SPN
01/11/2012 11:00
ADDRESS
REL: 1100 HRS South Port New Zealand Limited (NS)
ADDRESS: SPN: South Port - 2012 Annual Meeting Release
NZX STATEMENT
1 November 2012
South Port Highlights Dividend Policy
The dividend policy of South Port New Zealand Ltd has resulted in a sustained
lift in dividends over a five year period, the Company's Chairman, Mr Rex
Chapman, told shareholders attending the Annual Meeting in Southland.
Rather than adopting a fixed dividend payout ratio, South Port's Board
maximises dividend payments by linking them to Free Cash Flow and
profitability. "Improved profitability, together with this policy has more
than doubled dividends from 7.75 cents per share in 2007 to 20 cents per
share in each of the last two years," said Mr Chapman.
The Company's share price over the past four years has increased from $2 per
share to around $3 a share, reflecting the increase in underlying
profitability and dividend payments, he said.
In the latest year, reported profit was influenced by extraordinary items or
one-off adjustments such as the one-off gain of $270,000 on the sale of a
surplus mobile harbour crane. Normalised profit was $5.72m compared with
$5.98m in 2011.
Mr Chapman said the reduction in profit doesn't mean operating performance
has deteriorated but in part represents the cost of providing additional
resources to service a sustained lift in cargo. The Company also absorbed
increased depreciation on recent plant purchases and significantly higher
charges for insurance.
The financial result was thus very close to last year's record profit. South
Port declared a 14.5 cents per share final dividend resulting in a full year
dividend of 20 cents per share, and representing a pay-out ratio of 88% of
reported net profit. The total dividend equated to a gross return of 9.4% on
30 June share price of $3.05.
In the 2011 year the port operator experienced a 25% volume increase in
cargo, and that was a "major step up". The goal for 2012 was to consolidate
on such a substantial lift and in 2012 a new record volume of 2.69 million
tonnes was achieved. This lifted net surplus to just short of $6m.
As part of the Company's strategy to protect existing trade, it is considered
vital to have a cost effective and efficient container handling capability to
service Southland's import/export container cargoes. A diverse range of bulk
cargo also forms an important part of the business and this diversity "has
been a real strength" in recent years.
The Company is also pursuing a strategy of acquiring non-port businesses for
the Port, preferably with cargo linkages. Blue Sky Meats has become a cold
storage customer and the business of Southland Cool Stores was acquired in
September.
South Port is building a 5,900m dry warehouse on the Island Harbour. This
would be available in March 2013.
The Chief Executive, Mr Mark O'Connor, detailed the variances in cargo flows
during 2012, with wood chips volume up 42%, stock food 114%, petroleum 20%
and sawn timber 13%, while the logs trade was down 28% and alumina volume
fell 8%.
NZAS imports comprised 32% of the 2012 cargo by volume and the aluminium
smelter's exports represent 11% of the cargo mix.
Overall, however, cargo volumes had risen 45% over the last three years. To
meet this increase in business, South Port had invested in a modern mobile
harbour crane and in infrastructure such as large forklifts and a reach
stacker, and upgraded berth paving.
Mr O'Connor said cold storage capacity was now 8,700 tonnes on Island Harbour
and 7,700 tonnes at the South Port Foreshore Road facility.
He provided an update on the offshore exploration permit position and also
the Southern lignite project by Solid Energy. A lignite-to-urea conversion
plant would be a nationally significant project which would present very
sizeable long term cargo opportunities for the region and South Port.
Mr Chapman said, "Deteriorating economic conditions and falling coal prices
have caused Solid Energy to undertake a major review of its activities but at
this stage it is understood that Solid Energy remains committed to its longer
term plans to develop Southland's lignite resource."
Mr Chapman noted that calls for port rationalisation have become more muted
than previously and South Port is not aware of any catalyst that was likely
to stimulate developments.
The Company estimates a 2013 bottom line consistent with 2012. A flat trading
period may continue in the short-to-medium term as there is still a flow on
effect from uncertainty in the US and European markets. Primary industries
would be the on-going key for both the Port and region.
FOR FURTHER INFORMATION PLEASE CONTACT:
Mr Mark O'Connor
Chief Executive
South Port New Zealand Ltd
Tel 03 212 8159
Mobile 0272 560 407
End CA:00229204 For:SPN Type:ADDRESS Time:2012-11-01 11:00:06
