Cargo Volume Growth Increases Profit for Port of Tauranga
u:\documents\word\pressreleases\nzx letter - full year result june 2019.docx
28 August 2019
NZX
Wellington
Dear Sir/Madam
PORT OF TAURANGA LIMITED FULL YEAR RESULTS: 30 JUNE 2019
In accordance with the NZ Stock Exchange Listing Rules, please find attached the following
documentation for release to the market:
1 Press Release
2 Investor Presentation
3 Annual and Integrated Report (including audited financial statements)
4 NZX Results Announcement
5 NZX Distribution Notice – Full Year
6 NZX Distribution Notice – Special
Yours sincerely
Steve Gray
CHIEF FINANCIAL OFFICER
---
Queen
Mary
2
Presentation to Analysts
28 August 2019
Disclaimer
The information in this presentation is for information purposes and has b
een
prepared by Port of Tauranga Limited with due care and attention. However,neither the Company, nor any of its Directors, officers, employees, contr
actors or
agents, shall have any liability whatsoever to any person, for any loss of d
amage
resulting from the use or reliance on this presentation.The information contained in this presentation is not intended to be relie
d upon
as advice to investors and does not tak
e into account the investment object
ives,
financial situation or needs of any particular investor.Past performance is not indicative of future performance and no guarantee
of
future returns is implied or given.The information contained in this presentation should be considered inconjunction with the Company’s latest audited financial statements whic
hare
available in the investor section of our website.
Highlights
• Group NPAT up 6.7%• Parent NPAT up 13.9%• Total trade up 10.2%• Container volumes up 4.3%• Transhipment up 11.2%• Imports up 8.4%• Exports up 11.2%• Ordinary dividends up 4.7%• Final special dividend of 5 cents
to be paid in October 2019
• Special dividend programme
extended for 4 years with a 2.5 cent dividend payable
Highlights
Group Net Profit After Tax up 6.7%
$83,441
$94,273
$100,577
$0
$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000
$100,000$110,000$120,000
2017
2018
2019
Parent Net Profit After Tax up 13.9%
$68,796
$77,882
$88,692
$0
$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000
2017
2018
2019
Ordinary Dividends up 4.7%
Continuance of 2.5cps special dividend for a further 4 years
11.2
12.7
13.3
02468
101214
2017
2018
2019
Cents per share
Port Performance
Net Debt / Net Debt +Equity
28.7%
26.2%
27.5%
0%5%
10%15%20%25%30%35%40%
2017
2018
2019
Total Trade up 10.2%
22,194
24,458
26,946
0
5,000
10,00015,00020,00025,00030,000
2017
2018
2019
Container Volumes up 4.3%
1,085,987
1,182,147
1,233,177
100,000200,000300,000400,000500,000600,000700,000800,000900,000
1,000,0001,100,0001,200,0001,300,0001,400,000
2017
2018
2019
Successful Executionof Hub Strategy
Source. Ministry of Transport
NZ’s Largest Container Terminal
Handle
s
44% more containers than
Auckland
(container volumes by quarter –
all ports)
0
50,000
100,000150,000200,000250,000
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
13Q4
14Q1
14Q2
14Q3
14Q4
15Q1
15Q2
15Q3
15Q4
16Q1
16Q2
16Q3
16Q4
17Q1
17Q2
17Q3
17Q4
18Q1
18Q2
18Q3
18Q4
19Q1
Auckland
Lyttelton
Napier
Otago
Tauranga
Wellington
Port Performance
Transhipped Container Volumes up 11.2%
245,896
303,284
337,183
100,000150,000200,000250,000300,000350,000400,000
2017
2018
2019
NZ Transhipped
Container Volumes up 10.8%
TEUs
0
5,000
10,00015,00020,00025,00030,00035,000
Auckland
Bluff
Lyttelton
Napier
Nelson
Port
Chalmers
Timaru Wellington
New Zealand Transhipment FY18
cf
FY19
2017 / 2018 TEUs
2018/2019 TEUs
Log Exports up 12.5%
5,490
6,276
7,063
0
1,0002,0003,0004,0005,0006,0007,0008,000
2017
2018
2019
Dairy Exports
2,223
2,312
2,322
0
500
1,0001,5002,0002,500
2017
2018
2019
Fertiliser Imports down 9.2%
474
552
501
0
100200300400500600
2017
2018
2019
Oil Products up 2.0%
1,436
1,569
1,600
0
500
1,0001,500
2017
2018
2019
Grain & Dairy Feed
Supplement Imports down 10%
1,156
1,343
1,209
0
500
1,0001,500
2017
2018
2019
Kiwifruit TEUs up 15.2%
25,048
31,949
36,804
0
5,000
10,00015,00020,00025,00030,00035,00040,000
2017
2018
2019
TEUs
Cruise Vessels
116 visits in FY19, expecting 111 in FY20
Subsidiaries & Associate Companies
Subsidiaries & Associates
Net Profit After Tax
$14,645
$16,391
$11,885
$0
$5,000
$10,000$15,000$20,000
2017
2018
2019
$000s
Associate & Subsidiary Companies
NPAT down 27.5%
2019$000
2018$000
Quality Marshalling Limited
2,661
2,312
Northport Limited
8,995
9,191
PrimePort Timaru Limited
2,080
1,523
Timaru Container Terminal Limited
627
651
Coda Group LP
(2,412)
2,768
PortConnect Limited
(66)
(51)
Total Subsidiary and Associate Income
11,885
16,394
Northport
• Earnings down 2.1%• Handled 12,849 TEU• Trade down 5%
Future Expansion
Coda Group
• Normalised loss of $1.29 million• $3.7m of one-off write offs• Loss making contracts• New CEO and CFO• Return to profitability in FY20
Optimising Supply Chains
Aligning the Domestic and Export Supply Chains
FMCG product loaded at Savill Drive Auckland for distribution to Palmerston North
Dairy powder loaded in Taranaki for export to the world
PrimePort Timaru
• Earnings up $0.557 million
to $2.080 million
• On a normalised basis
earnings in line with 2018
• New 60 bollard tug
commissioned January 2019
• Looking to build new bulk
berth
Timaru Container Terminal
• Earnings flat at $0.627 million • Handled 80,378 TEU’s v 89,087 TEUs in FY18• Rio Class ships calling at TCTL
Timaru –
Future
Terminal Capacity
Quality Marshalling
• Earnings up $0.349 million to $2.661 million• All contracts performing well
Licence to Operate in our Community
Air Quality / Visual Amenity
Before
After
Improved Bulk Cargo Handling
Methyl Bromide Recapture
Methyl Bromide Recapture
Debarking
Stormwater Treatment
More Comprehensive Monitoring
CEMARS Certification
Emission Management
Greenhouse gas emission sources top 10 for Port
of Tauranga for 2017-2018 reporting year
Cost of Becoming Carbon Neutral
• Port of Tauranga’s most recent GHG inventory was a total of
27,684 tCO
2
e.
• Offsetting using New Zealand Permanent Forest Sinks Initiative
(PFSI) carbon credits, at around $35 per unit, would cost$968,940, close to $1 million.
Decarbonisation Strategy
Objective• 5% reduction in Scope 1 carbon emissions per cargo tonne• Net zero emissions by 2050Insetting• “Create a protected fund of money to implement emissions
reduction projects inside the organisation”
Electric Vehicles
Each BEV reduces emissions by 2 tCO
2
e
Battery Hybrid
Straddle Carriers
(each straddle $215,000 more
expensive than diesel/electric
equivalent)
Solar Generation
Proportion of
Total Volume Transported by Rail
0%
20%40%60%
2012 2013 2014 2015 2016 2017 2018
Port of Tauranga Rail Share
Export
Import
Linear (Export)
Linear (Import)
Modal Shift (Trans-shipment and Rail)
Customers wanting to reduce their
Scope 3 emissions
Big ships offer > 30% lower carbon / container
Outlook 2019
Log Forecasts
At this stage, forecast FY20 logs to be
approximately 6 million JASM
Annual Log Storage Turn
•
“At Tauranga every square metre of storage space hosted 20 m
3
.
•
This is almost double the average maintained on all the other ports in New Zealand.
•
A higher storage turn means that a port can make more productive use of the limited land resources available.”
Source: SCION
Log
Export Costs by Port
Tauranga has lowest composite costs to export 16,000 m3 consign
ment
Source: SCION, circa 2014
Source: Zespri
Export Tray Volume
Additional 3,500 ha new Gold licence 2018-2022
Kiwifruit - Zespri’s Forecast
Kiwifruit - Containerised Volumes
Source: Ze
s
Container Volume
Export Tray Volume
Additional 3,500 ha new Gold licences 2018-2022
Cars
Tainui - 30 year Agreement for Ruakura Inland Port
192 hectares for logistics and industrial use
Terminal Equipment
• Auto Stacking Cranes (ASC) lead
time 9 - 12 months from order.
• RFI to be provided to
manufacturers Q3 2019.
• Crane 9 due January 2020. • New crane lead time 12 - 18
months from order.
Full Build Out ~3M TEUs
Parent Capital Expenditure 2016-2020
$63,323
$60,166
$16,788
$40,073
$59,512
$0
$20,000$40,000$60,000$80,000
2016
2017
2018
2019
2020F
Upper North
Island
Supply
Chain Study
NAME
OF
SPEAKER
Title
Thank
You
---
Our place, our future
INTEGRATED ANNUAL REPORT 2019
/a
Port of Tauranga is New Zealand ’s
largest, fastest-growing and most
efficient port.
It is the international freight gateway
for the country’s imports and exports
and the only New Zealand port able
to accommodate the largest container
vessels to visit. We handle 30%
of all New Zealand cargo, 35% of
New Zealand exports and 37%
of all shipping containers
1
.
We provide our customers with highly
effective supply chains through our
investment in other ports, inland freight
hubs, cargo handling expertise and
logistics services.
We have the people and expertise
required to deliver excellent service to
our customers, sustainable benefits
to the community and strong financial
returns to our shareholders.
Port of Tauranga is the economic
anchor of the Bay of Plenty economy,
creating jobs and wealth for the
Tauranga community, the broader
region and beyond.
Our approach is grounded in the principle
of kaitiakitanga or guardianship – of our
environment, our people, our community
and our future.
Port of Tauranga is New Zealand ’s Port
for the Future.
Facilitating the
most efficient
and sustainable
trade to and from
New Zealand
1. Source: Ministry of Transport
Port of Tauranga – Integrated Annual Report 2019
Table of contents
Our highlights and challenges 02
Chair and Chief Executive’s report to shareholders 04
Our integrated report 12
Our business model 14
Our national network 15
How Port of Tauranga creates value 16
What matters to our stakeholders
18
Our strategies for the future 20
Capital #01 – Our relationships 24
Capital #02 – Our people 34
Capital #03 – Our skills and knowledge 44
Capital #04 – Our environment 52
Capital #05 – Our assets and infrastructure 62
Capital #06 – Our finances 70
Senior Management Team 78
Board of Directors 80
Consolidated Financial Statements 82
Directors’ Responsibility Statement 83
Independent Auditor’s Report 84
Corporate Governance Statement 121
Financial and Operational Five Year Summary 128
Company Directory 129
/01
Group Net Profit After Tax up
6.7 %
to $100.6 million
Imports up
8.4%
to 9.8 million tonnes
Port of Tauranga Total
Recordable Injury
Frequency Rate down
55%
Revenue up
10.4 %
to $313.3 million
Exports up
11.2 %
to 17.1 million tonnes
Container crane
productivity rate of
33.6
moves/hour
Total trade up
10.2 %
to 26.9 million tonnes
Ordinary dividend up
4.7 %
to 13.3 cents per share
Ship visits down
3.9 %
to 1,678
Container volumes up
4.3%
to 1.2 million TEUs
2
Subsidiary and Associate
Companies’ earnings down
2 7.5 %
116 cruise ship visits, a
39.8 %
increase
Transhipped
3
containers up
11.2 %
Contractors’ Total Recordable
Injury Frequency Rate down
22%
People hosted on port tours
2,000+
Our highlights
and challenges
For the year ended 30 June 2019
/02
Port of Tauranga – Integrated Annual Report 2019
Provided educational
scholarships to 18 tertiary
students with ties to the
Bay of Plenty
18
tertiary students
A massive fire destroyed our
electricians’ workshop at the
Tauranga Container Terminal
in August
Signs of a slowing in the
New Zealand economy
Port of Tauranga Chief
Executive Mark Cairns honoured
with a prestigious leadership
award by the Institute of
Finance Professionals
The Government commenced a
high-level review of the Upper
North Island Supply Chain
with a view to move much of
Auckland’s cargo to
Whangarei’s Northport
(50% owned by Port of Tauranga)
Regional transport
infrastructure capacity under
strain due to population growth
and increased economic activity
Secured resource consent for
stormwater management at our
Mount Maunganui wharves
Evolving industrial frameworks,
including legislative changes,
caused uncertainty for
employers
Renewed long-term operating
agreement with Oji Fibre
Solutions for a further ten years
Ordered a ninth container crane,
due for delivery in January 2020,
and seven straddle carriers
Compliance costs
continue to rise
2. Twenty Foot Equivalent Units – a standard measure of shipping containers
3. Transhipment is when containers are transferred from one ship to another at Port of Tauranga
/03
Chair and Chief Executive’s
report to shareholders
Our year in review
/04
Port of Tauranga – Integrated Annual Report 2019
Mark Cairns
Chief Executive
David Pilkington
Chair
/05
In the year to
30 June 2019, container
transhipment grew
11.2%. Transhipment
now makes up 32.1%
of the containers
handled at Tauranga.
We are pleased to present our
annual review of performance of
Port of Tauranga Limited for the
year to 30 June 2019.
Port of Tauranga has had another
good year. We handled more
than 26.9 million tonnes of cargo,
an increase of 10.2% in volume.
Containerised cargo grew 4.3%
in volume, to more than 1.2 million
TEUs.
Group Net Profit After Tax passed
the $100 million milestone for the
first time, increasing 6.7% on last
year’s profit of $94.3 million to reach
$100.6 million.
Hub port strategy
We continue to see big increases
in transhipment as evidence of our
success in becoming New Zealand’s
major international hub port.
Transhipment, where containers
are transferred from one service
to another, has been growing
significantly since 2016, with the
completion of Port of Tauranga’s
$350 million investment in building
capacity to become big ship capable.
Having the necessar y infrastructure
is one thing, but it is also vital to have
the long-term relationships in place
to ensure we have the freight volume
to justify the big ship services. Our
relationships with key cargo owners
such as Oji Fibre Solutions, Kotahi
Logistics and Zespri International
give us that assurance.
New Zealand shippers can now
access fast, big ship services that
call only in Tauranga by utilising the
sea links between Tauranga and
Timaru, Napier, Nelson or Wellington.
In the year to 30 June 2019,
container transhipment grew 11.2%.
Transhipment now makes up 32.1% of
the containers handled at Tauranga.
The number of containers
transferred by rail to and from
our inland freight hub, MetroPort
Auckland, increased 4.3%. MetroPort
Auckland now stands alone as the
countr y ’s fourth largest container
terminal by volume.
We recently announced a
partnership with Tainui Group
Holdings to support the development
of the Ruakura Inland Port in
Hamilton, which is approximately
midway between Tauranga and
MetroPort Auckland.
Our other inland freight hub,
MetroPort Christchurch, is now home
to a purpose-built warehouse for our
Associate Company Coda Group. The
facility allows Coda Group to handle
Westland Milk dairy exports.
Meanwhile, in response to customer
demand, we are pursuing plans to
add another container vessel berth
by extending up to 385 metres to
the south of the existing Sulphur
Point wharves.
Our ninth container crane will be
delivered in January 2020.
/06
Port of Tauranga – Integrated Annual Report 2019
Oji Fibre Solutions agreement
extended
Port of Tauranga and Oji Fibre
Solutions have agreed on a ten
year extension to our long-term
operating agreement. Oji, New
Zealand’s major manufacturer
of market kraft pulps, container
board and packaging products,
has committed to consolidating
the majority of its import and export
cargo through Tauranga.
Trade trends
Exports increased 11.2% to 17.1
million tonnes and imports increased
8.4% to 9.8 million tonnes for the year
ended 30 June 2019.
Log exports increased 12.5% to
7.1 million tonnes. This trend is not
expected to continue in the short
term, with log prices declining in
June 2019 following a drop in demand
from China, New Zealand’s biggest
log export market. We expect
some impact on volumes in the
coming months.
Sawn timber exports increased 5.4%
in volume. Overall, forestr y-related
exports increased 10% in volume.
Dairy product exports remained
steady at just over 2.3 million
tonnes. Imports of dair y herd food
supplements decreased 11.8%, and
fertiliser imports decreased 9.2%.
Kiwifruit exports increased 15.2%
during the period.
Other primar y produce sectors also
performed strongly, with frozen
meat exports increasing 18.8% in
volume and apple exports
increasing 54.3%.
Cement imports decreased 17.1% and
steel exports decreased 7.7%. Salt
imports increased 26.8% in volume.
Oil product imports increased by
almost 2% and dr y chemical imports
increased by almost 9%.
The average size
of vessels continues
to increase. The
average gross tonnage
of container ships
visiting Tauranga
has increased
25.2% between 2016
and 2019.
/07
Ship visits decreased 3.9% to 1,678
for the year. The average size of
vessels continues to increase.
The average gross tonnage of
container ships visiting Tauranga
has increased 25.2% between 2016
and 2019.
Financial performance
Revenue increased 10.4% to $313.3
million. Parent EBITDA (earnings
before interest, tax, depreciation
and amortisation) increased 12.4%
to $168.6 million.
Associate and Subsidiary Company
performance
Earnings from Associate Companies
decreased 27.5% after a very
disappointing result from Coda
Group, our 50/50 joint venture with
Kotahi. We are confident Coda Group
will return to profitability in the next
financial year. Coda Group’s new
Chief Executive, Gerard Morrison,
has embarked on an extensive
change programme to ensure its
long-term success.
Our 100% subsidiar y Quality
Marshalling had an outstanding year,
with profits increasing 15.1%, and
our joint venture in the South Island,
PrimePort Timaru, increased its
contribution by 36.6%.
Dividend policy extended
The Port of Tauranga Board of Directors
declared a final fully imputed dividend
of 7.3 cents per share, bringing the
full year ’s dividend to 13.3 cents
per share, a 4.7% increase on the
previous year.
The Board has decided to extend the capital
repayment programme from October 2020
through special dividends of 2.5 cents per
share for another four years, subject to
meeting certain conditions.
/08
Port of Tauranga – Integrated Annual Report 2019
The last of four special dividends of
5.0 cents per share will be paid on
4 October 2019.
The Board has decided to extend
the capital repayment programme
from October 2020 through special
dividends of 2.5 cents per share
for another four years, subject to
meeting certain conditions.
Health, safety and people
We continue to make progress
towards our health and safety
goals, with a 55% reduction in
Total Recordable Injur y Frequency
Rate and a 17% reduction in Injury
Severity. We had one lost-time
injur y during the year, involving
blistered feet.
We have a ver y special bunch of
people working at Port of Tauranga.
They show enormous compassion
for many good causes. They take
immense pride in their surroundings,
both in their guardianship of the
natural environment and their
thorough care of the equipment and
facilities we own and operate.
Our people continuously
demonstrate a can-do attitude
towards the challenges presented
to them. Their commitment to
problem-solving has contributed
to our reputation as an innovative
organisation that puts customer
needs at the heart of ever ything
we do.
Sustainability
We take climate change seriously in
our business and are proud to have
one of the lowest carbon emissions
per tonne of cargo handled of
any port in New Zealand. We are
committed to the Paris Agreement
target to keep global warming below
two degrees.
Port of Tauranga has gained
certification of its carbon emissions.
The CEMARS (Certified
Measurement and Reduction
Scheme) accreditation will help us
measure our progress in reducing
our carbon footprint.
We have set an initial short-term
goal of a 5% reduction in our
Scope 1
4
emissions per cargo tonne
and we are targeting net-zero
emissions by 2050.
Part of our response is to “inset ”
carbon offsets by investing the
money into sustainability initiatives
within our business. This year, this
fund sits at just under $1 million.
The largest source of our Scope 1
emissions is from diesel-powered
straddle carriers at the container
terminal and we are using the
insetting fund to purchase more
expensive, battery-hybrid straddle
carriers. Our next stage of expansion
will allow us to utilise fully electric
automated stacking cranes, avoiding
increased diesel consumption.
We are also replacing light vehicles
with electric or hybrid models where
available, installing LED lighting, and
using biodiesel. We favour electricity
suppliers that use renewable
energy sources. Our modern fleet
of ship-to-shore gantr y cranes
now all have sophisticated electric
motors that re-generate up to 700
kw of electricity when lowering a
container. Excess electricity can be
made available to adjacent cranes
lifting containers, or fed back into
the terminal to power refrigerated
container connections.
Our emissions from waste to landfill
have grown due to increased
wharf sweeping to prevent dust
and debris entering the harbour.
A large proportion of bark from the
log wharves is already recycled into
compost, and we are looking at ways
we can recycle more waste.
We have set an initial
short-term goal of a 5%
reduction in our Scope 1
emissions per cargo tonne
and we are targeting net-
zero emissions by 2050.
4. Scope 1 measures the direct emissions of our activities on site. Scope 2 measures carbon consumed but not created (e.g. electricity from the national grid).
Scope 3 measures emissions from other parts of our supply chain (e.g. air travel)
/09
We favour rail transport over road
because of the lower emissions and
are working with our rail partners
KiwiRail to reduce train-related
emissions through efficiency and
technology. We are also working
with Pacifica Shipping to promote
greater use of coastal shipping
where feasible.
The availability of rail and coastal
shipping to consolidate cargo at
the Port, and the efficiency of the
big ship services, means Port of
Tauranga is the obvious choice
for customers seeking the lowest
carbon supply chain. Big ships of
7,500 to 9,500 TEUs have a carbon
footprint more than 31% lower than
the previous average size vessels
calling in New Zealand
5
.
In addition to our response to climate
change, we are placing increasing
focus on the impact of our growing
business on our various communities
and stakeholder groups.
We are ver y pleased to have secured
resource consent for our stormwater
network at Mount Maunganui.
We have also made significant
progress in dust suppression and
spill prevention.
We encourage the moves to require
ships to use low sulphur fuel and
note the continuing improvements
to minimising the amount of the log
fumigant methyl bromide that is
released to the atmosphere.
Upper North Island Supply Chain
Review
In February 2018, the Government
announced an Upper North Island
Supply Chain Review. A working
group is reviewing the current supply
chain to advise on priorities for
transport investment, with a view to
moving significant cargo volumes
from Ports of Auckland to Northport
in Whangarei. We see a growing role
for Northport in helping to alleviate
the pressure on Ports of Auckland.
After the release of the working
group’s interim progress report,
we hosted the group in Tauranga
and outlined the significant capacity
still available for cargo growth.
We look forward to the group’s future
reports, which we hope will address
well-known issues such as the need
for increased investment in road
and rail networks and the historic
financial under-performance of
some port companies.
External influences
Port of Tauranga’s ability to create
value for our stakeholders is impacted
by external factors. This includes
economic conditions, trade trends and
technological change. We also operate
within the context of the current
political environment, both locally and
nationally. We share our views with
elected representatives across the
political spectrum, especially in regard
to regulatory and legislative changes
impacting the port industry.
We continue to focus on maintaining diversity
in our cargo and customer mix, giving us a
range of revenue sources and ensuring we can
capitalise on any new business opportunities.
5. http://shipperscouncil.co.nz/wp-content/uploads/The_Question_of_Bigger_Ships-1.pdf
/10
Port of Tauranga – Integrated Annual Report 2019
Current global influences include
increased trade protectionism
(including the tension between the
United States and China), political
uncertainty with the ongoing Brexit
process, and geopolitical threats
involving the Middle East, Russia and
North Korea.
Market outlook
Log export prices dropped sharply
mid-year from their historic highs
due to multiple international market
influences. We expect some impact
on volumes in the coming months,
in line with the usual fluctuations in
demand for this commodity. Port
of Tauranga’s largest log export
customers source logs from the
extensive forestry estates in the
central North Island, which tend to
maintain steady harvesting rates.
We continue to focus on maintaining
diversity in our cargo and customer
mix, giving us a range of revenue
sources and ensuring we can
capitalise on any new business
opportunities.
We will provide earnings guidance for
the 2020 financial year at our Annual
Shareholders Meeting on 25 October
2019, once we have a feel for the first
quarter ’s trade.
Finally, we would like to acknowledge
and thank our loyal staff and
contractors, whose dedication,
innovation and enthusiasm make
Port of Tauranga New Zealand’s Port
for the Future.
David Pilkington
Chair
Mark Cairns
Chief Executive
Finally, we would
like to acknowledge
and thank our loyal
staff and contractors,
whose dedication,
innovation and
enthusiasm make
Port of Tauranga
New Zealand’s
Port for the Future.
/11
Our integrated report
As promised last year,
we have surveyed
our internal and
external stakeholders
to identify what
matters most to them.
Port of Tauranga last year began
the journey towards integrated
reporting – a more comprehensive
and transparent method of
communicating our strategy,
governance, performance and
prospects. This report outlines
how Port of Tauranga creates
value for our stakeholders over
the short, medium and long term.
We define “stakeholders” as
anyone who has something to gain,
or something to lose, from Port of
Tauranga’s activities.
We have made significant progress
in the past year in aligning our
reporting against the internationally-
recognised <IR> Framework
of the International Integrated
Reporting Council (IIRC: www.
integratedreporting.org), consistent
with the NZX’s updated Corporate
Governance Code.
The framework examines the capitals,
resources or inputs that we use or
affect, and their interdependencies.
We explain how we use six capitals
– relationships, people, skills and
/12
Port of Tauranga – Integrated Annual Report 2019
knowledge, the environment, assets
and infrastructure, and finances –
to create value.
As promised last year, we have
surveyed our internal and external
stakeholders to identify what
matters most to them. Our
strategies to address these
material issues are a work in
progress and this is described in
the following pages.
We acknowledge the risks that could
erode the value created by Port
of Tauranga and, throughout this
report, we outline our approach to
managing and mitigating these risks.
We have engaged an independent
expert and developed a three-
year plan to guide the evolution
of our reporting. We have
expanded our assurance to
include carbon emissions (using
the CEMARS certification) and will
expand assurance to other non
financial content to increase our
transparency and credibility.
Please join us as we progress our
integrated thinking, actions and
reporting in a way that ensures
the best possible outcomes for
our shareholders, employees,
customers, partners and
community. This is our future.
David Pilkington
Chair
/13
State Highway 1
State Highway 2
Golden Triangle
Rail Network
East Coast Main
Trunk Rail Network
KEY
Our business
model
Port of Tauranga works
with its long-term partners
to deliver highly effective
logistics networks that meet
the needs of the New Zealand
supply chain.
We deliver appropriate risk and sustainable
returns for our shareholders and help cultivate
a prosperous city, region and nation.
Our success is only possible through the efforts
of a proud, safe and motivated workforce. We also
rely on the ongoing support of our communities,
which in turn look to us to be responsible stewards
of our shared environment.
Christchurch
Timaru
Invercargill
Wellington
Napier
Murupara
Hamilton
Auckland
Northport
Port of Tauranga
5
4
6
3
2
1
/14
Port of Tauranga – Integrated Annual Report 2019
OUR CORE VALUES THAT
INFORM EVERYTHING WE DO:
–
Safety
–
Integrity
– Innovation
–
Communication
– Teamwork
Our national
network
/15
Operated by Parent Company
and KiwiRail
•
Inland port in the heart of
Auckland’s commercial
and industrial area,
connected by rail to
Tauranga and Hamilton
• New Zealand’s fourth
largest container terminal.
50% ownership
with Kotahi
•
Freight logistics group
incorporating Tapper
Transport, Dairy Transport
Logistics, Priority Logistics
and MetroPack
• 50% shareholding in
MetroBox
• Operates New Zealand’s
largest intermodal freight
hub at Otahuhu in Auckland
• Operates freight hub at
Crawford Street, Hamilton.
50% ownership with Marsden
Maritime Holdings
•
Deep water commercial
port near Whangarei.
50% ownership with Ports
of Auckland
• Online cargo
management system.
Operated by Timaru
Container Terminal
•
Intermodal freight hub
at Rolleston
• Rail connections to Timaru
Container Terminal and
rest of South Islan
• New warehouse built for
Coda Group.
50.1% ownership
with Kotahi
•
Direct links to Tauranga
• Operates MetroPort
Christchurch at Rolleston.
