Assets

All items of property, plant and equipment except land are stated at cost less accumulated depreciation and impairment.

After recognition as an asset at date of transition to NZ IFRS an item of land whose fair value can be measured reliably is carried at a revalued amount, being its value at the date of the revaluation less any subsequent accumulated impairment losses. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at balance date.

Any revaluation increase arising on the revaluation of land is credited to a revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in the profit or loss, in which case the increase is credited to the profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of land is charged as an expense in the profit or loss to the extent that it exceeds the balance, if any held in the revaluation reserve relating to a previous revaluation of that asset. On

the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the revaluation reserve, is transferred directly to retained earnings.

After recognition as an asset, an item of property, plant and equipment other than land shall be carried at its cost less any accumulated depreciation and any accumulated impairment losses.

Maintenance Dredging

The cost of maintenance dredging incurred is expensed over the period of benefit through to the commencement of the next dredging campaign. The value of the unexpired portion of maintenance dredging at balance date is reflected in property, plant and equipment.

Subsequent Costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. All other costs are charged to the profit or loss during the financial period in which they are incurred.

(f) Intangibles

Intangible assets acquired by the Company comprise computer software and are stated at cost less accumulated amortisation and impairment losses.

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(g) Impairment of Non Financial Assets

Assets are reviewed for impairment at each reporting date for events or changes in circumstances that indicate that the carrying amount may not be recoverable. An impairment loss is determined as the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value, less costs to sell, and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash generating units).

Recoverable amount is the higher of fair value less costs to sell and value in use. 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


32

the risks specific to the assets for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in the profit or loss immediately, unless the relevant asset is carried at fair value, in which case the reversal of the impairment loss is treated as a revaluation increase.

(h) Employee Benefits

(h) (i) Long Term Benefits

The Company’s net obligation in respect to future benefits that can extend up to the date of retirement for all existing employees are long term benefits. They relate to benefits that employees have earned in return for their service in the current and prior periods, although they may or may not have vested at balance sheet date. The obligation is calculated using an actuarial method and is discounted to its present value. The discount rate the Company uses is the market yield on long term New Zealand Government bonds as at balance sheet date. The probability of the Company’s obligation to pay the future benefit is then determined actuarially.

Long term employee benefits for the Company include: Long service leave and retirement allowances.

Long Service Leave

The Company has long service milestones of 15, 25, 30 and 35 years of service. Leave entitlement accrued towards milestones not yet achieved are calculated in accordance with the long term benefits policy. No benefit is payable to an employee upon leaving the Company for any milestone worked towards but not achieved, however the probability of attaining vested status is determined and applied in calculating the expected liability amount.

Retirement Allowance

The Company has a retirement policy in place which provides for a retirement allowance. Actuarial calculations are made to assess both the amount projected to be paid (in accordance with the Company’s policy) and the probability that the employee will qualify for the allowance.

(h) (ii) Post Employment Benefits

Defined Benefit Plans

The Company is a participating employer in the National Provident Fund Defined Benefit Plan 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 note 26). Similarly, if a number of employers ceased to participate in the Scheme, the employer could be responsible for an increased share of the deficit.

The Company treats payments as expenses when incurred, similar to the treatment for defined contribution schemes as sufficient information is not available to use defined benefit accounting.

(h) (iii) Short Term Benefits

Short term benefits represent the Company’s net obligation with respect to benefits for services performed that are expected to be paid in the ensuing 12 months. These accruals are calculated based on existing remuneration rates expected to be in place when the benefits are paid.

Short term employee benefits for the Company include: vested leave, sick leave, long service leave and retirement allowance provision.

Vested Leave

Where an employee has rendered service to the Company and has attained the right to paid leave, the undiscounted amount expected to be paid, is recognised as a current liability as all accumulated leave is expected to be used within 12 months of balance sheet date. The remuneration rates expected to be in place when the benefits are paid is applied to the time owed for entitlements to holiday pay earned, and alternate days owing where statutory days have been worked, and long service leave where the milestone has been achieved.

Sick Leave

The Company measures the amount of additional payments that are expected to arise solely from the fact that the benefit accumulates. The accrual is for the amount estimated it will cost the Company for any employee taking leave in


33

excess of their annual entitlement. It is calculated based on the average expected daily rate of all employees, and the actual average number of sick days taken collectively by employees in excess of annual entitlement in the previous three years.

The current portion of the sick leave provision, the long service leave provision, vested annual leave and retiring allowance provision are presented as current employee benefit provisions.

(i) Provisions

A provision is recognised in the Statement of Financial Position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, 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, where appropriate, the risks specific to the liability.

( j) Trade and Other Payables

Trade and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services. Subsequent to initial recognition, trade payables and other accounts payable are recorded at amortised cost. Given the nature of these liabilities amortised cost equals their notional principal.

ACC

As a port operator, the Company is liable to pay residual claims levies to the ACC. As at balance date the ACC actuary advises that the residual claims fund is expected to be fully funded by 2019. An accrual is made at balance date reflecting the estimated amount payable through to 2019 based upon current residual levy rates. The assessed figure is discounted at the 10 year government bond rate to determine the final provision.

The current and non current portions of the ACC accrual is presented as trade and other payables.

(k) Interest Bearing Borrowings

All loans and borrowings are initially recognised at fair value, net of transaction costs. Subsequent to the initial recognition, loans and borrowings are carried at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in the profit and loss over the period of the borrowing using the effective interest method, except that they are capitalised in accordance with (q) below.

All interest bearing borrowings are measured at

amortised cost using the effective interest rate method which allocates the cost through the expected life of the borrowing. Amortised cost is calculated taking account of any establishment costs.

