South Port half-year highlights diversity

SOUTH PORT NEW ZEALAND LIMITED


NZX/MEDIA STATEMENT


13 February 2020


South Port half-year highlights diversity

South Port New Zealand Ltd has followed up its excellent 2019 performance with a steady
result for the first six months of FY2020 ending 31 December 2019; recording a net profit
after tax of $4.6 million consistent with the previous corresponding period in FY2019.

Considering recent market conditions South Port Chairman, Rex Chapman, says it is a
pleasing start to the financial year.

“Bulk cargoes, particularly logs and fertiliser came under pressure due to market conditions
and inclement weather patterns respectively,” he says.

“This was balanced out by a strong performance in the cold storage operation as a result of
recent capital investments allowing an increase to blast freezing capacity.”

The key factors related to the interim result include:

 Particularly wet conditions in the southern region that resulted in lower than expected
volumes of inbound fertiliser being received in the first six months.

 High log prices in China led to an oversupply of softwood into this market. This has
now been exacerbated as a result of the bark beetle infestation in Europe pushing
large volumes of Spruce logs into this market. These two factors have seen a
reduction of log exports through the Port.

 The installation of a new blast freezer has improved the efficiency and capacity of
this operation which has allowed the introduction of new customers.

Outlook

The Chief Executive said, “The recent outbreak of the Coronavirus has sent ripples through
the international marketplace, impacting tourism and trade. There is a fair amount of
uncertainty as to the level of impact however the Port will notify shareholders should there
be any material changes in the coming months.”

South Port has again provided an outlook including the Company’s year-end NPAT forecast
range.

Mr Chapman says, “Weather and offshore market conditions are two variables that regularly
have an impact on the trade volumes through the Port and this year is no exception.

“The continuing wet conditions leading up to Christmas impacted fertiliser imports and
although these are recovering we do not expect to recoup the total volume lost.

“The log trade has also been difficult and expectations are that this trend will continue for the
remainder of the year.

P a g e | 2


“Our expectations are that all other cargoes will track close to budget with potential upside in
both containers and cold storage activities although the recent flood event in rural Southland
and Otago may impact volumes.”

Based on all known factors at the date of releasing its 2020 interim result, South Port
estimates that its full year earnings should fall in the range of $8.20 million to $8.70 million
(FY2019 - $9.79 million).

Dividend

After assessing the anticipated year end result, South Port Directors have declared a fully
imputed interim dividend of 7.50 cents per share (2019 – 7.50 cents) payable on
4 March 2020. In the event that the Company’s FY2020 year-end profit falls within the
forecast range then they are confident that the full year dividend payment will be consistent
with the previous year.

Cargo Spread

South Port’s results continue to underscore the importance of the Port’s diversified trades
and pivotal position in the Southern Region.

“Total cargo activity was 1,687,000 tonnes compared with 1,772,000 tonnes in the prior year
interim period, a reduction in cargo flows of 85,000 tonnes or less than 5%,” says South Port
Chief Executive, Nigel Gear.

“However, while some bulk cargoes were negatively impacted by climatic and demand
changes such as fertiliser (-51,000 tonnes) and logs (-84,000 tonnes) there were other
positive movements which included increases in petroleum products (+13,000 tonnes) and
alumina (+20,000 tonnes).”

Recent Capital Expenditure

“The benefits of the recent capital expenditure on the cold stores load-in/load-out area and
the installation of a new blast freezer are now being realised. Increased efficiency, safety
and capacity have allowed the Port to increase throughput and introduce more customers to
our blast freezing facility. This is consistent with our purpose which is to facilitate the best
logistic solutions for the Southern Region.”

“A container terminal expansion was successfully completed in December 2019 at an
investment cost of $1.2 million. This expansion was undertaken to alleviate some of the
stress caused by the 25% growth in volumes experienced in FY2019.”

