South Port Year-end pleasing despite impacts of Covid-19

GROUP
NOTEGROUP
STATEMENT OF COMPREHENSIVE INCOME
OF SOUTH PORT NEW ZEALAND LIMITED FOR THE YEAR ENDED 30 JUNE 2020
STATEMENT OF CHANGES IN EQUITY
OF SOUTH PORT NEW ZEALAND LIMITED FOR THE YEAR ENDED 30 JUNE 2020
Share CapitalRetained EarningsTotal Equity
In Thousands of New Zealand Dollars 2020 2019
Total operating revenues from port services 5 44,573 43,950
Total operating expenses 7 (26,688) (25,768)
Gross profit 17,885 18,182
Administrative expenses (4,014) (3,802)
Operating profit before financing costs 13,871 14,380
Financial income 11 25
Financial expenses (569) (746)
Net financing costs 6 (558) (721)
Other income 5 35 51
Surplus before income tax 13,348 13,710

Income tax (3,988) (3,923)
Adjustments relating to tax legislation changes 70 —
Total income tax 10 (3,918) (3,923)
Net surplus after income tax 9,430 9,787
Other comprehensive income — —
Total other comprehensive surplus/(loss) after income tax — —
Total comprehensive surplus/(loss) after income tax 9,430 9,787
Basic earnings per share 16 $0.359 $0.373
In Thousands of New Zealand Dollars
Balance 1 July 2018 9,418 30,642 40,060
Profit/(loss) after income tax — 9,787 9,787
Other comprehensive income — — —
Total comprehensive income — 9,787 9,787
Contributions by and distributions to owners
Dividends paid during the period (refer to note 14) — (6,821) (6,821)
Balance as at 30 June 2019 9,418 33,608 43,026
Balance 1 July 2019 9,418 33,608 43,026
Profit/(loss) after income tax — 9,430 9,430
Other comprehensive income — — —
Total comprehensive income — 9,430 9,430
Contributions by and distributions to owners
Dividends paid during the period (refer to note 14) — (6,821) (6,821)
Balance as at 30 June 2020 9,418 36,217 45,635
732020 SOUTH PORT ANNUAL REPORT

STATEMENT OF FINANCIAL POSITION
OF SOUTH PORT NEW ZEALAND LIMITED as at 30 JUNE 2020
On behalf of the Board
Dated 27 August 2020
Chairman of DirectorsDirector
The accompanying notes form part of these financial statements
In Thousands of New Zealand Dollars 2020 2019
TOTAL EQUITY 14 45,635 43,026
NON-CURRENT ASSETS
Property, plant and equipment 11 51,189 49,571
Right-of-use assets 23 374 —
Deferred tax asset 10(d) 159 —
Total non-current assets 51,722 49,571
CURRENT ASSETS
Cash and cash equivalents 12 1,229 1,426
Trade and other receivables 13 6,460 5,702
Total current assets 7,689 7,128
Total assets 59,411 56,699
NON-CURRENT LIABILITIES
Employee entitlements 18 38 19
Deferred tax liability 10(d) — 48
Loans and borrowings 17 5,000 7,000
Financial liabilities 20 750 530
Lease liabilities 22 333 —
Total non-current liabilities 6,121 7,597
CURRENT LIABILITIES
Loans and borrowings 17 1,500 —
Trade and other payables 19 3,728 3,152
Employee entitlements 18 1,321 1,172
Provision for taxation 10(c) 1,055 1,682
Financial liabilities 20 — 70
Lease liabilities 23 51 —
Total current liabilities 7,655 6,076
Total liabilities 13,776 13,673
TOTAL NET ASSETS 45,635 43,026
Net asset backing per share $1.74 $1.64
NOTEGROUP
74 SOUTH PORT ANNUAL REPORT 2020

