POT Offers Safe Harbour in a Global Covid-19 Storm
u: \documents\word\pressreleases\nzx letter - full year result june 2020.docx
28 August 2020
NZX
Wellington
Dear Sir/Madam
PORT OF TAURANGA LIMITED FULL YEAR RESULTS: 30 JUNE 2020
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 Integrated Annual Report (containing audited financial statements)
4 NZX Results Announcement
5 NZX Distribution Notice – Full Year
Yours sincerely
Simon Kebbell
CHIEF FINANCIAL OFFICER
---
28 August 2020
Port of Tauranga Offers Safe Harbour
in a Global Covid-19 Storm
Financial results for the year to 30 June 2020
Port of Tauranga, New Zealand’s largest port, today reported Group Net Profit After Tax of $90.0
million on 24.8 million tonnes of trade.
Despite the ongoing disruption caused by the Covid-19 global pandemic, container volumes
increased 1.5% to 1,251,741 TEUs
1
for the year ended 30 June 2020.
The Port of Tauranga Limited Board has declared a final dividend of 6.4 cents per share.
Results summary:
• Annual revenue of $302.0 million (2019: $313.3 million)
• Group Net Profit After Tax of $90.0 million (2019: $100.6 million)
• Subsidiary and Associate Companies’ earnings of $14.1 million (up 18.5% from $11.9
million in 2019).
• Final dividend of 6.4 cents per share (total ordinary dividend of 12.4 cents per share)
• Average annual compounding Total Shareholder Return of 23.34% over the last decade
• Total trade of 24.8 million tonnes (2019: 26.9 million tonnes)
• Container volumes: 1,251,741 TEUs (up 1.5% from 1,233,177 TEUs)
• Transhipped
2
containers remained nearly a third of total containers handled
• Imports decreased 7.8% to 9.0 million tonnes
• Exports decreased 8.0% to 15.8 million tonnes
• Reduced our overall carbon emissions
3
by 15.3%
• Continued improvement in safety culture and safety performance with our Combined Port
of Tauranga and Contractor Total Recordable Injury Frequency Rate (TRIFR) dropping 26%
to 4.5
4
(2019: 6.1)
• Remaining Australasia’s most productive container terminal with Average Net Crane Rate
for the year increasing 8.8% to 35.8 moves per hour
• Our high quality land and building portfolio increased in value by $43.5 million.
1
TEUs = twenty foot equivalent units, a standard measure of shipping containers
2
Transhipment is when containers are transferred from one ship to another at Port of Tauranga
3
Scope 1, 2 and 3 emissions, audited under the Certified Measurement and Reduction Scheme (CEMARS)
4
Per million hours worked
2
Port of Tauranga’s Chair, David Pilkington, says the results reflect the turbulent year and are a
strong performance in view of an almost 22% reduction in log exports.
“Some of our customers saw record export volumes, while others were unable to operate during
the lockdown,” says Mr Pilkington.
“Port of Tauranga is New Zealand’s major international hub port so it is not surprising that we
have seen the effects of the global upheaval.”
The Covid-19 pandemic has had a wide-ranging impact on the business, including shipping
cancellations, reduced cargo volumes, operational challenges and increased costs, and the
resulting economic recession in New Zealand and the world.
“We are better positioned than most, due to our track record of strong capital discipline, our
conservative balance sheet and capacity headroom,” says Mr Pilkington.
“Our diversity of cargo gives us some resilience in terms of revenue, while the strength of our
people and processes has really shone through in keeping New Zealand’s most efficient port
operating.”
Port of Tauranga has extended its strategic alliance with New Zealand’s biggest container
exporter, Kotahi, through to 2031. The Port also has long-term freight volume agreements in place
with other key exporters such as Oji Fibre Solutions and Zespri International.
“These long-term partnerships give Port of Tauranga certainty to plan for the future, and to expand
capacity in a way that matches customer demand rather than investing speculatively,” says Mr
Pilkington.
“It’s vital to have strong relationships with our customers to ensure we have the freight volume to
attract the big ship services.”
Mr Pilkington believes shippers will increasingly seek out the lowest carbon supply chain, which
they can access through the bigger ship services calling only at Tauranga. Larger vessels of 7,500
to 9,500 TEUs have a carbon footprint more than 31% lower than the average size vessels calling
in New Zealand previously.
“We are the only New Zealand port able to offer the efficient, short transit time services that these
larger vessels bring,” says Mr Pilkington.
Port of Tauranga has formed a joint venture with Tainui Group Holdings to develop the 30 hectare
Ruakura Inland Port at Hamilton. The partnership will help Waikato-based importers and
exporters to easily access the direct rail link to Tauranga.
Port of Tauranga Chief Executive, Mark Cairns, says the port team put in an outstanding
performance to keep essential imports and exports flowing throughout the Covid-19 lockdown.
“Our team and partners managed a record cargo exchange on the Sally Maersk container vessel
during lockdown. They transferred a total of 9,367 TEUs in two and a half days, obliterating the
previous record exchange of just under 7,000 TEUs,” says Mr Cairns.
“We also commissioned our ninth container crane, which arrived in pieces in February and was
in service just 11 weeks later.”
3
Port of Tauranga is now planning for the next stage of cargo growth and, in response to customer
demand, intends to add another container vessel berth to the south of the existing Sulphur Point
wharves.
“We take a long-term, strategic view of our infrastructure investment to ensure we can provide
importers and exporters with the facilities they will need in the future,” says Mr Cairns.
Financial performance
Group EBITDA (earnings before interest, tax, depreciation and amortisation) decreased 8.1% to
$166.5 million.
Solid performances, led by PrimePort Timaru, saw earnings from Subsidiary and Associate
Companies’ earnings increase 18.5% to $14.1 million.
Dividend policy
The Board has reviewed its dividend policy in the light of the pandemic and its fallout. The special
dividend scheme will be suspended, with funds reserved to accelerate capital expenditure such
as the planned container berth extension. The Board has maintained the existing ordinary
dividend policy of paying between 70% and 100% of Underlying Net Profit After Tax.
The Board has declared a final dividend of 6.4 cents per share, bringing the full year ordinary
dividend to 12.4 cents per share (90% of Underlying Net Profit After Tax).
The average annual compounding Total Shareholder Return has been 23.34% over the last
decade.
Cargo trends
Exports decreased 8.0% in volume to nearly 15.8 million tonnes and imports decreased 7.8% to
just over 9.0 million tonnes for the year ended 30 June 2020.
In the first half of the financial year, log volumes were hit by lower international prices and demand.
By March positive signs were emerging in China, New Zealand’s major log export market, as
business there returned to normal and demand increased.
However, forestry was deemed a non-essential industry during New Zealand’s Level 4 lockdown
from late March. Log inventory stored at the Mount Maunganui wharves could be shipped to make
way for essential cargoes, but cart-in did not resume through the port gates until early May.
Overall, log volumes decreased 21.5% compared with the previous year, to 5.5 million tonnes.
Sawn timber exports decreased 10.4% in volume. Pulp and paper exports increased slightly over
the full year.
Dairy product exports increased 1.7% to nearly 2.4 million tonnes. Meat products increased
15.4% in volume.
Kiwifruit export volumes remained steady, with a continuing trend towards containerisation.
Imported fertilisers remained steady in volume compared with the previous year, while protein
and feed imports increased 20.1% in volume. Grain imports increased 26.1% in volume.
Oil product imports decreased 12.3% in volume, reflecting the economic conditions.
4
Transhipment volumes remained steady, despite the overall decline in cargo volumes.
Transhipped containers represent nearly a third of all containers handled.
Ship visits decreased by 9.7%, from 1,678 to 1,515 for the year.
People and safety
Mr Cairns says the Port of Tauranga team demonstrated strength, resilience and fortitude in
dealing with the Covid-19 pandemic and the wide-reaching impacts on the Port’s operations.
“Our systems, processes and people were tested in a myriad of ways, and the effects are
ongoing,” he says.
“Our people’s health and wellbeing is more important than ever. Since the beginning of the
outbreak, we have supported our frontline workers to keep them safe from Covid-19. They
continue to operate at Level 4 standards, with temperature checks, wearing of masks and gloves,
social distancing, attention to hand hygiene and frequent surface sanitisation,” says Mr Cairns.
Meanwhile, safety performance during the year improved again, with the combined Port of
Tauranga and contractors’ injury rate improving 26%. There is strong evidence of a proactive
safety culture through lead indicator reporting.
Sustainability
Measuring, understanding and reducing our carbon emissions is a big focus and we are proud to
report that the Company has cut its overall emissions by 15.3% compared with the previous
financial year.
Much of the decrease has come through a waste minimisation programme that reduced the
volume of waste going to landfill from the Mount Maunganui wharves by 48.5%. Significantly
more waste is being recycled instead, and we believe we can still generate further improvements
in this area.
All of our business units reduced emissions compared with the previous year. We achieved a
4.2% decrease in Scope 1 emissions, and the intensity (Scope 1, 2 and 3 emissions per cargo
tonne) decreased 7.9%.
Our emissions are certified through the Certified Emissions Measurement and Reduction Scheme
(CEMARS) and audited by Toitū Envirocare. It is important to us that our emissions reduction
strategy is not based on hollow promises or greenwashing. Our approach is to break down every
part of our business to ensure we are making lasting and tangible change.
The Port’s focus on air and water quality continues, with significant progress in dust suppression.
The international move to low sulphur fuel for shipping (or the use of exhaust scrubbers) has had
an immediate effect on air quality.
The amount of methyl bromide used at the port for container and log export fumigation dropped
36.6% as a result of log de-barking and other alternatives. Fumigation contractors Genera now
utilise recapture technology to recapture close to 90% of log fumigations and 100% of container
fumigations.
Outlook
Mr Cairns says the short and medium-term impacts of the Covid-19 pandemic are still uncertain.
“We expect cargo volumes to slowly recover over the next three years, with dairy product and
kiwifruit exports likely to be the strongest performers in terms of growth.
5
“We are still confident of growth over the long-term and, given the lead time required for any
investment, we continue to pursue capacity expansion,” he says.
“Our track record means we have a strong credit rating and we believe we are well placed to
weather the Covid-19 storm.”
Port of Tauranga Limited will provide an update on the first quarter’s trade, and earnings guidance
for the full year, at the Annual Shareholders’ Meeting on 30 October 2020.
For further details, please contact:
David Pilkington Mark Cairns
Chair Chief Executive
Port of Tauranga Limited
Ph: 021 609 635 Ph: 021 978 887
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
---
THIS REPORT
HONOURS THE
STRENGTH AND
RESILIENCE OF OUR
RELATIONSHIPS,
OUR PEOPLE AND
OUR PORT.
PORT OF
TAURANGA
LIMITED –
INTEGRATED
ANNUAL
REPORT 2020
PORT OF TAURANGA
REMAINS
NEW ZEALAND’S
LARGEST AND MOST
EFFICIENT PORT.
P
ort of Tauranga handles 32% of all New Zealand
cargo, 37% of New Zealand exports and 41% of all
shipping containers.
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 to deliver excellent care of our
customers, sustainable and wide-reaching benefits to our
community, and strong financial returns to our shareholders.
Port of Tauranga creates jobs and wealth for the Tauranga
community, the wider Bay of Plenty region and beyond. Our
national network reaches to Whangarei, Auckland, Hamilton,
Timaru and Christchurch.
Port of Tauranga is New Zealand’s Port for the Future.
It is the international freight
gateway for the country’s imports
and exports. It is the only New
Zealand port able to accommodate
larger container vessels, unlocking
economic and environmental
benefits for shippers.
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 1
TABLE OF
CONTENTS
/ 2
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
4/ HIGHLIGHTS AND CHALLENGES
8/ CHAIR AND CHIEF EXECUTIVE’S REPORT TO SHAREHOLDERS
20/ INTEGRATED REPORTING
22/ COMPANY OVERVIEW
– Our purpose
– Our values
– Our national network
28/ HOW PORT OF TAURANGA CREATES VALUE
30/ WHAT MATTERS MOST
– Stakeholder engagement and materiality
31/ MANAGING RISKS AND OPPORTUNITIES
34/ OUR STRATEGIES FOR THE FUTURE
38/ CAPITAL #1 – OUR RELATIONSHIPS
44/ CAPITAL #2 – OUR PEOPLE
50/ CAPITAL #3 – OUR SKILLS AND KNOWLEDGE
56/ CAPITAL #4 – OUR ENVIRONMENT
66/ CAPITAL #5 – OUR ASSETS AND INFRASTRUCTURE
70/ CAPITAL #6 – OUR FINANCES
74/ BOARD OF DIRECTORS
76/ SENIOR MANAGEMENT TEAM
78/ CONSOLIDATED FINANCIAL STATEMENTS
120/ CORPORATE GOVERNANCE STATEMENT
128/ FINANCIAL AND OPERATIONAL FIVE YEAR SUMMARY
130/ COMPANY DIRECTORY
/ 3
Group Net Profit After Tax
$90.0
million (decreased 10.5%
from $100.6 million)
Total trade
24.8
million tonnes (decreased 7.9%
from 26.9 million tonnes)
Container volumes
1.25
million TEUs
1
(up 1.5%)
Revenue
$302.0
million (from $313.3 million)
Imports
9.0
million (decreased 7.8% from
9.8 million tonnes)
Exports
15.8
tonnes (decreased 8.0%
from 17.1 million tonnes)
Total shareholder return
23.34%
annual compounding rate
over last decade
18.4%
increase in Subsidiary and
Associate Company earnings
Final dividend
6.4
cents per share (total ordinary
dividend 12.4 cents per share)
Container crane
productivity rate
34.4
moves/hour (up from
33.6 moves/hour)
15.3%
reduction in total
carbon emissions
25%
reduction in Total Recordable
Injury Frequency Rate for
combined contractors/Port of
Tauranga
CHALLENGE
IS OUR
OPPORTUNITY
HIGHLIGHTS AND CHALLENGES
FOR THE YEAR ENDED 30 JUNE 2020
1
TEUs = Twenty foot Equivalent Units – a standard measure of shipping containers
/ 4
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 5
HIGHLIGHTS AND CHALLENGES
FOR THE YEAR ENDED 30 JUNE 2020
/ 6
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
240%
increase in staff-led safety
interventions
Ship visits
1,515
(down 9.7% from 1,678)
106
cruise ship visits
(down from 116 last year)
2,000+
people hosted on port tours
16
educational scholarships
for students
Commissioned a ninth
container crane and seven
straddle carriers, including three
hybrid models
Extended long-term operating
agreement with Kotahi Logistics,
New Zealand’s biggest exporter
of containerised cargo
Agreed to form 50:50 venture
with Tainui Group Holdings to
develop Ruakura Inland Port
at Hamilton
The Government’s Upper North
Island Supply Chain review
recommended the move of
much of Auckland’s cargo to
Whangarei’s Northport
(50% owned by Port of Tauranga)
Compliance costs
continue to rise
Regional transport
infrastructure continues to be
under strain due to population
growth and increased economic
activity over the long term
Wide-ranging impact on business
from the Covid-19 pandemic,
including but not limited to
shipping cancellations, reduced
cargo volumes, operational
challenges and cost,
and economic recession in
New Zealand and the world
/ 7
The 2020 financial year was
a tumultuous one, and we
are extremely grateful for
the strength, resilience and
fortitude demonstrated by the
Port of Tauranga team.
RESILIENCE
THE YEAR IN REVIEW:
CHAIR AND CHIEF EXECUTIVE’S
REPORT TO SHAREHOLDERS
MA R K CA IR NS – Chief Executive
/ 8
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
Our systems, processes
and people were tested
in a myriad of ways.
The effects of the ongoing
Covid-19 global pandemic
still reverberate in all
parts of our business and
the long-term impact
remains uncertain.
2020 results
O
ur diversity of cargoes and income streams,
strong balance sheet and ongoing vigilance
regarding costs have helped Port of Tauranga
to weather the initial impact of the Covid-19 pandemic.
As an essential service, Port of Tauranga continued
trading through all Government alert levels.
For the financial year ended 30 June 2020, Port of
Tauranga handled a total of just over 24.8 million tonnes
of cargo, a decrease of 7.9% on the previous year.
Containerised cargo grew 1.5% in volume, to more
than 1.25 million TEUs.
Group Net Profit After Tax was $90.0 million, compared
with $100.6 million in 2019. The Board has declared
a final dividend of 6.4 cents per share.
Dividend policy reviewed
T
he Board has reviewed our dividend policy
in the light of the pandemic and its fallout.
Our special dividend scheme will be
suspended, with funds reserved to accelerate capital
expenditure such as our planned container berth
extension. Our policy is to maintain an ordinary
dividend payout of between 70% and 100% of
Underlying Net Profit After Tax
RESILIENCE
DAVID PILK INGTON – Chair
/ 9
Hub port strategy success
P
artnerships with our key customers are
an integral feature of Port of Tauranga’s
long-term success and ability to invest
in building capacity.
We have extended our strategic alliance with
Kotahi, New Zealand’s largest containerised
freight exporter.
The renewed agreement extends Kotahi’s freight
volume commitment to Port of Tauranga for an
additional seven years, through to mid-2031.
Kotahi manages freight on behalf of more than 40
of New Zealand’s importers and exporters, including
its shareholders Fonterra and Silver Fern Farms.
The alliance has already brought significant benefits
to New Zealand. When it was established in 2014,
it paved the way for the introduction of the next
generation of larger, more efficient container ships
to New Zealand – and with them a lower carbon
supply chain.
In September, we celebrated the 20th anniversary
of our MetroPort Auckland freight hub, the country’s
first true intermodal inland port. MetroPort’s rail
links and strategic location in the South Auckland
industrial belt give shippers easy access to the big
ship services that call at Port of Tauranga.
We’ve replicated the intermodal model at our
MetroPort Christchurch facility at Rolleston, and
we are now partnering with Tainui Group Holdings
to develop an inland port in Hamilton.
Ruakura Inland Port partnership announced
P
ort of Tauranga and Tainui Group Holdings
are forming a 50:50 joint venture to bring
the Ruakura Inland Port at Hamilton to
fruition within two years.
The new joint venture will take an initial 50-year
ground lease to establish the inland port, and plans
to start operations at Ruakura following the opening
of the nearby Hamilton section of the Waikato
Expressway, currently scheduled for late 2021.
The project is of national scale and significance and
will add to Port of Tauranga’s strong and growing
capacity to serve the Auckland, Waikato and Bay of
Plenty regions. It combines the Port’s expertise in
developing and operating ports, the deep regional
connections of Tainui and the scale and efficiencies
offered by the site.
It will also unlock significant environmental and
economic benefits for freight customers using the
rail-connected inland port.
The facility will cover approximately 30 hectares,
with 192 surrounding hectares earmarked for
logistics and industrial uses. The project has
attracted Government funding for roading
connections, as has a new industrial park under
development to the port’s east, at Rangiuru near
Te Puke.
Carbon emissions cut by 15.3%
M
easuring, understanding and reducing
our carbon emissions is a big focus and
we are proud to report that the Company
has cut its overall emissions by 15.3% compared with
the previous financial year.
Much of the decrease has come through a waste
minimisation programme that reduced the volume
of waste going to landfill from the Mount Maunganui
wharves by 48.5%. Significantly more waste is
being recycled instead, and we believe we can still
generate further improvements in this area.
All of our business units reduced emissions
compared with the previous year.
Our emissions are certified through the Certified
Emissions Measurement and Reduction Scheme
(CEMARS) and audited by Toitū Envirocare. It is
important to us that our emissions reduction strategy
is not based on hollow promises or “greenwashing”.
Our approach is to break down every part of our
business to ensure we are making lasting and
tangible change.
All of our business units reduced
emissions compared with the
previous year.
/ 10
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 11
Cargo volume trends
E
xports decreased 8.0% in volume to nearly
15.8 million tonnes and imports decreased
7.8% to just over 9.0 million tonnes for the
year ended 30 June 2020.
In the first half of the financial year, log volumes
were hit by lower international prices and demand.
By March, positive signs were emerging in China,
our major log export market, as business there
returned to normal and demand increased.
However, log and other forestry product exports
were deemed a non-essential cargo during the Level
4 lockdown from late March. Inventory stored at our
Mount Maunganui wharves could be shipped to
make way for essential cargoes, but no new exports
came through the port gates until early May.
