Napier Port – Product Disclosure Statement

The issuer under this offer is Napier Port Holdings Limited.
This document gives you important information about this investment
to help you decide whether you want to invest. There is other useful
information about this offer on www.business.govt.nz/disclose,
offer number (OFR12679).
Napier Port Holdings Limited has prepared this document in
accordance with the Financial Markets Conduct Act 2013. You can
also seek advice from a financial adviser to help you to make an
investment decision.
PRODUCT
DISCLOSURE
STATEMENT
INITIAL PUBLIC OFFERING OF ORDINARY SHARES
IN NAPIER PORT HOLDINGS LIMITED
15 JULY 2019
JOINT LEAD MANAGERSCO-MANAGER

1.1 WHAT IS THIS?
This is an offer of ordinary shares (Offer Shares) in Napier Port
Holdings Limited (Napier Port Holdings). Ordinary shares in
Napier Port Holdings (Shares) give you a stake in the ownership
of Napier Port Holdings. You may receive a return if dividends are
paid or Napier Port Holdings increases in value and you are able to
sell your Shares at a higher price than you paid for them.
If Napier Port Holdings runs into financial difficulties and is wound
up, you will be paid only after all creditors have been paid. You may
lose some or all of your investment.
1.2 ABOUT NAPIER PORT
Napier Port is a port located in Hawke’s Bay and is New Zealand’s
fourth largest port by container volume
1
. Napier Port provides a
range of port and logistics services (marine, handling and value-
add services), with its core revenue streams arising from container
services, bulk cargo and cruise. In FY2018 Napier Port managed
the arrival and departure of over 680 ships, carrying over five
million tonnes of cargo and over 100,000
2
cruise passengers.
Napier Port Holdings will be the parent company of the Napier Port
group on completion of the Offer. Napier Port Holdings is currently
a wholly-owned subsidiary of Hawke’s Bay Regional Investment
Company Limited (HBRIC), the investment arm of Hawke’s Bay
Regional Council. Port of Napier Limited is the operating company
of the Napier Port group and will be acquired by Napier Port
Holdings prior to Listing.
For more information, see Section 2 (
Napier Port and what
it does).
1.3 PURPOSE OF THIS OFFER
The primary purpose of the Offer is to raise capital for
Napier Port to:
• reduce existing debt and provide capacity to fund the 6 Wharf
expansion project; and
• enable HBRIC to realise a portion of its investment in Napier
Port (on completion of the Offer, HBRIC will own 55% of the
total Shares on issue).
For more information, see Section 3 (
Purpose of the Offer).
1.4 KEY TERMS OF THE OFFER
Offer
Offer of new Shares by Napier Port
Holdings
Description of the
equity securities
Fully paid ordinary shares
Indicative Price
Range
1
$2.27 – $2.60 per Offer Share
Total number of
Shares being
offered under the
Offer
90 million Shares, representing 45%
of the 200 million Shares on issue
immediately after Listing
Gross proceeds
from the Offer
2
$204.3 million – $234.0 million
Priority Offer opens
23 July 2019
Priority Offer closes
5 August 2019
Institutional Offer
and Bookbuild
6 August – 7 August 2019
Final Price
announced and
allocation
7 August 2019
Broker Firm Offer
opens
8 August 2019
Broker Firm Offer
closes
16 August 2019
Settlement
and allotment
19 August 2019
Listing, expected
commencement of
trading on the NZX
Main Board and
earliest expected
mailing of holding
statements
20 August 2019
Expected payment
of first dividend
following the Offer
December 2019
Liabilities, fees
and charges
If you sell your Shares, you may be
required to pay brokerage or other sale
expenses. You may also be liable for
tax on the sale of your Shares. You
should seek your own tax advice in
relation to your Shares
The above dates are indicative only and may change. Napier Port,
in consultation with the Joint Lead Managers, reserves the right
to vary or extend these dates. Napier Port may also withdraw the
Offer at any time before Settlement or accept late Applications
(either generally or in individual cases).
1.
The Indicative Price Range is indicative only. The Final Price will be set after the
conclusion of the Bookbuild and may be within, above or below this range. The Indicative
Price Range may be varied at any time by Napier Port.
2.
Equal to the number of Offer Shares multiplied by the lower and upper end of the
Indicative Price Range (as applicable).
For more information, see Section 3.2 (Minimum Offer amount),
Section 5 (Terms of the Offer) and Section 13 (Glossary).
SECTION 1 /
KEY INFORMATION SUMMARY
1.
Deloitte Freight Yearbook 2019.
2.
2017/2018 cruise season.
01

1.5 HOW PRICING OF
OFFER SHARES IS FIXED
Napier Port has set an Indicative Price Range of $2.27 to $2.60
per Offer Share.
The Final Price will be set by way of a Bookbuild managed by the
Joint Lead Managers. The Bookbuild is expected to take place
from 6 August to 7 August 2019 and the Final Price is expected
to be announced and posted on www.napierportshareoffer.co.nz
on or about 7 August 2019. All Offer Shares will be issued at the
Final Price.
For more information, see Section 5 (
Terms of the Offer).
1.7 KEY DRIVERS OF RETURNS
Drivers of financial performanceKey strategies and plans
Cargo volume received by
the Port
Export and import trade to and from
Hawke’s Bay and the surrounding
regions passing through the Port
is a key driver of revenue, with
logs and containers being the
largest components.
• Maintain close and collaborative relationships with a wide range of primary producers,
forestry industry participants and other cargo owners through the integration of our Port
operations with their supply chains.
• Provide innovative solutions that create efficiencies for our customers, such as our vehicle
booking system for traffic management.
• Further develop our network of infrastructure to extend our reach across our catchment
areas through the use of off-Port sites, such as the Thames Street container depot and the
Whakatu land holding.
• Actively manage our pricing strategies to ensure we earn a fair return on our assets.
Cargo mix
Our charges and revenue vary across
the different containerised and bulk
cargo products passing through the
Port and therefore cargo mix is an
important driver of profitability.
• Increase the focus on handling high-value cargo such as perishable primary products
exported in refrigerated containers.
• Build relationships with importers to increase the number of full containers coming into the
Port rather than empty containers. See Section 2.10 (
Strategic case studies – Big Save
Furniture) for an example of us implementing this strategy.
• Provide fit for purpose port facilities that allow the Port to meet the needs of a diverse range
of export and import cargo.
Ships visiting the Port
The number, type and size of ships
calling at the Port is a key driver of
our revenue given we charge a fixed
all-in marine services fee depending
on a ship’s characteristics.
• Development of port infrastructure and marine services to accommodate an increased range
and frequency of ships visiting the Port to meet our customers’ needs.
• The construction of 6 Wharf will increase the Port’s capacity for the number of ships that
can visit as well as the size of ships that can visit.
• Invest in ongoing training and marine simulation testing to support the development of our
marine personnel involved in the safe management, planning and handling of ships visiting
the Port.
Napier Port service offering
Our value-add services contribute
to revenue and increase our
customer connection.
• Grow our existing value-add service offering, such as container storage and container
packing/unpacking services, through our connections with customers and informed by data
collected from them, and explore additional incremental service offerings.
• Build on existing data capture and technological developments such as container condition
reports and container stowage software programs to improve the quality of the service
offering to shipping lines and their customers.
Operating costs
Our operating costs directly impact
our profitability.
• Improve organisational capability and our teams’ wellbeing by continuing to invest in our
‘culture of care’, through training and improved work practices.
• Utilise fit for purpose asset management and port layout planning tools and processes to
optimally manage the use and maintenance of our plant, machinery and port site assets.
• Harness data and technology to develop new cost-effective methods of providing our services.
• Manage peak cargo periods to minimise ship movements and ensure smooth cargo transfer.
You should read this table in conjunction with Section 2 (
Napier Port and what it does) and Section 7 (Napier Port’s financial information).
1.6 HOW YOU CAN GET
YOUR MONEY OUT
Napier Port Holdings intends to quote the Offer Shares on the
NZX Main Board. This means you may be able to sell them on
the NZX Main Board if there are interested buyers. You may get
less than you invested. The price will depend on the demand for
the Shares.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
02

1.8 KEY RISKS AFFECTING
THIS INVESTMENT
Investments in shares are risky. You should consider if the degree
of uncertainty about Napier Port’s future performance and returns
is suitable for you. The price of these Shares should reflect the
potential returns and the particular risks of these Shares. Napier
Port considers that the most significant risk factors that could
affect the value of the Shares are:
6 Wharf construction risk: We are committed to constructing
a new sixth wharf (as detailed in Section 2.7 (
6 Wharf expansion
project)), which is planned to commence at the end of 2019 and
be completed at the end of 2022. There is no assurance that the
construction of 6 Wharf will complete on time and on budget, or
at all. In addition, the construction may have an adverse impact on
our operations.
Significant asset damage and interruption risk: A major
natural event, such as a tsunami or a significant earthquake,
could destroy or damage our assets, which are essential to our
operations. If such an event was to occur, it is unlikely that our
insurance policies would cover us for all of the damage.
Major Shareholder risk: Following completion of the Offer, the
Council (through HBRIC) will control 55% of the shares in Napier
Port Holdings. The Council will have material influence over Napier
Port. There is a risk that the Council’s interests may conflict with
the interests of other Shareholders.
Forestry sector risk: Our business is heavily dependent on
the forestry sector, particularly logs, woodpulp and timber.
Any decrease in the supply or demand for New Zealand or
Hawke’s Bay and surrounding areas’ forestry products could
have a significant adverse impact on our financial position
and performance. An example of this is the recent reduction of log
prices being paid by Chinese buyers.
Biosecurity risk: Our exports are primarily made up of primary
produce, including forestry products, pipfruit and meat. Any
significant biosecurity event could result in the supply or demand
for primary produce exported through the Port being materially
reduced, and could also increase the production costs for
growers and producers associated with ongoing quarantine and
monitoring processes.
China and other Asian market risk: Exports to Asian markets
made up 84% of our total exported cargo volume by weight
in 2018 (65% to China)
3
. If access to these key markets was
impaired, or some other event occurred that resulted in demand for
cargo passing through the Port decreasing, it could have a material
adverse impact on our financial position and performance.
Cargo owner customer concentration risk: A significant
proportion of our revenue is from a small number of cargo owner
customers. Any loss, or decrease in demand from, key customers
may have a materially adverse effect on our financial performance.
This summary does not cover all of the risks of investing in
the Shares.
You should also read Section 2 (
Napier Port and what it does),
including Section 2.7 (6 Wharf expansion project), Section 2.8
(
Capital management), Section 2.9 (Industry overview) and Section
2.20 (Other material governance disclosures), and Section 8
(
Risks to Napier Port’s business and plans).
3.
Ministry of Transport (Freight Information Gathering System); 2018.
03
SECTION 1 / KEY INFORMATION SUMMARY
SECTION 1 / KEY INFORMATION SUMMARY

1.9 NAPIER PORT’S FINANCIAL INFORMATION
The financial position and performance of Napier Port are essential to an assessment of this Offer. You should also read Section 7
(
Napier Port’s financial information).
Capitalisation Table
Number of Shares being offered 90 million
Number of Shares on issue following the Offer 200 million
Indicative Price Range $2.27 - $2.60
Implied market capitalisation $454.0 million - $520.0 million
Net Debt / (Cash) on completion of the Offer $(22.4) million
Implied enterprise value $431.6 million - $497.6 million
Key investment metrics
FY2019FFY2020F
Implied enterprise value / Pro forma EBITDA 10.9x - 12.5x10.6x - 12.2x
Price / Pro forma earnings per Share 23.6x - 27.1x22.7x - 26.0x
Pro forma earnings per Share $0.10 $0.10
Price / Earnings per Share 81.2x - 92.9x22.7x - 26.0x
Earnings per Share $0.03 $0.10
Dividends declared per Share
1
$0.07
Implied dividend yield – cash dividend declared
1
2.9% - 3.3%
Implied dividend yield – gross dividend declared
1
4.0% - 4.6%
1.
Dividends declared per Share, implied dividend yield – cash dividend declared and implied dividend yield – gross dividend declared for FY2019F have not been included as Napier Port
considers these metrics are not comparable due to the $44.0 million special dividend which has been declared and will be paid to HBRIC on completion of the Offer. See Section 3.1
(Purpose of the Offer) and Section 7.6 (Dividends).
The above metrics should be read in conjunction with the assumptions and risks in Section 7 (Napier Port’s financial information)
and Section 8 (Risks to Napier Port’s business and plans).
1.10 APPLICANT WITHDRAWAL RIGHTS
In certain limited circumstances, including where a significant adverse development occurs prior to the Bookbuild, Applicants under
the Priority Offer may have the right to withdraw their Applications within a certain time period and have their Application Monies
refunded. You should also read Section 5.6 (
Priority Offer Applicants’ withdrawal rights).
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
04

CONTENTS
1.KEY INFORMATION SUMMARY1
LETTER FROM THE CHAIR 6
2.
NAPIER PORT AND WHAT IT DOES 7
3.
PURPOSE OF THE OFFER51
4.
KEY DATES AND OFFER PROCESS52
5.
TERMS OF THE OFFER53
6.
KEY FEATURES OF THE SHARES57
7.
NAPIER PORT’S FINANCIAL INFORMATION58
8.
RISKS TO NAPIER PORT’S BUSINESS AND PLANS65
9.
TA X71
10.
WHERE YOU CAN FIND MORE INFORMATION71
11.
HOW TO APPLY72
12.
CONTACT INFORMATION73
13.
GLOSSARY74
05

Na
-
to
-
rourou, na
-
taku rourou ka ora ai te iwi.
With your food basket and my food basket, the
people will thrive.
Te
-
na
-
koutou e nga
-
kaiwhakarato moni – Greetings Investors,
On behalf of the Napier Port board, I am delighted to invite you to
invest in our company.
For nearly 150 years, Napier Port has been connecting Hawke’s
Bay and the surrounding regions with the people and markets of
the world.
We operate a long-term regional infrastructure asset that supports
the Hawke’s Bay economy. Indeed, our strategic purpose is to
continue to build a long term successful business by collaborating
with the people and organisations that have a stake in helping our
region grow.
We are New Zealand’s fourth largest port by container volume
and have experienced growth in cargo volumes over the last 10
years. The Port is also the gateway to the Hawke’s Bay region for
an increasing number of cruise ship visits. These cruise visits are
making a growing contribution to the Port and the broader region.
We have long standing collaborative relationships with many of the
world’s largest shipping lines. With our connections to the core
national road and rail networks, we also reach outside Hawke’s
Bay to the lower North Island and the east coast to the north of
Hawke’s Bay.
Led by Chief Executive Todd Dawson, Napier Port has a
management team experienced in all aspects of the operation
and development of such an important regional asset. The team
is also committed to our strategy of fostering strong connections
and relationships with our customers, our people and the broader
Hawke’s Bay region to build on our success and fulfil the important
role we play in the community. In addition, we have an experienced
board of directors with extensive experience in the port industry
and the finance sector and with listed company experience that will
assist Napier Port during the Offer period and going forward.
The combination of a robust regional economy, our position in the
country’s major transport routes and our experienced management
team, has underpinned the Port’s strong financial performance in
recent years.
We are committed to making further investments to support our
role in Hawke’s Bay and the growth of the region for the future.
The centrepiece of this investment programme is our plan for a
new wharf, 6 Wharf.
The planned wharf offers benefits including reduced on-Port
congestion, increased container vessel capacity and operating
efficiencies, and an ability to handle larger vessels and growth
in cruise ship demand.
Funds raised from the issue of new Shares in this Offer will allow
Napier Port to pay off its current debt and allow it to finance
6 Wharf and the other investments necessary to achieve its
aspirations from new borrowing and future retained earnings. The
Offer will also allow Hawke’s Bay Regional Investment Company
Limited (HBRIC) to realise part of its investment in Napier Port.
Napier Port is currently 100% owned by HBRIC, the investment
arm of Hawke’s Bay Regional Council (Council). HBRIC will
retain a 55% stake following the Offer, reflecting the ongoing
support of Council and HBRIC to Napier Port and their desire to
remain involved in Napier Port as a long-term owner – alongside
new investors.
This PDS contains important information about Napier Port and
the offer. We encourage you to read it carefully and consider, in
particular, Section 8 (
Risks to Napier Port’s business and plans)
before making your investment decision.
Naku
-
noa, Na
-

Alasdair MacLeod
Chair
LETTER FROM
THE CHAIR
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
06

