south port annual report · south port annual report. ... liebherr hm 400 model at a $6 million ......
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South Port annual report
Financial calendarInside front cover: Financial Calendar 1 Company Profile 2 Significant Events 3 Financial Results in Brief 4-10 Review of Operations 11 Directors’ Profiles and Photo 12,13 Corporate Governance 14 Statutory Report of Directors 15 Southern Region Production Locations 16,17 Mediterranean Shipping Company – Weekly
Container Line Servicing Bluff 18,19 Port Infrastructure 20-23 Profile – Ship Types through Bluff and their Cargoes 24 Auditor’s Report 25 Statement of Comprehensive Income / Statement of Movement in Equity 26 Statement of Financial Position 27 Statement of Cash Flows 28-46 Notes to the Financial Statements 47 Five Year Summary 48 Statutory Disclosure in Relation to ShareholdersInside back cover: Directory and Management Photo
2010 Full Year Profit Announcement Date 19 August 2010
Proxies must be lodged by 10.45 a.m. 28 September 2010
Annual Meeting – 10.45 a.m. 30 September 2010Venue: South Port Board Room, Island Harbour, Bluff
Close of Share Register for Entitlement to Final Dividend 24 September 2010
Final Dividend Payment mailed2 November 2010
2011 Interim Profit Announcement 10 February 2011
2011 Interim Dividend Payment March 2011
2011 Financial Year End 30 June 2011
contentS
Front cover: Export logs stored on Island Harbour leFt: Tanker Torea at the Tiwai Wharf with both South Port tugs in attendance
newzealand
SouthlandBluFF
CompanyPro ilef
South Port Facts
South Port new zealand ltd (South Port) is the southern most commercial port in new zealand, located at Bluff and operating on a year round, 24 hour basis. it is situated in the rich productive province of Southland which is responsible for generating a sizeable proportion of new zealand’s total exports by value. the region’s major cargo producing sites are situated within 30 to 80 km of the Port.
the Port of Bluff has been operating since 1877 while the company was formed in 1988 having taken over the assets and liabilities of the former Southland Harbour Board.
South Port was listed on the nz Stock exchange (nzX) in 1994 and has environment Southland, the region’s local government environmental agency, as its 66% majority shareholder.
owns and manages assets which have a book value of $34 million
directly employs more than 60 full time equivalent staff
is the only Southland based company listed on nzX – market capitalisation as at 30 June 2010 equates to $68 million
Handles in excess of 2 million tonnes of cargo in a normal trading year
offers full container, break-bulk and bulk cargo capability and services the following main cargoes:
import – alumina, petroleum products, fertiliser, acid, fish, stock food and cement
export – aluminium, timber, logs, dairy, meat by-products and woodchips
Has split its land-based operating resource into four main divisions – warehousing & packing, containers, cool & cold storage and dairy
Undertakes its primary port operation on a 40 ha man-made island Harbour situated at Bluff
operates a separate dedicated fuel berth at Bluff town wharf plus provides the tiwai wharf facility to nzaS under a long term licence
Services vessels carrying approx 1.0 million tonnes of cargo destined for movement across the tiwai wharf each year, of which 2/3 is raw material imports while 1/3 is finished aluminium product
Has approximately 9 ha of on-port land available for further port development or industry establishment
achieved $3.13 million profit result (2009 $4.12 million) after deducting several one-off, non-cash accounting adjustments. Underlying trading profit was favourable as a result of strong cargo and warehousing activity with pre-tax profit reflecting $7.45 million (2009: $5.68 million).
one-off deferred tax adjustments totalling $2.08 million reduced the 2010 reported profit but have no bearing on the underlying trading result of the business. these losses relate to taxation adjustments triggered by government changes to depreciation on buildings and corporate tax rates.
lifted total dividend to 17.00 cents per share (2009 – 13.50 cents) after adding back non-cash deferred tax charges recorded during the period. 2011 dividend level forecast at approximately 13.0 cents.
Cargo volume lifted by 14% or 306,000 tonnes (2009 – 1.86 million). this increase is largely attributable to uplifts in forestry sector and nzaS cargo.
t w o
Improved forestry demand driven by Chinese consumption meant that this cargo category recorded a volume gain of 182,000 tonnes (+ 177%). Forestry cargo grouping includes logs, woodchips and sawn timber.
nZaS, South Port’s single largest customer by volume, re-established its normal operating capability during the period resulting in a 104,000 tonne cargo increase (lower 2009 levels created by major transformer outage).
Containerised cargo lifted from 24,000 teU equivalents to 29,000 p.a. representing an increase of 21%. MSc weekly service continues to secure consistent support from regional importers and exporters.
upgrade of Company’s existing mobile crane committed to (June 2010) with ordering of larger capacity liebherr lHM 400 model at a $6 million cost.
new log export customer secured (nac Forest) and development of additional 1 hectare of log storage area commenced in May 2010.
Dairy warehousing volumes serviced for open Country Dairy and Fonterra, the former achieving increased production from its awarua plant.
South port and nZaS received interim arbitration award (June 2010) and proceeded to establish new terms for a licence agreement 35 year renewal period covering the provision of the tiwai wharf/access Bridge.
Cold storage division generated an improved contribution due to contracted year round utilisation plus increased storage demand.
exploration consortiums (led by exxon Mobil & oMv) obtained 12 month “drill or drop” deferrals from nz Government. Decisions on possible exploration campaigns are now expected in october 2010 & June 2011.
Solid energy / ravensdown undertook preliminary study into the potential establishment of a lignite-to-urea conversion process in Southland.
New Hyster forklift working the container pad
Signi icant Events 2009-10f
$5.2m*
80.9%
7.75c
$4.1m
$2.5m
$2.2m$2.4m
$m
5.0
4.0
3.0
2.0
1.0
0
16%
14%
12%
10%
8%
6%
4%
2%
0%
25%
20%
15%
10%
5%
0%
90%
85%
80%
75%
70%
65%
Financial Results in BriefSurpluS aFter tax
2006 2007 2008 2009 2010
t h r e e
18c
15c
12c
9c
6c
3c
0c
$m
6.0
5.0
4.0
3.0
2.0
1.0
0
$3.1m
$6.4m
$3.7m
$4.1m$4.4m
operatInG CaSH FloW
2006 2007 2008 2009 2010
$4.9m
87.8%
92.8%
88.5%
84.1%
eQuItY ratIo
2006 2007 2008 2009 2010
13.50c
9.50c
7.75c
DIVIDenDS per SHare
2006 2007 2008 2009 2010
17.00c
15.0%
9.4%
8.5%
9.4%
return on eQuItY
2006 2007 2008 2009 2010
11.4% 18.8%
14.0%
11.5%12.4%
return on aSSetS
2006 2007 2008 2009 2010
2006 2007 2008 2009 2010
23.1%
In Thousands of New Zealand dollars
2010 2009
revenue $22,937 $20,077
Surplus after tax
$3,129 $4,118
cashflow $4,942 $6,459
total assets $33,715 $31,539
total equity $27,287 $27,700
Shareholders’ equity ratio
80.9% 87.8%
earnings per Share
11.9c 15.7c
dividends declared 17.00c 13.50cper Share
net asset Backing $1.04 $1.06per Share
return on Shareholders’ 11.4% 15.0%Funds
cargo throughput 2,169 1,863(000’s tonnes)
* Restated profit with $2.08 million of one-off deferred tax adjustments added back
10,700
28,900
Mark O’Connor John Harrington
F o U r
oVerVIeW
the 2010 financial year delivered signs that the negative aspects of the Global Financial crisis were gradually subsiding. notwithstanding this assessment, South Port acknowledges that it has been a particularly testing period for a number of its customers and trading gains have been restricted to a narrow range of sectors. in South Port’s case strong cargo and warehousing activity plus the resolution of the new zealand aluminium Smelters (nzaS) licence arbitration meant that the company generated an improved pre-tax trading profit result of $7.45 million (2009 - $5.68 million).
the reported after tax profit of $3.13 million (2009 – $4.12 million) is a misleading indication of the strength of the company’s business during the past 12 months. this is due to recent Government tax changes relating to the removal of tax depreciation on buildings and the pending reduction of corporate tax rates. as a consequence of these changes South Port is required to reflect an additional $2.08 million tax charge in the 2010 year. this adjustment to profit is a one-off, non-cash accounting entry which has no impact on the company’s underlying profitability, cash flows or dividend policy.
other one-off factors reflected in the 2010 financial result include the following:
reaching a favourable agreement with nzaS over arrears and ongoing charges applicable to the tiwai wharf licence
an impairment adjustment (reduction in value) associated with the company’s existing mobile harbour crane
Foreign exchange losses linked to hedging contracts associated with the purchase of a replacement mobile harbour crane
continuing containerised cargo support by the region’s exporters and importers was evident on the MSc capricorn weekly service. cargo volume in containerised form grew by 21% increasing from 24,000 teU equivalents to 29,000 annually. recognising the need for reliable infrastructure to support this customer activity and taking into consideration that South Port operates a single mobile crane operation, in June 2010 the Board committed to replace the existing crane with a new and larger capacity liebherr lHM 400 model. a $6 million contract was entered into for this new plant and an additional heavy lift container forklift costing $700,000 was also ordered at the same time. this increased level of capital expenditure and resulting higher funding and depreciation expense will impact the company’s 2011 profit.
the other significant growth area for South Port’s business during 2010 was that of the forestry sector. tonnage in the logs/woodchips/sawn timber category lifted by 182,000 tonnes or +177% above the prior years volume.
other areas of the business which contributed positively to the bottom line included dry warehousing (dairy product) and cold storage (cheese/fish/pet food).
2008 2009 2010
bulk
number of Containers(teU equivalents)
23,800
2008 2009 2010
Breakdown of Cargo(Bulk/Break-bulk/Containers tonnage)
breAk-bulk
2008 2009 2010 2008 2009 2010
coNtAiNerS
1,200
4,900
2008 2009 2010
Containers(Vanned / Devanned)
4,900
Review of Operations
1,428,000
1,779,000
1,673,000
346,000
203,000
245,000
124,000
232,000250,000
NZASImports
34%
ForestProducts
19%
PetroleumProducts
11%Fertiliser
11%
Other 6%
Agricultu
ral
Products
4%
NZASExports
12%
ComparatIVe CarGo BreakDoWn
NZASImports
38%
ForestProducts
15%
PetroleumProducts
11%
Fertiliser12%
Other 6%
Acid 3%Agricultural Products 2%
NZASExports
13%
2009
2010
IMPORTS 62% EXPORTS 38%
IMPORTS 67% EXPORTS 33%
F i V e
Acid 3%
CarGo aCtIVItY
across all cargoes South Port registered an annual volume of 2.17 million tonnes (2009 – 1.86 million tonnes). Products to reflect volume increases included fertiliser, logs, petroleum and woodchips while improvement was recorded across a range of containerised cargo but especially in the dairy, sawn timber, fish food and general import/export categories. Smaller cargo declines occurred with stock food, molasses, pebbles and meat.
cargo volumes during the 12 months ended 30 June 2010 were also boosted by normal production capacity being re-established at the nzaS tiwai aluminium Smelter.
the nzaS capacity reduction in the prior year was caused by the substantial failure of a transformer in november 2008 which resulted in a “pot-line” having to be taken out of production. the net effect of this technical failure was a 30% reduction in nzaS’s output capability for almost 8 months of that financial year. as a consequence of nzaS reverting to normal production levels, the cargo tonnages generated by this customer increased by 104,000 tonnes during 2010.
af ter hav ing to manage severa l challenging years the forestry sector enjoyed a more buoyant trading period. logs and woodchips in particular registered sizeable volume increases. improved chinese demand for logs saw South Port’s existing storage areas fully utilised and the securing of a new export customer (nac Forest) meant that an extra 1.0 hectare of long term storage area had to be constructed on the island Harbour. in addition, eucalyptus trees planted in Southland in the early 1990’s are now available for harvest and this has boosted the volume of woodchip material being exported. Sawn
timber customers also experienced more consistent demand with this product being distributed in containerised form.
it is positive to see strong support from cargo providers who ship their goods via Bluff on the second largest container shipping operator in the world, Mediterranean Shipping company (MSc). the weekly capricorn service offers an “industry standard” frequency plus global linkages and will greatly assist South Port’s involvement and growth in the handling of containerised cargo. MSc continues to expand its presence in the new zealand market with both of its current shipping services experiencing robust demand.
open country dairy generated increased production of milk powder at its awarua plant (approximately 15 km from Bluff) during its second season of operation. this customer utilises South Port’s warehousing systems and a 4,500 m2 dedicated store located on the island Harbour to distribute its products to a variety of global markets.
Fonterra edendale marked the opening of the 2009/10 dairy season with the commissioning of the world’s largest milk powder drier. Known as ed4, the single drier can generate 27 tonnes of powder an hour when running at full capacity which translates to a seasonal production capability of 150,000 tonnes. the addition of this fourth drier means that the edendale site can now deliver a peak processing capacity of 15 million litres of milk per day. South Port continues to act as an overflow storage supplier for Fonterra in addition to providing year round cold storage for cheese product originating from the edendale plant.
the company’s cold storage division again produced an improved contribution. this was largely due to the contracted year round utilisation of the no. 2 cold store and increased storage demand arising from slower movement of consumer products such as salmon and other fish species.