The accompanying notes form part of these financial statements
STATEMENT OF CASH FLOWS
OF SOUTH PORT NEW ZEALAND LIMITED FOR THE YEAR ENDED 30 JUNE 2020
In Thousands of New Zealand Dollars 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided by (applied to):
Receipts from customers 43,377 43,897
Payments to suppliers and employees (25,650) (25,856)
Interest received 11 25
Interest paid (420) (488)
Income taxes paid (4,752) (4,123)
Net goods and services tax paid 39 99

Net cash flow from operating activities 24 12,605 13,554
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided by (applied to):
Proceeds from disposal of non-current assets 60 48
Acquisition of other non-current assets (5,493) (6,146)
Net cash used in investing activities (5,433) (6,098)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided by (applied to):
Dividend paid (6,821) (6,821)
Drawdown/(repayment) of borrowings (500) (200)
Lease liabilities paid (48) —
Net cash used in financing activities (7,369) (7,021)
NET INCREASE (DECREASE) IN CASH HELD (197) 435
Add cash at beginning of year 1,426 991
TOTAL CASH AT END OF YEAR 12 1,229 1,426
NOTEGROUP
752020 SOUTH PORT ANNUAL REPORT

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer South Port New Zealand Limited
Reporting Period 12 months to 30 June 2020
Previous Reporting Period 12 months to 30 June 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$44,573 1.41%
Total Revenue $44,619 1.34%
Net profit/(loss) from
continuing operations
$9,430 -3.60%
Total net profit/(loss) $9,430 -3.60%
Final Dividend
Amount per Quoted Equity
Security
$0.18500000

Imputed amount per Quoted
Equity Security
$0.07194444
Record Date 02/11/2020
Dividend Payment Date 10/11/2020
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.74 $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
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

27/08/2020

Audited financial statements accompany this announcement.

---

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 SPN
ISIN (If unknown, check on NZX
website)
NZSPNE0001S8
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 02/11/2020
Ex-Date (one business day before the
Record Date)
30/10/2020
Payment date (and allotment date for
DRP)
10/11/2020
Total monies associated with the
distribution
1

$4,853,456.13

Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.25694444
Gross taxable amount
3
$0.18500000
Total cash distribution
4
$0.18500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.03264706
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
$0.07194444
Resident Withholding Tax per
financial product
$0.01284722
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

27/08/2020





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

---

SOUTH PORT NEW ZEALAND LIMITED

NZX Announcement and Media Release

SOUTH PORT FULL YEAR 2020 RESULTS
For Release following the 27 August 2020 Board Meeting


27 August 2020

South Port Year-end pleasing despite impacts of Covid-19

The results for the year ending 30 June 2020 for South Port New Zealand Limited
(South Port) were pleasing but also reflect the unavoidable effects of the nationwide
Alert Level 4 lockdown, including some unexpected offsets.

Trade volumes were impacted by a softening of international commodity markets,
compounded by the domestic disruption due to the Covid-19 pandemic.

During the Alert Level 4 lockdown, the Port continued operating as an essential
business. New processes and procedures were quickly adopted to ensure the Port’s
people were safe and able to continue in their work.

South Port Chief Executive, Nigel Gear said, “the business operated extremely well
due to the hard work and dedication of the port team. Our core set of values, especially
‘Safety First’, served us well in making good decisions during this period.”

Total cargo throughput was 3,269,000 tonnes, a 7.2% decrease on the prior year.

South Port Chairman, Rex Chapman said, “Like the rest of the country we were
noticeably affected in April.”

“Despite these impacts, the Company has reported an after-tax profit of $9.43 million,
3.6% below last year, which is still a very pleasing result overall and in line with our
forecasts presented at the 2019 Annual Shareholders’ Meeting in November last year.”

Operating revenue for the year was 1.4% higher than FY19 at $44.6 million.

Total log volumes exported through Bluff were 33% down on FY19. Total container
volumes fell 2% at 47,600 TEU (2019: 48,600 TEU).

Pre-tax operating profit was $13.35 million (2019: $13.71 million) and net profit
after-tax for the year was $9.43 million ($9.79 million).