“Containerised cargo increased 7% to 21,000 TEU. This improvement was due to a number
of cargo categories increasing which is a pleasing result,” said Mr Gear.

“The Company achieved a milestone of 50,000 TEU in the calendar year which was a
strategic goal set five years ago at the time of the purchase of the second crane.”

Commenting on the completion by Open Country Dairy (OCD) of their new 8,000 m
2

warehouse located at Awarua, Mr Gear notes, “This warehouse will store ingredient products
and will also provide capacity for export product to settle before being transported to the Port
for packing and export.”

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The change means that the existing South Port owned warehouse on the Port at Bluff,
where OCD ingredients are currently stored, will now be marketed to other potential
customers.

In respect to the well-known cost issues related to the operations of the New Zealand
Aluminum Smelter (NZAS), Mr Gear says, “Since 2008 NZAS has paid close to $200 million
of increased transmission pricing costs, most of which is used for upgrades in the North
Island (currently pay between $65 million and $70 million annually).

“This pricing regime needs to be addressed by the Electricity Authority now to allow NZAS to
become internationally competitive once again and remain an important part of the
Southland landscape.”

An update on the strategic review of NZAS is expected at the end of the first quarter 2020.

Natural gas exploration resumed in the Great South Basin when OMV began drilling an
exploratory well in early January. Mr Gear says, “This operation takes approximately 40 to
50 days therefore all support services are being run out of their existing base in Taranaki.
Should OMV be successful in their search for natural gas then South Port is well positioned
to be involved in supporting the next stages of the development.”




FOR FURTHER INFORMATION PLEASE CONTACT:

Mr Nigel Gear
Chief Executive
South Port New Zealand Ltd
Tel: (03) 212 8159
Email: ngear@southport.co.nz

Mr Warren Head
Managing Director
Head Consultants Ltd
Tel: 021 340 650
Email: headconsultants@xtra.co.nz

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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 South Port New Zealand Limited
Reporting Period 6 months to 31 December 2019
Previous Reporting Period 6 months to 31 December 2018
Currency NZD

Amount (000s) Percentage change
Revenue from continuing
operations
$21,583 3.18%
Total Revenue $21,585 3.07%
Net profit/(loss) from
continuing operations
$4,556 0.11%
Total net profit/(loss) $4,556 0.11%
Interim Dividend
Amount per Quoted Equity
Security
$0.07500000
Imputed amount per Quoted
Equity Security
$0.02916667

Record Date 28/02/2020
Dividend Payment Date 04/03/2020
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.63 $1.52
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
N/A
Authority for this announcement
Name of person

authorised
to make this announcement
Lara Stevens – Finance Manager
Contact person for this
announcement
Kirsten Hoyle
Contact phone number 027 253 9112
Contact email address khoyle@southport.co.nz
Date of release through MAP

13/02/2020

Unaudited financial statements accompany this announcement.

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Distribution Notice

Updated as at 18 December 2019



Please note: all cash amounts in this form should be provided to 8 decimal places

Section 1: Issuer information
Name of issuer South Port New Zealand Limited
Financial product name/description Fully Paid Shares
NZX ticker code
ISIN (If unknown, check on NZX
website)
NZSPNE0001S8
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 28/02/2020
Ex-Date (one business day before
the Record Date)
27/02/2020
Payment date (and allotment date for
DRP)
04/03/2020
Total monies associated with the
distribution
1

$1,967,617.35

Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.10416667
Gross taxable amount
3
$0.10416667
Total cash distribution
4
$0.07500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.01323529
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed X
Partial imputation
No imputation

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
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“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.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not
constitute advice as to whether or not RWT needs to be withheld.