Borrowings are classified as current liabilities (either advances and deposits or current portion of term debt) unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

(l) Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit or loss except to the extent that it relates to items of other Comprehensive Income, in which case it is recognised in other Comprehensive Income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the comprehensive balance sheet liability method, for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxation assets attributable to tax losses or deductible temporary differences are recognised when realisation is probable. Deferred taxation liabilities attributable to taxable temporary differences are amounts of income taxes payable in future periods. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Deferred tax assets and liabilities are calculated using the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted at balance sheet date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Current and deferred tax is recognised as an expense in the profit or loss except when it relates to items of other Comprehensive Income. Deferred taxation assets and liabilities can be offset when they relate to income taxes levied by the same taxation authority.


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(m) Dividends

Provisions for dividends are recognised in the period in which they are authorised and approved.

(n) Goods and Services Tax (GST)

All items in the Statement of Financial Position are stated exclusive of GST with the exception of receivables and payables, which include GST. All items in the Statement of Profit or Loss and Other Comprehensive Income are stated exclusive of GST. Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to the taxation authority is classified as operating cash flows.

(o) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable.

Rendering of Services

The Company recognises revenue for the rendering of services when the amount can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity, the transaction can be measured reliably and the costs incurred or to be incurred can be measured reliably.

Interest Revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

(p) Research and Development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the profit or loss when incurred. Expenditure on developing the application of any research findings will only be capitalised if able to demonstrate all of the following conditions: It is technically feasible to complete so it will be available for sale or use, intended to be completed, able to be used or sold, will generate probable future economic benefits, there are adequate technical, financial and other resources to complete the development to use or sell, and can be measured reliably during its development.

(q) Borrowing Costs

The Company recognises as an expense within the profit or loss all borrowing costs incurred, with the exception of interest costs incurred during construction/assembly of major capital projects,

which are capitalised as part of the initial cost of the respective assets.

(r) Depreciation

Property, plant and equipment other than land are depreciated on a straight line basis over their estimated useful lives.

Depreciation periods are:

Buildings 5 to 45 years Port installations 5 to 66 years Plant, equipment and fittings 2.5 to 25 years Floating plant 3 to 25 years Bulk tanks 5 to 25 years Maintenance dredging 2 years Capital dredging 50 years

The residual values, and the useful lives of assets are reviewed at least annually and, if expectations differ from previous estimates, the change shall be accounted for as a change in accounting estimate in accordance with NZ IAS 8.

(s) Amortisation

Amortisation is charged to the profit or loss on a straight line basis over the estimated useful life of the intangible assets unless the estimated useful life is indefinite. There are no indefinite life intangible assets held at balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

Computer software 2 - 5 years

(t) Operating Leases

An operating lease is one where the lessor retains significant risks and rewards of ownership of the leased asset.

i) Payments made under operating leases are recognised in the profit or loss on a straight line basis over the term of the lease, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

ii) Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease.

(u) Statement of Cash Flows

Cash flows from operating activities are presented using the direct method.

Definitions of terms used in the Statement of Cash Flows:

- Cash means cash on deposit with banks, net of outstanding bank overdrafts.


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- Investing activities comprise the purchase and sale of property, plant and equipment, investment properties and investments.

- Financing activities comprise the change in equity and debt capital structure of the Company and the payment of cash dividends.

- Operating activities include all transactions and events that are not investing or financing activities.

CRITICAL ACCOuNTING JuDGMENTS AND ESTIMATES

In the application of NZ IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.

The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined by using valuation techniques. The Company uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date. The carrying value of the derivative financial instruments are disclosed in note 18.

The estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Management have made judgments that relate to the estimated useful life of property, plant and equipment, its fair value, and the value of receivables. The judgements are disclosed in Statement of Accounting Policies (r) and (s), and Notes to the Financial Statements, note 9 and note 10 carrying amount, revaluations and other disclosures.

If the estimated useful life of depreciable assets was 5% longer/shorter the operating profit for the year would have increased/decreased for the following classes by:

Buildings 42,533 Port installations 82,522 Plant, equipment and fittings 85,947 Bulk tanks 5,000 Floating plant 45,415 Maintenance dredging 48,413 Capital dredging 22,563

CHANGES IN ACCOuNTING ESTIMATES

2015 and 2014: There had been no changes to accounting estimates.

ADOPTION OF NEW AND REVISED ACCOuNTING STANDARDS

In the current year the Company has adopted all of the Standards and Interpretations issued by the External Reporting Board (the XRB) that are relevant to its operations and effective for the current reporting period.

At the date of authorisation of the financial report, the following Standards and Interpretations were on issue but not yet effective:

Effective for annual Expected to be reporting periods initially applied in the beginning on or after financial year ending

- NZ IFRS 9 - Financial Instruments 1 January 2018 30 June 2019

- NZ IFRS 14 - Regulatory Deferral Accounts 1 January 2016 30 June 2017

- NZ IFRS 15 - Revenue from Contracts with Customers 1 January 2017 30 June 2018

Amendments

- NZ IAS 26 - Fair Value Disclosures by Retirement Benefit Plans 1 January 2015 30 June 2016

- IAS 27 - Equity Method in Separate Financial Statements 1 January 2016 30 June 2017

- IAS 16 & IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 30 June 2017

- NZ IFRSs 2014 Omnibus Amendments 1 April 2015 30 June 2016

- NZ IFRS 11 - Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 30 June 2017

2014 NZ IFRSs Omnibus

Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture 1 January 2016 30 June 2017

Application of the Standards, Amendments and Interpretations is not expected to have a material impact on the financial statement account balances of the Company but may require additional financial statement disclosures. All other Standards, Amendments and Interpretations are not applicable or expected to have a material effect.

CHANGES IN ACCOuNTING POLICIES

Accounting policies have been applied consistently with those in the previous year.


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Notes to and forming part of the financial Statements

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2015

1 Principal Activities

The Company facilitates export and import activities through Port Taranaki.

