Port Nelson Annual Report 2012 (pdf)

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performance performance review - Port Nelson Limited 2012 2011 2010 2009 2008 Operations Trade (millions of cargo tonnes) 2.65 2.71 2.75 2.76 2.68 Container throughput (TEUs) 86,178 83,800 85,735 82,272 77,561 Vessel arrivals (over 100GT) 733 850 835 921 921 Total Vessel GT calling (millions) 6.9 7.9 8.1 8.3 8.3 Employees (FTEs) 135 136 141 148 137 Financial ($ millions) Revenue* $38.8 $38.3 $37.9 $38.0 $36.2 EBITDA** $19.1 $16.9 $16.7 $14.8 $17.8 Earnings before interest and taxation (EBIT) $14.4 $12.6 $12.5 $10.7 $13.9 Net interest expense $2.5 $2.7 $2.7 $3.1 $3.3 Taxation $1.6 $3.4 $6.3 $2.7 $3.2 Net surplus after taxation $10.4 $6.6 $3.4 $4.9 $7.5 Dividends declared $12.2 $4.2 $4.1 $4.0 $3.8 Capital Expenditure $3.3 $10.3 $4.1 $8.5 $10.1 Net interest bearing debt $39.9 $39.3 $36.5 $43.0 $41.0 Total non-current tangible assets $185.6 $186.8 $181.4 $182.8 $152.3 Shareholder return metrics Earnings per share (cents) 40.8 25.9 13.5 19.4 29.5 Dividend per share (cents) 48.0 16.5 16.1 15.7 15.0 Net assets per share $5.27 $5.38 $5.27 $5.26 $5.29 Equity 69.9% 70.6% 71.2% 69.6% 71.2% Return on average equity 7.7% 4.9% 2.6% 3.7% 6.1% Return on average assets 7.5% 6.6% 6.5% 5.6% 8.0% * Revenue includes investment property revaluations ** Earnings before interest, tax, depreciation and amortisation processes An efficient and consistent approach to the way we do things • Embed a culture of continuous improvement vision • Ensure the integrity of source data • Provide for an accurate flow of information between systems • Streamline processes to achieve zero wastage • Standardise, document and train in what we do 4
directors’ report As Chairman of Port Nelson Limited (Port Nelson), it gives me great pleasure to report on a good year for the company, particularly when taking into account the ongoing challenging conditions in the wider economy. Port Nelson has produced another strong financial result, with earnings before interest and tax of $14.4 million, some $1.4 million above budget. One of the main influences on the result was the strong performance of the Unimar business over the last 12 months, as mentioned below. Operating revenue for the last 12 months was marginally under budget, but was compensated for by lower-than-budgeted operating expenses and by maintenance costs coming in around $600,000 lower than anticipated. The main points to note regarding the revenue and expenses figures are as follows: •Cargo volumes were 131,000 tonnes lower than budgeted, due mainly to the drop off in log exports to China • Container volumes at 86,178 TEU* were just above the previous record figure of two years ago • Maintenance costs were well contained for the year, with dredging expenses in particular not as high as had been expected • Tax expense was significantly reduced due to the recognition of buildings and building fit outs previously not depreciable now being depreciable for tax purposes. This adjustment resulted in a reduction in tax expense of $0.65 million. Additionally a further $0.35 million tax expense reduction was recognised due to a previous period adjustment. Total cargo for 2011/12 was 2.65 million tonnes, down very slightly on the previous year and also below what had been budgeted. The main reason for this, as mentioned above, was the reduction in log exports to China from the region, from the middle of 2011 onwards. MDF, fish and wine volumes were all above budget during this period, with sawn timber and fruit being at slightly lower levels than had been expected. We have continued our ongoing programme of maintaining, and where necessary upgrading, equipment and facilities to ensure the business is sustainable and reliable for the long term. Major items this year included purchase of a new Empty Container Handler (ECH), and pavement upgrading in sections of the container yard and log storage area. We also completed the camera installation project around the port area, resulting in vastly improved coverage with operational and security benefits. From a property-holding perspective, the major development we undertook in the last year was the upgrading of the Steel and Tube leased property. This meant lesees could consolidate two sites they had around the wider Nelson area into one within the port precinct. As the commercial property market in Nelson picks up, it is hoped we can attract more such tenants to the port area, with the advantages that it can offer. While still on the subject of property, during the year, Nelson City Council purchased the former Reliance Engineering and Four Seasons buildings and sites from Port Nelson. Long term, these were not seen as being of operational use to us and this sale fits in with the council plan to further connect the city to the sea. The performance of the partly Port Nelson-owned Unimar Limited has been a highlight of the last 12 months, with the company heavily involved in the salvage of cargo from the stricken vessel Rena off the coast of Tauranga. As the New Zealand representative for UK-based Braemar Howells, Unimar has been intricately involved in a large amount of recovery work. This has seen the fortunes of the business change significantly from only 12 months earlier, and it has been pleasing to see a Nelson-based company at the forefront of the salvage project. This year’s net surplus after tax, significantly inflated by the one-off effect of the Unimar work on the Rena and the aforementioned tax adjustments, resulted in an average return of shareholders’ funds of 7.7 per cent, and dividends declared for the full year of $12.2 million. These dividends were made up of the normal annual dividend plus an additional special dividend of a further $8 million that the Board also declared. This put the total dividends paid out to shareholders since Port Nelson Limited was formed in 1988 in the region of $122 million. The special dividend was paid after the Board undertook a comprehensive review of the company’s position. As the financial year came to an end, the main focus was on the continued uncertainty over container shipping services and the challenges this brings to regional ports in particular. After much speculation and considerable lobbying by a number of key Nelson exporters and others including Port Nelson, Maersk made the decision to retain a Nelson call, with the introduction of calls from their NZ1 service from early August. While this announcement was pleasing for all concerned, the uncertainty that the service changes created only served to emphasise the vulnerability of regional ports in retaining ongoing services, a continued concern for us all. As we head into another financial year, it is clear that 2012/13 will be a difficult one, with cargo volumes predicted to remain static and costs such as insurance and electricity continuing to rise. Port Nelson is committed to continuing to work hard to provide our customers with the most efficient service we can offer, recognising this is an ongoing process as customer expectations continue to increase. In closing, I would like to thank our management team and all our staff for their efforts over the last year. I would also like to extend our continued appreciation to our customers, whether they be importers, exporters or shipping lines, for their continued custom. We also value and appreciate the ongoing contribution from our two shareholders Tasman District Council and Nelson City Council. Finally, my thanks go out to my fellow directors for their contribution over the previous 12 months. Nick Patterson Chairman, Port Nelson Limited. *TEU = Twenty-foot Equivalent Container Unit. 5
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Port Nelson Annual Report 2012 (pdf)

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