If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$0.02916667
Resident Withholding Tax per
financial product
$0.00520833
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP

Date strike price to be announced (if
not available at this time)

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

Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Lara Stevens – Finance Manager
Contact person for this
announcement
Kirsten Hoyle
Contact phone number 027 253 9112
Contact email address khoyle@southport.co.nz
Date of release through MAP

13/02/2020





6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
TOTAL EQUITY 42,729 39,758 43,026
Non-Current Assets
Property, plant & equipment 50,225 49,091 49,571
Total non-current assets 50,225 49,091 49,571
Current Assets
Cash and cash equivalents 1,387 905 1,426
Trade and other receivables 7,682 7,031 5,702

Total current assets 9,069 7,936 7,128
Total assets 59,294 57,027 56,699
Non-Current Liabilities
Employee entitlements 35 39 19
Deferred tax liability 19 219 48
Loans and borrowings 10,500 – 7,000
Financial liabilities 542 296 530
Total non-current liabilities 11,096 554 7,597
Current Liabilities
Trade and other payables 3,843 3,065 3,152
Employee entitlements 1,230 775 1,172
Provision for taxation 395 653 1,682
Loans and borrowings 1 12,100 –
Financial liabilities – 122 70
Total current liabilities 5,469 16,715 6,076

Total liabilities 16,565 17,269 13,673
TOTAL NET ASSETS 42,729 39,758 43,026

Net asset backing per share $1.63 $1.52 $1.64
31/12
2018
$000’s
31/12
2019
$000’s
Year to
30/06/19
$000’s
UnauditedUnauditedAudited
Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
SIX MONTH PERIOD ENDED
31 DECEMBER 2019
Total operating revenues
from port services 21,583 20,918 43,950
Total operating expenses (13,140) (12,489) (25,768)
Gross profit 8,443 8,429 18,182

Administrative expenses (1,871) (1,756) (3,802)
Operating profit before
financing costs 6,572 6,673 14,380