100%
ownership
•
Specialist cargo handling
services company with
operations at Tauranga
and Timaru.
50% ownership with
Timaru District Holdings
•
Commercial port in Timaru
• Bulk cargoes including
major cement handling
facility
• Developing new oil terminal.
METROPORT
CHRISTCHURCH
565166
Parent Company
• New Zealand’s largest port and international freight gateway
• Container terminal, bulk cargo wharves and bunkering
• Extensive cargo storage and handling facilities
• Rail connections to Hamilton, Auckland and the central North Island
• Extensive road networks and coastal shipping connections.
1
METROPORT
AUCKLAND
31236413
5
Inputs
– our capitals
Our
capabilities
OUR
RELATIONSHIPS
OUR
PEOPLE
OUR SKILLS
& KNOWLEDGE
OUR
ENVIRONMENT
OUR ASSETS
& INFRASTRUCTURE
OUR
FINANCES
Can-do attitude
Sector-leading safety performance
Flexibility
History of strong commercial
infrastructure investment
Deep understanding of supply
chain dynamics
Proven ability to execute on strategy
Located close to cargo catchments
and linked by road, rail and sea
Cost-effective and competitive
labour model
Strong and transparent governance
framework
Strong financial and risk management
OUR
RELATIONSHIPS
OUR
PEOPLE
OUR SKILLS
& KNOWLEDGE
OUR
ENVIRONMENT
OUR ASSETS
& INFRASTRUCTURE
OUR
FINANCES
How Port of Tauranga
creates value
/16
Port of Tauranga – Integrated Annual Report 2019
Our
outputs
Outcomes for
our stakeholders
Enduring, mutually beneficial
partnerships
A proud, safe and motivated
workforce
Highly effective logistics
networks that meet the needs of
the New Zealand supply chain
Responsible environmental
stewardship
Appropriate risk and sustainable
returns for our shareholders
Prosperity for local, regional and
national communities
Growing trade volumes based on
long-term freight agreements with
key customers
Constructive partnerships with iwi and
our community, focussed on harbour
health, education and youth development
Consistent, reliable and efficient
performance through safe and
resilient operations within a competitive
operating model
Innovative investments in other ports,
inland freight hubs, logistics and cargo
handling specialists
Strategic land holdings on both sides of
Tauranga Harbour and other key locations
Cargo handling equipment and storage
capacity that enables cargo growth
Proactive pollution prevention
and focus on energy efficiency and
waste minimisation
Strong balance sheet
Job creation (direct and indirect)
Dividends paid to shareholders, including
regional ratepayers (through cornerstone
shareholder, Quayside)
Tourism income from visiting cruise
ship passengers
/17
We asked a sample of people
across the Port and our community,
iwi representatives, customers,
suppliers and partners to identify
issues and prioritise those we
should focus on as an organisation.
We engaged an independent expert
to review our business documents,
objectively compile a key issues
list, validate the list with senior
management and then conduct
an email and phone survey.
The results give us a clear picture
of the issues with the most potential
to impact the way we create or
erode value for the Company and
our stakeholders – our “material
issues”. They include economic,
environmental and social issues.
The top 12 material issues for Port
of Tauranga can be summarised as:
• Health, safety and wellbeing
• Stormwater management
• Biosecurity
• Customer satisfaction and trust
• Air quality management
• Port capacity and expansion
• Profitability
• Workforce engagement
• Geographic reach
• Community engagement
• Land transport networks
• Iwi engagement.
The survey respondents believed
that Port of Tauranga is doing a good
job in many of these areas. In some,
we need to be more proactive or
better communicate our actions
and progress. The feedback from
our stakeholders will help us
prioritise our resources to improve
our performance. You will see these
themes reflected throughout this
report and in our future reporting.
The following sections outline
our strategies, recent progress,
and commentar y on how we utilise
the resources, or “capitals”, at
our disposal.
Reward does not come without
risk and Port of Tauranga has
extensive programmes in place to
identify, manage and mitigate the
risks to our staff, our Company, our
community and our environment.
You can read more on our approach
to risk management throughout this
report and in detail in our Corporate
Governance Statement on our
website www.port-tauranga.co.nz.
The results give us a
clear picture of the
issues with the most
potential to impact
the way we create or
erode value for the
Company and our
stakeholders – our
“material issues”.
They include economic,
environmental and
social issues.
What matters to
our stakeholders
/18
Port of Tauranga – Integrated Annual Report 2019
Profitability
Port capacity
and expansion
Air quality
management
Customer
satisifaction
and trust
Biosecurity
Stormwater
management
Health, safety and wellbeing
Iwi engagement
Land transport
networks
Community
engagement
Geographic
reach
Workforce
engagement
3.0
4.0
5.0
2.0
This graph shows the strong alignment between the views of internal stakeholders
(our employees and managers) and external stakeholders (the community, iwi,
our customers, partners, suppliers, interest groups, government agencies and
regulator y authorities). It demonstrates the areas that matter to our stakeholders.
Stakeholder ViewBusiness View
/19
Material issues Our strategies Recent progress
Health, safety
and wellbeing
• Create a positive health,
safety and wellbeing
culture, where incidents
are prevented and
wellbeing is proactively
managed
• Prioritise crisis and
emergency response
preparedness, through
thorough planning and
regular training exercises.
• Introduced “ShipShape”, a comprehensive wellness
programme for staff and quickly achieved bronze
accreditation from Toi Te Ora Public Health
• Implemented policies and training about domestic
violence, discrimination, bullying and harassment,
diversity and inclusion
• Held joint training exercises with Fire and
Emergency NZ, NZ Police, Maritime NZ, NZ Defence
Force, NZ Customs and other agencies
• Reframed our assessment of critical operating
risks and mitigations through the “bow tie”
methodology.
Stormwater
management
• Protect biodiversity and
marine habitats through
responsible stewardship
of the harbour, including
stormwater management
to prevent harbour
pollution.
• Secured a resource consent for stormwater
management at our Mount Maunganui wharves,
ensuring all our drainage on both sides of the
harbour is fully regulated
• Increased wharf sweeping and installed additional
screening chambers on
stormwater drains
• Developing a better stormwater monitoring
programme to support improvement solutions.
Biosecurity• Minimise pest incursions to
protect native biodiversity
and the local economy
• Utilise technology as well
as the “eyes and ears” of the
wider Port community to
increase threat detection.
• Continued to work with border agencies and
primary producers through our award-winning
Biosecurity Excellence Partnership
• Supported the Tauranga Moana Biosecurity
Capital initiative.
Our strategies
for the future
/20
Port of Tauranga – Integrated Annual Report 2019
OUR
RELATIONSHIPS
PAGE 24
OUR
ENVIRONMENT
PAGE 52
OUR
PEOPLE
PAGE 34
OUR ASSETS
& INFRASTRUCTURE
PAGE 62
OUR SKILLS
& KNOWLEDGE
PAGE 44
OUR
FINANCES
PAGE 70
KEY
Material issues Our strategies Recent progress
Customer satisfaction
and trust
• Create new and build
on existing long-term
partnerships with a diverse
range of customers, such
as shipping lines and
exporters
• Foster a positive can-do
customer focus across the
workforce.
• Secured the renewal of our long-term operating
agreement with one of our biggest customers,
Oji Fibre Solutions
• Worked with our partners KiwiRail to
accommodate vessels diverted from Auckland due
to congestion
• Continued to work with large customers
(e.g. forestry product exporters) to predict
and plan for demand.
Air quality
management
• Monitor fumigation on
Port premises to ensure
processes and procedures
are strictly complied
with and workers and the
community are protected
• Support forestry industry
efforts to reduce methyl
bromide fumigant use
• Manage dust through
sealed wharf and cargo
storage areas, increased
sweeping, dust reduction/
suppression techniques
and technology
• Support move to low
sulphur fuel to reduce air
pollution from ships.
• Supported industry moves to phase out the use of
methyl bromide for log fumigation by incentivising
bark removal
• Ensured fumigation was carried out according
to regional and national standards
• More closely monitored dusty cargo loading
and unloading to prevent pollution
• Improved and refined dust recovery procedures for
vacuum sweeper trucks
• Installed water misters on bulk cargo hoppers
to suppress dust
• Supported Port Industry CEOs’ submission to the
Ministry of Transport on low sulphur fuel.
/21
Our strategies
for the future
Material issues Our strategies Recent progress
Port capacity
and expansion
• Keep ahead of demand
through targeted
commercial investment
in shipping and channel
widening/deepening, new
cargo handling equipment
such as cranes, and berth
extensions
• Maximise efficiency
within current footprint by
utilising technology.
• Progressed plans to extend the container terminal
wharves to the south, using existing port land
• Ordered our ninth container crane, due for delivery
in January 2020
• Ordered new straddle carriers, including three
hybrid models
• Acquired additional warehousing to relocate
tenants, freeing up additional storage space
at the container terminal.
Profitability• Provide sustainable
shareholder returns
through revenue growth
from diverse income
streams, increased trade,
new customers/cargoes,
operational efficiencies and
prudent cost management.
• Achieved an increase in revenue and net profit after
tax for financial year 2018-2019
• Increased ordinary dividends and paid special
dividends to return capital to shareholders.
Workforce
engagement
• Deliver world-leading
productivity through the
team work of a proud,
engaged and satisfied
workforce where talent
is recruited, nurtured,
retained and recognised.
• Enhanced employee share ownership scheme,
offering discounted purchase utilising
interest-free loans
• Introduced ShipShape wellbeing programme.
Geographic reach• Grow Port of Tauranga’s
hinterland beyond the
Bay of Plenty
• Provide connectivity for
international shipping via
road, rail and sea, utilising
inland freight hubs in
Auckland, Hamilton and
Christchurch
• Utilise our network ’s
expertise to eliminate
waste from the supply chain
and influence sustainable
practices.
• Developed a large new cargo handling facility
for Coda Group at our MetroPort Christchurch
freight hub
• Increased transhipment of containers from other
New Zealand ports.
/22
Port of Tauranga – Integrated Annual Report 2019
Material issues Our strategies Recent progress
Community
engagement
• Invest in areas such as
community infrastructure,
the arts, education, sport,
economic growth and the
environment
• Take an active interest in
youth development
• Be a good neighbour
by connecting with and
listening to community
interests and concerns and
actively working together
on them.
• Sponsored community events and projects
such as Tauranga Arts Festival and Mauao walking
track maintenance
• Increased numbers of members of the public
hosted on port tours
• Provided 18 scholarships to tertiary students
in two schemes
• Increased communication and engagement
through social media and other channels.
Land transport
networks
• Take a collaborative
approach to proactive land
transport management
with KiwiRail, NZ Transport
Agency, Tauranga City
Council, Bay of Plenty
Regional Council and the
Ministry of Transport.
• Introduced vehicle booking system at the
container terminal and incentivised traffic outside
of peak hours
• Continued to lobby for investment in regional
infrastructure, including state highway designation
for Totara Street, Mount Maunganui
• Participated in the multi-agency Urban Form and
Transport Initiative
• Transported increased cargo volumes via rail and
coastal shipping where possible.
Iwi engagement• Create and maintain
relationships with the three
iwi with mana whenua
status in Tauranga Moana
to protect cultural and
spiritual values and foster
education.
• Supported community projects and eight tertiary
students through the Ngā Mātarae Charitable
Trust, a partnership with local iwi and other
Maori organisations
• Awarded ten Turirangi Te Kani Memorial
educational scholarships for 2019
• Consulted iwi regarding resource consents for our
Mount Maunganui stormwater network and our
plans to extend the container terminal wharves.
OUR
RELATIONSHIPS
PAGE 24
OUR
ENVIRONMENT
PAGE 52
OUR
PEOPLE
PAGE 34
OUR ASSETS
& INFRASTRUCTURE
PAGE 62
OUR SKILLS
& KNOWLEDGE
PAGE 44
OUR
FINANCES
PAGE 70
KEY
/23
/24
Port of Tauranga – Integrated Annual Report 2019
Port of Tauranga’s relationships
with customers, communities,
employers and business partners
tend to be long-term in nature and
mutually beneficial in outcomes.
The Company takes pride in its reputation for a can-do attitude
and innovative approach to typical business challenges. We seek
bold solutions to tricky problems and look for the same qualities
in our partners. We have had relationships with some of our
suppliers, such as container crane manufacturers Liebherr,
for more than 40 years.
Capital #
01
OUR
RELATIONSHIPS
/25
Oji chooses Tauranga as its port
for the future
Our long-term freight agreements
with major exporters give us
the certainty to make rational
investments in future capacity.
In December, we renewed our
operating agreement with one of our
key customers, Oji Fibre Solutions,
New Zealand’s biggest producer of
pulp, paper and packaging products.
Oji has committed to consolidating
the majority of its import and export
cargo volumes through Port of
Tauranga for the next decade.
The agreement reflects the long and
productive relationship between the
two companies, dating back to the
1950s. Oji has pulp and paper mills in
the central North Island and Eastern
Bay of Plenty, and leases a purpose-
built, 22,000m
2
warehouse at Port of
Tauranga’s container terminal as well
as other facilities nearby. The shed
was constructed by Port of Tauranga
in 2017 to enable Oji to improve
quality and flexibility around product
storage, handling and packing.
Customer relationships for the
long term
Port of Tauranga has long-term
commitments with other key
customers.
The Company is mid-way through
a ten year freight agreement with
freight and logistics management
company Kotahi, which in turn has
a separate long-term agreement
with Maersk Line, the world’s largest
container shipping company. The
commitments were the catalysts
for Port of Tauranga’s investment in
becoming “big ship capable”. Kotahi
is a joint venture between Fonterra
and Silver Fern Farms.
Port of Tauranga and Kotahi co-own
the Timaru Container Terminal
and Coda Group – a freight logistics
group incorporating Tapper Transport,
Dair y Transport Logistics,
18
scholarships
increase in Facebook
page followers
more than
2,000
people hosted on port tours
Renewed long-term
operating agreement
with Oji Fibre Solutions
In the past few years, Port of
Tauranga has been refocussing
its sponsorship portfolio towards
the provision and protection of
infrastructure and equipment
that can benefit the community
long-term.
38.2%
/26
Port of Tauranga – Integrated Annual Report 2019
Priority Logistics and MetroPack.
Its aim is to work with KiwiRail,
trucking companies, importers
and exporters to eliminate waste
in the supply chain. Coda operates
intermodal freight hubs in Auckland
and Hamilton.
The partnership model also applies
to Port of Tauranga’s agreements
with other major exporters. Last
year we opened a new purpose-built
coolstore at Berth No 1 to handle
kiwifruit cargo and better maintain
produce quality. Shed 1 is leased
to Tauranga Kiwifruit Logistics,
which handles exports for Zespri
International.
The transitional coolstore is
far more efficient than the
converted cargo shed it replaced,
using less electricity and more
environmentally-friendly refrigerant.
We have also worked closely with the
major log exporting customers for
decades, giving us valuable insight
into trends and forecasts.
Port helps build Bay of Plenty
communities
In the past few years, Port of Tauranga
has been refocusing its sponsorship
portfolio towards the provision and
protection of infrastructure and
equipment that can benefit the
community long-term.
Some of the projects funded
include the Pilot Bay boardwalk in
Mount Maunganui, purchase of the
specialist winch on the Bay of Plenty
Trustpower TECT rescue helicopter,
and the installation of floodlighting at
the Bay of Plenty Oval cricket ground
adjacent to the port at Blake Park,
Mount Maunganui.
Last year, Port of Tauranga also
purchased two patrol boats for the
Tauranga Yacht and Power Boat Club,
to support young sailors learning on
the harbour.
In 2018, we formally joined Project
Tauranga, a partnership between
Tauranga City Council and local
businesses to fund community
projects. This membership allows
us to better identify suitable future
investments that are closely aligned
with community priorities.
One of our first Project Tauranga
initiatives was the enhancement of
walkways on Mauao, the landmark
mountain that stands sentinel to the
entrance of Tauranga Harbour and
the port.
Mauao is visited by people nearly two
million times a year and is a popular
attraction for cruise ship passengers
visiting the port.
Dividends benefit regional
ratepayers
Port of Tauranga’s main shareholder
is Quayside Holdings, the investment
arm of the Bay of Plenty Regional
Council. Quayside received dividends
of $66.3 million over the past year.
Since the company was listed on
the New Zealand Stock Exchange in
1992, Quayside has received a total of
more than $800 million in dividends.
Capital #01 : Our Relationships
One of our first Project Tauranga initiatives was the enhancement
of walkways on Mauao, the landmark mountain that stands sentinel
to the entrance of Tauranga Harbour and the port.
/27
In addition, Quayside has used its
54.14% shareholding in Port of
Tauranga to establish a $200 million
infrastructure fund to help fund
regional assets. It was set up in 2008
through a share issue by Quayside and
has been used so far to kickstart large-
scale projects throughout the region.
Contributing to good causes
Port of Tauranga is a long-
term supporter of community
organisations making a difference
in the Bay of Plenty.
The Port ’s annual Gibo’s Fun Fishing
Tournament for staff, customers and
suppliers raised a record $5,515 for
the Waipuna Hospice this year.
We also increased the amount of our
Christmas giving. We have a long-
standing tradition of making a sizeable
donation to the Tauranga Community
Foodbank, in lieu of purchasing
Christmas gifts for customers.
In 2018, Port of Tauranga gifted
$10,000 to the foodbank, its largest
ever donation.
Port of Tauranga staff also nominate
another charity to receive a company
donation at the end of the year.
The 2018 recipient was the
Tauranga branch of the Child Cancer
Foundation, which received $2,500.
Community events
Port of Tauranga supports
events that help create vibrant
communities.
The Company is a founding sponsor
of the biennial Tauranga Arts
Festival. In December, the Port was
a sponsor of the Mount Monster,
New Zealand’s most prestigious
surf lifesaving endurance race held
at Mount Maunganui’s main beach,
close to the port.
Iwi engagement
Port of Tauranga works both
formally and informally with Maori
organisations and the three iwi with
mana whenua status in Tauranga
Moana – Ngāi Te Rangi, Ngāti
Ranginui and Ngāti Pūkenga.
The Ngā Mātarae Charitable Trust
brings together the Port, the three
iwi, the Mauao Trust and the Tauranga
Moana Iwi Customar y Fisheries Trust.
It was founded five years ago to
balance the impact on the cultural
and spiritual values of local Maori from
our harbour capital dredging project
and is funded through an annual grant
from the Port.
The Trust offers scholarships to
tertiar y students studying subjects
that could benefit Te Awanui
Tauranga Harbour and sponsors
projects to improve harbour health,
such as a pipi relocation project
involving local school children and
university researchers.
In 2019, scholarships were awarded
to three first-year recipients, three
second-year recipients and two
third-year recipients. The scholars
are studying subjects as diverse as
commerce, genetics, engineering,
biochemistr y, political science and
Maori studies.
Port of Tauranga also provides
educational scholarships through
the Turirangi Te Kani Memorial
scheme, established 29 years ago
in honour of a much-respected
kaumatua. In 2019, the Port provided
ten scholarships under the scheme.
Port of Tauranga also provides educational scholarships through the
Turirangi Te Kani Memorial scheme, established 29 years ago in
honour of a much-respected kaumatua.
Other community donations
Port of Tauranga made one-off donations to a wide range of organisations, events and individuals,
including: New Zealand waterpolo representative Ella Pollock, Bay of Plenty Science Fair, Mount
Maunganui Primar y School golf tournament, New Zealand Blue Light Ventures, Mount Maunganui Tennis
Club, New Zealand synchronised swimming representative Isobel Pettit, Evolution Aquatics, Tauranga
Boys College golf tournament, Merivale Community Inc, Heart Kids Day Out, Te Puke High School
volleyball team, Chamber of Commerce golf tournament, One Base fishing tournament, Katikati Arts
Festival, Mount Maunganui College golf tournament, Bethlehem School gala, Merchant Navy, Gumboot
Friday Appeal, Autism New Zealand, Global Connections fashion show, Gate Pa Tennis Club, Royal
Society event participant Amy Bewsher, Tauranga Volunteer Coastguard, Tauranga Sport Fishing Club.
/28
Port of Tauranga – Integrated Annual Report 2019
Capital #01 : EnvironmentCapital #01 : Our Relationships
Port of Tauranga has helped fund walking track maintenance on Mauao, the mountain at the entrance to Tauranga Harbour
/29
Port of Tauranga Security Officer, Paul Bullen
/30
Port of Tauranga – Integrated Annual Report 2019
P
ort of Tauranga works
closely with New
Zealand Police and
Customs to detect any
criminal activity within
the port gates.
New Zealand Police Detective Senior
Sergeant Greg Turner leads a team of
more than 60 staff investigating and
preventing crime across the Western
Bay of Plenty.
“ We really value the ver y strong
working relationship we have with
the Port to reach our common goals,”
he says.
Local police officers undergo a
Port of Tauranga safety induction
so they can quickly respond to any
emergencies on site and can patrol
the premises at any time. Police can
access the Port ’s security camera
footage to help solve crimes such as
attempted drug smuggling.
Port staff are trained to detect
fugitives, explosives and contraband
and joint training exercises are regularly
held with other frontline organisations.
New Zealand Police is one of several
government agencies with a regulator y
role in border protection at the Port.
Others include New Zealand
Customs and the Ministr y for Primar y
Industries. Worksafe, Maritime
New Zealand and the Tauranga
Harbourmaster also have safety
responsibilities.
“It ’s important for all of the agencies
to work together to prevent harm to
the communities of the Western Bay
of Plenty and New Zealand,”
says Greg.
“ The Port has taken some great
steps to protect people and its
business, as well as assisting other
agencies to reduce the opportunity
for crime or harm.”
“We really value the very
strong working relationship
we have with the Port to reach
our common goals.”
Capital #01 : Our Relationships
Detective Senior Sergeant Greg Turner, NZ Police
Police and Port work
together to detect and
prevent border crime
/31
Pacifica Shipping’s coastal vessel Spirit of Canterbur y, soon to be replaced by the Moana Chief
/32
Port of Tauranga – Integrated Annual Report 2019
Pacifica
Shipping upgrades
coastal vessel
P
acifica Shipping has
acquired a larger 1,700
TEU vessel for its New
Zealand coastal shipping
service as the trend to
transhipment continues.
The Moana Chief will commence
operations in September 2019
to meet growing domestic and
international transhipping demand.
Pacifica was acquired in 2014 by
The China Navigation Company, the
parent of one of Port of Tauranga’s
key customers, Swire Shipping. In
addition to the New Zealand coastal
container service, Swire Shipping’s
log charter, cement carrier and
multipurpose breakbulk vessels call
frequently at Port of Tauranga on
domestic, trans-Tasman, North Asia
and South East Asia services.
Swire New Zealand Countr y Manager,
Brodie Stevens, says there is rising
demand to ship domestic cargo
as well as international tranship
containers through hub ports such as
Port of Tauranga.
“ We see enormous potential to
create efficiencies through coastal
shipping, with freight volumes only
forecast to increase.
“Coastal shipping is highly
complementar y to road and rail
networks,” he says. “It is a lower
carbon emissions option for moving
large volumes of freight and can take
the load off other transport modes,
without the need to create additional
infrastructure.
“Coastal shipping is flexible and can
be scaled up quickly without capital
cost.”
He says ports must ensure coastal
vessels can remain on schedule by
offering efficient port calls.
“We need speed, consistency and
connections. Port of Tauranga is
ver y good at maintaining schedule
integrity, which is vital when you are
operating a weekly service. They
have a professional, competitive
model that integrates seamlessly
with the supply chain.”
“We see enormous potential to
create efficiencies through coastal
shipping, with freight volumes
only forecast to increase.”
Capital #01 : Our Relationships
Brodie Stevens, Swire New Zealand
Our Future
Port of Tauranga needs to maintain its social licence with the local community to continue day-to-day operations as well as
secure consent for future expansion. We will create and maintain strong relationships with our neighbours, interest groups
and regulatory bodies, such as Bay of Plenty Regional Council. We will also be connected to key central government agencies,
such as Maritime New Zealand and WorkSafe.
We will take an active interest in youth development and work with iwi to foster education and support local rangitahi.
/33
OUR
PEOPLE
Port of Tauranga aspires
to be a national employer of
choice, with an inclusive and
equitable workplace of highly
engaged employees.
More than 42% of our people have worked with us for more than
10 years, and more than 22% have been employed for 20 plus
years. At the end of the financial year, we had four employees who
had been with us for four decades or more and three more will
celebrate their 40th anniversar y soon.
Port of Tauranga employs 230 permanent team members and
more than 30 casuals.
Capital #
02
/34
Port of Tauranga – Integrated Annual Report 2019
/35
70%
employee satisfaction
55%
reduction in Total
Recordable Injury
Frequency Rate
Staff share ownership
estimated at
Staff turnover
increased to
7%
75%
of staff departures
were retirements
230
permanent
employees
We are pleased that near miss
reporting increased 11.5% and
safety observations increased
12.5%, reflecting the proactivity
we encourage.
Older workers share experience
In May, Port of Tauranga participated
in a government-funded Massey
University research project on
workforce participation by older
New Zealanders. Two researchers
interviewed 30 employees over four
days to help understand successful
strategies to support older workers
in light of the growing trend for
prolonged working lives. Five other
organisations across New Zealand
also participated and the findings are
due at the end of the year.
Fewer injuries across port
community
Safety is one of our core values
and we expect the same proactive
stance from all of the companies that
operate on the port. Our approach
involves identifying, understanding
and minimising hazards, as well as
recording, analysing and responding
to near misses and incidents.
Our Total Recordable Injur y
Frequency Rate (TRIFR) reduced to
2.5 per million hours worked, a 55%
improvement. We had one lost-time
injury (blistered feet) and two first aid
incidents (a cut and a strained neck
muscle), neither of which required
medical attention.
Our contractors also improved their
safety performance, reducing their
collective TRIFR to 7.7 per million hours
worked, a 22% improvement. Port of
Tauranga and contractors combined
No pay equity disparity
95%
/36
Port of Tauranga – Integrated Annual Report 2019
0
3
6
9
12
15
2018/192017/182016/172015/162014/15
TRIFR per Million Person Hours
achieved a 29% improvement to
6 per million hours worked.
We are also pleased that near miss
reporting increased 11.5% and safety
observations increased 12.5%,
reflecting the proactivity
we encourage.
However, we missed our targets
for health and safety training, and
inspections, and will be addressing
this in the comprehensive training
and development programme
currently being designed.
We have been reframing our
assessment of critical operating
risks (the activities that could
seriously injure or kill a person)
through the “bow tie” methodology
endorsed by the Business Leaders’
Health and Safety Forum. The
practice details all the risk controls
needed for a particular activity to
ensure workers have the highest
protection level possible.
Staff satisfaction monitored
Our most recent staff engagement
survey found employee satisfaction
was 70%. Staff work groups
developed action plans to address
the issues raised, and the next
survey will be undertaken in
February 2020.
Training framework to develop
staff skills
Port of Tauranga is developing
a comprehensive training and
development framework to ensure
our employees have a personalised
plan to improve and expand their skills.
Avoiding fatigue
Port of Tauranga is a 24 hour/seven
days a week operation and many
of our staff are required to do shift
work. We have engaged fatigue
management experts to help us
make any necessar y changes to work
patterns and rosters to manage the
risk of fatigue. This work has been
staff-led and will continue in the
coming year.
Promoting inclusivity at the Port
Port of Tauranga provides a
workplace that recognises and
values different skills, abilities,
genders, ages, ethnicities and
experiences.
In 2019 we updated and extended
our Diversity and Inclusion Policy
to better reflect our commitment
to building a culture that promotes
diversity and inclusiveness within a
meritocracy. The Board of Directors,
management and all employees
have more clearly defined roles and
objectives.
The Board has set a gender balance
target of at least 40% women and
40% men to hold director, executive
and manager level positions by 2025.
Director, executive and manager
positions currently sit at 22% female.
Overall, 16.5% of our employees are
female. We do not believe that we
have any pay disparity between male
and female employees in comparable
roles and with similar experience.
Capital #02 : Our People
Our Total Recordable Injury Frequency Rate (TRIFR) reduced to
2.5 per million hours worked, a 55% improvement. We had one
lost-time injury (blistered feet) and two first aid incidents (a cut and
a strained neck muscle), neither of which required medical attention.
/37
Protecting our people from
discrimination
In addition to our Diversity and
inclusion Policy, we have developed
a Discrimination, Bullying and
Harassment Policy to guide the
identification and management of any
unlawful or unacceptable behaviours.
The policy outlines the standards
expected of our employees, forms of
discrimination and harassment, and
the complaints process.