OVERVIEW
2.1
REVENUE BREAKDOWN
FY2018
EXPORT / IMPORT SPLIT
FY2018, BY WEIGHT
In this Section 2, we describe the business of
Napier Port, as well as other important matters that
you should be aware of, including the proposed
6 Wharf construction (Section 2.7 (
6 Wharf
expansion project
)), our approach to capital
management (Section 2.8 (
Capital management))
and matters relevant to our relationship with our
major Shareholder (Section 2.20 (
Other material
governance disclosures
)).
The Hawke’s Bay region is an $8.1 billion
4
economy and a major
New Zealand producer, processor and exporter of primary products
supported by high sunshine hours and fertile soils. Key Hawke’s
Bay primary products include logs, forestry products, pipfruit,
vegetables, meat and wine.
For nearly 150 years, Napier Port, currently New Zealand’s fourth
largest port by container volume
5
, has been connecting Hawke’s
Bay and its surrounding regions with the people and markets of the
world. We are located on the east coast of New Zealand’s North
Island and benefit from a sizeable local cargo catchment. We are
located on the main New Zealand transit route for international
shipping services and we are connected with national road and
rail networks.
The role of the Port is to receive and process cargo, container and
cruise ships arriving and departing by sea. We provide a range of
port and logistics services, with our core revenue streams arising
from container services, bulk cargo and cruise. In FY2018 we
managed the arrival and departure of over 680 ships, carrying over
five million tonnes of cargo and over 100,000 (2017/2018 cruise
season) cruise passengers.
4.
StatsNZ, nominal gross regional product for the year-ended Mar 2018.
5.
Deloitte Freight Yearbook 2019.
CONTAINER
SERVICES
63%
BULK CARGO
32%
CRUISE
3%
OTHER INCOME
2%
EXPORTS
79%
IMPORTS
21%
680+ SHIPS
4TH LARGEST
PORT BY
CONTAINER
VOLUME
5
FY2018
FY2018
5M+ TONNES
OF CARGO
SECTION 2 /
NAPIER PORT AND WHAT IT DOES
07

Our growth over the last 10 years has resulted in a strategic upgrade
of certain infrastructure being required so that we can support
ongoing growth and customer service standards. This includes
plans to develop the new 6 Wharf (which has received all resource
consents expected to be required) shortly after completion of the
Offer and a third tugboat due to be operational by the end of 2019.
Napier Port Holdings will be the parent company of the Group
and its shares will be listed on the NZX Main Board on completion
of the Offer. Napier Port Holdings is currently a wholly owned
subsidiary of HBRIC, the investment arm of the Council. Port of
Napier is the operating company of the Group and will be acquired
by Napier Port Holdings prior to Listing pursuant to the Acquisition
Agreement. Upon the issuance of Offer Shares by Napier Port
Holdings under the Offer, HBRIC’s shareholding in Napier Port
Holdings will be diluted from 100% to 55%.
For further information on the Acquisition Agreement, see Section
2.20 (
Other material governance disclosures – Acquisition
Agreement) and the document titled “Other material information”
on the Offer Register.
See Section 8 (
Risks to Napier Port’s business and plans – Major
Shareholder risk).
PRE AND POST OFFER
OWNERSHIP STRUCTURE
PRE-OFFER STRUCTUREPOST-OFFER STRUCTURE
COUNCIL
COUNCIL
HBRIC
HBRIC
PORT OF NAPIER
NAPIER PORT HOLDINGS
PORT OF NAPIER
NAPIER PORT HOLDINGS
INVESTORS
100%
100%
100%
100%
55%
45%
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
08

OUR HISTORY
2.2
1875
1931196419721973
1988
Napier Port is a longstanding and established
business, originating in 1875. Our purpose is to
build a thriving region by connecting our customers,
people and community to the world.
Port of Napier
incorporated as a
limited liability
company following
New Zealand
Government reform
of the port sector
Napier Harbour
Board incorporated
A major earthquake
hits Napier.
The breakwater
(at the Port’s current
location) survives
and all port activities
move to the current
location
Ravensdown imports
totalled 222,478
tonnes
Pan Pac on-Port
pulp storage
established
Napier Port
reaches one million
tonnes of cargo
SECTION 2 / NAPIER PORT AND WHAT IT DOES
SECTION 2 / NAPIER PORT AND WHAT IT DOES

20182019202220092015
Expected
completion
of 6 Wharf
Late 2019
Expected
commencement
of 6 Wharf
Expansion Project
Napier Port
completes
development of
nearby land holding
on Thames Street
into a container
storage facility
November
Napier Port receives
resource consents
for 6 Wharf
Construction
of 4 Wharf and
associated land
reclamation
completed
(an investment
of approximately
$40 million)
Napier Port board
and management
explore expansion
alternatives for
the port
July
Napier Port
reaches five million
tonnes of cargo
May
Hawkes Bay
Regional Council
votes to approve
Napier Port making
a minority initial
public offering, and
listing on the NZX
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
10

KEY BUSINESS STRENGTHS
2.3
• Napier Port is an established long-term infrastructure
asset that provides a key gateway linking Hawke’s Bay
and its surrounding regions to global markets.
• The majority of our exporters are located within 100
kilometres of the Port, providing a nearby, cost effective
route to market.
• The Port is positioned on New Zealand’s main
shipping route with core national rail and road
network connectivity.
• A number of the world’s largest shipping lines
regularly call at the Port.
LONG-TERM
INFRASTRUCTURE
ASSET
1|
KEY INFRASTRUCTURE METRICS:
5 existing
wharves
(1.67 kilometres
total length)
35 heavy
container
handling
machines
50 hectares
of on-site
port land
1,000+
connection points
for refrigerated
cargo
6 mobile
harbour
cranes
SECTION 2 / NAPIER PORT AND WHAT IT DOES

36,607 square
metres of
warehousing
16 hectares of
dedicated container
terminal space
10 hectares
of dedicated
log storage
space
2 tugboats with a
third tugboat due to
be operational by
the end of 2019
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
12

• Napier Port’s 6.5% compound annual growth in combined
export and import cargo throughput (by weight) over the last
10 years has been primarily driven by trade destined for, or
originating from, Hawke’s Bay and its surrounding regions.
• Hawke’s Bay is an $8.1 billion
6
economy which has
experienced 4.4%
6
compound annual growth in its gross
regional product over the last 10 years. It produces some
of New Zealand’s main primary sector commodities, having
approximately 61%
7
of New Zealand’s total planted area of
pipfruit and approximately 8%
8
of New Zealand’s total planted
forest area.
• Hawke’s Bay’s growing profile as a tourism destination
has supported growth in cruise ship visits through the Port,
a trend that is expected to continue into the 2019/2020
cruise season.
For further information on Hawke’s Bay, see Section 2.4
(
Our region).
6.
StatsNZ; nominal gross regional product for the year ended March 2018; compound
annual growth of nominal gross regional product for the years ended March 2009 to
March 2018.
7.
Hawke’s Bay Regional Council - Regional Pest Management Plan 2018 - 2038.
8.
The Ministry of Primary Industries, Te Uru Rakau, the New Zealand Farm Forestry
Association and the New Zealand Forest Owners Association - National Exotic Forest
Description as at 1 April 2018.
2.3
KEY BUSINESS STRENGTHS
FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017FY2018
3,416
3,643
3,713
3,987
4,10 5
4,067
3,916
4,755
5,088
2,894
CAGR: 6.5%
6,000
4,000
2,000
5,000
3,000
1,000
0
Imports Exports
NAPIER PORT THROUGHPUT
FY2009 TO FY2018, 000 TONNES
SUPPORTIVE
REGIONAL ECONOMIC
GROWTH DRIVERS
2|
8%
OF NEW ZEALAND’S
TOTAL PLANTED
FOREST AREA
8
61%
OF NEW ZEALAND’S
TOTAL PLANTED
PIPFRUIT AREA
7
13
SECTION 2 / NAPIER PORT AND WHAT IT DOES

• We are primarily export focused (with exports making up 79%
of all cargo by weight processed through the Port in FY2018)
but imports also contribute to our diversified trade portfolio.
• A number of different revenue streams across container
services, bulk cargo, cruise and other income.
• Over 30 export and import commodity products are handled
through the Port.
For further information, see Section 2.6 (
Our operations).
NAPIER PORT EXPORT PRODUCT MIX
FY2018, BY WEIGHT
NAPIER PORT IMPORT PRODUCT MIX
FY2018, BY WEIGHT
LOGS
55%
WOODPULP
12%
TIMBER
7%
PIPFRUIT
7%
MEAT
5%
OTHER
14%
FERTILISER
34%
OIL PRODUCTS
26%
GENERAL CARGO
15%
FOODSTUFFS
10%
CEMENT
5%
OTHER
8%
DIVERSIFIED
TRADE PORTFOLIO
3|
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT

KEY BUSINESS STRENGTHS
• We have formed partnerships with a wide range of cargo
owner customers over many years, integrating ourselves into
their supply chains. These include providing port services
for over forty years to each of Pan Pac (a forestry products
business) and Ravensdown (a fertiliser business). For
examples of such partnerships, see Section 2.10 (
Strategic
case studies).
• We work hard to maintain relationships with a number of global
shipping lines in order to provide a range of options for our
cargo owner customers. We currently have ten international
container shipping lines operating through the Port, across
six scheduled weekly services. See Section 2.9 (
Industry
overview – Shipping line relationships
).
• We maintain collaborative relationships with our customers,
people, unions, local iwi and central and local government.
• We recognise and respect the importance of the local and
wider Hawke’s Bay community to us. We acknowledge:
–the need to generate trust and support in our operation of
the Port;
–the benefit our customers receive from their use of local
infrastructure, including roads; and
–our role in supporting Hawke’s Bay and its
surrounding regions.
• Napier Port has a sponsorship programme that supports
community initiatives, sporting events and environmental
projects, including the Napier Port Hawke’s Bay Primary
Sector Awards, the Napier Port Harbour to Hills multi-sport
event and the Waitangi-Lower Tu
-
taekuri Wetland.
For further information on our values and our engagement with the
Hawke’s Bay community, see Section 2.11 (
Culture of care).
4|
STRONG RELATIONSHIPS
WITH OUR CUSTOMERS,
PEOPLE AND COMMUNITY
2.3
15
SECTION 2 / NAPIER PORT AND WHAT IT DOES

WE MAINTAIN
COLLABORATIVE
RELATIONSHIPS
with our customers, people, unions,
local iwi and central and local government.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
16

2.3
KEY BUSINESS STRENGTHS
5|
6 WHARF EXPANSION
PROJECT
For further details in relation to
the 6 Wharf expansion project,
see Section 2.7 (6 Wharf
expansion project) and Section
8 (Risks to Napier Port’s
business and plans – 6 Wharf
construction risk).
• 6 Wharf is a long-term solution which will enable us to
capitalise on future growth opportunities and continue to
support our customers, and therefore Hawke’s Bay and its
surrounding regions.
• Benefits include reduced congestion, an ability to handle
larger vessels and growth in cruise ship demand, extending
the Port’s capacity to handle container vessels, an ability
to provide 24-hour berthing of larger container vessels and
increased operational agility and resilience.
• HEB, which is a member of the VINCI Group (as part of the
VINCI Construction International Network), has been engaged
as the main construction contractor so that the project can
commence shortly after completion of the Offer.
17
SECTION 2 / NAPIER PORT AND WHAT IT DOES

• Napier Port has delivered compound annual revenue and EBITDA growth of 8.1% and 8.7%
respectively, over the last ten years (FY2009 – FY2018).
• Forecast to deliver compound annual revenue growth of 5.7% from FY2018 – FY2020F and
consistent Pro forma EBITDA margins of approximately 40% in FY2019F and FY2020F.
• Forecast to deliver a gross dividend yield of between 4.0% and 4.6% in FY2020F.
For further information, see Section 6.2 (
Dividend policy) and Section 7 (Napier Port’s
financial information
).
NAPIER PORT REVENUE
FY2009 TO FY2018, $ MILLION
6|
STABLE
GROWTH
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009
$91.7
$45.5
$48.8
$54.1
$60.3
$62.1
$67. 0
$72.1
$72.7
$86.7
CAGR: 8.1%
NAPIER PORT PRO FORMA EBITDA
FY2016 TO FY2020F, $ MILLION AND % MARGIN
FY2020F
$40.9
39.9%
FY2019F
$39.7
40.7%
FY2018
$37. 2
40.5%
FY2017
$35.3
40.7%
FY2016
38.2%
$27. 8
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
18

OUR REGION
NAPIER
HASTINGS
WAIROA
GISBORNE
TAUPO
WELLINGTON
PALMERSTON
NORTH
WHANGANUI
NEW
PLYMOUTH
OHAKUNE
5
2
2
1
1
1
1
3
3
2
ROTORUA
HAMILTON
TAURANGA
AUCKLAND
ROADRAIL
RANGES
2.4
The Hawke’s Bay region is a major producer,
processor and exporter of primary products
including logs, forestry products, pipfruit,
vegetables, meat and wine. For the year ended
31 March 2018, primary produce represented
12.2%
9
of Hawke’s Bay gross regional product by
value, compared to the national average of 6.7%
9
.
19
SECTION 2 / NAPIER PORT AND WHAT IT DOES

9.
Infometrics, 2018 Annual Economic Profile, Hawke’s Bay; Year ended March 2018.
Primary produce defined as agriculture, forestry, fishing and mining.
10.
Ministry for Primary Industries, Te Uru Rakau, the New Zealand Farm Forestry
Association and the New Zealand Forest Owners Association - National Exotic Forest
Description as at 1 April 2018.
11.
Ministry of Transport (Freight Information Gathering System); 2018.
12.
Ministry for Primary Industries. Situation and outlook for primary industries, June 2019.
NAPIER PORT FORESTRY PRODUCT EXPORT COMPOSITION
FY2009 TO FY2018, 000 TONNES
Logs Woodpulp Sawn timber Woodchips Paper
FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017FY2018
1, 603
1, 74 2
1, 724
1, 966
2,10 6
1,950
2,001
2,442
2,996
1, 305
3,000
2,000
1,000
2,500
1,500
500
0
HAWKE’S BAY FORESTRY PLANTING
1990 TO 2018, HECTARES
199019921994199619982000200420082002200620102014201820122016
10,000
6,000
4,000
8,000
2,000
0
Source: Forme Forest Industry Consultants.
HAWKE’S BAY IS A KEY PLAYER IN
NEW ZEALAND’S FORESTRY INDUSTRY
• Hawke’s Bay has approximately 134,000 hectares
10
of planted
forests (approximately 8% of New Zealand’s total planted
forest area) and its forestry exports represent approximately
11%
11
of New Zealand’s total forestry exports.
• Forestry harvests in Hawke’s Bay have increased in volume
over recent years, and are expected to further increase
over approximately the next five years due to the significant
programme of tree planting carried out in the mid-1990s
coming to maturity. Trees (predominantly
pinus radiata) are
typically harvested 25 to 30 years after planting. The increased
volumes experienced in recent years are expected to reduce in
accordance with the planting and harvest profile after this next
five year period.
• Demand for log exports from New Zealand has grown
over recent years mainly due to growth in the Chinese
construction industry.
12
• The Port is conveniently located for both cargo owners and
shipping lines and is an export gateway for logs and forestry
products from Hawke’s Bay, as well as for some areas in the
surrounding regions.
• An increase in Hawke’s Bay forestry harvest volumes has
contributed to the growth in the volume of forestry products cargo
exported through the Port from approximately 1.3 million tonnes
in FY2009 to approximately 3.0 million tonnes in FY2018.
See Section 8 (
Risks to Napier Port’s business and plans –
Forestry sector risk).
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
20

HAWKE’S BAY IS NEW ZEALAND’S
LARGEST APPLE AND PEAR
(PIPFRUIT) PRODUCER
• Hawke’s Bay is New Zealand’s main pipfruit producing region,
with a total planted area of approximately 6,000 hectares
13
of
pipfruit, representing approximately 61% of New Zealand’s
total planted area of pipfruit.
13
• Apples are New Zealand’s third largest horticultural export by
value (following kiwifruit and wine).
14
• New Zealand apple orchards are yielding an average of
approximately 61 tonnes/hectare
14
, assisted by the adoption
of new growing strategies and technologies by local growers.
The global average yield for apple producing countries is
approximately 23 tonnes/hectare.
15
13.
Hawke’s Bay Regional Council - Regional Pest Management Plan 2018 - 2038.
14.
FreshFacts 2018, The New Zealand Institute for Plant & Food Research Ltd.
15.
FreshFacts 2018, The New Zealand Institute for Plant & Food Research Ltd. Global
average yield based upon 33 countries.
16.
Apples & Pears New Zealand.
NAPIER PORT PIPFRUIT EXPORTS
FY2009 TO FY2018, TEUs
• It is anticipated that approximately one million apple trees will
be planted in New Zealand in 2019, with at least two thirds of
those plantings in Hawke’s Bay.
16
• The Port is the most conveniently located export gateway for
Hawke’s Bay pipfruit, given the close proximity of Hawke’s
Bay’s orchards to the Port and the need to quickly export the
fruit following harvest.
• An increase in Hawke’s Bay pipfruit harvest volumes has
contributed to the growth in pipfruit cargo exported through
the Port from 17,368 TEUs in FY2009 to 23,917 TEUs
in FY2018.
• Napier Port has invested in purpose-built refrigerated
container stacking towers to increase on-Port capacity for
pipfruit and other perishable goods and to support product
quality requirements for those goods.
Section 8 (
Risks to Napier Port’s business and plans –
Biosecurity risk).
FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017FY2018
14,575
16,267
15 ,141
19,025
18,018
21,007
23,201
22,094
23,917
17,368
2.4
OUR REGION
21
SECTION 2 / NAPIER PORT AND WHAT IT DOES