Financial income 66 10 25
Financial expenses (200) (312) (746)
Net financing costs (134) (302) (721)
Other income 2 23 51
Surplus before income tax 6,440 6,394 13,710
Income tax (1,884) (1,843) (3,923)
Net surplus after income tax 4,556 4,551 9,787
Other comprehensive income – – –
Total comprehensive
surplus/(loss) after income tax 4,556 4,551 9,787
Basic earnings per share $0.174 $0.173 $0.373
31/12
2018
$000’s
31/12
2019
$000’s
Year to
30/06/19
$000’s
CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTH PERIOD ENDED
31 DECEMBER 2019
Cash flows from operating
(note 7) 3,847 3,417 13,554
Cash flows from investing (2,533) (3,550) (6,098)
Cash flows from financing (1,353) 47 (7,021)
NET INCREASE/(DECREASE) (39) (86) 1,426
IN CASH
31/12
2018
$000’s
31/12
2019
$000’s
Year to
30/06/19
$000’s
UnauditedUnauditedAudited
UnauditedUnauditedAudited
Notes to the
Financial Statements
1 ACTIVITIES OF SOUTH PORT GROUP
The Group is primarily involved in providing and managing port
and warehousing services.
2 ACCOUNTING POLICIES
The Group is a Financial Markets Conduct (FMC) reporting
entity for the purposes of the Financial Reporting Act 2013
and the Financial Markets Conduct Act 2013. These financial
statements comply with these Acts and have been prepared in
accordance with the New Zealand equivalents to International
Financial Reporting Standards (NZ IFRS) and other applicable
Financial Reporting Standards, as appropriate for profit-
orientated entities. These financial statements comply with
International Financial Reporting Standards (IFRS). There has
been no change in accounting policies. All policies have been
applied on a consistent basis with the most recent annual
report.
3 AMENDMENTS TO NZ IFRS
One new standard is effective for annual periods ending
30 June 2020, being NZ IFRS 16: Leases.
NZ IFRS 16 has been adopted however the impact to the Group
is immaterial. The right-to-use asset, lease liability, interest
and depreciation will be recognised in the Statement of
Comprehensive Income and Statement of Financial Position at
year end (30 June 2020).
4 TAXATION
Income tax expense comprises current and deferred tax at the
company tax rate of 28%. Income tax expense is recognised in
the Statement of Comprehensive Income except to the extent
that it relates to items recognised directly in equity, in which
case it is recognised in equity.
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2019
R T CHAPMAN
Chairman
N G GEAR
Chief Executive
Total equity at beginning
of the period 43,026 40,060 40,060
Profit/(loss) after income tax 4,556 4,551 9,787
Other comprehensive income – – –
Total comprehensive surplus 4,556 4,551 9,787
Distributions to shareholders (4,853) (4,853) (6,821)
Total equity at end of the period 42,729 39,758 43,026
31/12
2018
$000’s
31/12
2019
$000’s
Year to
30/06/19
$000’s
UnauditedUnauditedAudited
6 STATEMENT OF CHANGES IN EQUITY
SIX MONTH PERIOD ENDED
31 DECEMBER 2019
Surplus after taxation 4,556 4,551 9,787
Add/(less) items classified
as investing/financing activities – – –
Add/(less) non-cash items 1,792 1,824 3,762
Add/(less) movement in working
capital (2,501) (2,958) 5
Net cash provided by operating
activities 3,847 3,417 13,554
7 NET CASH FLOW FROM OPERATING ACTIVITIES
5 SEGMENTAL REPORTING
The South Port Group operates in the Port Industry in
Southland, New Zealand, and therefore only has one
reportable segment and one geographical area based on the
information as reported to the chief operating decision maker
on a regular basis. South Port engaged with one major customer
who contributed individually greater than 10% of its total
revenue for the period ended 31 December 2019. This customer
contributed $5.06 million for the six months ended
31 December 2019 (2018: $4.22 million).
Upper North Island Supply Chain Study (UNISCS)
Recently the third installment of the UNISCS was released
recommending that the Auckland Port should close and that
their operation should be relocated to North Port (Whangarei).
While there may be a case to move the Auckland port
operation sometime in the future there needs to be clear
and robust discussions with all stakeholders supported by
accurate data to assist any future decision making; which is
not the case with the current report. It is important that a
thorough process be put in place to ensure the right decision
is made for New Zealand.
HEALTH, SAFETY AND WELLBEING (HSW)
The HSW team began the first of many Bowtie risk
assessments this financial year. These assessments are
currently focused on critical risks and developing controls
to mitigate these risks or alternatively to “fail safely”. To fail
safely is important as controls need to be put in place for
when accidents do occur to protect our employees from harm.
These sessions involve all staffing levels and have been very
successful to date with a number of positive outcomes being
actioned as a result of these assessments.
OUTLOOK
The recent outbreak of the Coronavirus has sent ripples
through the international marketplace, impacting tourism and
trade. There is a fair amount of uncertainty as to the level of
impact however the Port will notify shareholders should there
be any material changes in the coming months.
Weather and offshore market conditions are two variables
that regularly have an impact on the trade volumes through
the Port and this year is no exception. The continuing wet
conditions leading up to Christmas impacted fertiliser imports
and although these are recovering, we do not expect to recoup
the total volume lost. The log trade has also been difficult
due to oversupply into the China market in the first six months
of the year and expectations are that this trend will continue
for the remainder of the year. Other than these two trades,
expectations are that all other cargoes will track close to
budget with potential upside in both containers and cold
storage activities.
Based on all known factors at the date of releasing its 2020
interim result, South Port estimates that its full year earnings
should fall in the range of $x.xx million to $x.xx million (FY2018
- $9.79M).
DIVIDEND
After assessing the anticipated year end result, the Directors
have declared a fully imputed interim dividend of 7.50 cents
per share (2019 – 7.50 cents) payable on 4 March 2020. In the
event that the Company’s FY2020 year end profit falls within
the forecast range then the Directors are confident that the
full year dividend payment will be consistent with the previous
year.