Earnings per share were $0.359 (2019: $0.373). Net tangible asset backing was $1.74
(2019: $1.64).

The Board’s ongoing policy is to take into consideration both free cash flows and
reported profits in determining the annual dividend. This year, the Directors also had
regard to the uncertain economic outlook caused by the pandemic.

P a g e | 2

As a result, the Directors have determined to declare an unchanged final dividend for
the year of 18.5 cents, which takes the full year’s dividend to 26.0 cents (2019:
26.0 cents), with full imputation credits attached.

Mr Chapman said, “The full dividend payment represents a gross return of 5.2%
(net 3.7%) based on a share price of $6.95 at 30 June. This means that South Port’s
dividend pay-out ratio will be 72% of reported net profit (and 79% of free cash flow).”

TIWAI POINT

The Port along with the Southland region has expressed concern over the potential
closure in August 2021 of New Zealand’s Aluminium Smelter (NZAS), which
represents one-third of the Port’s cargo base and ~18-20% of NPAT.

Since the announcement by Rio Tinto, Southland business and community leaders
have together lobbied Government to work with Rio Tinto for an extension of the
shutdown for at least a 4-5 year timeframe. This would allow for the planning and
transition to new industries, and importantly preserving jobs and keeping skilled labour
in the region.

Mr Chapman noted that NZAS contributes around $450 million annually to the NZ
economy. He said, “NZAS is producing some of the lowest carbon aluminium in the
world, using hydro electricity from the Manapouri Power Station supplied by a
dedicated transmission network.”

“The base fundamentals for the continued operation of NZAS are still very sound and
it is important that the Government, electricity providers and Rio Tinto negotiate a
sensible solution that will benefit not only Southland but the NZ economy. The Port
will closely monitor the progress of negotiations.”

TRADE IMPACT

Forestry was the main contributor to the decline in FY20 cargo with both logs and
woodchips down on past seasons.

“Log volumes in particular were affected by an oversupply of Spruce logs into the
China market as a result of a bark beetle infestation in Europe which accelerated the
harvesting of that species,” said Chief Executive, Nigel Gear.

“This was compounded during the lockdown when forestry cargoes were not
considered an essential industry therefore log and woodchip exports (including
containerised timber products) ceased during this period.”

“Record volumes of bulk stock food products were imported due to a late season surge
of shipments through the Port.”

“These increases were partly attributed to Covid-19 restrictions that dictated a change
in working conditions at the meat plants, slowing down the number of stock units being
processed which was perceived to lead to a shortage of feed in the region.”

P a g e | 3

BENEFITS OF DIVERSIFICATION

“While bulk cargoes are the backbone of the Company’s trade, the standouts this past
financial year were the cold storage facility and the container activities, effectively
making up for any bulk volumes lost through the Port,” said Mr Gear.

“The cold storage facility upgrade completed 18 months ago with extended load-in and
load-out bays, increasing efficiency and improving safety. The new blast freezer
continues to exceed our volume expectations.”

A $1 million expansion project for the container terminal area was completed and has
provided much-needed additional space for the efficient storage and movement of
containers. This has assisted with the planning of the depot and ship day operations
in the container terminal. These efficiencies combined with the increased throughput
of refrigerated cargo at the Port has been one of the highlights of FY20.

OUTLOOK

“Unknown variables could affect the Company in the coming year”, said Mr Chapman.
“The continued impact of Covid-19 on international markets and the ongoing disruption
from outbreaks of the virus within New Zealand are still a material risk going forward.”

“South Port is considered an essential industry and we expect that should the country
return to higher alert levels in the future, all cargoes, including forestry, will continue
to be handled through the Port.”

“Our customers indicate they have good visibility of sales to the end of the third quarter
(October 2020); however, beyond this timeframe there is some uncertainty.”

Based on presently known factors, South Port is expecting FY21 earnings to be down
~2% and the Company will endeavour to maintain dividends at the current level.


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 Rex Chapman
Chairman
Mobile: 027 454 8455
Email: rex.chapman@cplaw.co.nz