2015 NZ$ 2014 NZ$

2 Profit from Operations (a) Revenue Port operating revenue from sale of services 46,839,079 49,381,038 Lease and rental revenue 2,433,027 5,866,136 49,272,106 55,247,174 Interest revenue 92,703 12,726 Total revenue 49,364,809 55,259,900

(b) Profit before taxation Profit before tax for the year has been arrived at after charging the following: Employee benefits 14,470,719 13,307,372 Employee benefits - termination 157,811 628,731 Defined contribution plans 862,910 872,351 Cost of services used 1,646,369 3,161,404 General expenses 3,646,566 3,886,223 Finance costs 1,387,235 1,938,376 Maintenance dredging - depreciation (note 9) 968,268 1,080,362 Maintenance dredging other costs 4,354 10,441 Repairs and maintenance 4,239,962 7,578,805 Depreciation and amortisation (notes 9 and 10) 6,008,817 6,195,577 (excludes maintenance dredging) Net loss on disposal of property, plant and equipment (4,914) 228,256 Included in General expenses were the following expenses: Change in estimated doubtful debts (7,000) 6,000 Translation adjustments comprising: Net loss/(gain) on foreign currency bank balances (1,528) (45,404) Payments to auditor Audit fees 71,660 70,350


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2015 NZ$ 2014 NZ$ Payments to directors included with Employee Benefits J S Auld 71,500 65,000 P D Horton 36,850 33,500 E R Krogh 36,850 33,500 D N MacLeod 36,850 33,500 G J Marshall 36,850 7,694 M C Norgate 44,220 40,200 R N Taylor 36,850 33,500 299,970 246,894 3 Income Tax Expense/(Credit)

a) Income Tax recognised in the Profit and Loss Current tax expense 4,707,849 6,076,947 Deferred tax on temporary differences (97,351) (1,449,690) Income tax expense/(credit) per Profit and Loss 4,610,498 4,627,257 Income tax is calculated at an effective tax rate of 28 percent of the estimated assessable profit for the year. b) Reconciliation of Accounting Profit Before Tax and Income Tax Expense/(Credit) Profit before taxation 15,976,714 16,372,002 Income tax expense calculated at 28% 4,473,480 4,584,160 Tax effect of non deductible expenses in profit before tax 11,417 4,528 Tax effect of zero rated building additions/disposals current year 71,586 192,668 Prior period adjustments impacting income expense under/(over) 54,015 (154,099) Income Tax Expense per Statement of Comprehensive Income 4,610,498 4,627,257 4 Taxation Refundable/(Payable)

Opening balance (2,655,315) (1,012,354) Prior year tax paid/(refund) 2,758,357 1,033,334 Prior period adjustment (103,043) 28,486 Current taxation payable (4,604,806) (6,105,433) Provisional taxation paid 3,200,000 3,400,652 Taxation refundable/(payable) (1,404,807) (2,655,315)


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5 Deferred Tax Asset/(Liability)

Depreciation/ Provisions/ Receivables/ Total Amortisation NZ$ Payables NZ$ Prepayments NZ$ NZ$ As at 1 July 2013 (1,775,613) 1,130,404 (236,702) (881,911) (Charged)/Credited to Profit or Loss in the Statement of Comprehensive Income 799,813 440,894 208,982 1,449,689 As at 30 June 2014 (975,800) 1,571,298 (27,720) 567,778 (Charged)/Credited to Profit or Loss in the 244,607 (177,216) 29,960 97,351 Statement of Comprehensive Income As at 30 June 2015 (731,193) 1,394,082 2,240 665,129 There are no income tax losses carried forward. 2015 NZ$ 2014 NZ$ 6 Cash and Cash Equivalents

Cash at bank and on hand 1,269,750 19,098 The carrying amount for cash and cash equivalents equals fair value. 7 Trade and Other Receivables

a) Current Trade receivables 4,110,667 7,474,744 Provision for impairment (8,000) (15,000) Net trade receivables 4,102,667 7,459,744 Other receivables 354,142 236,375 4,456,809 7,696,119 The fair value of trade and other receivables approximates their carrying value. The average credit period on sales of services is 35 days (2014: 45 days). The Company reserves the right

entirely at its discretion to apply an interest charge at 2.5% per month compounding on overdue accounts, as per ‘Standard Conditions of Business’ 5.5(c) issued by Port Taranaki Limited. If credit has been granted, then payment for services rendered is due by the 20th of the month following invoice. The Company has provided in full for any receivables over 90 days old which are considered potentially unrecoverable. All other debtors are provided for based on estimated irrecoverable amounts determined by reference to past default experience.

Included in the Company’s trade receivable balance are debtors with a carrying amount of $0.295m (2014: $1.062m) which are past due at the reporting date. The average age of the $0.295m (2014: $1.062m) receivables is 58 days (2014: 51 days).


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2015 NZ$ 2014 NZ$ Movement in the provision for impairment Balance 1 July 15,000 9,000 Increase/(Decrease) in impairment provision recognised in profit or loss (7,000) 6,000 Balance 30 June 8,000 15,000 In determining the recoverability of a trade receivable the Company considers any change in the credit quality

of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk lies in trade debtors where 25.71%, or 18 (2014: 32.05%, 25) by number of trade debtors, represent 89.23% (2014: 92.46%) of the total amount of trade debtors. 7.00% (2014: 14.21%) of trade receivables were overdue but not impaired at balance sheet date. 0.19% (2014: 0.20%) of trade receivables were considered impaired.