We have also implemented a
Domestic Violence Leave Policy
to allow affected employees to
take leave or use flexible working
arrangements to deal with a
situation. Port of Tauranga has
appointed and trained First
Responders to support staff and
provide appropriate services.
We hope that these two new policies
will contribute to Port of Tauranga
employees feeling safe and supported
in their workplace.
Port of Tauranga offers an
independent, confidential
counselling service to all employees.
In 2019, we updated and extended our Diversity and Inclusion Policy
to better reflect our commitment to building a culture that promotes
diversity and inclusiveness within a meritocracy.
Male Female
0
10
20
30
40
50
60
70
80
70+60–6950–5940–4930–3920–29
Age and Gender Profile
Male Female
0
20
40
60
80
100
120
>4031–4021–3011–201–10< 1
Diversity vs Length of Service (Years)
Male Female
0
2
4
6
8
10
12
70+60–6950–5940–4930–3920–29
Age Profile of permanent employees
recruited in the last 12 months
Manager
Supervisor
Operations
Administration
Manager
Supervisor
Operations
Administration
Male Female
Permanent Employees 192.0 38.0
Average Age 52.9 46.9
Average Length of Service 12.3 10.1
Executive Team 80% 20%
Directors 72% 28%
/38
Port of Tauranga – Integrated Annual Report 2019
Capital #02 : Our People
/39
Port of Tauranga Cargo Services Manager, Mark Whitworth, at the Mount Maunganui wharves
/40
Port of Tauranga – Integrated Annual Report 2019
Keeping
our people
shipshape for life
T
he first year of Port of
Tauranga’s employee
wellbeing programme
has tackled a wide range
of common challenges to
health and happiness.
“ShipShape” brings together existing
and new wellbeing initiatives and, 12
months after launch, has received
bronze accreditation under the
WorkWell framework of Toi Te Ora
Public Health.
The programme was launched in
June 2018 with lunch bags and drink
bottles for all team members.
They were invited to take part in the
Tough Guy and Gal extreme off-road
running event in Rotorua in August,
with the 22-strong team winning the
corporate team category.
Since then, staff have jumped into
the harbour for Prostate Cancer
Awareness Month and signed up
for free blood pressure checks.
New Zealander of the Year Mike King
delivered a series of seminars on
mental health to Port of Tauranga
staff, their families and friends, as
part of his Key to Life tour in aid of
suicide awareness and prevention.
Employees have also been
transported to blood donation
locations, received information
about smoking cessation, and been
offered a free Healthy Food Guide
magazine subscription.
ShipShape has been an umbrella for
staff fundraising drives for health
causes including Mental Health
Awareness Week, Breast Cancer
Awareness Week, Movember for
men’s health, and Gumboot Friday for
suicide awareness.
ShipShape initiatives are selected by
a committee of representatives from
across the business.
Port of Tauranga staff can access free
annual health assessments (including
skin checks), subsidised health
insurance and free flu vaccinations.
ShipShape has been an umbrella
for staff fundraising drives
for health causes including
Mental Health Awareness Week,
Breast Cancer Awareness Week,
Movember for men’s health,
and Gumboot Friday for
suicide awareness.
Capital #02 : Our People
/ 41
Port of Tauranga Personnel Advisor, Rachael Nunn
/42
Port of Tauranga – Integrated Annual Report 2019
Our Future
Port of Tauranga will continue to create a positive health, safety and wellbeing culture, where risks are proactively managed.
Our thorough planning, preparation and practice will help us deal with any emergencies or crises.
One of our core values is teamwork, through which we deliver world-leading productivity. We will recruit, nurture, retain
and recognise our team members to foster a proud, engaged and satisfied workforce.
Attracting
younger workers
into port careers
Port of Tauranga Personnel Advisor, Rachael Nunn
Capital #02 : Our People
/43
P
ort of Tauranga, our
service providers and
other organisations in
the supply chain are
facing the challenge of
tr ying to attract younger
workers into port-related careers.
Port of Tauranga has cadetship,
apprenticeship, internship,
scholarship and casual job
opportunities to help attract
younger workers. Some participants
are lucky enough to secure
permanent roles, such as recent
Victoria University Bachelor of
Commerce graduate, 21-year-old
Rachael Nunn.
Rachael spent the summer of 2018
working on a project to scope Port of
Tauranga’s training needs and is now
the Port’s Personnel Advisor.
“The work experience at Port of
Tauranga completely changed my
perspective and gave me real world
experience as I went into my final
year of study,” says Rachael, who
went on to win top student awards
in human resources and industrial
relations, and marketing.
“ There are so many different roles
in this industr y and it is a constantly
changing environment. I have spent
time with each business unit and
I’ve learned a huge amount in a short
time,” she says. “ There are some
great opportunities for young people
in this industr y and it ’s such an
exciting time to join it.
“I’ve been given the opportunity to
take the lead in some big initiatives
and have great role models and
mentors to support me.”
“The work experience at Port of
Tauranga completely changed
my perspective and gave me real
world experience as I went into
my final year of study.”
/44
Port of Tauranga – Integrated Annual Report 2019
OUR SKILLS
& KNOWLEDGE
We nurture a culture of
innovation and foresight to
deliver our customers creative
business solutions and world-
leading productivity.
Our integrated view of the supply chain has seen us
invest in other ports, inland freight hubs, cargo handling
specialists, transport operations and logistics services.
We are currently examining areas as diverse as the future
of work, maximising productivity through technology and
harbour health.
We share our particular expertise with the wider industry
and government agencies, taking a leadership role in
national forums where appropriate.
03
Capital #
/45
Removing inefficiencies from the
supply chain
Our partner KiwiRail works with us
to simplify the supply chain.
Dedicated trains run 12 times a day
between Tauranga and our inland
freight hub, MetroPort Auckland.
Imported containers are transferred
to Auckland.
Trains are then filled with emptied
containers to be shifted to Hamilton,
where Fonterra can refill them with
exports. The train is reloaded with
cargo bound for export from Tauranga.
This avoids the need to constantly
relocate empty containers via road and
sea, reducing lead times and costs for
shippers, optimising train capacity and
avoiding carbon emissions.
Extending our cargo hinterland
We replicated the model of our
successful MetroPort Auckland inland
freight hub by establishing MetroPort
Christchurch at Rolleston. MetroPort
Christchurch is linked to our Timaru
Container Terminal and the rest of the
South Island by rail, giving importers
access to a major metropolitan area
and exporters access to our fast
international services.
We have recently built a new
19,000m
2
warehouse at MetroPort
Christchurch for Coda Group. It will
use the facility to handle Westland
Milk’s dairy product exports.
Coda Group, a 50/50 joint venture
with Kotahi Logistics, gives us the
platform to integrate port operations
with other parts of the supply chain
and remove cost, empty capacity
and delays from the cargo network.
Subsequent to the end of the
financial year, we announced a
new partnership with Tainui Group
Holdings to support the development
of the Ruakura Inland Port in Hamilton.
Sharing our experience and
expertise
Port of Tauranga participates in
multiple local and national forums
to address the issues faced by our
industry, our communities and the
countr y as a whole.
We take an active role in business
organisations such as the Employers
and Manufacturers’ Association,
Business New Zealand, Export NZ (Bay
of Plenty), the Tauranga Chamber of
Commerce and Priority One, the Bay of
Plenty economic development agency.
We are members of the Port Industr y
Association, Port Chief Executives’
Forum and the Business Leaders’
Health and Safety Forum. We also
have strong relationships with
industr y regulators Maritime New
Zealand and WorkSafe, and support
their efforts to improve safety in under-
performing areas of the port sector.
Understanding harbour health
Port of Tauranga supports the
University of Waikato Coastal Marine
Field Station based in Tauranga.
The station’s work contributes to
Tauranga Harbour ’s reputation as
one of the most researched and best
understood harbours in Australasia.
Researchers have recently
examined the impacts of dredging,
the health of kaimoana/seafood
and the potential effects of future
development.
4.3%
increase in containers
transferred by rail to and
from MetroPort
33.6
moves per hour
average crane rate
(NZ average 31.7)
Rail share of land
movements
6
42.2%
of imports
48.4%
of exports
Ship rate
84.3
moves per hour
(NZ average 72.3)
/46
Port of Tauranga – Integrated Annual Report 2019
Tauranga remained the
country’s most efficient port
measured by ship rate, with an
average of 84.3 moves per hour
in 2018. This compared with
the national average of 72.3
moves per hour.
New Zealand’s most efficient
container port
The Ministr y of Transport monitors
the productivity of New Zealand’s
six container ports
7
. In 2018, Port
of Tauranga handled 44.3% more
containers than the next largest port.
Our container handling productivity
decreased slightly, primarily because
of accommodating unexpected
cargo volumes diverted to Tauranga
due to congestion in Auckland.
Port of Tauranga’s average crane
rate (containers per hour per crane)
in calendar year 2018 was 33.6 moves
per hour, down from 36.2 moves per
hour in 2017 but still well ahead of the
national average of 31.7 moves per hour.
Tauranga remained the countr y ’s
most efficient port measured by ship
rate, with an average of 84.3 moves
per hour in 2018. This compared with
the national average of 72.3 moves
per hour.
In Australia, the top five container
ports had an average crane rate of
28.1 moves per hour in the six months
from July to December 2017
8
(the
most recent figures available), and
an average ship rate of 54.9 moves
per hour.
Capital #03 : Our Skills & Knowledge
6. Source Ministry of Transport
7. https://www.transport.govt.nz/mot-resources/freight-resources/figs/port-container-handling/
8. https://www.bitre.gov.au/publications/2018/water_062.aspx
/47
Fire and Emergency NZ rescuers in training at Port of Tauranga
/48
Port of Tauranga – Integrated Annual Report 2019
T
he Port of Tauranga team
and local emergency
services prepare
for potential crises
by undertaking joint
training programmes.
Fire and Emergency NZ crews recently
practiced rescuing a driver from a
container crane cab, a confined space
high above Tauranga Harbour.
Crews also practiced emergency
evacuations with staff from Port
of Tauranga and some of the other
companies that have operations on the
port, including cold store operators.
Our mechanical and electrical team’s
emergency preparedness was put
to the test when a devastating fire
broke out at its workshop in August.
Fire investigators found the cause
to be a rechargeable batter y.
Manager Mechanical and Electrical
Services, Laurie Johnson, says it
was a relief that no one was injured
after the fire quickly took hold.
“The fire was a huge blow for all
the fitters and sparkies who lost
personal tools and belongings. It
was also difficult for everyone to see
years of work disappear so quickly,”
says Laurie.
The team has relocated to Port-
owned premises just outside the
container terminal gate in Mirrielees
Road. The Company has received
full compensation from its insurers
and discussions are under way about
future plans for the workshop.
Capital #02 : Skills & KnowledgeCapital #03 : Our Skills & Knowledge
Fire and Emergency NZ crews
recently practiced rescuing a
driver from a container crane
cab, a confined space high above
Tauranga Harbour.
Preparing for
emergencies
/49
Caldwell Partners Managing Partner, Simon Monks, and Port of Tauranga Chief Executive, Mark Cairns
/50
Port of Tauranga – Integrated Annual Report 2019
Capital #03 : Our Skills & Knowledge
P
ort of Tauranga’s
outstanding returns
to shareholders were
highlighted when
Chief Executive Mark
Cairns received a
prestigious award.
Mark received the Caldwell Partners
Leadership Award at the 2019 INFINZ
(Institute of Finance Professionals)
Awards. They recognise innovation
and excellence in the financial and
capital markets sector.
The expert judging panel noted Port
of Tauranga’s excellent productivity
rates, industr y-leading safety
record, increasing cargo volumes
and shareholder returns that have
compounded by an average 20.4%
since Mark took the helm in 2005.
Mark says he was humbled by the
accolade, which was to be shared by
the entire Port of Tauranga team.
“This award recognises the
extraordinary efforts of a fantastic
bunch of people working here. I
am proud and privileged to lead a
company that has achieved so much.”
Meanwhile, Port of Tauranga staff
won plaudits at the annual awards of
the Chartered Institute of Logistics
and Transport.
Mike Lambert and Les Fleming
graduated from the Leaders for the
Future programme, while Elizabeth
Anderson won the prestigious
Ministry of Transport Award for
outstanding achievement at Masters
level – the Institute’s premier award
for research.
Port chief wins
prestigious award
“This award recognises the
extraordinary efforts of a
fantastic bunch of people
working here. I am proud and
privileged to lead a company
that has achieved so much.”
Our Future
Port of Tauranga will continue to work with partners, including KiwiRail and coastal shippers, to extend our network to
better serve New Zealand importers and exporters. This will include developing inland freight hubs with complementary
services, and utilising our expertise to eliminate waste from the supply chain.
We will work with local, regional and national agencies to ensure land transport networks meet the needs of the Port,
other businesses and the residents of our communities.
Port of Tauranga Chief Executive, Mark Cairns
/51
/52
Port of Tauranga – Integrated Annual Report 2019
OUR
ENVIRONMENT
Port of Tauranga sets, monitors
and continuously improves
operational standards to ensure
our actions are environmentally
sustainable.
All port users are required to meet these standards to improve
environmental protection and prevent pollution.
We manage adverse effects and risks, share best practice with
all port users and audit their performance.
We also recognise the aspirations of local hapu and iwi for the
moana and its surrounds.
Capital #
04
/53
Replacing vehicles with
electric/hybrid models
85,123
tonnes of carbon
emission avoided
via rail use
9
532,089
truck trips avoided
by rail use
9
Investing in energy-
efficient equipment
such as LED lighting
31%
fewer carbon emissions
from big ship services
(per TEU)
5%
target reduction
in Scope 1 carbon
emissions
We favour rail transport over
road because of the lower
emissions and are working
with our rail partners KiwiRail
to reduce emissions through
efficiency and technology.
Keeping the water clean
Port of Tauranga has obtained
resource consent for stormwater
discharges from our Mount
Maunganui wharves area after
lengthy negotiations with iwi,
Tauranga City Council and Bay of
Plenty Regional Council.
The consent means that all of our
stormwater system and discharges
on both sides of the harbour are now
covered by management plans to
avoid harbour pollution.
In recent years, the Port has focussed
on improved housekeeping to prevent
dust and debris from entering the
harbour. A third sweeper truck has
recently been introduced to further tidy
the log wharves and surrounding areas,
and log and dusty cargo stevedoring
contractors are also required to
continuously clean their work sites.
9. Source KiwiRail
/54
Port of Tauranga – Integrated Annual Report 2019
Capital #02 : Skills & KnowledgeCapital #04 : Our Environment
All cargo storage, handling areas
and rail sidings within the Port
boundaries are sealed to avoid dust
from vehicle operations.
Seventeen screening chambers have
been installed on stormwater drains
at the Mount Maunganui wharves to
capture contaminants. Steel fenders
and rope bunds at the wharf face
catch incidental product losses so
they cannot enter the harbour.
At Tauranga’s container terminal,
isolation valves have been automated
to allow faster safety responses
in the case of an accidental fuel or
chemical spill.
The three valves attached to the
stormwater pipe network can
be quickly sealed to avoid any
contaminants entering the harbour
in the event of an oil, diesel or
chemical spill. Until recently, the
valves were manually controlled
and had to be shut by hand.
Port of Tauranga spent $120,000
to automate the valves so they
can be shut with the touch of a
button, allowing a rapid response
to any emergency.
Reducing shipping pollution
We support New Zealand’s accession
to Annex VI of the International
Convention for the Prevention of
Pollution from Ships (MARPOL),
being considered by the Ministr y of
Transport. Annex VI aims to reduce
carbon emissions and improve air
quality around ports by requiring
ships to either switch to low sulphur
fuel or be fitted with compliant
exhaust gas cleaning systems.
Many of the cruise lines visiting
New Zealand have already pledged
to comply with the convention.
The Port Company CEOs’ forum, of
which Port of Tauranga is a member,
has made a submission in support
of accession to Annex VI.
Ensuring high environmental
standards across the port
Port of Tauranga monitors port
users to ensure compliance with our
environmental standards.
The monthly Port Users’ Health, Safety
and Environment Forum, which brings
together key operators working on the
port, has expanded its focus to include
environmental issues. It is proving a
useful platform for delivering training
and education on environmental
threats and mitigations.
The forum is helping Port of
Tauranga address the risks outlined
in its comprehensive environmental
improvement plan, which incorporates
air quality, stormwater management,
fumigation of imports and exports,
noise, spill prevention, energy
consumption, waste and asbestos.
Fumigation controls tightened
Many imported and exported cargoes
are fumigated to kill any bugs tr ying
to enter or leave New Zealand.
A common fumigant is methyl
bromide, an odourless gas that is
toxic to humans and damaging to the
environment. The biggest users of
methyl bromide in New Zealand are
log exporters, whose major markets
demand its use.
At Port of Tauranga, fumigation is
carried out by highly experienced
operators Genera, according to
codes of practice outlined by the
Environmental Protection Agency
Sulphur Point Mount Maunganui
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Y2019Y2018Y2017Y2016Y2015Y2014
Truck movements to and from the Port
Tranship
Rail
Road
Pipeline
Volumes moved to
and from Port by
transport mode
Port of Tauranga spent $120,000
to automate stormwater pipe
valves so they can be shut with
the touch of a button, allowing a
rapid response to any emergency.
/55
and the Bay of Plenty Regional
Council, as well as our own protocols.
They require Genera to recapture
methyl bromide used in fumigation
and adhere to rules regarding
exclusion zones and notifications.
Genera currently undertakes methyl
bromide recapture on around 80%
of log fumigations and 100% of
container fumigations.
Forestry exporters are working to
reduce the amount of methyl bromide
required. In May, Timberlands Limited
opened a multi-million dollar facility
at its Murupara rail exchange to
remove bark from logs.
De-barked logs destined for China,
New Zealand’s biggest log market,
are not required to be fumigated
because insects are removed along
with the bark.
Stopping pests from hitchhiking
on cargo
A multi-disciplinary approach has
proved valuable in keeping the brown
marmorated stink bug and other
pests out of New Zealand.
Importers, Port of Tauranga, the
Ministr y for Primar y Industries and
fumigation contractors Genera work
together to screen, fumigate and
process cargo.
Increased vigilance during the
stink bug high-risk season caused
delays in processing some cargo
at the container terminal. The Port
provided additional wharf space for
fumigation and encouraged off-site
fumigation to minimise delays.
Raising biosecurity awareness
across the port
Port of Tauranga is part of an award-
winning biosecurity excellence
partnership with the Ministr y for
Primary Industries (MPI), Kiwifruit
Vine Health, primar y produce
organisations, scientists and local
government. It aims to build a port
community prepared to prevent any
pest incursions through the port.
The partnership runs an annual
Biosecurity Week to raise awareness
among the port community. Other
promotional tools include calendars
and playing cards starring the pests
to look out for.
We are conducting regular surveys
of port users to ensure awareness
is increasing.
Port of Tauranga supports the
Tauranga Moana Biosecurity Capital
initiative, which seeks to raise
biosecurity awareness throughout
the western Bay of Plenty. The
collaboration involves iwi, interest
groups, industry, government
agencies, educators and scientists.
The need for heightened awareness
was illustrated in December 2018
when a lone male brown marmorated
stink bug was found in a Mount
Maunganui home. MPI laid special
traps throughout the area and a
detector dog did regular patrols but
no other stink bugs were found.
Protecting habitats and biodiversity
in Tauranga Harbour
Tauranga Harbour is home to an
abundance of wildlife and is an
important kaimoana or seafood
gathering place for local residents.
Port of Tauranga, with local iwi, has
sponsored pipi bed monitoring and
seeding work in the sand banks of
the inner harbour.
Port of Tauranga Environmental Manager, Joey McKenzie, samples stormwater
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Port of Tauranga – Integrated Annual Report 2019
Capital #04 : Our Environment
The port ’s sand pile, where material
from maintenance dredging is
dumped before being recycled
for roading works and beach
replenishment, is often used as
a temporar y home by shore birds
and migrator y sea birds. The Port
has also offered sand to establish
bird roosting sites in other parts of
the region. We have engaged a bird
expert to help us better understand
the avian population in and around
the port.
Dealing with waste
The Port has identified waste as
an area needing more attention.
Although a large volume of excess
bark from log operations is recycled
into compost, there is still a
significant amount of sweepings and
other waste being sent to landfill.
Our improved housekeeping efforts
in the past two years have resulted
in a larger amount of waste, which
has in turn increased our carbon
emissions and disposal costs.
We believe there is the opportunity
to recycle more waste. We are
undertaking work to identify waste
sources and composition that will
allow us to determine recycling and
reuse options.
Spill prevention measures
Port of Tauranga takes spills
ver y seriously and all companies
operating on the port must have
environmental management plans
that outline how they will manage
risks. They must have their own
protective equipment, and additional
equipment including booms is held
on site by Port of Tauranga, the
Bay of Plenty Regional Council and
Maritime New Zealand. Our tanker
berth is a specially-designed sealed
and bunded area to ensure spills in
that area can be contained.
Port of Tauranga does extensive
education and training with other
port users around spill minimisation
and response. All environmental
incidents reported to the Port are
investigated, and any subsequent
improvements are implemented
and shared through our monthly
Port Users’ Health, Safety and
Environment Forum.
Port of Tauranga is part of an award-winning biosecurity excellence
partnership with the Ministry for Primary Industries (MPI), Kiwifruit
Vine Health, primary produce organisations, scientists and local
government. It aims to build a port community prepared to prevent
any pest incursions through the port.
/57
Refrigerated containers awaiting export at the Tauranga Container Terminal
/58
Port of Tauranga – Integrated Annual Report 2019
P
ort of Tauranga is now
certified under CEMARS
(the Certified Emissions
Measurement and
Reduction Scheme). Our
carbon emission sources
are mainly diesel and electricity use,
rail freight and waste to landfill.
Our emissions for the 2018-2019
financial year are currently being
audited by our accreditors, Enviro-
Mark Solutions.
We have developed a carbon
reduction and management plan and
have set an initial short-term target
of a 5% reduction in emissions per
cargo tonne. We are targeting net-
zero emissions by 2050.
Part of our response is to “inset ”
carbon offsets by investing the
money into sustainability initiatives
within our business. To date, this
fund sits at just under $1 million,
which we are using to purchase
hybrid straddle carriers for our
container terminal.
We are replacing other vehicles
with electric or hybrid models where
available, installing LED lighting,
and using biodiesel. We favour
power suppliers that use renewable
energy sources.
Our emissions from waste to landfill
have grown due to increased
sweeping of our wharves to prevent
dust and debris entering the harbour.
A large proportion of bark from the
log wharves is already recycled into
compost, and we are looking at ways
we can recycle more waste.
We favour rail transport over road
because of the lower emissions
and are working with our rail
partners KiwiRail to reduce train-
related emissions through efficiency
and technology.
We have developed a
carbon reduction and
management plan and
have set an initial short-
term target of a 5%
reduction in emissions
per cargo tonne.
Measuring and
reducing our carbon
emissions
Capital #02 : Skills & KnowledgeCapital #04 : Our Environment
/59
Port of Tauranga Bulk Cargo Coordinator, James Oldehaver, at the Mount Maunganui wharves
/60
Port of Tauranga – Integrated Annual Report 2019
S
tricter housekeeping
rules and monitoring are
helping to ensure dust and
debris does not end up in
Tauranga Harbour.
Updated bulk cargo
handling guidelines have been
developed in consultation with
importers and exporters.
Port of Tauranga’s James Oldehaver
was appointed in October 2018 as the
Port’s first Bulk Cargo Coordinator.
He monitors log export operations
and other bulk cargo imports and
exports to ensure all dust and debris
is contained and collected. There
are three sweepers, a plough and a
bucket loader operating under his
direction, and he can often be found
on the end of a broom.
“By following the rules, we can avoid
any impact on the environment from
dust pollution or debris being washed
into the harbour,” says James.
Much of the bark collected from
log storage areas is recycled
into landscape supplies such as
compost and mulch by long-time
operator Daltons.
Port of Tauranga’s Mount Maunganui
wharves are also used by cruise
ships and bulk vessels carr ying
fertiliser, stock feed supplements,
cars and other cargoes.
Bulk cargo handlers are expected
to comply with wind limits for
discharging dusty cargoes and must
continuously clean work areas.
“By following the rules, we
can avoid any impact on the
environment from dust pollution
or debris being washed into
the harbour.”
Housekeeping for
better harbour health
Our Future
Port of Tauranga will protect the biodiversity of Tauranga Moana through responsible stewardship of the environment.
We will prevent air and water pollution through dust suppression, stormwater management and reducing carbon emissions,
including supporting the switch to low sulphur fuel for ships.
We will support industry efforts to reduce fumigation, whilst ensuring the port community is well equipped to detect and
destroy pests, pathogens and other biosecurity threats.
Port of Tauranga’s James Oldehaver
Capital #02 : Skills & KnowledgeCapital #04 : Our Environment
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Port of Tauranga – Integrated Annual Report 2019
OUR ASSETS AND
INFRASTRUCTURE
Port of Tauranga’s investment in
capacity to accommodate bigger
ships has proven a successful
strategy for growth. We spent more
than $350 million over six years
to prepare for larger vessels,
which started calling in late 2016.
The investment included dredging to widen and deepen
shipping lanes, extending the container terminal wharves
by a third, and purchasing new ship-to-shore cranes and
cargo handling equipment.
We are now planning for future cargo growth.
Capital #
05
/63
Building capacity for the future
Port of Tauranga owns 190 hectares
of land on both sides of Tauranga
Harbour, with about 40 hectares
still available for development.
We believe container throughput
could reach 2.8 to 3.0 million
TEUs in future through land
reconfiguration, stacking cranes
and other technology.
We have engaged port capacity
planning expertise to help us shape
the port for future cargo growth. The
next significant capital expenditure
will be extending the container
terminal quay length to the south.
Port-owned land adjacent to the
existing berths will be converted from
cargo storage to a fourth container
vessel berth, adding up to 385 metres
to the overall quay length.
We are consulting with iwi, undertaking
ecological assessments and hope to
lodge a resource consent application
by the end of the year.
We are also looking at how we can
maximise the tidal windows for
large vessels.
11.2%
increase in transhipped
containers
1,233,177
TEUs container throughput
26.9million
tonnes overall
cargo volumes
1,678
ship visits
3.9%
decrease
19,000m
2
warehouse built at
MetroPort Christchurch
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Port of Tauranga – Integrated Annual Report 2019
Our ninth container crane will be
delivered in Januar y for assembly
on site. We have also ordered seven
new straddle carriers, including
three hybrid models. We already
have diesel electric straddles, but
the new models will be even more
fuel efficient and help reduce our
carbon footprint.
Later this year, we will remove a
warehouse on site to free up space
for assembling our new crane.
Following its commissioning, the
land will become available for
container storage.
At the Mount Maunganui wharves,
we have storage space available to
accommodate growing cargoes,
including a secure area for
marshalling imported cars.
Protecting information and systems
International shipping has not been
immune to cyber attack and we have
robust protections in place to secure
our administrative and specialist
computer systems, as well as manual
backup plans where necessary.
We have contingency plans in place
to deal with infrastructure damage
or failure, such as a blockage of
shipping channels, problems with
the rail or road networks connecting
the port to our customers, or wharf
structural problems.
Smoothing traffic flows at the port
and beyond
A new vehicle booking system is
improving traffic flows into the
container terminal. The system
incentivises truck visits outside
peak hours, to ease cargo deliver y
and pick up within the port gates
and avoid congestion on roads
surrounding the port.
Much of the increase in cargo
volume in recent years has been
able to be absorbed without adding
significantly to truck movements
on local highways. The increase in
transhipment, where containers
are transferred between ships at
Tauranga, and the utilisation of rail,
has prevented a big increase in truck
traffic. Over the past five years, the
compound annual growth rate in
truck volumes to and from the Port
was 3.2%.
However, traffic congestion remains
a big problem for residents and
industry alike.
We have renewed our support of
state highway designation for Totara
Street, which serves our Mount
Maunganui wharves. It is a busy
thoroughfare through the industrial
area adjacent to the port and is a
vital route for commuters.
The road meets the criteria for truck
movements, city population and port
freight. A state highway designation
would help fast-track safety
improvements, additional capacity
and intersection upgrades.
A new vehicle booking system is improving traffic flows into the
container terminal. The system incentivises truck visits outside peak
hours, to ease cargo delivery and pick up within the port gates and
avoid congestion on roads surrounding the port.
Capital #02 : Skills & KnowledgeCapital #05 : Our Assets and Infrastructure
/65
Utilising land transport networks
Just under half of cargo volumes
arrive at or leave the port via road,
with the majority being transhipped,
transported by rail or delivered by
pipeline. Nearly 45% of all forestr y
exports arrive by rail.