61%
13
OF NEW ZEALAND’S
TOTAL PLANTED AREA
OF PIPFRUIT IS IN THE
HAWKE’S BAY REGION
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
22

OUR STRATEGY
2.5
OUR STRATEGY
TOGETHER WE BUILD A THRIVING REGION BY
CONNECTING OUR CUSTOMERS, PEOPLE AND
COMMUNITY TO THE WORLD
Our strategy will guide how we manage our assets (see Section 2.7
(
6 Wharf expansion project)), work with our customers to improve their
supply chains (see Section 2.10 (
Strategic case studies)) and engage
our people (see Section 2.11 (
Culture of care)).
FOCUS AREAS
OUR FOUNDATION
OUR PURPOSE
CUSTOMER
CONNECTION
HARNESS DATA
& TECHNOLOGY
NETWORKED
INFRASTRUCTURE
COLLABORATIVE
PARTNERSHIPS
CULTURE OF CARE
23
SECTION 2 / NAPIER PORT AND WHAT IT DOES

CUSTOMER CONNECTION
• Develop close customer relationships that help us
to identify opportunities to deliver innovative logistics
solutions and integrate us into our customer supply
chains, with our business model extending beyond the
Port gate.
• Use insights gained from these connections to inform our
investment decisions, both on and off the Port.
HARNESS DATA AND TECHNOLOGY
• Capture data from customer supply chains and operations
to deliver productivity gains for customers and Napier Port.
• Develop innovative technologies that create efficiencies
for our customers and our Port operations.
NETWORKED INFRASTRUCTURE
• Connect our customers’ cargo to market with an
established and growing infrastructure network, operating
as an integrated and intelligent system.
• Enhance our reach across our catchment area, and
provide opportunities to develop further customer
solutions, including through our off-Port sites, including
the Thames Street container depot and Whakatu
land holding.
COLLABORATIVE PARTNERSHIPS
• Work to develop collaborative partnerships with people
and organisations, particularly those within the Hawke’s
Bay region, with shared interests and aspirations to
support our efforts to build a thriving region.
• Support our local community and the environment.
OUR FOUNDATION
OUR FOCUS AREAS
CULTURE OF CARE
• Support our strong and resilient culture which encourages
care for our people, the local community and the
environment. This ‘Culture of Care’ is the foundation of
our strategy and is pivotal to achieving our goals. See
Section 2.11 (
Culture of care).
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
24

OUR OPERATIONS
CONTAINERS
• We handled over
260,000 TEUs in
FY2018, across a
diverse range of dry
and refrigerated cargo
and empty containers
• Exports represented
approximately 80%
17

of our container trade
(by TEU) in FY2018
We generate revenue by providing port and logistics services,
with core revenue streams arising from container services, bulk
cargo and cruise.
Napier Port’s on-site operations include marine, handling and
value-add services. Supporting our operations, we have a team
of engineers, electricians, carpenters and technicians that
maintain and service the Port’s infrastructure.
ON-SITE SERVICES
PORT ACTIVITIES
BULK CARGO
• We handled over three
million tonnes of bulk
cargo in FY2018
• Exports represented
78% of our bulk
cargo trade (by weight)
in FY2018
MARINE SERVICES
• Marine services include
pilotage (ships being
guided through the
channel by our pilots),
towage (manoeuvring
vessels by tugboat)
and berthage and
mooring services
• Marine services revenue
is based on a fixed all-in
fee depending on the
vessel’s length
CRUISE
• We welcomed 70
cruise ships and
over 115,000
cruise passengers
in the 2018 / 2019
cruise season
17.
Excluding empty and other
container movements.
2.6
25
SECTION 2 / NAPIER PORT AND WHAT IT DOES

HANDLING SERVICES
• We conduct handling services
for containers, which involve all
container movements between
the entrance gate and the vessel
• Handling services for bulk cargo
are predominantly conducted by
external service providers and
involve all cargo movements
between the entrance gate and
the vessel
• We contract with an external
stevedoring company, which
provides on-board stevedore
services (guiding and lashing
containers onto vessels)
VALUE-ADD SERVICES
We have implemented a range
of value-add services to grow
our service offering, integrate
us into the supply chains of
our customers and attract new
customers, in particular from
surrounding regions. These
services include Port Pack (an
on-site container packing and
unpacking facility operated by
Napier Port) and depot services
(surveying, cleaning, repairing,
pre-trip inspections and storage
of containers)
OTHER ON-SITE
SERVICES
Other services provided
on-site include the leasing
of four hectares of Port
space to bulk cargo owners
for storage purposes and the
provision of Port space for
external providers to offer
log fumigation services
(Napier Port is one of only
three ports in New Zealand
which offers this)
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
26

OUR OPERATIONS
CONTAINERS
EXPORT-DRIVEN DIVERSIFIED TRADE
Our container trade is predominantly export driven (accounting for
approximately 80%
18
of our container trade by TEUs in FY2018),
and consists of a diverse range of primary produce, including
forestry products, pipfruit and meat.
Our service offering includes marine, handling and value-add
services such as depot services, Port Pack and empty container
storage at the Thames Street container depot.
Approximately 40% of our exported containers by TEU are
refrigerated containers (reefers) carrying perishable primary
products. Reefer exports are high-value cargo to global shipping
lines, which assists in encouraging shipping lines to call at the Port.
A significant portion of containers imported through the Port
are empty containers required by regional exporters (constituting
approximately 75% of all TEU imported through the Port
in FY2018).
Increasing the proportion of imported TEUs containing goods
provides us with a potential future opportunity to grow our position
as an import gateway, improve our revenue and provide two-way
income for shipping lines.
Our ability to service larger container vessels is currently
constrained at the Port. The planned new 6 Wharf will extend
the Port’s container vessel operating capability and capacity. For
further information in relation to the 6 Wharf expansion project, see
Section 2.7 (
6 Wharf expansion project) and Section 8 (Risks to
Napier Port’s business and plans – 6 Wharf construction risk).
CONTAINERS – EXPORT PRODUCT MIX
FY2018, BY TEU
18
CONTAINERS – EXPORT DESTINATION MIX
FY2018, BY TEU
18
WOODPULP
22%
TIMBER
20%
PIPFRUIT
19%
MEAT
12%
CANNED / OTHER FOOD
8%
FRESH PRODUCE
6%
OTHER
13%
CHINA
34%
ASIA (EXCL. CHINA)
29%
EUROPE
13%
AUSTRALIA / PACIFIC
11%
USA
9%
OTHER
4%
CONTAINERS – IMPORT PRODUCT MIX
FY2018, BY TEU
18
GENERAL CARGO
47%
CANNED / OTHER FOOD
17%
FROZEN FOODSTUFFS
9%
PAPER
9%
MANUFACTURED ITEMS
5%
FERTILISER
4%
OTHER
7%
18.
Excluding empty and other container movements.
2.6
27
SECTION 2 / NAPIER PORT AND WHAT IT DOES

CONTAINER VOLUMES
FY2009 TO FY2020F, 000 TEUs
FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017FY2020FFY2019FFY2018
272
269
266
167
181
18 8
204
206
220
256
257
288
300
200
100
250
150
50
0
Note: Full container includes DLRs; Increase in FY2017 container volumes partially due to the impact of the Kaikoura earthquake on CentrePort Wellington.
Full Empty
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
28

2.6
OUR OPERATIONS
BULK CARGO
LOGS DRIVE CARGO VOLUMES
The principal bulk cargo exports through the Port are log and
forestry products, while the principal bulk cargo imports are
fertiliser, petrochemicals and cement.
We maintain close relationships with cargo owners, including three
forestry estates, eight logging exporters and more than 10 general
cargo producers and importers.
Our service offering to bulk cargo owners includes marine services,
handling services and log fumigation facilities with some services
BULK CARGO – EXPORT PRODUCT MIX
FY2018, BY WEIGHT
BULK CARGO – EXPORT DESTINATION MIX
2018, BY WEIGHT
19
BULK CARGO – IMPORT PRODUCT MIX
FY2018, BY WEIGHT
LOGS
93%
WOODPULP
4%
TIMBER
1%
OTHER
3%
CHINA
85%
INDIA
5%
JAPAN
4%
SOUTH KOREA
2%
OTHER
4%
FERTILISER
49%
OIL PRODUCTS
41%
CEMENT
7%
OTHER
4%
provided by third-party providers. In addition, we lease sheds, silos
and tanks (or the ground on which such structures are affixed) to
bulk cargo owners.
Logs account for a significant portion of our total bulk cargo
throughput (72% by weight in FY2018). Logs represent an
opportunity for increased trade for us over approximately the next
five to ten years as forests planted in the mid-1990s in Hawke’s
Bay and surrounding regions mature for harvest and potential
export as they approach 25-30 years since planting.
19.
Ministry of Transport (Freight Information Gathering System), 2018.
29
SECTION 2 / NAPIER PORT AND WHAT IT DOES

BULK CARGO VOLUMES
FY2009 TO FY2020F, 000 TONNES
FY2009FY2010FY2011FY2012FY2013FY2014FY2015FY2016FY2017FY2020FFY2019FFY2018
3,317
3,380
3,071
1, 696
2,072
2,240
2,15 6
2,370
2,445
2,185
2,025
2,506
3,500
2,500
1,500
500
3,000
2,000
1,000
0
Logs Other
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
30

CRUISE
HAWKE’S BAY IS A POPULAR
TOURIST DESTINATION
Hawke’s Bay offers a wide range of tourist attractions including
vineyards and wineries, golf courses, festivals, museums, and
restaurants as well as Napier’s renowned Art Deco architecture.
We are the gateway to the Hawke’s Bay region for the growing
number of cruise visits and we are one of the key ports of
call for cruise ships in New Zealand. Cruise tourism has
grown in popularity over recent years. Globally, the number of
people taking cruises increased from 24.7 million in the year
ended 31 December 2016 to 28.5 million
20
in the year ended
31 December 2018 (7.7% CAGR). The number of cruise visitors
to New Zealand has grown from approximately 237,000 in the
year ended 30 June 2016 to approximately 259,000 passengers
in the year ended 30 June 2018 (4.6%
21
CAGR).
20.
Cruise Industry Ocean Source Market Report: Australia 2016 & New Zealand 2018.
21.
Stats NZ; Unique cruise passengers to New Zealand (number of passengers), 30 June 2016 to 30 June 2018.
In the 2018/2019 cruise season, we hosted over 115,000
passengers on 70 cruise ship calls, including six visits from
Ovation of the Seas (a 348-metre cruise ship which can hold
approximately 4,900 passengers), the largest cruise ship visiting
New Zealand waters.
Based on advanced cruise ship bookings, the number of cruise
ship calls to the Port is forecast to increase to approximately 87
for the 2019/2020 cruise season. Cruise lines typically book up to
two years in advance, providing visibility for capacity planning and
financial forecasting purposes. Our ability to service the growing
demand for cruise ship visits is currently constrained by congestion
and 6 Wharf will relieve some of this congestion (see Section 2.7
(
6 Wharf expansion project)).
CRUISE SHIP VISITS
2013/2014 SEASON TO 2019/2020F SEASON, NUMBER OF CRUISE SHIP VISITS
2013/2014
season
2014/2015
season
2015/2016
season
2016/2017
season
2017/2018
season
2018/2019
season
2019/2020F
season
56
45
54
57
70
87
47
OUR OPERATIONS
2.6
31
SECTION 2 / NAPIER PORT AND WHAT IT DOES

OFF-SITE SERVICES
We have developed certain off-site services and opportunities to
develop further customer solutions:
• 11.6 hectares of off-site container storage capacity at nearby
Thames Street container depot.
• 12.3 hectares of off-Port land holding in nearby Whakatu
held for the purposes of potential development into an off-site
port facility, providing us with an opportunity to expand our
storage capacity.
• a 1.9 hectare container yard and a warehousing facility at the
Manawatu Inland Port which is connected by rail and road
across the lower North Island through to the Port.
22.
Information as at 31 March 2019.
EMPLOYEES
22
Labour represents a significant cost in our business, making up
approximately 50% of operating expenses for FY2018.
We employ over 280 people of which approximately 76% are
directly involved in container, bulk cargo and cruise operations
and handling. Approximately 30% of our employees have been
with Napier Port for over 10 years.
Approximately 70% of our employees are party to collective
employment agreements across three different unions. The
most significant union by number of employees is the Rail and
Maritime Transport Union (RMTU) (covering 156 employees).
Napier Port will be required to negotiate a new collective
employment agreement with the RMTU, with the current
agreement expiring on 30 September 2019.
We have not experienced any industrial action for more than
10 years, which we believe is a reflection of the importance
we place on healthy engagement with our people and the
collaborative relationships we endeavour to maintain with
the unions represented at Napier Port. Napier Port has a
predominantly unionised workforce, whose unions and their
members are afforded a number of rights and obligations under
the Employment Relations Act 2000.
32
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT

6 WHARF
EXPANSION
PROJECT
The 6 Wharf expansion project will enable us to
address current operational constraints, capitalise
on future growth opportunities and continue to
support our customers, and therefore Hawke’s
Bay and its surrounding regions. The project is
planned to commence at the end of 2019 and, on
the basis of this commencement date, is expected
to be completed in 2022. There are risks associated
with the 6 Wharf expansion project – see Section 8
(
Risks to Napier Port’s business and plans –
6 Wharf construction risk).
6 Wharf will be a multi-purpose 350 metre length wharf, planned
to be located along the northern face of the existing container
terminal. The 6 Wharf expansion project includes a dredging
programme which will create a new vessel turning area. The
project has received all resource consents expected to be required,
with other construction related consents such as building consents
still to be obtained.
The key operational benefits of the 6 Wharf expansion
project include:
• Reduced congestion: 6 Wharf will improve operating efficiency
by reducing secondary vessel movements (temporarily moving
vessels off wharves to accommodate other vessels) by an
estimated 100 movements per year
• Ability to handle larger vessels: 6 Wharf will be able to handle
container ships up to 320 metres in length and cruise ships up
to 360 metres in length
• Extending the Port’s container vessel capacity
• Allowing berthing for larger container vessels 24-hours per day
• Operational agility: 6 Wharf will be used for both container and
cruise ships, and will be capable of supporting twin lift gantry
cranes if required in the future
• Operational resilience: 6 Wharf’s design improves the Port’s
potential resilience to a significant seismic event
There will be an impact on our operations during the period that
6 Wharf is under construction, principally through the reduction
of the operational area for the existing container terminal.
We are managing this risk through the development of detailed
plans for capacity management and expected traffic movements,
health and safety management planning and through the ability
in the Construction Contract to prioritise shipping operations by
temporarily suspending construction works. To create more space
at our main port site we are planning to move components of the
empty container depot service operation to our Thames Street site.
However, there are still risks that 6 Wharf expansion project may
have to our operations – see Section 8 (
Risks to Napier Port’s
business and plans – 6 Wharf construction risk
).
HEB has been engaged as the main construction contractor and
Beca Group has been engaged to provide design and engineering
services. HEB has been engaged pursuant to the binding Letter
Agreement, which entitles Napier Port to require HEB to execute
the Construction Contract within a specified timeframe and
then commence carrying out the contract works under and in
accordance with the Construction Contract. The Letter Agreement
sets out the contract price for the construction, dredging and
related works. The contract price is subject to finalisation based
on certain fuel price movements, currency fluctuations and steel
pricing as well as agreed changes arising from value engineering
undertaken in accordance with the Letter Agreement. Once the
Construction Contract is executed, the contract price is fixed
other than in respect of certain measure and value items and also
subject to cost fluctuation for fuel pricing (unless Napier Port
elects to supply the fuel). A more detailed summary of the Letter
Agreement and the Construction Contract is available on the Offer
Register – see section 3.4 (
Material contracts – Summary of Letter
Agreement and Construction Contract
) of the document titled
“Other material information”.
3 WHARF
2 WHARF
1 WHARF
5 WHARF
6 WHARF
4 WHARF
2022
TARGET
COMPLETION
DATE
2.7
33
SECTION 2 / NAPIER PORT AND WHAT IT DOES