8 Inventories Maintenance consumables 668,672 680,701 9 Property, Plant and Equipment

Land Carrying amount at 1 July 74,183,000 74,183,000 Additions 130,000 - Carrying amount at 30 June 74,313,000 74,183,000 Buildings As at 30 June previous year Cost 25,808,262 24,902,041 Accumulated depreciation (12,409,622) (11,637,334) Net book value previous year 13,398,640 13,264,707 Carrying amount at 1 July 13,398,640 13,264,707 Additions 358,923 1,000,875 Disposals (15,530) (40,733) Depreciation (850,652) (826,209) Carrying amount at 30 June 12,891,381 13,398,640


40


2015 NZ$ 2014 NZ$ Maintenance dredging As at 30 June previous year Cost 2,305,823 2,305,823 Accumulated depreciation (1,497,790) (417,428) Net book value previous year 808,033 1,888,395 Carrying amount at 1 July 808,033 1,888,395 Additions 1,967,383 - Depreciation (968,268) (1,080,362) Carrying amount at 30 June 1,807,148 808,033 Port installations As at 30 June previous year Cost 44,937,760 41,604,625 Accumulated depreciation (27,412,000) (25,700,953) Net book value previous year 17,525,760 15,903,672 Carrying amount at 1 July 17,525,760 15,903,672 Additions 1,007,109 3,333,135 Reclassification (888,561) - Depreciation (1,650,441) (1,711,047) Carrying amount at 30 June 15,993,867 17,525,760 Bulk tanks As at 30 June previous year Cost 999,999 999,999 Accumulated depreciation (108,333) (8,334) Net book value previous year 891,666 991,665 Carrying amount at 1 July 891,666 991,665 Depreciation (100,000) (99,999) Carrying amount at 30 June 791,666 891,666


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2015 NZ$ 2014 NZ$ Plant, equipment and fittings As at 30 June previous year Cost 27,041,287 26,485,715 Accumulated depreciation (16,832,329) (15,062,470) Net book value previous year 10,208,958 11,423,245 Carrying amount at 1 July 10,208,958 11,423,245 Additions 1,011,894 738,257 Disposals (352,384) (31,177) Depreciation (1,718,944) (1,921,367) Carrying amount at 30 June 9,149,524 10,208,958 Floating plant As at 30 June previous year Cost 17,514,338 14,450,892 Accumulated depreciation (6,941,356) (6,234,249) Net book value previous year 10,572,982 8,216,643 Carrying amount at 1 July 10,572,982 8,216,643 Additions 19,917 3,071,285 Depreciation (908,299) (714,946) Carrying amount at 30 June 9,684,600 10,572,982 Capital dredging As at 30 June previous year Cost 21,505,192 21,505,192 Accumulated depreciation (3,081,877) (2,651,773) Net book value previous year 18,423,315 18,853,419 Carrying amount at 1 July 18,423,315 18,853,419 Reclassification 888,561 - Depreciation (451,260) (430,104) Carrying amount at 30 June 18,860,616 18,423,315 Capital works in progress Carrying amount at 1 July 5,533,497 1,778,375 Additions 11,088,362 11,898,673 Transferred upon completion (4,495,226) (8,143,551) Carrying amount at 30 June 12,126,633 5,533,497 Total property, plant and equipment 155,618,435 151,545,851


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As at 30 June 2015 Cost Accumulated Carrying depreciation amount Land (Including revaluations) 74,313,000 - 74,313,000 Buildings 26,117,399 (13,226,018) 12,891,381 Maintenance dredging 2,125,098 (317,950) 1,807,148 Port installations 44,887,059 (28,893,192) 15,993,867 Bulk tanks 999,999 (208,333) 791,666 Plant, equipment & fittings 26,992,492 (17,842,968) 9,149,524 Floating plant 17,535,006 (7,850,406) 9,684,600 Capital dredging 22,563,001 (3,702,385) 18,860,616 Capital works in progress 12,126,633 - 12,126,633 Total property, plant and equipment 227,659,687 (72,041,252) 155,618,435 Revaluations Land was revalued at 30 June 2013 by Mr Ian Baker, a registered valuer with Telfer Young (Taranaki) Ltd, New

Plymouth. Telfer Young have been contracted by Port Taranaki as independent valuers. The revalued amount of land used in this report amounts to $74.1m using the Direct Sales Comparison Approach methodology.

Land assets have been valued on their highest and best use taking into account the existing zoning, potential for utilisation and localised port market. All land holdings are used or held for port operational requirements and as such are valued under the requirements of NZ IAS 16 using fair value (market value).

The carrying amount of land had it been recognised under the cost model is as follows:

2015 NZ$ 2014 NZ$ 25,336,198 25,206,198 Other disclosures (i) There are no material items of property, plant or equipment which are not in current use. (ii) There have been impairment losses recognised in the current period, for 1 asset (2014: 3 assets) impaired

for a total value of $43,488 (2014: $173,000). (iii) $343,796 (2014: $84,000) of borrowing costs were capitalised. (iv) There are no restrictions in titles relating to property, plant and equipment or items pledged as security for

liabilities apart from those held by Westpac Banking Corporation (note 13). (v) On 12 June 2013 the Company purchased 18.805 hectares of adjoining land from Contact Energy Limited.

As part of the sale and purchase agreement Contact Energy Limited: 1. Has a right to reacquire 6.66 hectares of specified land at a fixed price for the purposes of electricity

generation and/or gas related import/export facilities for a period of up to 25 years from the settlement date; and

2. Has a right of first refusal. The Company cannot sell any of the 18.805 hectares of land without first providing Contact Energy Limited the option to reacquire the property under the price terms and conditions the Company desires to sell.


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2015 NZ$ 2014 NZ$ 10 Other Intangible Assets – Computer Software

As at 30 June previous year Cost 4,724,302 4,565,058 Accumulated amortisation (4,215,808) (3,723,954) Net book value previous year 508,494 841,104 Carrying amount at 1 July 508,494 841,104 Additions 662,463 159,244 Amortisation (394,776) (491,854) Carrying amount at 30 June 776,181 508,494 As at 30 June 2015 Cost Accumulated Carrying depreciation amount Computer software 4,101,568 (3,325,387) 776,181 11 Trade and Other Payables

a) Current liabilities Related parties payables and accruals 419 - Employee benefits 864,062 1,466,749 Interest payable 3,222 1,611 Trade payables and accruals 4,752,788 5,660,723 5,620,491 7,129,083

Terms of credit are payment on the 20th of the month following invoices unless other terms are specified by suppliers. The Company has financial risk management systems in place to ensure that all payables are paid within the credit timeframe.