InDuStrY ConSolIDatIon anD SHIppInG DeVelopmentS
Rationalisation of Shipping Services – ongoing shipping service rationalisation has been a feature of the international port landscape over the past 12 – 18 months. South Port has had discussions with several liner operators in an effort to develop additional shipping connections from Southern nz but the current economic environment is not necessarily conducive to creating such opportunities. notwithstanding this fact, nzaS has entered into a term contract with Se Shipping to distribute a manufacturing by-product to europe on a 6 weekly cycle. it is envisaged that this new service will connect with australia and South african markets before reaching europe and
thereby provide additional shipping links for Southern cargo.
LPC/Port Otago Merger Negotiations – in February 2010 lyttelton Port and Port otago announced publicly that they had committed to “detailed negotiations” on a merger opportunity. this possible action by the two port companies was first mooted as far back as late 2007. the more recent announcement marked the follow up to an initial evaluation report prepared by auckland based antipodes capital which explored the potential benefits and how a merger transaction might be structured. no further official commentary has been provided by the companies on the merger discussions although it is apparent that commerce commission approval will need to be sought if a merger transaction was to proceed.
Western Blue Highway Study – Shareholders may recall that one of the remaining funded projects under the now defunct domestic Sea-freight Fund (established by the labour Government to assist new projects involving the coastal shipping of cargo) was that of the western Blue Highway Study. initially
246
284
2008 2009 2010
Ship Calls
252
12.5
15.0
2008 2009 2010
Crane productivity(moves per hour)
15.6
S i X
two parties proceeded to negotiate an agreement relating to the ongoing provision of this infrastructure. a formal agreement was executed in august 2010 and this will serve as the charging basis for the 35 year renewal term of the licence. Both South Port and nzaS are pleased that certainty now exists over the future provision, funding and maintenance of the infrastructure covered by the long term licence.
Port Infrastructure Developments – Significant ‘capex’ outlays during the 2010 financial year related to:
the first stage of a two part paving upgrade of the container berth apron
other pav ing reconst ruc t ion associated with areas adjacent to the Marstel bulk-liquid storage terminal and warehouse no. 5
relocating the rail siding to the rear of the container pad
replacing the cooling towers in South Port’s cold storage complex
lodging a $2.2 million deposit for a larger capacity mobile crane.
the company has also continued to implement the requirements of the medium term focused asset Maintenance Plan which was developed for its major infrastructure in 2006/2007.
one additional coastal cargo rotation was potentially viable, that being a new Plymouth to nelson ro-ro shuttle concept. this scenario is being further investigated by the ports identified. the study understandably confirmed that the quantity of available coastal freight is a key determinant of viability but it also assisted the parties to better understand the costs associated with distributing coastal cargo.
otHer eVentS
NZAS/South Port Arbitration – South Port’s largest customer by volume, nzaS, receives and distributes the majority of its cargo across the dedicated tiwai wharf and access Bridge. these assets and associated port infrastructure are provided by South Port to nzaS under a long term licence (lease) agreement. this historic agreement expired in april 2008 and was renewed by nzaS for a further 35 year period effective from that date. as a result of being unable to reach agreement on an appropriate ongoing licence charge it was determined that the companies should revert to an arbitration process to resolve this impasse.
Following the receipt of the arbitrator’s interim award in early June 2010, the
driven by Port taranaki this exercise was expanded to also involve South Port, Port nelson, Ports of auckland (with emphasis on onehunga), Port of Greymouth and Port of westport.
the brief of the exercise was to capture and analyse data that may support a commercial shipping option based around cargo movements originating from or destined for the western Sea Board of new zealand. the output of the study reported during 2010 that only
Southwood Export’s wood chip stockpile on the Island Harbour
Recently purchased Hyster forklift in operation
S e V e N
$3.40
$3.30
$3.20
$3.10
$3.00
$2.90
$2.80
$2.70
$2.60
$2.50
$2.40
$2.30
$2.20
$2.10
$2.00
$1.90
$1.80
$1.70
$1.60
$1.50
SHare prICe from 1 July 2007 to 30 June 2010
200920082007 2010
SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL
Hardwood Forests – as proposed in the 2009 annual report a final non-taxable distribution of approximately $91,000 was received from Hardwood Forests in the 2010 year. this payment concluded the distribution of assets and wind-up of this company.
FInanCIal
2010 Financial result (comparatives shown in brackets)
revenue from port and warehousing operations increased by 18% from last year to $22.6 million ($19.1 million).
operating profit before financing costs and tax improved by 74% to $8.2 million ($4.7 million).
net financing costs for the Group reflected an expense of $723,000 ($719,000 credit/gain due to dividend distribution from Hardwood Forests). included in the financial expense is a $636,000 foreign exchange loss associated with hedging contracts taken out over the purchase of the replacement mobile harbour crane.
the Group’s overall result was a surplus of $3.13 million ($4.12 million), which equates to a 24% reduction on the previous year – note this surplus is calculated after deducting the one-off, non-cash deferred tax adjustment of $2.08 million.
Based on the reported result, earnings per share have decreased to 11.9 cents per share (15.7 cents per share).
total shareholders equity is $27.3 million ($27.7 million) after allowing
for dividend payments during the period of $3.54 million ($2.95 million).
Group equity includes issued capital of $9.4 million ($9.4 million), which is made up of 26,234,898 ordinary shares.
total Group assets stand at $33.7 million ($31.5 million).
net tangible asset backing per share equates to $1.04 ($1.06 per share).
current assets amount to $7.6 million ($4.8 million), whereas current liabilities stand at $4.6 million ($3.8 million). this creates a net working capital position of positive $3.0 million versus $1.0 million last year.
non-current assets excluding Property, Plant and equipment stood at $15,000 ($1.5 million).
term liabilities now total $1.8 million ($0.1 million).
Property, Plant and equipment stood at $26.1 million ($25.2 million).
Changes introduced in the taxation (Budget measures) act 2010
on 20 May 2010, the new zealand Government announced a number of tax changes and these were implemented in the taxation (Budget Measures) act 2010.
the changes that will directly impact the company included:
a reduction in the depreciation rate applicable to ‘building structures’ to 0%, with effect from 1 July 2011,and
the removal of a depreciation loading for assets acquired after 20 May 2010 (under the current rules a depreciation loading increases the depreciation rate by 20% for qualifying assets, such as certain plant and equipment).
the net result of these changes will be to increase the company’s effective tax rate however this impact will be more than offset by the Government’s programmed reduction in the corporate tax rate from 30% to 28% from 2012 onwards.
the change in the depreciation rate applicable to ‘building structures’ will however result in a reduction to the tax book value of items classified as ‘building structures’ to nil for financial reporting purposes because future tax deductions will no longer be available from the financial year commencing 1 July 2011. the reduction in the company’s tax rate from 30% to 28% will also affect deferred tax balances recorded by the company.
the net effect of these deferred tax adjustments is an estimated $2.08 million increase in net deferred tax liabilities and income tax expense, resulting in a reduction in both net Profit after tax and Shareholders’ Funds. Shareholders are reminded that the deferred tax adjustments will not affect underlying profitability, cash flows or dividend distributions.
DIVIDenDS
Shareholders will be aware directors have adopted an ongoing policy of aligning South Port’s dividend flow with both its Free cash Flows (FcF) and its reported profitability. For the purpose of this policy Free cash Flows is interpreted as being annual operating cash flow less net capital expenditure in the same period. when calculating 2010 FcF, an allowance was also made for the nzaS receivable at balance date which will be settled prior to the year end dividend payment date.
e i G h t
in assessing the level of dividend payment directors’ took heed of the company’s improved profitability plus the non-cash nature of the deferred tax charge recorded in the 2010 year. accordingly the Board elected to pay a final dividend of 12.5 cents. this translates to a full year dividend of 17.0 cents (2010 – 13.50 cents). note that in the current year dividend, 4.0 cents of the total distribution relates to arrears and interest due upon settlement of the nzaS licence dispute and should therefore be deducted when assessing potential future dividend streams.
Full imputation credits will be attached to all distributions. the dividend payment represents a gross return of 9.7% (net 6.5%) based on a share price of $2.60 as at 30 June 2010.
a dividend payout ratio of 86% results for 2010 (using nPat adjusted for the one-off deferred tax charge) and the company has assessed that a distribution of approximately 90% should be targeted in the foreseeable future. Based on current budget indications the forecast dividend level for 2011 is approximately 13.0 cents per share.
(millions)
net Surplus after income tax 3.1
one-off non-cash deferred tax adjustments 2.1
restated Profit upon which 2010 dividend distribution assessed $5.2
SaFetY
South Port’s commitment to workplace safety has been enhanced over the past 18 months through the appointment of a Health & Safety co-ordinator. the function of this new role is to more actively engage with the company’s staff and contractors in areas where workplace safety can be improved.
the company also gained secondary
level accreditation for the acc workplace Safety Management Programme (wSMP) in September 2009 and maintaining this accreditation further reinforces South Port’s intention to seek continuous improvement in Health in Safety.
in addition, elements of the company’s future capital expenditure programme will have a stronger linkage to achieving South Port’s health and safety targets.
StaFF ContrIButIon
the South Port Board and Management wish to recognise the positive contribution delivered by all staff throughout the 2010 financial year. South Port is fortunate to have a flexible and competent workforce which enhances the company’s ability to meet its customers’ requirements. thanks are extended to South Port’s personnel for their diligent and consistent work output.
BoarD CompoSItIon
Mr Graham Heenan retires this year by rotation and being eligible, offers himself for re-election. Mr Gary Kirk also retires this year and has elected to step down from the Board after 6 years service. the company thanks him for his input during a period when significant strategic gains have been achieved by the business.
the company has received one valid director nomination for Mr Philip cory-wright, who is an auckland based strategic adviser.
enVIronment
the company ’s operat ions were undertaken throughout the year in accordance with all existing resource consent conditions. South Port’s primary environmental responsibilities are subject to two different planning instruments; the invercargill district Plan administered by the invercargill city council and the Southland regional Plan which is administered by environment Southland.
in the past 12 months the company had no significant new capital projects that impacted on the environment.
CommunItY anD reGIonal aSSIStanCe
the sponsorship of a number of local sporting and cultural groups is part of a long-term commitment to support the community and region in which South Port operates. organisations that received sponsorship assistance over the past financial year included:
Bluff coastguard Bluff Hill/Motupohue environment
trust – pest eradication programme Bluff Maritime Museum Bluff oyster & Seafood Festival
Bluff rugby club Bluff Yacht club Bluff schools, Bluff Promotions and
various other sporting organisations rugby Southland
South Port continued its primary sponsorship of the Southland export Forum providing financial assistance to administer the forum and facilitate the holding of a number of events. in addition, the company will assist with the funding of the bi-annual Southland export awards dinner scheduled to be held in early September 2010.
Further, the company ’s ongoing scholarship assistance comprises both community and staff categories, with scholarship being awarded this year to tane campbell and thomas Hildebrand. tane is studying towards a certificate in Mechanical engineering (level 2) at Sit in invercargill and has a long term goal of becoming a Marine engineer. thomas is undertaking a Marine Biology degree at the University of canterbury.
enerGY SeCtor
Oil & Gas Exploration – Seismic activity was completed over the 2007/2008 summer months by the two largest consortiums who secured exploration licences in the Great South Basin. the consortium consisting of exxonMobil and todd energy engaged contractor westernGeco to undertake its seismic activity while the consortium headed up by oMv Group assigned wavefield inseis the responsibility of collecting its seismic information.
during the last quarter of calendar 2009 both the exxonMobil consortium and the oMv consortium sought and received from the new zealand Government 12 month deferrals to comply with their exploration licence conditions. what this means is that exxonMobil has until october 2010 to commit to an exploration campaign in Great South Basin while oMv has until July 2011 to do likewise.
exxonMobil said that it would be seeking interest from other potential partners. currently the exploration licence interest is held 90% by exxonMobil and 10% by todd energy. the main reason for deferral put forward by oMv was the additional time needed to gather and interpret extra seismic data plus plan a potential exploration campaign. linked to this statement was oMv’s action to engage Singapore-based reflect Geophysical to complete an additional 2,900 km of seismic mapping in January and February 2010.
whilst there are no assurances that South Port will secure future oil and gas industry activity, it is useful to restate several advantages that Bluff is able
Open Country Dairy’s Awarua Plant
N i N e
to provide over its competitors when it comes to meeting the requirements of an exploration base:
Bluff was selected as the base for previous Great South Basin exploration
South Port can offer extensive lay down storage areas directly on the port
the refuelling of support vessels and the provision of diesel supplies for rig operations are more easily accessible than other ports (note support vessels normally require draft of 7 – 8 metres which can be comfortably provided at Bluff Port)
a wide selection of dedicated service berths are available
South Port has established expertise handling project and break-bulk cargoes
the Southland region has a more extensive engineering resource as a result of companies servicing the nzaS aluminium smelter and the meat processing, dairy and forestry industries over several decades
local government in the region also has a reputation of being willing to try harder to address the needs of new commercial ventures while still meeting the requirements of their local stakeholders.