Overall, log volumes decreased 21.5% compared
with the previous year, to 5.5 million tonnes. Sawn
timber exports decreased 10.4% in volume. Pulp and
paper exports increased slightly over the full year.
Dairy product exports increased 1.7% to nearly
2.4 million tonnes. Meat products increased 15.4%
in volume.
Kiwifruit export volumes remained steady, with
increasing volumes shipped via container.
Imported fertilisers remained steady in volume
compared with the previous year, while protein
and feed imports increased 20.1% in volume. Grain
imports increased 26.1% in volume.
Oil product imports decreased 12.3% in volume,
reflecting the economic conditions.
Transhipment rates remained steady, despite the
overall decline in cargo volumes. Transhipment,
where cargo is transferred from one ship to another
at Tauranga, increased 0.2% overall.
Ship visits decreased by 9.7%, from 1,678 to 1,515
for the year.
Impact of Covid-19 pandemic
P
ort of Tauranga felt the impacts of Covid-19
well before the virus reached New Zealand.
As China extended its New Year shutdown to
contain the outbreak, log inventories in China surged
and exports from New Zealand shrunk considerably.
As New Zealand imposed its own strict border
controls and subsequent local lockdown, we had
a duty to ensure that imports and exports could flow
unimpeded across our wharves. We implemented
extensive measures to protect our people, trade
and the community.
These included cleaning of all shared work
stations and equipment between shifts, and more
frequent cleaning of shared facilities such as staff
rooms, toilets and vehicles. Shifts and teams were
separated, including on breaks.
/ 12
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
Non-essential shuttle transport for international crews
was suspended, effectively cancelling crew shore
leave. Electronic transactions were encouraged at our
Tauranga container terminal and MetroPort Auckland.
Our administration offices were closed to visitors, in-
person meetings were cancelled and all employees
who could work from home were asked to do so.
Our IT team worked long hours to ensure this was as
seamless as possible.
Our health and safety team sourced vital supplies
of personal protective equipment and cleaning
supplies to protect our frontline workers. Disposable
gloves and masks remain in use by maritime pilots
and the crew members they come into contact with.
Essential cargoes prioritised
I
mporters were encouraged to identify
cargo required for essential services before
its arrival in New Zealand so that it could be
handled and transported first. The dwell charges
deadline for priority cargo was extended to provide
relief to our customers while ensuring cargo was
collected promptly.
As Level 4 lockdown was introduced from 25 March,
we made arrangements in both Tauranga and Auckland
to ensure non-essential cargo could be temporarily
stored on or off-site until it could be collected by
truck or transferred by rail to MetroPort Auckland.
Dwell charges were suspended for these cargoes.
Cruise ship season disrupted
I
n December, 38 passengers visiting Tauranga
on the Ovation of the Seas cruise ship were
caught in a volcanic eruption while visiting
Whakaari White Island, approximately 90 kilometres
away. The ship extended its stay at Tauranga by
several days and a karakia was held by local iwi Ngāi
Te Rangi before its departure. A total of 47 people
were killed or injured as a result of the eruption.
In February, the unfolding Covid-19 crisis threw cruise
ship schedules into chaos, with multiple service
changes and cancellations through to mid-March,
when the Government announced a ban on cruise
ships entering New Zealand waters. One of our
regular cruise ship visitors, the Noordam, spent five
nights on an unscheduled layover, with only crew on
board, in early March following a charter cancellation.
In total, Port of Tauranga lost 16 cruise ship visits
from the end of the 2019/2020 season, and we
are currently not budgeting for any visits in the
2020/2021 season.
Dairy product exports
increased 1.7% to nearly 2.4
million tonnes. Meat products
increased 15.4% in volume.
/ 13
Lessons from lockdown
T
he pandemic revealed the strength of our
team in many ways.
During the lockdown, we utilised our in-
house resources and remote support to commission
our ninth container crane.
The crane arrived in parts from Ireland in mid-
February, was assembled on site and then moved
several hundred metres on to the berth.
The Tauranga Container Terminal team handled a
record container exchange in April, obliterating all
previous records. The Sally Maersk container ship
exchanged 9,367 TEUs over two and a half days
before departing Tauranga for Kaohsiung in Taiwan.
TOGETHER
STRONGER
At the same time, another 1,772 TEUs were
exchanged on two other vessels, all while
maintaining the physical separation of workers
demanded by Covid-19 lockdown restrictions.
Many of our team were anxious about continuing
to work through the lockdown and concerned for
the health of our loved ones. However, they also
realised their privilege in continuing to work while
many people in our region lost their jobs or worked
reduced hours.
The crisis pushed many local families into vulnerable
positions and our team suggested we make a one-
off donation to the Tauranga Community Foodbank,
which the Port donates to each Christmas. We made
a $25,000 donation in late April.
/ 14
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
TOGETHER
STRONGER
Log ship stranded at harbour entrance
O
ur team’s resilience was once more put
to the test when a departing log ship lost
engine power at the harbour entrance
during extreme weather in July.
The MV Funing drifted to the edge of the shipping
channel and became entangled in a marker buoy.
Our marine team, including maritime pilots and tug
boat crews, managed to tow the disabled vessel to
a deeper anchorage. The ship was subsequently
towed into port for further inspections and repairs.
Upper North Island Supply Chain
Review continues
I
n February 2018, the Government announced
an Upper North Island Supply Chain Review
as part of the coalition agreement between
Labour and New Zealand First. A working group
recommended that Ports of Auckland’s cargo
volumes be shifted to Northport.
A subsequent review of the working group’s
recommendations was undertaken by economic
consultants Sapere. It concluded that a new port
on the Manukau Harbour was the best option for
Auckland cargo, with the second best option being
Port of Tauranga.
/ 15
SCALING
UP
/ 16
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
A Government decision has been deferred until after
the 2020 election and a detailed feasibility study
would still be required to test whether a Manukau
Harbour option is even possible, given the major
shipping issues, costs and environmental impact.
Sapere’s report is the latest of more than 20 reports
to examine this issue in the last 15 years. In our view,
if all port companies simply priced and invested to
achieve a cost of capital return, a natural hierarchy
of ports would emerge quite quickly. Ultimately,
Auckland City ratepayers and the Government
need to decide whether they wish to fund a major
new port or utilise the current well-performing and
efficient assets at Northport and Port of Tauranga.
In the meantime, Port of Tauranga continues to
increase capacity without increasing our existing
footprint. International experts have told us that
Port of Tauranga can easily accommodate up to
2.8 million TEUs on our current land holdings.
There is also the opportunity to factor in the future
freight handling capacity of the Ruakura Inland
Port in Hamilton.
UP
In the meantime, Port of Tauranga
continues to increase capacity without
increasing our existing footprint.
/ 17
Changes to the leadership team
D
uring the year we had two retirements
from the Senior Management Team
– our award-winning Chief Financial
Officer of 13 years, Steve Gray, and our Corporate
Services Manager, Sara Lunam.
Simon Kebbell, formerly Port of Tauranga’s Finance and
IT Manager, became Chief Financial Officer in July.
As part of its succession planning, Port of Tauranga
appointed Leonard Sampson to the newly-created
position of Chief Operating Officer, reporting to the
Chief Executive. Leonard was the Port’s Commercial
Manager for seven years after joining the Company
from KiwiRail.
Blair Hamill, formerly Zespri International’s Chief
Global Supply Officer, took up the Commercial
Manager position in July.
Port of Tauranga’s longstanding Group Health and
Safety Manager, Pat Kirk, has joined the Senior
Management Team. Pat has been with the Company
for seven years and has more than three decades’
experience in health and safety.
Two other appointments have also been made to the
Senior Management Team. Melanie Dyer, formerly
Trustpower’s General Manager People and Culture,
started in August as our new Corporate Services
Manager. Our Communications Manager, Rochelle
Lockley, will join the team in September.
Prestigious business award for
Port of Tauranga Chair
C
hair David Pilkington was named
Chairperson of the Year at the Deloitte Top
200 Business Awards. David joined the Port
of Tauranga Board in July 2005 and has been Chair
sin ce 2013.
His win scored a hat trick for Port of Tauranga Limited
at the prestigious annual awards. Mark Cairns won the
accolade for Chief Executive of the Year in 2012, while
Chief Financial Officer, Steve Gray, won CFO of the
Year in 2017.
External influences on our business
P
ort of Tauranga’s ability to create value for
our stakeholders is impacted by multiple
external factors. They include economic
conditions, trade trends and longer-term influences
such as technological and social change. We also
operate within the context of the current political
environment, both locally and nationally.
Chair David Pilkington was
named Chairperson of the
Year at the Deloitte Top 200
Business Awards.
/ 18
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
We are grateful for the ongoing
support of our community and
iwi as we play our role in the
management of and recovery
from the Covid-19 pandemic.
The impacts of the Covid-19 pandemic, and
the resulting worldwide economic recession,
remain difficult to quantify. Its effects will be
far-reaching and long-term. We are already
seeing more attention on supply chain
resilience and a trend to regionalisation (as
opposed to globalisation). We expect lower
carbon alternatives to become increasingly
important to shippers.
We continue to use our relationships to
gather market intelligence and our networks
to influence public policy.
Historic growth
We have achieved a compound annual
growth rate of 4.76% in cargo throughput
over the last 15 years. The rate of container
throughput growth has been 7.5% per
annum over the same period, with both
rates outpacing the 2.8% increase in GDP
between 2002 and 2019.
The average annual compounding Total
Shareholder Return over the last decade has
been 23.34%.
Market outlook for 2021 and beyond
Our long-term track record means we have
a strong credit rating and we believe we are
well placed to weather the Covid-19 storm.
The short and medium impacts of the
Covid-19 pandemic are still uncertain.
We expect cargo volumes to slowly recover
over the next three years, with dairy product
and kiwifruit exports likely to be the strongest
performers in terms of growth.
We are unlikely to see international cruise
ship traffic this coming summer.
We are still confident of growth over the
long-term and, given the lead time required
for any investment, we continue to pursue
capacity expansion.
We will provide earnings guidance for
the 2021 financial year at our Annual
Shareholders’ Meeting on 30 October 2020,
once we have a feel for the first quarter’s
trade and the ongoing influence of the
Covid-19 pandemic on the global economy.
Thank you
W
e are grateful for the ongoing
support of our community and
iwi as we play our role in the
management of and recovery from the
Covid-19 pandemic.
We would also like to pay tribute to our amazing
team members, contractors, suppliers, partners
and customers, who have kept the port moving
through extremely challenging times and
who continue to make Port of Tauranga
New Zealand’s Port for the Future.
DAVID PILKINGTON MARK CAIRNS
Chair Chief Executive
/ 19
INTEGRATED
REPORTING
Welcome to Port of Tauranga’s
integrated annual report for the 2020
financial year. This report outlines how
Port of Tauranga creates value for our
stakeholders over the short, medium
and long term. We aim to communicate
our strategy, governance, performance
and prospects.
O
ur reporting follows the internationally-
recognised <IR> Framework of the
International Integrated Reporting
Council
3
and is consistent with the principles
and recommendations of the NZX Corporate
Governance Code
4
.
This year, for the first time, we have also indicated
how we contribute to meeting the aspirations
outlined in the United Nations Sustainable
Development Goals
5
. The goals seek to tackle
some of the biggest and most urgent global
challenges, such as inequality, climate change
and environmental degradation. We have
also expanded our description of climate-
related risks and opportunities, in line with the
recommendations of the Taskforce for Climate-
related Financial Disclosures
6
.
In this report, we examine the capitals, resources
or inputs that we use or affect: our relationships,
our people, our skills and knowledge, our
environment, our assets and infrastructure, and our
finances. We outline the capabilities and strengths
we add, describe our activities and outputs,
and the resulting outcomes for our stakeholders.
We define “stakeholders” as anyone who has
something to gain, or something to lose, from
Port of Tauranga’s activities.
Last year, we surveyed our internal and external
stakeholders to identify what issues matter most to
them. We’ll repeat these conversations next year
3
https://integratedreporting.org
4
https://www.nzx.com/regulation/nzx-rules-guidance/corporate-governance-code
5
https://www.un.org/sustainabledevelopment/
6
https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-2017-TCFD-Report-11052018.pdf
/ 20
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
to ensure our strategies focus on those issues
that are the highest priority for our stakeholders.
Our carbon emissions are audited annually
by Toitū Envirocare using the CEMARS
certification. We intend to seek assurance on
other non-financial data in future.
We will continue to enhance our non-financial
reporting to increase our transparency and
build credibility and trust with our stakeholders.
Integrated thinking, actions and reporting will
help us ensure the best possible outcomes
for our shareholders, employees, customers,
partners and community.
DAVID PILKINGTON
Chair
/ 21
COMPANY OVERVIEW:
OUR PURPOSE
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.
W
e deliver sustainable returns, while taking
appropriate risks, for our shareholders and work
to 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 participants in our shared environments.
6,216
TEU total
ground slots
2.8km
total quay length,
with 14 berths
45ha
of land
in Auckland
3,426
dedicated
reefer connections
238
permanent employees
(up from 230 in 2019)
190ha
of land
in Tauranga
14.5m
shipping
channel depth
15ha
of land in Rolleston
near Christchurch
9
container
cranes (up from
8 cranes in
2019)
53
straddle carriers
(up from 46
straddles in
2019)
/ 22
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 23
SAFETY
INTEGRITY
INNOVATION
COMMUNICATION
TEAMWORK
Our core
values inform
everything we do
COMPANY OVERVIEW:
OUR VALUES
/ 24
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 25
COMPANY OVERVIEW:
OUR NATIONAL NETWORK
Christchurch
Timaru
Invercargill
Wellington
Napier
Murupara
Hamilton
Auckland
Northport
Port of Tauranga
5
4
6
3
2
1
State Highway 1
State Highway 2
Golden Triangle
Rail Network
East Coast Main
Trunk Rail Network
KEY
/ 26
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
Ruakura
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.
PLANNED 50:50 JOINT VENTURE
WITH TAINUI GROUP HOLDINGS
• Inland port connected by rail
to Tauranga and Auckland.
OPERATED BY TIMARU
CONTAINER TERMINAL
• Intermodal freight hub
at Rolleston
• Rail connections to Timaru
Container Terminal and
rest of South Island
• 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
• New oil terminal.
METROPORT
CHRISTCHURCH
565166
12364
13
5
2
METROPORT
AUCKLAND
3
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.
• New Zealand’s largest port and international freight gateway
• Container terminal, bulk cargo wharves and bunkering/bulk liquids facilities
• Extensive cargo storage and handling facilities
• Rail connections to Hamilton, Auckland and the central North Island
• Extensive road networks and coastal shipping connections.
1
PARENT COMPANY
/ 27
OUR
CAPABILITIES
Can-do attitude
Sector-leading safety performance
Flexibility
History of sound commercial
infrastructure investment
Deep understanding of supply
chain dynamics
Proven ability to execute 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
INPUTS
Our relationshipsOur people
Our skills and knowledge
Our assets and infrastructure
Our finances
Our environment
HOW PORT
OF TAURANGA
CREATES VALUE
/ 28
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
OUR
OUTPUTS
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
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 return for
our shareholders
Prosperity for local, regional and
national communities
HOW PORT
OF TAURANGA
CREATES VALUE
/ 29
Stakeholder
engagement and
materiality
Port of Tauranga’s business strategies
are focused on the issues that matter
most to our community, iwi, customers,
suppliers, partners and investors.
In 2019, we engaged an independent
expert to consult our internal and external
stakeholders about the “material issues”
most likely to impact the way we create
or erode value. 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.
WHAT
MATTERS
MOST
This report outlines
our strategies, recent
progress, and
commentary on how
we utilise the available
resources to address
these issues.
We engage our
stakeholders regularly
across a variety of
formal and informal
communications channels
and we will formally
consult our stakeholders
again in the next
12 months. This ensures
we continue to prioritise
resources to improve our
performance in the most
important areas.
The assessment of
our top issues informs
our risk management
framework, outlined in
the following pages.
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 30
Port of Tauranga has extensive
programmes in place to identify,
manage and mitigate any risks
to our employees, our Company,
our community and our environment.
This allows us to pursue business growth
and grow shareholder returns while
we protect our people, our assets,
the environment and our reputation.
Port of Tauranga’s Board of Directors
is responsible for ensuring risk is
managed effectively. The Board
considers strategic, operational,
financial and compliance risk.
While risks are continuously evolving,
we have identified our top strategic
risks as:
• Maintaining the health, safety
and wellbeing of our people
• Protecting our social licence
to operate
• Legal and regulatory risk
• A natural disaster event
• Commercial and business risk
due to global economic
or geopolitical situations
• Malicious cyber attack
• A vessel foundering in the channel.
More detail on the potential
consequences and how we mitigate
these risks is outlined in the Corporate
Governance Statement on our
website: www.port-tauranga.co.nz
Spotlight on:
Seismic risk
Tauranga City Council has undertaken
extensive modelling based on a
tsunami of up to 14 metres resulting
from a magnitude 9 earthquake on the
Kermadec fault line, which it estimates
has a 1-4% chance of occurring in the
next 100 years. It shows the effect on
the inner harbour would be significantly
lower than on the ocean side.
We have installed earthquake monitors
on our wharf infrastructure to monitor
even the slightest seismic activity and
its effects.
MANAGING
RISKS AND
OPPORTUNITIES
0.1 to 0.25m
0.25 to 0.5m
0.5 to 1m
Above 1m
Harbour Inundation - Year
2130, SLR 1.25m, 1%AEP
/ 31
Spotlight on: Climate-related
risks and opportunities
We have considered the guidelines of the Task Force on
Climate-related Financial Disclosures. There are two major
categories of climate-related impacts:
• The risks and opportunities related to New Zealand’s
transition to a lower-carbon economy
• The risks and opportunities related to the physical
impacts of climate change.
Projections of climate change depend on future
greenhouse gas emissions, which are uncertain.
Port of Tauranga relies on the projections used by central
Government agencies – including the Ministry for the
Environment, the Ministry for Primary Industries and the
National Institute of Water and Atmospheric Research
(NIWA) – for the Bay of Plenty. We also consider scenario
planning by the Bay of Plenty Regional Council and the
Tauranga City Council.
The regional impacts from climate change include
an increased likelihood of heatwaves, increased storm
intensity, and droughts that are more frequent, longer
and more intense. More frequent extreme rainfall events
are also a possibility
7
.
Current models show potential for flooding along wharf
edges and of Port of Tauranga land at the southern end
of the Mount Maunganui wharves, and to the south of the
container terminal at Sulphur Point. Sea level rise analysis
shows there is likely to be minimal impact to current wharf
structures under most scenarios
8
.
Our measures to reduce greenhouse gas emissions are
outlined in Our Environment on page 56.
MANAGING RISKS
AND OPPORTUNITIES
7
https://www.mfe.govt.nz/climate-change/likely-impacts-of-climate-change/how-could-climate-change-affect-my-region/bay-of
8
https://www.tauranga.govt.nz/Portals/0/data/living/natural_hazards/files/niwa_sea_level_analysis_report.pdf
/ 32
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
ExamplesPotential impacts
Transition risks
• Increased reporting requirements• Increased compliance costs
• Costs of transition to lower
emissions technology
• Increased capital expenditure
and operating costs
• Changing customer, investor
and community expectations
and supply/demand
• Reduced demand from
customers and/or investors,
e.g. for imported coal
• Changes to Government and
regulator policies
• Technological improvements
and innovations
Transition opportunities
• Use of more efficient modes of transport• Lower operating costs
• Increased recycling• New revenue sources
• Reduced energy use and greater use
of lower-emission energy sources
• Increased demand from
customers and/or investors
• Changing customer and investor
expectations and supply/demand
• Technological improvements
and innovations
Physical risks
• Increased severity and occurrence
of extreme weather events with
the potential to damage equipment
and infrastructure
• Increased operating costs
• Rising sea levels impacting on port
land and operations
• Increased insurance premiums
• Productivity impacts or supply chain
disruption due to acute or chronic
climate change
• Increased capital expenditure
to replace or repair equipment
and infrastructure
• Increased biosecurity risk due
to warmer, wetter conditions
allowing invasive pests and weeds
to become established
• Impact on cargo volumes due
to decreased productivity,
especially in primary sectors,
due to extreme weather events
or a warmer climate
• Impact on primary production
from the establishment of
invasive pests
Physical opportunities
• Investment in more resilient equipment,
infrastructure and technologies
• Lower operating costs from
more efficient equipment
and technologies
• New or increased revenue
streams as a result of increased
productivity in some primary
sectors due to warmer weather
MANAGING RISKS
AND OPPORTUNITIES
/ 33
MATERIAL
ISSUES
OUR
STR ATEGIE S
RECENT
PROGRESS
ALIGNED UN
SUSTAINABLE
DEVELOPMENT GOALS
9
Health, safety
and wellbeing
Refer to:
Our relationships
Our skills and
knowledge
Our people
• Encourage a positive
health, safety and
wellbeing culture,
where incidents
are prevented and
wellbeing is proactively
managed
• Prepare for crises and
emergencies through
thorough planning,
testing and training.