CAPITAL
MANAGEMENT
Napier Port’s board has determined to target a ratio of Net Debt to
EBITDA in the range of 2.0x – 3.0x over the long term. The Board
has determined that targeting a ratio of Net Debt to EBITDA of no
greater than 3.5x is appropriate through the 6 Wharf construction
period, with the expectation that Napier Port’s Net Debt to
EBITDA ratio will be managed to within its long-term target range
over time, following completion of 6 Wharf.
Immediately after completion of the Offer, Napier Port is expected
to have cash of approximately $22 million and $180 million
available under new debt facilities. This cash and the funds
available under the debt facilities are intended to be applied
towards costs associated with the 6 Wharf expansion project and
general corporate purposes. The Board views that, immediately
following the Offer, Napier Port will have sufficient balance sheet
capacity to fund the expected construction costs of 6 Wharf and to
pay dividends from Free Cash Flow during the 6 Wharf investment
and construction period and beyond. For a description of our
dividend policy, see Section 6.2 (
Dividend policy).
The financial covenants applicable to the new debt facilities include
a limit of Net Debt to EBITDA ratio of 4.5x (1.0 x greater than
the Board’s targeted level). The Board does not expect to need to
exceed its targeted level of 3.5x during the 6 Wharf construction
period. However, there are risks associated with Napier Port’s
operations, specifically project execution and operational risks
associated with the 6 Wharf expansion project, which could impact
Napier Port’s targeted Net Debt to EBITDA ratio. These risks are
outlined in Section 8 (
Risks to Napier Port’s business and plans).
The Board has considered these risks when establishing Napier
Port’s capital management and dividend policies.
The Board will review its debt facility limits regularly to ensure it
has sufficient flexibility to enable Napier Port to meet its ongoing
capital and general corporate requirements.
While Napier Port will be in a net cash position immediately
following the Offer, the Board intends to manage interest costs
and the risk of volatility as it draws on its banking facility through
an appropriate hedging policy.
The 6 Wharf expansion project is estimated to cost
$173-190 million, excluding capitalised interest and
overheads. The expected project cost includes the
costs provided for under the Construction Contract with
HEB (approximately $147 million), other costs directly
associated with the project (for example, mooring
system procurement, engineering, project management
and environmental) and an estimate of specific and
overall project contingencies. The investment meets
Napier Port’s internal long-term return thresholds.
The net proceeds from the Offer received by Napier
Port will be used to pay down existing debt and provide
capital structure capacity to fund the 6 Wharf expansion
project through Napier Port’s cash on balance sheet
and new debt facilities (see Section 2.8 (
Capital
management
) and Section 3 (Purpose of the Offer).
$173M –
$190M
ESTIMATED
COST
350
METRES
LENGTH
2.8
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
34

INDUSTRY
OVERVIEW
New Zealand has a long-standing history as a trading nation with
$82.3 billion
23
in exports and $80.8 billion
23
in imports in the
year ended 31 December 2018. The primary sector dominates
New Zealand’s export profile, making up approximately 75%
24
of
sea exports by weight for the year ended 31 December 2018.
New Zealand’s exports have grown by 7.7% per annum by
value from 31 December 2016 to 31 December 2018
25
while
New Zealand GDP has increased by 5.9% per annum by value
over the same period
26
.
International trade is supported by New Zealand’s free trade
agreements with Australia, China and several other Asian
countries. In addition, the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership has increased
New Zealand’s connectivity with Australia, Brunei, Canada,
Chile, Japan, Malaysia, Mexico, Peru, Singapore and Vietnam.
23.
StatsNZ; Goods and services trade (NZ$ billions), year ended December 2018.
24.
Ministry of Transport (Freight Information Gathering System), 2018.
25.
StatsNZ; Goods and services trade (NZ$ billions), 31 December 2016 to 31 December 2018.
26.
StatsNZ; Gross Domestic Product (NZ$ billions), 31 December 2016 to 31 December 2018 (nominal values used).
Sea freight is New Zealand’s main international trade
transportation method, representing over 99%
24
of total overseas
cargo movements (by weight) for the year ended 31 December
2018. New Zealand’s national sea freight network includes 13
commercial ports, seven of which are located in the North Island
and six of which are located in the South Island.
NEW ZEALAND SEA EXPORTS MIX
2018, BY WEIGHT
24
NEW ZEALAND SEA EXPORTS DESTINATIONS
2018, BY WEIGHT
24
LOGS
50%
WOOD & PAPER PRODUCTS
8%
DAIRY
7%
VEGES, FRUIT, FOODSTUFFS
7%
COAL, OIL & GAS
5%
CHEMICALS, PLASTICS, RUBBER
5%
MEAT
3%
OTHER
15%
CHINA
53%
REST OF ASIA
31%
AUSTRALIA / PACIFIC
8%
CANADA / USA
2%
EUROPE
2%
OTHER
3%
2.9
35
SECTION 2 / NAPIER PORT AND WHAT IT DOES

NEW ZEALAND PORT LOCATIONS
CENTREPORT WELLINGTON
PORT OF TAURANGA
PRIMEPORT
TIMARU
PORT OTAGO
SOUTH PORT NZ
LY T T E LTO N P O R T
OF CHRISTCHURCH
PORT NELSON
PORT MARLBOROUGH
PORT TARANAKI
PORTS OF AUCKLAND
EASTLAND PORT
NORTHPORT
HAWKE’S BAY REGION
KEY NEW ZEALAND PORT STATISTICS FOR
2018 (RANKED BY CONTAINER TEU
S
)
Port Container
TEUs (000s)
Bulk cargo
tonnes (millions)
3
Port of Tauranga1,18211.4
Ports of Auckland9746.8
Lyttelton Port
of Christchurch
4255.8
Napier Port2663.1
Port Otago2051.7
Port Nelson1223.6
CentrePort Wellington851.6
PrimePort Timaru841.4
South Port NZ392.7
Port Taranaki0
1
5.2
Port Marlborough0
1
0.8
Northport–
2
–
2
Eastland Port–
2
–
2
Source: Deloitte Freight Yearbook 2019
1.
Port Taranaki and Port Marlborough do not have container operations.
2.
Information not available in Deloitte Freight Yearbook 2019.
3.
Bulk cargo tonnes does not include non-bulk cargo.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
36

INDUSTRY OVERVIEW
Further information on Napier Port’s regulatory environment is
available on the Offer Register in the document titled “Other
Material Information”.
SUPPLY CHAIN
Ports are subject to a number of supply chain risks that are largely
beyond their control. The cargo coming in and out of the Port
arrives and leaves by road, rail and sea. Each of those connecting
transport routes could be subject to disruptions, such as a
blockage or shipping incident in the shipping channel, or landslides
affecting the road or rail links. To reduce the impact of these
potential disruptions, we maintain strong relationships with road
and rail transport network operators and invest in agile equipment
such as mobile container cranes, which can move container
handling operations to another wharf in the case of disruption.
SHIPPING LINE RELATIONSHIPS
Relationships with shipping lines are an important attribute of a port
business. We arrange for ship visits directly with container shipping
lines and cruise lines. Bulk cargo vessels are generally contracted
or chartered directly by the cargo owner.
We currently have ten international container shipping line
relationships, including with Maersk/Hamburg Sud, MSC,
COSCO, OOCL, PIL, CMA–CGM, ANL, APL, ONE (Ocean
Network Express) and Hapag Lloyd. Those ten shipping lines
account for six scheduled services to the Port each week.
New Zealand ports are impacted by a number of key trends in the
global shipping industry, including:
• larger ships being manufactured for global container lines with
larger tonnage vessels being cascaded into smaller trade lanes
such as New Zealand.
• shipping lines consolidating and forming alliances – the
three major alliances (2M, Ocean Alliance and THE
Alliance) controlling approximately 80%
27
of global container
ship capacity.
• varying shipping rates and fuel prices influencing the type
and frequency of shipping services visiting New Zealand, the
economics of various import and export goods and the speed
with which goods are shipped to market (with slow steaming
saving fuel costs for shipping operators).
REGULATION
The Port Companies Act and the Waterfront Industry Reform
Act 1989 vested New Zealand’s ports’ social and environmental
responsibilities to territorial authorities in the late 1980’s. Ports
in New Zealand benefit from a stable regulatory environment and
are not subject to price or quality regulation. The New Zealand
Commerce Commission can conduct competition studies and
investigate whether port services should be subject to economic
regulation under the Commerce Act 1986.
The Commerce Commission noted, in a release made on
18 December 2018 associated with the publication of its annual
Consumer Issues Report, that it had received complaints regarding
regional ports, primarily relating to the conduct of ports in
competitive markets for the supply of services, and that it will be
maintaining a close watch on the sector over the next year. Napier
Port has not been contacted by the Commerce Commission in
relation to this matter.
2.9
27.
Deloitte Freight Yearbook 2019.
37
SECTION 2 / NAPIER PORT AND WHAT IT DOES

STRATEGIC CASE STUDIES
2.10
CARGO OWNER RELATIONSHIPS
Our close and collaborative relationships with our largest customers provide a blueprint
for how our strategies and plans are implemented across our full network of customers.
Examples of our cargo owner relationships within that network are described below.
Pipfruit exporters
We work closely with pipfruit exporters to
understand their businesses and requirements
to quickly deliver their high value, perishable
products to market.
In 2015, we opened the Thames Street
container depot to support the delivery of
shipping containers ahead of the peak pipfruit
export season.
We have also invested in purpose-built
refrigerated container stacking towers to
boost on-Port capacity and support product
quality requirements.
We extend our opening hours and use a vehicle
booking and a traffic management system
to manage on-Port traffic during the peak
pipfruit season.
We have developed a container stowage
planning application which is used to manage
the movement of containers from our container
terminal onto the ship, in order to meet shipping
customers’ stowage plans and relevant cargo
product requirements.
Big Save Furniture
We have worked with Big Save Furniture
retail chain, to import containers of furniture
and homewares via the Port. As a result, Big
Save has reduced its import costs by taking
advantage of the shipping lines’ desire to bring
full containers into the Port (rather than the
empty containers required to supply the region’s
export demand).
Napier Port and Big Save work collaboratively to
support and expand imports into Hawke’s Bay
via the Port. This includes working with local
business associations and with local government
on regional transport and town planning activities
to attract other importers to the Port.
Pan Pac Forest Products Limited
For more than 45 years, we have worked closely
with Pan Pac to export products including wood
pulp, lumber and logs.
Pan Pac is a major customer of Port Pack and
leases an on-Port shed for the storage of wood
pulp ahead of shipping.
Our expertise in handling forestry products
supports the needs of Pan Pac and other
forestry sector companies.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
38

CULTURE OF CARE
2.11
HEALTH AND SAFETY LEADERSHIP
We are committed to ensuring the safety of our people
and others that visit and work at Napier Port and our
sites. Robust health and safety practices are embedded
into our daily operations. Our health and safety practices
were recognised at the 2018 New Zealand Workplace
Health & Safety Awards. Our introduction of ‘pre-
vessel meetings’ won the IMPAC Best Collaboration
Between PCBUs (Persons Conducting a Business or
Undertaking) award. The meetings are an example of
the way we seek to establish collaborative relationships
with all organisations working on the Port. They bring
together all companies involved in the discharging and
loading of an incoming ship to discuss conditions and
agree protocols for the ship’s visit. In the first year
following the introduction of these meetings, log-related
vehicle accidents at the Port reduced by 80%.
COLLABORATING WITH OUR
COMMUNITY
Napier Port’s collaborative approach extends
to the community. We engaged with more than
2,000 locals on the proposed 6 Wharf design
before applying for resource consent. Now that
such consent has been granted, we are working
with local hapu and iwi organisations on a Cultural
Marine Health Programme and recreational and
commercial fishers to minimise any impacts that
construction of 6 Wharf may have on fish stocks.
The studies and monitoring we have conducted in
connection with 6 Wharf are now publicly available
and provide a comprehensive local environmental
data set which we believe will assist us and the
Hawke’s Bay region in appropriately managing
Hawke’s Bay’s marine environment.
Our award-winning ‘culture of care’ promotes safety, resilience, and
innovation. These values are at the heart of Napier Port. We focus on
meaningful engagement with our people and the broader community,
treating them well and taking safety seriously.
Our people repay us with their dedication and commitment to our customers and the Hawke’s
Bay region. Examples of this culture in action and how it delivers value to Napier Port are below.
39
SECTION 2 / NAPIER PORT AND WHAT IT DOES

RESILIENT
CULTURE AND
COMMITTED PEOPLE
Our people demonstrated their
commitment to Napier Port following
the November 2016 Kaikoura
earthquake. The impact to Wellington’s
container terminal caused by the
earthquake resulted in us handling an
increased number of TEUs. The Port
achieved record container throughput
in FY2017 through the support of our
people without an increase in health
and safety related incidents. We
believe our success during this period,
in significant measure, resulted from
our focus on our engagement with and
the development of our workforce.
ENVIRONMENTAL,
SOCIAL
AND GOVERNANCE
Napier Port is committed to
implementing a comprehensive
environmental, social and
governance (ESG) strategy.
We have begun preparatory
work and we are working
towards beginning to implement
this strategy in FY2020.
INNOVATIVE SOLUTIONS
Napier Port’s crane training simulator represents
a convergence of our safety culture and
the determination of our people to develop
innovative solutions. The simulator, which we
developed with partners and opened in 2015,
allows operators to train within different types
of environment (e.g., weather, location, time of
day and type of ship) for a role that demands
mastery of a large, complex and high-value
machine within a safety-critical environment. It
is used as a recruitment tool to test candidate
crane operators, while existing crane operators
use the simulator to refine their skills. It is now
also used by other New Zealand and offshore
ports and several port-related companies for
training and pre-employment assessment.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
40

DIRECTORS AND
SENIOR MANAGERS
BOARD OF DIRECTORS
Napier Port has an experienced Board with a diverse range of skills,
including industry and business knowledge, financial management
and corporate governance experience. The board of directors of
Napier Port Holdings comprises an independent Chair, five other
independent Directors and two other Directors. The board of directors
of Port of Napier comprises the same directors as the board of Napier
Port Holdings.
FROM TOP LEFT:
ALASDAIR MACLEOD
JOHN HARVEY
RICK BARKER
STEPHEN MOIR
WENDIE HARVEY
DIANA PUKETAPU
VINCENT TREMAINE
BLAIR O’KEEFFE
2.12
41
SECTION 2 / NAPIER PORT AND WHAT IT DOES

ALASDAIR MACLEOD
Independent Director and Chair
HND (Civil), MBA, MInstD
Alasdair joined the Napier Port board in
April 2014 and was appointed Chair in
December 2014. Originally a Civil Engineer,
Alasdair has a broad range of experience
across the energy, infrastructure,
technology and primary sectors. As a
Partner in Deloitte for 12 years, Alasdair led
the teams that developed New Zealand’s
Aquaculture Strategy, Horticulture Strategy,
and Red Meat Sector Strategy. Alasdair
is Chair of technology businesses Optimal
Workshop Limited and SilverStripe Limited,
and the independent member of the
Board Appointments Committee for IHC
New Zealand.
Alasdair is Chair of the Hawke’s Bay
chapter of ExportNZ (a division of
BusinessNZ) and was involved in authoring
the Hawke’s Bay Regional Economic
Development Strategy –
Matariki.
STEPHEN MOIR
Independent Director
Stephen Moir was appointed as a director
of Napier Port on 19 December 2016 and
chair’s the Audit and Risk Committee.
Stephen brings an extensive background
in institutional banking and financial
markets, having held senior roles at
Westpac Institutional Bank, Credit Suisse
(Singapore), and Citibank (Singapore,
Thailand and Australia).
Stephen is a director of The Guardians of
the New Zealand Superannuation Fund and
a director of the Todd Family Office. He
was previously a non-executive director on
the BNZ board, and chaired both BNZ Life
Insurance Ltd and BNZ Insurance Services
Ltd, as well as the advisory board to the
Victoria University Chair of Business in Asia.
Stephen was previously a member of the
NZ Markets Disciplinary Tribunal.
JOHN HARVEY
Independent Director
BCom, FCA and CFInstD
John joined the Napier Port board on
7 February 2019. John has a background
in financial services, including NZX
listings, acquisitions, mergers and financial
reporting, with over 35 years’ professional
experience as a chartered accountant. He
was a partner at PricewaterhouseCoopers
for 23 years, including eight years as
Auckland Managing Partner.
John is a Chartered Fellow of the Institute
of Directors in New Zealand (Inc.) and is
currently a director of Heartland Bank,
Investore Property, Stride Property Group
and Kathmandu Holdings. He previously
served on the board of Port Otago for nine
years, and has been a director of Ballance
Agri-Nutrients and APN News and Media.
WENDIE HARVEY
Independent Director
LLB, MInstD
Wendie joined the Napier Port board
on 16 December 2013, and has over
25 years’ experience as a lawyer, executive
manager and business consultant.
Wendie is currently a director of Hawke’s
Bay Airport, Hawkes Bay Construction
Limited (Chair), Centralines Limited, ETCO
(Electrical Training Company Limited) and
Aurora Energy Limited. Wendie also serves
on the Eastern Institute of Technology
Council, the Board of Fire and Emergency
New Zealand and as a Commissioner on
the New Zealand Gambling Commission.
She has previously served on the board of
Quality Roading Services (Wairoa) Limited,
Hohepa Homes National Trust Board and
the Hawke’s Bay Rescue Helicopter Trust.
VINCENT TREMAINE
Independent Director
BBus., FCPA, FAICD, GAIST
Vincent joined the Napier Port board
on 7 February 2019. Vincent has broad
experience in the port sector, having
served for 16 years as CEO of Flinders
Ports Holdings, which owns seven South
Australian ports, the Adelaide Container
Terminal and Flinders Logistics.
Vincent is currently Chair of Riverland
Holdings and a director of South Australia’s
Statewide Super. He has served as Chair
of Ports Australia and the South Australian
Chamber of Commerce and Industry, and
as a director of Australia’s National Heavy
Vehicle Regulator. Vincent also worked for
Toll Ports and Resources, managing the
Ports of Geelong and Hastings in Victoria.
HON RICK BARKER
Director
MPP
Rick joined the Napier Port board on
27 June 2019. Rick serves as the Deputy
Chair of the Hawke’s Bay Regional
Council, having been elected as a councillor
for Hastings in October 2013. He was
previously a Member of Parliament for
18 years, serving six years as a Cabinet
Minister and also acting as Assistant
Speaker to the House during his tenure.
Rick is currently working on behalf of the
Minister for Treaty of Waitangi Negotiations
on a number of negotiations to settle
historic grievances against the Crown.
Rick completed a Master’s Degree in
Public Policy 2012.
DIANA PUKETAPU
Independent Director
FCA, CMInstD
Diana joined the Napier Port board on
13 December 2017, and has a background
in commercial, iwi and sports governance.
Diana is a director of Nga
-
ti Porou Holding
Company, Ta
-
maki Redevelopment
Company, Manawanui Support Limited,
New Zealand Olympic Committee and NZ
Cricket. She has previously served as a
director of Auckland Council Investments
Limited and the World Masters Games
2017, and was formerly the Chief Financial
Officer of Nga
-
ti Wha
-
tua O
-
ra
-
kei Corporate.
Diana is a Fellow Chartered Accountant
and a Chartered Member of the Institute
of Directors.
BLAIR O’KEEFFE
Director
BBS Honours, MInstD
Blair was appointed as a director of
Napier Port on 27 June 2019. Blair is
a professional company director, with
governance experience in local and central
government, and NZX listed companies. He
is currently an independent director of NZX
listed Z Energy. He is also the former Chair
of crown entity Maritime New Zealand, was
previously Chief Executive of CentrePort, a
New Zealand port company, for seven years
and is currently Chief Executive of HBRIC.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
42