Up to 86 trains run between Tauranga
and Auckland, carrying up to 9,200
TEUs per week. The line has capacity
for up to 24 trains each day, or 17,800
TEUs per week.
Rail costs are a significant
component of our costs, with capital
and operational spending exceeding
$300 million since MetroPort Auckland
opened nearly 20 years ago.
Recycling byproducts into
community assets
Port of Tauranga recycles two major
byproducts of its operations.
Sand that is collected from the
harbour and shipping channels
during annual maintenance dredging
is used to replenish beaches and
construct roading projects.
In the past year, more than 4,000
cubic metres of sand was provided
to create a new beach at Kulim Park.
Another 24,000 cubic metres was
deposited at Maxwells Road Reserve,
Memorial Park, the Matua Peninsula
and Fergusson Park.
Pilot Bay at Mount Maunganui also
gets an annual top up from the
stockpile. Last year, the beach
adjacent to Whareroa Marae near the
airport was renourished.
Another by-product that is recycled
is bark debris gathered from the
Port ’s log storage and handling
areas. Landscape supplies
manufacturer Daltons clears the
Mount Maunganui wharves of bark
waste in an arrangement dating back
around 40 years.
Daltons turns the raw material into
high-quality horticultural mixes, some
of which pass back over the wharf in
bags for export to Asia and beyond.
Inland freight hubs
In addition to 190 hectares of
strategic land holdings around
Tauranga Harbour, Port of Tauranga
owns and operates inland freight
hubs in Auckland and Christchurch.
The MetroPort Auckland complex
comprises nearly 33 hectares and
is home to the inland freight hub
operated by Port of Tauranga and
KiwiRail, as well as Coda Group and
other logistics industry tenants.
Port of Tauranga also owns 15 hectares
at Rolleston for the MetroPort
Christchurch facility, which is linked
by rail to our container terminal
at Timaru. We have recently
constructed a large warehouse at
Rolleston for Coda Group to handle
Westland Milk’s exports.
Coda Group also operates inland
freight hubs in Hamilton and at Savill
Drive in Otahuhu, New Zealand’s
largest intermodal hub.
Another strategic asset with potential
as a freight hub is the 126 hectares
owned by our major shareholder,
Quayside, at the Rangiuru Business
Park near Te Puke, approximately
35 kilometres southeast of the port.
After the financial year end, we
announced a partnership with Tainui
Group Holdings to support the
development of the Ruakura Inland
Port. The 480 hectare Ruakura estate
has 192 hectares earmarked for
logistics and industrial uses, including
30 hectares for the inland port.
Another strategic asset with potential as a freight hub is the 126 hectares
owned by our major shareholder, Quayside, at the Rangiuru Business
Park near Te Puke, approximately 35 kilometres southeast of the port.
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Port of Tauranga – Integrated Annual Report 2019
Capital #02 : Skills & KnowledgeCapital #05 : Our Assets and Infrastructure
14.5m
shipping channel depth
8
cranes
46
straddle carriers
2.8km
total key length with 14 berths
6,343
TEU total ground slots
2,634
dedicated reefer connection
19 0 h a
of land in owned in Tauranga
45ha
of land in Auckland
15h a
of land owned in Rolleston
near Christchurch
/67
KiwiRail’s new locomotives depart Port of Tauranga
/68
Port of Tauranga – Integrated Annual Report 2019
R
ail is an integral
component of Port
of Tauranga’s land
transport networks.
It is the most efficient
method for moving
large volumes of freight to and
from key cargo catchment areas,
keeps trucks off busy local roads
and state highways, and creates
fewer carbon emissions.
Rail use avoided the equivalent of
532,000 truck journeys in the 2018-
2019 financial year, according to
KiwiRail’s figures.
KiwiRail says rail transport emits
approximately 66% less greenhouse
gas than heavy trucks. By utilising
rail over road where possible, around
31.3 million litres of fuel use and
85,123 tonnes of carbon emission
have been avoided in the past year.
Port of Tauranga has partnered
with KiwiRail to ensure maximum
utilisation of train capacity, including
balancing import (northbound) and
export (southbound) containerised
cargo transferred by rail between
Tauranga and MetroPort Auckland
inland port.
KiwiRail CEO Greg Miller says the
collaboration between Port of
Tauranga and KiwiRail allows the
supply chain to custom design
and deliver the most efficient
infrastructure.
“ We connect New Zealand
businesses to the world through our
strong and strategic partnerships
with customers in the Upper North
Island, “ he says.
The “golden triangle” of cargo and
population, encompassing Auckland,
Hamilton and Tauranga, already
accounts for around half of all freight
volumes in New Zealand.
In October, Port of Tauranga was the
deliver y port for 15 new locomotives
for KiwiRail. Some of them are now
back at the Port hauling cargo.
“We connect New Zealand
businesses to the world through
our strong and strategic
partnerships with customers
in the Upper North Island.”
Partnership with
KiwiRail has benefits
for customers and
communities
KiwiRail CEO, Greg Miller
Our Future
Port of Tauranga will continue to grow its hinterland beyond the Bay of Plenty to ensure New Zealand importers and
exporters have easy and cost-efficient access to international shipping networks. We will utilise road, rail and sea connections,
as well as inland freight hubs as cargo consolidation points.
We will prepare for the future by maximising our current footprint through technology and supply chain expertise, as well
as expanding our facilities in a way that is sustainable.
Capital #02 : Skills & KnowledgeCapital #05 : Our Assets and Infrastructure
/69
OUR
FINANCES
Port of Tauranga issued shares to
the public in 1992 at $1.05 each,
with a total market capitalisation
of $79 million. Today’s market
capitalisation is well above
$4 billion.
Bay of Plenty Regional Council owns 54.14% of the Company
and has received dividends and capital repayments in excess
of $800 million since listing. Port of Tauranga is also the city’s
largest ratepayer.
Soon after listing, Port of Tauranga’s container terminal at
Sulphur Point was opened and has since made increasingly
significant contributions to our income, alongside New Zealand’s
largest bulk cargo operation at our Mount Maunganui wharves.
Capital #
06
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Port of Tauranga – Integrated Annual Report 2019
/71
Strong results from increased
cargo volumes
Despite international economic
worries caused by political
uncertainty and trade protectionism,
Port of Tauranga has seen increased
trade volumes and revenue. The
results have been bolstered by
buoyant domestic GDP, population
growth, strong prices for key
commodities such as dair y
exports, international demand for
forestr y products and recover y in
kiwifruit volumes.
Healthy balance sheet
Net debt to net debt+equity remains
strong at 29.5%. Net debt now totals
$460 million.
New dividend policy announced
Ordinar y and special dividends for
2019 total $122.4 million, a 6.5%
increase on the previous year.
In 2016, Port of Tauranga reviewed
its capital structure and resolved
to return up to $140 million to
shareholders over four years.
The last of those special dividends,
at 5.0 cents per share, is due to be
paid this September.
The aim was to return excess capital
to shareholders in a tax efficient
manner, optimising shareholder
returns while retaining a conservative
debt level and strong balance sheet.
We have reviewed our dividend policy
and plans for capital expenditure over
the next few years and have decided
to continue paying a special dividend
of 2.5 cents per share per annum,
subject to certain conditions.
13.3cents
per share
ordinary dividends
15.0cents
earnings per share,
a 7.1% increase
$313.3million
revenue
$100.6million
Group NPAT
$168.6million
Parent EBITDA
Earnings from
Associates and
Subsidiaries down
27.5%
$122.4
million
total dividends,
a 6.5% increase
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Port of Tauranga – Integrated Annual Report 2019
Investing in future capacity
Capital expenditure for the 2018-2019
financial year was $45 million, less
than forecast. Port of Tauranga has
capital expenditure of $310 million
in the pipeline, in five stages aligned
with cargo volume growth.
The programme includes extending
the container terminal quay length
to create a fourth berth. Container
cranes and straddle carriers to
service the new berth will be
purchased, and additional container
storage space developed.
Stage one of the programme is the
deliver y of the ninth gantr y crane in
early 2020 and removal of buildings
to create more container storage,
estimated to cost around $20 million.
Keeping costs down and
maximising returns
Currency fluctuations and oil price
volatility can affect costs for Port of
Tauranga, our service providers and
our customers.
There is considerable variation in
other port companies’ approach
to valuations, making it difficult to
see if capital expenditure is a good
use of shareholders’ funds. Port
of Tauranga uses fair value, based
on the expected cash flows to be
generated. We seek a minimum
return of 8.5% after tax.
Bay of Plenty a popular cruise
destination
It was a bumper cruise ship season
for the Bay of Plenty, with 116 cruise
ships calling at Port of Tauranga
in the 2018-2019 season, up from
83 the previous year. An estimated
227,000 passengers and 89,000 crew
members were on board.
So far, 112 cruise ships are booked
to visit Tauranga in the 2019-2020
season, which begins on 6 October
with a call that day by regular visitor
Maasdam.
Cruise ship passengers are an
important source of revenue
for the Bay of Plenty and Waikato
tourism industries.
Cruise ship expenditure was an
estimated $90.3 million in the Bay
of Plenty in the 2019 season
10
, an
increase of 34.8% on the previous
year. This total, which includes both
vessel and visitor spending, was
close to 16% of the expenditure
nationally and second only to
Auckland. Tauranga recorded the
countr y ’s largest increase in
passenger numbers, up 49% on
the previous year.
Regional economy grows
Economic growth in the Bay of Plenty
in 2018 was 4.9%, compared with
the New Zealand average of 3.2%. In
the last ten years, the Bay of Plenty
economy has grown 3.1%, 1% ahead
of New Zealand as a whole
11
.
Employment in 2018 grew 5% in the
Bay of Plenty, compared to national
employment growth of 3%.
Capital expenditure for the 2018-2019 financial year was $45 million,
less than forecast. Port of Tauranga has capital expenditure of $310
million in the pipeline, in five stages aligned with cargo volume growth.
Capital #06 : Our Finances
10. Statistics New Zealand: https://www.stats.govt.nz/news/cruise-ship-numbers-and-spend-swell
11. Priority One economic development agency: https://www.priorityone.co.nz/our-economy
/73
View of the Tauranga Harbour from Mauao
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Port of Tauranga – Integrated Annual Report 2019
B
ay of Plenty Regional
Council highlighted the
substantial benefits
of Port of Tauranga’s
current operating
and governance
arrangements to the local, regional
and national economy at a meeting
in June 2019.
The Council told the Government-
appointed working group studying
the Upper North Island Supply Chain
that there was significant growth
expected in the region due to new
developments in aquaculture,
horticulture and other industries.
“The outcomes of any (supply chain)
review must ensure the continuation
of the successful business model
operated by Port of Tauranga, New
Zealand’s best-performing port,”
said Deputy Chair, Jane Nees. “Port
of Tauranga is a key connection
between the upper North Island and
international markets.”
Ratepayers across the region benefit
from the Port ’s dividends, as well as
the $200 million worth of regional
projects and assets funded by the
Council through its 54.14% ownership
of the Port.
She said the money had been spent on
regionally-important infrastructure,
such as $20 million towards the
Opotiki Harbour Transformation,
$15 million to the Tauranga Tertiar y
Campus, $5 million towards the
Tauranga Marine Precinct and $2.5
million for the Scion Innovation Hub.
Port of Tauranga is also the city ’s
largest ratepayer, having paid more
than $1.6 million in rates to the
Tauranga City Council in the past year.
Regional ratepayers
benefit from Port’s
success
“Ratepayers across the region
benefit from the Port’s dividends,
as well as the $200 million worth
of regional projects and assets
funded by the Council through its
54.14% ownership of the Port.”
Bay of Plenty Regional Council ’s Jane Nees
Capital #06 : Our Finances
/75
Timaru Container Terminal
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Port of Tauranga – Integrated Annual Report 2019
P
ort of Tauranga’s
investment in the South
Island has transformed
the potential future of
PrimePort Timaru.
And there’s none happier
than Mayor of Timaru, Damon Odey,
who also sits on the PrimePort
Timaru Board of Directors.
“Partnering with New Zealand’s
biggest and most progressive port
has put us on a different level. We
can draw on their expertise and forge
relationships more quickly than we
could have by ourselves,” he says.
The strategic alliance allows Timaru
to be used as a marshalling point
for South Island cargo going to or
from the international hub port at
Tauranga. The Timaru operations are
complemented by Port of Tauranga’s
inland freight hub, MetroPort
Christchurch, which is connected to
PrimePort by rail.
“ The hub and spoke model uses
our under-utilised rail and coastal
shipping networks. It ’s a strategic
approach that has multiple benefits,
including taking trucks off roads and
creating efficiencies for importers
and exporters,” says Damon.
Port of Tauranga formed its
partnership with PrimePort in early
2015. It acquired a 50% shareholding
in PrimePort and a 35 year lease
on its container terminal. Port of
Tauranga operates Timaru Container
Terminal Limited in a joint venture
with major exporter Kotahi Logistics.
PrimePort is undertaking an
infrastructure renewal programme and
has plans for a new multipurpose berth.
“ We’re not tr ying to create another
mega port here but we are a vital
part of the national network. Port
of Tauranga has the vision and the
strategy and it ’s really going to
be exciting as we embark on our
expansion,” says Damon.
PrimePort partnership
supports “hub and
spoke” network
Our Future
Port of Tauranga provides sustainable shareholder returns through revenue growth from diverse income streams and
increased trade. We also actively seek new customers and cargoes.
We will continue to seek operational efficiencies in all areas of our business and ensure prudent cost management
in all areas of activity. Through our cornerstone shareholder, Quayside Holdings, the residents and ratepayers of the wider
Bay of Plenty will receive the financial benefits of their investment today and well into the future.
“Partnering with New Zealand’s
biggest and most progressive port
has put us on a different level.”
Mayor of Timaru, Damon Odey
Capital #06 : Our Finances
/77
Senior
Management
Te a m
From left:
Leonard Sampson
– Commercial Manager
Dan Kneebone – Property & Infrastructure Manager
Sara Lunam – Corporate Services Manager
Steven Gray – Chief Financial Officer
Mark Cairns – Chief Executive
Port of Tauranga’s senior management team at Pilot Bay in Mount Maunganui, where the Company sponsored the construction of a beach boardwalk.
/78
Port of Tauranga – Integrated Annual Report 2019
/79
Board of
Directors
D A PILKINGTON
BSc, BE, GradDip Dairy Science &
Technology, CFInstD, Chair
Independent Director
David Pilkington was a member of
Fonterra’s senior executive team.
He holds directorships in Port of
Tauranga Trustee Company Limited
and PrimePort Timaru Limited and
chairs Douglas Pharmaceuticals
Limited, Northport Limited and
Rangatira Limited. He has a
strong background in marketing,
international business and supply
chain logistics. David joined the
Board in July 2005.
A M ANDREW
BE Chemical & Materials (1st Class
Honours), MBA (Distinction), FEngNZ,
CMInstD
Independent Director
Alison Andrew is currently
Chief Executive of Transpower
New Zealand Limited having joined
in 2014. She has held a number of
senior executive roles across various
industry sectors, most recently as
Global Head of Chemicals for Orica
PLC. She has also been a Director for
Genesis Energy. Prior to those roles,
she held a number of senior roles
at Fonterra Cooperative Group and
across the Fletcher Challenge Group
in Energy, Forests and Paper. Alison
has a MBA from Warwick University,
and studied Engineering (Chemicals
and Materials) at Auckland University.
Alison joined the Board
in April 2018.
K R ELLIS
BCA Economics (1st Class Honours),
BE Chemical (1st Class Honours)
Independent Director
Kim Ellis is Chair of Metlifecare
Limited, NZ Social Infrastructure
Fund Limited and Sleepyhead
Group Limited, and a Director of
Ballance Agri-Nutrients Limited,
Fonterra Shareholders Fund (FSF)
Management Company Limited
and Freightways Limited. Kim chairs
the Remuneration Committee and
joined the Board in May 2013.
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Port of Tauranga – Integrated Annual Report 2019
J C HOARE
BCom, FCA, CMInstD
Independent Director
Julia Hoare has a comprehensive
range of commercial, financial,
tax, regulatory and sustainability
expertise which she developed over
the course of 20 years as a partner
with PwC.
Julia is Deputy Chair of The a2 Milk
Company Limited and Watercare
Services Limited and her other
directorships include: Director,
Auckland International Airport
Limited, AWF Madison Group Limited,
New Zealand Post Limited, and The
a2 Milk Company (New Zealand)
Limited (subsidiary of The a2 Milk
Company Limited), and Member of
Auckland Committee, Institute of
Directors, Advisory Panel to External
Reporting Board and the Institute
of Directors Council. Julia chairs
the Audit Committee and joined the
Board in August 2015.
Sir R A MCLEOD
Sir Rob McLeod joined the Board
of Quayside Holdings Limited in
November 2016 and is Chair. Rob
is currently on the Board of NZX
listed Sanford Group and has been
past Board Member at ANZ National
Bank, Tainui Group Holdings, Sky City
Entertainment Group and Telecom.
Sir Rob was Oceania (Australia,
New Zealand and Pacific Islands)
CEO / Managing Partner for the
international accounting practice
of Ernst & Young and more latterly as
Ernst & Young New Zealand Chair,
a position from which he retired on
31 December 2015. Sir Rob joined the
Board in October 2017.
D W LEEDER
Doug Leeder is Chair of Bay of Plenty
Regional Council. He is a dair y farmer,
and has considerable experience in
governance and management. Doug
has held positions of governance in
Federated Farmers, was a Director
and Chair of Bay Milk Products,
Director of the East Bay Health
Board, Chair of Subsidiar y
East Bay Energy Trust, Chair of NZ
Dair y Group and Dair y Insight, and
Director of DEXCEL. Doug joined the
Board in October 2015.
A R LAWRENCE
BCA (Business Admin)
Independent Director
Alastair Lawrence is a very
experienced corporate advisor,
specialising in commercial evaluation
and strategy development. He was a
Director of private investment bank,
Antipodes, from 1998-2014.
Governance roles have included
Takeovers Panel, Landcare Research
Limited, Coda GP and a number
of mid market private companies.
Alastair joined the Board in
February 2014.
/81
CONSOLIDATED
FINANCIAL STATEMENTS
Contents
Directors’ Responsibility Statement 83
Independent Auditor's Report 84
Consolidated Income Statement 87
Consolidated Statement of Comprehensive Income 88
Consolidated Statement of Changes in Equity 89
Consolidated Statement of Financial Position 90
Consolidated Statement of Cash Flows 91
Reconciliation of Profit After Taxation to Cash Flows From Operating Activities 92
Notes to the Consolidated Financial Statements 93
Corporate Governance Statement 121
Financial and Operational Five Year Summary 128
Company Directory 129
For the Year Ended 30 June 2019
Port of Tauranga Limited and Subsidiaries
Port of Tauranga – Integrated Annual Report 2019
/82
Port of Tauranga – Integrated Annual Report 2019
The Directors are responsible for ensuring that the financial statements
give a true and fair view of Port of Tauranga Limited (the Group) as at
30 June 2019.
The Directors consider that the financial statements of the Group have been
prepared using appropriate accounting policies, consistently applied and
supported by reasonable judgements and estimates, and that all relevant
financial reporting and accounting standards have been followed.
The Directors are pleased to present the financial statements of the Group
for the year ended 30 June 2019.
The financial statements were authorised for issue for and on behalf of the
Directors on 27 August 2019.
..........................................................
Chair
..........................................................
Director
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Directors’ Responsibility Statement
FOR THE YEAR ENDED 30 JUNE 2019
/83
Independent Auditor’s Report
The Auditor-General is the auditor of Port of Tauranga Limited and its subsidiaries (the Group). The Auditor-General has appointed me, Glenn Keaney,
using the staff and resources of KPMG, to carry out the audit of the consolidated financial statements of the Group on his behalf.
Opinion
We have audited the consolidated financial statements of the Group on pages 87 to 120, that comprise the consolidated statement of financial position
as at 30 June 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 30 June
2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with New Zealand equivalents to
International Financial Reporting Standards and International Financial Reporting Standards.
Basis for Opinion
We conducted our audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the Professional and Ethical Standards and
the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are
independent of the Group in accordance with the Auditor-General’s Auditing Standards, which incorporate Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
When carrying out the audit of the Group we followed the independence requirements of the Auditor-General, which incorporate the independence
requirements of the External Reporting Board.
In addition to the audit we have carried out a treasury function review, a data insights risk review of GST and the tax fixed asset register, and a review
of the hedge accounting policy, each of which are compatible with those independence requirements. Other than the audit and these assignments, we
have no relationship with or interests in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements
of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matterHow the matter was addressed in our audit
Property, plant and equipment recorded at fair value (refer note 10 of the financial statements)
The Group has property, plant and equipment of $1,531 million.
The Group has a policy of valuing land, buildings, wharves, hardstanding
and harbour improvements (Revalued PP&E) at fair value. Independent
valuations are obtained at least every 3 years (by an independent valuer),
or more frequently if there is an indicator that the fair value has changed
significantly. Prior to this financial year the last independent valuation was
carried out on these assets at 30 June 2018. In the current year, land has
been revalued.
The Revalued PP&E is considered a key audit matter due to the judgement
involved in the assessment of the fair value. The judgement in the current
financial year also relates to the assessment of whether the carrying values
of assets not revalued materially represent their fair values.
Our procedures focussed on the appropriateness of the Group’s
assessment as to whether the carrying values of Revalued PP&E
materially represent their fair values, and if a revaluation of a class
of asset was required, that the revalued assets have been accurately
reflected in the financial statements.
Our procedures by major category included:
– For land:
– Where valuation expert(s) are engaged, considering the
competence, objectivity and independence of the valuer;
– In conjunction with our valuation specialists, assessing whether the
valuation methodology used to fair value land were appropriate;
– Assessing whether the evidence used by the valuer is based on
appropriate comparable properties and benchmarks; and
– Where increases in value were recognised, we assessed
whether the uplift was appropriately reflected in the reported
carrying values of respective assets.
– For buildings:
– Assessing the appropriateness of the key assumptions used by
management with respect to applicable internal, industry or
market data; and
– Challenging management’s assessment of the estimated fair
value movements.
– For wharves and hardstanding and harbour improvements (assets
previously valued using the ‘depreciated replacement cost’ method):
– Assessing whether the capital goods price indices or relevant
data used by the Group are appropriate and agreeing to
observable data points;
– Testing the accuracy of the Group’s calculation of the impact of
these changes; and
– Challenging management’s assessment of the estimated fair
value movements in each asset class.
To the Shareholders of Port of Tauranga Limited
/84
Port of Tauranga – Integrated Annual Report 2019
Other Information
The Directors are responsible on behalf of the Group for the other information. The other information comprises the information included on pages 1 to 83 and
121 to 128, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Directors’ Responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with
New Zealand equivalents to International Financial Reporting Standards and International Financial Reporting Standards, and for such internal control as the
Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Directors’ responsibilities arise from the Financial Markets Conduct Act 2013.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Auditor-General’s Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of shareholders taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with the Auditor-General’s Auditing Standards, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the use of the going concern basis of accounting by the Directors and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion
on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
/85
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Our responsibilities arise from the Public Audit Act 2001.
Glenn Keaney
KPMG
On behalf of the Auditor-General
Tauranga, New Zealand
27 August 2019
Independent Auditor’s Report (continued)
To the Shareholders of Port of Tauranga Limited
/86
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Consolidated Income Statement
FOR THE YEAR ENDED 30 JUNE 2019
Note
2019
NZ$000
2018
NZ$000
Total operating revenue 4313,263283,726
Contracted services for port operations
(63,775)(58,797)
Employee benefit expenses
5(38,275)(3 7,7 8 0)
Direct fuel and power expenses
(10,752)(9,230)
Maintenance of property, plant and equipment
(11,979)(9,346)
Other expenses
(15,312)(14,478)
Operating expenses(140,093)(129,6 31)
Results from operating activities173,170154,095
Depreciation and amortisation
10, 12(27,585)(25,269)
Impairment of property, plant and equipment(499)0
Reversal of previous revaluation deficit
0446
(28,084)(24,823)
Operating profit before finance costs, share of profit from Equity Accounted Investees and taxation145,086129,272
Finance income
7417391
Finance expenses
7(18,594)(18,418)
Net finance costs7(18,17 7)(18,027)
Share of profit from Equity Accounted Investees
148,10 015,141
Profit before income tax135,009126,386
Income tax expense
8(34,432)(32,113)
Profit for the period 100,57794,273
Basic earnings per share (cents)
1715.014.0
Diluted earnings per share (cents)
1714.813.9
These statements are to be read in conjunction with the notes on pages 93 to 120.
/87
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2019
2019
NZ$000
2018
NZ$000
Profit for the period
100,57794,273
Other comprehensive income
Items that may be reclassified to profit or loss:
Cash flow hedge – changes in fair value*
(8,942)(3,520)
Cash flow hedge – reclassified to profit or loss*
1,6292,226
Share of net change in cash flow hedge reserves of Equity Accounted Investees
(308)(71)
Items that will never be reclassified to profit or loss:
Asset revaluation, net of tax*
72 ,129209,778
Share of net change in revaluation reserve of Equity Accounted Investees
4481,711
Total other comprehensive income
64,956210,124
Total comprehensive income165,533304,397
*Net of tax effect as disclosed in notes 8 and 9.
These statements are to be read in conjunction with the notes on pages 93 to 120.
/88
Port of Tauranga – Integrated Annual Report 2019
Share
Capital
NZ$000
Share Based
Payment
Reserve
NZ$000
Hedging
Reserve
NZ$000
Revaluation
Reserve
NZ$000
Retained
Earnings
NZ$000
Total
Equity
NZ$000
Balance at 30 June 201768,2763,868( 7, 9 8 9)729,065138,723931,943
Profit for the period
000094,27394,273
Other comprehensive income
00(1,365)211,4 8 90210,124
Total comprehensive income00(1,365)211,4 8994,273304,397
Decrease in share capital
(1,460)0000(1,460)
Shares, previously subject to a call option, issued
3,938(3,938)0000
Dividends paid during the period (refer to note 16)
0000(115,017)(115,017)
Equity settled share based payment accrual
(refer to note 16)
02 ,1170002 ,117
Total transactions with owners in their capacity
as owners
2,478(1,821)00(115,017 )(114,3 6 0)
Balance at 30 June 201870,7542,047(9,354)940,554117, 97 91,121,980
Adjustment on adoption of NZ IFRS 9
(refer to note 20(a))
0000(274)(274)
Profit for the period
0000100,577100,577
Other comprehensive income
00(7,621)72,577064,956
Total comprehensive income00( 7,621)72,577100,577165,533
Decrease in share capital
(997)0000(997)
Dividends paid during the period (refer to note 16)
0000(122,440)(122,440)
Equity settled share based payment accrual (refer
to note 16)
02,0380002,038
Revaluation surplus transferred to retained
earnings on asset disposal
00004545
Total transactions with owners in their capacity
as owners
(997)2,03800(122,395)(121,354)
Balance at 30 June 201969,7574,085(16,975)1,013,13195,8871,165,885
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2019
These statements are to be read in conjunction with the notes on pages 93 to 120.
/89
Note
2019
NZ$000
2018
NZ$000
Assets
Property, plant and equipment
101,531,2111,446,270
Intangible assets
1219,02818,521
Investments in Equity Accounted Investees
14132,731134,331
Receivables
1225
Total non current assets 1,682,9821, 5 9 9,147
Cash and cash equivalents
3,9035,836
Receivables and prepayments
1560,61051,646
Inventories
1,366402
Total current assets65,8795 7, 8 8 4
Total assets1,748,8611,657,031
Equity16
Share capital
69,75770,754
Share based payment reserve
4,0852,047
Hedging reserve
(16,975)(9,354)
Revaluation reserve
1,013,131940,554
Retained earnings
95,887117, 9 7 9
Total equity1,165,8851,121,980
Liabilities
Loans and borrowings
18124,213130,021
Derivative financial instruments
1920,89511,7 8 7
Provisions
221,7831,74 6
Deferred tax liabilities
966,38970,484
Total non current liabilities213,280214,038
Loans and borrowings
18322,000275,335
Derivative financial instruments
191,1380
Trade and other payables
2133,68832,656
Revenue received in advance
260279
Provisions
222 ,1783,080
Income tax payable
10,4329,663
Total current liabilities369,696321,013
Total liabilities582,976535,051
Total equity and liabilities1,748,8611,657,031
Net tangible assets per share (dollars per share)1.711.64
For and on behalf of the Board of Directors who authorised these financial statements for issue on 27 August 2019.