• Implemented extensive changes to
work practices to protect workers
f rom Covid-19
• Extra attention to employee mental
wellbeing as we continue to recover
from the challenges and related
stress of Covid-19
• Bronze level accreditation (from
Toi Te Ora Public Health) for
our comprehensive wellness
programme, ShipShape
• Implemented policies and
training about domestic violence,
discrimination, bullying and
harassment, diversity and inclusion
• Design and ongoing implementation
of a comprehensive training
and development programme
for all employees
• A 25% reduction in injury rate
for combined Port of Tauranga
and contractors
• Increased reporting of “near misses”
reflecting a proactive health and
safety culture
• Training exercises involving NZ Police,
Customs, Maritime NZ, Fire and
Emergency NZ and other border
agencies and emergency services.
Stormwater
management
Refer to:
Our environment
Our skills and
knowledge
Our relationships
• Protect biodiversity and
marine habitats through
responsible stewardship
of the harbour, including
pollution prevention.
• Extensive and regular stormwater
monitoring as part of the resource
consent for stormwater management
at our Mount Maunganui wharves.
Biosecurity
Refer to:
Our environment
• Avoid or minimise pest
incursions to protect
native biodiversity and
the local economy
• Utilise technology and
the knowledge 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
• In partnership with Kiwifruit
Vine Health (KVH), held our third
annual Biosecurity Week for
frontline port workers
• Supported the Tauranga Moana
Biosecurity Capital initiative.
Our strategies to address the issues important to our stakeholders are outlined here,
along with recent progress. More details can be found in the sections following:
OUR STRATEGIES
FOR THE FUTURE
9
https://www.un.org/sustainabledevelopment/
/ 34
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
MATERIAL
ISSUES
OUR
STR ATEGIE S
RECENT
PROGRESS
ALIGNED UN
SUSTAINABLE
DEVELOPMENT GOALS
9
Customer
satisfaction
and trust
Refer to:
Our relationships
Our skills and
knowledge
Our people
Our finances
• Create new and build
on existing long-
term partnerships
with a diverse
range of customers,
including shipping
lines, importers and
exporters
• Foster a customer-
centric, can-do attitude
across the team.
• Extended long-term freight
agreement with Kotahi,
New Zealand’s largest
container exporter
• Partnered with Tainui Group
Holdings to develop an inland
port at Ruakura, Hamilton
• Continued to work with large
customers to predict and plan
for demand.
Air quality
management
Refer to:
Our relationships
Our skills and
knowledge
Our environment
• Monitor fumigation
on port premises to
ensure processes and
procedures are strictly
followed 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,
intense sweeping,
dust reduction
and suppression
techniques and
technology
• Support the 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, resulting
in a significant decrease in the
amount of fumigant used
• Ensured fumigation is carried out
according to regional and national
standards, including meeting
recapture targets
• Closely monitored dusty cargo
exchanges to prevent pollution
• Improved and refined dust
recovery procedures for vacuum
sweeper trucks
• Low sulphur fuel use reduced air
pollution since January 2020.
Port capacity
and expansion
Refer to:
Our assets and
infrastructure
Our finances
Our skills &
knowledge
• Keep ahead of
customer demand
through targeted
commercial investment
in shipping channel
widening and
deepening, investment
in cargo handling
equipment and berth
extensions
• Maximise efficiency
within current footprint
by utlising technology.
• Commissioned our ninth container
crane during lockdown
• Commissioned seven new
straddle carriers, including three
hybrid models
• Progressed plans to extend the
container terminal wharves to the
south, using existing port land
• Commenced demolition of a
container terminal shed to create
more cargo storage space.
/ 35
MATERIAL
ISSUES
OUR
STR ATEGIE S
RECENT
PROGRESS
ALIGNED UN
SUSTAINABLE
DEVELOPMENT GOALS
9
Profitability
Refer to:
Our finances
• Provide sustainable
shareholder returns
through revenue
growth from diverse
income streams,
increased trade, new
customers/cargoes,
operational efficiencies
and prudent cost
management
• Retain Standard &
Poor’s (S&P) long-term
issuer credit rating.
• Paid interim dividend of
$40.8 million
• Reviewed special dividend policy to
expedite capital expenditure plans
• Renewed debt facilities
• Diligent attention to costs due to the
economic impact of Covid-19
• S&P raised Port of Tauranga’s long-
term credit rating from BBB+ to A–
in August 2019 and affirmed the A-2
short-term rating.
Workforce
engagement
Refer to:
Our people
Our skills and
knowledge
• Deliver world-leading
productivity through
the teamwork of a
proud, engaged and
satisfied workforce
where talent is
recruited, nurtured,
retained and
recognised.
• 76% of employees took up our 2018
share offer. An estimated 95% of
employees are shareholders
• Employee satisfaction grew to
74% (up from 70%) in our latest
engagement survey
• 240% increase in employee-led
safety interventions across the port
• Nine out of 10 employees agree the
Company consistently demonstrates
a genuine commitment to health
a n d s af et y.
Geographic reach
Refer to:
Our assets and
infrastructure
Our skills and
knowledge
Our relationships
• Invest in infrastructure
for more efficient (and
lower carbon) bigger
ships
• 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.
• Partnership with Tainui Group
Holdings to develop the Ruakura
Inland Port in Hamilton
• Transhipped containers have
increased 225% since 2016.
/ 36
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
MATERIAL
ISSUES
OUR
STR ATEGIE S
RECENT
PROGRESS
ALIGNED UN
SUSTAINABLE
DEVELOPMENT GOALS
9
Community
engagement
Refer to:
Our relationships
• Invest in 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
• Hosted members of the public
for annual port tours
• Provided 16 scholarships to tertiary
students in two schemes
• Increased communication and
engagement through social media
and other channels.
Land transport
networks
Refer to:
Our assets and
infrastructure
Our environment
Our relationships
• Take a collaborative
approach to proactive
land transport
management with
KiwiRail, Waka Kotahi
NZ Transport Agency,
Tauranga City Council,
Bay of Plenty Regional
Council and the
Ministry of Transport.
• Implemented a 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.
Iwi engagement
Refer to:
Our relationships
Our environment
• Create and maintain
relationships with the
three iwi with mana
whenua status in
Tauranga Moana to
protect cultural and
spiritual values and
foster education.
• Investment in harbour health and
education through the Ngā Mātarae
Charitable Trust, including seven
scholarships for 2020
• Awarded nine Turirangi Te Kani
Memorial educational scholarships
for 2020
• Consulted iwi regarding
resource consent applications
for the extension to the container
terminal wharves.
/ 37
CAPITAL #1
OUR RELATIONSHIPS
NURTURING
STRONG
RELATIONSHIPS
Port of Tauranga seeks
long-term, mutually
beneficial relationships with
a diverse range of customers,
communities and business
partners. This helps us plan
for the future.
W
e take pride in our reputation for
a can-do attitude and innovative
approach to typical challenges faced
by our customers. We seek bold solutions to
tricky problems and look for the same qualities
in our suppliers and partners.
We invest in our community, especially in
infrastructure, and take an active interest
in youth development and education. We aim
to be a good neighbour by connecting with,
and listening to, our community.
/ 38
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
FUTURE
FOCUS
Port of Tauranga will protect
our social licence with the local
community, to maintain our
day-to-day operations as well as plan
for the future. We will create and
nurture strong relationships with
our neighbours, interest groups
and regulatory bodies – locally,
regionally and nationally.
MATERIA L
ISSUES
Customer satisfaction and trust
Community engagement
Iwi engagement.
/ 39
Joint venture established with
Tainui Group Holdings to
develop Ruakura Inland Port
Extension of long-term freight
agreement with Kotahi
2,000+
people hosted
on port tours
16
tertiary scholarships
awarded
53%
increase in Facebook
page followers
KOTA H I CON FI R MS
TAURANGA AS
ITS PORT FOR
THE FUTURE
Port of Tauranga has extended our
long-term volume commitment agreement
with Kotahi, New Zealand’s largest
containerised freight exporter.
T
he renewed agreement extends Kotahi’s
commitment to Port of Tauranga for an additional
seven years, through to mid-2031. Kotahi manages
freight on behalf of more than 40 of New Zealand’s
importers and exporters, including its shareholders
Fonterra and Silver Fern Farms.
The collaboration between our two companies gives us
the confidence to invest further in expanding our container
terminal. The alliance has already brought significant
benefits to New Zealand, including the introduction of
more efficient big ships and, with them, a lower carbon
supply chain.
CAPITAL #1
OUR RELATIONSHIPS
/ 40
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
CUSTOMER
RELATIONSHIPS
FOR THE
LO NG -T E R M
Port of Tauranga has long-term
commitments with other key customers.
I
n December 2018, we renewed our operating
agreement with key customer Oji Fibre Solutions,
New Zealand’s biggest producer of pulp, paper and
packaging products. Oji committed to consolidating the
majority of its import and export volumes through Port of
Tauranga for another decade.
Oji has pulp and paper mills in the central North Island
and eastern Bay of Plenty and its relationship with Port of
Tauranga dates back to the 1950s. Oji leases a purpose-
built, 22,000m
2
warehouse at Port of Tauranga’s container
terminal (pictured above) as well as other facilities nearby.
Another purpose-built facility, a coolstore at the Mount
Maunganui wharves, is leased to Tauranga Kiwifruit
Logistics, which handles exports for Zespri International.
We also work closely with the major log exporters,
giving us valuable insight into short and long-term trends
and forecasts.
CONNECTIONS
WITH TAURANGA
MOA NA I WI
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.
T
he Ngā Mātarae Charitable Trust brings together
the Port, the three iwi, the Mauao Trust and the
Tauranga Moana Iwi Customary Fisheries Trust.
It was founded six years ago to balance the impact on the
cultural and spiritual values of local Maori from the harbour
capital dredging project completed in 2016. It is funded
through an annual grant from the Port.
The Ngā Mātarae Charitable Trust offers scholarships
to tertiary 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 2020, scholarships were awarded to seven tertiary
students in their first, second or third year of study.
Port of Tauranga also provides educational scholarships
through the Turirangi Te Kani Memorial scheme,
established 30 years ago in honour of a much-respected
kaumatua. In 2020, the Port provided nine scholarships
under the scheme, for first, second and third years of study.
/ 41
DIVIDENDS PAID
TO 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 $67.4
million over the past year.
S
ince the company was listed on the New Zealand
Stock Exchange in 1992, Quayside has received
a total of more than $860 million in dividends.
In addition, Quayside has used its 54.14% shareholding
in Port of Tauranga to establish a $200 million infrastructure
fund to help pay for regional assets. It was set up in 2008
through a share issue by Quayside and has been used
so far to kickstart projects such as the Opotiki Harbour
transformation, the Tauranga tertiary campus, the Tauranga
marine precinct and the Scion Innovation Hub in Rotorua.
PORT SUPPORT FOR
BAY OF PLENTY
COMMUNITIES
Port of Tauranga sponsorship has helped
provide and protect valued community
infrastructure and equipment.
W
e helped fund the Pilot Bay boardwalk in
Mount Maunganui (pictured), the purchase
of the Bay of Plenty TECT rescue helicopter’s
specialist winch, and floodlighting at the Bay of Plenty
Oval cricket ground. We have also purchased two patrol
boats for the Tauranga Yacht and Power Boat Club
to support young sailors learning on the harbour.
Through a partnership with Tauranga City Council, we also
supported the enhancement of the popular walkways
on Mauao, the landmark mountain at the entrance to
Tauranga Harbour and the port.
CAPITAL #1
OUR RELATIONSHIPS
/ 42
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
DONATING TO
GOOD CAUSES
Port of Tauranga is a long-term supporter
of community organisations making a
difference in the Bay of Plenty. The last
six months, especially, have been incredibly
tough for the charities assisting the most
vulnerable in our community.
P
ort of Tauranga donates money every Christmas
to the Tauranga Community Foodbank. During
the Covid-19 lockdown, the pressure on the
foodbank escalated rapidly, and the Port decided to make
a $25,000 gift. This was on top of the $10,000 donation
made in December.
In addition to our Christmas gift to the foodbank,
Port of Tauranga employees annually nominate another
charity to receive an end-of-year donation. The 2019
recipient was the Waikato/Bay of Plenty Cancer Society.
The $5,000 donation was made in honour of the Port’s
former Corporate Services Manager, Terry James,
who lost his fight with cancer last year.
During and after the lockdown, we were able to donate
some cleaning supplies and protective gear to local
organisations, including anti-viral disinfectant to SPCA
Tauranga and face masks and gloves to local marae
community outreach workers.
BACKING FOR
LOCA L EVENTS
Port of Tauranga supports the creation
of vibrant communities through event
sponsorship. The Company is a founding
sponsor of the biennial Tauranga
Arts Festival.
I
n the past year, the Port has also sponsored
the Ngāi Te Rangi Rangatahi Summit to develop
youth leadership and a wide range of other
community events.
Although Tauranga won’t be hosting any America’s Cup
racing, we were pleased to waive the cargo handling fees
for Emirates Team New Zealand’s race yacht Te Aihe on
her way to and from Europe through our container terminal
(pictured above).
Where local events have been cancelled or postponed
due to Covid-19, we have converted our sponsorship into
a one-off donation.
/ 43
CAPITAL #2
OUR PEOPLE
LONG-TERM
HEALTH
& WELLBEING
Port of Tauranga delivers
world-leading productivity
through the teamwork
of a proud, engaged and
satisfied workforce.
W
e encourage a positive
health, safety and
wellbeing culture and
foster an inclusive and equitable
workplace. We aim to recruit talent,
nurture it, retain it and recognise it.
/ 44
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
LONG-TERM
HEALTH
& WELLBEING
FUTURE
FOCUS
Port of Tauranga will continue to
foster a positive health, safety and
wellbeing culture, where risks are
proactively managed and mitigated.
Our thorough planning, preparation
and practice will help us deal with
any challenges, emergencies or
crises. We will encourage teamwork
and collaboration as the means
to achieve our aspirations.
MATERIA L
ISSUES
Health, safety and wellbeing
Workforce engagement
/ 45
3%
Staff turnover
74%
Job satisfaction increased
(up from 70% in 2017)
53%
of job vacancies
filled internally
LOOKING A FTER
OUR PEOPLE’S
WELLBEING
The Covid-19 pandemic has made the
nurturing of our people’s health and happiness
more important than ever.
O
ur employee wellbeing programme, ShipShape,
provided the perfect platform to promote
physical, mental and emotional health at a
time when people’s work and personal routines were
undergoing immense upheaval.
Regular newsletters helped to promote coping strategies,
share online resources and maintain social connections.
ShipShape was launched in 2018 to bring together
existing and new wellbeing initiatives and is driven by
a committee of team members from across the business.
The programme has bronze accreditation under the
WorkWell framework of Toi Te Ora Public Health.
Team-building events promoted through ShipShape
include the annual Tough Guy and Gal extreme off-road
running event in Rotorua, Steptember and the Aotearoa
Bike Challenge.
P
ort of Tauranga employees can access subsidised
health insurance, free annual health assessments and
skin checks, flu vaccinations, financial advice and an
exercise membership subsidy. The Company also provides
a free, confidential employee a
ssistance programme
through Vitae.
CAPITAL #2
OUR PEOPLE
/ 46
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
76%
of employees participated
in latest staff share
ownership offer
18%
of workforce
is female
2.5
Total Recordable Injury
Frequency Rate per million hours
worked (the same as last year)
FEWER INJURIES
ACROSS PORT
COMMUNITY
Safety is one of our core values and we expect
all of the companies that operate on the port to
share our attitudes to keeping people safe.
W
e identify, understand and minimise hazards.
All near misses and incidents are recorded,
analysed and acted on.
Our Total Recordable Injury Frequency Rate (TRIFR)
remained at 2.5 per million hours worked, the same rate
as last year. Our people suffered one lost-time injury – a
minor lower back strain. We have a good team reporting
culture, and saw a 240% increase in employee-led safety
interventions across the port.
Port of Tauranga and contractors combined achieved
another big improvement with a 25% decrease in the TRIFR
to 4.5 per million ho
urs worked.
We are finalising the design of a comprehensive training
and development programme to ensure we are meeting
our targets for safety and other training.
Port of Tauranga’s prioritisation of health and safety is
reflected in the results of our employee engagement
survey, with nine out of ten respondents agreeing that
the Company consistently demonstrates a genuine
commitment to health and safety.
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
30
60
90
120
150
> 4031 - 4021 - 3011 - 20< 10
Length of Service (Years)
/ 47
CAPITAL #2
OUR PEOPLE
PROTECTING OUR
PEOPLE FROM
DISCRIMINATION
In the past few years, Port of Tauranga
has implemented a suite of policies to help
avoid unlawful or unacceptable behaviour
in the workplace.
T
hese include policies to manage diversity and
inclusion; discrimination, bullying and harassment;
and domestic violence leave.
All have been implemented with training for team leaders
and processes in place to address any complaints.
EM PLOY EE
SATISFACTION
INCR EASES
We conducted our biennial employee
engagement survey in late February and early
March 2020, just before the Covid-19 lockdown.
T
he survey results showed that employee job
satisfaction had grown to 74%, up from 70%
in late 2017.
Focus groups are developing action plans to address
the issues raised, such as improving the way we recognise
excellent performance within teams.
/ 48
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PROMOTING
INCLUSIVITY
AT PORT OF
TAU R A NG A
Port of Tauranga strives to provide a
workplace that recognises and values different
skills, abilities, genders, ages, ethnicities
and experiences.
I
n 2019 we updated and extended our Diversity
and Inclusion Policy to give the Board of Directors,
management and all employees more clearly defined
roles and objectives.
The Board has a gender balance target of at least 40%
females and 40% males to hold director, executive and
manager level positions by 2025.
At the end of the financial year, director, executive
and manager positions held by females was 17%,
with two females joining the Senior Management Team
after year-end.
Overall, 18% of our employees are female.
ATTR ACTING
WOR K ER S OF
A L L AGES
To try and attract younger workers into
port-related careers, Port of Tauranga offers
a range of cadetship, apprenticeship, internship,
scholarship and casual job opportunities.
W
e also seek to retain the skills and experience of
older workers by adapting individual roles when
requested and where possible.
/ 49
CAPITAL #3
OUR SKILLS AND KNOWLEDGE
SKILLS TO
OVERCOME
CHALLENGES
Port of Tauranga takes an
integrated view of the supply
chain, leading us to invest in
other ports, inland freight
hubs, cargo handling expertise,
transport operations and
logistics services.
O
ur collaborative approach
eliminates waste from the
supply chain.
We share our expertise with the
wider industry and government
agencies, taking a leadership role
in national forums.
/ 50
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
SKILLS TO
OVERCOME
CHALLENGES
FUTURE
FOCUS
Port of Tauranga will continue to
invest to match customer demand.
We will maximise efficiency within
our current footprint through
innovation and utilising technology.
We will expand our network through
partnerships, to better serve
New Zealand importers and exporters.
MATERIA L
ISSUES
Customer satisfaction and trust
Port capacity
Geographic reach
/ 51
RECORDS BROKEN
DURING COVID-19
LOCK DOWN
The Tauranga Container Terminal team broke
all previous records for container handling
when the Sally Maersk visited in April.