FROM TOP LEFT:
TODD DAWSON, KRISTEN LIE, DAVID KRIEL,
VIV BULL, WARREN YOUNG, MICHEL DE VOS,
BRUCE LOCHHEAD, ANDREA MANLEY, ADAM HARVEY
DIRECTORS AND
SENIOR MANAGERS
SENIOR MANAGERS
2.12
43
SECTION 2 / NAPIER PORT AND WHAT IT DOES

TODD DAWSON
Chief Executive Officer
BSC, PGDipBus, MInstD, PMP
Todd joined Napier Port as Chief Executive
Officer in January 2018, bringing broad
commercial experience across the transport
and logistics sectors. Prior to Napier Port,
Todd led strategic partnerships and new
ventures at Kotahi Logistics, working on the
introduction of big ships to New Zealand
and intermodal freight hub joint ventures.
He has over 20 years’ experience, having
worked on international projects including
the transformation of UK supermarket
Sainsbury’s supply chain. He has previously
held senior roles at IBM, Toll New Zealand
and Mainfreight.
Todd holds a Bachelor of Science and a
Post Graduate Diploma of Business in
Operations Management from Auckland
University. He is a member of the Institute
of Directors in New Zealand and is a Chair
of Napier Port’s intermodal joint venture at
Longburn and director of Total Advantage
Group in Auckland.
VIV BULL
General Manager – Culture & Community
Viv joined Napier Port in 2011 and leads
our human resources, health and safety and
communications functions. Her career has
included senior management roles with the
Department of Corrections, KPMG and the
State Services Commission.
Viv is Deputy Chair of the Hawke’s
Bay Chamber of Commerce and is an
independent member of the audit and risk
committee of the Heretaunga Tamatea
Settlement Trust.
BRUCE LOCHHEAD
Capability & Cruise Manager
Bruce is responsible for the development
of our cruise operation and will oversee the
future integration of major infrastructure
investments. Bruce has more than 30
years’ experience in the shipping sector and
prior to joining Napier Port in 2005, worked
for P&O Nedlloyd. Bruce sits on the board
of the New Zealand Cruise Association.
KRISTEN LIE
Chief Financial Officer
BBS, CA, CFA, CMInstD
Kristen joined Napier Port as Chief Financial
Officer in September 2015. Kristen has
more than 25 years’ financial experience
and strong commercial and strategic
planning skills, returning to Hawke’s Bay
after 18 years working across London,
Moscow and Oslo. His previous roles have
been with the London-based office of listed
shopping centre group Westfield, London-
based property investment company
Grosvenor, as well as Ernst & Young and
PricewaterhouseCoopers.
Kristen holds a Bachelor of Business
Studies from Massey University and is a
Chartered Accountant, Chartered Financial
Analyst and is a Chartered Member of the
Institute of Directors in New Zealand.
WARREN YOUNG
General Manager – Container Operations
Warren joined Napier Port in 1998 and
is responsible for our container terminal,
the Port Pack operation, our empty depot
network and Plant Services. Warren has
previously served as Napier Port’s Finance
Manager and as manager of Port Pack.
Prior to joining Napier Port, Warren was
Chief Financial Officer at Montana Wines.
ANDREA MANLEY
General Manager – Strategy & Innovation
Andrea joined Napier Port in 2019. She is
responsible for leading strategic planning
and performance, identifying growth
opportunities, implementing new strategic
initiatives and developing digital solutions.
Andrea has previously worked with Kotahi
Logistics, Goodman Fielder, Alcatel-Lucent,
Brightstar, Vodafone and IBM.
DAVID KRIEL
General Manager – Commercial
David joined Napier Port in 2018. David
has a background in transport and logistics
and worked with Lodestar and Oji Fibre
Solutions from 2005 to 2018. David is
a Fellow of the Chartered Institute of
Transport and Logistics. He is a member
of the East Asian Society for Transport
Studies and the Humanitarian Logistics
Association. David sits on the board of
Business Hawke’s Bay as the Napier Port
representative.
MICHEL DE VOS
General Manager – Infrastructure Services
Michel joined Napier Port in April 2014.
Michel is responsible for the maintenance,
planning and construction of all port
infrastructure, as well as overseeing
our environmental management
programme. Michel has a background
in marine engineering, having held roles
with Queensland’s Gladstone Ports
Corporation and Fremantle Ports in Perth,
as well as working with multi-national
dredging and maritime construction firms
on projects throughout Asia.
ADAM HARVEY
General Manager
– Marine & Cargo Operations
Adam joined Napier Port in 2010 and
is responsible for our log, logistics and
planning, security and shipping operations.
He has a background in human resources.
Prior to holding his current position Adam
was the Container Terminal Manager at
Napier Port. Adam sits on the executive of
the Port Industry Association.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
44

SUBSTANTIAL SHAREHOLDERS
AND RELEVANT INTERESTS HELD BY
DIRECTORS AND SENIOR MANAGERS
EXISTING SUBSTANTIAL SHAREHOLDINGS
As at the date of this PDS, the following Shareholder has a relevant
interest in 5% or more of the Shares in Napier Port Holdings:
Shareholder and nature of
relevant interest
Number
of Shares
% of
Shares
HBRIC is the registered holder and
beneficial owner of all of the Shares
in Napier Port Holdings. All of the
shares in HBRIC are owned by the
Council. The Council has the same
relevant interest as HBRIC. The
Share held by HBRIC was issued
to HBRIC upon incorporation
of Napier Port Holdings on
12 June 2019.
1 Share100%
EXPECTED SUBSTANTIAL SHAREHOLDINGS
UPON LISTING
The following Shareholder is likely to have a relevant interest in
5% or more of the Shares in Napier Port Holdings immediately
after Listing:
Shareholder and nature of
relevant interest
Indicative
number of
Shares
Indicative
% of
Shares
HBRIC will be the registered holder
and beneficial owner of Shares in
Napier Port Holdings. All of the
shares in HBRIC are owned by the
Council. The Council will have the
same relevant interest as HBRIC.
The Shares likely to be held by
HBRIC will be the Consideration
Shares. See Section 2.20 (
Other
material governance disclosures
).
110 million
Shares
55%
SHAREHOLDINGS HELD BY DIRECTORS AND
SENIOR MANAGERS
No Director or senior manager of Napier Port has a relevant
interest in Shares at the date of this PDS.
The Board has made a policy decision that none of the Directors
may acquire Shares under the Offer. Accordingly, none of the
Directors will likely have a relevant interest in Shares immediately
after Listing. The table below lists the senior managers of Napier
Port who will likely have a relevant interest in Shares immediately
after Listing:
Senior
manager
1
Nature of
relevant
interest
Number of
Shares
2, 3
% of
Shares
4
Todd DawsonBeneficial
owner
5, 6
68,5820.03%
Kristen LieBeneficial
owner
6, 7
42,7100.02%
David KrielBeneficial
owner
6
5,3380.00%
Viv BullBeneficial
owner
6
4,1060.00%
Adam HarveyBeneficial
owner
6, 8
23,4080.01%
Warren YoungBeneficial
owner
6, 9
32,8530.02%
Michel de VosBeneficial
owner
6, 10
22,5860.01%
Bruce
Lochhead
Beneficial
owner
6
10,2660.01%
Andrea ManleyBeneficial
owner
6
3,2850.00%
Total213,1340.11%
1.
None of the Directors (being Alasdair MacLeod, John Harvey, Wendie Harvey,
Stephen Moir, Diana Puketapu, Vincent Tremaine, Rick Barker and Blair O’Keeffe) are
participating in the Offer or are likely to have a relevant interest in shares immediately
after Listing.
2.
The interests in Shares expected to be held immediately following Listing assumes that
the senior managers take up their full entitlement under the Executive LTI Plan and
reflects the intentions of the Directors and senior managers at the date of the PDS in
relation to their acquisition of further Shares under the Offer.
3.
Based on the Final Price being the mid-point in the Indicative Price Range.
4.
Based on there being 200 million Shares on issue immediately after Listing.
5.
Includes rights to 66,529 Shares under the Executive LTI Plan.
6.
Includes $5,000 of Offer Shares under the Employee Share Loan. Any Shares funded
through the Employee Share Loan will be issued to, and held by, Pacific Custodians
(New Zealand) Limited as trustee on behalf of the relevant senior manager until that
senior manager’s loan has been repaid in full.
7.
Includes rights to 40,657 Shares under the Executive LTI Plan.
8.
Includes rights to 21,355 Shares under the Executive LTI Plan.
9.
Includes rights to 24,640 Shares under the Executive LTI Plan.
10.
Includes rights to 22,586 Shares under the Executive LTI Plan.
2.13
45
SECTION 2 / NAPIER PORT AND WHAT IT DOES

OTHER EQUITY SECURITIES OF NAPIER
PORT HOLDINGS
As at the date of this PDS, there are no classes of Napier Port
Holdings equity securities other than the Shares.
Under the Constitution, any other class of equity securities of
Napier Port Holdings that ranks equally with, or in priority to, the
Shares may be issued without a Special Resolution, provided that:
• for so long as a Council Party holds or controls more than
50% of the Shares, the restrictions relating to issuances of
new equity securities provided for under the Constitution are
complied with (see Section 2.20 (
Other material governance
disclosures)); and
• the issue of new equity securities in Napier Port Holdings
complies with the Listing Rules, which requires an approval
by Ordinary Resolution to the issue of new equity securities,
except in certain circumstances set out in the Listing Rules.
DirectorRemuneration and value of other benefits
received in FY2018
Expected remuneration and value of other benefits
expected to be received in FY2019
1
Fees as directors
of Port of Napier
Fees as directors of
Napier Port Holdings
2
Base feeCommittee work
and other
Total
Alasdair MacLeod
(Chair)
$88,187N/A$93,979
4
$10,000
8,9
$103,979
Wendie Harvey$47,844N/A$47,198
5
$13,583
8,9,10
$60,781
Stephen Moir$47,094N/A$47,198
5
$13,583
8,9,11
$60,781
Diana Puketapu$33,844
3
N/A$47,198
5
$10,000
8
$57,198
Vincent TremaineN/AN/A$32,156
5,6
$10,000
8
$42,156
John HarveyN/AN/A$32,156
5,6
$10,000
8
$42,156
Blair O’KeeffeN/AN/A$13,354
5,7
–$13,354
Rick BarkerN/AN/A$13,354
5,7
–$13,354
Napier Port Holdings was incorporated on 12 June 2019.
Accordingly, no Director received any remuneration or other
benefits from Napier Port Holdings during FY2018. However,
certain Directors did receive remuneration or other benefits in their
capacity as directors of Port of Napier during FY2018, and during
FY2019 prior to the incorporation of Napier Port Holdings.
Directors will receive directors’ fees following completion of the Offer
for the remainder of FY2019. Such fees will be aggregate fees in
respect of both their role as a director of Napier Port Holdings and
as a director of Port of Napier. The table below sets out the total
remuneration and value of other benefits expected to be received
by each Director in FY2019, as well as the nature of the services to
which that remuneration, or those other benefits, relates (other than
services provided in a person’s capacity as Director):
1.
Aggregate amounts in respect of both their role as a director of Napier Port Holdings and
as a director of Port of Napier.
2.
As Napier Port Holdings was not incorporated in FY2018, there were no directors’
fees paid.
3.
Diana Puketapu was appointed as a director of Port of Napier on 13 December 2017.
4.
With effect from 1 September 2019 the base fee for the Chair will be increased to
$135,000 per annum.
5.
With effect from 1 September 2019 the base fee for directors (other than the Chair) will
be increased to $70,000 per annum.
6.
Vincent Tremaine and John Harvey were each appointed as a director of Port of Napier
on 7 February 2019, with fees in connection with their roles as directors being paid with
effect from 1 February 2019.
7.
Blair O’Keeffe and Rick Barker were each appointed as directors of Napier Port Holdings
and Port of Napier on 27 June 2019, with fees in connection with their roles as directors
being paid with effect from 1 July 2019.
8.
Each of the independent Directors will receive an additional $10,000 to remunerate
them for additional work required in preparation for the Offer, subject to completion of
the Offer.
9.
With effect from 1 September 2019 the base fee for being a board committee Chair
will increase to $10,000 per annum. Alasdair MacLeod (as Chair of the Board) does not
receive any fees in respect of his role as Remuneration Committee Chair.
10.
$3,583 in respect of performing the role of Health & Safety Committee Chair.
11.
$3,583 in respect of performing the role of Audit & Risk Committee Chair.
DIRECTORS’ REMUNERATION
AND OTHER BENEFITS
2.15
2.14
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
46

During FY2018, only four Directors received remuneration or
other benefits from Port of Napier and no Director received any
remuneration or other benefits from Napier Port Holdings. During
FY2019, all Directors have received, and will following Listing
continue to receive, directors’ fees. In addition, the base fee and
committee fees paid to Directors (as applicable) in FY2019 will
be higher than that paid in FY2018, reflecting that, as a result of
the Listing of Napier Port Holdings on the NZX Main Board, the
Directors have increased responsibilities and will be required to
devote more time to the performance of their duties as Directors.
Accordingly, the remuneration and other benefits provided to
Directors, in their capacity as a director of both Napier Port
Holdings and Port of Napier, during FY2019 will be materially
different from the remuneration and other benefits provided to
Directors in FY2018.
The remuneration and other benefits to be provided to Directors
during the next financial year (being FY2020) are expected to be
consistent with the amounts payable from 1 September 2019 for
the remainder of FY2019 on an annualised basis. As at the date
of this PDS, the Directors are expected to receive the following
annual Directors’ fees in FY2020:
PositionFees per annum
Chair $135,000
Directors (other than the Chair)$70,000
Committee Chair $10,000
With effect from 1 September 2019, Napier Port Holdings has
set the Directors’ fees in aggregate for all Directors at $655,000
per annum in total. Under Listing Rule 2.11.3, if the total number
of Directors subsequently increases, the Directors are permitted
(without seeking Shareholder authorisation) to increase the total
remuneration by the amount necessary to enable Napier Port to
pay the additional Director or Directors remuneration not exceeding
the average amount then being paid to each of the Directors (other
than the Chair).
The Directors are entitled to be reimbursed for reasonable
travel, accommodation and other expenses incurred by them in
connection with their attendance at meetings, or otherwise in
connection with the Business. No retirement benefits will be paid
to any Director on their retirement.
Napier Port has granted indemnities permitted by the Companies
Act in favour of each of its Directors and certain employees. Napier
Port also maintains insurance for its Directors and officers.
EMPLOYEE
REMUNERATION
Napier Port Holdings does not have any employees as at the date
of this PDS. It is not envisaged that Napier Port Holdings will have
any employees as employees are, and are expected to continue to
be after Listing, primarily employed by Port of Napier.
The number of employees or former employees of Port of Napier
who, not being Directors, received remuneration and any other
benefits in their capacity as employees in respect of FY2018 that
in value was or exceeded $100,000 per annum was as follows:
1
Remuneration and other benefitsNumber of employees
$100,000 – $109,99928
$110,000 – $119,99921
$120,000 – $129,99919
$130,000 – $139,99915
$140,000 – $149,9995
$150,000 – $159,9992
$160,000 – $169,9991
$180,000 – $189,9992
$190,000 – $199,9991
$230,000 – $239,9991
$240,000 – $249,9993
$250,000 – $259,9992
$270,000 – $279,9993
$300,000 – $309,9991
$340,000 – $349,9991
$540,000 – $549,9991
$560,000 – $569,9991
1.
These amounts include all monetary amounts and benefits actually paid during FY2018,
including salary, redundancy, performance incentive payments on achievement of
targets, employer’s contribution to superannuation and other sundry benefits received in
their capacity as employees.
Napier Port does not expect the remuneration or benefits of its
employees during FY2019 to be materially different from the
details shown in the table above, other than there only being
remuneration and other benefits paid to one Chief Executive
Officer in FY2019. The above table for FY2018 provides for
the remuneration received by both Napier Port’s previous Chief
Executive Officer (who retired with effect from 31 December
2017) and Napier Port’s current Chief Executive Officer (who
commenced his role in January 2018).
2.16
47
SECTION 2 / NAPIER PORT AND WHAT IT DOES