................................................. ....................................................
Chair Director
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Consolidated Statement of Financial Position
AS AT 30 JUNE 2019
These statements are to be read in conjunction with the notes on pages 93 to 120.
/90
Port of Tauranga – Integrated Annual Report 2019
Note
2019
NZ$000
2018
NZ$000
Cash flows from operating activities
Receipts from customers
316,172284,379
Interest received
415388
Payments to suppliers and employees
(151,448)(135,078)
Taxes paid
(34,680)(32,030)
Interest paid
(18,270)(18,228)
Net cash inflow from operating activities112 ,18999,431
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
587
Finance lease payments received, including interest
1313
Repayment of advances from Equity Accounted Investees
1,000350
Dividends from Equity Accounted Investees
149,84010,033
Purchase of property, plant and equipment
(41,125)(17, 3 9 9)
Purchase of intangible assets
(1,058)(137)
Interest capitalised on property, plant and equipment
(274)(175)
Total net cash used in investing activities(31,546)(7,308)
Cash flows from financing activities
Proceeds from borrowings
44,2503 0,167
Dividends paid
16(122,440)(115,017)
Repurchase of shares
(1,386)(1,614)
Repayment of borrowings
(3,000)(5,007)
Net cash used in financing activities(82,576)(91,471)
Net increase/(decrease) in cash held(1,933)652
Add opening cash brought forward
5,8365,18 4
Ending cash and cash equivalents3,9035,836
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Consolidated Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2019
These statements are to be read in conjunction with the notes on pages 93 to 120.
/91
Note
2019
NZ$000
2018
NZ$000
Profit after taxation100,57794,273
Items classified as investing/financing activities:
Finance lease interest revenue
7(2)(3)
Loss/(gain) on sale of property, plant and equipment
40(463)
38(466)
Add/(less) non cash items and non operating items:
Depreciation
102 7,0 3 924,784
Amortisation expense
12546485
Impairment of property, plant and equipment
104990
Decrease in deferred taxation expense
9(1,017)(1,175)
Ineffective portion of change in fair value of cash flow hedge
126
Amortisation of interest rate collar premium
8664
Reversal of previous revaluation deficit
0(446)
Share of net profit after tax retained by Equity Accounted Investees
14(8,100)(15,141)
Increase in equity settled share based payment accrual
2,0382 ,117
21,09210,714
Add/(less) movements in working capital:
Change in trade receivables and prepayments
(10,606)(7,483)
Change in inventories
(964)(360)
Change in income tax payable
7691,260
Change in trade, other payables and revenue received in advance
1,2831,493
(9,518)(5,090)
Net cash flows from operating activities112 ,18999,431
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Reconciliation of Profit After Taxation to Cash Flows From Operating Activities
FOR THE YEAR ENDED 30 JUNE 2019
These statements are to be read in conjunction with the notes on pages 93 to 120.
/92
Port of Tauranga – Integrated Annual Report 2019
1 COMPANY INFORMATION
Reporting Entity
Port of Tauranga Limited (referred to as the Parent Company), is a port company. The Parent Company carries out business through the provision of
wharf facilities, land and buildings, for the storage and transit of import and export cargo, berthage, cranes, tugs and pilot services for customers.
Port of Tauranga Limited holds investments in other New Zealand ports and logistic companies.
The Parent Company is a company domiciled in New Zealand, and registered under the Companies Act 1993 and listed on the New Zealand
Stock Exchange (NZX). The Parent Company is a Financial Markets Conduct (FMC) reporting entity for the purposes of the Financial Reporting
Act 2013 and Financial Markets Conduct Act 2013. The financial statements comply with these Acts.
The financial statements of the Group for the year ended 30 June 2019 comprise the Parent Company and its Subsidiaries (together referred to
as the Group) and the Group’s interest in Equity Accounted Investees.
In accordance with the Financial Markets Conduct Act 2013, where a reporting entity prepares consolidated financial statements, parent
company disclosures are not required.
2 BASIS OF PREPARATION
Statement of Compliance and Basis of Preparation
These financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). These
financial statements comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), and other applicable
Financial Reporting Standards, as appropriate for Tier 1 for-profit entities. They also comply with International Financial Reporting Standards.
The financial statements are prepared on the historical cost basis except for the following assets and liabilities which are stated at their fair value:
derivative financial instruments, land, buildings, harbour improvements, and wharves and hardstanding.
These financial statements are presented in New Zealand Dollars (NZ$), which is the Group’s functional currency. All financial information
presented in New Zealand Dollars has been rounded to the nearest thousand.
Significant accounting policies that are relevant to an understanding of the financial statements are provided throughout the notes to the
financial statements.
Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have a
significant effect on the amount recognised in the financial statements, are detailed below:
• valuation of land, buildings, harbour improvements, and wharves and hardstanding (refer to note 10);
• valuation of derivative financial instruments (refer to note 19);
• impairment assessment of intangible assets (refer to note 12); and
• valuation of share rights granted (refer to note 24).
Fair Value Hierarchy
Assets and liabilities measured at fair value are classified according to the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly
(derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
New and Amended Accounting Standards Adopted
The following new standard has been adopted and applied in preparing these financial statements:
• NZ IFRS 9 Financial Instruments
The standard was adopted with effect from 1 July 2018. The main changes under NZ IFRS 9 are:
• new financial assets classification requirements for determining whether an asset is measured at fair value or amortised cost (refer to note 20);
• a new impairment model for financial assets based on expected losses, which may result in the earlier recognition of impairment losses
(refer to note 20(a)); and
• revised hedge accounting requirements to better reflect the management of risks.
To give effect to the adoption of NZ IFRS 9, at 1 July 2018 an amount of $0.274 million has been transferred from retained earnings to
provision for doubtful debts. This amount represents the impact of the new impairment model for financial assets. A full restatement of
financial statements is not required as the impact of doing so is not considered to be material. Hedging relationships continue to be effective.
New Accounting Standards and Interpretations Not Yet Adopted
The following standards and interpretations which are considered relevant to the Group but not yet effective for the year ended 30 June 2019
have not been applied in preparing these financial statements:
• NZ IFRS 16 Leases
This standard becomes mandatory for the Group’s 2020 consolidated financial statements. NZ IFRS 16 requires a lessee to recognise a lease liability
reflecting future lease payments and a “right-of-use asset” for virtually all lease contracts. Included is an optional exemption for certain short-term leases
and leases of low value assets, however this exemption can only be applied by lessees. The estimated impact of the adoption of NZ IFRS 16, based
on the current leases and terms, in the Group’s 2020 consolidated financial statements is forecast to increase total assets and total liabilities by
$24.238 million and is forecast to decrease net profit after tax by $0.264 million. The Group is required to adopt this standard from 1 July 2019.
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
FOR THE YEAR ENDED 30 JUNE 2019
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3 SEGMENTAL REPORTING
Operating Segments
The Group determines and presents operating segments based on the information that is internally provided to the Chief Executive, who is
the Group’s Chief Operating Decision Maker (CODM).
The Group operates in three primary reportable segments, being:
• Port Operations: This consists of providing and managing port services, and cargo handling facilities through the Port of Tauranga
and MetroPort. The Port’s terminal and bulk operations have been aggregated together within the Port Operations segment, due to the
similarities in economic characteristics, customers, nature of products and processes, and risks.
• Property Services: This consists of managing and maintaining the Port’s property assets.
• Marshalling Services: This consists of the contracted terminal operations, stevedoring, marshalling and scaling activities of Quality
Marshalling (Mount Maunganui) Limited (Quality Marshalling).
The three primary business segments are managed separately as they provide different services to customers and have their own
operational and marketing requirements.
The remaining activities of the Group are not allocated to individual business segments. Due to the significant shared cost base of the Port,
operating costs, measures of profitability, assets and liabilities are aggregated and are not reported to the CODM at a segmental level,
but rather at a port level, as all business decisions are made at a “whole port level”.
The Group operates in one geographical area, that being New Zealand.
The Group segment results are as follows:
2019
Port
Operations
Group
NZ$000
Property
Services
Group
NZ$000
Marshalling
Services
Group
NZ$000
Unallocated
(1)
Group
NZ$000
Inter
Segment
Group
NZ$000
Group
NZ$000
Revenue (external)
276,81928,7694,85500310,443
Inter segment revenue
05812,8230(12,881)0
Total segment revenue276,81928,82717,6 780(12,881)310,443
Other income and expenditure:
Share of profit from Equity
Accounted Investees
0008 ,10 008 ,10 0
Interest income
0004170417
Other income
00102,81002,820
Interest expense
000(18,463)0(18,463)
Depreciation and amortisation
expense
00(895)(26,690)0(27,585)
Other unallocated expenditure
00(13,097)(140,507)12,881(140,723)
Income tax expense
00(1,035)(33,397)0(34,432)
Total other income and expenditure
00(15,017)(2 0 7,7 3 0)12,881(209,866)
Total segment result276,81928,8272,661(207,730)0100,577
(1)
Operating costs are not allocated to individual business segments within the Parent Company.
2018
Port
Operations
Group
NZ$000
Property
Services
Group
NZ$000
Marshalling
Services
Group
NZ$000
Unallocated
(1)
Group
NZ$000
Inter
Segment
Group
NZ$000
Group
NZ$000
Revenue (external)
251,38826,9464,92900283,263
Inter segment revenue
7549,8690(9,930)0
Total segment revenue251,39527,00014,7980(9,930)283,263
Other income and expenditure:
Share of profit from Equity
Accounted Investees
00015,141015,141
Interest income
0003910391
Other income
0045670463
Interest expense
000(18,328)0(18,328)
Depreciation and amortisation
expense
00(867)(24,402)0(25,269)
Other unallocated expenditure
00(11,17 9)(128,026)9,930(129,275)
Income tax expense
00(896)(31,217)0(32,113)
Total other income and expenditure
00(12,486)(186,434)9,930(188,990)
Total segment result251,39527,0002,312(186,434)094,273
(1)
Operating costs are not allocated to individual business segments within the Parent Company.
/94
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
4 OPERATING REVENUE
2019
NZ$000
2018
NZ$000
Revenue
Port services revenue
276,819251,388
Rental revenue
28,76926,946
Marshalling services revenue
4,8554,929
Total revenue310,443283,263
Other income2,820463
Total operating revenue313,263283,726
Policies
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the
ordinary course of the Group’s activities. Standard credit terms are a month following invoice with any rebate variable
component calculated at the client’s financial year end. Rebateable sales are eligible for sales volume rebates. When
the rebate is accrued, it is accrued as a current liability (rebate payable) based on contracted rates and estimated
volumes, and will be paid out in cash. For financial reporting purposes rebates are treated as a reduction in profit or
loss. Revenue is shown, net of GST, rebates and discounts. Revenue is recognised as follows:
• Port services and marshalling services revenues: are recognised when the related service is performed. If at
reporting date, the service is in progress, then the portion performed, determined using the percentage completion
method, is recognised in the current year.
• Rail revenue: this includes providing rail transport services, for which revenue is recognised at a point in time on
when the delivery service is completed and goods have been delivered to destination.
• Rental revenue: from property leased under operating leases is recognised in the income statement on a straight
line basis over the term of the lease. Lease incentives provided are recognised as an integral part of the total lease
income, over the term of the lease.
5 EMPLOYEE BENEFIT EXPENSES
2019
NZ$000
2018
NZ$000
Wages and salaries
36,33435,961
ACC levy
261273
KiwiSaver contribution
1,4211,342
Medical subsidy
259204
Total employee benefit expenses38,2753 7,7 8 0
6 OTHER EXPENSES
The following items of expenditure are included in other expenses:
2019
NZ$000
2018
NZ$000
Operating lease payments
1,7121,531
Auditors fees:
Audit fees paid to principal auditor
153163
Review of half year financial statements
1212
Fees paid for other services provided by the principal auditor:
Payments data analysis review
022
Treasury function review
330
Data insights risk review of GST and tax fixed asset register
120
Hedge accounting policy review
70
/95
7 FINANCIAL INCOME AND EXPENSE
2019
NZ$000
2018
NZ$000
Interest on finance lease
23
Interest income on bank deposits
123127
Interest on advances to Equity Accounted Investees
292261
Finance income417391
Interest expense on borrowings
(18,737)(18,503)
Less:
Interest capitalised to property, plant and equipment
274175
(18,463)(18,328)
Ineffective portion of changes in fair value of cash flow hedges
(1)(26)
Amortisation of interest rate collar premium
(86)(64)
Currency option expense
(44)0
Finance expenses(18,594)(18,418)
Total net finance costs(18,17 7)(18,027)
Policies
Finance income comprises interest income on bank deposits, finance lease interest and gains on hedging instruments
that are recognised in the income statement. Interest income is recognised as it accrues, using the effective interest
method. Finance lease interest is recognised over the term of the lease using the net investment method, which
reflects a constant periodic rate of return.
Finance expenses comprise interest expense on borrowings, finance lease interest expense, unwinding of the
discount of provisions and losses on hedging instruments that are recognised in the income statement. Except for
interest capitalised directly attributable to the purchase or construction of qualifying assets, all borrowing costs are
recognised in the income statement using the effective interest method.
Capitalised
Interest
The average weighted interest rate for interest capitalised to property, plant and equipment, was 3.83% for the current
period (2018: 4.12%).
Total interest capitalised to property, plant and equipment, was $0.274 million for the current period (2018: $0.175 million).
/96
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
8 INCOME TAX
Components of Tax Expense
2019
NZ$000
2018
NZ$000
Profit before income tax for the period135,009126,386
Income tax on the surplus for the period at 28.0 cents
37, 8 0 335,388
Tax effect of amounts which are non deductible/(taxable) in calculating taxable income:
Share of Equity Accounted Investees after tax income, excluding Coda Group
(3,258)(3,179)
Other
(113)(96)
Total income tax expense34,43232,113
The income tax expense is represented by:
Current tax expense
Tax payable in respect of the current period
35,73633,290
Adjustment for prior period
(287)(2)
Total current tax expense35,44933,288
Deferred tax expense
Adjustment for prior period
(82)1
Origination/reversal of temporary differences
(935)(1,176)
Total deferred tax expense (refer to note 9)(1,017)(1,175)
Total income tax expense34,43232,113
Income tax recognised in other comprehensive income:
2019
NZ$000
2018
NZ$000
Revaluation of property, plant and equipment
(234)15,737
Cash flow hedges
(2,844)(504)
Total income tax recognised in other comprehensive income (refer to note 9)(3,078)15,233
Policies
Income tax expense comprises current and deferred tax, calculated using the rate enacted or substantively enacted
at balance date and any adjustments to tax payable in respect to prior years. Income tax expense is recognised in the
income statement except to the extent that it relates to items recognised in other comprehensive income or equity.
Imputation
Credits
Total imputation credits available for use in subsequent reporting periods are $39.750 million at 30 June 2019 (2018:
$45.088 million).
/97
9 DEFERRED TAXATION
AssetsLiabilitiesNet
2019
NZ$000
2018
NZ$000
2019
NZ$000
2018
NZ$000
2019
NZ$000
2018
NZ$000
Deferred tax (asset)/liability
Property, plant and equipment
0074,06675,33174,06675,331
Intangible assets
00555416555416
Finance lease receivables
00710710
Derivatives
(6,246)(3,402)00(6,246)(3,402)
Provisions and accruals
(1,993)(1,871)00(1,993)(1,871)
Total (8,239)(5,273)74,62875,75766,38970,484
Recognised in the
Income Statement
Recognised in Other
Comprehensive Income
2019
NZ$000
2018
NZ$000
2019
NZ$000
2018
NZ$000
Property, plant and equipment
(1,031)(1,154)(234)15,737
Intangible assets
139(8)00
Finance lease receivables
(3)(3)00
Derivatives
00(2,844)(504)
Provisions and accruals
(122)(10)00
Total(1,017)(1,175)(3,078)15,233
Policies
Deferred tax is recognised on temporary differences that arise between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse.
A deferred tax asset is recognised only to the extent it is probable it will be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset and when the
deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Unrecognised
Tax Losses
or Temporary
Differences
There are no material unrecognised income tax losses or temporary differences carried forward. There are no material
unrecognised temporary differences associated with the Group’s investments in Subsidiaries or Equity Accounted
Investees.
/98
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
10 PROPERTY, PLANT AND EQUIPMENT
Freehold
Land
NZ$000
Freehold
Buildings
NZ$000
Wharves and
Hardstanding
NZ$000
Harbour
Improvements
NZ$000
Plant and
Equipment
NZ$000
Work in
Progress
NZ$000
Total
NZ$000
Gross carrying amount:
Balance at 1 July 2017
580,3189 6,874272,93615 7, 8 3 8214,00410,13 31,332 ,103
Additions
09,9658,3106194,667(4,560)19,001
Disposals
0000(1,548)0(1,548)
Transfers between asset
classes
0(939)548391000
Revaluation
150,0889119,78514,43600184,400
Balance at 30 June 2018730,406105,991301,579173,284217,12 35,5731,533,956
Balance at 1 July 2018
730,406105,991301,579173,2842 17,12 35,5731,533,956
Additions
2210,23717, 2 3 31,18 32,8779,08340,635
Disposals
0(1,300)00(1,036)0(2,336)
Revaluation
72,7760000072,776
Balance at 30 June 2019803,204114,92 8318,812174,467218,96414,6561,645,031
Accumulated depreciation
and impairment:
Balance at 1 July 2017
0(6, 291)(18,213)(2,679)( 7 7, 6 9 7 )0(104,880)
Depreciation expense
0(3,478)(9,806)(1,13 2)(10,368)0(24,784)
Disposals
00004170417
Transfers between asset
classes
084(84)0000
Revaluation
09,64728,1033 , 8110041,561
Balance at 30 June 20180(38)00(87,6 4 8)0(87,6 8 6)
Balance at 1 July 2018
0(38)00( 8 7, 6 4 8)0(87,6 8 6)
Depreciation expense
0(4,170)(11,147 )(1, 291)(10,4 31)0(2 7,0 3 9)
Impairment
0(463)00(36)0(499)
Disposals
04660093801,404
Balance at 30 June 20190(4,205)(11,147 )(1,291)(97,17 7 )0(113, 82 0)
Carrying amounts:
Total net book value
as at 30 June 2018
730,406105,953301,579173,284129,4755,5731,446,270
Total net book value
as at 30 June 2019
803,204110,723307,665173,176121,78714,6561,531,211
For each revalued class of property, plant and equipment, the notional carrying amount that would have been recognised, had the assets
been carried under the cost model, would be:
2019
Notional
Carrying
Amount
NZ$000
2018
Notional
Carrying
Amount
NZ$000
Freehold land
117,6 01117, 5 7 9
Freehold buildings
81,32975,12 5
Wharves and hardstanding
116,73910 5,174
Harbour improvements
61,11862,393
Total notional carrying amount376,787360,271
/99
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Policies
Property, plant and equipment is initially measured at cost, and subsequently stated at either fair value or cost, less
depreciation and any impairment losses.
Subsequent expenditure that increases the economic benefits derived from the asset is capitalised.
Land, buildings, harbour improvements, and wharves and hardstanding are measured at fair value, based upon
periodic valuations by external independent valuers. The Group undertakes a three yearly revaluation cycle to ensure
the carrying value of these assets does not differ materially from their fair value. If during the three year revaluation
cycle there are indicators that the fair value of a particular asset class may differ materially from its carrying value, an
interim revaluation of that asset class is undertaken.
Depreciation of property, plant and equipment, other than freehold land and capital dredging (included within harbour
improvements), is calculated on a straight line basis and expensed over their estimated useful lives.
Major useful lives are:
Freehold buildings 33 to 85 years
Maintenance dredging 3 years
Wharves 44 to 70 years
Basecourse50 years
Asphalt15 years
Gantry cranes10 to 40 years
Floating plant10 to 25 years
Other plant and equipment5 to 25 years
Electronic equipment3 to 5 years
Capital and maintenance dredging are held as harbour improvements. Capital dredging has an indefinite useful life
and is not depreciated as the channel is maintained via maintenance dredging to its original depth and contours.
Maintenance dredging is depreciated over three years.
Work in progress relates to self constructed assets or assets that are being acquired which are under construction at
balance date. Once the asset is fit for intended service, it is transferred to the appropriate asset class and depreciation
commences. Software developed undertaken as part of a project is transferred to intangibles on completion.
An item of property, plant and equipment is derecognised when it is sold or otherwise disposed of, or when its use is
expected to bring no future economic benefit. Upon disposal or derecognition, any revaluation reserve relating to the
particular asset being disposed or derecognised is transferred to retained earnings.
Restriction
on Title
An area of 8,000 square metres of land located between the Sulphur Point wharves and the Parliamentary approved
reclamation does not have formal title. Actions are being taken to resolve the issue and obtain title. The resolution lies
with the Government.
Security
Certain items of property, plant and equipment have been pledged as security against certain loans and borrowings
of the Group (refer to note 18).
Occupation
of Foreshore
The Parent Company holds consent to occupy areas of the Coastal Marine Area to enable the management and
operation of port related commercial undertakings that it acquired under the Port Companies Act 1988. The consented
area includes a 10 metre radius around navigation aids and a strip from 30 to 60 metres wide along the extent of the
wharf areas at both Sulphur Point and Mount Maunganui.
Capital
Commitments
The estimated capital expenditure for property, plant and equipment contracted for at balance date but not provided
for is $19.603 million.
JudgementsFair Values
This fair value measurement has been categorised as a Level 3 fair value based on the inputs for the assets which are
not based on observable market data (unobservable inputs), (refer to note 2 for fair value measurement hierarchy).
Judgement is required to determine whether the fair value of land, buildings, wharves and hardstanding, and harbour
improvements assets have changed materially since the last revaluation. The determination of fair value at the time of
the revaluation requires estimates and assumptions based on market conditions at that time. Changes to estimates,
assumptions or market conditions subsequent to a revaluation will result in changes to the fair value of property, plant
and equipment.
Remaining useful lives and residual values are estimated based on Management’s judgement, previous experience
and guidance from registered valuers. Changes in those estimates affect the carrying value and the depreciation
expense in the income statement.
At the end of each reporting period, the Group makes an assessment whether the carrying amounts differ materially
from the fair value and whether a revaluation is required. The assessment considers movements in the capital goods
price indices and other market indicators since the previous valuations.
The Group revalued land assets at 30 June 2019, due to indicators of potential material movement in the fair value of
the asset class. At 30 June 2019, the assessment is that there is no material change compared with carrying value in
the fair value of buildings, wharves and hardstanding, and harbour improvements.
/100
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Judgements
(continued)
Land Valuation
The valuation of land assets was carried out by Colliers International New Zealand Limited. The valuation increased
the carrying amount of land by $72.776 million.
Land assets are valued using the direct sales comparison approach which analyses direct sales of comparable
properties on the basis of the sale price per square metre which are then adjusted to reflect stronger and weaker
fundamentals relative to the subject properties.
The interim valuation was performed on a desk top basis with no physical inspection of the sites or review of land titles
for each property. Therefore the work performed is less than that which would be undertaken at the full revaluation cycle.
The significant assumptions applied in the valuation of these assets are:
20192018
Asset
Valuation
MethodKey Valuation AssumptionsHectares
Range of
Significant
Assumptions
$
Weighted
Average
$
Range of
Significant
Assumptions
$
Weighted
Average
$
Direct sales
comparison
Tauranga (Sulphur Point) /
Mount Maunganui – wharf
and industrial land per
square metre
181.7
330-770411
300-700374
Auckland land – land
adjacent to MetroPort
Auckland per square metre
6.8
568-596592
500-525522
Rolleston land – MetroPort
Christchurch per square
metre
15.0
100 100
100100
• Waterfront Access Premium: A premium of approximately 25% has been applied to the main wharf land areas
reflecting the locational benefits this land asset gains from direct waterfront access.
• No Restriction of Title: Valuation is made on the assumption that having no legal title to the Tauranga harbour
foreshore will not detrimentally influence the value of land assets.
• Highest and Best Use of Land: Subject to relevant local authority’s zoning regulations.
• Tauranga and Mount Maunganui: The majority of land is zoned “Port Industry” under the Tauranga City Plan and
a small portion of land at both Sulphur Point and Mount Maunganui has “Industry” zoning.
• Auckland: The land is zoned “Heavy Industry Zone” under the Auckland Unitary Plan.
• Rolleston: The land is zoned “Business 2A” under the Selwyn District Plan.
Building Valuations
The last valuation was carried out at 30 June 2018 by Colliers International New Zealand Limited. The majority of
assets are valued on a combined land and building basis using a Capitalised Income Model with either contract
income or market income. A small number of specialised assets, such as gatehouses and toilet blocks, are valued on
a Depreciated Replacement Cost basis due to their specialised nature and the lack of existing market.
The Capitalised Income Model uses either the contracted rental income or an assessed market rental income of a
property and then capitalises the valuation of the property using an appropriate yield. Contracted rental income is
used when the contracted income is receivable for a reasonable term from secured tenants. Market income is used
when the current contract rent varies from the assessed market rent due to over or under renting, vacant space and a
number of other factors.
The value of land is deducted from the overall property valuation to give rise to a building valuation.
The significant assumptions applied in the valuation of these building assets are:
20192018
Asset Valuation MethodKey Valuation Assumptions
Range of
Significant
Assumptions
%
Weighted
Average
%
Range of
Significant
Assumptions
%
Weighted
Average
%
Capitalised income
model
Market capitalisation rate
5.00-8.005.47
5.00-8.005.47
Wharves and Hardstanding, and Harbour Improvements
The last valuation of wharves and hardstanding, and harbour improvements assets were carried out at 30 June 2018
by WSP Opus. Wharves and hardstanding, and harbour improvements assets are classified as specialised assets and
have accordingly been valued on a Depreciated Replacement Cost basis.
/101
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Judgements
(continued)
The significant assumptions applied in the valuation of these assets are:
• Replacement Unit Costs of Construction Rates – Cost Rates Are Calculated Taking Into Account:
• The Parent Company’s historic cost data, including any recent competitively tendered construction works.
• Published cost information.
• The WSP Opus construction cost database.
• Long run price trends.
• Historic costs adjusted for changes in price levels.
• An allowance is included for costs directly attributable to bringing assets into working condition, management costs
and the financing cost of capital held over construction period.
• Depreciation – the Calculated Remaining Lives of Assets Are Reviewed, Taking Into Account:
• Observed and reported condition, performance and utilisation of the asset.
• Expected changes in technology.
• Consideration of current use, age and operational demand.
• Discussions with the Parent Company’s operational officers.
• Opus Consultants’ in-house experience from other infrastructure valuations.
• Residual values.
The significant assumptions applied in the valuation of these wharves and hardstanding, and harbour improvements
assets are:
20192018
Asset Valuation
MethodKey Valuation Assumptions
Range of
Significant
Assumptions
$
Weighted
Average
$
Range of
Significant
Assumptions
$
Weighted
Average
$
Depreciated
replacement cost
basis
Wharf construction
replacement unit cost rates
per square metre – high
performance wharves
5,000-7,000 6,446
5,000-7,0006,446
Earthworks construction
replacement unit cost rates per
square metre
9 9
99
Basecourse construction
replacement unit cost rates per
square metre
20-40 31
20-4031
Asphalt construction
replacement unit cost rates per
square metre
23-50 44
23-5044
Capital dredging replacement
unit cost rates per square
metre
4-75 *
4-75
Depreciation method
Straight line
basis
Not
applicable
Straight line
basis
Not
applicable
Channel assets (capital
dredging) useful life
IndefiniteNot
applicable
IndefiniteNot
applicable
Pavement remaining useful
lives
2-32 years14 years
2-32 years14 years
Wharves remaining useful lives
0-65 years24 years
0-65 years24 years
* Weighted average unit cost rates are not presented due to the complexity in measuring the types and locations of
removed quantities.
/102
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Judgements
(continued)
Sensitivities to Changes in Key Valuation Assumptions for Land, Buildings, Wharves and Hardstanding, and Harbour
Improvements
The following table shows the impact on the fair value due to a change in significant unobservable input:
Fair Value Measurement
Sensitivity to Significant
Increase
in Input
Decrease
in Input
Unobservable inputs within the direct sales comparison approach for land
Rate per square metreThe rate per square metre assessed from recently
sold properties of a similar nature
IncreaseDecrease
Unobservable inputs within the income capitalisation approach for buildings
Market rentThe valuer’s assessment of the net market income
attributable to the property
IncreaseDecrease
Market capitalisation rateThe rate of return, determined through analysis of
comparable market related sales transactions, that is
applied to a market rent to assess a property’s value
DecreaseIncrease
Unobservable inputs within depreciated replacement cost analysis for
buildings, wharves and hardstanding, and harbour improvements
Unit costs of constructionThe cost of constructing various asset types based on
a variety of sources
IncreaseDecrease
Remaining useful livesThe remaining useful life on an assetIncreaseDecrease
11 OPERATING LEASES
Operating Leases Where the Group is the Lessor
Included in the financial statements are land and buildings, leased to customers under operating leases.