Stavanger, Norway Exercise – Shareholders may recollect that the formation of the Southland energy consortium (Sec) in 2007 was an initiative driven by South Port and venture Southland. this entity is made up of key regional businesses and organisations who could deliver services to those parties wishing to undertake sizeable energy projects in Southland.
Being mindful of the opportunity that energy resources represent for the region, a Sec delegation, which included South Port management, visited the norwegian oil and gas service hub of Stavanger in late november 2009. the delegation was hosted by the Greater Stavanger economic development Unit and gained a valuable insight into the main strategies deployed to attract oil/gas participants to that region plus the infrastructure necessary to support the resulting activity.
Following the Stavanger exercise, Sec concluded that Southland must continue to plan for development of potentially significant energy reserves located within the province or immediately offshore. active promotion to international oil/gas companies and central government will continue to be a feature of this planning work.
Development of Southland’s Lignite Resource – Solid energy and ravensdown announced in late September 2009 that the two companies would undertake a joint study into the viability of establishing a lignite-to-fertiliser conversion plant in Southland. with an estimated establishment cost of $1.5 billion such a plant would be capable of producing up to 1.2 million tonnes of nitrogen fertiliser (urea) annually. the 2 million tonnes of lignite material for this annual production would be sourced from Solid energy’s large lignite resources in eastern Southland.
if it is determined that such a process is viable the development could result in export of urea fertiliser as well as supplying domestic farming needs. this type of development could also be the
forerunner to a much larger project to produce synthetic diesel from the same extensive lignite resources.
Solid energy and ravensdown expect to complete the initial study later in 2010 when they will decide whether to proceed to the next stage of a feasibility exercise. Following engineering design, and subject to consenting and financing, construction could start by 2014, and the plant could be operational by late 2016.
in addition to evaluating the merits of a lignite-to-fertiliser plant, Solid energy is also trialling the manufacture of coal briquettes in Southland. it has recently shipped 500 tonnes of Southland lignite to the USa for commercial trials at a colorado based drying plant. Solid energy has entered into a joint venture with USa based Gtl energy ltd, to investigate the feasibility of building a briquette plant in eastern Southland. the briquette system involves a mechanical process to extract moisture from the coal thereby enhancing the thermal value.
Should the briquette plant proceed, it would be the first of its kind in new zealand and process an estimated 100,000 tonnes of lignite a year. a decision to advance the briquette development would be partly based on the likely demand from Solid energy’s South island industrial and commercial customers. a viable process could also create potential export opportunities for the briquette product in the future.
Coal Seam Gas – l&M energy (previously l&M Petroleum) continue to actively develop coal seam gas opportunities in Southland. in June 2010 the company announced an agreement with H w richardson Group to investigate
Longest vessel to visit the Port, MSC Brasilia
t e N
pricing, potential new industry establishment and electricity demand in the region
wind Prospect cwP nz ltd is also working up a proposal to develop a wind farm at Slopedown 15 Km east of wyndham. the site would consist of 50 towers with a maximum generation of 150 Mw of electricity. a resource application is expected to be lodged in late 2011 with construction potentially targeted for 2012.
outlook
the company highlighted in its interim report that the new zealand economy contained a sense of fragility and that it was likely to take some time before full confidence is restored to international markets . th is pos i t ion remains unchanged and will have a bearing on the primary industry exports generated in Southland. the domestic marketplace is also beginning to show greater signs of strain that were not necessarily apparent during the height of the Global Financial crisis.
it would be fair to say that at this time it is difficult for any commentator to accurately predict the likely direction of global economic activity in the medium term. what is clear is that new zealand, particularly the Southern part of the country, remains in a more favourable position then many other regions around the world. demand for forestry, dairy and other agricultural goods is still relatively strong and this coupled with nzaS production should underpin the cargo levels passing through the Port of Bluff.
despite the challenging global conditions that presently exist the company looks forward to providing appropriate distribution infrastructure and to being of service to both existing and future customers. South Port will continue to
work with various companies connected with potential energy related projects including the targeted conversion of Southland’s 6 billion tonnes of recoverable lignite reserves into other more viable products. the company’s directors and Management maintain the view that the Port of Bluff is located in a unique part of the world and that the future still offers considerable upside for the increased storage and movement of cargo.
all known factors and assumptions suggest an estimated tax-paid profit range of $3.50 million to $3.90 million is a probable outcome for the 2011 financial year. this profitability estimate takes into account the increased funding and depreciation expenses associated with the $6 million replacement of the mobile harbour crane. assuming that the above profit level is achieved, shareholders should expect a total dividend payout level in the order of approximately 13.0 cents. as in the past an update of the earnings outlook will be provided by the company at the time of releasing its interim result.
J.a. HarrinGton
Chairman
M.P. o’connor
Chief Executive
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
1 – 1993 9 month period due to change in financial year end2 – 2009 drop in tonnage due to 30% decrease in NZAS throughput attributable to a pot-line outage
1
2
1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
HIStorIC traDe FIGureS (tonneS) 1922-2010
the feasibility of delivering automotive lnG. in addition, industry analysts are suggesting that the dairy sector could potentially utilise this energy source either as industrial heat/electricity or automotive fuel.
l&M energy also holds several sizeable coal and lignite extraction licences in Southern nz and remains interested in the potential that exists to convert lignite into synthetic diesel.
Wind-farm Project Timing – Previous shareholder communications have outlined that there are two regional wind-farm projects currently in the planning stage.
trustPower ltd has obtained resource consents from the Gore district council to build a wind farm at Kaiwera downs, east of Gore. the consents allow for the installation of up to 240 Mw of electricity or a maximum of 83 towers. it is expected that this wind farm would be developed over a 2 to 3 year period should the project become viable.
Factors impacting viability (and therefore timing) include exchange rates, wind turbine availability, sector
HMNZS otago on maiden voyage arrives at Bluff
e l e V e Ne l e V e N
Directors' ProfJoHn artHur HarrInGton c.a., aFinstdChairman
Mr Harrington is a company director, Business consultant and trustee. He provides business and financial advice to a number of companies, and also acts as a director for a number of South island based private companies. Previously he was a practicing chartered accountant for a period of 40 years.
rex tHomaS CHapman llB
Mr chapman is a Senior litigation and commercial Partner in invercargill law Firm cruickshank Pryde.
rICk CHrIStIe crSnz, MSc (Hons), aFinstd
Mr christie is a company director based in wellington. He is currently a director and chairman of a number of public and private companies. He has also held a number of government appointments and was a chief executive for many years prior to becoming a professional director. He was recently made a companion of the royal Society of new zealand.
tHomaS mcCuISH FoGGo
Mr Foggo is based in invercargill and is the Southland Manager for Sanford ltd. He has held senior management positions and directorships in the Seafood industry for over 27 years and has for the past 13 years been a director of live lobster Southland 1995 ltd. He is also a Government appointed director of invercargill airport ltd.
GraHam DouGlaS Heenan B.com, aFinstd, FnziM
Based in christchurch, Mr Heenan is chairman of dB South island Brewery ltd, Heller tasty ltd, dairyworks ltd and Hanmer Springs thermal Pools & Spa. He is a director of intercity Group ltd and is a past director of the Port of timaru ltd, canterbury district Health Board, and the taB. Mr Heenan also acts as a consultant to several companies.
GarY JoHn kIrk
Mr Kirk, who resides in riversdale, Southland is currently involved in property development and building industry consulting. in addition to agri-cultural sector experience, his previous professional associations include involvement on the Southland education Property Board and Southland Business development Board and as a director of invercargill airport ltd.
Directors and Chief Executive with the Ranfurly Shield, from left:
• thomas Foggo• rex chapman• John Harrington• Gary Kirk• Mark o'connor• rick christie• Graham Heenan
iles
t w e l V e
the Board of South Port new zealand limited is committed to ensuring that the company adheres to best practice governance principles and maintains the highest ethical standards. the Board believes that good governance is based on a set of principles and behaviours that provide a clear basis for the company’s everyday activities to ensure transparency, fairness and recognition of the interests of South Port’s stakeholders.
Following a review of its governance practices the Board adopted a code of corporate Governance. the code has been developed after considering contemporary best practice and principles contained in the new zealand Stock exchange corporate Governance Best Practice code issued in october 2003 and the Port companies act 1988.
CoDe oF etHICS
the company expects its employees and directors to maintain high ethical standards. a code of ethics has been adopted as part of the corporate governance framework and is monitored by the Board. the company’s code of ethics has been published and made available to all directors and staff. this key corporate governance document is available on the company’s website (www.southport.co.nz).
the code of ethics addresses, amongst other things:
conflicts of interest; receipt of gifts; corporate opportunities; confidentiality; expected behaviours; delegated authority; director responsibilities; and reporting issues regarding
breaches of the code of ethics, legal obligations and other policies of the company.
reSponSIBIlItIeS oF tHe BoarD
the business and affairs of the company are managed under the direction of the Board of directors. the South Port Board is collectively accountable to shareholders for the performance of the company. directors, in carrying out their
responsibilities, undertake to act in the best interests of the company, its shareholders and its other stakeholders in accordance with applicable law.
Key responsibilities of the Board include:
to review and approve the strategic, business and financial plans prepared by management and to develop a depth of knowledge of the company’s business so as to understand and question the assumptions upon which such plans are based;
to monitor the company’s performance against its approved strategic, business and financial plans;
to review the company’s code of ethics from time to time;
to select and appoint (and, if appropriate, remove from office) the chief executive, determine his/her conditions of service and monitor his/her performance against established objectives;
to review the company’s remuneration policy at least annually; and
to monitor South Port’s regulatory and legislative compliance and risk management processes.
the Board delegates management of the day-to-day affairs and management responsibilities of the company to achieve the strategic direction and goals determined by the Board.
BoarD CompoSItIon
at present, there are six independent directors on the Board including a non executive chairman. the biography of each Board member is set out in the “directors’ Profiles” section of this annual report.
the size and composition of the Board is subject to the limits imposed by South Port’s constitution and in accordance with the provisions of the Port companies act 1988. the constitution requires the Board to comprise of a minimum number of six directors. Under the nzX listing rules the Board is required to maintain at least two independent directors.
Pursuant to the company’s constitution, one third of the
Corporate Governancedirectors retire by rotation at each annual Meeting, but are eligible for reappointment by shareholders.
the Board conducts regular performance reviews to consider the appropriate mix of skills required by the Board to maximise its effectiveness and its contribution to the company.
auDIt CommIttee
the audit committee provides the Board with assistance in fulfilling their responsibilities to shareholders, the investment community and others for overseeing the company’s financial statements, financial reporting pro-cesses, internal accounting systems, financial controls and South Port’s relationship with its independent au-ditors.
the committee is governed by an audit committee charter adopted by the Board in august 2004. the Board regularly reviews the performance of the committee in accordance with the charter.
the committee comprises of three independent members of the Board of directors.
the committee chairman, also appointed by the Board, cannot also be the chairman of the company. rex chapman, a commercial lawyer is the audit committee chairman. at least one member of the committee must have an accounting or financial background; both John Harrington and Graham Heenan are or have been members of the new zealand institute of chartered accountants.
directors’ attendance at Meetings – 1 July 2009 to 30 June 2010
total Meetings 1 10 2
r.G. Bettle – 1 –
r.t. chapman 1 10 2
r.G. M. christie – 8 –
t. M. Foggo 1 9 –
J. a. Harrington 1 10 2
G. d. Heenan 1 9 2
G. J. Kirk 1 10 -
ann
ual
Mee
ting
Boa
rd
Mee
ting
aud
itc
omm
ittee
t h i r e e N
SHareHolDer CommunICatIon
South Port seeks to ensure its shareholders are appropriately informed on its operations and results, with the delivery of timely and focused communication, and the holding of shareholder meetings in a manner conducive to achieving shareholder participation.
to ensure shareholders have access to relevant information the company:
Provides a website which contains media releases, current and past annual reports, dividend histories, notices of meeting and other information about the company,
Makes available printed half year and annual reports and encourages shareholders to access these documents on the website and to receive advice of their availability by email,
Publishes press releases on issues/events that may have material information content that could impact on the price of its traded securities,
issues additional explanatory memoranda where circumstances require, such as explanations of dividend changes and other explanatory memoranda as may be required by law,
Maintains regular contact with leading analysts and brokers who monitor the company’s activities.
Shareholder meetings are generally held at the company’s place of business (Bluff) at a time which best ensures full participation by shareholders.
Full participation of shareholders at the annual Meeting is encouraged to ensure a high level of accountability and identification with the company’s strategies and goals. Shareholders have the opportunity to submit questions prior to each meeting and senior management and auditors are present to assist in answering any specific queries raised. there is also an opportunity for informal discussion with directors and senior management for a period after the meeting concludes.
SenIor manaGement remuneratIon
the Board is responsible for reviewing the remuneration of the company’s senior management in consultation with the chief executive of the company.
the remuneration packages of senior management consist of a mixture of a base remuneration package and a variable remuneration component based on relevant performance measures.
the remuneration policy for senior management is designed to attract, motivate and retain high quality employees who will enable the company to achieve its short and long term objectives.
a general and wider disclosure of senior management and other staff remuneration is included in the “employee remuneration” section set-out in the Statutory information section of this annual report, where the company has disclosed in various escalating remuneration bands the number of employees and former employees whose remuneration, including benefits, exceeds $100,000.
rISk manaGement
effective management of all types of risk (financial and non-financial) is a fundamental part of the company’s business strategy. the audit committee is responsible for overseeing risk management practices and works closely with Management, external advisors and the company’s auditors to ensure that risk management issues are properly identified and addressed.
the company has a separate risk Management committee which meets annually to review changes to the risk profile of the business and to consider ways of mitigating additional risks identified. a director currently sitting on the audit committee is appointed to the risk Management committee as a Board representative.