b) Non current liabilities Trade payables and accruals 461,000 590,000 6,081,491 7,719,083


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2015 NZ$ 2014 NZ$ 12 Provisions - Employee Benefits

a) Current liabilities Sick leave 55,000 41,000 Retiring allowance 239,000 223,000 Annual leave 1,335,607 1,264,646 Long service leave 162,094 163,773 Closing balance 1,791,701 1,692,419 b) Non current liabilities Retiring allowance 724,000 766,000 Long service leave 185,000 193,000 Closing balance 909,000 959,000 2,700,701 2,651,419

The provision is affected by a number of estimates including the expected employment period of employees and the timing of employees utilising the benefits. Benefits are recalculated annually, retiring allowance and long service leave by an actuary, and all non current portions are discounted using the appropriate government bond rate matched to the year the provision is due as applicable at balance sheet date. All movements are recorded in operating expenses.

13 Borrowings a) Current liabilities Secured loans - Westpac 23,474 153,597 Weighted average interest rate 0.00% 0.00% b) Non current liabilities Secured loans - Westpac 30,000,000 31,900,000 Less deferred loan facility fee (21,845) (31,507) Secured loans - Westpac 29,978,155 31,868,493 Weighted average interest rate 3.30% 4.49%


45


2015 NZ$ 2014 NZ$ Other disclosures i) The non current loans are due within 3 years. ii) The carrying amount for current and non current loans and their fair values are disclosed in note 18. iii) The carrying amount for current and non current loans is denominated in New Zealand dollars. iv) The secured loans are obtained under a $50 million (2014: $50 million) funding facility provided by Westpac

Banking Corporation. As at 30 June $20.0 million (2014: $18.1 million) was undrawn. The borrowings in the Statement of Financial Position include accrued interest.

v) During the year there had not been any defaults or breaches of bank covenants. vi) The sole security interest, fixed charge and agreement to mortgage is to Westpac Banking Corporation for a

priority amount of $80 million (2014: $80 million). The security interest is in Port Taranaki’s Personal Property (present and after acquired) and the fixed charge and agreement to mortgage is granted over Other Property (present and future rights). Other Property is defined as any other land or assets not deemed Personal Property. Personal Property can be considered to be any property other than land.

vii) The weighted average interest rate is based on the applicable fixed rates and floating rates as at balance date. The weighted average interest rate for the current liability in 2015 is 0.00% (2014: 0.00%) as this is solely interest payable.

14 Issued Capital Balance30June 26,000,000 26,000,000 The total number of shares authorised, issued and fully paid at 30 June 2015 was 52,000,000 (30 June 2014 was

52,000,000). The shares have no par value. All shares rank equally in terms of voting rights, rights to fixed dividends and rights to share in any surplus on

wind up of the Company. There is no right of redemption attached to these shares. 15 Asset Revaluation Reserve

The asset revaluation reserve arises on the revaluation of land. Where revalued land is sold, that portion of the asset revaluation reserve which relates to that asset and is effectively realised, is transferred directly to retained earnings.

Balance 30 June 48,976,802 48,976,802 16 Retained Earnings

Balance 1 July 40,993,331 32,948,586 Profit for the period 11,366,215 11,744,745 Dividends (note 17) (4,070,000) (3,700,000) Balance 30 June 48,289,546 40,993,331


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2015 NZ$ 2014 NZ$ 17 Dividends Paid

Paid September 2,035,000 1,850,000 Paid February 2,035,000 1,850,000 4,070,000 3,700,000 All dividends were paid in cash and fully imputed. 18 Financial Instruments and Risk Management

a) Capital risk management The Company manages its capital to ensure it is able to continue as a going concern while maximising the

return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Company consists of debt, which includes the borrowings disclosed in note 13, and

equity attributable to the shareholder, comprising issued capital, reserves and retained earnings as disclosed in notes 14, 15 and 16.

The Company’s Board of Directors monitors and reviews the capital structure annually through the statement of corporate intent process and treasury policy review. Part of this review includes adherence to bank covenant requirements which have capital requirements in relation to debt to equity ratio. Through these two processes the Company seeks to balance the growth objectives of the Company with the Company’s dividend policy objective. Due to the strength of the Company’s Statement of Financial Position all new business ventures of the Company can currently be debt funded.

b) Categories and fair value of financial instruments The estimated fair values of financial instruments are as follows:

2015 Carrying 2015 Fair 2014 Carrying 2014 Fair Amount NZ$ Value NZ$ Amount NZ$ Value NZ$ Financial Assets Loans and receivables Foreign currency bank balances 20,086 20,086 18,798 18,798 Cash and cash equivalents 1,249,664 1,249,664 300 300 Receivables 4,456,809 4,456,809 7,696,119 7,696,119 Derivative financial instruments (505,785) (505,785) 1,301,241 1,301,241 Financial Liabilities At amortised cost Payables and accruals current 5,620,491 5,620,491 7,129,083 7,129,083 Payables and accruals non current 461,000 461,000 590,000 590,000 Interest bearing loans - Westpac 30,001,629 29,945,081 32,022,090 32,022,090


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2015 NZ$ 2014 NZ$ The following methods and assumptions were used to estimate the fair value of each class of financial instrument: Derivative financial instruments - Cash flow hedge Interest rate swap The nature of the risk is the variability of the hedged item resulting from the changes on BKBM interest rates

associated with on-going term borrowings. Fair value is stated at the indicative market value obtained from the calculation agent Effective commencement date 24 June 2013

Rate 3.86% Term 84 months Expiry date 24 June 2020 Notional value 30,000,000

Cash flow hedge reserve Balance 1 July 1,301,241 634,366 Revaluation increments/(decrements) (1,807,026) 666,875 Balance 30 June (505,785) 1,301,241 Cash and cash equivalents, foreign currency balances, receivables and short term payables long term

liabilities and accruals The carrying value of these items is equivalent to the fair value. Interest bearing loans The fair value of the current loans and term loans are estimated based upon the market prices available for

similar debt securities obtained from the lender at balance sheet date. c) Financial risk management objectives The finance department of the Company provides treasury services to the Company, monitoring and reviewing

financial risk through internal management reporting. These risks include market risk (including currency risk and fair value interest rate risk), credit risk, liquidity risk and cash flow interest rate risk.