2019
Valuation
NZ$000
2019
Accumulated
Depreciation
NZ$000
2018
Valuation
NZ$000
2018
Accumulated
Depreciation
NZ$000
Land
378,6420378,6260
Buildings
84,2732,49574,4 670
Total462,9152,495453,0930
Future minimum lease receivables from non cancellable operating leases where the Group is the lessor are as follows:
2019
NZ$000
2018
NZ$000
Within one year
18,29514,74 6
One year to two years
14,7307, 4 5 0
Two years to five years
26,24813,321
Greater than five years
39,72133,007
Total98,99468,524
Policies
Where the Group is the Lessor, assets leased under operating leases are included in property, plant and equipment,
in the statements of financial position, as appropriate.
Payments and receivables made under operating leases are recognised in the income statement on a straight line
basis over the term of the lease.
Lease incentives are recognised as an integral part of the total lease expense/revenue, over the term of the lease.
/103
12 INTANGIBLE ASSETS
Goodwill
NZ$000
Computer
Software
NZ$000
Consents and
Contracts
NZ$000
Total
NZ$000
Cost:
Balance at 1 July 2017
15,4903,16710,00028,657
Additions
09870987
Disposals
0000
Balance at 30 June 201815,4904,15410,00029,644
Balance at 1 July 2018
15,4904,15 410,00029,644
Additions
04865671,053
Balance at 30 June 201915,4904,64010,56730,697
Accumulated amortisation:
Balance at 1 July 2017
0(1,374)(9,264)(10,638)
Amortisation expense
0(362)(123)(485)
Balance at 30 June 20180(1,736)(9,387)(11,123)
Balance at 1 July 2018
0(1,736)(9,387)(11,123)
Amortisation expense
0(422)(124)(546)
Balance at 30 June 20190(2 ,158)(9, 511)(11,6 69)
Carrying amounts:
Total net book value 30 June 201815,4902,41861318,521
Total net book value 30 June 201915,4902,4821,05619,028
Policies
Goodwill that arises upon the acquisition of Subsidiaries is included in intangible assets. The Group measures goodwill
as the fair value of consideration transferred, less the fair value of the net identifiable assets and liabilities assumed at
acquisition date.
Goodwill is measured at cost less accumulated impairment losses.
Other intangible assets acquired by the Group, which have finite useful lives, are measured at cost less accumulated
amortisation and accumulated impairment losses.
The estimated useful lives for the current and comparative periods are as follows:
Consents and contracts10 to 35 years
Computer software1 to 10 years
The carrying amounts of the Group’s intangibles other than goodwill are reviewed at each reporting date to determine
whether there is any objective evidence of impairment.
Goodwill is tested for impairment annually, based upon the value in use of the cash generating unit to which the goodwill
relates. The cash flow projections include specific estimates for five years and a terminal growth rate thereafter.
Judgements
Goodwill relates to goodwill arising on the acquisition of Quality Marshalling.
Goodwill was tested for impairment at 30 June 2019 and confirmed that no adjustment was required.
For impairment testing the calculation of value in use was based upon the following key assumptions:
• Cash flows were projected using management forecasts over the five year period.
• Terminal cash flows were estimated using a constant growth rate of 2% after year five.
• A pre-tax discount rate of 12% was used.
/104
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
13 INVESTMENTS IN SUBSIDIARIES
Investments in Subsidiaries Comprises:
Name of EntityPlace of BusinessPrincipal Activity
2019
%
2018
%
Balance
Date
Port of Tauranga Trustee
Company Limited
New ZealandHolding company for employee share
scheme
100.00
100.0030 June
Quality Marshalling
(Mount Maunganui) Limited
New ZealandMarshalling and terminal operations
services
100.00
100.0030 June
Policies
Subsidiaries are entities controlled by the Group. Control exists when the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those returns through its power over the investee. In
assessing control, potential voting rights that presently are exercisable, are taken into account. The financial statements of
Subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases.
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES
(a) Investments in Equity Accounted Investees Comprises:
Name of EntityPrincipal Activity
2019
%
2018
%
Balance
Date
Coda Group Limited PartnershipFreight logistics and warehousing
50.00
50.0030 June
Northport LimitedSea port
50.00
50.0030 June
PortConnect LimitedOn line cargo management
50.00
50.0030 June
PrimePort Timaru LimitedSea port
50.00
50.0030 June
Timaru Container Terminal LimitedSea port
50.10
50.1030 June
(b) Carrying value of investments in Equity Accounted Investees
2019
NZ$000
2018
NZ$000
Balance as at 1 July
134,33112 7, 5 8 3
Group’s share of net profit after tax
8,10 015,141
Group’s share of hedging reserve
(308)(71)
Group’s share of revaluation reserve
4481,711
Group’s share of total comprehensive income8,24016,781
Dividends received
(9,840)(10,033)
Balance as at 30 June 132,731134,331
/105
14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED)
(c) Summarised Financial Information of Equity Accounted Investees:
The following table summarises the financial information of individually material Equity Accounted Investees, Northport Limited and
Coda Group Limited Partnership, and the combined value of individually immaterial Equity Accounted Investees as included in their own
financial statements, adjusted for fair value adjustments at acquisition and differences in accounting policies.
2019
Northport
Limited
NZ$000
Coda Group
Limited
Partnership
NZ$000
Individually
Immaterial Equity
Accounted
Investees
NZ$000
Total
NZ$000
Cash and cash equivalents
3863,74 82,4646,598
Total current assets4,76626,0917,6 9 838,555
Total non current assets131,51540,05394,194265,762
Total assets136,28166,144101,892304,317
Current financial liabilities excluding trade and other payables
and provisions
0(2,749)(6,738)(9,487)
Total current liabilities(4,812)(20,101)(11,3 6 6)(36,279)
Non current financial liabilities excluding trade and other
payables and provisions
(35,3 41)( 7, 417 )(28,384)(71,142)
Total non current liabilities(35,341)( 7,417 )(28,384)(71,142)
Total liabilities(40,153)(2 7, 518)(39,750)(107,421)
Net assets9 6,12838,62662 ,142196,896
Group’s share of net assets 48,06419,31331,07898,455
Goodwill acquired on acquisition of Equity Accounted
Investees
029,4144,86234,276
Carrying amount of Equity Accounted Investees48,06448,72735,939132,731
Revenues
42,622215,88436,797295,303
Depreciation and amortisation
(3,818)(1,799)(2,272)(7,889)
Interest expense
(1,813)(18)(1,246)(3,077)
Net profit before tax24,028(7,072)7, 2 8 924,245
Tax expense
(6,038)0(2,012)(8,050)
Net profit after tax17, 9 9 0(7,072)5,27716,195
Other comprehensive income
(296)0576280
Total comprehensive income17,6 9 4(7,072)5,85316,475
Group’s share of net profit after tax8,995(3,536)2,6418,10 0
Group’s share of total comprehensive income 8,847(3,536)2,9298,240
Group’s share of dividends/distributions9,19 006509,840
/106
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED)
2018
Northport
Limited
NZ$000
Coda Group
Limited
Partnership
NZ$000
Individually
Immaterial Equity
Accounted
Investees
NZ$000
Total
NZ$000
Cash and cash equivalents
1964,8413 ,1118,148
Total current assets4,64429,8319,77344,248
Total non current assets132,24337, 97282,930253,145
Total assets136,8876 7, 8 0 392,703297,393
Current financial liabilities excluding trade and other payables
and provisions
0(1,14 5)( 7, 8 4 2)(8,987)
Total current liabilities(4,537)(15,692)(11,913)(32 ,142)
Non current financial liabilities excluding trade and other
payables and provisions
(33,850)(6,413)(23,000)(63,263)
Total non current liabilities(35,536)(6,413)(23,204)(65,153)
Total liabilities(40,073)(22 ,105)(3 5,117 )(97, 2 9 5)
Net assets96,81445,69857,586200,098
Group’s share of net assets 48,40722,84928,799100,055
Goodwill acquired on acquisition of Equity Accounted
Investees
029,4144,86234,276
Carrying amount of Equity Accounted Investees48,40752,26333,661134,331
Revenues
42 ,172201,70236,555280,429
Depreciation and amortisation
(4,14 8)(2,021)(2,242)(8,411)
Interest expense
(1,809)(70)(1,238)(3,117 )
Net profit before tax24,5897,6 6 05,81838,067
Tax expense
(6,208)0(1,581)( 7,78 9)
Net profit after tax18,3817,6 6 04,23730,278
Other comprehensive income
1,92801,3523,280
Total comprehensive income20,3097,6 6 05,58933,558
Group’s share of net profit after tax9,1913,8302 ,12015,141
Group’s share of total comprehensive income 10,1553,8302,79616,781
Group’s share of dividends/distributions9,333070010,033
Policies
The Group’s interests in Equity Accounted Investees comprise interests in Joint Ventures.
A Joint Venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net
assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
Equity Accounted Investees are accounted for using the equity method.
In respect of Equity Accounted Investees, the carrying amount of goodwill is included in the carrying amount of
the investment and not tested for impairment separately.
Tax Treatment
of Coda
Group
Coda Group is treated as a partnership for tax purposes and is not taxed at the partnership level. Fifty percent of
the income and expense flow through the limited partnership to the Parent Company who is then taxed.
Judgements
It has been determined that the Group has joint control over its investees, due to the existence of contractual
agreements which require the unanimous consent of the parties sharing control over relevant business activities.
The investment in Coda Group was tested for impairment at 30 June 2019 and confirmed that no adjustment was
required.
/107
15 RECEIVABLES AND PREPAYMENTS
2019
NZ$000
2018
NZ$000
Trade receivables
51,70242 ,10 8
Trade receivables from Equity Accounted Investees and related parties
58474 0
52,28642,848
Advances to Equity Accounted Investees (refer to note 23)
5,3196,319
Prepayments and sundry receivables
3,0052,479
Total receivables and prepayments60,61051,646
The ageing of trade receivables at reporting date was:
2019
NZ$000
2018
NZ$000
Not past due
35,35824,971
Past due 0-30 days
14,40016,031
Past due 30-60 days
1,339891
Past due 60-90 days
60121
More than 90 days
4194
Total of ageing of trade receivables51,70242 ,10 8
Polices
Receivables and prepayments are initially recognised at fair value. They are subsequently measured at amortised
cost, and adjusted for impairment losses.
Receivables with a short duration are not discounted.
Fair Values
The nominal value less impairment provision of trade receivables are assumed to approximate their fair values due to
their short term nature.
Judgements
A provision for doubtful receivables is established when the assessment under NZ IFRS 9 deems a provision is
required (refer to note 20 (a)).
Advances
to Equity
Accounted
Investees
The Parent Company makes advances to Equity Accounted Investees for short term funding purposes. These
advances are repayable on demand and interest rates charged on these advances are varied.
/108
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
16 EQUITY
Share Capital
20192018
Number of ordinary shares issued
Balance as at 1 July
680,119,179680,390,580
Shares issued during year
128,82053,400
Shares repurchased by the Group during the year
(32 7,474)(324,801)
Balance as at 30 June679,920,5256 8 0,119,179
Dividends
The following dividends were declared and paid during the period:
2019
NZ$000
2018
NZ$000
Final 2018 dividend paid 7.0 cents per share (2017: 6.2 cps)
47,61942 ,19 5
Final 2018 special dividend paid 5.0 cents per share (2017: 5.0 cps)
34,01434,029
Interim 2019 dividend paid 6.0 cents per share (2018: 5.7 cps)
40,80738,793
Total dividends122,440115 , 017
PoliciesCapital Management
The Parent Company’s policy is to maintain a strong capital base, which the Group defines as total shareholders’ equity,
so as to maintain investor, creditor and market confidence, and to sustain the future business development of the Group.
The Group has established policies in capital management, including the specific requirements that interest cover is to
be maintained at a minimum of three times and that the debt/(debt + equity) ratio is to be maintained at a 40% maximum.
It is also Group policy that the ordinary dividend payout is maintained between a level of between 70% and 100% of net
profit after tax for the period.
The Group has complied with all capital management policies during the reporting periods.
Share Capital
All shares are fully paid and have no par value. All shares rank equally with one vote attached to each fully paid
ordinary share.
During the year 128,820 shares at $3.02 per share were issued to employees from the Port of Tauranga Trustee
Company Limited as part of the Employee Share Ownership Plan (2018: 53,400 shares at $2.88 per share).
During the year 194,200 shares were repurchased on market and transferred to the Port of Tauranga Trustee
Company Limited as part of the Employee Share Ownership Plan (2018: 18,450 shares).
Where the Group purchases its own share capital (treasury shares), the consideration paid, including and directly attributable
to incremental costs are deducted from share capital until the shares are cancelled or reissued. Where such shares are
reissued, any consideration received, net of any directly attributable transaction costs, are included in share capital.
During the year 133,274 shares were repurchased on market and are held as treasury stock (2018: 306,351 shares).
Dividends
The dividends are fully imputed. Supplementary dividends of $630,929 (2018: $529,761) were paid to shareholders
that are not tax residents in New Zealand, for which the Group received a foreign tax credit entitlement.
Share Based
Payment
Reserve –
Container
Volume
Commitment
Agreement
On 1 August 2014, the Parent Company issued 2,000,000 shares as a volume rebate to Kotahi as part of a 10 year
freight alliance. Due to the Parent Company completing a 5:1 share split on 17 October 2016, the number of shares
originally issued to Kotahi increased to 10,000,000. Of these shares, 8,500,000 are subject to a call option allowing
the Parent Company to “call” shares back at zero cost if Kotahi fails to meet the volume commitments specified in the
10 year Container Volume Commitment Agreement.
The increase in the reserve of $1.258 million (2018: $1.214 million) recognises the shares earned based on containers
delivered during the period.
The grant-date fair value of equity settled share based payments is recognised as a rebate against revenue, with a
corresponding increase in equity, over the vesting period. The amount recognised as a rebate is adjusted to reflect the
number of awards for which the related service is expected to be met, such that the amount ultimately recognised is based
on the number of awards that meet the related service conditions at the vesting date.
Share Based
Payments
Reserve –
Management
Long Term
Incentive
Share rights are granted to employees in accordance with the Parent Company’s Management Long Term Incentive
Plan. The fair value of share rights granted under the plan are measured at grant date and recognised as an employee
expense over the vesting period with a corresponding increase in equity. The fair value at grant date of the share rights
are independently determined using an appropriate valuation model that takes into account the terms and conditions
upon which they were granted (refer to note 24).
This reserve is used to record the accumulated value of the unvested shares rights, which have been recognised as
an expense in the income statement. Upon the vesting of share rights, the balance of the reserve relating to the share
rights is offset against the cost of treasury stock allotted to settle the obligation, with any difference in the cost
of settling the commitment transferred to retained earnings.
Hedging
Reserve
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging
instruments, related to hedged transactions that have not yet occurred.
Revaluation
Reserve
The revaluation reserve relates to the revaluation of land, buildings, wharves and hardstanding, and harbour improvements.
/109
17 EARNINGS PER SHARE
20192018
Earnings per share
Net profit attributable to ordinary shareholders (NZ$000)
100,57794,273
Weighted average number of ordinary shares (net of treasury stock) for basic earnings per share
671,641,605671,479,113
Basic earnings per share (cents)
15.014.0
Weighted average number of ordinary shares (net of treasury stock) for diluted earnings per share
680,797,763680,631,527
Diluted earnings per share (cents)
14.813.9
Policies
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the weighted average
number of ordinary shares outstanding for the Parent Company during the period.
Diluted EPS adjusts for any commitments the Parent Company has to issue shares in the future that would decrease
the basic EPS. The Parent Company has two types of dilutive potential ordinary shares, Management Long Term
Incentive Plan share rights (refer note 24) and Container Volume Commitment Agreement share rights (refer note
16). Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of the share rights.
18 LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group’s interest bearing loans and borrowings.
2019MaturityCoupon
Committed
Facilities
NZ$000
Undrawn
Facilities
NZ$000
Carrying
Value
NZ$000
Non current
Standby revolving cash advance2023Floating
200,000151,00049,000
Standby revolving cash advance facility 2022Floating
180,000180,0000
Fixed rate bond – 2nd issue20214.792%
75,000075,000
Advances from employeesVarious0%
00213
Total non current 455,000331,000124,213
Current
Fixed rate bond – 1st issue20195.865%
50,000050,000
Standby revolving cash advance facility2019Floating
50,000050,000
Multi option facility2019Floating
5,0003,0002,000
Commercial papers<3 monthsFloating
00220,000
Total current 105,0003,000322,000
Total 560,000334,000446,213
/110
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
18 LOANS AND BORROWINGS (CONTINUED)
2018MaturityCoupon
Committed
Facilities
NZ$000
Undrawn
Facilities
NZ$000
Carrying
Value
NZ$000
Non current
Standby revolving cash advance2022Floating
100,000100,0000
Fixed rate bond – 2nd issue20214.792%
75,000075,000
Standby revolving cash advance facility 2021Floating
100,000100,0000
Standby revolving cash advance facility2020Floating
80,00075,0005,000
Fixed rate bond – 1st issue20195.865%
50,000050,000
Advances from employeesVarious0%
0021
Total non current 405,000275,000130,021
Current
Standby revolving cash advance2019Floating
100,00050,00050,000
Multi option facility2018Floating
5,00005,000
Commercial papers<3 monthsFloating
00220,000
Advances from employeesVarious0%
00335
Total current 105,00050,000275,335
Total 510,000325,000405,356
Policies
Loans and borrowings are recognised at fair value, plus any directly attributable transaction costs, if the Group
becomes a party to the contractual provisions of the instrument. Loans and borrowings are derecognised if the
Group’s obligations as specified in the contract expire or are discharged or cancelled.
Subsequent to initial recognition, loans and borrowings are measured at amortised cost using the effective interest
method, less any impairment losses.
Fixed Rate
Bonds
The Parent Company has issued two six-year fixed rate bonds, a $50 million fixed rate bond with a final maturity on
29 October 2019 and a $75 million fixed rate bond with final maturity on 29 January 2021.
The Parent Company incurred costs of $0.244 million in connection with the issuance of bonds which is being
amortised over the term of the bonds.
Commercial
Papers
Commercial papers are secured, short term discounted debt instruments issued by the Parent Company for funding
requirements as a component of its banking arrangements. The commercial paper programme is fully backed by
committed term bank facilities.
At 30 June 2019 the Group had $220.000 million of commercial paper debt that is classified within current liabilities
(2018: $220.000 million). Due to this classification, the Group’s current liabilities exceed the Group’s current assets.
Despite this fact, the Group does not have any liquidity or working capital concerns as a result of the commercial
paper debt being interchangeable with direct borrowings within the standby revolving cash advance facility which
is a term facility.
Standby
Revolving
Cash
Advance
Facility
Agreement
The Parent Company has a $430.000 million financing arrangement with ANZ Bank New Zealand Limited, Bank of
New Zealand Limited, Commonwealth Bank of Australia, New Zealand Branch and MUFG Bank, Ltd, Auckland Branch
(2018: $380.000 million financing arrangement with ANZ Bank New Zealand Limited, Bank of New Zealand Limited,
Commonwealth Bank of Australia, New Zealand Branch and MUFG Bank, Ltd, Auckland Branch). The facility, which
is secured, provides for both direct borrowings and support for issuance of commercial papers.
This facility was refinanced on 29 July 2019 (refer to note 26).
Multi Option
Facility
The Parent Company has a $5.000 million multi option facility with Bank of New Zealand Limited, used for short term
working capital requirements (2018: $5.000 million).
Security
Bank facilities and fixed rate bonds are secured by way of a security interest over certain floating plant assets ($17.285
million, 2018: $17.951 million), mortgages over the land and building assets ($913.791 million, 2018: $836.216 million), and
by a general security agreement over the assets of the Parent Company ($1,631.564 million, 2018: $1,611.927 million).
Covenants
The Parent Company has complied with all covenants during the reporting periods.
Fair Values
The fair value of fixed rate loans and borrowings is calculated by discounting the future contractual cash flows at
current market interest rates that are available for similar financial instruments. The amortised cost of variable rate
loans and borrowings is assumed to closely approximate fair value as debt facilities mature every 90 days.
Interest Rates
The average weighted interest rate of interest bearing loans was 3.85% at 30 June 2019 (2018: 3.28%).
/111
19 DERIVATIVE FINANCIAL INSTRUMENTS
2019
NZ$000
2018
NZ$000
Current liabilities
Foreign exchange derivatives – cash flow hedges(266)0
Interest rate derivatives – cash flow hedges
(872)0
Total current liabilities(1,138)0
Non current liabilities
Interest rate derivatives – cash flow hedges
(20,895)(11,7 8 7 )
Total non current liabilities(20,895)(11,7 8 7 )
Total liabilities(22,033)(11,7 8 7 )
Policies
The Group uses derivative financial instruments to hedge its exposure to foreign exchange, commodity and interest rate
risks arising from operational, financing and investment activities. In accordance with its Treasury Policy, the Group does
not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge
accounting are accounted for as trading instruments.
Derivative financial instruments qualifying for hedge accounting are classified as non current if the maturity of the
instrument is greater than 12 months from reporting date and current if the instrument matures within 12 months from
reporting date. Derivatives accounted for as trading instruments are classified as current.
Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately.
Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on
remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for
hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedging relationship.
The Group’s hedging policy parameters are:
Interest Rate Derivatives
Debt Maturity
Minimum Hedging
%
Maximum Hedging
%
0-1 year45100
1-3 years3085
3-5 years1565
5-10 years050
Foreign Exchange Derivatives
Expenditure
Minimum Hedging
%
Maximum Hedging
%
Upon Board approval of capital expenditure denominated in
a foreign currency
050
Upon signing of contract with supplier for capital expenditure
denominated in a foreign currency
75100
Cash Flow
Hedges
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly
in the cash flow hedge reserve to the extent that the hedge is effective. To the extent that the hedge is ineffective,
changes in fair value are recognised in the income statement.
The Group determines the existence of an economic relationship between the hedging instrument and hedged item
based on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative
designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of
the hedged item using the hypothetical derivative method.
The notional amount of the hedging instrument must match the designated amount of the hedged item for the hedge to
be effective.
Sources of hedge ineffectiveness are:
• Material changes in credit risk that affect the hedging instrument but do not affect the hedged item.
• Drawn liabilities that fall below the hedging amount, causing the hedge ratio to exceed 100%.
If the hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated or exercised,
then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in the hedging
reserve remains there until the highly probable forecast transaction, upon which the hedging was based, occurs. When
the hedged item is a non financial asset, the amount recognised in the hedging reserve is transferred to the carrying
amount of the asset when it is recognised. In other cases the amount recognised in the hedging reserve is transferred to
the income statement in the same period that the hedged item affects the income statement.
/112
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
19 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Fair Values
The fair value of derivatives traded in active markets is based on quoted market prices at the reporting date. The fair
value of derivatives that are not traded in active markets (for example over-the-counter derivatives), are determined by
using market accepted valuation techniques incorporating observable market data about conditions existing at each
reporting date.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair
value of forward exchange contracts is determined using quoted forward exchange rates at the reporting date.
Valuation inputs for valuing derivatives are as follows:
Valuation InputSource
Interest rate forward price curvePublished market swap rates
Discount rate for valuing interest rate
derivatives
Published market interest rates as applicable to the remaining life
of the instrument adjusted for the credit risk of the counterparty for
assets and the credit risk of the Group for liabilities
Foreign exchange forward pricesPublished spot foreign rates and interest rate differentials
All financial instruments held by the Group and designated fair value are classified as level 2 under the fair value
measurement hierarchy (refer to note 2).
20 FINANCIAL INSTRUMENTS
The following tables show the classification, fair value and carrying amount of financial instruments held by the Group at reporting date:
2019
Designated at Fair
Value Through Other
Comprehensive Income
NZ$000
Other
Amortised
Cost
NZ$000
Total
Carrying
Amount
NZ$000
Fair
Value
NZ$000
Assets
Receivables
0121212
Total non current assets0121212
Cash and cash equivalents
03,9033,9033,903
Receivables
057,60557,60557,605
Total current assets061,50861,50861,508
Total assets061,52061,52061,520
Liabilities
Loans and borrowings
0124,213124,21312 7, 0 7 7
Derivative financial instruments
20,895020,89520,895
Total non current liabilities20,895124,213145,108147, 972
Loans and borrowings0322,000322,000322,609
Derivative financial instruments
1,13 801,13 81,13 8
Trade and other payables
012 ,14 412 ,14 412 ,14 4
Total current liabilities1,138334,144335,282335,891
Total liabilities22,033458,357480,390483,863
/113
20 FINANCIAL INSTRUMENTS (CONTINUED)
2018
Designated at
Fair Value
NZ$000
Loans and
Receivables
NZ$000
Other
Amortised
Cost
NZ$000
Total
Carrying
Amount
NZ$000
Fair
Value
NZ$000
Assets
Receivables
02502525
Total non current assets02502525
Cash and cash equivalents
05,83605,8365,836
Receivables
04 9,16704 9,1674 9,167
Total current assets055,003055,00355,003
Total assets055,028055,02855,028
Liabilities
Loans and borrowings
00130,021130,021134,714
Derivative financial instruments
11,7 8 70011,7 8 711,7 8 7
Total non current liabilities11,7870130,021141,808146,501
Loans and borrowings
00275,335275,335275,335
Trade and other payables
0011, 3 4 511, 3 4 511, 3 4 5
Total current liabilities00286,680286,680286,680
Total liabilities11,7870416,701428,488433,181
Financial Risk
Management
The Group’s overall financial risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s financial risk
management framework. The Audit Committee is responsible for developing and monitoring the Group’s financial risk
management policies, and reports regularly to the Board of Directors on its activities.
The Group’s financial risk management policies are established to identify and analyse the risks faced by the Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits. Financial risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Board of Directors oversees how management monitors compliance with the Group’s financial risk management
policies and procedures and reviews the adequacy of the financial risk management framework in relation to the risks
faced by the Group.
(a) Credit Risk
The Group recognises an allowance for expected credit losses (ECLs) for all financial assets. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
For advances to Equity Accounted Investees, which have not had a significant increase in credit risk since initial recognition, ECLs are
calculated based on the probability of a default event occurring within the next 12 months. An industry-accepted probability of default
has been obtained for use in this calculation.
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes
in credit risk, but instead, recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a
provision matrix that is based on its historical credit loss experience.
On that basis, the following table details loss allowance for trade receivables:
2019
Not
Past Due
Past Due
0-30 Days
Past Due
30-60 Days
More Than
60 DaysTotal
Expected loss rate (%)0.0140.0310.2831.488
0
Gross carrying amount – trade receivables
(NZ$000)
35,35814,4001,33960551,702
Loss allowance on trade receivables
(NZ$000)
544922
/114
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
20 FINANCIAL INSTRUMENTS (CONTINUED)
Movements in the provision for impairment of financial assets are as follows:
2019
NZ$000
2018
NZ$000
Adjustment to opening balance on adoption of NZ IFRS 9
2740
Provision for trade receivables
100
Provision for advances to Equity Accounted Investees
100
Bad debts written off
(3)0
Closing balance2910
Credit Risk
Management
Policies
Counterparty credit risk is the risk of losses (realised or unrealised) arising from a counterparty failing to meet its
contractual obligations. Financial instruments which potentially subject the Group to credit risk, principally consist of
bank balances, trade receivables, advances to Equity Accounted Investees and derivative financial instruments.
The Group only transacts in treasury activity (including investment, borrowing and derivative transactions) with
Board approved counterparties. Unless otherwise approved by the Board, counterparties are required to be New
Zealand registered banks with a Standard & Poor’s credit rating of A+ or above. The Group continuously monitors
the credit quality of the financial institutions that are counterparties and does not anticipate any non performance.
The Group adheres to a credit policy that requires each new customer to be analysed individually for credit
worthiness before the Group’s standard payment terms and conditions are offered. Customer payment
performance is constantly monitored with customers not meeting creditworthiness being required to transact with
the Group on cash terms. The Group generally does not require collateral.
Default
The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to
the Group in full, without recourse by the Group to actions such as security (if any is held).