A
total of 9,367 TEUs were exchanged over
two and a half days before the ship departed
Tauranga for Kaohsiung in Taiwan.
T he exchange completely eclipsed the previous record
exchange of just under 7,000 TEUs. At the same time,
another 1,772 TEUs were exchanged on two other vessels.
The need to keep all workers safe by maintaining
physical distances meant some things took a little longer
than usual, but the teams demonstrated patience,
cooperation and commitment. Four ship-to-shore
cranes were used, with operators achieving a ship rate
of 97.49 moves per hour – an impressive 160% more
efficient than the national average.
The effort was made possible by the Port of Tauranga
and Quality Marshalling teams, our service providers
Independent Stevedoring Limited and C3 Limited,
as well as transport providers. Border agencies Customs
New Zealand and the Ministry for Primary Industries also
ensured the quick processing of imported containers.
34.4
average moves per hour
per container crane
(up from 33.6 moves/hour)
CAPITAL #3
OUR SKILLS AND KNOWLEDGE
/ 52
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
NEW CONTAINER
CRA NE PUT
INTO SERVICE
The commissioning of Port of Tauranga’s
newest and largest container crane was another
epic achievement during lockdown.
T
he commissioning of Port of Tauranga’s newest
and largest container crane was another epic
achievement during lockdown.
Our ninth ship-to-shore gantry crane arrived in parts from
Ireland in mid-February on a special purpose delivery
ship. It was assembled on site and moved several hundred
metres on to the berth in a 48-hour operation.
It started work just 11 weeks after it arrived.
The new crane can load and unload container ships up
to 49 metres or 19 containers wide, compared with the
18 container reach of the Port’s other large cranes.
The project was a great achievement by the Port of Tauranga
team, assemblers Rich Rigging and manufacturers Liebherr,
based in Ireland. The crane was mostly assembled prior
to the Covid-19 Level 4 lockdown, with commissioning
and testing supported remotely by engineers at the
Liebherr factory in Ireland.
The decision was made to move the crane onto the wharf
during lockdown to free up the construction zone for
much-needed storage space for containerised cargo.
It was also safer for the crane to be anchored onto the
rails on the berth in case of stormy weather.
WORKING WITH
ENFORCEMENT
AGENCIES
Port of Tauranga works closely with
New Zealand Police and Customs to detect
any criminal activity within the port gates.
L
ocal police officers undergo a Port of Tauranga
safety induction so they can quickly respond
to any emergencies on site. Regular patrols are
complemented by access to the Port’s security camera
footage when required.
Other government agencies with a regulatory role in
border protection and safety at the port include the
Ministry for Primary Industries, WorkSafe, Maritime NZ
and the Tauranga Harbourmaster.
/ 53
LINKING SHIPPERS
TO NATIONA L
N ET WOR K S
Our network of ports, inland freight hubs and
transport links ensures New Zealand importers
and exporters have ready access to the most
efficient supply chain, no matter their location.
W
e established our market-leading inland freight
hub, MetroPort Auckland, two decades ago,
connecting Auckland-based shippers with
Port of Tauranga by rail.
In 2015 we replicated this successful model in the South
Island by establishing MetroPort Christchurch at Rolleston.
MetroPort Christchurch is linked to our Timaru Container
Terminal by rail, giving importers access to the Christchurch
metropolitan area and exporters access to our fast
international services.
We are now working with Tainui Group Holdings to
establish the Ruakura Inland Port near Hamilton.
PROVIDING THE
MOST EFFICIENT
SUPPLY CHAIN
Dedicated container trains run up to 12 times
per day between Tauranga and our inland
freight hub, MetroPort Auckland.
T
hrough a process we call “triangulation”, imported
containers are railed to Auckland, where trains are
then filled with emptied containers for transfer
to Fonterra in Hamilton. There, the train is reloaded with
cargo bound for export from Tauranga.
Triangulation 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.
CAPITAL #3
OUR SKILLS AND KNOWLEDGE
/ 54
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
STILL NEW
Z EA L A N D’S
MOST EFFICIENT
CONTAINER PORT
The Ministry of Transport monitors the
productivity of New Zealand’s six largest
container ports, through quarterly reviews
10
.
I
n calendar year 2019, Port of Tauranga handled 55%
more containers than Ports of Auckland, and 228%
more cargo tonnes overall
11
.
Port of Tauranga’s average crane rate (containers per
hour per crane) in calendar year 2019 was 34.4, up from
33.6 moves per hour in 2019 and well ahead of the national
average of 30.1 moves per hour.
Tauranga’s ship rate was an average of 83.4 moves per
hour, compared with the national average of 62.3.
In Australia, the top five container ports had an average
crane rate of 30.8 moves per hour in the six months to
June 2019 (the most recent figures available) and an average
ship rate of 64.6 moves per hour
12
.
SHARING OUR
EXPERTISE
Port of Tauranga participates in multiple local
and national forums to address the issues facing
our industry, our communities and the country
as a whole.
D
uring the Covid-19 pandemic, we have been
invited to lend our expertise to a range of
government-related forums and working groups,
including Parliament’s Epidemic Response Committee.
We are heavily involved in port sector safety strategy and sit
on the Covid-19 related Maritime Border Working Group.
We hold leadership roles in the Port Industry Association
and Maritime NZ/WorkSafe joint port sector groups.
We also take an active role in regional and national business
organisations such as Priority One, the Bay of Plenty
region’s economic development agency.
10
https://www.transport.govt.nz/mot-resources/freight-resources/figs/port-container-handling/
11
https://www.transport.govt.nz/mot-resources/freight-resources/figs/trade/tables/
12
https://www.bitre.gov.au/publications/2019/waterline-65
/ 55
CAPITAL #4
OUR ENVIRONMENT
Port of Tauranga
sets, monitors and
continuously improves
operational standards to
protect the environment
and prevent pollution.
W
e demand the same high
standards from other
port users. We monitor
their efforts and regularly share best
practice, including through our
monthly Port Users’ Health, Safety
and Environment Forum.
We also recognise the aspirations
of local hapu and iwi for the moana
and its surrounds, and invest in
harbour health through the Ngā
Mātarae Charitable Trust.
PROTECTING
OUR
ENVIRONMENT
/ 56
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
FUTURE
FOCUS
Port of Tauranga will prevent air
and water pollution through dust
suppression, stormwater management
and spill prevention. We will support
industry efforts to reduce fumigation,
while ensuring the port community is
vigilant in detecting pest incursions that
threaten our way of life. We will reduce
our carbon emissions across all areas
of our business and choose energy
efficient equipment where possible.
MATERIA L
ISSUES
Stormwater
Biosecurity
Air quality
Iwi engagement
/ 57
CAPITAL #4
OUR ENVIRONMENT
R EDUCTION
IN CARBON
EMISSIONS
Port of Tauranga achieved a 15.3% decrease
in greenhouse gas emissions compared with
the 2019 financial year.
A
bout half of the reduction was the result of a
waste minimisation plan that reduced the amount
of waste disposed to landfill. The volume of yard
waste sent to the dump was reduced by 48.5% through
recycling, saving the Port around $215,000 in costs.
This was an important area for us to focus on, as the volume
of waste had grown due to increased wharf sweeping
to prevent dust and debris entering the harbour. A large
proportion of bark swept from the log wharves is already
recycled into compost and other landscape supplies,
so we knew there was an opportunity to do more.
Another significant decrease in total emissions came from
changes to our rail-related emissions. A small reduction
in cargo tonnage, combined with an adjusted calculation
factor, resulted in a 6.7% decrease.
Overall, all areas of our business were able to reduce
their volume of greenhouse gas emissions over the year.
Total emissions were 40,430 tonnes.
We achieved a 4.2% decrease in overall Scope 1
13
emissions, and the intensity (Scope 1, 2 and 3 emissions
per cargo tonne) decreased 7.9%.
Part of our emissions reduction strategy is to “inset” carbon
offsets by investing the money into sustainability initiatives
within our business.
The largest source of our Scope 1 emissions is from
diesel-powered straddle carriers at the container terminal.
We used 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.
3
new hybrid
straddle carriers
15.3%
reduction in total
carbon emissions
10.2%
decrease in annual
truck movements
49.3%
of containers carted in by rail
(up from 48.4%), compared to
8.1% at Auckland
Total Truck Movements
Truck Movements to and from the Port
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2020201920182017
13
Scope 1 measures the direct emissions of our activities on site. Scope 2 measures carbon consumed but not
created (eg electricity from the national grid). Scope 3 measures emissions from other parts of our supply chain.
/ 58
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF
TAU R A NG A
OFFERS LOWEST
CARBON SUPPLY
CHAIN
By far the largest proportion of carbon
emissions in New Zealand’s container supply
chain relates to the “blue water” or ocean-going
component of the cargo journey.
L
andside emissions from road or rail transport
contribute only a small percentage of the
total carbon emissions related to container
imports and exports.
Port of Tauranga is the only New Zealand port able
to handle larger container vessels and give importers
and exporters access to their higher efficiency and
lower emissions.
Port of Tauranga regularly receives visits from vessels with
capacity of around 9,500 TEUs. The carbon footprint for
a 20 foot, 15 tonne dry container (the average weight) from
Shanghai to Port of Tauranga on a ship of that size is smaller
than the same box shipped from Shanghai to Auckland
on a 4,500 TEU vessel. This is true even taking into account
the emissions from transferring the container by rail from
Tauranga to Auckland.
/ 59
CAPITAL #4
OUR ENVIRONMENT
CO
2
e calculations are based on a 20 foot, 15 tonne container shipped on a typical container vessel
size of 3,000-4,999 TEUs (via Auckland) and 8,000+ TEUs (via Tauranga)
BIGGER SHIPS OFFER A LOWER
CARBON SUPPLY CHAIN
Import cargo from
China to South Auckland
C0
2
emission comparison
ORIGIN
China
MEDIUM SHIP
RAIL TRANSPORTRAIL TRANSPORT
BIG SHIP
Wiri
SOUTH AUCKLAND
TOTAL:
2,429 C0
2
e (kg)
MetroPort
AUCKLAND
TOTAL:
1,945 C0
2
e (kg)
IMPORT CONTAINER
1,837
C0
2
e (kg)
2,404
C0
2
e (kg)
Auckland
/ 60
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
Export cargo from
Hamilton to China
C0
2
emission comparison
DESTINATION
China
ORIGIN
Hamilton
MEDIUM SHIPBIG SHIP
ROAD TRANSPORT
RAIL TRANSPORT
EXPORT CONTAINER
1,837
C0
2
e (kg)
2,404
C0
2
e (kg)
Auckland
TOTAL:
2,660C0
2
e (kg)
TOTAL:
1,893 C0
2
e (kg)
/ 61
FOCUS ON AIR AND
WA T E R Q UA L I T Y
Port of Tauranga’s comprehensive
environmental management plan incorporates
air quality, stormwater management,
fumigation of imports and exports, noise,
spill prevention, energy consumption, waste
and asbestos.
A
s part of our new resource consent for stormwater
discharges from our Mount Maunganui wharves,
we are undertaking comprehensive monitoring
of water quality, especially after high rainfall. This will help
inform future improvements of our stormwater management.
In recent years, Port of Tauranga has focussed on improved
housekeeping to prevent dust and debris from entering
the harbour. Sweeper trucks are continuously cleaning the
wharves and storage areas, all of which are sealed to avoid
dust from vehicle movements. A third sweeper truck was
added to the fleet in June 2019, enabling an increase in
sweeping hours and even more efficient dust removal.
Wind fences have been erected on boundaries next to
log handling areas and traffic controls installed to confine
vehicles and other machinery to clean, swept roadways.
Screening chambers are installed on stormwater drains,
and steel fenders and rope bunds at the wharf face prevent
any products accidentally dropping into the harbour.
We have strict procedures in place to avoid spills and any
spills onto land or into water must be reported, managed,
minimised and investigated so improvements can be made.
Recent additions to the Port’s stormwater infrastructure
include automating stormwater drain shut-off valves and
installation of containment structures in high risk areas.
CAPITAL #4
OUR ENVIRONMENT
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
IMPROVING AIR
QUALITY IN AND
AROUND THE PORT
Concerns about air quality in industrial
areas led to the establishment of the
Mount Maunganui Airshed in November 2019.
T
he airshed declaration allows the Bay of Plenty
Regional Council to target air discharges in the
area and introduce new rules to improve air quality.
The council has 10 air quality monitors in the area, testing
a range of parameters.
The council has also proposed changes to its Regional Air
Plan. Some of the changes, referred to as “Plan Change 13”,
have been appealed to the Environment Court. While Port
of Tauranga is not appealing any of the changes, some of its
customers have appealed provisions regarding bulk solid
material handling and we are a party to the proceedings.
The community of Whareroa Marae, located next
to Tauranga Airport not far from the port, has been
campaigning against the presence of heavy industry
in the area, including the operations of some of the
Port’s customers, tenants and neighbours.
Port of Tauranga continues its discussions with the iwi
and hapu involved to ensure port operations have the
least possible impact on neighbouring communities.
Bay of Plenty Regional Council and Tauranga City
Council, whose job it is to balance the needs of residents,
commercial and industrial land users, are developing an
air quality action plan for the marae.
R EDUCING
SHIPPING
POLLUTION
Air pollution from shipping has been reduced
by new low sulphur fuel limits introduced
internationally on 1 January 2020.
A
lthough New Zealand has not yet implemented
the new rules, most international ships visiting
here have already complied.
The sulphur limit was reduced from 3.5% to 0.5% by
mass for marine fuels under Annex VI of the International
Convention for the Prevention of Pollution from Ships
(MARPOL). It aims to reduce carbon emissions and
improve air quality around ports by requiring the use
of low sulphur fuel or exhaust gas cleaning systems,
known as “scrubbers”.
Following supportive submissions from Port of Tauranga
and other New Zealand ports, the Government has agreed
to accede to the convention, meaning domestic cargo
ships will also be required to meet the standards from
early 2022.
According to Bay of Plenty Regional Council air monitoring
data, the new requirement had an immediate effect
on sulphur dioxide levels recorded at the Rata Street
monitoring station, near the port.
2019-01
900
800
700
600
500
400
300
200
100
0
2020-082020-01
Mount Maunganui, Rata Street. Air Pollution from shipping.
Sulphur Dioxide Micrograms per Cubic Metres
Micrograms per Cubic Metres
Year/Month
/ 63
FUMIGA NT
USE REDUCED
Many imported and exported cargoes are
fumigated to kill any pests trying to enter or
leave New Zealand. A common fumigant is
methyl bromide, an odourless gas that is toxic
to humans and damaging to the ozone layer.
T
he 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
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 close to 90% of log fumigations and 100% of
container fumigations.
Genera closely monitors the fumigation activity and
publishes the results on its website
14
. An independent
contractor also audits fumigation activities to ensure
compliance, and Bay of Plenty Regional Council monitors
for methyl bromide indicators at four air quality monitoring
stations on the port boundary.
Forestry exporters are working to reduce the amount of
methyl bromide required. Last year, 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.
The amount of methyl bromide used at Port of Tauranga
has decreased from 243 tonnes in 2017 to 154 tonnes
in the year to June 2020 (a 36.6% decrease).
CAPITAL #4
OUR ENVIRONMENT
14
https://genera.co.nz/our-services/
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PR EVENTING
PESTS FROM
ENTER ING
NEW ZEALAND
Port of Tauranga’s award-winning
biosecurity excellence partnership has
again proved its worth, helping to catch
a potential pest incursion.
A
solitary, dead spotted lantern fly was found by
a worker unpacking a container at a Tauranga
transitional facility. He recognised it as one of
the top 12 most unwanted pests featured in the annual
calendar
15
, published and distributed by the partnership.
The spotted lantern fly eats everything in sight and those
who work on the port or in transitional facilities are trained
to look for it and its egg masses, which look like grey putty.
The biosecurity excellence partnership involves Port of
Tauranga, the Ministry for Primary Industries, Kiwifruit Vine
Health, primary produce organisations, scientists and local
government. It aims to build a port community prepared to
prevent any bug invasions through the port.
As well as producing the calendar and other publications,
the partnership runs an annual Biosecurity Week to raise
awareness among the port community.
Port of Tauranga also supports the Tauranga Moana
Biosecurity Capital initiative, which seeks to raise biosecurity
awareness throughout the wider western Bay of Plenty.
PROTECTING
BIODIVERSITY IN
AND AROUND THE
HA R BOUR
Tauranga Harbour is home to an abundance
of flora and fauna and is an important
kaimoana or seafood gathering place.
P
ort of Tauranga, with local iwi, has sponsored pipi
bed monitoring and seeding work in the sand
banks of the inner harbour.
Maungatapu Primary School pupils are getting a helping
hand to protect native crabs in Tauranga Harbour thanks to
Port of Tauranga.
The Pāpaka project is supported by Port of Tauranga and
local iwi Ngāi Te Rangi and Ngāti Ranginui. A $5,000
donation towards science and technology resources will
help the school pupils research and protect the creatures
that live in Tauranga Moana, with an emphasis on the native
Pāpaka o Rangataua.
The pāpaka are iconic to the tangata whenua of the school
community but are at risk from invasive species such as the
Asian paddle crab.
15
https://www.kvh.org.nz/vdb/document/104875
/ 65
CAPITAL #5
OUR ASSETS AND
INFRASTRUCTURE
Port of Tauranga’s
investment in capacity to
accommodate bigger ships
has proven a successful
strategy for growth.
W
e 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.
PROVEN
GROWTH
STRATEGY
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
FUTURE
FOCUS
Port of Tauranga is now planning for
future cargo growth. We will expand
capacity at our container terminal
through more efficient use of space,
the introduction of electric stacking
cranes and extending the wharves
to a fourth berth.
We will continue to grow our national
network through road, rail and sea
connections to intermodal freight
hubs in key cargo catchments in the
North and South Islands.
MATERIA L
ISSUES
Port capacity
Geographic reach
/ 67
INCR EASING
CON TA I N ER
HA NDLING
CA PACIT Y
Our ninth and largest container crane was
delivered in February for assembly on site.
W
e were able to complete its commissioning
during lockdown with the support of
assemblers Rich Rigging and the Liebherr
crane factory in Ireland.
We also purchased seven new straddle carriers to serve the
new crane. They include three hybrid models, which are
more fuel efficient than our current diesel electric models.
CHOOSING
ENERGY EFFICIENT
VEHICLES
Our modern fleet of ship-to-shore gantry cranes
all have sophisticated electric motors that
re-generate up to 700 kw of electricity when
lowering a container.
E
xcess electricity can be made available
to adjacent cranes lifting containers, or fed
back into the terminal to power refrigerated
container connections.
As well as the recent purchase of our first hybrid straddle
carriers, we are choosing electric and hybrid models,
whenever possible, for our light vehicle fleet. Suitable
options are increasingly available.
Ninth crane added to container
terminal
Seven new straddle carriers,
including three hybrid models
225%
increase in transhipped
containers since 2016
1,251,741
TEUs, a 1.5% increase
1,515
ship visits
(down 9.7%)
CAPITAL #5
OUR ASSETS AND
INFRASTRUCTURE
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
SMOOTHING
TRAFFIC FLOWS
AT THE PORT
AND BEYOND
A vehicle booking system introduced at our
container terminal last year has improved
traffic flows.
T
he 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.
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.
We continue to lobby for state highway designation for
Totara Street, a busy thoroughfare that serves our Mount
Maunganui wharves and the surrounding industrial and
residential areas. A state highway designation would help
fast-track safety improvements, additional capacity and
intersection upgrades.
STRATEGIC
LA ND HOLDINGS
Port of Tauranga owns 190 hectares of land
on both sides of Tauranga Harbour, with about
40 hectares still available for development.
P
ort-owned land adjacent to the existing container
wharves will be converted from cargo storage to
a fourth container vessel berth.
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 recently removed
a cargo shed to make room for assembling our newest
container crane and that land has now been converted
into container storage.
At the Mount Maunganui wharves, we still have storage
space available to accommodate growing cargoes,
including a secure area for marshalling imported cars.
/ 69
CAPITAL #6
OUR FINANCES
In 1992, Port of Tauranga
issued shares to the public
at $1.05 each, with a total
market capitalisation of
$79 million. Today’s market
capitalisation is more than
$5 billion.