The Company seeks to minimise the effects of these risks by adhering to a treasury policy reviewed by the Company’s Board of Directors. The treasury policy provides written guidelines on foreign exchange risk, interest rate risk and credit risk. Surplus funds are either applied against Company borrowings minimising surplus liquidity or invested short term until required.

The Company does not enter into, or trade financial instruments, including derivative financial instruments for speculative purposes.

d) Market risk The Company’s activities expose it to interest rate movement risk principally, and occasionally to foreign

exchange risk when capital assets are purchased in foreign currency. These risks are minimised by adherence to the Company’s treasury risk policy which endeavours to minimise risk by:

i) Ensuring a minimum of 50% of the Company’s interest bearing debt is fixed term or fixed by way of financial derivative. At balance date the financial derivative exposure was limited to an interest swap listed in (b) above.

ii) Ensuring that any capital asset purchase of $250,000 or greater sourced in foreign currency is fully hedged within two days of unconditional purchase.


48


At balance date the foreign currency exposure was limited to foreign currency bank balances listed in (b) above.

As at 30 June 2015, if interest rates at that date had been 100 basis points lower with all other variables held constant, post-tax profit for the year would have been $310,142 (2014: $316,142) higher, arising as a result of lower interest expense on average variable rate borrowings. If interest rates had been 100 basis points higher, with all other variables held constant post-tax profit would have been $310,142 (2014: $316,142) lower, arising as a result of higher interest expense on variable rate borrowings.

e) Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial

loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit worthiness of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

In the normal course of its business the Company incurs credit risk from trade debtors and financial institutions. The extent of concentration of credit risk lies in trade debtors. Refer to note 7.

Except, as currently provided for, the Company does not expect the non performance in respect of any outstanding obligations at balance date.

The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Company’s maximum exposure to credit risk without taking account of any collateral obtained.

No security is held on any of the above amounts. f) Liquidity risk management ultimate responsibility for liquidity risk management rests with the board of directors, who have built an

appropriate liquidity risk management framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and by monitoring working capital turnover. Included in note 13(iv) is a list of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk.

Liquidity and interest risk tables - financial liabilities The following tables detail the Company’s remaining contractual maturity for its non-derivative financial

liabilities. As the amounts included in the tables are contractual undiscounted cash flows these amounts will not reconcile to the amounts disclosed in the Statement of Financial Position.


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2015 Interest risk table financial liablilities

Weighted average effective Less than 1-3 3 months 1-5 5+ Total interest rate 1 month months to 1 year years years % NZ$ NZ$ NZ$ NZ$ NZ$ NZ$

Trade and other payables 0.00 4,765,392 677,360 177,739 461,000 - 6,081,491

Provisions 0.00 149,308 298,617 1,343,776 445,000 464,000 2,700,701

Variable interest rate instruments 4.08 - 306,000 918,000 31,327,956 - 32,551,956

Derivative financial instruments 3.30 - 42,345 127,036 677,523 - 846,904

4,914,700 1,324,322 2,566,551 32,911,479 464,000 42,181,052


Weighted average effective Less than 1-3 3 months 1-5 5+ Total interest rate 1 month months to 1 year years years % NZ$ NZ$ NZ$ NZ$ NZ$ NZ$

Trade and other payables 0.00 5,918,762 445,200 175,119 590,000 - 7,129,081

Provisions 0.00 141,035 282,070 1,269,314 210,980 748,020 2,651,419

Variable interest rate instruments 4.40 2,028,661 330,000 990,000 32,752,110 - 36,100,771

Derivative financial instruments 3.62 - 18,148 54,444 290,368 72,592 435,552

8,088,458 1,075,418 2,488,877 33,843,458 820,612 46,316,823

Interest risk tables - financial assets

The following tables detail the Company’s expected maturity for its non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual assets including interest that will be earnt on those assets except where the Company anticipates that the cash flow will occur in a different period. As the amounts included in the tables are contractual undiscounted cash flows these amounts will not reconcile to the amounts disclosed in the Statement of Financial Position.


Weighted average effective Less than 1-3 3 months 1-5 5+ Total Interest rate 1 month months to 1 year years years % NZ$ NZ$ NZ$ NZ$ NZ$ NZ$

Cash and cash equivalents variable 1,269,750 - - - - 1,269,750

Trade and other receivables 0.00 4,456,809 - - - - 4,456,809

5,726,559 - - - - 5,726,559


Weighted average effective Less than 1-3 3 months 1-5 5+ Total Interest rate 1 month months to 1 year years years % NZ$ NZ$ NZ$ NZ$ NZ$ NZ$

Cash and cash equivalents variable 19,098 - - - - 19,098

Trade and other receivables 0.00 7,696,119 - - - - 7,696,119

7,715,217 - - - - 7,715,217


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2015 NZ$ 2014 NZ$ g) Fair value Fair value hierarchy The Company’s assets and liabilities which are measured at fair value are categorised into one of three levels as

follows: Level one - the fair value is determined using unadjusted quoted prices from an active market for identical

assets and liabilities. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker industry company, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Level two - the fair value is derived from inputs other than quoted prices included in level one that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (derived from prices). Financial instruments in this level include interest rate swaps and options and valuation of land.

Level three - the fair value is derived from inputs that are not based on observable market data. The Company’s policy is to recognise transfers between fair value hierarchy levels as at the date of the event

or change in circumstances that caused the transfer. There were no transfers between level one, two and three during the year (2014: nil).

