SPN
22/08/2013 13:49
FLLYR
REL: 1349 HRS South Port New Zealand Limited (NS)
FLLYR: SPN: South Port Year End Result
22 August 2013
South Port Prospers and Rewards Shareholders with 10% Dividend Lift
Southland's listed port operator, South Port New Zealand Ltd (NZX:'SPN')
confirmed a record net profit of $6.50 million, plus a 22 cents per share
total dividend, in the June 2013 year demonstrating that the breadth of its
regional business base has offset the effects of a slowdown in production at
New Zealand Aluminium Smelters Ltd (NZAS).
Company Chairman, Rex Chapman, stated "Fortunately South Port has built a
diversified trading base that reduces its reliance on specific cargoes. The
improved profit level was largely driven by stronger levels of other bulk
cargoes and better cold storage utilisation at both of the South Port
physical storage sites."
Total cargo volume handled declined by 7% to 2.51 million tonnes compared to
the previous year's record volume level of 2.69 million tonnes.
The major contributor to reduced cargo flows was one of the Company's larger
customers, NZAS, which continues to operate the Tiwai aluminium smelter at a
15% reduction in its normal capacity, thereby generating considerably lower
bulk tonnage. Approximately 100,000 tonnes or around 56% of the total
reduction in volume related to lower NZAS activity. Other cargoes to record
lower tonnages included stock food and wood chips.
TRADE SITUATION
South Port Chief Executive, Mark O'Connor, said a record level of fertiliser
product was imported through South Port during the past season.
"Approximately 387,000 tonnes of fertiliser and sulphuric acid produced this
record throughput (2012 - 342,000 tonnes).
"Log exports also staged a welcome resurgence particularly in the second half
of the financial year with the full year volume at 246,000 tonnes (2012 -
198,000 tonnes). Two new log exporters, Highlander Forests and Forest
Management, were active at South Port moving volume into Asian markets."
"The global softwood chip commodity market experienced a notable downturn and
this reflected in lower volumes passing across South Port's wharves. It is
unclear when the market for this product will recover."
"Stronger demand for dairy product by global markets meant that this sector
was able to export volume more rapidly during the past season. As a
consequence warehousing demand diminished and the overall dairy tonnage
passing through South Port's dry warehouses decreased." The dairy sector
continues to be an important contributor to South Port's overall activity
providing a growing volume of import and export cargoes.
The expanded cold storage division provided an important contribution to the
overall FY13 result. Following the acquisition of the Bluff based Southland
Cool Stores business in September 2012, South Port integrated this business
with its existing Island Harbour cold storage operation. These locations now
form an enlarged single cold storage division with resulting operating
efficiencies.
Construction of a further 6,000 m2 dry warehouse at the west end of the Bluff
Island Harbour was completed in June 2013 and is fully tenanted.
A further stage of the container terminal paving upgrade was also completed
at a cost of over $1.1 million
South Port and regional stakeholders continue to liaise with Shell NZ and
remain optimistic about the energy potential available in the Great South
Basin. The exploration licence requires the consortium to advise the
Government before February 2014 of its intention to commit to exploration
drilling or to relinquish the licence.
"Whilst there are no assurances that South Port will secure future oil and
gas industry activity, the Port of Bluff has several advantages when it comes
to meeting the requirements of an exploration/production base."
SMELTER
"The NZAS business is important to South Port and strategically so for
Southland," said Mr Chapman.
"Extensive media coverage during the past 12 months highlighted the
precarious operating position of NZAS. South Port is pleased to see Meridian
Energy and NZAS recently conclude the renegotiation of their electricity
contract."
"The previous contract, which came into effect from 1 January 2013, had
included price increases which threatened the future of the smelter in the
face of falling aluminium prices and the strong NZ dollar. The revised
contract has set new reduced pricing from 1 July 2013."
"Under the deal, Meridian Energy will require NZAS to reduce its contracted
load from Meridian from the current 572MW to 400MW by January 2017, at which
time the smelter will be able to replace that power with purchases from other
generators. This will provide NZAS with many options, depending on market
conditions, including being able to cancel the contract in 2017."
"We are hopeful that the new contract, which has a maximum potential term of
17 years, will enable NZAS to achieve a competitive cost position for its
operations in the longer term."
FINANCIAL
Revenue from port and warehousing operations increased by 12%, which equated
to $29.3 million ($26.0 million).
Operating profit before financing costs and tax increased by 8% to $9.0
million ($8.3 million). Net financing costs for the group were $270,000
($375,000).
The reported after tax profit of $6.50 million (2012 - $5.99 million) is an
8.5% increase on the previous year and bettered the prior record profit of
$6.26 million set in 2011. Earnings per share were 24.8 cents per share (22.8
cents per share).
Mr Chapman said South Port's Board has elected to pay a final dividend of
15.5 cents, taking the full year dividend to 22.0 cents and providing a 10%
lift on the prior year (2012 - 20.0 cents). Full imputation credits will be
attached to all distributions.
The dividend payment represents a gross return of 9.9% (net 7.1%) based on a
share price of $3.10 as at 30 June 2013. The dividend payout ratio to NPAT is
89%, consistent with the prior year payout ratio of 88% and is broadly in
line with the distribution forecast in last year's annual report.
Total equity is $30.6 million ($29.6 million) after allowing for dividend
payments during the period of $5.51 million ($5.25 million).
Total group assets stand at $41.3 million ($34.8 million). Net tangible asset
backing per share equates to $1.17 ($1.13 per share).
Current assets amount to $5.5 million ($5.0 million). Current liabilities
rose to $10.0 million ($4.5 million). This swing in net working capital
position reflects the classification of the majority of South Port's bank
debt as a Current Liability.
Term liabilities were unchanged at $0.8 million.
OUTLOOK
"The year ahead is likely to throw up a number of challenges despite positive
economic indicators being promoted in the market place," said Mr Chapman.
"The Southern region of New Zealand is substantially dependent on our trading
partners buying our premium grade primary produce."
An internal Process Improvement Programme has begun and will extend over 18
months. This will review the processes that support the existing cargo flows
within the business and encourage a continuing focus on operational
improvement, better use of existing resources and the creation of a solid
platform for future growth.
"Taking into account lower warehousing inventory levels, plus a slightly
slower start in the cargo area, South Port is forecasting a lower level of
tax-paid profit (back 5% - 10%) for the 2014 financial year," said Mr
Chapman. An update of the earnings outlook will be provided at the time of
releasing its interim result.
Directors Mr Philip Cory-Wright and Mr Graham Heenan retire from the South
Port Board this year by rotation and being eligible are standing for
re-election.
- SPN's issued capital is $9.4 million which is made up of 26,234,898
ordinary shares
FOR FURTHER INFORMATION PLEASE CONTACT:
Mr Mark O'Connor Mr Rex Chapman
Chief Executive Chairman
Tel: 03 212 8159 Mob: 027 454 8455
Mob: 0272 560 407
SOUTH PORT FACTS
- Owns and manages assets which have a book value of $41 million
- Directly employs more than 80 full time equivalent staff
- Is the only Southland based company listed on NZX - market capitalisation
as at 30 June 2013 equates to $81 million
- Handles in excess of 2.5 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 -
dairy warehousing, containers, cool & cold storage and general cargo
- 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 approximately 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 7 ha of on-port land available for further port
development or industry establishment
End CA:00240050 For:SPN Type:FLLYR Time:2013-08-22 13:49:48