EXECUTIVE
LTI PLAN
Concurrent with the Offer, Napier Port has adopted the Executive
LTI Plan. Under the Executive LTI Plan, the Board may invite
certain employees of Napier Port to participate in an award of
share rights. Share rights provide each participant with the right
to receive Shares for no cash cost subject to the satisfaction
of certain conditions. The first grant of share rights under the
Executive LTI Plan will be made to certain senior managers of
Napier Port contemporaneously with the issue of Shares under the
Offer and will have a two or three year vesting period. These share
rights, if taken up in full, will equate to a total number of Shares
that will be calculated based on an aggregate remuneration pool
of $423,000 divided by the Final Price (which would be 173,716
Shares based on the Final Price being set at mid-point of the
Indicative Price Range).
Further information is available on the Offer Register in the
document titled “Other Material Information”.
EMPLOYEE
SHARE LOAN
Concurrent with the Offer, Napier Port Holdings has established
an Employee Share Loan (known as “Fair Share”), the purpose
of which is to facilitate participation by Napier Port employees
as Shareholders, improving the alignment of interests between
employees and Shareholders. Under the Employee Share Loan,
Napier Port Holdings will fund the acquisition of up to $5,000
of Shares by each Eligible Employee under the Priority Offer
at the Final Price. This funding will take the form of a limited
recourse, interest-free loan made by Napier Port Holdings to
Eligible Employees.
The maximum aggregate amount of the loans to be made
by Napier Port Holdings under the Employee Share Loan is
$1,320,000 (based upon 264 Eligible Employees as at the date
of the PDS). This amount may change depending upon the final
number of Eligible Employees.
The costs of operating the Employee Share Loan, including the
trustee’s fees and expenses, will be met by Napier Port.
Further information is available on the Offer Register in the
document titled “Other Material Information”.
2.17
2.18
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
48

MATERIAL
INTERESTS
IN NAPIER PORT
No Director, proposed Director, senior manager or proposed
senior manager or any person associated with them has, or has
had at any time since 1 October 2015, any direct or indirect
material interest in Napier Port or any of its subsidiaries, or in any
agreement entered into on behalf of or in respect of Napier Port
or any of its subsidiaries, and that are material to either the person
who has the interest, or Napier Port or any of its subsidiaries.
All of the senior managers of Napier Port have entered into
employment agreements with Napier Port. In addition to being
directors of Napier Port Holdings, all the Directors are directors of
Port of Napier.
Information regarding related party transactions can also be found
in section 19 of Port of Napier’s FY2018 financial statements,
which are available on the Offer Register.
OTHER MATERIAL
GOVERNANCE
DISCLOSURES
2.20
HBRIC – GENERAL SHAREHOLDER RIGHTS
AND PROTECTIONS
Upon Listing, HBRIC will be Napier Port’s largest Shareholder,
with 55% of the total number of Shares on issue. See
Section 8 (Risks to Napier Port’s business and plans – Major
Shareholder risk).
For so long as HBRIC holds more than:
• 50% of the Shares, HBRIC can pass or block the passage
of an Ordinary Resolution (even without the support of other
Shareholders). This means HBRIC will control the election/
removal of Directors subject to the requirement to have a
certain number of independent directors on the Board; and
• 25% of the Shares, HBRIC can block the passage of
Special Resolutions.
In accordance with the Listing Rules, HBRIC will not be able to
vote on certain matters in which it is interested.
HBRIC – SPECIFIC SHAREHOLDER RIGHTS
AND PROTECTIONS
HBRIC will also have certain additional rights and protections to
those provided at law or by the Listing Rules. These additional
rights and protections are described below:
Consent to undertake material transactions
For so long as HBRIC (or any other Council Party), holds or
controls more than 50% of the Shares:
• Napier Port Holdings will require approval by Ordinary
Resolution before undertaking any of the following
transactions:
–acquiring or agreeing to acquire assets the value of which
is more than 30% of the value of Napier Port Holdings’
assets before the acquisition; or
–disposing or agreeing to dispose of assets the value
of which is more than 30% of the value of Napier Port
Holdings’ assets before the disposition (subject to limited
exceptions relating to the granting of security over Napier
Port Holdings’ assets),
meaning that, in effect, HBRIC’s (or the other Council Party’s)
consent is required in order for Napier Port Holdings to
undertake such a transaction; and
• Port of Napier will require approval by Ordinary Resolution of
Napier Port Holdings’ Shareholders before undertaking any of
the following transactions:
–acquiring or agreeing to acquire assets the value of which
is more than 30% of the value of Port of Napier’s assets
before the acquisition;
–disposing or agreeing to dispose of assets the value
of which is more than 30% of the value of Port of
Napier’s assets before the disposition (subject to limited
exceptions relating to the granting of security over Port of
Napier’s assets);
–making an alteration to, or revocation of, Port of Napier’s
constitution, or the adoption of a new constitution; or
–issuing, or registering the transfer of, shares in Port of
Napier to any person who is not Napier Port Holdings or
a wholly-owned subsidiary of Napier Port Holdings,
meaning that, in effect, HBRIC’s (or the other Council Party’s)
consent is required in order for Port of Napier to undertake
such a transaction.
As a result of Shareholder approval being required for Napier
Port to undertake transactions meeting a lower threshold than
would otherwise have applied under the Companies Act, all
Shareholders will benefit from enhanced engagement regarding
those transactions.
For so long as Port of Napier is a subsidiary of Napier Port
Holdings, Napier Port Holdings is required to exercise its rights
and powers in a manner that is consistent with, and ensures
compliance with, the provisions of Port of Napier’s constitution
described above.
2.19
49
SECTION 2 / NAPIER PORT AND WHAT IT DOES

Issue of new Shares and 51% minimum shareholding
For so long as HBRIC (or any other Council Party), holds or
controls more than 50% of the Shares, unless HBRIC (or any
other Council Party) agrees otherwise:
• all new Shares must, subject to certain limited exceptions
(including new Shares issued in connection with any dividend
reinvestment plan), be offered to Shareholders pro rata,
such that HBRIC (or the relevant Council Party) is given the
opportunity to subscribe for new shares that would result in
HBRIC (or the other Council Party) holding or controlling at
least the same percentage of shares it held or controlled prior
to that offer; and
• no new Shares may be issued if it would result in HBRIC (or
the relevant Council Party) holding or controlling less than 51%
of the Shares.
Although not specifically provided for in the Constitution, in order
for HBRIC (or the Council Parties) to reduce its Shareholding
below 51%, public consultation will need to be undertaken
pursuant to the Local Government Act. The consultation
process will be required regardless of whether the reduction in
Shareholding would result from the issuance of new Shares,
the transfer of Shares by HBRIC (or any other Council Party)
or otherwise.
The minimum shareholding threshold for HBRIC (or the relevant
Council Party) has been set at 51% despite HBRIC holding
55% of the Shares immediately after Listing. HBRIC’s minimum
shareholding threshold was set below the level of HBRIC’s
shareholding immediately after Listing in order to provide Napier
Port Holdings with the flexibility to undertake certain non-material
pro-rata offer equity capital raisings without the need for HBRIC’s
participation or consent.
Mirror boards of directors
The composition of Port of Napier’s board of directors must at
all times mirror the composition of Napier Port Holdings’ board
of directors.
ARRANGEMENTS BETWEEN NAPIER PORT, HBRIC
AND THE COUNCIL
Napier Port Holdings has entered into arrangements:
• with HBRIC and the Council which provide for HBRIC and
the Council to receive Napier Port’s information, subject to
confidentiality, content and use restrictions; and
• with HBRIC which provide for Napier Port to assist HBRIC to
sell any Shares should it wish to do so.
These arrangements are set out in the confidentiality deed,
information access protocol and the deed of arrangement, further
details of which can be found on the Offer Register.
ACQUISITION AGREEMENT
Napier Port Holdings and HBRIC have entered into the Acquisition
Agreement, pursuant to which Napier Port Holdings will acquire
all of the shares in Port of Napier on the business day immediately
prior to Settlement. The consideration under the Acquisition
Agreement will be the issuance of the Consideration Shares by
Napier Port Holdings to HBRIC and cash, as illustrated in Section
3.1 (
Purpose of the Offer).
Further details are available on the Offer Register in the document
titled “Other Material Information”.
OTHER GOVERNANCE DISCLOSURES
The Board intends to adopt, from Listing, various board policies
and charters that are typical for a company listed on the NZX,
including a Conflicts of Interest policy and a Code of Ethics.
Further information in relation to material contracts and other
governance considerations is available on the Offer Register in the
document titled “Other Material Information”. This includes further
information relating to:
• the encumbrance being registered in favour of the Council
Parties restricting the use and transfers of the land at the Port
site; and
• the regulatory environment in which Napier Port operates,
including an overview of Port of Napier’s obligations as a
“port company”, and Napier Port Holdings’ obligations as a
related party of a “port company”, for the purposes of the Port
Companies Act and Napier Port Holdings’ obligations as a
council-controlled organisation.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
50

3.1 PURPOSE OF THE OFFER
The primary purpose of the Offer is to raise capital for Napier Port to:
• reduce existing debt and provide capacity to fund the 6 Wharf expansion project; and
• enable HBRIC to realise a portion of its investment in Napier Port (on completion of the Offer, HBRIC will own 55% of the total Shares
on issue).
The gross proceeds of the Offer will be used, and relate to our strategy, as follows:
AmountUse of proceeds
$110.2 millionAmount to be retained by Napier Port to repay Napier Port’s existing debt (including the
forecast cost of $6.6 million to close out its interest rate swap liabilities) and provide Napier Port
with cash and undrawn debt facilities sufficient to meet its future capital requirements, including
the development of 6 Wharf.
$13.7 million – $14.3 millionTo fund Offer costs.
$1.7 million To fund loans to Eligible Employees to purchase Shares under the Priority Offer under the
Employee Share Loan and to acquire Shares for the purposes of the Executive LTI Plan.
$78.7 million – $107.9 millionTo enable HBRIC to realise a portion of its investment in Napier Port comprising:
• $44.0 million to pay HBRIC a special dividend in order to utilise substantially all of Napier
Port’s imputation credit balance (which would otherwise be lost due to the change in
ownership following completion of the Offer); and
• $34.7 million – $63.9 million to enable Napier Port Holdings to pay the cash component
of the consideration due to HBRIC for the acquisition of Port of Napier shares under the
Acquisition Agreement.
$204.3 million – $234.0 millionGross proceeds from the Offer.
3.2 MINIMUM OFFER AMOUNT
A minimum amount of $169.6 million must be raised before the Offer Shares are issued. This represents the total amount of new capital
to be raised by Napier Port to repay its debt facilities and provide it with cash and undrawn debt facilities sufficient to meet its future capital
requirements ($110.2 million), the amounts required to fund Offer costs ($13.7 million) and the loans to Eligible Employees to purchase
Shares under the Employee Share Loan and to acquire Shares for the purposes of the Executive LTI Plan ($1.7 million), and the special
dividend ($44.0 million) already declared and payable to HBRIC (each as shown in the table in Section 3.1 (
Purpose of the Offer)). HBRIC
will receive the balance of the proceeds of the Offer after all of these amounts are deducted.
The use of the proceeds raised under the Offer will not change depending on the total amount that is raised.
3.3 UNDERWRITING
The Offer is not underwritten.
SECTION 3 /
PURPOSE OF THE OFFER
51

4.1 KEY DATES
Priority Offer opens23 July 2019
Priority Offer closes5 August 2019
Institutional Offer and Bookbuild6 August to 7 August 2019
Final Price announced and allocation7 August 2019
Broker Firm Offer opens8 August 2019
Broker Firm Offer closes16 August 2019
Settlement and allotment19 August 2019
Listing, expected commencement of trading on the NZX Main Board20 August 2019
Earliest expected mailing of holding statements for Shares to be traded on the NZX Main Board20 August 2019
Expected payment of first dividend following the OfferDecember 2019
The above dates are indicative only and the dates may change. Napier Port, in consultation with the Joint Lead Managers, reserves the
right to vary or extend these dates. Napier Port may also withdraw the Offer at any time before Settlement or accept late Applications
(either generally or in individual cases).
Further information about these dates is set out in Section 5 (
Terms of the Offer).
SECTION 4 /
KEY DATES AND OFFER PROCESS
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
52

SECTION 5 /
TERMS OF THE OFFER
5.1 KEY TERMS
The table below sets out the terms of the Offer. The Constitution sets out the terms of the Shares (a copy of which is available on the
Offer Register).
Offer
This is an offer of 90 million new Shares (representing 45% of the total Shares on issue immediately
after Listing).
Key dates
See Section 4 (
Key dates and Offer process).
Price
The Indicative Price Range is $2.27 to $2.60 per Offer Share. All Offer Shares will be issued at the
Final Price. The Final Price will be set by way of a Bookbuild. The Bookbuild will take place from
6 August to 7 August 2019.
The Bookbuild is a process through which selected Institutional Investors, and selected NZX Firms,
submit bids for the number of Shares they wish to purchase across a range of prices for the Shares.
That information is then used to assist with the determination of the Final Price and allocations of the
Offer Shares.
Napier Port, in consultation with the Joint Lead Managers, will set the Final Price following completion
of the Bookbuild. Napier Port reserves the right to set the Final Price within, above or below the
Indicative Price Range.
In setting the Final Price, several factors will be taken into account, including:
• the desire for an informed and active trading market for the Shares on the NZX Main Board;
• the level of demand for Shares in the Priority Offer, the Broker Firm Offer and the Institutional
Offer; and
• any other factors that Napier Port deems relevant.
The Final Price is expected to be announced and posted on www.napierportshareoffer.co.nz on or
about 7 August 2019.
Structure of the Offer
The Offer comprises:
• the Priority Offer; and
• the Broker Firm Offer; and
• the Institutional Offer.
See Section 5.2 (
Components of the Offer).
HBRIC will hold 55% of the total Shares immediately after Listing.
There is no general public offer or a public pool. Members of the public wishing to subscribe for
Shares must be allocated Shares by an NZX Firm or must be offered Offer Shares by Napier Port
Holdings as part of the Priority Offer.
53

Discretion regarding the
Offer and refunds
The Offer may be withdrawn by Napier Port at any time before the Offer Shares are issued at
Napier Port’s sole discretion.
If the Offer, or any part of it, does not proceed, all relevant Application Monies will be refunded
(without interest) no later than five Business Days after the decision to withdraw the Offer, or any
part of it, is announced.
Napier Port reserves the right to close the Offer or any part of it early, extend the Offer or any part of
it, accept late Applications, settlement or bids either generally or in particular cases, reject or refuse
any Application or bid, allocate to any Applicant or any bidder fewer Shares than applied for or accept
an Application in part only. If Napier Port refuses an Application or accepts an Application in part, the
relevant Application Monies will be refunded (without interest) to the relevant Applicant no later than
five Business Days after the last date on which Offer Shares are issued under the Offer.
Refunds will be paid in the manner in which you elect any future dividends to be paid.
If your Application Form is not completed correctly, or if the accompanying Application Monies are for
the wrong amount, your Application may still be treated as valid.
The decision of Napier Port as to whether to treat your Application as valid, and how to construe,
amend or complete your Application Form, will be final. The decision on the number of Offer Shares to
be allocated to you will also be final. However, you will not be treated as having agreed to purchase a
greater number of Offer Shares than that for which payment has been made.
Scaling
If the Offer is oversubscribed, Applications for Offer Shares may be scaled back, subject to meeting
the minimum guaranteed allocations described in Section 5.2 (
Components of the Offer). Any scaling
will be determined at the absolute discretion of Napier Port and may not be on a pro-rata basis.
Allotment
Any New Zealand resident with a CSN will have their Offer Shares allotted under their CSN, if the
CSN is provided on their Application Form.
Priority Offer and Broker Firm Offer Applicants who do not have a CSN or who do not provide
a CSN on their Application Form will be allocated a CSN at the time of submitting an Application
Form. The CSN will be advised at the time the allotment of Offer Shares is confirmed and the
associated Authorisation Code (FIN) will be sent as a separate communication by mail on or around
7 August 2019.
Offer Shares issued under the Offer are expected to be allotted on 19 August 2019 and commence
trading on the NZX Main Board on 20 August 2019.
Holding statements are expected to be sent to all successful Applicants on 20 August 2019 at the
earliest. No person accepts any liability or responsibility should any person attempt to sell or otherwise
deal with Offer Shares before a statement confirming allotment is received.
What you need to do to sell
your Shares
If you wish to sell your Offer Shares on the NZX Main Board, after confirming your allocation, you
must contact an NZX Firm and have a CSN and an Authorisation Code (FIN). Opening a new broker
account can take a number of days depending on the NZX Firm’s new client procedures. If you do not
have a CSN, you will:
• be assigned one when you set up an account with an NZX Firm; or
• receive one from the Share Registrar.
If you do not have an Authorisation Code (FIN), it is expected that you will be sent one as a
separate communication by the Share Registrar. If you have an NZX Firm and have not received an
Authorisation Code (FIN) by the date you want to trade your Shares, your NZX Firm can obtain one,
but may pass the cost for doing so on to you.
If you sell your Shares, you may be required to pay brokerage or other sale expenses. You may
also be liable for tax on the sale of your Shares. You should seek your own tax advice in relation
to your Shares.
No guarantee
No person guarantees the Shares offered under this PDS. No person warrants or guarantees the
performance of the Shares or any return on any investments made pursuant to this PDS.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
54
SECTION 5 / TERMS OF THE OFFER