J
ust over 54% of the Company is
owned by regional ratepayers
through the Bay of Plenty Regional
Council’s investment arm, Quayside
Holdings. Port of Tauranga dividends
are used by Quayside towards its
contribution of 25% of the Council’s
annual revenues.
Port of Tauranga is also the city’s
largest ratepayer.
GROWTH
THROUGH
DIVERSITY
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
FUTURE
FOCUS
Port of Tauranga will provide
sustainable shareholder returns
through revenue growth from diverse
income streams and will actively seek
new customers and cargoes. We will
keep a close eye on costs and target
operational efficiencies in all areas
of our business.
Through our cornerstone
shareholder, Quayside Holdings,
we will share the financial benefits
of the Port’s success with residents
and ratepayers of the Bay of Plenty.
MATERIA L
ISSUES
Profitability
Community engagement
/ 71
RAISED
CREDIT RATING
In August, ratings agency Standard & Poor’s
(S&P) raised its long-term issuer credit rating
on Port of Tauranga Limited from BBB+ to
A-. S&P also affirmed Port of Tauranga’s A-2
short-term rating.
T
his upgrade to our long-term credit rating by S&P
reflects the Port’s consolidation of its competitive
position in New Zealand, on the back of strategic
investments and constrained competitors.
CAUTION
DURING COVID-19
LOCK DOWN
Port of Tauranga comfortably paid our interim
dividend of $40.8 million in March 2020, just
before the lockdown, thanks to a strong balance
sheet and strong operating cashflows from
diverse revenue streams.
P
ort of Tauranga’s Board of Directors believed
it prudent to withdraw the full year profit guidance
due to the widespread uncertainty about the
impact of Covid-19 and the Government measures against
the pandemic.
Many of the Port’s major exports, including meat and
dairy products, were classified as essential cargoes under
Level 4 lockdown. Imports of oil products, food and
medical supplies were also essential cargoes, and the
kiwifruit export season got under way as scheduled
in mid-March.
However, log and other forestry exports were considered
a non-essential cargo despite increasing demand from
major markets such as China.
Group Net Profit After Tax
$90.0
million (decreased 10.5%
from $100.6 million)
13.4
cents earnings per share
(2019: 15.0 cents)
Revenue
$302.0
million (from $313.3 million)
12.4
cents per share
ordinary dividends
$166.5
million Group EBITDA
16
$14.1
million earnings from
Subsidiary and Associate
Companies
CAPITAL #6
OUR FINANCES
16
EBITDA = earnings before interest, tax, depreciation and amortisation. Refer to page 128 for more detail.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
CRUISE SHIP
SEASON’S
EA R LY END
The summer cruise ship season came to an
early end, with 16 cruise ship visits to Tauranga
cancelled as a result of a Government ban.
W
hile the loss of income was relatively small
for Port of Tauranga, the cancellations had
a significant impact on the Bay of Plenty
businesses catering to international tourists.
A total of 106 ships visited in the 2019/2020 summer
season, compared with 116 the previous year.
DEBT FACILITIES
INCR EASED
AND EXTENDED
Port of Tauranga has total committed debt
facilities of $660 million, of which $172 million
is undrawn. Only $5 million of these debt
facilities mature in 2020.
J
ust prior to the pandemic, the Company began
negotiations to increase and extend debt facilities
maturing in January 2021. Our banking partners were
very supportive and we experienced no issues with the
routine extension of the facilities.
WE SAY
FA R EWEL L TO
STEVE GR AY
Port of Tauranga’s award-winning
Chief Financial Officer, Steve Gray, has
retired after 13 years in the role and 33 years
with the Company.
S
teve was instrumental in the Company’s
success and oversaw outstanding returns for
its shareholders. He led the team that negotiated
the original long-term freight agreement with Kotahi that
prompted the Port’s expansion to accommodate
bigger ships.
In 2017, Steve was named CFO of the Year in the Deloitte
Top 200 Business Awards. He is continuing his association
with Port of Tauranga through governance roles on its
Associate Company Boards.
/ 73
J
ulia 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,
Meridian Energy 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.
K R ELLIS
BCA Economics (1st Class Honours),
BE Chemical (1st Class Honours)
Independent Director
BOARD OF DIRECTORS
D
avid Pilkington was a member of
Fonterra’s senior executive team.
He holds directorships in Northport
Limited, Port of Tauranga Trustee Company
Limited and PrimePort Timaru Limited and chairs
Douglas Pharmaceuticals 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
lastair 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.
D A PILKINGTON
BSc, BE, GradDip Dairy Science &
Technology, CFInstD, Chair
Independent Director
K
im Ellis is Chair of Metlifecare Limited,
NZ Social Infrastructure Fund Limited,
Green Cross Health, 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.
J C HOARE
BCom, FCA, CMInstD
Independent Director
A R LAWRENCE
BCA (Business Admin)
Independent Director
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
S
ir 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 A NZ 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
oug Leeder is Chair of Bay of
Plenty Regional Council. He is a
dairy 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 Subsidiary East
Bay Energy Trust, Chair of NZ Dairy Group
and Dairy Insight, and Director of DEXCEL.
Doug joined the Board in October 2015.
A
lison 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.
A M ANDREW
BE Chemical & Materials (1st Class Honours),
MBA (Distinction), FEngNZ, CMInstD
Independent Director
SIR R A MCLEOD
LLB, BCom, FCA
D W LEEDER
/ 75
LEONARD SAMPSON
Chief Operating Officer
SENIOR MANAGEMENT TEAM
MARK CAIRNS
Chief Executive
M
ark has been Chief Executive of Port of Tauranga
Limited since 2005.
He was previously Chief Executive of Toll Owens
Limited and Owens Cargo Company Limited.
He has a First Class Honours Degree in Civil Engineering,
a degree in Business Studies and a Master of Management.
He is a Fellow of Engineering New Zealand and a member of
the Institute of Directors. In 2019, Mark received the prestigious
Caldwell Partners Leadership Award from the Institute of
Finance Professionals.
S
imon was appointed Chief Financial Officer of Port of
Tauranga Limited in 2020. He has been with the Company
since 2003 and was previously IT/Finance Manager.
He is a chartered accountant and has a First Class Honours Degree
in a Bachelor of Management Studies.
Prior to joining Port of Tauranga, Simon was Manager – Internal
Audit for PricewaterhouseCoopers in Singapore. He also held
positions at Ernst & Young in Singapore and Auckland.
SIMON KEBBELL
Chief Financial Officer & Company Secretary
DAN KNEEBONE
Property & Infrastructure Manager
L
eonard was appointed to the newly created role
of Chief Operating Officer in September 2019.
Leonard was Port of Tauranga’s Commercial
Manager from 2013, when he joined the Company
from the role of General Manager – Sales at KiwiRail.
He also held senior roles at Carter Holt Harvey and
Mainfreight.
D
an has overall responsibility for both
the property portfolio and engineering
interests of the Port.
Dan joined the Port of Tauranga Senior
Management Team in January 2013. He was
previously National Property and Development
Manager for Bunnings Limited and has
extensive commercial property experience.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
DAN KNEEBONE
Property & Infrastructure Manager
BLAIR HAMILL
Commercial Manager
PAT KIRK
Group Health & Safety Manager
P
at joined the Company in 2013 and the
Senior Management Team in March
2020, reflecting the importance of health
and safety to our ongoing success.
Pat has three decades of extensive strategic and
applied industry health and safety experience
across a wide range of sectors. Pat is Chair of
the Port Industry Health & Safety Committee
and a member of various national health and
safety organisations, including the WorkSafe/
ACC National Industry Prevention Working
Group, the WorkSafe/Maritime NZ Industry
Advisory Group (Port Sector) and the Business
Leaders’ Health & Safety Forum.
B
lair oversees port operations, marketing
and new business opportunities.
He joined the Company in July 2020 after
20 years at Zespri International, the world’s largest
kiwifruit marketer. Blair held a variety of senior roles
at Zespri, including Global Commercial Manager
and, most recently, Chief Global Supply Officer.
Blair is a former chartered accountant.
ROCHELLE LOCKLEY
Communications Manager
MELANIE DYER
Corporate Services Manager
M
elanie joined Port of Tauranga Limited in
August 2020 from Trustpower Limited, where
she was General Manager, People and Culture.
Prior to joining Trustpower in 2014, Melanie spent 11 years
at Hydro Tasmania.
Melanie has a Master’s Degree in organisational
development and leadership studies.
R
ochelle will join the Company’s Senior Management
Team in September 2020.
Rochelle, a former journalist, held senior
communications roles in tourism and telecommunications
in New Zealand and overseas before establishing a
communications consultancy in 2005.
/ 77
CONSOLIDATED
FINANCIAL
STATEMENTS
Contents
Directors’ Responsibility Statement 79
Independent Auditor's Report 80
Consolidated Income Statement 83
Consolidated Statement of Comprehensive Income 84
Consolidated Statement of Changes in Equity 85
Consolidated Statement of Financial Position 86
Consolidated Statement of Cash Flows 87
Reconciliation of Profit for the Period to Cash Flows From Operating Activities 88
Notes to the Consolidated Financial Statements 89
Corporate Governance Statement 120
Financial and Operational Five Year Summary 128
Company Directory 130
FOR THE YEAR ENDED 30 JUNE 2020
PORT OF TAURANGA LIMITED AND
SUBSIDIARIES
/ 78
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
/ 78
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 2020.
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 2020.
The financial statements were authorised for issue for and on behalf
of the Directors on 27 August 2020.
..........................................................
Chair
..........................................................
Director
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
DIRECTORS’ RESPONSIBILITY STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
/ 79
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,
Brent Manning, 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 83 to 88, that comprise the consolidated statement
of financial position as at 30 June 2020, 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 2020, 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 (NZ IFRS) and International Financial
Reporting Standards (IFRS).
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the Auditor-General’s Auditing Standards, which incorporate Professional and
Ethical Standard 1: International 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.
In addition to the audit, our firm has also provided other services to the company in relation to the data & analytical review of the
depreciation rates for property, plant and equipment. In addition, subject to certain restrictions, partners and employees of our firm
may deal with the company on normal terms within the ordinary course of trading activities of the business of the company. These
matters have not impaired our independence as auditor of the company. Other than these engagements and arm’s length transactions,
and in our capacity as auditor acting on behalf of the Auditor-General, we have no relationship with, or interest in, the company.
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 in the current period. We summarise below those matters and our key audit procedures to address those matters
in order that the shareholders as a body may better understand the process by which we arrived at our audit opinion. Our procedures
were undertaken in the context of and solely for the purpose of our statutory audit opinion on the consolidated financial statements as
a whole and we do not express discrete opinions on separate elements of the consolidated financial statements.
The Key Audit MatterHow The Matter Was Addressed in Our Audit
Value of property, plant and equipment
Refer to note 10 of the financial statements.
The Group has property, plant and equipment of $1,584 million.
The Group has a policy of valuing Land; Buildings; Wharves and
Hardstanding; and Harbour Improvements at fair value (Revalued
PP&E). Full valuations are obtained (by an independent valuer)
on an annual basis for Land and Buildings and every 3 years on
Wharves and Hardstanding, and Harbour Improvements, unless
there is an indicator that the fair value has changed significantly.
Prior to this financial year the last full independent valuation on
Wharves and Hardstanding, and Harbour Improvements were
carried out on 30 June 2018.
The independent valuers have undertaken their valuations with
reference to Covid-19 and the valuation uncertainty involved in
assessing the fair value of the assets in the current economic
environment. (Refer to Note 2 on page 90.)
The assumptions that have the largest impact on the valuations are:
– The impact on the capitalisation rate, rental growth rate and
terminal yield impacting the value of land and buildings.
– The estimated future cash flows and expected rate of return
from the land and buildings.
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 and Buildings:
– Where valuation expert(s) are engaged, considering the
competence, objectivity and independence of the valuer;
– 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.
To the Shareholders of Port of Tauranga Limited
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
The Key Audit MatterHow The Matter Was Addressed in Our Audit
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.
The Covid-19 pandemic has created significant additional risks
across the business, particularly in the valuation of property,
plant and equipment. All forward looking assumptions are
inherently more uncertain during these unprecedented times.
While this key audit matter is consistent with last year, the
underlying audit risk has increased which impacted the extent
and nature of audit evidence that we had to gather.
– For Wharves and Hardstanding, and Harbour
Improvements:
– 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.
– We also considered the appropriateness of the accounting
policies and disclosures in the financial statements.
– Based on the above procedures there were no matters
to report.
Investment in Coda
Refer to note 14 of the financial statements.
The Group has $127 million invested in businesses in which
it has significant influence or joint control over the operation
of those businesses and they are equity accounted in the
financial statements.
As mentioned in Note 2 on page 90, the Group identified
an indicator of impairment in relation to its investment in one
of its equity accounted investees, the Coda Group Limited
Partnership (Coda), as a result of the impact of Covid-19.
The Group therefore performed an impairment test, utilising
a detailed cash flow model that discounted the next five years
of Coda’s cash flows and applied a terminal growth rate to
the cash flows expected in Year 5. As a result the Group has
recorded an impairment charge of approximately $7 million
against the carrying value of its investment in Coda.
The investment in Coda is considered a key audit matter
because of the judgement involved in determining the future
cash flows of the business and the impact any impairment
may have on reported profit.
Our procedures included the following:
– We challenged the basis for determining the assumptions
used in estimating the future cash flows of the Coda
business. We compared the cash flow forecasts to approved
budgets and where possible we corroborated information
for inputs against historical results and third-party contracts;
– We performed sensitivity analysis on the key assumptions
used, risk weighting those assumptions with higher
estimation uncertainty;
– We used our valuation specialists to assess the discount
rate and terminal growth rate used in the cash flow model;
– We assessed whether the approach to estimating the future
cash flows was reasonable and in accordance with the
relevant accounting standard;
– We considered the impact of Covid-19 on the estimates
used within the valuations;
– We read and assessed the disclosures made in the financial
statements in relation to the Group’s investment in Coda; and
– Based on the above procedures there were no matters
to report.
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 79 and 120 to 130, 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 NZIFRS and IFRS, 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.
/ 81
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.
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.
Brent Manning
KPMG
On behalf of the Auditor-General
Wellington, New Zealand
27 August 2020
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
Note
2020
NZ$000
2019
NZ$000
Total operating revenue 4301,985313,263
Contracted services for port operations
(61,363)(63,775)
Employee benefit expenses
5(4 0,110)(38,275)
Direct fuel and power expenses
(10,195)(10,752)
Maintenance of property, plant and equipment
(11,543)(11,979)
Other expenses
(16,547)(15,312)
Operating expenses(139,758)(140,093)
Results from operating activities162,227173,170
Depreciation and amortisation
10, 11, 12(29,746)(27,585)
Impairment of property, plant and equipment
0(499)
Reversal of previous revaluation deficit
1750
(29,571)(28,084)
Operating profit before finance costs, share of profit from Equity Accounted Investees and taxation132,656145,086
Finance income
7310417
Finance expenses
7(18,840)(18,594)
Net finance costs7(18,530)(18,177)
Share of profit from Equity Accounted Investees
14(c)11,3 0 58,100
Impairment of investment in Equity Accounted Investees
14(b)(6,986)0
4,3198,100
Profit before income tax118,445135,009
Income tax expense
8(28,418)(34,432)
Profit for the period 90,027100,577
Basic earnings per share (cents)
1713.415.0
Diluted earnings per share (cents)
1713.214.8
These statements are to be read in conjunction with the notes on pages 89 to 119.
/ 83
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
2020
NZ$000
2019
NZ$000
Profit for the period
90,027100,577
Other comprehensive income
Items that may be reclassified to profit or loss:
Cash flow hedge – changes in fair value*
(7,555)(8,942)
Cash flow hedge – reclassified to profit or loss*
2,3411,629
Share of net change in cash flow hedge reserves of Equity Accounted Investees
(186)(308)
Items that will never be reclassified to profit or loss:
Asset revaluation, net of tax*
36,87672,129
Share of net change in revaluation reserve of Equity Accounted Investees
216448
Total other comprehensive income
31,69264,956
Total comprehensive income121,719165,533
*Net of tax effect as disclosed in notes 8 and 9.
These statements are to be read in conjunction with the notes on pages 89 to 119.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
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 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
Profit for the period
000090,02790,027
Other comprehensive income
00(5,400)37,092031,692
Total comprehensive income00(5,400)37,09290,027121,719
Decrease in share capital
(705)0000(705)
Dividends paid during the period (refer to note 16)
0000(124,486)(124,486)
Equity settled share based payment accrual (refer
to note 16)
01,1670001,167
Shares issued upon vesting of Management Long
Term Incentive Plan
764(739)00(25)0
Total transactions with owners in their capacity
as owners
5942800(124, 511)(124,024)
Balance at 30 June 202069,8164,513(22,375)1,050,22361,4031,163,580
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
These statements are to be read in conjunction with the notes on pages 89 to 119.
/ 85
Note
2020
NZ$000
2019
NZ$000
Assets
Property, plant and equipment
101,584,8651,531,211
Right-of-use assets
1125,0110
Intangible assets
1218,97919,028
Investments in Equity Accounted Investees
14126,984132,731
Receivables
012
Total non current assets 1,755,8391,682,982
Cash and cash equivalents
8,5653,903
Receivables and prepayments
1551,39960,610
Inventories
1,3831,366
Total current assets61,34765,879
Total assets1, 817,18 61,748,861
Equity16
Share capital
69,81669,757
Share based payment reserve
4,5134,085
Hedging reserve
(22,375)(16,975)
Revaluation reserve
1,050,2231,013,131
Retained earnings
61,40395,887
Total equity1,163,5801,165,885
Liabilities
Loans and borrowings
18229,458124,213
Lease liabilities
1124,8100
Derivative financial instruments
1929,35920,895
Employee benefits
53,1571,783
Deferred tax liabilities
965,34966,389
Total non current liabilities352,133213,280
Loans and borrowings
18259,000322,000
Lease liabilities
115920
Derivative financial instruments
1901,138
Trade and other payables
2132,06633,688
Revenue received in advance
93260
Employee benefits
57242,178
Income tax payable
8,99810,432
Total current liabilities301,473369,696
Total liabilities653,606582,976
Total equity and liabilities1, 817,18 61,748,861
Net tangible assets per share (dollars per share)1.701.71
For and on behalf of the Board of Directors who authorised these financial statements for issue on 27 August 2020.
................................................. ....................................................
Chair Director
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
These statements are to be read in conjunction with the notes on pages 89 to 119.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
Note
2020
NZ$000
2019
NZ$000
Cash flows from operating activities
Receipts from customers
321,275316,172
Interest received
273415
Payments to suppliers and employees
(151,007)(151,448)
Taxes paid
(35,293)(34,680)
Interest paid
(18,111)(18,270)
Net cash inflow from operating activities117,137112,189
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
6858
Finance lease payments received, including interest
1313
Repayment of advances from Equity Accounted Investees
01,000
Dividends from Equity Accounted Investees
1410,0969,840
Purchase of property, plant and equipment
(38,239)(41,125)
Purchase of intangible assets
(587)(1,058)
Interest capitalised on property, plant and equipment
(451)(274)
Total net cash used in investing activities(29,10 0)(31,546)
Cash flows from financing activities
Proceeds from borrowings
130,26544,250
Dividends paid
16(124,486)(122,440)
Repurchase of shares
(716)(1,386)
Repayment of borrowings
(88,004)(3,000)
Repayment of lease liabilities
(434)0
Net cash used in financing activities(83,375)(82,576)
Net increase/(decrease) in cash held4,662(1,933)
Add opening cash brought forward
3,9035,836
Ending cash and cash equivalents8,5653,903
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
These statements are to be read in conjunction with the notes on pages 89 to 119.