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
Concentration
of Credit Risk
The only significant concentration of credit risk at reporting date relates to bank balances and advances to Equity
Accounted Investees. The nature of the Group’s business means that the top ten customers account for 62.7%
of total Group revenue (2018: 65.9%). The Group is satisfied with the credit quality of these debtors and does not
anticipate any non performance.
(b) Liquidity Risk
The following table sets out the contractual cash outflows for all financial liabilities (including estimated interest payments) and derivatives:
2019
Statement
of Financial
Position
NZ$000
Contractual
Cash Flows
NZ$000
6 Months
or Less
NZ$000
6-12
Months
NZ$000
1-2
Years
NZ$000
2-5
Years
NZ$000
More Than
5 Years
NZ$000
Non derivative
financial liabilities
Loans and borrowings
(446,213)(461,630)(376,051)(2,678)(80,087)(2,814)0
Trade and other
payables
(12,144)(12,144)(12,144)0000
Total non derivative
financial liabilities
(458,357)(473,774)(388,195)(2,678)(80,087)(2,814)0
Derivatives
Interest rate
derivatives
Cash flow hedges –
outflow
(21,767)(23,656)(1,643)(2,159)(9,804) (7,053)(2,997)
Foreign currency
derivatives
Cash flow hedges –
outflow
(294)(295)(295)0000
Cash flow hedges –
inflow
2828280000
Total derivatives(22,033)(23,923)(1,910)(2,159)(9,804)(7,053)(2,997)
Total(480,390)(497,697)(390,105)(4,837)(89,891)(9,867)(2,997)
/115
20 FINANCIAL INSTRUMENTS (CONTINUED)
2018
Statement
of Financial
Position
NZ$000
Contractual
Cash Flows
NZ$000
6 Months
or Less
NZ$000
6-12
Months
NZ$000
1-2
Years
NZ$000
2-5
Years
NZ$000
More Than
5 Years
NZ$000
Non derivative financial
liabilities
Loans and borrowings
(405,356)(424,765)(284,862)(3,966)(56,064)(79,873)0
Trade and other payables
(11,345)(11,345)(11,345)0000
Total non derivative
financial liabilities
(416,701)(436,110)(296,207)(3,966)(56,064)(79,873)0
Derivatives
Interest rate derivatives
Cash flow hedges –
outflow
(11,787)(13,139)(1,365)(1,329)(2,839)(6,481)(1,125)
Total derivatives(11,787)(13,139)(1,365)(1,329)(2,839)(6,481)(1,125)
Total(428,488)(449,249)(297,572)(5,295)(58,903)(86,354)(1,125)
Liquidity and
Funding Risk
Management
Policies
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient
cash and borrowing facilities available to meet its liabilities when due, under both normal and adverse conditions.
The Group’s cash flow requirements and the utilisation of borrowing facilities are continuously monitored, and it is
required that committed bank facilities are maintained at a minimum of 10% above maximum forecast usage.
Funding risk is the risk that arises when either the size of borrowing facilities or the pricing thereof is not able to be
replaced on similar terms, at the time of review with the Group’s banks. To minimise funding risk it is Board policy to
spread the facilities’ renewal dates and the maturity of individual loans. Where this is not possible, extensions to, or
the replacement of, borrowing facilities are required to be arranged at least six months prior
to each facility’s expiry.
(c) Market Risk
Interest Rate Risk
At reporting date, the interest rate profile of the Group’s interest bearing financial assets/(liabilities) were:
Carrying Amount
2019
NZ$000
2018
NZ$000
Fixed rate instruments
Fixed rate bonds
(125,000)(125,000)
Total(125,000)(125,000)
Variable rate instruments
Commercial papers
(220,000)(220,000)
Standby revolving cash advance facility
(99,000)(55,000)
Interest rate derivatives(21,767)(11,7 8 7 )
Multi option facility
(2,000)(5,000)
Cash balances
3,9035,836
Total (338,864)(28 0,951)
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Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
20 FINANCIAL INSTRUMENTS (CONTINUED)
Sensitivity Analysis
If, at reporting date, bank interest rates had been 100 basis points higher/lower, with all other variables held constant, the result would
increase/(decrease) post tax profit or loss and the hedging reserve by the amounts shown below. The analysis was performed on the same
basis for 2018.
Profit or LossCash Flow Hedge Reserve
100 bp
Increase
NZ$000
100 bp
Decrease
NZ$000
100 bp
Increase
NZ$000
100 bp
Decrease
NZ$000
Variable rate instruments
(2,239)2,26900
Interest rate derivatives
1,13 5(1,13 5)7, 3 3 7(7,774)
Total as at 30 June 2019(1,104)1,1347, 3 37( 7,7 74)
Variable rate instruments
(1,930)1,96000
Interest rate derivatives
832(832)6,271(7,080)
Total as at 30 June 2018(1,098)1,1286,271( 7,0 8 0)
Market Risk
Management
Policies
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity
prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the
return on risk.
The Group uses derivative financial instruments such as interest rate swaps and foreign currency options to hedge
certain risk exposures. All derivative transactions are carried out within the guidelines set out in the Group’s Treasury
Policy which has been approved by the Board of Directors. Generally the Group seeks to apply hedge accounting in
order to manage volatility in the income statement.
Interest Rate
Risk
Interest rate risk is the risk of financial loss, or impairment to cash flows in current or future periods, due to adverse
movements in interest rates on borrowings or investments. The Group uses interest rate derivatives to manage its
exposure to variable interest rate risk by converting variable rate debt to fixed rate debt.
The total nominal value of interest rate derivatives outstanding is $125.000 million.
The average interest rate on interest rate derivatives is 3.9%.
21 TRADE AND OTHER PAYABLES
2019
NZ$000
2018
NZ$000
Accounts payable
12,01611, 3 0 0
Accrued employee benefit liabilities
4,5974,281
Accruals
16,94717, 0 3 0
Payables due to Equity Accounted Investees and related parties
12845
Total trade and other payables33,68832,656
Policies
Trade and other payables are initially measured at fair value and subsequently measured at amortised cost.
Fair Values
The nominal value of trade and other payables are assumed to approximate their fair values due to their short term nature.
/117
22 PROVISIONS
Long Service
Leave
NZ$000
Management
Long Term
Incentive Plan
NZ$000
Profit Sharing
and Bonuses
NZ$000
Total
NZ$000
Balance at 30 June 2018
1,74 68182,2624,826
Additional provision
1941402,6983,032
Unused amounts reversed
(75)00(75)
Utilised during the period
(82)(958)(2,782)(3,822)
Balance at 30 June 20191,78302 ,1783,961
Total current provisions002 ,1782 ,178
Total non current provisions1,783001,783
Policies
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
Employee
Benefits –
Long Service
Leave
Underlying assumptions for provisions relate to the probabilities of employees reaching the required vesting period
to qualify for long service leave. Probability factors for reaching long service leave entitlements are based on historic
employee retention information.
Employee
Benefits –
Management
Long Term
Incentive Plan
Members of the Parent Company’s Executive Management Team are eligible to receive payment under the Management
Long Term Incentive plan. The plan is classified as a cash settled share based payment plan and is based upon a
combination of total shareholder return versus an index and earnings per share growth, both over a three year period.
The amount recognised in the income statement during the period is $0.140 million, (2018: $0.386 million).
The current cash settled share based payment plan has been replaced and vested for the last time in the 2018 financial
year with payment made in August 2018 (refer to note 24).
Employee
Benefits –
Profit Sharing
and Bonuses
The Profit Sharing and Bonus Scheme rewards eligible employees based on a combination of Company performance
against budget and personal performance. The incentive is generally paid biannually.
23 RELATED PARTY TRANSACTIONS
Related party transactions with related parties:
2019
NZ$000
2018
NZ$000
Transactions with Equity Accounted Investees
Services provided to Port of Tauranga Limited
556441
Services provided by Port of Tauranga Limited
3,8242,74 3
Accounts receivable by Port of Tauranga Limited
239285
Accounts payable by Port of Tauranga Limited
12545
Advances by Port of Tauranga Limited
5,3196,319
Services provided to Quality Marshalling (Mount Maunganui) Limited
30
Services provided by Quality Marshalling (Mount Maunganui) Limited
3,9133,973
Accounts receivable by Quality Marshalling (Mount Maunganui) Limited
345455
Accounts payable by Quality Marshalling (Mount Maunganui) Limited
30
Transactions with key management personnel
Directors’ fees recognised during the period
735697
Executive officers’ salaries and short term employee benefits recognised during the period
3,5934,091
Executive officers’ share based payments (cash and equity settled) recognised during the period
9201,289
/118
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
23 RELATED PARTY TRANSACTIONS (CONTINUED)
Related
Parties
Related parties of the Group include the Joint Ventures disclosed in note 14 and the Controlling Entity (Quayside
Securities Limited) or Ultimate Controlling Party (Bay of Plenty Regional Council).
Quayside Securities Limited owns 54.14% (2018: 54.14%) of the ordinary shares in Port of Tauranga Limited.
Quayside Securities Limited is beneficially owned by Bay of Plenty Regional Council.
Transactions with the Ultimate Controlling Party during the period include services provided to Port of Tauranga
Limited, $0.076 million (2018: $0.029 million).
In March 2013, the Ultimate Controlling Party granted Port of Tauranga Limited a resource consent to widen and
deepen the shipping channels. As a condition of this consent, an environmental bond to the value of $1.000 million is
to be held in escrow in favour of the Ultimate Controlling Party. The bond is to ensure the remedy of any unforeseen
adverse effects on the environment arising from the dredging. The resource consent expires on 6 June 2027.
No related party debts have been written off, forgiven or provided for as doubtful during the year.
Transactions
With Key
Management
Personnel
During the year, the Group entered into transactions with companies in which Group Directors hold directorships.
These directorships have not resulted in the Group having a significant influence over the operations, policies, or key
decisions of these companies.
The Group does not provide any non cash benefits to Directors in addition to their Directors’ fees.
All members of the Parent Company’s Executive Management Team participate in Management Long Term Incentive
Plans and may receive cash or non cash benefits as a result of these plans (refer note 24).
24 MANAGEMENT LONG TERM INCENTIVE PLAN
Policy
The Group provides benefits to the Parent Company’s Executive Management Team in the form of share based payment
transactions, whereby executives render services in exchange for rights over shares (equity settled transactions) or cash
settlements based on the price of the Parent Company’s shares (cash settled transactions). The cost of the transactions
is spread over the period in which the employees provide services and become entitled to the awards.
Equity Settled Transactions
The cost of the equity settled transactions with employees is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The cost of equity settled transactions is recognised in the income
statement, together with a corresponding increase in the share based payment reserve in equity.
Cash Settled Transactions
The fair value of cash settled transactions is determined at each reporting date, and the change in fair value is
recognised in the income statement with a corresponding change recognised in the provisions’ liability.
Management
Long Term
Incentive
Plan – Equity
Settled
In December 2016, the Directors introduced an equity settled long term incentive (LTI) plan that will vest from
financial year 2019 onwards. Under this LTI plan, share rights are issued to participating executives and have a
three year vesting period. The first granting of share rights under this LTI plan occurred in the 2018 financial year
and this LTI plan replaces the former cash settled plan.
The vesting of share rights, which entitles the executive to the receipt of one Port of Tauranga Limited ordinary share
at nil cost, is subject to the executive remaining employed by Port of Tauranga Limited during the vesting period and
the achievement of certain earnings per share (EPS) and total shareholder return (TSR) targets.
For EPS share rights granted, the proportion of share rights that vest depends on the Group achieving EPS growth
targets.
For TSR share rights granted, the proportion of share rights that vests depends on the Groups TSR performance
ranking relative to the NZX50 index less Australian listed stocks.
To the extent that performance hurdles are not met or executives leave Port of Tauranga Limited prior to vesting, the
share rights are forfeited.
The share based payment expense relating to the LTI plan for the year ended 30 June 2019 is $0.780 million (2018:
$0.903 million) with a corresponding increase in the share based payments reserve (refer note 16).
/119
24 MANAGEMENT LONG TERM INCENTIVE PLAN (CONTINUED)
Management
Long Term
Incentive
Plan – Equity
Settled
(continued)
Number of Share Rights Issued to Executives:
Grant Date
Scheme
End DateRight Type
Balance at
30 June 2018
Granted During
the Year
Balance at
30 June 2019
1 March 201830 June 2019EPS127,4700127,470
1 March 201830 June 2019TSR106,2250106,225
1 March 201830 June 2020EPS121,9340121,934
1 March 201830 June 2020TSR101,6120101,612
1 July 201830 June 2021EPS0108,500108,500
1 July 201830 June 2021TSR090,41790,417
Total LTI Plan457,241198,917656,158
Fair Value of
Share Rights
Granted
Share rights are valued as zero cost in-substance options at the day at which they are granted, using the Black-
Scholes-Merton model. The following table lists the key inputs into the valuation:
Grant Date
Scheme
End DateRight Type
Grant Date
Share Price
$
Risk Free
Interest Rate
%
Expected
Volatility of
Share Price
%
Valuation
per Share
Right
$
1 March 201830 June 2019EPS5.091.7915.104.92
1 March 201830 June 2019TSR5.091.7915.104.48
1 March 201830 June 2020EPS5.091.9615.104.81
1 March 201830 June 2020TSR5.091.9615.102.26
1 July 2018
30 June 2021
EPS5.10
1.7216.3
4.64
1 July 201830 June 2021TSR5.101.7216.32.00
Management
Long Term
Incentive
Plan – Cash
Settled
Prior to the introduction of the equity settled LTI plan, members of the Parent Company’s executive team were eligible
to receive payment under a cash settled LTI plan. This plan vested for the last time in the 2018 financial year with
payment made in August 2018 (refer note 22).
25 CONTINGENT LIABILITIES
Disclosures
No material contingent liabilities or assets have been identified.
26 SUBSEQUENT EVENTS
Approval of
Financial
Statements
The financial statements were approved by the Board of Directors on 27 August 2019.
Final and
Special
Dividend
A final dividend of 7.3 cents per share to a total of $49,650,337 and a special dividend of 5.0 cents per share to a total
of $34,007,080 has been approved subsequent to reporting date. The final and special dividends were not approved
until after year end, therefore they have not been accrued in the current year financial statements.
Refinancing
of Standby
Revolving
Cash
Advance
Facility
On 29 July 2019, the Parent Company refinanced a tranche of its $430.000 million Standby Revolving Cash Advance
Facility, increasing the facility size by $50.000 million to $480.000 million.
The Tranche 1 $50.000 million facility was increased by $50.000 million to $100.000 million and the maturity date of
this tranche was extended from 1 October 2019 to 29 January 2021.
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Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED 30 JUNE 2019
This statement is a summary of the Corporate Governance Statement
approved by the Board of Directors (the Board) of Port of Tauranga Limited
(the Company) on 27 August 2019. The full statement is available at: http://
www.port-tauranga.co.nz/about-port-of-tauranga/corporate-governance/
The Board and Senior Management Team of the Company recognise
the importance of good corporate governance and consider it is core to
ensuring the creation, protection and enhancement of shareholder value.
The Board is committed to ensuring that the Company meets best practice
governance principles and maintains the highest ethical standards.
The Board has an important role in directing the Company’s activities.
With the objective of increasing shareholder value, it is responsible for
setting the Company’s strategic direction, providing oversight of its
management and directing business strategy.
As at 27 August 2019, the Board considers that the Company’s corporate
governance practices materially reflect the NZX Corporate Governance
Best Practice Code, the Financial Markets Authority’s Corporate
Governance in New Zealand Principles and Guidelines and the NZX
Main Board Listing Rules (NZX Rules). The Board regularly reviews and
assesses the Company’s governance structures and processes to ensure
that they are consistent with best practice.
The Board’s policies and charters are available on the Corporate Structure
page of the About Port of Tauranga section of the Company’s website: http://
www.port-tauranga.co.nz/about-port-of-tauranga/corporate-governance/
ETHICS
The Code of Ethics provides guidance regarding the ethical and
behavioural standards expected of Directors, Senior Management and
employees in relation to conduct, conflicts, proper use of assets and
information and the procedure for reporting concerns. The Whistleblowing
Policy sets out the procedure for reporting concerns regarding a breach
of the Code of Ethics or any other serious wrongdoing within the Company.
New Directors are provided with a copy of the Code of Ethics and they
confirm that they have read and understand the document. The Code of
Ethics and the Employee Code of Conduct and Behaviour are included
in the employee induction. Confirmation is required that these have been
read and understood.
SHARE TRADING
The Board has an Insider Trading Policy which sets out the procedures that
must be followed by Directors, Senior Management and any other employees
with inside information when purchasing or selling Company securities.
Directors and Senior Management require approval to trade shares at any
time and may not trade during certain specified periods. Directors’ interests
are disclosed on page 125 of this Integrated Report.
OUR BOARD STRUCTURE
The Board has the ultimate responsibility for all decision making within the
Company. The roles and responsibilities are set out in the Board Charter.
The Board comprises seven Directors, five of whom are independent.
Profiles are provided on pages 80 to 81 of this Integrated Report and on
the website. Director independence is assessed annually by the Board.
A normal term of service for a Director is nine years. All new Directors
are provided with a letter of engagement.
The Board has determined that to operate effectively and to meet its
responsibilities it requires a mix of skills, perspectives, knowledge and
competencies. The current mix of skills and experience is considered
appropriate for governing the Company.
Directors’ period of appointment:
0-3 Years3-9 Years9 Years+
Number of Directors
241
Director attendance at meetings together with remuneration, are set out
on pages 2 to 3 of the comprehensive Corporate Governance Report
held on the Company’s website: http://www.port-tauranga.co.nz/about-
port-of-tauranga/corporate-governance/ .
The Board has three Committees to provide oversight on certain matters.
The Committees are Audit, Nomination and Remuneration. All Committees
operate under a charter approved by the Board.
The performance of the Board, Committees, Directors and the Chair is
reviewed regularly.
The Chief Executive (CE), Chief Financial Officer (CFO) and other
Management regularly attend Board and Committee meetings.
The positions of Chair of the Board and Chair of the Audit Committee are held
by independent Directors. These two roles, and the role of CE, are all held
by different people. The Chair has been assessed as being independent.
DIVERSITY AND INCLUSION
The Board is committed to providing a workplace that recognises and
values different skills, abilities, genders, ethnicity and experiences. The
Board is committed to creating an inclusive workplace where all staff feel
included and valued, and to providing equal employment opportunities
with all appointments being merit based.
During the year, the Company revised its Diversity and Inclusion Policy
and set itself the objective of achieving a minimum of 40% women and
40% men holding director, executive and manager level positions by
2025. In 2019, the Company had 22% women and 78% men holding
these positions.
As at 30 June 2019As at 30 June 2018
FemaleMaleFemaleMale
No. %No.%No.%No.%
Directors
229571229571
Executives
120480120480
Permanent
employees
381719283351717383
Total411720183381718283
FINANCIAL AND NON FINANCIAL INFORMATION
The Board is committed to ensuring timely and accurate information
is provided to shareholders and market participants. The Integrated
Report for 2019 is based on the Integrated Reporting Framework so that
stakeholders can better understand the non financial aspects of
the Company. It is Port of Tauranga Limited’s first Integrated Report.
REMUNERATION
Remuneration policies and processes for Directors, the Chief Executive
and Senior Executives are the responsibility of the Remuneration
Committee. An external review of Directors’ fees and executive
remuneration will be undertaken in 2020.
Corporate Governance Statement
FOR THE YEAR ENDED 30 JUNE 2019
COMMITTED TO
EFFECTIVE GOVERNANCE
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PORT OF TAURANGA LIMITED
A table listing remuneration for employees paid above $100,000, a
report on the Chief Executive’s remuneration and a report on Directors’
remuneration is on pages 123 to 125 of this Integrated Report and
also in the comprehensive Corporate Governance Report held on
our website: http://www.port-tauranga.co.nz/about-port-of-tauranga/
corporate-governance/
RISK MANAGEMENT AND AUDIT
Management of risk is a high priority to ensure the protection of the
Group’s employees, the environment, Company assets and reputation.
The Company has a comprehensive risk management system in place,
overseen by the Board, which is used to identify and manage all risks.
A summary of selected key risks is presented in the comprehensive
Corporate Governance Report on our website: http://www.port-
tauranga.co.nz/about-port-of-tauranga/corporate-governance/
The Auditor-General is the Auditor of Port of Tauranga Limited and
is therefore independent. The Auditor-General has appointed Glenn
Keaney from KPMG to carry out the audit on his behalf. The Board has
received written confirmation from KPMG regarding its independence.
Other assurance services considered and approved by the Audit
Committee were provided by KPMG and are included in Note 6 of the
financial statements in the 2019 Integrated Report.
The Audit Committee oversees an active internal audit programme.
SHAREHOLDER RELATIONS
The Board is committed to engaging with shareholders and market
participants in order that timely and accurate information is provided and
two-way communication is facilitated. The Company’s website has the
Annual and Interim Reports as well as various announcements to the NZX
and the public.
The annual shareholder meeting is held locally, reflecting the head office
location for the Company, and to encourage participation in person by
many of the Company’s shareholders. The 2019 meeting will be webcast.
Directors advise shareholders on any major decisions. The Notice of
Meeting will be available at least 20 business days prior to a meeting.
Where voting on a matter is required, voting is conducted by way of poll.
REMUNERATION REPORT
Port of Tauranga is committed to providing a remuneration framework
that promotes a high performance culture and aligns rewards to the
creation of sustainable value for shareholders.
Port of Tauranga’s remuneration philosophy is aimed at attracting,
retaining and motivating employees of the highest quality at all levels
of the organisation. It is based on practical, guiding principles and
a framework that provides consistency, fairness and transparency.
The philosophy promotes behaviours and values that drive
performance, a pervasive “can do” attitude and sustainable growth in
shareholder value. All remuneration packages are reviewed annually
in the context of individual and Company performance, market
movements and expert advice.
The Board, through the Remuneration Committee, establishes the
policies and practices for the remuneration of executives. Port of
Tauranga’s remuneration for the Chief Executive and nominated
executives provides the opportunity to receive, where performance
merits, a total remuneration package in the upper quartile for
equivalent market-matched positions.
Total remuneration is made up of three components: Fixed
Remuneration, a Short Term Incentive (STI) and a Long Term Incentive
(LTI). Both short and long-term performance incentives are “at-risk”
with the outcome determined by performance against a combination
of agreed financial and non financial objectives.
Fixed Remuneration
Fixed remuneration is determined in relation to the market for
comparable sized and performing companies. It includes all benefits,
allowances and deductions.
Port of Tauranga’s policy is to pay fixed remuneration at the median of its
peer group. Adjustments are not automatic and are determined based on
performance which is reviewed annually by the Remuneration Committee.
Short Term Incentives
Short Term Incentives (STIs) are at-risk payments linked to the
achievement of annual financial and strategic targets. They are
designed to motivate and reward for performance in that financial year.
The target value of the STI is set as a percent of the fixed remuneration.
For the 2019 financial year, the Chief Executive’s STI was set at 60%
and for all nominated executives it was 40%. For the 2019 financial
year, there were four nominated executives included in the STI
Scheme, the same number as the previous year.
For the Chief Executive, 70% of the STI is linked to the Company’s
financial performance with the actual opportunity in the range
0-110%. The remaining 30% comprised agreed safety and strategic
objectives. Strategic objectives are set each year by the Remuneration
Committee (and approved by the Board) and closely align to the Port
of Tauranga’s strategic aspirations. These are adjusted annually and
cascaded throughout the Company. The financial objective is to meet
or exceed the normalised net profit after tax target. A threshold of 90%
of target is required before any of the financial component is paid.
The Board retains complete discretion over paying an STI and may
determine, despite the actual performance against objectives, that a
reduced bonus or no bonus will be paid in a given year.
Long Term Incentives
The Long Term Incentive is an at-risk payment designed to align the
reward of executives with the growth in shareholder value over a three
year period.
The LTI is a Performance Share Rights Plan (PSR), where payments are
made in shares rather than cash. The maximum number of shares an
executive may receive as an allocation is determined by dividing the
value of the grant less tax by the face value of a Port of Tauranga share
at the grant date.
The 2017 LTI (allocated on 1 July 2016), which vested at the end of
the 2019 financial year, was set at 50% of fixed remuneration for the
Chief Executive and 30% of fixed remuneration for the nominated
executives. The value of each allocation is set at the date of the grant.
The plan’s performance hurdles are based on two metrics, the first 50%
is Port of Tauranga’s three year Total Shareholder Return (TSR) relative
to the performance of the NZX50 less Australian companies listed
in New Zealand. The second 50% is measured by achieving target
compound earnings per share (EPS) growth.
The LTI targets are as follows:
TSR Percentile Ranking
%
Earned
%
Below 40
Nil
At 50
50
Above 50 to below 75
50-99
At 75 or above
100
EPS* Three Year CAGR**
%
Earned
%
0
0
3.5
50
7.0
100
8.0
110
9.0
120
*Earnings per Share
**Compound Annual Growth Rate
As in the case of the STI, the Board retains absolute discretion over the
payment of the LTI to participants.
Corporate Governance Statement (continued)
FOR THE YEAR ENDED 30 JUNE 2019
/122
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED
Employee Share Ownership
Permanent employees can choose to join Port of Tauranga’s Employee
Share Ownership Plan (ESOP). The ESOP gives employees the
opportunity to buy shares in the Company via weekly pay deductions.
The shares are offered every three years and paid off over the intervening
three year period. In 2018 an offer of $5,000 worth of shares was made
to employees at a 30% discount to the market price. On the day of
allocation, the price was $5.08 per share and participating individuals
received 980 shares. Over 95% of our staff are shareholders. .
Employee Remuneration
The number of employees and former employees of Port of Tauranga
who, during the year, received cash remuneration and benefits (including
at risk performance incentives) exceeding $100,000 are shown below:
Parent Company
Remuneration Range
$000
Number of
Employees
2019
Number of
Employees
2018***
100-109
2122
110-119
2121
120-129
1823
130-139
1423
140-149
1311
150-159
87
160-169
64
170-179
86
180-189
30
190-199
24
200-209
13
210-219
32
220-229
01
230-239
08
240-249
82
250-259
43
260-269
31
530-539
01**
580-589
01**
630-639
1*0
650-659
01**
660-669
1*0
670-679
01**
740-749
1*0
780-789
1*0
1,680-1,689
01**
1,770-1,779
1*0
Total138146
*Includes vesting of Long Term Incentive Scheme and payment of
Short Term Incentive.
**Includes vesting of Long Term Incentive Scheme and payment of Short
Term Incentive and Holidays Act remediation payments.
***For all non executive employees 2018 includes Holidays Act
remediation payments.
Chief Executive Remuneration
For the 2019 financial year, the Chief Executive’s fixed remuneration was
lifted by 2% to $867,000.
FY2019
Fixed
Remuneration*
$
Performance Pay**
Total
Remuneration***
$
STI
$
LTI
$
Subtotal
$
867,000449,055384,684833,7391,773,259
*Fixed remuneration includes the value of any benefits (health care,
superannuation or vehicle) taken. The Chief Executive participates in the
Company’s Health Insurance Scheme.
**Performance pay was earned over the previous periods but paid in the
current financial year.
***Total remuneration includes payments that arise from calculating
actual holiday pay per the NZ Legislation.
FY2018
Fixed
Remuneration*
$
Performance Pay*
Total
Remuneration**
$
STI
$
LTI
$
Subtotal
$
850,000414,604172,8805 8 7, 4 8 41,680,10 6
*Performance pay was earned over the previous periods but paid in the
current financial year.
**Total remuneration includes the Holidays Act holiday pay arrears
reparation.
Total remuneration paid is fixed remuneration and the short and long-term
performance payments earned in the year. Performance payments are
actually those earned in prior periods.
An explanation of the Chief Executive’s performance pay paid in 2019 is
shown in the following table:
DescriptionPerformance Measures
Percent
Achieved
STI
Set at 60% of fixed
remuneration. Based
on a combination
of financial and non
financial performance
measures.
70% based on achieving
normalised NPAT target.
The range for the financial
performance is 0-110%.
30% based on key strategic
measures and safety. The
range is 0-100%.
107.5
43.0
LTI
Set at 50% of fixed
remuneration.
50% based on TSR
performance relative to
the NZX50 less Australian
companies listed in NZ. The
range is 0-100%.
50% based on EPS CAGR.
The range is 0-120%.