ContInuouS DISCloSure
in accordance with the nzX listing rules, the company is required to disclose to the market matters which could be expected to have a material effect on the price or value of the company’s shares. Management processes are in place to ensure that all material matters which may require disclosure are promptly reported to the Board through established reporting lines. Matters reported are assessed as and when required by the nzX listing rules, advised to the market. the chairman and chief executive are responsible for communications with nzX and for ensuring that such information is not provided to any person or organisation until nzX has confirmed its release to the market.
all material announcements are posted on the company’s website www.southport.co.nz.
Ultimate Goal “South Port
New Zealand limited will be the best
distribution cost option for all Southern region importers and exporters
through the delivery of innovative solutions.”
Key Objectives To increase customer usage of South Port and
improve customer satisfaction. To make the best use of South Port’s resources
and develop the assets of Bluff Harbour. To improve returns to shareholders and create
positive value. To achieve differentiation in the market
and gain competitive advantage over other operators in the transport sector.
To assist the establishment of new industry and the growth of existing businesses in the southern region.
F o U r e e N
Statutory Report of Directorsthe directors have pleasure in submitting their 2010 report and Financial Statements.
principal activities the company is primarily engaged in the commercial operation of the Port of Bluff. there has been no significant change in the nature of the company’s business during the year.
accounting period the financial statements are for the 12 month period from 1 July 2009 to 30 June 2010.
resultsthe company recorded a surplus for the period of $3,129,000.
Disclosure of Share Dealing by Directors directors acquired no additional equity securities in the company since the date of the last annual Meeting.
Dividend the directors have declared an ordinary dividend of $4,460,000 for the period ended 30 June 2010 including the final dividend amount of $3,279,000 payable in november 2010.
Directors and officers liability Insurance the company has arranged directors and officers’ liability insurance with vero liability insurance ltd. this cover insures directors against liabilities to other parties that may arise from their positions as directors. the insurance does not cover liabilities arising from criminal actions or any legal action brought by the company’s majority shareholder.
remuneration of Directorsdirectors’ remuneration for the 12 month period ended 30 June 2010 was as follows:
J.a. Harrington $47,500r.G. Bettle* $16,850(resigned October 2009)r.t. chapman $26,500r.G.M. christie $20,000(appointed October 2009)t.M. Foggo $26,500G.d. Heenan $26,500G.J. Kirk $26,500
*includes retiring allowance
no other benefits have been provided by the company to a director or in any other capacity. no loans have been made by the company to a director nor has the
company guaranteed any debts incurred by a director.
Directors’ Shareholdingcurrent beneficial shareholding held by directors:
J.a. Harrington 2,333G.J. Kirk 1,000
remuneration of employeesSection 211(1)(g) of the new zealand companies act 1993 requires disclosure of remuneration and other benefits, including redundancy and other payments made on termination of employment, in excess of $100,000 per year, paid in respect of the current year by the company to any employees who are not directors of the company.
Number ofRemuneration Employees
$100,000 - $110,000 1$141,000 - $150,000 1$161,000 - $170,000 2$191,000 - $200,000 3$261,000 - $270,000 1
the chief executive officer’s employment contract is reviewed annually by the Board. it is not a fixed term contract.the remuneration of senior management is reviewed annually and is determined in a transparent, deliberate and objective manner.
notice and pause provisionsthe company has adopted “notice and pause” provisions in its constitution.
accounting policiesthere were no changes in accounting policies during the period. all policies are consistent with those applied in the previous year.
audit Committeethe company has a formally constituted audit committee comprising Messrs r.t. chapman (chairman), J.a. Harrington and G.d. Heenan.
it is the role of the audit committee to review the company’s financial statements and announcements, liaise directly with the company’s auditors and review the company’s accounting policies, practices and related matters.
auditor’s remunerationduring the year $35,616 was paid to the company’s auditors, wHK, for audit services carried out as agent for the controller and auditor-General.
the company also paid $3,813 to the auditors for advice and guidance on other matters. this did not compromise the independence of the auditors.
Interest registerthe company maintains an interest register in which particulars of certain transactions and matters involving the directors are recorded. entries in the interests register must in turn be disclosed in the annual report. no material transaction entries were recorded in the interests register for the period 1 July 2009 to 30 June 2010.
Disclosure of InterestPursuant to Section 140 of the companies act 1993, directors have disclosed interests in the following entities with which the company conducts or may conduct business from time to time:
Mr R.T. Chapman PositionBright wood nz ltd SolicitorJ. crooks & Sons ltd SolicitorPrime range Meats ltd SolicitorSouthland veneers ltd Solicitortransport rentals ltd Solicitor
Mr R.G.M. ChristieSolnet Solutions ltd adviser
Mr T.M. FoggoBarnes oysters ltd directorBluff oyster Management co. ltd directorinvercargill airport ltd directorlive lobster Southland 1995 ltd directorSanford ltd Branch Manager
Mr J.A. HarringtonBrazier Scaffolding ltd directorPrint central ltd director
Mr G.D. Heenanintercity Group ltd director
Mr G.J. Kirk nil
J.A. HARRINGTONChairman of Directors
G.D. HEENANDirector
Dated 19 August 2010
F i F e e N
9
13
8
2
KilOMetRes fROM Bluff
1 Craigpine timber . . . . . . . . . . . . . . . . . . 60 NZ Growing Media . . . . . . . . . . . . . . . . 60 Winton stock feed . . . . . . . . . . . . . . . . 60 2 Quality foods . . . . . . . . . . . . . . . . . . . . . 30 stabicraft Marine . . . . . . . . . . . . . . . . . 30 Prime Range Meats . . . . . . . . . . . . . . . 33 3 Ballance Agri Nutrients . . . . . . . . . . . . 15 south Wood export . . . . . . . . . . . . . . . . 15 south Pacific Meats . . . . . . . . . . . . . . . 15 Open Country Dairy . . . . . . . . . . . . . . . . 15 4 NZ & Aus. Pet food ingredients . . . . . . . . . . . . . . . . . . . . . . . 0 Dynes stockfood . . . . . . . . . . . . . . . . . . . 0 sanford Bluff . . . . . . . . . . . . . . . . . . . . . . 0 southfish . . . . . . . . . . . . . . . . . . . . . . . . . 0 NZAs tiwai smelter . . . . . . . . . . . . . . . 30 5 Dongwha Patinna NZ . . . . . . . . . . . . . . 70 Alliance Mataura Plant . . . . . . . . . . . . 75 6 Pyper’s Produce. . . . . . . . . . . . . . . . . . . 45 Alliance lorneville Plant . . . . . . . . . . . 40 Alliance Makarewa Plant . . . . . . . . . . 45 7 silver fern farms Kennington Plant . . 38 Blue sky Meats . . . . . . . . . . . . . . . . . . . 55 southland Veneers . . . . . . . . . . . . . . . . 38 Niagara sawmilling . . . . . . . . . . . . . . . . 38 8 fonterra edendale . . . . . . . . . . . . . . . . . 65 9 silver fern farms Gore Plant . . . . . . . . 80 10 lindsay & Dixon . . . . . . . . . . . . . . . . . . . 88 11 silver fern farms Balclutha Plant . . 145 12 fonterra stirling . . . . . . . . . . . . . . . . . . 145 13 silver fern farms Mossburn Plant . . 118 14 Procure Cement . . . . . . . . . . . . . . . . . . 195
4
2
15
10
14
1
4
5
6Balclutha
lumsden
Winton
te Anau
Queenstown
Mossburn
tuatapere
invercargill
GoreMataura
edendale
bluff
stewartisland
73
tapanui
1112
Southern Region Production Locations
naPa Service vessel, Positive Passion, at the South Port-owned tiwai wharf.
F i F e e N
Sines
Trans-shipment to USA
Jebel Ali
Ad Dammam Bandar Abbas
Durban
Capetown
Mediterranean Shipping Company - Weekly Container Line Servicing Bluff
S i X e e N
SERVICE OVERVIEWNOUMEASydney–Brisbane–Noumea–Sydney
CHEETAHSingapore–Port Louis–Durban–Capetown
FALCONSingapore–Bandar Abbas–Jebel Ali–Ad Dammam
kiwi Sydney–Melbourne–Nelson–Auckland–Tauranga–Lyttelton–Wellington–New Plymouth–Sydneyl
PANDA Melbourne–Sydney–Brisbane–Kaohsiung–Chiwan–Hong Kong–Melbourne
CAPRiCORN Sydney–Bluff–PortChalmers–Lyttelton–wellington–Napier–Tauranga–Brisbane–Singapore–Jakarta–Fremantle–Melbourne–Sydney
EURO Sydney–Melbourne–Adelaide–Fremantle–Singapore–Colombo–Jeddah–Gioia Tauro–La Spezia–Felixstowe–Antwerp–Le Havre–Montoir–Valencia–Fos–La Spezia–Naples–Pointe de Galets (Reunion)–Port Louis–SydneywALLAByFremantle–Melbourne–Sydney–Brisbane–Yokohama–Osaka–Busan–Qingdao–Shanghai–Ningbo–Fremantle
Valencia
Montoir
Felixstowe Antwerp
La Spezia Naples
Gioia Tauro
Jeddah
Port Louis Pointe de Galets
(Reunion)
Colombo
Le Havre
Fos
Bluff
Noumea
Trans-shipment to USA and
South America
Napier
Mediterranean Shipping Company - Weekly Container Line Servicing Bluff
S e V e N e e NS e V e N e e N
Ningbo
Shanghai
Qingdao
Busan Yokohama
Osaka
Port Chalmers
NewPlymouth
Lyttelton
Wellington
Tauranga Auckland
Nelson
Chiwan Hong Kong Kaohsiung
TrAnS-ShipmenT porTSTo USA/SoUTh AmericA• Sines • chiwan
Colombo
Singapore
Jakarta
Adelaide
Melbourne
Sydney
Brisbane Fremantle
3
4
8
910
11
12
13
14 15
16
1819
20
24
21
port infrastructure7
21
e i G h e e N
1 island Harbour – comprises 40 ha, 10 shipping berths
2 Vacant land for Development – available for future growth
3 town Wharf – petroleum product discharge, bunkering
4 Fishing boat Piers – 72 inshore fishing boat berths
5 r&D office
6 Administration building
7 log Storage
8 cold Stores complex – 39,000m3 of storage capacity in 3 cold/cool stores
9 Wood chip Stockpile10 Syncrolift Dry Docking for
Vessels – boat construction and repair facility11 Mobile Harbour crane – liebherr lHM 320 (heavy lift capacity 100
tonnes) Dry Warehouses:12 No.1 — 2,000m2 sanford Bluff13 No.2 — 1,400m2 Cement storage14 No.3 — 3,300m2 Packing and
devanning store15 No.3A — 4,500m2 Open Country Dairy
product storage16 No.3B — 3,300m2 transit and dairy
storage17 No.4 — 5,900m2 Dynes stockfood
product storage18 No.5 — 5,500m2 fonterra product
storage19 No.6 — 1,500m2 NZ & Australian Pet food ingredients20 Dedicated container Servicing
Pad21 bulk Storage Facilities –
storing caustic soda, sulphuric acid, molasses and tallow
22 rail Marshalling Yard23 island Harbour Access bridge24 entrance channel
1
5
6
7
17
22
port infrastructure2
23
N i N e e e N
CEMENT MILk POWDER
SAWN TIMBER ALuMINIuM INGOT
FISH
containers are a metal box structure of standard design in which cargo
can be stowed, coming in many forms, including: ventilated,
insulated, refrigerated, flat rack, open top, bulk liquid, dry bulk and
typically in either 20 or 40 foot lengths.
Mediterranean Shipping company's vessel MSc Nederland entering Port
containerShip types through bluff and their cargoes
PEBBLES
t w e N t y
cargoes carried on a ship constructed to transport liquids, such as petroleum, in bulk.
coastal oil logistics chartered vessel, Torea, berthed at Bluff
WORkS INFRASTRuCTuRE TANk(BITuMEN)
Ballance Agri-Nutrients Tank Farm(SuLPHuRIC ACID)
Pacific Terminals Tank Farm(TALLOW AND MOLASSES)
MOBIL OIL TANk FARM(JET, DIESEL, PMS RMS)
GREENSTONE BuNkER TANkS(MARINE GAS OIL)
Mobil Oil Tank Farm(JET, DIESEL, PREMIuM/REGuLAR MOTOR SPIRIT)
Greenstone Bunker Tank Farm(MARINE GAS OIL)
tankerWorks Infrastructure Tank
(BITuMEN)
Ship types through bluff and their cargoes
t w e N t y o N e
Marstel Terminals Tank Farm(CAuSTIC SODA)
cargo moved in bulk form, such as alumina (dry bulk) or
diesel (bulk liquid).