/ 87
Note
2020
NZ$000
2019
NZ$000
Profit for the period90,027100,577
Items classified as investing/financing activities:
Finance lease interest revenue
7(2)(2)
Loss on sale of property, plant and equipment
6840
6638
Add/(less) non cash items and non operating items:
Depreciation
10, 112 9,11027,039
Amortisation expense
12636546
Impairment of property, plant and equipment
100499
Decrease in deferred taxation expense
9(5,441)(1,017)
Ineffective portion of change in fair value of cash flow hedge
(1)1
Amortisation of interest rate collar premium
8686
Reversal of previous revaluation deficit
(175)0
Share of net profit after tax retained by Equity Accounted Investees
14(c)(11,3 0 5)(8,100)
Impairment of investment in Equity Accounted Investees
14(b)6,9860
Increase in equity settled share based payment accrual
1,1672,038
21,06321,092
Add/(less) movements in working capital:
Change in trade receivables and prepayments
9, 211 (10,606)
Change in inventories
(17)(964)
Change in income tax payable
(1,434)769
Change in trade, other payables and revenue received in advance
(1,779)1,283
5,981(9,518)
Net cash flows from operating activities117,137112,189
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
RECONCILIATION OF PROFIT FOR THE PERIOD TO CASH FLOWS
FROM OPERATING ACTIVITIES
FOR THE YEAR ENDED 30 JUNE 2020
These statements are to be read in conjunction with the notes on pages 89 to 119.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
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 2020 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);
• impairment assessment of investments in Equity Accounted Investees (refer to note 14); and
• valuation of share rights granted (refer to note 23).
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).
Financial Instruments
Financial Assets – Classification and Subsequent Measurement
On initial recognition, a financial asset is classified as measured at: amortised cost; Fair Value Through Other Comprehensive Income
(FVOCI) – debt investment; FVOCI – equity investment; or Fair Value Through Profit and Loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing
financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
/ 89
2 BASIS OF PREPARATION (CONTINUED)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all
derivative financial assets.
Financial Liabilities – Classification, Subsequent Measurement and Gains and Losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified
as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised
in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
New and Amended Accounting Standards Adopted
The following new standard has been adopted and applied in preparing these financial statements:
• NZ IFRS 16 Leases (refer to note 11).
There are no new or amended accounting standards and interpretations that are issued but not yet adopted that are expected to have
a material impact on the Group.
Covid-19
The Group has considered the potential impact of Covid-19 as part of its impairment testing of assets on its statement of financial position.
The Group’s services are considered essential services and as such, the Group continued trading throughout all alert levels, including
through the recent full lockdown. This has limited the impact of Covid-19 and the Government’s response on the Group. The table below
provides an assessment of the impact of Covid-19 on the Group’s assets. It is acknowledged that there is significant uncertainty in how
Covid-19 will impact the New Zealand economy and the Group in the future. This assessment is effective as at 30 June 2020 and has made
use of all available information at that time.
AssetCovid-19 Assessment
Receivables and
Prepayments
The Group has increased its provision for expected credit losses as a result of the deteriorating outlook for
the New Zealand economy. Refer to note 20(a) for more details.
Property, Plant and
Equipment
The Group’s property, plant and equipment (excluding plant and equipment) are held at fair value, and
land and buildings have been revalued as at 30 June 2020 following an independent valuation by Colliers
International New Zealand Limited (Colliers). Colliers have reported their valuation on the basis of “material
valuation uncertainty”, given the unprecedented set of circumstances on which to base a judgement.
Refer to note 10 for more detail on valuation inputs.
Right-of-use Assets
Covid-19 has not had any impact on any of the lease agreements underpinning these right-of-use assets.
The Group has not sought any rent relief from landlords or changed its view on likely contract extensions.
Investment in Equity
Accounted Investees
An impairment test was performed on Coda Group Limited Partnership due to the impact of Covid-19 on
its operations. Refer to note 14 for more detail. There were no impairment indicators for the remaining
Equity Accounted Investees.
Tax Depreciation on Buildings
On 25 March 2020 the Government enacted the Covid-19 Response (Taxation and Social Assistance Urgent Measures) Act (Act). The Act
reintroduces depreciation deductions on industrial and commercial buildings with effect from the start of the 2021 tax year. Refer to note 9
for more detail and the impact of this law change on the financial statements.
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.
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3 SEGMENTAL REPORTING (CONTINUED)
The Group segment results are as follows:
2020
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)
266,29329,6284,96600300,887
Inter segment revenue
06913,0040(13,073)0
Total segment revenue266,29329,69717, 9700(13,073)300,887
Other income and expenditure:
Share of profit from Equity Accounted
Investees
00011,305011,305
Impairment of investment in Equity Accounted
Investees
000(6,986)0(6,986)
Interest income
0003100310
Other income
0001,27301,273
Interest expense
000(18,840)0(18,840)
Depreciation and amortisation expense
00(946)(28,800)0(29,746)
Other unallocated expenditure
00(13,513)(139,318)13,073(139,778)
Income tax expense
00(983)(27,435)0(28,418)
Total other income and expenditure
00(15,442)(208,491)13,073(210,860)
Total segment result266,29329,6972,528(208,491)090,027
(1)
Operating costs are not allocated to individual business segments within the Parent Company.
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
0008,10008,100
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)(207,730)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.
/ 91
4 OPERATING REVENUE
2020
NZ$000
2019
NZ$000
Revenue from contracts with customers
Container terminal revenue
178,394176,473
Multi cargo revenue
52,58460,948
Marine services revenue
40,28143,367
271,259280,788
Other revenue
Rental revenue
29,62828,769
Other income
1,0983,706
Total operating revenue301,985313,263
Policies
Revenue comprises the fair value of the consideration received or receivable for the sale of 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. 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:
• Container terminal revenue: relates to the handling, processing, storage and rail containers. Contracts are entered
into with shipping lines and cargo owners. The primary performance obligations identified include the load and
discharge of containers (which include the services provided to support the handling of containers). Container
terminal revenue is recognised over time based on the number of containers exchanged (an output method). This
method is considered appropriate as it allows revenue to be recognised based on the Group’s effort to satisfy the
performance obligation. The transaction price is determined by the contract and adjusted by variable consideration
(rebates). Rebates are based on container volume and the Group accounts for the variable consideration using
the expected value method. The expected value is the sum of probability weighted amounts in a range of possible
consideration amounts. The Group estimates container volumes based on market knowledge and historical data.
• Multi cargo revenue: relates to the wharfage and storage of bulk goods. Contracts are entered into with cargo
owners. The stevedoring services are provided by a third party. Multi cargo revenue is recognised over time, from
the point that cargo transferred from vessel to land (or vice versa), being an output method. The transaction price for
multi cargo services is determined by the contract.
• Marine services revenue: relates directly to the visit of a vessel to the port and includes fees for pilotage, towage
and mooring. Contracts are entered into with vessel operators. The performance obligations identified include vessel
arrival, departure and berthage. Revenue is recognised over time, based on time elapsed (berthage), being an input
method. The transaction price for marine services is determined by the contract.
• 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.
• Other income: is recognised when the right to receive payment is established.
/ 92
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
5 EMPLOYEE BENEFIT EXPENSES
2020
NZ$000
2019
NZ$000
Wages and salaries
38,09636,334
ACC levy
291261
KiwiSaver contribution
1,4361,421
Medical subsidy
287259
Total employee benefit expenses4 0,11038,275
Employee Benefit Provisions
Long
Service
Leave
NZ$000
Profit
Sharing and
Bonuses
NZ$000
Total
NZ$000
Balance at 30 June 2019
1,7832,1783,961
Additional provision
4822,4142,896
Unused amounts reversed
(65)0(65)
Utilised during the period
(88)(2,823)(2 ,911)
Balance at 30 June 20202,1121,7693,881
Total current provisions0724724
Total non current provisions2,1121,0453,157
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 –
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.
6 AUDIT FEES
Included in other expenses are fees paid to the auditors:
2020
NZ$000
2019
NZ$000
Audit and review of financial statements
201165
Treasury function review
033
Data analytics review of GST and fixed assets
1312
Hedge accounting policy review
07
Total audit and other services fees214217
/ 93
7 FINANCIAL INCOME AND EXPENSE
2020
NZ$000
2019
NZ$000
Interest on lease
22
Interest income on bank deposits
68123
Interest on advances to Equity Accounted Investees
205292
Ineffective portion of changes in fair value of cash flow hedges
350
Finance income310417
Interest expense on borrowings
(18,209)(18,737)
Less:
Interest capitalised to property, plant and equipment
451274
(17,75 8)(18,463)
Interest expense on lease liabilities
(996)0
Ineffective portion of changes in fair value of cash flow hedges
0(1)
Amortisation of interest rate collar premium
(86)(86)
Currency option expense
0(44)
Finance expenses(18,840)(18,594)
Total net finance costs(18,530)(18,177)
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 on financial assets carried at
amortised cost is calculated 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 measured at amortised cost and 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 3.25% for the
current period (2019: 3.83%).
Total interest capitalised to property, plant and equipment, was $0.451 million for the current period (2019:
$0.274 million).
/ 94
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
8 INCOME TAX
Components of Tax Expense
2020
NZ$000
2019
NZ$000
Profit before income tax for the period118,445135,009
Income tax on the surplus for the period at 28.0 cents
33,16537,803
Tax effect of amounts which are non deductible/(taxable) in calculating taxable income:
Tax effect on change to depreciation rate for buildings (refer to note 9)
(3,327)0
Impairment of investment in Equity Accounted Investees (refer to note 14)
1,9560
Share of Equity Accounted Investees after tax income, excluding Coda Group Limited Partnership
(3,438)(3,258)
Other
62(113)
Total income tax expense28,41834,432
The income tax expense is represented by:
Current tax expense
Tax payable in respect of the current period
33,20635,736
Adjustment for prior period
653(287)
Total current tax expense33,85935,449
Deferred tax expense
Adjustment for prior period
(634)(82)
Origination/reversal of temporary differences
(1,480)(935)
Tax effect on change to depreciation rate for buildings (refer to note 9)
(3,327)0
Total deferred tax expense (refer to note 9)(5,441)(1,017)
Total income tax expense28,41834,432
Income tax recognised in other comprehensive income:
2020
NZ$000
2019
NZ$000
Revaluation of property, plant and equipment
6,429(234)
Cash flow hedges
(2,028)(2,844)
Total income tax recognised in other comprehensive income (refer to note 9)4,401(3,078)
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 $28.696 million at 30 June 2020
(2019: $39.750 million).
/ 95
9 DEFERRED TAXATION
AssetsLiabilitiesNet
2020
NZ$000
2019
NZ$000
2020
NZ$000
2019
NZ$000
2020
NZ$000
2019
NZ$000
Deferred tax (asset)/liability
Property, plant and equipment
0075,93974,06675,93974,066
Intangible assets
00520555520555
Finance lease receivables
004747
Derivatives
(8,273)(6,246)00(8,273)(6,246)
Provisions and accruals
(2,416)(1,993)00(2,416)(1,993)
Equity Accounted Investees
(425)000(425)0
Total 11,114(8,239)76,463 74,62865,34966,389
Recognised in the
Income Statement
Recognised in Other
Comprehensive Income
2020
NZ$000
2019
NZ$000
2020
NZ$000
2019
NZ$000
Deferred tax (asset)/liability
Property, plant and equipment
(4,556)(1,031)6,429(234)
Intangible assets
(35)13900
Finance lease receivables
(3)(3)00
Derivatives
10(2,028)(2,844)
Provisions and accruals
(423)(122)00
Equity Accounted Investees
(425)000
Total(5,441)(1,017)4,401(3,078)
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.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
For this purpose, the carrying amount of buildings classified as property, plant and equipment carried at cost
is presumed to be recovered through use.
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.
Tax Depreciation
of Buildings
On 25 March 2020 the Government enacted the Covid-19 Response (Taxation and Social Assistance Urgent
Measures) Act (Act). The Act reintroduces depreciation deductions on industrial and commercial buildings with
effect from the start of the 2021 tax year. Tax depreciation on buildings with an estimated useful life of 50 years
or more was previously removed from the start of the 2012 tax year.
The 2012 law change reduced the tax base which resulted in the recognition of deferred tax liabilities for
those buildings. The reinstatement of tax depreciation on those buildings in the current year will increase the
tax base and reduce the existing deferred tax liability. The quantum of the tax base going forward reflects tax
depreciation deductions available over the remaining economic life of the building.
The impact of this law change has resulted in a decrease to tax expense and a movement in deferred tax of
$3.327 million.
/ 96
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2018
730,406105,991301,579173,284217,1235,5731,533,956
Additions
2210,23717,2331,1832,8779,08340,635
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
Balance at 1 July 2019
803,204114,928318,812174,467218,96414,6561,645,031
Additions
05,3236,9401,28429,432(4,383)38,596
Disposals
0(145)00(1,139)0(1,284)
Revaluation
22,35212,652000035,004
Transfers between asset
classes
04,687(4,687)0000
Balance at 30 June 2020825,556137,445321,065175,751247, 2 5710,2731,717, 3 47
Accumulated depreciation
and impairment:
Balance at 1 July 2018
0(38)00(87,648)0(87,6 8 6)
Depreciation expense
0(4,170)(11,147)(1,291)(10,431)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)
Balance at 1 July 2019
0(4,205)(11,147)(1,291)(97,177)0(113, 82 0)
Depreciation expense
0(4,373)(11,675)(1,518)(10,719)0(28,285)
Disposals
0145001,00301,148
Transfers between asset
classes
0(96)960000
Revaluation
08,47500008,475
Balance at 30 June 20200(54)(22,726)(2,809)(106,893)0(132,482)
Carrying amounts:
Total net book value
as at 30 June 2019
803,204110,723307,665173,176121,78714,6561,531,211
Total net book value
as at 30 June 2020
825,556137, 3 91298,339172,942140,36410,2731,584,865
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. In the years
between independent valuations, the carrying value of land is adjusted annually based on a desktop valuation
provided by an independent valuer, as underlying land values are considered the significant determinant
of fair value changes. For the remaining asset classes, 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.
/ 97
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Policies (continued)
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 12,000 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 Land Information New Zealand.
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 $6.989 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.
In line with policy, at 30 June 2020, the Group adjusted the carrying value of land based on a desktop valuation.
The Group also revalued buildings due to indicators of potential material movement in the fair value of the asset
class. At 30 June 2020, the assessment is that there is no material change compared with carrying value in the
fair value of wharves and hardstanding, and harbour improvements.
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 $22.352 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, therefore the work
performed is less than that which would be undertaken at the full revaluation cycle.
/ 98
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Judgements
(continued)
The significant assumptions applied in the valuation of these assets are:
20202019
Asset
Valuation
Method
Key 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
360-930417
330-770411
Auckland land – land
adjacent to MetroPort
Auckland per square
metre
6.8
720-800746
568-596592
Rolleston land –
MetroPort Christchurch
per square metre
15.0
110110
100 100
• 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 valuation of buildings was carried out by Colliers International New Zealand Limited. The valuation
increased the carrying amount of buildings by $21.127 million.
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:
20202019
Asset
Valuation
Method
Key Valuation
Assumptions
Range of
Significant
Assumptions
%
Weighted
Average
%
Range of
Significant
Assumptions
%
Weighted
Average
%
Capitalised
income model
Market capitalisation rate
4.50-8.005.33
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.
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.
/ 99
10 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Judgements
(continued)
• 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:
20202019
Asset
Valuation
Method
Key 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
5,000-7,0006,446
5,000-7,000 6,446
Earthworks construction
replacement unit cost rates per
square metre
99
9 9
Basecourse construction
replacement unit cost rates per
square metre
20-4031
20-40 31
Asphalt construction replacement
unit cost rates per square metre
23-5044
23-50 44
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.
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 metre
The 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
rate
The 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
construction
The cost of constructing various asset types based
on a variety of sources
IncreaseDecrease
Remaining
useful lives
The remaining useful life on an assetIncreaseDecrease
/ 100
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11 LEASES
Leases as a Lessee
NZ IFRS 16 Leases replaces NZ IAS 17 Leases and removes the classification of leases as either operating leases or finance leases,
for the lessee, and consequently all lease (other than short term or low value leases), are recognised on the balance sheet. This has
resulted in the Group recognising right-of-use assets and related lease liabilities on the statement of financial position. As a result,
payments for leases previously classified as operating leases, which include leases of land and building, and vehicles, have been
reclassified from operating expenses to depreciation and interest expense.
The Group has adopted NZ IFRS 16 using the modified retrospectively approach from 1 July 2019 but it has not restated comparatives
for previous periods. The reclassifications and the adjustments arising from the new standard are therefore recognised in the opening
balance sheet on 1 July 2019.
The lease liabilities were measured at the present value of the remaining lease payments. Lease payments are discounted at the
Group’s incremental borrowing rate as at 1 July 2019. The weighted average incremental borrowing rate applied to lease liabilities
at 1 July 2019 was 4.0%. The right-of-use assets were measured at the amount equal to the corresponding lease liabilities, with no
change in net assets.
The Group applied the following practical expedients when applying NZ IFRS 16 to leases previously classified as operating leases
under NZ IAS 17:
• a single discount rate to a portfolio of leases with similar characteristics;
• exemption to not recognise right-of-use assets for low value leases; and
• exemption to not recognise, right-of-use assets for leases with less than 12 months remaining.
The judgements and estimates made when adopting NZ IFRS 16 include:
• incremental borrowing rate, being the rate that the Group have to pay to borrow the funds necessary to obtain an asset of a similar
value with similar terms and conditions; and
• lease terms, including any right of renewal where it is reasonably certain they will be exercised.
The impact of adoption of NZ IFRS 16 on the Group’s statement of financial position is summarised in the table below:
30 June 2020
NZ$000
1 July 2019
NZ$000
Right-of-use assets
25,01124,273
Lease liabilities (current)
(592)(397)
Lease liabilities (non current)
(24,810)(23,876)
When compared to the accounting policies in the prior comparative period, the adoption of NZ IFRS 16 on the Group’s income statement
for the year ended 30 June 2020 is summarised in the table below:
Pre
NZ IFRS 16
NZ$000
Adjustments
NZ$000
Post
NZ IFRS 16
NZ$000
Other expenses
17,976(1,429)16,547
Depreciation and amortisation
28,92182529,746
Finance expenses
17,84499618,840
Income tax expense
24,748(110)24,638
The Group as the lessee has various non cancellable leases predominantly for the lease of land and buildings. The leases have varying
term and renewal rights.
/ 101
11 LEASES (CONTINUED)
Information about leases for which the Group is a lessee is presented below:
30 June 2020
NZ$000
Right-of-use assets
Opening balance
24,273
Depreciation
(825)
Additions to right-of-use assets
298
Adjustments to existing right-of-use assets
1,265
Closing balance25,011
Lease liabilities maturity analysis
Between zero to one year
592
Between one to five years
2,496
More than five years
22,314
Total lease liabilities25,402
During the year a lease liabilities interest expense of $0.996 million was recognised in the income statement.
30 June 2020
NZ$000
Reconciliation of lease commitments to lease liabilities
Operating commitments as at 30 June 2019 not previously disclosed
49,613
Discounted at the incremental borrowing rate at the date of initial application
(25,340)
Net present value of future lease payments as at 1 July 201924,273
Leases as a Lessor
Lessor accounting is substantially unchanged from accounting under NZ IAS 17 and no adjustments resulted on transition to NZ IFRS 16.
Future minimum lease receivables from non cancellable operating leases where the Group is the lessor are:
2020
NZ$000
2019
NZ$000
Within one year
21,52718,295
One to two years
14,60314,730
Two to three years
11,4 8 610,840
Three to four years
9,0189,332
Four to five years
8,2806,076
Greater than five years
44,09639,721
Total109,01098,994
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.
Where the Group is a lessee, a right-of-use asset and a lease liability are recognised at the lease commencement date.
The right-of-use asset is initially measured at a cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus any initial indirect costs. The right-of-use asset is
subsequently depreciated using the straight-line method over the life of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date, discounted using the Group’s incremental borrowing rate. The lease liability is subsequently measured at amortised
cost using the effective interest rate method. It is remeasured when there is a change in future lease payments or if the
Group changes its assessment of whether it will exercise a right of renewal.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset.