Valuation of level two Fair value of level two derivatives is determined using methodology described in note 9 revaluations

subheading and note 18b. Items carried at fair value Interest rate swap (note 18b) (505,785) 1,301,241 Land valuation (revaluations subheading note 9) 74,313,000 74,183,000 19 Reconciliation of Profit for the Period to Net Cash Flows from Operating Activities

Profit after taxation 11,366,215 11,744,745 Plus/(Less) non-cash items: Depreciation, amortisation & impairment 7,100,418 7,275,941 Decrease/(Increase) in deferred tax balances (97,351) (1,449,690) Net loss/(Profit) on disposal of property, plant and equipment (4,914) 228,256 6,998,153 6,054,507 Changes in net assets and liabilities (Increase)/Decrease in assets: Trade and other receivables 3,239,310 (3,153,841) Prepayments - 226,908 Derivative financial instruments 1,807,026 (666,875) Inventories 12,028 (210,698)


51


2015 NZ$ 2014 NZ$ Increase/(Decrease) in liabilities: Provisions 49,283 100,975 Trade and other payables (3,444,623) 4,354,979 Interest payable - (19,271) Taxation payable (1,250,508) 1,642,962 412,516 2,275,139 Plus/(Less) items classified as investment activities: Movement in fixed asset creditors (404,166) (1,269,658) Net cash provided by operating activities 18,372,718 18,804,733 20 Operating Leases

a) Non Cancellable Operating Leases as Lessee Lease commitments due as follows: Within 1 year 44,382 18,040 Between 1-5 years 177,528 - Greater than 5 years 199,719 - 421,629 18,040 Lease payments under operating leases recognised as an expense during the year 48,350 42,080 Operating lease payments represent rentals payable by Port Taranaki Limited for the lease of land and buildings.

All operating lease contracts contain market review clauses in the event that Port Taranaki Limited exercises its option to renew. Port Taranaki Limited does not have an option to purchase any of the leased assets at the end of the lease periods.

b) Non Cancellable Operating Leases as Lessor Future minimum lease payments under non cancellable leases are as follows: Within 1 year 2,484,930 2,709,910 Between 1-5 years 6,354,197 6,516,693 Greater than 5 years 7,672,628 8,855,325 16,511,755 18,081,928

Port Taranaki Limited leases a range of land and buildings to a number of customers. The majority of leases

include rights of renewal for periods of up to seven years, with several land leases containing rights of renewal from 20 up to 50 years. There were no contingent rents recognised as income in the 2015 and 2014 years.


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2015 NZ$ 2014 NZ$ 21 Imputation Credit Account

The imputation credits available for use in subsequent reporting periods are: 23,187,523 20,062,452 22 Related Party Transactions

The Company has a related party relationship with its parent, directors and executive officers. a) Transactions with parent Port Taranaki Limited was a 100% owned subsidiary of the Taranaki Regional Council (TRC) at all times

during the year. Apart from dividends (see note 17) the following transactions occurred between Port Taranaki Limited and

TRC during the year. i) Sale of goods and services to parent 39,212 48,416 ii) Purchase of goods and services from parent 66,027 49,709 iii) Current payables to parent at balance date 419 - iv) Current receivables from parent at balance date - - v) There are no guarantees or bad debts vi) There was no taxation grouping arrangement in 2015 or 2014 b) Transactions with subsidiaries 2015 and 2014: Port Taranaki Limited had no subsidiaries. c) Transactions with key management personnel i) The compensation of the directors and executives, being the key

management personnel of the Company is set out below: Short term employee benefits 1,774,036 1,825,675 Other long term benefits (5,000) (4,000) Termination benefits 58,000 - Post employment benefits 3,000 (46,000) 1,830,036 1,775,675 ii) Sale of goods and services to key management 15,652 - iii) Purchase of goods and services from key management 108,001 -


53


2015 NZ$ 2014 NZ$ 23 Commitments

Estimated capital expenditure contracted for at balance date but not provided, $1,746,596 (2014: $4,034,672) for demolition works, roadworks, shore tension units and wharf strengthening (2014 for demolition works and property purchase).

1,746,595 4,034,672 24 Events Subsequent to Balance Date

2015 and 2014: There are no events subsequent to balance date. 25 Contingent Liabilities

2015 and 2014: The Company is a participating employer in the NPF 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 (note 26). Similarly, if a number of employers ceased to participate in the Scheme, the Company could be responsible for an increased share of the deficit.

26 Defined Benefit Plan

As at 30 June 2015 the multi-employer defined benefit plan with National Provident Fund (NPF) entitles 3 employees (2014: 3 employees at balance date) to retirement benefits. No other post retirement plans are provided by the Company. The total expenses recognised in the profit or loss of $0 (2014: $0) represents contributions paid to the plan. The Company has no other known liability in respect to the scheme.

The Schemes Actuary has advised that 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. The Scheme had 408 members as at March 2014. 3 of these are Employees of Port Taranaki Limited. Employers have no right to withdraw from the plan.

As at 31 March 2014, the Scheme had a past service surplus of $16.2m (2013: $17.4m), 8.0% (2013: 7.7%) of the liabilities. This amount is exclusive of Employer Superannuation Contribution Withholding Tax. 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.

The Actuary to the Scheme recommended previously that the employer contributions were suspended with effect from 1 April 2011. In the latest report the Actuary recommended employer contributions remain suspended.

27 Other Annual Report Disclosures

The shareholder has resolved not to require disclosure of the matters listed in section 211(1),(e)and(g)oftheCompanies Act 1993.

28 Statutory Compliance

2015: During the year there were no breaches of Statutory Compliance. 2014: During the year there were no breaches of Statutory Compliance.


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INDEPENDENT AUDITOR’S REPORT

TO ThE READERS OF PORT TARANAKI LIMITED’S FINANCIAL STATEMENTS FOR ThE YEAR ENDED 30 JuNE 2015The Auditor-General is the auditor of Port Taranaki Limited (the company). The Auditor-General has appointed me, Bruno Dente, using the staff and resources of Deloitte, to carry out the audit of the financial statements of the company on her behalf.