5.2 COMPONENTS OF THE OFFER
Broker Firm OfferPriority OfferInstitutional Offer
Who can apply?
The Broker Firm Offer
is open to New Zealand
resident retail clients of
NZX Firms who have
received an allocation
from their NZX Firm.
You should contact an NZX
Firm to determine whether
they may offer Shares to you
under the Broker Firm Offer.
The Priority Offer comprises an offer to:
• Local Residents or Non-Resident
Ratepayers;
• Eligible Employees; and
• Eligible Iwi.
An Applicant may only apply for one allocation
of Shares under the Priority Offer, regardless
of whether the Applicant qualifies for more than
one of the eligibility categories.
With respect to any application for Shares as a
Non-Resident Ratepayer, only one allocation of
Shares will be permitted for (i) each qualifying
rateable property even where there is more
than one Non-Resident Ratepayer for that
property and (ii) each Non-Resident Ratepayer
even where that person owns more than one
qualifying rateable property.
Applicants under the Priority Offer certify that
they meet the relevant eligibility criteria for the
Priority Offer.
Napier Port reserves the right to determine in its
sole discretion whether an Applicant is eligible to
participate in the Priority Offer.
The Institutional Offer
comprises an invitation to
selected NZX Firms and
Institutional Investors to
apply for Shares.
Certain Institutional
Investors and NZX Firms
will be invited to bid for
Shares in the Bookbuild.
How do you
apply?
See Section 11 (
How to apply) and the relevant Application Form for detailed instructions on how to apply
for Shares.
How many Offer
Shares can you
apply for?
Your NZX Firm will determine
the number of Shares
their clients may apply for.
However, the minimum
Application amount is
2,500 Shares.
Applications under the Priority Offer must be for
a minimum of $1,000 of Shares, and thereafter
in multiples of $100.
Each Share will be issued at the Final Price.
The amount applied for in the Application Form
will be divided by the Final Price to calculate the
number of Offer Shares applied for, rounded
down to the nearest whole Offer Share.
There is no maximum dollar amount of Shares
that can be applied for by investors applying
under the Priority Offer.
N/A
How do you pay
for your Offer
Shares?
See the Application Form for
payment details.
See the Application Form for payment details.Full details will be provided
by the Joint Lead Managers
to successful participants.
When do you need
to apply?
The Broker Firm Offer opens
at 9.00am on 8 August 2019
following the Bookbuild.
You should send your
completed Application Form
and Application Monies to
your NZX Firm in time to
enable forwarding to the
Share Registrar by 5.00pm
on 16 August 2019.
The Priority Offer opens at 9.00am on
23 July 2019 and will close at 5.00pm on
5 August 2019.
The opening and closing date of the Priority
Offer may be changed by Napier Port.
N/A
55
SectiOn 5 / termS Of the Offer

Broker Firm OfferPriority OfferInstitutional Offer
Allocation policy
The number of Shares to
be offered under the Broker
Firm Offer will be determined
following the Bookbuild
by Napier Port following
consultation with the Joint
Lead Managers.
Allocations by NZX Firms
under the Broker Firm
Offer to their clients will be
determined by those NZX
Firms. It will be a matter for
the NZX Firms to ensure
that their clients who have
received an allocation from
them receive the relevant
Shares. Broker Firm Offer
Applicants should contact the
NZX Firm from whom they
received their allocation to
find out if their Application
was successful.
The number of Shares to be allocated to the
Priority Offer, and among participants in the
Priority Offer, will be determined following the
Bookbuild by Napier Port following consultation
with the Joint Lead Managers.
Applicants under the Priority Offer will only
receive one allocation under the Priority
Offer even if they meet more than one of the
eligibility criteria.
Applicants who are Eligible Employees will
receive a guaranteed minimum allocation of
$5,000 of Shares at the Final Price, rounded
down to the nearest whole Offer Share (i.e.,
applications for up to $5,000 of Shares by
Eligible Employees will not be scaled).
Local Residents and Non-Resident Ratepayers
will receive a guaranteed minimum allocation of
$2,000 of Shares at the Final Price, rounded
down to the nearest whole Offer Share (i.e.,
applications for up to $2,000 of Shares by
Local Residents and Non-Resident Ratepayers
will not be scaled).
Preferential allocations to Eligible Iwi will be
determined once demand for the Offer Shares
is known.
Applicants should contact the Share Registrar by
email at applications@linkmarketservices.co.nz
to find out if their Application was successful.
The number of Shares
to be offered under the
Institutional Offer, and the
allocation of Shares among
Institutional Investors and
NZX Firms that have bid for
Shares in the Bookbuild,
will be determined by
Napier Port following
consultation with the Joint
Lead Managers.
There is no assurance
that any participant in the
Bookbuild will be allocated
any Shares or the number
of Shares for which it has
bid. The allocation policy will
be influenced by a number
of factors which may
include the timeliness of the
bid by particular bidders.
5.3 LISTING
Napier Port expects that trading of the Shares on the NZX Main
Board will commence on 20 August 2019. If admission to list on
the NZX Main Board is denied, the Offer will not proceed.
Application has been made to NZX for permission to list Napier
Port Holdings and to quote the Shares on the NZX Main Board.
All of NZX’s requirements relating to that application that can
be complied with on or before the date of this PDS have been
complied with. However, NZX accepts no responsibility for any
statement in this PDS. The NZX Main Board is a licensed market
operated by NZX, which is a licensed market operator regulated
under the FMC Act.
5.4 HBRIC’S INTENTION IN RELATION TO
HOLDING OF SHARES
HBRIC is not subject to any escrow arrangements that would
prevent it from selling or otherwise disposing of any Shares that it
holds. However, HBRIC has advised Napier Port that HBRIC has
no present intention to sell or otherwise dispose of any of the 55%
shareholding in Napier Port that it will hold upon completion of the
Offer. There are restrictions on HBRIC’s holding of Shares falling
below 51%, including the requirements for public consultation
and Council approval. See Section 2.20 (
Other material
governance disclosures
).
5.5 SELLING RESTRICTIONS
The Offer is only being made to:
• eligible persons under the Priority Offer;
• New Zealand resident clients of selected NZX Firms who have
received a firm allocation of Shares from that NZX Firm under
the Broker Firm Offer; and
• selected NZX Firms and Institutional Investors under the
Institutional Offer.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
56

6.1 KEY FEATURES
All Shares issued under the Offer will be fully paid ordinary shares
in Napier Port Holdings which rank equally with each other and
all other ordinary shares in Napier Port Holdings on issue. The
Offer Shares have the same key features as ordinary shares in a
company generally.
6.2 DIVIDEND POLICY
For information relating to dividends to be paid during the
Prospective Period, see Section 7.6 (
Napier Port’s financial
information – Dividends
).
For dividends to be declared and paid after the Prospective Period,
the Board is targeting paying total dividends within a range of
70% to 90% of Free Cash Flow. The Board considers this is
sustainable, both during the Prospective Period and thereafter,
and that the dividend policy reflects the capital requirements
of Napier Port, including the 6 Wharf expansion project
(see Section 2.7 (
6 Wharf expansion project)).
Free Cash Flow is a non-NZ GAAP measure adopted by Napier
Port. It excludes capital expenditure on development projects
(including 6 Wharf) and the interest costs which will be capitalised
during construction. Once construction is completed, debt for
the 6 Wharf project is expected to be at its highest and interest
costs will not be capitalised. This will reduce the Free Cash Flow
available for distributions. However, we expect that additional
revenue from increased cargo volumes and pricing over time will
help grow our Free Cash Flow.
The payment of dividends is not guaranteed and will be at the
discretion of the Board and depend on a number of factors. These
factors include the general business environment, operating
results (including our ability to grow Free Cash Flow) and financial
condition of Napier Port, future funding requirements, any
contractual, legal or regulatory restrictions on the payment of
dividends by Napier Port and any other factors the Board may
consider relevant. In declaring dividends, Napier Port must comply
with the solvency test under the Companies Act and the covenants
in its banking facilities.
Dividend payments are expected to be split into an interim dividend
paid in June, targeting 40% of the total expected dividend for the
financial year, and a final dividend paid in December. Napier Port
intends to impute dividends to the maximum extent possible.
SECTION 6 /
KEY FEATURES OF THE
SHARES
5.6 PRIORITY OFFER APPLICANTS’
WITHDRAWAL RIGHTS
Pursuant to the Exemption, if Napier Port becomes aware prior
to commencement of the Bookbuild of a circumstance that has
arisen since the PDS or Offer Register was lodged that otherwise
would have been required by the FMC Act or FMC Regulations
to be disclosed in the PDS or Offer Register, Napier Port will
not be required to deal under section 80(1) of the FMC Act with
Applications but may:
• update or replace the PDS or amend the Offer Register
(as the case may be) to correct the deficiency; and
• advise investors of those developments by publishing
advertisements in newspapers, with additional information on
the Offer website and in a notice to be released via NZX and
provided to Applicants by their broker (in the case of Applicants
applying through a broker), by Napier Port (in the case of
Eligible Employees) and by email (in the case of Applicants
who have applied online).
In that case, in addition to any other rights of withdrawal that an
Applicant may have, an Applicant may withdraw their Application
within seven working days after the publication of the newspaper
advertisements if the Application Form is dated on or before the
date of the newspaper advertisements.
Notice of withdrawal must be given in one of the following manners:
• by completing the withdrawal form that will be made available
on the Offer website www.napierportshareoffer.co.nz;
• by informing the NZX Firm through whom the Applicant had
applied for Offer Shares; or
• by informing a designated Port of Napier representative in the
case of Eligible Employees.
If an Applicant does not validly withdraw their Application within
the relevant time period, Napier Port will be entitled to accept the
Applicant’s Application.
Napier Port must refund any Applicant who has validly withdrawn
their Application (without interest) within five working days after the
earlier of the end of the withdrawal period and the cancellation of
the Offer.
5.7 FURTHER INFORMATION
This PDS is intended for use solely in connection with the Offer.
You can find further information on the Offer Register in relation
to the terms of the Offer, including the Constitution and additional
selling restrictions relating to Institutional Investors, the Takeovers
Code and the Overseas Investment Act 2005.
57
SectiOn 5 / termS Of the Offer

7.1 INTRODUCTION
These tables provide key financial information about Napier Port.
Full financial statements are available on the Offer Register at
www.business.govt.nz/disclose, offer number OFR12679. If you
do not understand this financial information, you can seek advice
from a financial adviser or an accountant.
Historical information presented in this document for FY2016 to
FY2018 (including 1HY2018) and 1HY2019 relates to Port of
Napier. Napier Port Holdings, which will acquire Port of Napier
prior to Settlement, was incorporated only shortly before the date
of this PDS. In reliance on the Exemption, financial information
for Napier Port Holdings for that short period is not shown in the
selected financial information table in Section 7, but is incorporated
within the pro forma financial information for FY2019F. The
Board believes the presentation of historical financial information
for Port of Napier provides more useful information for investors,
making it more easily comparable with the prospective financial
information for the Group for FY2019F and FY2020F.
The Supplementary Financial Information and other financial
information is also available on the Offer Register.
This PDS contains prospective financial information (Pfi) for
FY2019F and FY2020F (together, the Prospective Period).
The PFI is based on the Directors’ assessment of events and
conditions existing at the date of this PDS and the accounting
policies and assumptions set out in the Supplementary Financial
Information which is available on the Offer Register. The principal
assumptions on which the PFI is based are set out under Section
7.4 (
Overview of historical and prospective financial performance
– Overview of prospective financial performance).
PFI by its nature is inherently uncertain. It is a prediction of future
events which cannot be assured. It involves risks and uncertainties,
many of which are beyond the control of Napier Port. The Board
believes that the PFI has been prepared with due care and
attention, and considers the assumptions, when taken as a whole,
to be reasonable at the time of preparing this PDS. Actual results
are likely to vary from the information presented and variances
may be material. Accordingly, neither the Directors nor any other
person can provide any assurance that the PFI will be achieved
and investors are cautioned not to place undue reliance on the PFI.
You should read the PFI in this PDS in light of the assumptions,
and in conjunction with the other information in this PDS (including
in particular, the information in Section 8 (
Risks to Napier Port’s
business and plans
)).
The financial information in this PDS is presented in New Zealand
dollars and is rounded, which may result in some discrepancies
between the sum of the components and totals within tables, and
also certain percentage calculations.
7.2 SELECTED FINANCIAL INFORMATION
The table of Selected Financial Information contains the following
types of financial information:
(a) Statutory historical financial information as reported in
Port of Napier financial statements.
(b) Statutory Pfi which presents the PFI on the same basis as
that on which Napier Port intends to report under NZ GAAP
in the future.
(c) Pro forma historical financial information which has been
derived from the statutory historical financial information,
adjusted for structural changes and non-recurring or
infrequent events of Napier Port. Napier Port believes these
adjustments allow investors to compare the historical financial
information with the PFI and to better understand the trends
in financial performance. These adjustments are described in
Section 7.9 (
Reconciliation of Pro forma EBITDA to Statutory
NPAT - Description of pro forma adjustments).
(d) Pro forma Pfi adjusts the statutory PFI to reflect pro
forma adjustments in the first year of the Prospective Period
(FY2019F) including the removal of non-recurring Offer costs
and the change in capital structure of Napier Port arising
from the Offer as described in Section 7.9 (
Reconciliation of
Pro forma EBITDA to Statutory NPAT - Descriptions of pro
forma adjustments
).
The pro forma historical financial information and the pro forma
PFI have been prepared solely for the purpose of inclusion in
this PDS. More information about the pro forma adjustments,
the principal assumptions on which the PFI is based, and
reconciliations of pro forma financial information to information
prepared in accordance with NZ GAAP, is available in the
Supplementary Financial Information.
The FY2019F information includes six months of actual results
for the period ended 31 March 2019 and six months of forecast
information for the period ended 30 September 2019. Where
labelled pro forma, the FY2019F period also includes the pro
forma adjustments outlined in Section 7.9.
The historical financial information is extracted from Port of
Napier audited financial statements or the Supplementary
Financial Information which are available on the Offer Register.
This document presents historical financial information of Napier
Port for the financial periods 30 September 2016 (fY2016),
30 September 2017 (fY2017), 30 September 2018 (fY2018),
31 March 2018 (1hY2018) and 31 March 2019 (1hY2019)
(collectively the historical Periods). The prospective financial
information for the financial periods 30 September 2019
(fY2019f) and 30 September 2020 (fY2020f) is that presented
and described in the Supplementary Financial Information which is
available on the Offer Register.
SECTION 7 /
NAPIER PORT’S FINANCIAL INFORMATION
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
58