/ 102
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12 INTANGIBLE ASSETS
Goodwill
NZ$000
Computer
Software
NZ$000
Consents and
Contracts
NZ$000
Total
NZ$000
Cost:
Balance at 1 July 2018
15,4904,15410,00029,644
Additions
04865671,053
Balance at 30 June 201915,4904,64010,56730,697
Balance at 1 July 2019
15,4904,64010,56730,697
Additions
05870587
Balance at 30 June 202015,4905,22710,56731,284
Accumulated amortisation:
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)
Balance at 1 July 2019
0(2,158)(9,511)(11,6 69)
Amortisation expense
0(497)(139)(636)
Balance at 30 June 20200(2,655)(9,650)(12,305)
Carrying amounts:
Total net book value 30 June 201915,4902,4821,05619,028
Total net book value 30 June 202015,4902,57291718,979
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:
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 2020 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.
/ 103
13 INVESTMENTS IN SUBSIDIARIES
Investments in Subsidiaries Comprises:
Name of EntityPlace of BusinessPrincipal Activity
2020
%
2019
%
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 Parent Company. Control exists when the Parent Company 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
2020
%
2019
%
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
2020
NZ$000
2019
NZ$000
Balance as at 1 July
132,731134,331
Group’s share of net profit after tax
11,3 0 58,100
Group’s share of hedging reserve
(186)(308)
Group’s share of revaluation reserve
216448
Group’s share of total comprehensive income11,3358,240
Impairment of investment in Equity Accounted Investees
(6,986)0
Dividends received
(10,096)(9,840)
Balance as at 30 June 126,984132,731
/ 104
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
2020
Northport
Limited
NZ$000
Coda Group
Limited
Partnership
NZ$000
Individually
Immaterial Equity
Accounted
Investees
NZ$000
Total
NZ$000
Cash and cash equivalents
3252,9233,2236,471
Total current assets5,36622,7829,99838,146
Total non current assets141,67698,796114,921355,393
Total assets147,0 42121,578124,919393,539
Current financial liabilities excluding trade and other payables
and provisions
0(1,539)(8,146)(9,685)
Total current liabilities(5,542)(15,345)(12 ,911)(33,798)
Non current financial liabilities excluding trade and other
payables and provisions
(46,298)(69,551)(44,520)(160,369)
Total non current liabilities(46,298)(69,551)(44,520)(160,369)
Total liabilities(51,840)(84,896)(57,4 31)(194,167)
Net assets95,20236,68267,488199,372
Group’s share of net assets 47,6 0118,34133,75299,694
Goodwill acquired on acquisition of Equity Accounted
Investees, less impairment losses
022,4284,8622 7, 2 9 0
Carrying amount of Equity Accounted Investees47,6 0140,76938,613126,984
Revenues
39,840219,00039,3712 9 8, 211
Depreciation and amortisation
(4,054)(14,600)(2,896)(21,550)
Interest expense
(1,850)(3,240)(1,302)(6,392)
Net profit before tax22,527(1,944)9,51030,093
Tax expense
(4,937)0(2,548)(7,485)
Net profit after tax17, 59 0(1,944)6,96222,608
Other comprehensive income
(1,026)01,08660
Total comprehensive income16,564(1,944)8,04822,668
Group’s share of net profit after tax8,795(972)3,48211,3 0 5
Group’s share of total comprehensive income 8,282(972)4,02511,335
Group’s share of dividends/distributions8,74501,35110,096
/ 105
14 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED)
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
3863,7482,4646,598
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
(35,341)(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 Investees48,06448,72735,940132,731
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
Policies
The Parent Company’s interests in Equity Accounted Investees comprise interests in Joint Ventures.
A Joint Venture is an arrangement in which the Parent Company has joint control, whereby the Parent
Company 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 Limited
Partnership
Coda Group Limited Partnership 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 Parent Company 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 Limited Partnership was tested for impairment at 30 June 2020, based upon
the value-in-use of the investment. Value-in-use was determined by discounting five year future cash flows
and was based upon the following key assumptions:
• Cash flow projections for the years 2021 to 2023 were projected using management forecasts.
• An annual growth rate of 5% has been included in cash flow projections for the years 2024 and 2025.
• Terminal cash flows were estimated using a constant growth rate of 1.25% after year five.
• An after tax discount rate of 8.7% was applied in determining the recoverable amount of the investment.
The values assigned to the key assumptions represent management’s assessment of future trends in the
industry and are based on both external and internal sources.
As a result of impairment testing performed, the Parent Company has impaired its investment in Coda
Group Limited Partnership by $6.986 million.
/ 106
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15 RECEIVABLES AND PREPAYMENTS
2020
NZ$000
2019
NZ$000
Trade receivables
44,27851,702
Provision for expected credit losses – trade receivables (refer to note 20(a))
(201)(22)
Trade receivables from Equity Accounted Investees and related parties
101584
44,17852,286
Advances to Equity Accounted Investees (refer to note 22)
5,3195,319
Provision for expected credit losses – advances to Equity Accounted Investees (refer to note 20(a))
(481)(269)
Prepayments and sundry receivables
2,3833,005
Total receivables and prepayments51,39960,610
The ageing of trade receivables at reporting date was:
2020
NZ$000
2019
NZ$000
Not past due
31,37435,358
Past due 0-30 days
11,4 4214,400
Past due 30-60 days
1,0781,339
Past due 60-90 days
92601
More than 90 days
2924
Total of ageing of trade receivables44,27851,702
Polices
Receivables and prepayments are initially recognised at transaction price. 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 expected credit losses 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.
/ 107
16 EQUITY
Share Capital
20202019
Number of ordinary shares issued
Balance as at 1 July
679,920,525680,119,179
Shares issued during year
155,530128,820
Shares repurchased by the Group during the year
(110,623)(327,474)
Balance as at 30 June679,965,432679,920,525
Dividends
The following dividends were declared and paid during the period:
2020
NZ$000
2019
NZ$000
Final 2019 dividend paid 7.3 cents per share (2018: 7.0 cps)
49,66147,619
Final 2019 special dividend paid 5.0 cents per share (2018: 5.0 cps)
34,01434,014
Interim 2020 dividend paid 6.0 cents per share (2019: 6.0 cps)
40,81140,807
Total dividends124,486122,440
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 2,940 shares at $3.55 per share were issued to employees from the Port of Tauranga Trustee
Company Limited as part of the Employee Share Ownership Plan (2019: 128,820 shares at $3.02 per share).
During the year no shares were repurchased on market and transferred to the Port of Tauranga Trustee
Company Limited as part of the Employee Share Ownership Plan (2019: 194,200 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 110,623 shares were repurchased on market and are held as treasury stock (2019: 133,274
shares).
Dividends
The dividends are fully imputed. Supplementary dividends of $588,145 (2019: $630,929) 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. During the period the Container Volume Commitment Agreement was extended by seven years
and now expires on 31 July 2031.
The increase in the reserve of $1.277 million (2019: $1.258 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.
/ 108
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
16 EQUITY (CONTINUED)
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 23).
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.
17 EARNINGS PER SHARE
20202019
Earnings per share
Net profit attributable to ordinary shareholders (NZ$000)
90,027100,577
Weighted average number of ordinary shares (net of treasury stock) for basic earnings per share
671,685,796671,641,605
Basic earnings per share (cents)
13.415.0
Weighted average number of ordinary shares (net of treasury stock) for diluted earnings per share
680,771,040680,797,763
Diluted earnings per share (cents)
13.214.8
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 23) 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.
2020MaturityCoupon
Committed
Facilities
NZ$000
Undrawn
Facilities
NZ$000
Carrying
Value
NZ$000
Non current
Standby revolving cash advance facility2023Floating
200,000121,00079,000
Standby revolving cash advance facility2022Floating
180,000130,00050,000
Standby revolving cash advance facility 2021Floating
200,000100,000100,000
Advances from employeesVarious0%
00458
Total non current 580,000351,000229,458
Current
Fixed rate bond20214.792%
75,000075,000
Multi option facility2020Floating
5,0005,0000
Commercial papers<3 monthsFloating
00184,000
Total current 80,0005,000259,000
Total 660,000356,000488,458
/ 109
18 LOANS AND BORROWINGS (CONTINUED)
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
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 a $75 million fixed rate bond with final maturity on 29 January 2021.
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 2020 the Group had $184 million of commercial paper debt that is classified within current liabilities
(2019: $220 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 $580 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 (2019: $430 million). The facility, which is secured, provides for both direct borrowings and support for
issuance of commercial papers.
Multi Option Facility
The Parent Company has a $5 million multi option facility with Bank of New Zealand Limited, used for short term
working capital requirements (2019: $5 million).
Security
Bank facilities and fixed rate bonds are secured by way of a security interest over certain floating plant assets
($16.620 million, 2019: $17.285 million), mortgages over the land and building assets ($962.784 million, 2019:
$913.791 million), and by a general security agreement over the assets of the Parent Company ($1,768.615 million,
2019: $1,631.564 million).
Covenants
The Parent Company borrows under a negative pledge arrangement, which with limited circumstances does not
permit the Parent Company to grant any security interest over its assets. The negative pledge deed requires the
Parent Company to maintain certain levels of shareholders’ funds and operate within defined performance and
debt gearing ratios.
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 2.73% at 30 June 2020 (2019: 3.85%).
/ 110
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
19 DERIVATIVE FINANCIAL INSTRUMENTS
2020
NZ$000
2019
NZ$000
Current liabilities
Foreign exchange derivatives – cash flow hedges
0(266)
Interest rate derivatives – cash flow hedges
0(872)
Total current liabilities0(1,138)
Non current liabilities
Interest rate derivatives – cash flow hedges
(29,359)(20,895)
Total non current liabilities(29,359)(20,895)
Total liabilities(29,359)(22,033)
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
%
Within one year45100
One to three years3085
Three to seven years1565
Seven to ten 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 change in fair
value of the cash flow hedge is accounted for as a cost of hedging and recognised in the hedging reserve
within equity.
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.
The Group’s policy of ensuring a certain level of its interest rate risk exposure is at a fixed rate, is achieved
partly by entering into fixed-rate instruments and partly by borrowing at a floating rate and using interest rate
swaps as hedges of the variability in cash flows attributable to movements in interest rates. The Group applies
a hedge ratio of 1:1.
/ 111
19 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
Cash Flow Hedges
(continued)
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.
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:
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 measured at 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:
2020
Fair Value
Through Profit
and Loss
NZ$000
Amortised
Cost
NZ$000
Total
Carrying
Amount
NZ$000
Fair
Value
NZ$000
Cash and cash equivalents
08,5658,5658,565
Receivables
049,01649,01649,016
Total current assets057,58157,58157,581
Total assets057,58157,58157,581
Liabilities
Lease liabilities
024,81024,81024,810
Loans and borrowings
0229,458229,458229,458
Derivative financial instruments
29,359029,35929,359
Total non current liabilities29,359254,268283,627283,627
Lease liabilities
0592592592
Loans and borrowings
0259,000259,000260,676
Trade and other payables
07,3117,3117,311
Total current liabilities0266,903266,903268,579
Total liabilities29,359521,171550,530552,206
/ 112
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20 FINANCIAL INSTRUMENTS (CONTINUED)
2019
Fair Value
Through Profit
and Loss
NZ$000
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
0124,213124,213127,077
Derivative financial instruments
20,895020,89520,895
Total non current liabilities20,895124,213145,108147, 972
Loans and borrowings
0322,000322,000322,609
Derivative financial instruments
1,13801,1381,138
Trade and other payables
012,14412,14412,144
Total current liabilities1,138334,144335,282335,891
Total liabilities22,033458,357480,390483,863
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 is obtained annually from the Standard & Poor’s Global Corporate Default Study 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, adjusted for any significant known amounts that are not
receivable.
An additional $0.200 million has been included due to large forecast reductions in both New Zealand and global GDP over the next
year, as a result of Covid-19. There has been no indication of a change in customer payment behaviour, compared with pre-Covid-19
behaviour.
/ 113
20 FINANCIAL INSTRUMENTS (CONTINUED)
On that basis, the following table details loss allowance for trade receivables:
2020
Not
Past Due
Past Due
0-30 Days
Past Due
30-60 Days
More Than
60 DaysTotal
Expected loss rate (%)
0.10.44.518.30
Gross carrying amount – trade receivables (NZ$000)
31,37411,4421,07838444,278
Loss allowance on trade receivables (NZ$000)
30505071201
Movements in the provision for impairment of financial assets are:
2020
NZ$000
2019
NZ$000
Opening balance
291274
Provision for trade receivables
17910
Provision for advances to Equity Accounted Investees
21210
Bad debts written off
0(3)
Closing balance682291
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 64.1% of total Group revenue (2019: 62.7%). The Group is satisfied with the credit quality of these
debtors and does not anticipate any non performance.
/ 114
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20 FINANCIAL INSTRUMENTS (CONTINUED)
(b) Liquidity Risk
The following table sets out the contractual cash outflows for all financial liabilities (including estimated interest payments) and derivatives:
2020
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
(488,458)(498,575)(483,875)(11,149)(1,818)(1,733)0
Lease liabilities
(25,402)(50,326)(793)(790)(1,552)(4,263)(42,928)
Trade and other payables
(7,311)(7,311)(7,311)0000
Total non derivative
financial liabilities
(521,171)(556,212)(491,979)(11,939)(3,370)(5,996)(42,928)
Derivatives
Interest rate derivatives
Cash flow hedges – outflow
(29,359)(30,947)(2,931)(3,469)(7,930)(15,333)(1,284)
Total derivatives(29,359)(30,947)(2,931)(3,469)(7,930)(15,333)(1,284)
Total(550,530)(587,159)(494,910)(15,408)(11,3 0 0)(21,329)(44,212)
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)
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.
/ 115
20 FINANCIAL INSTRUMENTS (CONTINUED)
(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
2020
NZ$000
2019
NZ$000
Fixed rate instruments
Lease liabilities
(25,402)0
Fixed rate bonds
(75,000)(125,000)
Total(100,402)(125,000)
Variable rate instruments
Commercial papers
(184,000)(220,000)
Standby revolving cash advance facility
(229,000)(99,000)
Interest rate derivatives
(29,359)(21,767)
Multi option facility
0(2,000)
Cash balances
8,5653,903
Total (433,794)(338,864)
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 2019.
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
(2,918)2,95900
Interest rate derivatives
1,477(1,477)7,886(8,360)
Total as at 30 June 2020(1,441)1,4827, 8 8 6(8,360)
Variable rate instruments
(2,239)2,26900
Interest rate derivatives
1,135(1,135)7,337(7,774)
Total as at 30 June 2019(1,104)1,1347, 3 37( 7,7 74)
Market Risk
Management Policies
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates,
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 Group enters into derivative transactions into International Swaps Derivatives Association (ISDA) master
agreements. The ISDA agreements do not meet the criteria for offsetting in the balance sheet for accounting
purposes.
The total nominal value of interest rate derivatives outstanding is $280 million (2019: $310 million).
The average interest rate on interest rate derivatives is 3.3% (2019: 3.9%).
Foreign Exchange
Risk
Full disclosures on foreign exchange risk have not been presented as this risk is insignificant to the Group.
/ 116
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
21 TRADE AND OTHER PAYABLES
2020
NZ$000
2019
NZ$000
Accounts payable
7, 2 5912,016
Accrued employee benefit liabilities
5,1204,597
Accruals
19,63516,947
Payables due to Equity Accounted Investees and related parties
52128
Total trade and other payables32,06633,688
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.
22 RELATED PARTY TRANSACTIONS
Related party transactions with related parties:
2020
NZ$000
2019
NZ$000
Transactions with Equity Accounted Investees
Services provided to Port of Tauranga Limited
511556
Services provided by Port of Tauranga Limited
4,9873,824
Accounts receivable by Port of Tauranga Limited
27239
Accounts payable by Port of Tauranga Limited
342125
Advances by Port of Tauranga Limited
5,3195,319
Services provided to Quality Marshalling (Mount Maunganui) Limited
183
Services provided by Quality Marshalling (Mount Maunganui) Limited
4,0283,913
Accounts receivable by Quality Marshalling (Mount Maunganui) Limited
365345
Accounts payable by Quality Marshalling (Mount Maunganui) Limited
13
Transactions with key management personnel
Directors’ fees recognised during the period
764735
Executive officers’ salaries and short term employee benefits recognised during the period
2,9653,593
Executive officers’ share based payments (equity settled) recognised during the period
1,414920
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% (2019: 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, $0.021 million (2019: $0.076 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 to note 23).
/ 117
23 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.
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 2020 is -$0.110 million
(2019: $0.780 million) with a corresponding increase in the share based payments reserve (refer to note 16).
Number of Share Rights Issued to Executives:
Grant Date
Scheme
End Date
Right
Type
Balance at
30 June
2019
Granted
During
the Year
Vested
During
the Year
Forfeited
During
the Year
Balance at
30 June
2020
1 March 201830 June 2019EPS127,4700127,47000
1 March 201830 June 2019TSR106,2250100,2765,9490
1 March 201830 June 2020EPS121,934000121,934
1 March 201830 June 2020TSR101,612000101,612
1 July 201830 June 2021EPS108,500000108,500
1 July 201830 June 2021TSR90,41700090,417
1 July 201930 June 2022EPS090,0580090,058
1 July 201930 June 2022TSR075,0500075,050
Total LTI Plan656,158165,108227,7465,949587,571
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 Date
Right
Type
Grant Date
Share Price
$
Risk Free
Interest Rate
%
Expected
Volatility of
Share Price
%
Valuation
per Share
Right
$
1 March 201830 June 2020EPS5.091.9615.104.81
1 March 201830 June 2020TSR5.091.9615.102.26
1 July 201830 June 2021EPS5.101.7216.34.64
1 July 201830 June 2021TSR5.101.7216.32.00
1 July 201930 June 2022EPS6.280.8017.66.02
1 July 201930 June 2022TSR6.280.8017.62.72
PAYE Liability
Upon vesting of share rights, the Parent funds the PAYE liability and issues the net amount of shares to
executives.
/ 118
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
PORT OF TAURANGA LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
24 CONTINGENT LIABILITIES
Disclosures
No material contingent liabilities or assets have been identified.
25 SUBSEQUENT EVENTS
Approval of Financial
Statements
The financial statements were approved by the Board of Directors on 27 August 2020.
Final and Special
Dividend
A final dividend of 6.4 cents per share to a total of $43,531,749 has been approved subsequent to reporting
date. The final dividend was not approved until after year end, therefore it has not been accrued in the current
year financial statements.
Covid-19
On Wednesday 12 August 2020 at 12.00pm, the Auckland region moved to Alert Level 3 and the rest of
New Zealand moved to Alert Level 2.
This Alert Level escalation has had no material impact on the performance of the Group.
/ 119
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 2020. 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 2020, 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.
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 pages 124 to
125 of this Integrated Annual 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 74 to 75 of this Integrated Annual
Report and on the website. Director independence is assessed
annually by the Board. A normal term of service for a Director
is nine years but can extend beyond this term with continued Board
and shareholder support. 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 are:
0-3 Years4-6 Years7-9 Years9 Years+
Number of Directors
2311
Director attendance at meetings together with remuneration, are set
out on pages 124 to 125 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 by the Board.
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 employees feel included and valued, and to providing equal
employment opportunities with all appointments being merit based.
Last year the Company revised its Diversity and Inclusion Policy
and set itself the objective of achieving a minimum of 40% females and
40% males holding director, executive and manager level positions
by 2025. In 2020 the Company had 17% females and 83% males
holding these positions.
As at 30 June 2020As at 30 June 2019
FemaleMaleFemaleMale
No. %No.%No.%No.%
Non
independent
Directors
002100002 100
Independent
Directors
2403602 403 60
Executives
0051001 204 80
Management
2189822 208 80
Permanent
employees
3918183823516 18084
Total431820282401719783
FINANCIAL AND NON FINANCIAL INFORMATION
The Board is committed to ensuring timely and accurate information
is provided to shareholders and market participants. The Integrated
Annual Report for 2020 is based on the Integrated Reporting
Framework so that stakeholders can better understand the non
financial aspects of the Company. It is the Company’s second
Integrated Report.
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
COMMITTED TO
EFFECTIVE GOVERNANCE
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
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 2021.
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 122 to 124 of this Integrated Annual 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 the Company and is therefore
independent. The Auditor-General has appointed Brent Manning 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 2020 Integrated Annual 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
Integrated Annual Reports, Market Updates 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 2020 Annual Meeting will also
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 2020 financial year the Chief Executive’s STI was set at 60% and
for all nominated executives it was set between 40-50%.