80.0
85.7
/123
The Five Year Summary – Chief Executive Remuneration
FY
Total
Remuneration
$
Percent STI
Against
Maximum
%
Percent LTI
Against
Maximum
%
Span of LTI
Performance
Period
2019
1,773,2598297
2016-2018
2018
1,6 8 0,10 68675
2015-2017
2017
1,242,2147635
2014-2016
2016
1,205,2316228
2013-2015
2015
1,325,6725453
2012-2014
Total Shareholder Return Performance
Chief Executive Remuneration for 2020
Potential Chief Executive remuneration for the year ending June 2020 is
shown in the following chart.
Fixed remuneration reflects base salary and benefits. For performance
that meets expectations, the STI would pay out at 60% of fixed
remuneration and the LTI at 50% of fixed remuneration. For performance
that exceeds expectations, the STI would pay out at 107% of fixed
remuneration and the LTI at 110% of fixed remuneration.
APPROVED DIRECTOR REMUNERATION
The aggregate pool of fees able to be paid to Directors is subject to
shareholder approval and currently sits at $750,000.
In 2018, Port of Tauranga Directors did not seek a fee increase for
2019. Directors will seek an inflationary increase of 4% for the 2020
financial year. This is consistent with Executives’ pay increase of 2%
a year for the past two years.
The Board approved annual fees are:
Directors’ Fees
$
Chair
162,000
Directors
85,000
Audit Committee Chair
15,000
Audit Committee Member
7, 5 0 0
Remuneration Committee Chair
10,000
Remuneration Committee Member
5,000
0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
LTI
STI
Fixed
FY2019FY2018FY2017FY2016FY2015
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
NZX50
POT
FY2019FY2018FY2017FY2016FY2015
0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
LTI Grant (2022 Vesting)
STI
Fixed
MaximumOn TargetFixed
Corporate Governance Statement (continued)
FOR THE YEAR ENDED 30 JUNE 2019
/124
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED
Directors’ fees received during the 2019 year are:
Board
$
Audit
$
Remuneration
$
Total 2019
$
Total 2018
$
D A Pilkington
162,0005,000167,000167,000
J C Hoare
85,00015,000100,000100,000
A R Lawrence
85,0007, 5 0 092,50092,500
D W Leeder
85,0005,00090,00090,000
K R Ellis
85,0007, 5 0 010,000102,500102,500
R A McLeod
85,0007, 5 0 092,50060,416
A M Andrew
85,0005,00090,00021,250
Total$734,500$696,999
Port of Tauranga meets Directors’ reasonable travel and other costs associated with the business.
Remuneration paid to Directors in their capacity as Directors of subsidiaries during 2019 was:
DirectorSubsidiary
Fees
$
D A PilkingtonNorthport Chair
50,000
D A PilkingtonPrimePort Director
34,232
Total$84,232
Any fees paid to Port of Tauranga employees appointed as Directors of subsidiaries are paid to the Company, not the individual.
INTERESTS REGISTER
The Company is required to maintain an Interests Register in which particulars of certain transactions and matters involving the Directors must be recorded.
The matters set out below were recorded in the Interests Register of the Company during the financial year.
General Notice of Interest by Directors
The Directors of the Company have declared interests in the following identified entities as at 30 June 2019:
Director InterestEntity
Alison Moira Andrew
Chief Executive OfficerTranspower New Zealand Limited
Kimmitt Rowland Ellis
Chair Metlifecare Limited
ChairNZ Social Infrastructure Fund Limited
Chair Sleepyhead Group Limited
DirectorBallance Agri-Nutrients Limited
DirectorFonterra Shareholders Fund (FSF) Management Company
DirectorFreightways Limited
Julia Cecile Hoare
ChairAuckland Committee, Institute of Directors
Deputy ChairThe a2 Milk Company Limited
Deputy ChairWatercare Services Limited
Director Auckland International Airport Limited
DirectorAWF Madison Group Limited
DirectorNew Zealand Post Limited
Director The a2 Milk Company (New Zealand) Limited
(subsidiary of The a2 Milk Company Limited)
MemberExternal Reporting Advisory Panel
Vice PresidentInstitute of Directors Council
Alastair Roderick Lawrence
ChairBrittain Wynyard Limited
Chair Glenorchy Pastoral Management Limited
Director / ShareholderAntipodes Properties Limited and subsidiaries
Director / ShareholderCBS Advisory Limited
Director / ShareholderOlrig Limited
Director / ShareholderRetail Dimension Limited
TrusteeJAB Hellaby Trust
Douglas William Leeder
ChairBay of Plenty Regional Council
Sir Robert Arnold McLeod
ChairE Tipu e Rea Limited
ChairE Tipu e Rea Trustee Limited
Chair Quayside Holdings Limited
DirectorSanford Group
Director (resigned during the year)Tax Management NZ Limited
/125
General Notice of Interest by Directors (continued)
Director InterestEntity
David Alan Pilkington
Chair Douglas Pharmaceuticals Limited
Chair (resigned during the year)Hellers Limited
Chair Northport Limited
ChairRangatira Limited
Director / ShareholderExcelsa Associates Limited
Director Port of Tauranga Trustee Company Limited
Director PrimePort Timaru Limited
TrusteeNew Zealand Community Trust
DIRECTORS’ LOANS
There were no loans by the Company to Directors.
DIRECTORS’ INSURANCE
The Group has arranged policies of Directors’ Liability Insurance, which together with a Deed of Indemnity, ensures that generally Directors will
incur no monetary loss as a result of actions undertaken by them as Directors. Certain actions are specifically excluded, for example the incurring of
penalties and fines, which may be imposed in respect of breaches of the law.
SHAREHOLDER INFORMATION
The ordinary shares of Port of Tauranga Limited are listed on NZX. The information in the disclosures below has been taken from the Company’s
registers as at 30 June 2019.
TWENTY LARGEST ORDINARY EQUITY HOLDERS
Holder
Number of
Shares Held
% of Issued
Equity
Quayside Securities Limited
368,437,680 54.16
New Zealand Central Securities Depository Limited
60,405,0298.88
Custodial Services Limited (3 a/c)
20,260,1792.98
Custodial Services Limited (4 a/c)
15,084,0352.22
FNZ Custodians Limited
12,329,1291.81
Custodial Services Limited (2 a/c)
10,752,3691.58
Kotahi Logistics LP
8,500,0001.25
Custodial Services Limited (18 a/c)
7,009,1271.03
JBWere (NZ) Nominees Limited
5,232,2710.77
Forsyth Barr Custodians Limited
4,567,6380.67
New Zealand Depository Nominee Limited
3,314,9690.49
Custodial Services Limited (1 a/c)
2,910,4590.43
Masfen Securities Limited
2,708,395 0.40
Custodial Services Limited (16 a/c)
2,507,8980.37
Investment Custodial Services Limited
2,351,9620.35
Lloyd James Christie
1,535,000 0.23
Pt (Booster Investments) Nominees Limited
1,344,2660.20
FNZ Custodians Limited (DTA Non Resident a/c)
1,155,492 0.17
ASB Nominees Limited
1,106,425 0.16
Leveraged Equities Finance Limited
1,104,0500.16
Total
532,616,373 78.31
DISTRIBUTION OF EQUITY SECURITIES
Range of Equity Holdings
Number of
Holders
Number of
Shares Held
% of Issued
Equity
1-5,000
7, 6 2 117,466,4942.56
5,001-10,000
2,62020,311,5942.99
10,001-50,000
2,88261,880,0989.10
50,001-100,000
28720,425,4313.00
100,001 and over
1585 6 0,191, 2 6 282.35
Total
13,568680,274,879100.00
Corporate Governance Statement (continued)
FOR THE YEAR ENDED 30 JUNE 2019
/126
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED
SUBSTANTIAL SECURITY HOLDERS
According to Company records and notices given under the Financial Markets Conduct Act 2013, the substantial security holders in ordinary shares
(being the only class of quoted voting securities) of the Company as at 30 June 2019, were as follows:
Holder
Number of
Shares Held%
Quayside Securities Limited
368,437,68054.16
The total number of issued voting securities of the Company as at 30 June 2019 was 680,274,879.
DIRECTORS’ EQUITY HOLDINGS
As at 30 June 2019, Port of Tauranga Limited Directors’ had the following relevant interests in Port of Tauranga Limited equity securities:
Beneficially HeldHeld by Associated Persons
30 June 201930 June 201830 June 201930 June 2018
A M Andrew
0082,50082,500
K R Ellis
0062,75062,750
J C Hoare
0000
A R Lawrence
0000
D W Leeder
0000
R A McLeod
0000
D A Pilkington
0000
DONATIONS
Donations of $24,806 were made during the year ended 30 June 2019 (2018: $46,477).
STOCK EXCHANGE LISTING
The Company’s shares are listed on the New Zealand Stock Exchange.
NEW ZEALAND EXCHANGE (NZX) WAIVERS
The Company currently has no NZX waivers.
CREDIT RATING
The Company, during the year ended 30 June 2019, had a Standard and Poor’s rating of BBB+/Stable/A-2.
ANNUAL MEETING
The Annual Meeting will be held on Friday 25 October 2019 at 1.00pm, at Trustpower Baypark, 81 Truman Lane, Mount Maunganui.
Messrs Kimmitt Rowland Ellis and Alastair Roderick Lawrence are retiring by rotation and are seeking re-election at the Annual Meeting.
AUDITORS
Under section 19 of the Port Companies Act 1988, the Audit Office is the Auditor of the Company. The Audit Office has appointed, pursuant to section
32 of the Public Audit Act 2001, the firm of KPMG to undertake the audit on its behalf.
The amount paid as audit fees and for other services provided by the Auditors is set out in the accounts.
FURTHER INFORMATION ON-LINE
Additional information on Port of Tauranga Limited can be found on the Company’s website at: http://www.port-tauranga.co.nz
/127
FINANCIAL
Year
2019
$000
Year
2018
$000
Year
2017
$000
Year
2016
$000
Year
2015
$000
Operating income
313,263283,726255,882245,521268,460
EBITDA
181,270169,236152,38514 3,18 014 3,161
Surplus after taxation – reported
100,57794,27383,4417 7, 31479,14 8
Surplus after taxation – underlying
100,57794,27383,4417 7, 31479,007
Dividends paid related to earnings
122,440115 , 017108,89372 ,14269,419
Total equity
1,165,8851,121,980931,943885,6848 8 7, 5 5 0
Net interest bearing debt
442,0973 9 9,16 4374,816308,4202 8 7, 3 7 9
Total assets
1,748,8611,657,0311,422,6001,322,3671, 2 9 7, 018
Interest cover (times)
8.48.07.57.07.2
Gearing ratio (%)*
27.526.228.725.824.5
Return on average equity (%)
8.99.29.38.79.3
Share price ($)**
6.345.104.4519.5017.30
Market capitalisation ($)
4,312,0983,470,9643,028,5862,654,2672 , 3 5 4, 811
Net asset backing per share ($)**
1.711.641.366.516.52
Underlying earnings per share (cents per share)
15.014.012.457.058.0
*Net interest bearing debt to net interest bearing debt + equity.
**On 17 October 2016, the Parent Company completed a 5:1 share split.
The Board approved a final dividend of 7.3 cents per share ($49.7 million) and a special dividend of 5.0 cents per share ($34.0 million) after year
end payable on 4 October 2019.
OPERATIONAL
Year
2019
Year
2018
Year
2017
Year
2016
Year
2015
Cargo throughput (000 tonnes)
26,94624,4582 2 ,19 420,1202 0,179
Containers (TEU)*
1, 233,17 71,18 2 ,1471,085,987954,0068 51,10 6
Net crane rate (container moves per hour)**
33.635.536.235.635.5
Ship departures
1,6781,7471,6511,4821,555
Berth occupancy (%)
5048474646
Total cargo ship days in port
2,7692,6432,5892,5042,528
Turn-around time per cargo ship (days)
1.651.51.41.61.6
Cargo tonnes per ship
16,05814,00013,44213,54912,510
Average cargo ship gross tonnage (GT)
33,92030,21829,65426,66525,018
Average cargo ship length overall (metres)
207200199190185
Number of employees – Port of Tauranga Limited
230208206194193
Lost time injuries (LTI – frequency)***
2.52.82.85.62.9
Total injury (frequency rate)
2.55.55.65.614.7
*TEU = Twenty Foot Equivalent Unit.
**As measured by the Australian Productivity Commission.
***Number of lost time claims per million hours worked.
Operational data relates to the Parent Company as opposed to the Group.
Financial and Operational Five Year Summary
AS AT 30 JUNE 2019
/128
Port of Tauranga – Integrated Annual Report 2019
PORT OF TAURANGA LIMITED
DIRECTORS
D A Pilkington
Chair
A M Andrew
K R Ellis
J C Hoare
A R Lawrence
D W Leeder
Sir Robert McLeod
EXECUTIVE
M C Cairns
Chief Executive
S G Gray
Chief Financial Officer
D A Kneebone
Property & Infrastructure Manager
S M Lunam
Corporate Services Manager
L E Sampson
Commercial Manager
REGISTERED OFFICE
Salisbury Avenue
Mount Maunganui
Private Bag 12504
Tauranga Mail Centre
Tauranga 3143
New Zealand
Telephone 07 572 8899
Facsimile 07 572 8800
Email marketing@port-tauranga.co.nz
Website www.port-tauranga.co.nz
AUDITORS
Glenn Keaney
KPMG
Tauranga
(On behalf of the Auditor-General)
SOLICITORS
Holland Beckett Law
Tauranga
BANKERS
ANZ National Bank Limited
Bank of New Zealand
Commonwealth Bank of Australia
MUFG Bank, Limited (formerly known as The Bank of Tokyo-
Mitsubishi UFJ Limited)
CREDIT RATING AGENCY
Standard & Poor’s (S&P)
Australia
Port of Tauranga Limited’s rating: BBB+/Stable/A-2
SHARE REGISTRY
For enquiries about share transactions, change of address or
dividend payments contact:
Link Market Services Limited
PO Box 91976
Victoria Street West
Auckland 1142
Telephone 09 375 5998
Facsimile 09 375 5990
Email enquiries@linkmarketservices.co.nz
Website www.linkmarketservices.co.nz
Copies of the Annual and Interim Reports are available from our
website.
FINANCIAL CALENDAR
4 October 2019 Final dividend payment
25 October 2019 Annual Meeting
28 February 2020 Half year results announcement
March 2020 Interim Report published
13 March 2020 Interim dividend payment
30 June 2020 Financial year end
28 August 2020 Annual results announcement
Company Directory
WAVE24900
/129
PORT OF TAURANGA LIMITED
www.port-tauranga.co.nz
PORT OF TAURANGA – INTEGRATED ANNUAL REPORT 2019
Our place, our future
INTEGRATED ANNUAL REPORT 2019
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 8 May 2019
Results for announcement to the market
Name of issuer Port of Tauranga Limited
Reporting Period 12 months to 30 June 2019
Previous Reporting Period 12 months to 30 June 2018
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$313,263 10.4%
Total Revenue $313,263 10.4%
Net profit/(loss) from
continuing operations
$100,577 6.7%
Total net profit/(loss) $100,577 6.7%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.07300000
Imputed amount per Quoted
Equity Security
$0.02838888
Record Date 20/09/2019
Dividend Payment Date 04/10/2019
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.71 $1.64
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Authority for this announcement
Name of person
authorised
to make this announcement
Steven Gray, Chief Financial Officer
Contact person for this
announcement
Steven Gray, Chief Financial Officer
Contact phone number 027 245 7473
Contact email address steveg@port-tauranga.co.nz
Date of release through MAP
28/08/2019
Audited financial statements accompany this announcement.
---
Distribution Notice
Updated as at 8 May 2019
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer Port of Tauranga Limited
Financial product name/description Ordinary shares
NZX ticker code POT
ISIN (If unknown, check on NZX
website)
NZPOTE0003S0
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 20/09/2019
Ex-Date (one business day before the
Record Date)
19/09/2019
Payment date (and allotment date for
DRP)
04/10/2019
Total monies associated with the
distribution
1
$49,650,337.17
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.10138888
Total cash distribution
3
$0.07300000
Excluded amount (applicable to listed
PIEs)
Not applicable
Supplementary distribution amount $0.01288235
Section 3: Imputation credits and Resident Withholding Tax
4
Is the distribution imputed Fully imputed
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
100%
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
4
The imputation credits plus the RWT amount is 33% of the gross distribution for the purposes of this form. If the distribution is fully
imputed the imputation credits will be 28% of the gross distribution with remaining 5% being RWT. This does not constitute advice
as to whether or not RWT needs to be withheld.
Imputation tax credits per financial
product
$0.02838888
Resident Withholding Tax per
financial product
$0.00506944
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
%
Start date and end date for
determining market price for DRP
[dd/mm/yyyy] [dd/mm/yyyy]
Date strike price to be announced (if
not available at this time)
[
dd/mm/yyyy
]
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
$
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
[
dd/mm/yyyy
]
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Steven Gray, Chief Financial Officer
Contact person for this
announcement
Steven Gray, Chief Financial Officer
Contact phone number 027 245 7473
Contact email address steveg@port-tauranga.co.nz
Date of release through MAP
28/08/2019
---
Distribution Notice
Updated as at 8 May 2019
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer Port of Tauranga Limited
Financial product name/description Ordinary shares
NZX ticker code POT
ISIN (If unknown, check on NZX
website)
NZPOTE0003S0
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year Special X
DRP applies
Record date 20/09/2019
Ex-Date (one business day before the
Record Date)
19/09/2019
Payment date (and allotment date for
DRP)
04/10/2019
Total monies associated with the
distribution
1
$34,007,080.25
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.06944444
Total cash distribution
3
$0.05000000
Excluded amount (applicable to listed
PIEs)
Not applicable
Supplementary distribution amount $0.00882353
Section 3: Imputation credits and Resident Withholding Tax
4
Is the distribution imputed Fully imputed
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
100%
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
4
The imputation credits plus the RWT amount is 33% of the gross distribution for the purposes of this form. If the distribution is fully
imputed the imputation credits will be 28% of the gross distribution with remaining 5% being RWT. This does not constitute advice
as to whether or not RWT needs to be withheld.
Imputation tax credits per financial
product
$0.01944444
Resident Withholding Tax per
financial product
$0.00347222
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Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Steven Gray, Chief Financial Officer
Contact person for this
announcement
Steven Gray, Chief Financial Officer
Contact phone number 027 245 7473
Contact email address steveg@port-tauranga.co.nz
Date of release through MAP
28/08/2019
---
28 August 2019
Growth in Cargo Volumes Contributes to Increased Profit
for Port of Tauranga Limited
FINANCIAL RESULTS FOR THE YEAR TO 30 JUNE 2019
Port of Tauranga, New Zealand’s largest port, today reported record cargo volumes and increased
profits for the year to 30 June 2019.
Port of Tauranga continues to consolidate its position as New Zealand’s international hub port, with
transhipment increasing 11.2%. The Port handled more than 26.9 million tonnes of cargo, an increase
of 10.2% in volume, with containerised cargo growing 4.3% to more than 1.2 million TEUs
1
.
Group Net Profit After Tax passed the $100 million milestone for the first time, increasing 6.7% on last
year’s profit of $94.3 million to reach $100.6 million.
Highlights
Group Net Profit After Tax increases 6.7% to $100.6 million
Annual container throughput increases 4.3% to more than 1.2 million TEUs
Transhipment increases 11.2%, making up 32% of all container traffic
Log export volumes increase 12.5% to 7.1 million tonnes
Exports increase 11.2% to 17.1 million tonnes
Imports increase 8.4% to 9.8 million tonnes
Annual revenue increases 10.4% to $313.3 million
Final dividend of 7.3 cents per share bringing the full year dividend to 13.3 cents per share, a
4.7% increase on the previous year
A special dividend of 5.0 cents per share will also be paid, and the capital repayment programme
will be extended for another four years
Port of Tauranga’s Chair, David Pilkington, said the results were evidence of Port of Tauranga’s success
in becoming New Zealand’s major international hub port.
Transhipment, where containers are transferred from one service to another, has been growing
significantly since 2016, when the Port completed its $350 million capacity expansion programme to
accommodate bigger container ships. Transhipment now makes up 32.1% of the containers handled at
Tauranga.
New Zealand shippers can access fast, big ship services that only call in Tauranga by utilising the sea
links between Tauranga and Timaru, Napier, Nelson or Wellington.
Mr Pilkington says Port of Tauranga’s long-term agreements with key customers give it the assurance
to plan ahead for increases in cargo growth. The Port recently renewed its ten year operating agreement
with major customer Oji Fibre Solutions.
1
TEUs = twenty foot equivalent units, a standard measure of shipping containers
2
“Having the necessary infrastructure is one thing, but it is also vital to have the relationships to ensure
we have the freight volume to attract the big ship services,” says Mr Pilkington.
“We have long-term agreements in place with key cargo owners such as Oji Fibre Solutions, Fonterra’s
shipping supplier Kotahi Logistics and Zespri International.”
Port of Tauranga Chief Executive, Mark Cairns, says the number of containers transferred by rail to and
from Port of Tauranga’s inland freight hub, MetroPort Auckland, increased 4.3% in the year to 30 June
2019. MetroPort Auckland now stands alone as the country’s fourth largest container terminal by
volume.
Port of Tauranga recently announced a partnership with Tainui Group Holdings to support the
development of the Ruakura Inland Port in Hamilton, about midway between Tauranga and MetroPort
Auckland.
“This will help Waikato-based importers and exporters unlock the significant efficiencies to be gained
by being directly linked by rail to the big ship services calling at Tauranga,” says Mr Cairns.
Port of Tauranga also expanded its MetroPort Christchurch inland freight hub by constructing a large
warehouse that is being leased by associate company Coda Group to handle Westland Milk’s dairy
exports.
Mr Cairns says development of the Group’s network of ports, inland freight hubs and logistics services,
ensures importers and exporters in key cargo-producing areas throughout the country can access the
efficiencies offered by bigger ships.
“The availability of rail and coastal shipping to consolidate cargo at Port of Tauranga, and the efficiency
of the big ship services, means we can also offer a lower carbon supply chain to our customers,” says
Mr Cairns.
Financial performance
Parent EBITDA (earnings before interest, tax, depreciation and amortisation) increased 12.4% to
$168.6 million.
Earnings from Associate Companies decreased 27.5% after a very disappointing result from Coda
Group, Port of Tauranga’s 50/50 joint venture with Kotahi. We are confident Coda will return to
profitability in the next financial year. Coda’s new Chief Executive, Gerard Morrison, has embarked on
an extensive change programme.
Port of Tauranga’s 100% Subsidiary Quality Marshalling had an outstanding year, with profits increasing
15.1%, and our joint venture in the South Island, PrimePort Timaru, increased its contribution by 36.6%.
Dividend policy
Port of Tauranga’s Board of Directors has declared a final dividend of 7.3 cents per share, bringing the
full year’s dividend to 13.3 cents per share, a 4.7% increase on the previous year.
The last of four special dividends of 5.0 cents per share will be paid on 4 October 2019.
The Board has decided to extend the capital repayment programme from October 2020 through special
dividends of 2.5 cents per share for another four years, subject to meeting certain conditions.
3
Cargo trends
Exports increased 11.2% to 17.1 million tonnes and imports increased 8.4% to 9.8 million tonnes for
the year ended 30 June 2019.
Log exports increased 12.5% to 7.1 million tonnes. This trend is not expected to continue in the short
term, with log prices declining in June following a drop in demand from China, New Zealand’s biggest
log export market. We expect some impact on volumes in the coming months.
Sawn timber exports increased 5.4% in volume and, overall, forestry-related exports increased 10%.
Dairy product exports remained steady at just over 2.3 million tonnes, while imports of dairy herd food
supplements and fertiliser decreased by 11.8% and 9.2% respectively.
Kiwifruit exports increased 15.2% during the period. Other primary produce sectors also performed
strongly, with frozen meat exports increasing 18.8% in volume and apple exports increasing 54.3%.
Cement imports decreased 17.1% in volume and steel exports decreased 7.7%. Salt imports increased
26.8% in volume.
Oil product imports increased by almost 2% and dry chemical imports increased by almost 9%.
Ship visits decreased 3.9% to 1,678 for the year. The average size of vessels continues to increase.
Operational developments
Port of Tauranga is now planning for the next stage of growth and in response to customer demand,
intends to add another container vessel berth by extending up to 385 metres to the south of the existing
Sulphur Point wharves.
A ninth container crane will be delivered in January 2020.
People and safety
We continue to make progress in safety, a key focus, with a 55% reduction in Total Recordable Injury
Frequency Rate and a 17% reduction in Injury Severity. We had one lost-time injury during the year,
involving blistered feet.
Sustainability
We take climate change seriously in our business and we are proud to have one of the lowest carbon
emissions per tonne of cargo handled of any port in New Zealand. We are committed to the Paris
Agreement target to keep global warming well below two degrees.
Port of Tauranga has gained CEMARS (Certified Measurement and Reduction Scheme) accreditation
of its carbon emissions measurement and management.
The Port has set an initial short-term goal of a 5% reduction in Scope 1 emissions per cargo tonne and
is targeting net-zero emissions by 2050.
Mr Cairns says the Company will “inset” the potential cost of carbon offsets by investing in sustainability
initiatives within the business.
“This year we have set aside $1 million which we are investing in more expensive battery-hybrid straddle
carriers. The largest source of our emissions is from diesel-powered straddle carriers at the container
terminal,” he says.
4
“We are also replacing light vehicles with electric or hybrid models where available, and using biodiesel
where we can. Our modern fleet of ship-to-shore gantry cranes now all have sophisticated electric
motors that re-generate up to 700 kw of electricity when lowering a container onto the vessel or terminal,
which can then be made available to any adjacent cranes lifting containers or fed into the reefer blocks,
greatly reducing our electricity consumption,” he says.
“We favour rail transport over road because of the lower emissions and are working with our rail partners
KiwiRail to reduce train-related emissions through efficiency and technology. We are also working with
our partners Pacifica Shipping to promote greater use of coastal shipping where feasible,” he says.
The availability of rail and coastal shipping to consolidate cargo at the Port, and the efficiency of the big
ship services, means Port of Tauranga is the obvious choice for customers seeking the lowest carbon
supply chain. Big ships of 7,500 to 9,500 TEUs have a carbon footprint more than 31% lower than the
previous average size vessels calling in New Zealand.
In addition to our response to climate change we are also placing increasing focus on the impact of our
growing business on our various communities and stakeholder groups.
“We are very pleased to have secured resource consent for our stormwater network at Mount
Maunganui and we have also made significant progress in dust suppression and spill prevention. We
encourage the moves to require ships to utilise low sulphur fuel and note the improvement that
continues to be made in minimising the release of the log fumigant Methyl Bromide to the atmosphere,”
says Mark.
Upper North Island Supply Chain Review
A Government-appointed working group is reviewing the current supply chain with a view to moving
significant cargo volumes from Ports of Auckland to Northport in Whangarei (50% owned by Port of
Tauranga). We see a growing role for Northport in helping to alleviate the pressure on Ports of Auckland.
We have outlined to the working group the significant capacity still available at Tauranga for cargo
growth and we look forward to future reports, which we hope will address well-known issues such as
the need for increased investment in road and rail networks and the historic under-performance of some
port companies.
Outlook
Port of Tauranga is subject to external influences such as economic conditions, trade trends,
technological change and the political environment. The Company continues to focus on maintaining
diversity in its cargo and customer mix, giving it a range of revenue sources and ensuring it can
capitalise on any new business opportunities.
Looking to the 2020 financial year, Mr Cairns says log volumes are expected to fluctuate in the coming
months following the recent drop in international prices.
Port of Tauranga will provide an update on the first quarter’s trade, and earnings guidance for the full
year, at the Annual Shareholders’ Meeting on 25 October 2019.
For further details, please contact:
Mark Cairns, Chief Executive
Port of Tauranga Limited
Ph: 07 572 8829
http://www.port-tauranga.co.nz/category/current-news/
5
About Port of Tauranga
Port of Tauranga, headquartered in the Bay of Plenty, is New Zealand’s largest port and international freight
gateway. It operates wharves in Tauranga, Mount Maunganui and Timaru, as well as MetroPort Auckland, a
rail-linked inland port in South Auckland and MetroPort Christchurch, an intermodal freight hub in Rolleston.
The Port of Tauranga Group includes: Quality Marshalling (100% ownership), a cargo services company; Coda
(50% ownership), a freight logistics group; Northport (50% ownership), the deep water commercial port in
Whangarei; PrimePort Timaru (50% ownership), the commercial port in Timaru; Timaru Container Terminal
(50.1% ownership), which leases and operates the terminal at Timaru; and PortConnect (50% ownership), an
online cargo management system. For more information, please visit www.port-tauranga.co.nz
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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