Opinion

We have audited the financial statements of the company on pages 26 to 53, that comprise the statement of financial position, as at 30 June 2015, the statement of profit or loss and other 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.

In our opinion, the financial statements of the company:

• presentfairly,inallmaterialrespects:

• itsfinancialpositionasat30 June 2015; and

• it’sfinancialperformanceandcashflowsfortheyearthenended; and

• complywithgenerallyacceptedaccountingpracticeinNewZealand and have been prepared in accordance with New Zealand equivalents to International Financial Reporting Standards.

Our audit was completed on 13 August 2015. 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 Opinion

We 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, in our judgement, are likely to influence readers’ 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’s financial statements 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’s internal control.

An audit also involves evaluating:

• theappropriatenessofaccountingpoliciesusedandwhetherthey have been consistently applied;

• thereasonablenessofthesignificantaccountingestimatesand judgements made by the Board of Directors;

• theadequacyofalldisclosuresinthefinancialstatements;and

• theoverallpresentationofthefinancialstatements.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements. Also we did not evaluate the security and controls over the electronic publication of the financial statements.

We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion.

Responsibilities of the Board of Directors

The Board of Directors is responsible for the preparation and fair presentation of financial statements for the company that comply with generally accepted accounting practice in New Zealand.

The Board of Directors’ responsibilities arise from the Port Companies Act 1988.

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 is also responsible for the publication of the financial statements, whether in printed or electronic form.

Responsibilities of the Auditor

We 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.

Independence

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

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

Bruno Dente DELOITTE On behalf of the Auditor-General Hamilton, New Zealand


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COMPARATIVE REVIEW 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Operations

Trade (millions of freight tonnes)

Imports 0.88 0.86 0.75 0.78 0.79 0.66 0.76 0.85 0.77 0.61

Exports 4.73 4.65 3.82 3.06 3.10 2.93 2.76 2.53 2.51 2.04

Total 5.61 5.51 4.57 3.84 3.89 3.59 3.52 3.38 3.28 2.65

Vessel arrivals (over 100 GT) 776 899 679 664 783 717 695 927 897 677

Total gross tonnage (GT)(millions) 6.47 7.49 6.55 5.84 6.94 6.78 6.39 7.20 7.06 6.29

Permanent full-time employees 116 122 121 122 121 127 129 122 116 113

Financial ($millions)

Revenue 49.36 55.26 44.97 41.30 39.28 37.83 46.81 42.79 36.95 29.93

Total interest expense 1.39 1.94 1.46 2.32 2.93 3.08 2.72 3.31 1.55 1.57

Earnings before interest, subvention 17.27 18.30 12.16 8.67 7.63 6.71 10.87 11.28 8.96 3.65

payments and taxation (EBIT)

Taxation 4.61 4.63 3.24 2.01 1.64 4.91 2.74 3.25 2.67 1.42

Net profit after taxation 11.37 11.74 7.46 4.36 3.12 (1.27) 5.42 4.76 4.78 2.23

Dividends 4.07 3.70 2.95 2.20 1.85 1.90 3.90 1.80 1.00 0.84

Capital expenditure and acquisitions 11.75 12.06 21.03 2.94 3.78 4.34 16.21 5.90 20.34 11.34

Equity 122.76 117.27 108.56 91.05 88.88 87.61 90.78 89.26 71.56 67.79

Interest bearing debt 30.00 32.02 36.71 27.26 35.93 39.62 40.56 35.30 37.30 26.00

Total tangible assets 162.68 160.51 152.27 126.60 132.00 134.25 137.66 131.16 114.66 99.08

Earnings per share (¢) 21.86 22.59 14.35 8.39 6.01 (2.43) 10.42 9.16 9.19 4.29

Ordinary dividends per share (¢) 7.83 7.12 5.67 4.23 3.56 3.65 7.50 3.46 1.92 1.62

Net assets per share (¢) 236 226 209 175 171 168 175 172 138 130

Equity (%) 75.10 72.25 70.61 71.23 66.53 64.35 65.39 67.97 62.30 68.23

Return on equity (%) 9.26 10.02 6.87 4.79 3.51 (1.45) 5.97 6.34 6.67 3.29

Return on assets (%) 6.99 7.31 4.90 3.44 2.36 (0.95) 3.94 3.63 4.16 2.25

Operating cashflow 18.37 18.80 15.34 10.68 11.92 8.41 14.41 9.21 10.57 6.15

Interest cover (times covered by net 6.57 5.81 4.94 1.88 1.07 (0.39) 1.88 1.44 1.80 1.24

profit after taxation)


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DIRECTORYDirectorsJohn Auld, ChairmanCraig Norgate, Deputy Chairman to 7 July 2015Peter HortonRichard Krogh David MacLeodGraeme MarshallRoger Taylor MNZM

Company SecretaryBronwyn Clement

Executive Leadership TeamRoy Weaver, Chief Executive to 12 April 2015

Guy Roper, Commercial Manager to 12 April 2015 and Chief Executive from 12 April 2015

Allan Melhuish, Commercial Manager from 6 July 2015

John Lehman, Business Services Manager

Delys Tansley, Head of HR and Safety from 11 August 2014

Alistair Simmers, Operations and Infrastructure Manager from 20 May 2015

John Ireland, Marine Services Manager from 20 May 2015 to 19 June 2015

Neil Armitage, Marine Services Manager from 19 June 2015

AuditorsDeloitte on behalf of the Auditor-General

BankersWestpac Banking Corporation

SolicitorsGovett Quilliam

Contact DetailsPort Taranaki Centre2-8 Bayly RoadPO Box 348New Plymouth 4340New Zealand Telephone: 64 6 751 0200Facsimile: 64 6 751 0886Website: www.porttaranaki.co.nzEmail: [email protected]


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port taranaki limited annual report 2015 · 2015-09-24 · university of wellington, and a board...

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