LOGS (RADIATA PINE AND DOuGLAS FIR) FERTILISER
STOCk FOOD ALuMINA
bulkShip types through bluff and their cargoes
Pacific Basin's bulk carrier, Tiwai Point arriving at Bluff
(RADIATA PINE AND EuCALYPTuS)WOOD CHIPS
t w e N t y t w o
SCRAP METAL
General cargo, as opposed to cargo in containers. also referred to as conventional cargo. can include cargo in packages, pallets or bulk form (dry or liquid). large objects, such as those shown and project cargo for the Province also fall into this category.
FISH
TRANSFORMER
TANkS
Ship types through bluff and their cargoes
Mitsui oSK lines vessel, Rakiura Maru, at Bluff
break-bulkALuMINIuM BuLk BAG CARGOES
GREEN SAWN TIMBER & BILLET
t w e N t y t h r e e
t w e N t y F o U r
AUDIT REPORTTO THE READERS OF SOUTH PORT NEW ZEALAND LIMITED AND GROUP’SFINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010
the Auditor-General is the auditor of South Port New Zealand limited (the company) and group. the Auditor-General has appointed me, Kenneth Gordon Sandri, using the staff and resources of whK South NZ, to carry out the audit of the financial statements of the company and group, on her behalf, for the year ended 30 June 2010.
Unqualified Opinionin our opinion: − the financial statements of the company and group on pages 25 to 46:
− comply with generally accepted accounting practice in New Zealand; − comply with international Financial reporting Standards; and− give a true and fair view of:
− the company and group’s financial position as at 30 June 2010; and− the results of operations and cash flows for the year ended on that date.
− Based on our examination the company and group kept proper accounting records.the audit was completed on 19 August 2010, and 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 the Auditor, and explain our independence.
Basis of Opinionwe carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.we planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements did not have material misstatements, whether caused by fraud or error.Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements. if we had found material misstatements that were not corrected, we would have referred to them in our opinion.the audit involved performing procedures to test the information presented in the financial statements. we assessed the results of those procedures in forming our opinion.Audit procedures generally include:— determining whether significant financial and management controls are working and can be relied on to produce complete and
accurate data;— verifying samples of transactions and account balances;— performing analyses to identify anomalies in the reported data;— reviewing significant estimates and judgements made by the Board of Directors;— confirming year-end balances;— determining whether accounting policies are appropriate and consistently applied; and— determining whether all financial statement disclosures are adequate.we did not examine every transaction, nor do we guarantee complete accuracy of the financial statements.we evaluated the overall adequacy of the presentation of information in the financial statements. we obtained all the information and explanations we required to support our opinion above.Provision for unforeseen repairs and maintenancein forming our unqualified opinion, we considered the recognition, presentation and disclosure of the provision for unforeseen repairs and maintenance in the statement of financial position and note 20 in our view, the provision does not meet the definition of a liability and it should not be recognised as such. rather, equity should be increased by the amount of the provision. however, the amount involved is not material to the financial statements as a whole.
Responsibilities of the Board of Directors and the Auditorthe Board of Directors is responsible for preparing the financial statements in accordance with generally accepted accounting practice in New Zealand. the financial statements must give a true and fair view of the financial position of the company and group as at 30 June 2010 and the results of operations and cash flows for the year ended on that date. the Board of Directors’ responsibilities arise from the Port Companies Act 1988 and the Financial reporting Act 1993. we are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you. this responsibility arises from section 15 of the Public Audit Act 2001 and section 19 of the Port Companies Act 1988.
Independencewhen carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the institute of Chartered Accountants of New Zealand.whK South NZ has provided other guidance to the value of $3813 and also through an associated entity, Janet Copeland law, for employment law Services to the value of $372. other than this, and in our capacity as auditors, we have no relationship with or interests in the company or any of its subsidiaries.
Kenneth Gordon SandriwhK South NZon behalf of the Auditor-Generalwellington, New Zealand
WHK South NZ
Statement of comprehensive incomeoF SoUth Port New ZeAlAND liMiteD For the yeAr eNDeD 30 JUNe 2010
note Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
total operating revenues 5 22,630 19,070 22,630 19,070total operating expenses 8 (12,412) (12,334) (12,412) (12,334)
Gross Profit 10,218 6,736 10,218 6,736
administrative expenses (2,049) (2,045) (2,049) (2,045)
operating Profit before financing costs 8,169 4,691 8,169 4,691
Financial income 300 733 300 733 Financial expenses (1,023) (14) (1,023) (14)
net Financing costs 7 (723) 719 (723) 719
other income 6 7 274 7 274
Surplus before income tax 7,453 5,684 7,453 5,684
income tax (2,246) (1,566) (2,246) (1,566)adjustments relating to tax legislation changes (2,078) — (2,078) —
total income tax 11 (4,324) (1,566) (4,324) (1,566)
net surplus after income tax 3,129 4,118 3,129 4,118
other comprehensive income net change in fair value of available-for-sale investments 13 — (596) — (596)
income tax — — — —
total other comprehensive surplus/(loss) — (596) — (596) after income tax
total comprehensive surplus/(loss) after income tax 3,129 3,522 3,129 3,522
Basic earnings per share 18 $0.119 $0.157 $0.119 $0.157
Statement of changes in equityoF SoUth Port New ZeAlAND liMiteD For the yeAr eNDeD 30 JUNe 2010
note Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Profit/(loss) after income tax 3,129 4,118 3,129 4,118other comprehensive income/(loss) after income tax — (596) — (596)
total comprehensive income/(loss) for the period 3,129 3,522 3,129 3,522
distributions to Shareholders 16 (3,542) (2,951) (3,542) (2,951)
Movements in equity for the period (413) 571 (413) 571
equity at the beginning of year 27,700 27,129 27,637 27,066
equity at end of year 16 27,287 27,700 27,224 27,637
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Statement of Financial PositionoF SoUth Port New ZeAlAND liMiteD AS At 30 JUNe 2010
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note Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
total eQUitY 16 27,287 27,700 27,224 27,637
non-cUrrent aSSetS Property, plant and equipment 12 26,068 25,226 26,068 25,226 investments 13 15 15 15 15 deferred tax asset 11(d) — 1,522 — 1,503
total non-current assets 26,083 26,763 26,083 26,744
cUrrent aSSetS cash 14 696 1,780 664 1,755 trade and other receivables 15 6,936 2,996 6,936 2,996
total current assets 7,632 4,776 7,600 4,751
total assets 33,715 31,539 33,683 31,495
non-cUrrent liaBilitieS employee provisions 20 56 51 40 36 deferred tax liability 11(d) 1,456 — 1,475 — other 23 300 — 300 —
total non-current liabilities 1,812 51 1,815 36
cUrrent liaBilitieS current borrowings 19 1,950 — 1,950 — trade and other payables 22 1,613 2,511 1,707 2,602 Provisions 20 692 633 628 578 other 23 361 644 359 642
total current liabilities 4,616 3,788 4,644 3,822
total liabilities 6,428 3,839 6,459 3,858
total net aSSetS 27,287 27,700 27,224 27,637
net asset backing per share $1.04 $1.06 $1.04 $1.05
on behalf of the BoardDated 19 August 2010
chairman of directors director
note Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
caSH FlowS FroM oPeratinG activitieScash was provided by (applied to): receipts from customers 18,887 18,778 18,887 18,778 Payments to suppliers and employees (12,273) (12,006) (12,282) (12,006) dividends received 92 557 92 557 interest received 10 87 10 87 interest paid (79) (14) (79) (14) income taxes paid (1,765) (969) (1,763) (968) net goods and services tax paid 70 26 70 23
net cash flow from operating activities 26 4,942 6,459 4,935 6,457
caSH FlowS FroM inveStinG activitieScash was provided by (applied to): Proceeds from disposal of other investments — 200 — 200 Proceeds from disposal of non-current assets 26 2,073 26 2,073 acquisition of other non-current assets (3,958) (4,095) (3,958) (4,095) Foreign exchange Gains/(losses) (501) 148 (501) 148 acquisition of shares/investments (1) — (1) — net cash used in investing activities (4,434) (1,674) (4,434) (1,674)
caSH FlowS FroM FinancinG activitieScash was provided by (applied to): dividend paid (3,542) (2,951) (3,542) (2,951) drawdown/(repayment) of borrowings 1,950 (150) 1,950 (150)
net cash used in financing activities (1,592) (3,101) (1,592) (3,101)
net increaSe (decreaSe) in caSH Held (1,084) 1,684 (1,091) 1,682 add cash at beginning of year 1,780 96 1,755 73
total CaSH at enD oF Year 14 696 1,780 664 1,755
Statement of cash FlowsoF SoUth Port New ZeAlAND liMiteD For the yeAr eNDeD 30 JUNe 2010
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1 reportInG entItY
South Port new zealand limited (the “company”) is a company domiciled in new zealand, registered under the companies act 1993 and listed on the new zealand Stock exchange (“nzX”). the company is an issuer in terms of the Financial reporting act 1993.
the consolidated financial statements of South Port new zealand limited as at and for the period ended 30 June 2010 comprise the company and its subsidiary awarua Holdings ltd (together referred to as the “Group”).
South Port new zealand ltd is primarily involved in providing and managing port services and warehousing services.
2 BaSIS oF preparatIon
(a) Statement of Compliance
the financial statements have been prepared in accordance with new zealand Generally accepted accounting Practice (GaaP). they comply with new zealand equivalents to international Financial reporting Standards (nz iFrS), and other applicable Financial reporting Standards, as appropriate for profit-oriented entities. these financial statements comply with international Financial reporting Standards (iFrS).
the financial statements were approved by the Board of directors on 19 august 2010.
(b) Basis of measurement
the financial statements have been prepared on the historical cost basis except for the following:
• f i nanc ia l i ns t ruments a re measured at fair value
the methods used to measure fair values are discussed further in note 4.
(c) Functional and presentation Currency
these financial statements are presented in new zealand dollars ($), which is the company’s functional currency. all financial information presented in new zealand dollars has been rounded to the nearest thousand.
(d) Use of Estimates and Judgements
the preparat ion o f f inanc ia l statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. actual results may differ from these estimates.
estimates and underlying assumptions are reviewed on an ongoing basis. revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
there were no est imates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
in particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are as detailed below:
• Provisions (note 20)
• commitments and contingent liabilities (note 25)
• Financial instruments (note 24)
3 SIGnIFICant aCCountInG polICIeS
the accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.
certain comparative amounts have been reclassified to conform with the current year’s presentation.
(a) Basis of preparing Group Financial Statements
the Group financial statements include the parent company and its subsidiary accounted for using the purchase method. all significant inter-company items and transactions are eliminated on consolidation. in the parent company financial statements, investments in subsidiaries are stated at cost.
on acquisition of a subsidiary, fair values are assigned to their assets and liabilities. any excess of cost of acquisition of a subsidiary over the fair values assigned (being goodwill) is written off in the year of acquisition or amortised over the period to benefit from the investment.
where the cost of acquisition of a subsidiary is less than the fair values assigned (being a discount) this discount is applied to the reduction of the fair value of the non-monetary assets of the acquired company. Such a discount is then reflected in the Group income statement when non-monetary assets (property, plant and equipment) are realised through reduced depreciation charges.
(b) Foreign Currency
transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.
(c) Goods and Services tax (GSt)
all financial information is expressed exclusive of GSt, except for trade and other receivables, and trade and other payables, which are expressed inclusive of GSt in the Statement of Financial Position.
(d) Financial Instruments
(i) Non-derivative financial instruments
South Port new zealand ltd is party to financial instruments as part of its normal operations. these financial instruments include cash and cash equivalents, equity securities, trade and other receivables, loans and borrowings, and trade and other payables.
n o n - d e r i v a t i v e f i n a n c i a l instruments are recognised initially at fair value on transaction date plus, for instruments not at fair value through the profit or loss, any directly attributable transaction costs. Subsequent to in i t ia l recogni t ion non-derivative financial instruments are measured as described below.
a financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Purchases and sales of financial assets are accounted for at trade date. Financial liabilities are derecognised if the
notes to the Financial StatementsoF SoUth Port New ZeAlAND liMiteD For the yeAr eNDeD 30 JUNe 2010
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Group’s obligations specified in the contract expire or are discharged or cancelled.
cash and cash equivalents comprise cash balances and call deposits.
Investments in equity securities
investments in equity securities held by the Group are classified as available-for-sale investments. Financial instruments are initially measured at fair value, and changes therein are recognised in movements in equity.
trade and other receivables
trade and other receivables are stated at their cost less impairment losses.
Interest-bearing borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. after initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Trade and other payables
trade and other payables are stated at cost.
(ii) Derivative financial instruments
the Group uses der ivat ive financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from financing and investment activities. in accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. the gain or loss on re-measurement to fair value is recognised immediately in profit or loss.
a deriviative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
12 months and is not expected to be realised or settled within 12 months. other deriviatives are presented as current assets or current liabilities.
Interest rate swaps
derivative financial instruments also include interest rate swaps to hedge (economically but not in accounting terms) the Group’s risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value. derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.
any gains or losses arising from changes in the fair value of interest rate swaps are taken directly to profit or loss for the year.
the fair values of interest rate swap contracts are determined by reference to market values for similar instruments.