Selected financial information
1
NZ$000FY2016 FY2017 FY2018 FY2019F FY2020F 1HY2018 1HY2019
Financial period
12 months
ending
30 Sept 16
12 months
ending
30 Sept 17
12 months
ending
30 Sept 18
12 months
ending
30 Sept 19
12 months
ending
30 Sept 20
6 months
ending
31 Mar 18
6 months
ending
31 Mar 19
financial performance:
Revenue
2
72,653 86,679 91,749 97,358 102,533 43,766 48,658
Pro forma EBITDA
3
27,784 35,297 37,156 39,665 40,880 17,947 21,119
Net profit after tax11,471 16,706 17,576 5,594 19,973 7,896 9,160
Pro forma net profit after tax
4
19,217 19,973 10,549
Balance sheet and cash flow
items:
Dividends paid7,876 10,700 10,000 53,958 10,960 3,753 3,958
Post IPO dividends paid
5
10,960
Total assets302,580 329,083 331,959 370,781 409,473 339,292
Cash and cash equivalents459 231 – 20,069 - –
Total liabilities114,356 123,978 119,547 35,493 66,528 117,815
Total debt
6
79,700 83,571 80,599 – 32,378 80,828
Net cash flows from operating
activities23,125 25,186 28,364 24,213 29,945 10,151 11,340
Pro forma net cash flows from
operating activities
7
30,640 29,945 12,997
Free cash flow
8
21,201
1.
The selected financial information (excluding any financial information in the selected financial information table that is identified as being pro forma financial information) is extracted from
audited financial statements of Port of Napier for the FY2016, FY2017, FY2018 and 1HY2019 accounting periods together with 1HY2018 comparatives. The financial statements and
auditor’s reports for these periods are available on the Offer Register. The prospective financial information for FY2019F and FY2020F is extracted from the Supplementary Financial
Information for the Group (and not the financial statements of Port of Napier, from which the selected financial information for FY2016, FY2017, FY2018, 1HY2018 and 1HY2019
has been extracted). Some line items in the selected financial information include adjustments applied by Napier Port (denoted ‘pro forma’). For an explanation of pro forma adjustments,
please refer to Section 7.9 (
Reconciliation of Pro forma EBITDA to Statutory NPAT) and Part B of the Supplementary Financial Information.
2.
Revenue relates to operating income as disclosed for the Historical Periods in the audited financial statements of Napier Port.
3.
Pro forma EBITDA is a non-NZ GAAP measure that includes pro forma adjustments as described in Section 7.9 (Reconciliation of Pro forma EBITDA to Statutory NPAT).
4.
Pro forma net profit after tax is a non-NZ GAAP measure. This measure reflects the pro forma adjustments reflected in Pro forma EBITDA, the impairment of the investment in the
Longburn Intermodal Freight Hub joint venture and the overlay of Napier Port’s capital structure following completion of the Offer as if it had been in place since 1 October 2018.
The pro forma tax expense has been adjusted to reflect the tax implications of the pro forma adjustments. A reconciliation to statutory net profit after tax is included in Part B of the
Supplementary Financial Information.
5.
Post-IPO dividends paid relates to dividends which will be available to investors. It is separately shown as the dividends paid prior to completion of the Offer will not be available to new
investors and includes dividends paid to HBRIC in order to utilise substantially all of Napier Port’s imputation credit balance.
6.
Total debt includes term loans and borrowings.
7.
Pro forma cash flows from operating activities is a non-NZ GAAP measure that comprises net cash flows from operating activities adjusted to remove offer costs in FY2019F and
FY2020F and overlays Napier Port’s capital structure following completion of the Offer as if it were in place for all of FY2019F.
8.
For the definition of “Free Cash Flow” see Section 13 (Glossary). A reconciliation of Free Cash Flow to net profit after tax is available on the Offer Register.
59
SectiOn 7 / naPier POrt’S financial infOrmatiOn
SECTION 7 / NAPIER PORT’S FINANCIAL INFORMATION

7.3 HOW NAPIER PORT
GENERATES REVENUE
Napier Port primarily generates revenue through its port operations.
Napier Port has one reporting segment, but generates revenue
from three principal service areas. These are described below:
(a) container Services: which is a vertically integrated operation
that involves all operations required to service import and
export containers.
Container terminal revenue includes:
(i) Vessel marine charges for pilotage, towing, mooring
and berthage;
(ii) Container handling charges for marshalling, crane
operations, and stevedoring (which is sub-contracted to
a third party);
(iii) Providing power and monitoring for
refrigerated containers;
(iv) Vehicle booking charges for vehicles that enter the port
to pick up or deliver containers;
(v) Container storage charges for containers that are
stored on-port beyond the storage days included within
contractual arrangements; and
(vi) Various levies to recover infrastructure and
insurance expenditure.
Other container services revenue includes:
(vii) Port Pack charges for the packing of export cargo into
containers (mainly timber and wood pulp) and unpacking
of import containers; and
(viii) Depot services charges for the survey, cleaning, repair,
pre-trip inspection, servicing, and off-Port storage of
empty containers.
(b) Bulk cargo: which involves the import and export of
logs and other non-containerised bulk cargo. Bulk Cargo
revenue includes:
(i) Vessel marine charges for pilotage, towing, mooring
and berthage;
(ii) Wharfage charges for the volume of bulk cargo moved
to/from vessels;
(iii) Log charges for on-port storage and on-port
fumigation; and
(iv) Various levies to recover infrastructure and
insurance expenditure.
(c) cruise Services: which involves all operations associated
with cruise ships visiting Napier Port. Cruise Services
revenue includes:
(i) Cruise vessel marine charges for pilotage, towing and
mooring services; and
(ii) Various levies to recover infrastructure and
insurance expenditure.
In addition to the three principal service areas, Napier Port
also generates revenue from marine charges to fishing,
pleasure and other vessels and income from various
property leases.
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
60

7.4 OVERVIEW OF HISTORICAL AND PROSPECTIVE FINANCIAL PERFORMANCE
(a) introduction
This section provides an overview of the pro forma historical and prospective financial performance of Napier Port and should be read
in conjunction with the ‘Selected Financial Information’ table in Section 7.2 (
Selected Financial Information).
NZ$000FY2016FY2017FY2018FY2019FFY2020F
Financial period
12 months
ending
30 Sept 16
12 months
ending
30 Sept 17
12 months
ending
30 Sept 18
12 months
ending
30 Sept 19
12 months
ending
30 Sept 20
Container Services 51,982 60,615 58,005 59,483 63,117
Bulk Cargo 16,792 21,583 28,966 31,575 32,095
Cruise 1,513 2,083 2,561 3,596 4,795
Sundry revenue 251 306 353 757 418
revenue from port operations 70,538 84,587 89,884 95,410 100,425
Property income 2,114 2,092 1,865 1,948 2,109
Operating income 72,653 86,679 91,749 97,358 102,533

(b) Overview of historical financial performance
(i) fY2017 financial performance relative to fY2016
Between FY2016 and FY2017 Napier Port’s revenue
from port operations grew by 19.9% from $70.5 million
to $84.6 million. The key movements and drivers of
revenue growth were:
(A) Container Services revenue increased 16.6%
($8.6 million) to $60.6 million as container volumes
increased from 257,000 TEUs to 288,000
TEUs. The majority of this growth was driven by
containers being diverted to Napier following the
November 2016 Kaikoura earthquake’s damage to
CentrePort, Wellington.
(B) Bulk Cargo revenue increased by 28.5% ($4.8 million)
to $21.6 million, largely due to a 34.9% increase in
the volume of log exports. Log volumes increased
from 1.2 million tonnes to 1.6 million tonnes due
to increased forestry harvests. Other contributors
to revenue growth included a 14.3% increase in
imported bulk volumes (primarily fertiliser).
(C) Cruise Services revenue increased by 37.7%
($0.6 million) to $2.1 million due to an increase
in cruise ship schedule rates and nine additional
cruise ship calls.
Between FY2016 and FY2017 Napier Port’s Pro forma
EBITDA grew by $7.5 million (27.0%) to $35.3 million.
The growth in Pro forma EBITDA was predominantly driven
by the increased port operations revenue, a decrease in
fixed asset impairment ($0.6 million), partially offset by
increased expenses (e.g. labour and maintenance costs)
to support the additional cargo volume.
(ii) fY2018 financial performance relative to fY2017
Between FY2017 and FY2018 Napier Port’s revenue
from port operations grew by 6.3% from $84.6 million
to $89.9 million. The key movements and drivers of
overall revenue growth were:
(A) Container Services revenue declined 4.3%
($2.6 million) to $58.0 million due to a reduction
of container volumes from 288,000 TEUs to
266,000 TEUs, largely as a result of CentrePort
resuming container operations at the end of
FY2017. Decreased volume was partly offset by
tariff increases and additional levies in relation to
higher insurance expenses and a temporary targeted
customer infrastructure recovery contribution.
(B) Bulk Cargo revenue grew by 34.2% ($7.4 million)
to $29.0 million, largely from:
a) A 35.4% increase in the volume of logs being
exported, from 1.6 million tonnes to 2.2 million
tonnes, due to increased forestry harvests.
This resulted in overall bulk volumes growing
from 2.5 million tonnes to 3.1 million tonnes;
b) The increase in log volume also resulted in
additional berthage revenue where vessels
remained in port greater than 24 hours for
loading; and
c) Additional levies in relation to increased
insurance expenses.
(C) Cruise Services revenue increased by 22.9%
($0.5 million) to $2.6 million due to three
additional vessel calls and an industry trend
towards longer vessels.
Between FY2017 and FY2018 Napier Port’s Pro forma
EBITDA grew by $1.9 million (5.3%) to $37.2 million.
The growth in Pro forma EBITDA was due primarily
to growth in Bulk Cargo revenue, a decrease in fixed
asset impairment ($0.3 million), negatively impacted by
increased insurance costs to the port sector following
the Kaikoura earthquake and one-off employment
related expenses.
61
SectiOn 7 / naPier POrt’S financial infOrmatiOn

(c) Overview of prospective financial performance
This section provides an overview of the pro forma prospective
financial performance of Napier Port and should be read in
conjunction with the ‘Selected Financial Information’ table in
Section 7.2 (
Selected Financial Information). A full description
of the assumptions and sensitivities for the Prospective Period
is available in the Supplementary Financial Information on the
Offer Register.
Key assumption Summary
Container Services
revenue
Container Services forecast revenue assumes:
• TEUs will increase by 1.2% in both FY2019F
and FY2020F
• 15 fewer vessel visits in FY2019F
• An increase in container terminal rates
• The introduction of an infrastructure levy in
April 2019
Bulk Cargo revenueBulk Cargo forecast revenue assumes:
• Log volumes increase by 13.2% in FY2019F
and remain consistent at that level in FY2020F
• Other export volumes increase by 26.1% in
FY2019F and decrease by 7.0% in FY2020F
• Import volumes decrease by 4.3% in
FY2019F and 7.3% in FY2020F
• An increase in wharfage charges
Cruise Services
revenue
Cruise Services forecast revenue assumes:
• An increase of 13 cruise vessel calls in
FY2019F and 17 in FY2020F
• An increase in cruise vessel schedule rates
• The introduction of a passenger charge in
FY2020F
Operating expensesPro forma operating expenses are forecast to
increase by 5.7% in FY2019F and 7.1% in
FY2020F

(i) fY2019f financial performance relative to fY2018
From FY2018 to FY2019F, Napier Port’s revenue
from port operations is forecast to grow by 6.1%
($5.5 million) from $89.9 million to $95.4 million.
This is being driven by growth in revenue from all
services. Key movements and factors that are forecast
to drive these movements include:
(A) Container Services forecast revenue growth of 2.5%
($1.5 million to $59.5 million) is due to pre-agreed
tariff increases with shipping lines and an increase
in infrastructure charges. These will be partially
offset by the loss of a significant depot services
customer, a forecast decrease in Port Pack volume
and a decrease in container vessel visits due to a
customer’s revised shipping schedule. Container
volumes are forecast to increase moderately.
(B) Bulk Cargo forecast revenue growth of 9.0%
($2.6 million) to $31.6 million, is driven by expected
volume and tariff growth of exported logs, partly
offset by slightly lower volumes of imported fertiliser
and oil. Total bulk volumes are forecast to increase
from 3.1 million tonnes to 3.4 million tonnes.
Revenue growth is partly offset by the removal of
a log area paving levy.
(C) Cruise Services forecast revenue growth of
40.4% ($1.0 million) to $3.6 million, is driven
by an increase in cruise ship schedule rates and
13 additional vessel calls.
From FY2018 to FY2019F Napier Port’s Pro forma
EBITDA is forecast to increase by $2.5 million (6.8%) to
$39.7 million. This is driven by the increase in revenue
from port operations, partially offset by an increase in
staff related costs as employee numbers increase to
facilitate revenue growth.
(ii) fY2020f financial performance relative to fY2019f
(A) Container Services forecast revenue growth of 6.1%
($3.6 million) to $63.1 million due to anticipated
volume increases, from 269,000 TEUs to 272,000
TEUs, particularly of refrigerated containers
(which attract a higher revenue per container)
tariff increases and the full-year impact of the
infrastructure levy introduced in FY2019F.
(B) Bulk Cargo forecast revenue growth of 1.6%
($0.5 million) to $32.1 million, due to increases in
tariff rates. In light of current international log prices
in China, log export volumes are forecast to be
consistent with FY2019F at 2.5 million tonnes.
(C) Cruise Services forecast revenue growth of 33.4%
($1.2 million) to $4.8 million, driven by an additional
17 cruise ship calls and the introduction of a
passenger charge.
From FY2019F to FY2020F Napier Port’s Pro forma
EBITDA is forecast to increase by 3.1% ($1.2 million)
to $40.9 million. This is primarily driven by the increase
in port operations revenue, offset by an increase in
staff related costs and other operating costs such as
insurance.
7.5 NET PROFIT AFTER TAX
Net profit after tax (nPat) includes certain non-recurring items
and the impact of the pre Offer capital structure which have
been adjusted for in calculating Pro forma EBITDA. The key
drivers of the movement in NPAT over the FY2016 to FY2020F
period include:
(a) Between FY2016 and FY2017, NPAT increased by
$5.2 million, driven by the increase Pro forma EBITDA
(as noted above), partly offset by a corresponding increase
in income tax expense.
(b) Between FY2017 and FY2018 NPAT increased by
$0.9 million due to the increase in Pro forma EBITDA
(as noted above) and an increase in the fair value of
investment properties of $0.7 million, partly offset by
an increase in income tax expense.
(c) Despite Pro forma EBITDA being forecast to increase
between FY2018 and FY2019F, NPAT is forecast to
decrease by $12.0 million in FY2019F with this largely due to
the impact of the pro forma adjustments discussed in Section
7.9 (
Reconciliation of Pro Forma EBITDA to Statutory NPAT).
The key adjustments that impact NPAT in this period are:
(i) Offer costs ($7.3 million);
(ii) An increase in finance costs due to the closure of interest
rate swap agreements ($6.6 million);
(iii) A $1.0 million increase in the share of loss and
impairment of equity accounted investees due to the
NAPIER PORT / PRODUCT DISCLOSURE STATEMENT
62

impairment of the investment in the Longburn Intermodal
Freight Hub Limited joint venture, which is currently loss
making. The value of the investment in the joint venture
was impaired to $nil;
(iv) An increase in depreciation and amortisation
expenses reflecting capital expenditure over the period
($0.7 million);
(v) The above are partly offset by a decrease in income
tax expense.
(d) Between FY2019F and FY2020F NPAT is forecast to
increase by $14.4 million due to the forecast increase in
Pro forma EBITDA (as noted above), FY2019 pro forma
adjustments not repeating, and a $10.5 million decrease
in finance costs due to the impact of the listed capital
structure. This is partly offset by an increase in depreciation
and amortisation ($1.4 million) and income tax expense
($2.7 million).
7.6 DIVIDENDS
Napier Port intends to declare dividends during the Prospective
Period as follows:
(a) In respect of the FY2019F, Napier Port expects to pay
dividends to HBRIC of $54.0 million in total, comprising:
(i) ordinary dividends of $10.0 million which have been
declared and paid to HBRIC; and
(ii) a special dividend of $44.0 million, which has been
declared and will be paid to HBRIC on completion of the
Offer in order to utilise substantially all Port of Napier’s
imputation credit balance (that would otherwise be lost
due to the change in ownership following completion
of the Offer).
(b) Following the completion of the Offer, the Directors’ intention
is to declare a dividend of $5.0 million (2.5 cents per Share)
which will be paid to Shareholders in December 2019.
(c) In respect of FY2020F, provided the PFI is achieved, the
Directors’ intention is to pay dividends of $14.9 million which
represents a dividend payout ratio of approximately 70%
of Free Cash Flow. It is expected that this will comprise an
interim dividend of $6.0 million (payable in June 2020) and
a final dividend of $8.9 million (payable in December 2020).
A reconciliation of NPAT to Free Cash Flow is provided on the
Offer Register. For the definition of “Free Cash Flow” see Section
13 (
Glossary).
The dividends will be fully imputed to the extent possible and are
expected to be fully imputed in FY2019F and FY2020F. See
Section 6.2 (
Dividend policy).
7.7 CAPITALISATION TABLE
Capitalisation Table
Number of Shares being offered 90 million
Number of Shares on issue following the Offer 200 million
Indicative Price Range $2.27 - $2.60
Implied market capitalisation $454.0 million - $520.0 million
Net Debt / (Cash) on completion of the Offer $(22.4) million
Implied enterprise value $431.6 million - $497.6 million
explanation of implied market capitalisation and implied enterprise value
Implied market capitalisation is the value of all of the issuer’s equity securities, as implied by the price of the Shares being offered. It is a
measure of what Napier Port is proposing that Napier Port’s equity is worth.
Implied enterprise value (eV) is a measure of the total value of the business of Napier Port, as implied by the price of the Shares being
offered. Implied enterprise value is the amount that a person would need to pay to acquire all of Napier Port’s equity securities and to settle
all of Napier Port’s borrowings. It is a measure of what Napier Port is proposing the business of Napier Port as a whole is worth.
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SectiOn 7 / naPier POrt’S financial infOrmatiOn