For the 2020 financial year there were four nominated executives
included in the STI Scheme, the same number as the previous year.
For the Chief Executive, 60% (2019: 70%) of the STI is linked to the Company’s
financial performance with the actual opportunity in the range of 0-110%.
The remaining 40% (2019: 30%) comprised agreed safety, environmental
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. 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 (LTI) 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 2018 LTI (allocated on 1 July 2017), which vested at the end of
the 2020 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:
TSR Percentile Ranking
%
Earned
%
Below 40
Nil
Above 40 to 50
40–50
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 with the STI, the Board retains absolute discretion over the payment
of the LTI to participants.
/ 121
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 employees 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:
Parent Company
Remuneration Range
$000
Number of
Employees
2020
Number of
Employees
2019
100-109
2521
110-119
2621
120-129
2318
130-139
1314
140-149
1013
150-159
118
160-169
136
170-179
28
180-189
23
190-199
02
200-209
11
210-219
13
220-229
20
230-239
10
240-249
78
250-259
34
260-269
23
270-279
10
630-639
01*
660-669
1*1*
740-749
01*
780-789
01*
810-819
1*0
840-849
1*0
850-859
1*0
1,770-1,779
01*
2,020-2,029
1*0
Total148138
*Includes vesting of Long Term Incentive Scheme and payment of
Short Term Incentive
Chief Executive Remuneration
For the 2020 financial year the Chief Executive’s fixed remuneration
was lifted by 2% to $884,340.
There will be no increase in the Chief Executive’s fixed remuneration for
the 2021 financial year.
FY2020
Fixed
Remuneration*
$
Performance Pay**
Total
Remuneration***
$
STI
$
LTI
$
Subtotal
$
884,340434,107650,7341,084,8412,022,501
*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 previous periods but paid in the
current financial year.
***Total remuneration includes payments that arise from calculating
actual holiday pay per the NZ Legislation.
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.
Total remuneration paid includes fixed remuneration and the short and
long-term performance payments paid/vested in the year. Performance
payments are actually those earned in prior periods.
An explanation of the Chief Executive’s performance pay paid/vested in
2020 is shown in the following table:
DescriptionPerformance Measures
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%.
100.0
44.8
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%.
94.4
120.0
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
The Five Year Summary – Chief Executive Remuneration
FY
Total
Remuneration
$
STI Against
Maximum
%
LTI Against
Maximum
%
Span of LTI
Performance
Period
20202,022,5017897FY2017-2019
2019
1,773,2598297
FY2016-2018
2018
1,680,1068675
FY2015-2017
2017
1,242,2147635
FY2014-2016
2016
1,205,2316228
FY2013-2015
Total Shareholder Return Performance
Chief Executive Remuneration for 2021
The Chief Executive’s potential remuneration package for the year ending
June 2021 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 a maximum 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 $780,000.
There will be no increase in Directors fees for the 2021 financial year.
The Board approved annual fees are:
Directors’ Fees
$
Chair
168,480
Directors
88,400
Audit Committee Chair
15,600
Audit Committee Member
7,800
Remuneration Committee Chair
10,400
Remuneration Committee Member
5,200
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
LTI
STI
Fixed
FY2020FY2019FY2018FY2018FY2016
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
LTI Grant (2023 Vesting)
STI
Fixed
MaximumOn TargetFixed
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY2020FY2019FY2018FY2017FY2016
POT
NZX50
/ 123
Directors’ fees received during the 2020 year were:
Board
$
Audit
$
Remuneration
$
Total 2020
$
Total 2019
$
Mr D A Pilkington
168,4805,200173,680167,000
Ms A M Andrew
88,4005,20093,60090,000
Mr K R Ellis
88,4007,80010,400106,600102,500
Ms J C Hoare
88,40015,600104,000100,000
Mr A R Lawrence
88,4007,80096,20092,500
Mr D W Leeder
88,4005,20093,60090,000
Sir Robert McLeod
88,4007,80096,20092,500
Total$763,880$734,500
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 2020 was:
DirectorSubsidiary
Fees
$
Mr D A PilkingtonNorthPort Chair/Director*
35,416
Mr D A PilkingtonPrimePort Director
34,916
Total$70,332
*Mr Pilkington changed designation from Chair to Director during the year.
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 2020:
Director InterestEntity
Alison Moira Andrew
Chief Executive OfficerTranspower New Zealand Limited
Kimmitt Rowland Ellis
Chair (appointed during the year)Green Cross Health
ChairMetlifecare Limited
ChairNZ Social Infrastructure Fund Limited
Chair (resigned during the year)Sleepyhead Group Limited
DirectorBallance Agri-Nutrients Limited
DirectorFonterra Shareholders Fund (FSF) Management Company
DirectorFreightways Limited
Julia Cecile Hoare
Deputy ChairThe a2 Milk Company Limited
Deputy ChairWatercare Services Limited
Director Auckland International Airport Limited
DirectorAWF Madison Group Limited
Director (appointed during the year)Meridian Energy Limited
Director (resigned during the year)New 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 (resigned during the year)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
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
General Notice of Interest by Directors (continued)
Director InterestEntity
Sir Robert Arnold McLeod
Chair/Director (resigned during the year)E Tipu e Rea Limited
Chair/Director (resigned during the year)E Tipu e Rea Trustee Limited
Chair Quayside Holdings Limited
Director/Chair (appointed Chair during the year)Sanford Group
David Alan Pilkington
Chair Douglas Pharmaceuticals Limited
ChairRangatira Limited
Chair / Director (resigned as Chair and remained
as Director during the year)
Northport 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 2020.
Twenty Largest Ordinary Equity Holders
Holder
Number of
Shares Held
% of Issued
Equity
Quayside Securities Limited
368,437,680 54.17
New Zealand Central Securities Depository Limited
60,966,450 8.96
Custodial Services Limited (3 a/c)
18,230,216 2.68
Custodial Services Limited (4 a/c)
16,488,144 2.42
FNZ Custodians Limited
13,791,024 2.03
Custodial Services Limited (2 a/c)
10,542,501 1.55
Kotahi Logistics LP
8,500,000 1.25
Custodial Services Limited (18 a/c)
6,821,200 1.00
JBWere (NZ) Nominees Limited (NZ Resident a/c)
6,585,703 0.97
Forsyth Barr Custodians Limited (1-Custody a/c)
4,716,075 0.69
New Zealand Depository Nominee Limited (1 a/c)
4,258,092 0.63
Investment Custodial Services Limited (C a/c)
2,920,601 0.43
Masfen Securities Limited
2,708,395 0.40
Custodial Services Limited (1 a/c)
2,633,035 0.39
Custodial Services Limited (16 a/c)
2,632,709 0.39
Lloyd James Christie
1,535,000 0.23
FNZ Custodians Limited (DTA Non Resident a/c)
1,404,370 0.21
ASB Nominees Limited (729140 a/c)
1,214,225 0.18
Fraser Grant McKenzie & Dorothy Ann McKenzie
1,001,530 0.15
FNZ Custodians Limited (DRP NZ a/c)
871,862 0.13
Total
536,258,81278.84
/ 125
Distribution of Equity Securities
Range of Equity Holdings
Number of
Holders
Number of
Shares Held
% of Issued
Equity
1-5,000
2,904 1,684,428 0.25
5,001-10,000
5,783 16,745,685 2.46
10,001-50,000
2,645 20,421,400 3.00
50,001-100,000
3,077 79,446,639 11.68
100,001 and over
153 561,885,420 82.61
Total
14,562 680,183,572 100.00
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 2020, were:
Holder
Number of
Shares Held%
Quayside Securities Limited
368,437,68054.17
The total number of issued voting securities of the Company as at 30 June 2019 was 680,183,572.
Directors’ Equity Holdings
As at 30 June 2020 Port of Tauranga Limited Directors’ had the following relevant interests in Port of Tauranga Limited equity securities:
Held BeneficiallyHeld by Associated Persons
30 June 202030 June 201930 June 202030 June 2019
Mr D A Pilkington
0015,0000
Ms A M Andrew
0082,50082,500
Mr K R Ellis
0062,75062,750
Ms J C Hoare
0000
Mr A R Lawrence
0000
Mr D W Leeder
0000
Sir Robert McLeod
0000
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
DONATIONS
Donations of $47,059 were made during the year ended 30 June 2020 (2019: $24,806).
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 2020 had a Standard & Poor’s rating of A-/Stable/A-2.
ANNUAL MEETING
The Annual Meeting will be held on Friday 30 October 2020 at 1.00pm, at Trustpower Baypark, 81 Truman Lane, Mount Maunganui. The ability for the
Company to hold a physical meeting may change depending on Covid-19 restrictions at that time.
Messrs David Alan Pilkington and Douglas William Leeder 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
2020
$000
Year
2019
$000
Year
2018
$000
Year
2017
$000
Year
2016
$000
Operating income
301,985313,263283,726255,882245,521
EBITDA*
166,546181,270169,236152,385143,180
Surplus after taxation – reported
90,027100,57794,27383,44177,314
Dividends paid related to earnings
124,486122,440115,017108,89372,142
Total equity
1,163,5801,165,8851,121,980931,943885,684
Net interest bearing debt
479,435442,097399,164374,816308,420
Total assets
1, 817,18 61,748,8611,657,0311,422,6001,322,367
Interest cover (times)
7. 48.48.07.57.0
Gearing ratio (%)**
29.227.526.228.725.8
Return on average equity (%)
7.78.99.29.38.7
Share price ($)***
7.706.345.104.4519.50
Market capitalisation ($)
5,237,4144,312,0983,470,9643,028,5862,654,267
Net asset backing per share ($)***
1.701.711.641.366.51
*EBITDA is a non GAAP financial measure but is commonly used as a measure of performance as it shows the level of earnings before the impact
of gearing levels and non cash charges such as depreciation and amortisation. Market analysts use the measure as an input into company
valuation and other valuation metrics.
Year
2020
$000
Year
2019
$000
Year
2018
$000
Year
2017
$000
Year
2016
$000
Profit before taxation118 , 44 5135,009126,386111,347103,088
Net finance costs18,53018,17718,02716,77116,340
Depreciation and amortisation29,74627,58525,26924,46023,722
Asset impairment0499000
Reversal of previous revaluation deficit(175)0(446)(193)30
Total48 ,10146,26142,85041,03840,092
EBITDA166,546181,270169,236152,385143,180
**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 6.4 cents per share ($43.532 million) after year end payable on 2 October 2020.
FINANCIAL AND OPERATIONAL FIVE YEAR SUMMARY
AS AT 30 JUNE 2020
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/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
OPERATIONAL
Year
2020
Year
2019
Year
2018
Year
2017
Year
2016
Cargo throughput (000 tonnes)
24,80826,94624,45822,19420,120
Containers (TEU)*
1,251,7411,233,1771,182,1471,085,987954,006
Net crane rate (container moves per hour)**
35.832.935.536.235.6
Ship departures
1,5151,6781,7471,6511,482
Berth occupancy (%)
4550484746
Total cargo ship days in port
2,4412,7692,6432,5892,504
Turn-around time per cargo ship (days)
1.611.651.51.41.6
Cargo tonnes per ship
16,29116,05814,00013,44213,549
Average cargo ship gross tonnage (GT)
33,40833,92030,21829,65426,665
Average cargo ship length overall (metres)
207207200199190
Number of employees – Port of Tauranga Limited
238230208206194
Lost time injuries (LTI – frequency)***
2.52.52.82.85.6
Total injury (frequency rate)
2.52.55.55.65.6
*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.
/ 129
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
L E Sampson
Chief Operating Officer
M J Dyer
Corporate Services Manager
B J Hamill
Commercial Manager
S R Kebbell
Chief Financial Officer
P M Kirk
Group Health & Safety Manager
D A Kneebone
Property & Infrastructure Manager
R A Lockley
Communications Manager
REGISTERED OFFICE
Salisbury Avenue
Mount Maunganui
Private Bag 12504
Tauranga Mail Centre
Tauranga 3143
New Zealand
Telephone 07 572 8899
Email marketing@port-tauranga.co.nz
Website www.port-tauranga.co.nz
AUDITORS
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
CREDIT RATING AGENCY
Standard & Poor’s (S&P)
Australia
Port of Tauranga Limited’s rating: A-/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
New Zealand
Telephone 09 375 5998
Facsimile 09 375 5990
Email enquiries@linkmarketservices.co.nz
Website www.linkmarketservices.co.nz
Copies of the Integrated Annual Report and Market Update
(which replaces the Interim Report) are available from our website.
FINANCIAL CALENDAR
2 October 2020 Final dividend payment
30 October 2020 Annual Meeting
26 February 2021 Interim results announcement
March 2021 Interim Accounts and Market Update produced
26 March 2021 Interim dividend payment
30 June 2021 Financial year end
27 August 2021 Annual results announcement
COMPANY DIRECTORY
/ 130
/ PORT OF TAURANGA LIMITED – INTEGRATED ANNUAL REPORT 2020
---
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 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 18/09/2020
Ex-Date (one business day before the
Record Date)
17/09/2020
Payment date (and allotment date for
DRP)
02/10/2020
Total monies associated with the
distribution
1
$43,531,748.61
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.08888889
Gross taxable amount
3
$0.08888889
Total cash distribution
4
$0.06400000
Excluded amount (applicable to listed
PIEs)
Not applicable
Supplementary distribution amount $0.01129412
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
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
100%
Imputation tax credits per financial
product
$0.02488889
Resident Withholding Tax per
financial product
$0.00444444
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
Simon Kebbell, Chief Financial Officer
Contact person for this
announcement
Simon Kebbell, Chief Financial Officer
Contact phone number 027 482 7510
Contact email address simonk@port-tauranga.co.nz
Date of release through MAP
28/08/2020
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
---
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 Port of Tauranga 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
$301,985 -3.6%
Total Revenue $301,985 -3.6%
Net profit/(loss) from
continuing operations
$90,027 -10.5%
Total net profit/(loss) $90,027 -10.5%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.06400000
Imputed amount per Quoted
Equity Security
$0.02488889
Record Date 18/09/2020
Dividend Payment Date 02/10/2020
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.70 $1.71
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
Simon Kebbell, Chief Financial Officer
Contact person for this
announcement
Simon Kebbell, Chief Financial Officer
Contact phone number 027 482 7510
Contact email address simonk@port-tauranga.co.nz
Date of release through MAP
28/08/2020
Audited financial statements accompany this announcement.
---
Presentation
to
Analysts
28 August 2020
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 Net Profit After Tax
down 10.5%
$83,441
$94,273
$100,577
$90,027
$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
2020
Underlying Group Net Profit After Tax
down 5.4%
$83,441
$94,273
$99,058
$93,686
$0
$20,000$40,000$60,000$80,000
$100,000$120,000
2017
2018
2019
2020
Ordinary Dividends
maintained at 90% of
Underlying Net Profit After Tax
11.2
12.7
13.3
12.4
02468
101214
2017
2018
2019
2020
OrdinarySpecial
Cents per share
Source: Deloitte NZ Ports & Freight Yearbook 2020
Cash Dividends History by Port
Net Debt / Net Debt+Equity
28.7%
26.2%
27.5%
29.2%
0%5%
10%15%20%25%30%35%40%
2017
2018
2019
2020
Total Trade
down 8%
22,194
24,458
26,946
24,808
0
5,000
10,00015,00020,00025,00030,000
2017
2018
2019
2020
Container Volumes
up 2%
1,085,987
1,182,147
1,233,177
1,251,741
100,000200,000300,000400,000500,000600,000700,000800,000900,000
1,000,0001,100,0001,200,0001,300,0001,400,000
2017
2018
2019
2020
Source: Ministry of Transport FIGS
NZ Port Productivity – Net Crane Rate
(11% more than our nearest competitor)
05
10152025303540
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
19Q2
19Q3
19Q4
20Q1
Auckland
Lyttelton
Napier
Otago
Tauranga
Wellington
Transhipped Container Volumes
representing nearly a third of all containers handled
245,896
303,284
337,183
339,467
100,000150,000200,000250,000300,000350,000400,000
2017
2018
2019
2020
Log Exports
down 22%
deemed non-essential cargo for 2 months
5,490
6,276
7,063
5,544
0
1,0002,0003,0004,0005,0006,0007,0008,000
2017
2018
2019
2020
Dairy Exports
Up 2%
2,223
2,312
2,322
2,362
0
500
1,0001,5002,0002,500
2017
2018
2019
2020
Fertiliser Imports
up 1%
474
552
501
504
0
100200300400500600
2017
2018
2019
2020
Oil Products
down 12%
1,436
1,569
1,600
1,403
0
500
1,0001,500
2017
2018
2019
2020
Grain & Dairy Feed
Supplement Imports
up 22%
1,156
1,343
1,209
1,472
0
500
1,0001,500
2017
2018
2019
2020
Kiwifruit Volumes
up 18%
982
925
1,236
1,498
0
250500750
1,0001,2501,500
2017
2018
2019
2020
Cruise Vessels
0
20406080
100120140
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
8 2019 2020 2021
Visits
Subsidiaries & Associates
Net Profit After Tax up 18%
$14,645
$16,391
$11,885
$14,076
$0
$5,000
$10,000$15,000$20,000
2017
2018
2019
2020
$000s
Northport
• Trade down 11%• Earnings down 2.2%• Handled 12,314 TEUs
Future Expansion
Coda Group
• Normalised loss of $0.197 million, after removing impact of
IFRS16 leases (normalised loss FY19 $1.29m)
• Impairment to goodwill of $6.9 million recognised due to impacts
of COVID-19 on the business
• Cost cutting and margin growth initiatives underway
PrimePort Timaru
• Strong focus on Asset Management Plan• Earnings up $0.817 million to $2.897 million• Trade volumes down 10.2%
Timaru Container Terminal
• Handled 80,800 TEUs v 80,378 TEUs in FY19• Underlying Earnings maintained (excluding IFR16 impacts)
Quality Marshalling
• Earnings maintained at $2.528 million• Lower import rail volumes
Emission Management
15.3% reduction in absolute emissions
Electric Cars - Hybrid Straddles
Bigger Ships Offer a
Lower Carbon Supply Chain
CO
2
e (kg)
Import cargo from China to
South Auckland CO
2
emission comparison
Export cargo from Hamilton
to China CO
2
emission
comparison
Outlook 2020
Export Log Supply
At this stage, forecast FY21 logs to be approximately 6.2 milli
on
15%
17%
68%
At Wharf Gate
Mix
Forest Owner
Source: Zespri
Export Tray Volume
Additional 3,500 ha new Gold licence 2018-2022
Kiwifruit - Zespri’s Forecast
Tainui - 50 year Agreement for Ruakura Inland Port
480 hectares industrial development
Berth Extension
• The total length of the quay is currently 770 metres and is equipped with ei
ght STS
cranes.
• For the future there are plans to increase the berth to the south. There are
two scenarios
:
(1) 285m, resulting in a total length of 1,055m or (2 ) 385m
, resulting in a total length of 1,155m
•T
he maximum draft allowed for the berth is currently 14.5 metres
.
• The mooring margin is assumed to be 10 - 15 metres on each side of the vessel,
which
results in 20 - 30 metres separation between vessels.
Full Build Out ~3M TEUs
Parent Capital Expenditure 2016-2021
$63,323
$60,166
$16,788
$40,073
$38,288
$36,288
$23,000
$0
$20,000$40,000$60,000$80,000
2016
2017
2018
2019
2020
2021F
Terminal Southern Berth Extension
24 Previous Upper North Island Port Studies
•
“POT, located in the Bay of Plenty, is New Zealand’s fastest growingand most productive port, rated as one of the 10 most efficient portsin the world”
.
•
“The undeveloped POAL land value in the Future Port study wasestimated at $1,400/m
2
, with a total value just exceeding $1 billion”
($533/m2 in current balance sheet)
.
•
“The high land value that is required to continue operations at thePOAL site means that Auckland ratepayers are potentially missingout on subsidies approximately worth $5b to $6b.”
•
“Prime Minister Jacinda Ardern says moving Auckland’s port is not aquestion of if, but of when.”
(NZ Herald – 13/11/2019)
Upper North Island
Supply Chain Study
THANK
YOU
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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