(e) property, plant & equipment
(i) Recognition and measurement
items of property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses. land is not depreciated.
the initial cost includes the purchase price and any costs directly attributable to bringing the asset to the state of being ready for use in location. these costs can include installation costs, borrowing costs, cost of obtaining resource consents etc. any feasibility costs are expensed.
(ii) Subsequent expenditure
Subsequent expenditure is added to the gross carrying amount of an item of property, plant or equipment, if that expenditure increases the future economic benefits of the asset beyond its existing potential, or is necessarily incurred to enable future economic benefits to be obtained and its cost can be measured reliably.
(iii) Disposal of property, plant and equipment
where an item of such is disposed of, the gain or loss is recognised in the Statement of comprehensive income at the difference between the net sale price and the net carrying amount of the item.
(iv) Depreciation
depreciation is calculated on a straight line basis to allocate the cost of an asset, less its residual value, over its useful life. the estimated useful lives of property, plant and equipment are:
• Buildings 15-50 years
• Plant & equipment 3-50 years
depreciation methods, useful lives and residual values are reassessed at the reporting date.
(f) Impairment
the carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any objective evidence of impairment.
an impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. impairment losses directly reduce the carrying amount of assets and are recognised in the Statement of comprehensive income.
(i) Impairment of receivables
accounts receivable for the Group are valued at their anticipated realisable value after writing off amounts considered to be irrecoverable and making adequate provision for doubtful debts.
(g) provisions
a provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
(h) revenue
revenue is measured at the fair value of the consideration received or receivable, net of allowances, trade discounts and volume rebates, and recovery of the consideration is probable.
(i) Services
revenue from services rendered is recognised in the Statement of comprehensive income in proportion to the stage of completion of the transaction at the reporting date.
(ii) Rental Income
rental income from property is recognised in the Statement of comprehensive income on a straight-line basis over the term of the lease.
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(iii) Deferred Revenue
deferred revenue is revenue received in advance which is recorded as a liability and amortised to income on a straight line basis over the period to which the revenue relates.
(i) lease payments
Payments made under operating leases are recognised in the Statement of comprehensive income on a straight-line basis over the term of the lease.
(j) Finance Income and expenses
Finance income comprises interest income on funds invested, dividend income, foreign currency gains and changes in the fair value of financial assets at fair value through profit or loss. interest income is recognised as it accrues, using the effective interest method. dividend income is recognised on the date that the Group’s right to receive payment is established.
Finance expenses comprise interest expense on borrowings, foreign currency losses, and impairment losses recognised on financial assets. all borrowing costs are recognised in the Statement of comprehensive income using the effective interest method.
(k) Income tax expense
income tax expense comprises current and deferred tax. income tax expense is recognised in the Statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.
deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
a deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.
(l) earnings per Share
the Group presents basic earnings per share (ePS) data for its ordinary shares. Basic ePS is calculated by dividing the net surplus after income tax attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. there is no value difference between basic ePS and diluted ePS.
(m) Segment reporting
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive.
the Group operates solely in the port industry and all operations are carried out in the Southland region.
(n) amendments to nZ IFrS
the following new, revised or amended accounting standards issued by the international accounting Standards Board and the accounting Standards review Board in new zealand are mandatory for application by the Group for the financial year beginning 1 July 2009:
(i) nz iaS 1 (revised): Presentation of Financial Statements – the revised standard requires an entity to present all owner changes in equity, separately from non-owner changes in equity, in a Statement of changes in equity. all non-owner changes in equity (i.e. comprehensive income) are required to be presented in a performance statement. entities
can choose whether to present one performance statement (a Statement of comprehensive income) or two statements (an income Statement and a Statement of comprehensive income). the Group has elected to present one Statement of comprehens ive income. the financial statements have been prepared under the revised disclosure requirements.
(ii) nz iFrS 8: operating Segments – nz iFrS 8 replaces nz iaS 14: Segment reporting. it requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker and disclosure in note 27 – segment information has been prepared under the new standard.
(iii) nz iFrS 7 (amendment): Financial instruments – the amended standard requires enhanced disclosures about fair value measurement and liquidity risk. in particular, the amendment requires disclosure of fair value measurements by level of the following hierarchy:
• Quoted prices in active markets for identical assets or liabilities (level 1);
• Inputs other than quoted prices included with level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived form prices) (level 2); and
• Inputs for the asset or liability that are not based on observable market data (level 3).
as the change in accounting policy only results in additional disclosures, there is no impact on earnings or financial position.
no other amendments or revisions to nz iFrS have had a material impact on these financial statements.
(0) nZ IFrS issued but not yet effective
new standards, amendments and interpretations issued by the international accounting Standards Board and the accounting Standards review Board in new zealand that are not yet effective and have not been early adopted by the Group are:
• NZ IFRS 9: Financial Instruments – this standard will eventually
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5 operatInG reVenue Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Services 22,630 19,070 22,630 19,070
total revenues 22,630 19,070 22,630 19,070
replace nz iaS 39: Financial instruments – recognition and Measurement and is expected to be adopted by the Group in the financial statements for the year ending 30 June 2014. the standard is not expected to materially affect the Group’s financial statements.
no other standards, amendments or interpretations that have been issued but are not yet effective are expected to materially impact the Group’s financial statements.
4 DetermInatIon oF FaIr ValueS
a number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(a) Investments in equity and Debt Securities
the fair value of available-for-sale investments are determined by
reference to their quoted bid price at the reporting date.
(b) Derivative Financial Instruments
the fair value of forward exchange contracts is determined using quoted forward exchange rates at balance date.
(c) other non-Derivative Financial Instruments
the carrying values less impairment provisions of trade receivables and payables are assumed to approximate their fair values.
the carrying values of loans and borrowings approximate their fair values.
6 otHer InCome Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
net gain on sale of plant and equipment 7 274 7 274
total other income 7 274 7 274
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7 FInanCe InCome anD expenSeS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Incomeinterest income 208 89 208 89dividend income 92 557 92 557Foreign exchange gains — 87 — 87
total financial income 300 733 300 733
expensesinterest expense (88) (14) (88) (14)change in fair value of interest rate swap (299) — (299) —Foreign exchange losses (636) — (636) —
total financial expenses (1,023) (14) (1,023) (14)
net finance costs (723) 719 (723) 719
8 operatInG expenSeS the following items of expenditure are included in total operating expenses: Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
auditors’ remuneration for audit services 36 30 36 30auditors’ remuneration for other guidance 4 2 4 2amount paid for employment law services (to associated entity of auditors) — 6 — 6Bad debts written off — — — —depreciation of property, plant & equipment 2,005 1,926 2,005 1,926directors’ fees 180 170 180 170donations 2 2 2 2rental and lease expenses 89 94 89 94increase/(decrease) in liability for long-service leave 5 (6) 4 2loss on disposal of trading assets 9 1 9 1
10 keY manaGement perSonnel CompenSatIon
the compensation of the directors, chief executive and other senior management, being the key management personnel of the entity, is set out below:
Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Short-term employee benefits 1,088 1,031 605 571Post-employment benefits 71 69 33 31
1,159 1,100 638 602
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9 emploYee BeneFItS expenSe Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Salaries and wages 4,746 4,319 4,028 3,672defined contribution plans 118 93 59 37other employee benefits 124 125 77 77
4,988 4,537 4,164 3,786
11 InCome taxeS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
(a) Income tax recognised in profit or loss
tax expense/(income) comprises:
Current tax expense / (credit): current year 1,253 1,547 1,252 1,544 adjustments for prior years 93 (9) 94 (8)
1,346 1,538 1,346 1,536
Deferred tax expense / (credit) origination and reversal of temporary differences 900 28 900 30adjustments for prior years — — — — adjustments relating to change in tax rates 89 — 89 — adjustments relating to tax legislation changes 1,989 — 1,989 —
2,978 28 2,978 30
total tax expense / (income) 4,324 1,566 4,324 1,566
the prima facie income tax expense on pre-tax accounting surplus reconciles to the income tax expense in the financial statements as follows:
Surplus / (deficit) before income tax 7,453 5,684 7,453 5,684
income tax expense (credit) calculated at 30% 2,236 1,705 2,236 1,705
temporary differences (144) 53 (145) 52non-deductible expenses 88 (107) 88 (107) non assessable income (27) (76) (27) (76)
2,153 1,575 2,152 1,574
adjustments for prior years — — — — (over) / under provision of income tax in previous year 93 (9) 94 (8) adjustments relating to changes in tax rates 89 — 89 — adjustments relating to tax legislation changes 1,989 — 1,989 —
Income tax expense (credit) 4,324 1,566 4,324 1,566
the tax rate used in the above reconciliation is the corporate tax rate of 30% payable on taxable profits under new zealand tax law. there has been no change in the corporate tax rate when compared with the previous reporting period, although legislation has been passed which changes the corporate tax rate in 2011/2012 to 28%.
(b) Income tax recognised Directly In equity
there was no current or deferred tax charged / (credited) directly to equity during the period.
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Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
(c) Current tax assets and liabilities
Current tax refundable: current tax refundable — — — —
Current tax payable: current tax payable 165 583 163 581
(d) Deferred tax Balances Comprise:
taxable and deductible temporary differences arising from the following: Group
In Thousands of New Zealand dollars 1 July 2009 recognised recognised 30 June 2010
opening in in other closing Balance profit/loss comprehensive Balance income
2010 Gross deferred tax liabilities: other financial assets (25) (1,071) — (1,096)
(25) (1,071) — (1,096)
Gross deferred tax assets: other financial assets / liabilities 18 72 — 90 Provisions 192 6 — 198Property, plant and equipment 1,337 (1,985) — (648)
1,547 (1,907) — (360)
net deferred tax asset / (liability) 1,522 (2,978) — (1,456)
Group
In Thousands of New Zealand dollars 1 July 2008 recognised recognised 30 June 2009
opening in in other closing Balance profit/loss comprehensive Balance income
2009 Gross deferred tax liabilities: other financial assets (30) 5 — (25)
(30) 5 — (25)
Gross deferred tax assets: other financial assets / liabilites — 18 — 18Provisions 165 27 — 192Property, plant and equipment 1,415 (78) — 1,337
1,580 (33) — 1,547
net deferred tax asset / (liability) 1,550 (28) — 1,522
Note 11 continued...
Group
In Thousands of New Zealand dollars 2010 2009
(e) Imputation Credit account Balances
Balance at beginning of year 4,492 4,909 taxation paid 1,672 979 attached to dividends paid (1,658) (1,396)
Balance at end of year 4,506 4,492
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12 propertY, plant anD eQuIpment
In Thousands of New Zealand dollars 2009 cost additions disposals other cost accumulated impair- depn accumu- other accumulated carrying 1 July 30 June depn and ment expense lated depn depn and amt 2008 2009 impairment losses reversed impairment 30 June charges on charges 2009 1 July 2008 disposal 30 June 2009
land 2,043 — — — 2,043 — — — — — — 2,043 Buildings 7,272 3,547 — — 10,819 3,481 — 217 — — 3,698 7,121
Plant and machinery 40,596 1,329 (1,112) — 40,813 24,135 — 1,709 (1,093) — 24,751 16,062
49,911 4,876 (1,112) — 53,675 27,616 — 1,926 (1,093) — 28,449 25,226
Impairment during the year ended 30 June 2010 an impairment loss of $719,000 was recorded in the Statement of comprehensive income, included in the “total operating expenses” line. this loss relates to the company’s existing liebherr mobile harbour crane. South Port made a decision to purchase a replacement mobile harbour crane prior to 30 June 2010, and this new plant is due for delivery in the 2011 financial year. due to the intended sale of the existing crane, an approximate market value for this asset was sought from crane manufacturer liebherr and accordingly the asset has been written down to a lower value. liebherr has not provided a formal valuation however when estimating the value, consideration was given to the type of asset, the age and condition of the plant and the current prices that similar mobile harbour cranes are being sold for in an active market between willing buyers and willing sellers.
In Thousands of New Zealand dollars 2010 cost additions disposals other cost accumulated impair- depn accumu- other accumulated carrying 1 July 30 June depn and ment expense lated depn depn and amt 2009 2010 impairment losses reversed impairment 30 June charges on charges 2010 1 July 2009 disposal 30 June 2010
land 2,043 — — — 2,043 — — — — — — 2,043 Buildings 10,819 13 — — 10,832 3,698 — 270 — — 3,968 6,864
Plant and machinery 40,813 3,585 (526) — 43,872 24,751 719 1,735 (494) — 26,711 17,161
53,675 3,598 (526) — 56,747 28,449 719 2,005 (494) — 30,679 26,068
13 otHer InVeStmentS Group
In Thousands of New Zealand dollars 2010 2009
non-current investmentsavailable-for-sale investments 15 15
during the previous period, the forestry assets of Hardwood Forests ltd were sold and the company has since been wound up. the Group received a final dividend of $91,000 (non-taxable). this revenue has been included in Financial income in the Statement of comprehensive income.
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15 reCeIVaBleS anD aDVanCeS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Prepayments 24 83 24 83trade receivables 6,937 2,938 6,937 2,938Provision for doubtful debts (25) (25) (25) (25)
6,936 2,996 6,936 2,996
14 CaSH anD CaSH eQuIValentS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Bank balances 677 172 645 147 call deposits 19 1,608 19 1,608Cash and cash equivalents 696 1,780 664 1,755Bank overdrafts used for cash management purposes — — — —
Cash and cash equivalents in the statement of cash flows 696 1,780 664 1,755
16 CapItal anD reSerVeS reconciliation of movement in capital and reserves Group company
In Thousands of New Zealand dollars
Balance 1 July 2008 605 9,418 17,106 27,129 605 9,418 17,043 27,066 total recognised income and expense — — 4,118 4,118 — — 4,118 4,118 dividends to equity holders — — (2,951) (2,951) — — (2,951) (2,951) change in value of available-for-sale (596) — — (596) (596) — — (596) financials assets Balance at 30 June 2009 9 9,418 18,273 27,700 9 9,418 18,210 27,637
Balance 1 July 2009 9 9,418 18,273 27,700 9 9,418 18,210 27,637 total recognised income and expense — — 3,129 3,129 — — 3,129 3,129 dividends to equity holders — — (3,542) (3,542) — — (3,542) (3,542) change in value of available-for-sale — — — — — — — — financials assets Balance at 30 June 2010 9 9,418 17,860 27,287 9 9,418 17,797 27,224
Asset revaluation reserve – available-for-sale investments are revalued annually and changes in valuation are recognised in the asset revaluation reserve to keep the changes separate from retained earnings.
t h i r t y S i X
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the holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. all of the 26,234,898 ordinary shares rank equally with regard to the company’s residual assets. all shares are fully paid and have no par value. there were no shares issued or redeemed during the year.
Dividends dividends are recognised in the period that they are authorised and declared.
Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
2009 final dividend paid on all ordinary shares @ 9.00 cents per share (2008: 6.75 cents) 2,362 1,771 2,362 1,7712010 interim: on all ordinary shares @ 4.50 cents per share (2009: 4.50 cents) 1,180 1,180 1,180 1,180
total Distributions to Shareholders 3,542 2,951 3,542 2,951
after 30 June 2010 the following dividends were proposed by the directors for 2010. the dividends have not been provided for and there are no income tax consequences.
In Thousands of New Zealand dollars 2010
2010 final dividend payable on 2 November 2010 @ 12.5 cents per share 3,279
Share Capital Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Balance at beginning of year 9,418 9,418 9,418 9,418
Balance at end of year 9,418 9,418 9,418 9,418
Note 16 continued...
17 CapItal manaGement
the Group’s capital includes share capital, reserves and retained earnings. the Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence. the Board of directors’ objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders.
the Group meets its objectives for managing capital through its investment decisions on the acquisition, disposal and development of assets and its distribution policy. it is Group policy that the dividend payout is aligned annually with the company’s free cash flows and reported profit.
the Group is required to comply with certain financial covenants in respect of external borrowings set by the Group's bankers. all covenants have been adhered to throughout the years ended 30 June 2010 and 30 June 2009.
the Group’s policies in respect of capital management are reviewed regularly by the Board of directors. there have been no changes in the Group’s management of capital during the year.
18 earnInGS per SHare
the calculation of basic earnings per share at 30 June 2010 was based on the profit attributable to ordinary shareholders of $3,129,000 (2009: $4,118,000) and a weighted average number of ordinary shares outstanding of 26,234,898 (2009: 26,234,898). Basic and diluted ePS are the same value.
t h i r t y S e V e N
19 loanS anD BorroWInGS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
HSBc 1,950 — 1,950 —
total Current Borrowings 1,950 — 1,950 —
South Port new zealand limited’s revolving credit facility of $3 million from HSBc is on a 30 day rolling basis. the facility is secured by way of a general security registered over “all assets both present and future, and uncalled capital” of South Port new zealand limited. South Port new zealand limited also has a $5 million term loan facility with HSBc of which nil was drawn down at balance date. interest on the first $5 million drawn is payable according to the 5 year interest rate swap agreement the company has with HSBc and interest on the balance of funds drawn at any time is a variable rate based on the cost of funds.
Employee Entitlements(i) Defined Contribution plans obligations for contributions to defined contribution pension plans are recognised as an expense in the Statement of comprehensive income when they are due.
(ii) Annual Leave and Retirement Leave Provision is made in respect of the Group’s liability for annual leave and retirement leave calculated on an
actual entitlement basis at current rates of pay.
(iii) Long Service Leavethe Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. any actuarial gains or losses are recognised in the Statement of comprehensive income in the period in which they arise.
Unforeseen repairs and Maintenancethe port industry requires substantial investment in infrastructural assets. as a result of this type of asset base significant repairs and maintenance costs can arise unexpectedly. the Group's unforeseen repairs and maintenance provision allows for events of this nature.
20 proVISIonS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
provision for employee entitlementsBalance at beginning of year 584 481 514 418additional provisions made 69 111 58 96amount utilised (5) (8) (4) —
Balance at end of year 648 584 568 514
provision for unforeseen repairs and maintenanceBalance at beginning of year 100 100 100 100additional provisions made — — — —amount utilised — — — —
Balance at end of year 100 100 100 100
Current 692 633 628 578non-current 56 51 40 36 total provisions 748 684 668 614
t h i r t y e i G h t
21 emploYee entItlementS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
accrued salary and wages (including bonuses) 194 184 186 179annual leave 375 324 327 285long service leave 79 76 55 50 648 584 568 514
22 traDe anD otHer paYaBleS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
trade creditors and accruals 1,613 2,511 1,582 2,482inter entity creditors — — 125 120 1,613 2,511 1,707 2,602
23 otHer lIaBIlItIeS Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
non-currentinterest rate derivatives 300 — 300 — 300 — 300 — CurrentForward exchange contract 196 61 196 61income tax payable/(refund) 165 583 163 581 361 644 359 642
661 644 659 642
24 FInanCIal InStrumentS
Credit riskFinancial instruments which potentially subject the Group to credit risk principally consist of bank balances and accounts receivable. the carrying amount of these financial instruments represents the maximum exposure to credit risk. Management has a credit policy in place under which each new customer is individually analysed for credit worthiness. in order to determine which customers are classified as having payment difficulties the Group applies a mix of duration and frequency of default and makes provision for estimated balances considered to be impaired. the Group does not require collateral in respect of trade and other receivables. cash handling is only carried out with counterparties that have an investment grade credit rating.
liquidity riskliquidity risk represents the Group’s ability to meet its contractual obligations. the Group evaluates its liquidity requirements on an ongoing basis. in general, the Group generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and has credit lines in place to cover potential shortfalls and meet capital expenditure requirements.
the only liquidity risk the Group has at balance date is trade payables totalling $1,613,000 (2009: $2,511,000) which are all due within 30 days.
market riskthe Group enters into derivative arrangements in the ordinary course of business to manage foreign currency and interest rate risks.
t h i r t y N i N e
Foreign exchange riskthe Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the company’s functional currency, new zealand dollars ($), which is the presentation currency of the Group.
the Group enters into forward exchange contracts from time to time when a specific plant purchase is in another currency. the purpose of these contracts is to reduce the risk from price fluctuations of foreign currency commitments associated with these one-off purchases. any resulting differential to be paid or received as a result of the currency change is reflected in the profit or loss.
the Group has one forward exchange contract at balance date to purchase 500,000 euro. this contract relates to a committed plant purchase and will be settled in august 2010. the contract will be settled at an exchange rate of 0.4621, however at balance date the mark-to-market rate (considered to be fair value) was 0.5643 resulting in an unrealised foreign exchange loss of $196,000, which has been included in the profit or loss as "financial expenses”.
during the year Forex contracts were closed out in line with the deposit being made and losses of $440,000 have been added to the financial expenses in profit or loss.
Interest rate riskinterest payable to HSBc is charged on the following basis:
(i) 5 year interest rate swap; and(ii) variable rates based on the cost of funds.
during the period the range of interest rates applying to the revolving credit facility was between 2.925% and 7.63% (2009: 2.925% and 8.675%). the company is exposed to normal fluctuations in market interest rates.
interest rate swap – South Port nz ltd has an interest rate swap in place which matures in June 2015 in line with the maturity of the related interest bearing loan from HSBc. the interest rate swap has a fixed swap rate of 7.63% with a notional contract amount of $5 million at 30 June 2010 (2009: nil).
Credit Facilityat balance date the Group had a total bank facility of $8 million (2009: $2 million), of which $1.95m (2009: nil) had been drawn down.
Fair Valuesthe carrying amount is considered to be the fair value for each financial instrument.
the maturity profiles of the Group’s interest bearing investments and borrowings are disclosed below:
Note 24 continued...
MATURITY PROFILE OF FINANCIAL INSTRUMENTS the following table details the Group’s exposure to interest rate risk on financial instruments:
weighted variable non average interest Maturity dates interest total rate Bearing effective less 1 - 2 2 - 3 3 - 4 4 - 5 5 + interest than 1 years years years years years
2010 rate year % $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets: cash & cash equivalents — — 696 — — — — — 696 696trade & other receivables — — 6,936 — — — — — 6,936 6,936other financial assets – equity investments — — 15 — — — — — 15 15 Financial liabilities: trade & other payables — — 1,613 — — — — — 1,613 1,613Borrowings 7.63% 1,950 1,950 — — — — — — 1,950interest rate deriviatives 7.63% — — — — — 300 — — 300Forward exchange contracts — — 196 — — — — — 196 196
F o r t y
weighted variable non average interest Maturity dates interest total rate Bearing effective less 1 - 2 2 - 3 3 - 4 4 - 5 5 + interest than 1 years years years years years
2009 rate year % $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Financial assets: cash & cash equivalents 2.58% 1,608 1,780 — — — — — 172 1,780trade & other receivables — — 2,996 — — — — — 2,996 2,996other financial assets – equity investments — — 15 — — — — — 15 15 Financial liabilities: trade & other payables — — 2,511 — — — — — 2,511 2,511Borrowings — — — — — — — — — —Forward exchange contracts — — 61 — — — — — 61 61
Note 24 continued...
CREDIT RISK the following table details the ageing of the Group's trade receivables at balance date:
trade receivables Gross doubtful Gross doubtful receivable debts receivable debts
In Thousands of New Zealand dollars 2010 2010 2009 2009 not past due 6,036 — 2,142 2 Past due 0-30 days 714 1 622 1 Past due 31-120 days 144 18 118 12 Past due 121-360 days 41 4 55 9 Past due more than 1 year 2 2 1 1
total 6,937 25 2,938 25
there is no collateral held or other credit enhancements for security of trade receivables.
SENSITIVITY ANALYSIS the following table details a sensitivity analysis for each type of market risk to which the Group is exposed:
2010 interest rate risk Foreign exchange risk other price risk
In Thousands of carrying -100bp +100bp -10% +10% -10% +10%
New Zealand dollars amount Profit equity Profit equity Profit equity Profit equity Profit equity Profit equity
Financial assets cash and cash equivalents 696 — — — — — — — — — — — —trade and other receivables 6,936 — — — — — — — — — — — —available-for-sale investments 15 — — — — — — — — — (1) — 1
Financial liabilities loans and borrowings (1,950) 19 19 (19) (19) — — — — — — — — trade and other payables (1,613) — — — — — — — — — — — —derivatives – interest rate swaps (300) (212) (212) 212 212 — — — — — — — —derivatives – foreign exchange contracts (196) — — — — 98 — (81) — — — — —
total Increase/(Decrease) (193) (193) 193 193 98 — (81) — — (1) — 1
F o r t y o N e
Note 24 continued...
2009 interest rate risk Foreign exchange risk other price risk
In Thousands of carrying -100bp +100bp -10% +10% -10% +10%
New Zealand dollars amount Profit equity Profit equity Profit equity Profit equity Profit equity Profit equity
Financial assets cash and cash equivalents 1,780 (16) (16) 16 16 — — — — — — — —trade and other receivables 2,996 — — — — — — — — — — — —available-for-sale investments 15 — — — — — — — — — (1) — 1
Financial liabilities loans and borrowings — — — — — — — — — — — — — trade and other payables (2,511) — — — — — — — — — — — —derivatives – interest rate swaps — — — — — — — — — — — — —derivatives – foreign exchange contracts (61) — — — — 245 — (200) — — — — —
total Increase/(Decrease) (16) (16) 16 16 245 — (200) — — (1) — 1
explanation of interest rate risk sensitivitythe interest rate sensitivity is based on a reasonable possible movement in interest rates, with all other variables held constant, measured as a basis points (bps) movement. For example, a decrease in 100 bps is equivalent to a decrease in interest rates of 1.00%.
the sensitivity for derivatives (interest rate swaps) has been calculated using a derivative valuation model based on a parallel shift in interest rates of -100bps/+100bps (2009: -100bps/+100bps).
explanation of foreign exchange risk sensitivitythe foreign exchange sensitivity is based on a reasonable possible movement in foreign exchange rates, with all other variables held constant, measured as a percentage movement in the foreign exchange rate.
the sensitivity for derivatives (forward foreign exchange contracts) has been calculated using a derivative valuation model based on movement in forward exchange rates of -10%/+10% (2009: -10%/+10%).
explanation of other price risk sensitivitythe sensitivity for listed shares has been calculated based on a –10%/+10% (2009: -10%/+10%) movement in the quoted bid share price at balance date for the listed shares.
FAIR VALUE HIERARCHY
For those instruments recognised at fair value in the statement of financial position, fair values are determined according to the following hierarchy:
- Quoted market price (level 1) - Financial instruments with quoted prices for identical instruments in active markets.
- valuation technique using observable inputs (level 2) - Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.
- valuation techniques with significant non-observable inputs (level 3) - Financial instruments valued using models where one or more significant inputs are not observable.
F o r t y t w o
Note 24 continued...
the following table analyses the basis of the valuation of classes of financial instruments measured at fair value in the statement of financial position:
2010
In Thousands of New Zealand dollars total valuation technique
level 1 level 2 level 3 Financial assetsavailable-for-sale investments (shares) 15 15 — —
Financial liabilitiesderivatives – interest rate swaps (300) — (300) —derivatives – foreign exchange contracts (196) — (196) —
2009
In Thousands of New Zealand dollars total valuation technique
level 1 level 2 level 3 Financial assetsavailable-for-sale investments (shares) 15 15 — —
Financial liabilitiesderivatives – interest rate swaps — — — —derivatives – foreign exchange contracts (61) — (61) —
there were no transfers between the different levels of the fair value hierarchy during the year and no financial instruments fall under the level 3 category.
changing a valuation assumption to a reasonable possible alternative assumption would not significantly change fair value.
25 CommItmentS anD ContInGent lIaBIlItIeS
Capital expenditure Commitmentsas at 30 June 2010, South Port Group has one material capital expenditure commitment being the balance payable on the replacement mobile harbour crane of which a deposit was paid in June 2010. the balance owing is approximately $3.8m and will be payable during the first half of the 2011 financial year (2009: nil).
operating lease CommitmentsGross commitments under non-cancellable operating leases for the Group:
In Thousands of New Zealand dollars 2010 2009 within one year 63 84 one to five years 144 207 More than five years — — 207 291
operating lease commitments relate to two forklift leases with Forklifts nz limited.
Contingent liabilitiesthere are no known material contingent liabilities (2009: nil).
F o r t y t h r e e
26 net CaSH FloW From operatInG aCtIVItIeS
the following is a reconciliation between the surplus after taxation shown in the statement of comprehensive income and the net cash flow from operating activities
Group company
In Thousands of New Zealand dollars 2010 2009 2010 2009
Surplus after taxation 3,129 4,118 3,129 4,118
add/(less) items classified as investing/financing activities Foreign exchange (gain)/loss 501 (148) 501 (148)
501 (148) 501 (148)
add/(less) non-cash items depreciation 2,005 1,926 2,005 1,926 net (gain)/loss on disposal 2 (274) 2 (274) decrease/(increase) in value of forward exchange contracts and interest rate swaps 434 61 434 61 decrease/(increase) in deferred tax 2,978 27 2,979 29
5,419 1,740 5,420 1,742
add/(less) movement in working capital decrease/(increase) in trade debtors and other receivables (3,945) (296) (3,940) (293) (decrease)/increase in trade creditors and other payables 256 475 243 470 (decrease)/increase in the provision for income tax (418) 570 (418) 568
(4,107) 749 (4,115) 745
net cash provided by operating activities 4,942 6,459 4,935 6,457
F o r t y F o U r
27 SeGmental reportInG
the South Port Group operates in the Port industry in Southland, new zealand, and therefore only has one reportable segment and one geographical area based on the information as reported to the chief operating decision maker on a regular basis.
all segment information presented is prepared in accordance with the Group's accounting policies.
2010 2009
In Thousands of New Zealand dollars Port Total Port Total Industry Group Industry Group
revenue from external customers 22,630 22,630 19,070 19,070
total revenue 22,630 22,630 19,070 19,070
other income 7 7 274 274
eBitda 12,949 12,949 8,936 8,936impairment losses (719) (719) — — depreciation (2,005) (2,005) (1,926) (1,926)
Segment result 10,225 10,225 7,010 7,010
administrative expenses (2,049) (2,049) (2,045) (2,045) Financial income 300 300 733 733 Financial expenses (1,023) (1,023) (14) (14)
Surplus before income tax 7,453 7,453 5,684 5,684
income tax (4,324) (4,324) (1,566) (1,566)
net surplus after income tax 3,129 3,129 4,118 4,118
other comprehensive income/(losses) after income tax — — (596) (596)
total comprehensive surplus/(loss) after income tax 3,129 3,129 3,522 3,522
total assets 33,715 33,715 31,539 31,539
capital expenditure 3,598 3,598 4,876 4,876
total liabilities 6,428 6,428 3,839 3,839
South Port engages with two major customers which contribute individually greater than ten percent of its total revenue. one customer contributed $7.25 million for the year ended 30 June 2010 (2009: $6.20 million). the other customer contributed $5.21 million for the year ended 30 June 2010 (2009: $1.27 million).
F o r t y F i V e
28 relateD partY tranSaCtIonS
during the year South Port new zealand limited provided cold storage facilities and leased warehousing, land and wharf facilities to Sanford limited for $1,141,000 (2009: $871,000). Sanford limited debtors balance at 30 June 2010 was $53,000. Mr t.M. Foggo, a director of South Port new zealand limited is the Southland Manager of Sanford limited. all of these transactions were conducted on an arms length basis at market rates.
all balances owing by Sanford are due by the 20th of the month following invoice and all overdue invoices are subject to interest on arrears. during the year ended 30 June 2010 no amounts invoiced to Sanford were written off as bad debts or included in the doubtful debts provision at balance date (2009: nil).
Controlling EntitySouthland regional council owns 66.48% of the ordinary shares in South Port new zealand limited. during the year there were no material transactions with this related party.
Please refer to note 29 for additional related party transactions disclosed separately in relation to the company's subsidiary awarua Holdings limited.
29 InVeStment In SuBSIDIarY CompanY
awarua Holdings limited is 100% owned by South Port new zealand ltd and has been consolidated into the South Port new zealand limited Group results. awarua Holdings limited provides management and administration services to South Port new zealand limited based on market rates for the services provided.
all balances owed to awarua Holdings limited by South Port nz ltd are classified as inter-entity receivables and are repayable on demand. during the year ended 30 June 2010 no amounts invoiced by awarua Holdings limited were written off as bad debts or included in the doubtful debts provision at balance date (2009: nil).
total management fees paid to awarua Holdings ltd during the year were $796,000 (2009: $722,000).
30 SuBSeQuent eVentS
on 19 august 2010 the Board declared a final dividend for the year to 30 June 2010 for 12.50 cents per share amounting to approximately $3.279 million (before supplementary dividends). (2009: Final dividend declared for 9.00 cents per share amounting to approximately $2.361 million.)
31 autHorISatIon For ISSue
the chief executive, Mark o’connor, Finance Manager, lara Stevens, and directors certify that these Financial Statements comply with generally accepted accounting standards and new zealand equivalents to international Financial reporting Standards (nz iFrS) and international Financial reporting Standards (iFrS), and present a true and fair view of the financial affairs of the company. this being the case, the directors authorised the Financial Statements for issue on 19 august 2010.
F o r t y S i X
In Thousands of New Zealand dollars 2010 2009 2008 2007 2006
FIVe Year Group FInanCIal SummarY
revenue 22,937 20,077 15,369 14,622 14,806
net operating Surplus 7,453 5,684 4,039 3,260 3,564
Group Surplus 3,129 4,118 2,512 2,232 2,439
operating cashflow 4,942 6,459 3,687 4,146 4,418
Shareholders distributions Paid 3,542 2,951 2,033 2,033 2,033
total Shareholders’ equity 27,287 27,700 27,129 26,208 26,009
net interest Bearing debt 1,950 — 150 1,500 3,000
Property, Plant and equipment 26,068 25,226 22,295 22,787 23,715
capital expenditure 3,598 4,876 1,459 1,189 2,197
total assets 33,715 31,539 29,234 29,607 30,936
interest cover (times) 85.7 407.0 48.0 16.1 12.8
Shareholders’ equity ratio 80.9% 87.8% 92.8% 88.5% 84.1%
return on Shareholders’ Funds* 11.4% 15.0% 9.4% 8.5% 9.4%
return on assets* 23.1% 18.8% 14.0% 11.5% 12.4%
earnings Per Share 11.9c 15.7c 9.6c 8.5c 9.3c
operating cashflow Per Share 18.8c 24.6c 14.1c 15.8c 16.8c
dividends Paid Per Share 13.50c 11.25c 7.75c 7.75c 7.75cc
net asset Backing Per Share $1.04 $1.06 $1.03 $1.00 $0.99
* Based on average of period start and year end balances
2010 2009 2008 2007 2006
operatIonal SummarY
cargo throughput (000’s tonnes) 2,169 1,863 2,249 2,155 2,105
cargo Ship departures 284 252 246 245 271
Gross registered tonnage (000’s tonnes) 4,243 3,880 3,455 3,195 3,067
number of Full-time employees 60 60 49 43 47
total cargo Ship days in Port 687 635 751 714 713
turn-around time per cargo Ship (days) 2.42 2.52 3.05 2.91 2.63
cargo tonnes per Ship 7,637 7,392 9,142 8,796 7,767
dry warehousing capacity (m2) 27,400 27,400 21,500 21,500 21,500
cold/cool Storage capacity (m3) 39,500 39,500 39,500 39,500 39,500
Financial and operational Five Year Summary
F o r t y S e V e N
F o r t y e i G h t
iN relAtioN to ShAreholDerSStatutory Disclosure
AS At 30 JUNe 2010
SIZe oF HolDInG Number of Ordinary Percent Size of Holding Shareholders Shareholding Holders
1 – 1,000 245 176,626 0.67 1,001 – 5,000 371 1,042,253 3.97 5,001 – 10,000 77 614,210 2.34 10,001 – 100,000 51 1,324,645 5.05 100,001 and over 9 23,077,164 87.97
total number of Shareholders: 753 26,234,898 100.00
prICeS For SHareS traDeD DurInG tHIS Year as at 30 June 2010 High Low $2.60 $3.00 $2.03
top tWentY orDInarY SHareHolDInGS
Shareholder Holding Percent
Southland regional council (environment Southland) 17,441,573 66.48national nominees new zealand ltd 1,453,430 5.54James ian Urquhart 1,334,731 5.09K & M douglas trust 1,021,684 3.89douglas Family trust 516,787 1.97douglas irrevocable descendents trust 506,192 1.93M. a. Janssen ltd 381,403 1.45daniel Martin noonan 175,364 .67custodial Services ltd 122,161 .47Howard cedric zingel & lynn landmark zingel 113,556 .43anz nominees ltd 98,950 .38Kenneth ritchie anderson 77,184 .29investment custodial Services 70,883 .27Pauline ann Stapel & Stephen thomas McKee 70,881 .27Glenn owen Johnston 60,000 .23Herbert charles wilson 54,000 .21david Grindell 50,000 .19tarewai Fishing co. ltd 47,656 .18ian Gerald arnot 43,978 .17Henry James williams 37,685 .14
SuBStantIal SeCurItY HolDerS
as at 30 June 2010 the following persons have given notice (in terms of the Securities Markets act 1988) that they are substantial security holders in South Port new zealand limited. the number of shares shown is at the date of the last advice received from the substantial security holders.
Holder No. of Shares % of Issued Capital Date of Notice
Southland regional council 17,441,573 66.48 20 october 2000 James ian Urquhart 1,317,970 4.95 22 april 2010K & M douglas trust 1,021,684 3.89 24 december 2009douglas Family trust 516,787 1.97 24 december 2009douglas irrevocable descendents trust 506,192 1.93 24 december 2009
DIreCtorS
John arthur Harrington, ca, aFinstd Chairman
rick christie crSnz, MSc (Hons), aFinstd
rex thomas chapman, llB
thomas Mccuish Foggo
Graham douglas Heenan, Bcom, aFinstd , FnziM
Gary John Kirk Corporate exeCutIVeS Mark o’connor, Bcom, ca, FnziM, FciS Chief Executive
russell Slaughter, Be (civil) (Hons), MiPenz, cMilt Port General Manager
Geoffrey Finnerty, Bcom Cargo Operations Manager
nigel Gear, Bcom, dipPort Man Commercial Manager
Steve Kellett Cold Store Manager
lara Stevens, Bcom, dipGrad, ca Finance Manager
DirectoryGroup CompanIeSParent CompanySouth Port new zealand limitedSubsidiaryawarua Holdings limited
auDItorwHK as agent for the controller and auditor General62 deveron Streetinvercargill 9810
SolICItorSPreston russell law92 Spey Streetinvercargill 9810
BankerSHSBc 6th Floor, HSBc House 141 cambridge terracechristchurch 8013
aCCountantSMcintyre dick & Partners160 Spey Streetinvercargill 9810
SHare reGISterlink Market Services limited138 tancred Streetashburton 7700
reGIStereD oFFICeisland HarbourPo Box 1 Bluff 9842
ContaCt DetaIlStelephone +64 3 212 8159Facsimile +64 3 212 8685email [email protected] www.southport.co.nz
South Port Management, from left: nigel Gear, Geoff Finnerty, Steve Kellett, Mark o'connor, lara Stevens, russell Slaughter
island Harbour, Po Box 1, Bluff 9842, new zealand
telephone +64 3 212 8159Fax +64 3 212 8685
email [email protected] www.southport.co.nz
Craigs Design & Print, Invercargill
Photography by Chris Howell