Challenging market conditions impact South Port’s result

Challenging Market Conditions Reflected in
South Port’s Interim Result


MEDIA RELEASE
SOUTH PORT HALF-YEAR FY2024 RESULTS


16 February 2024


NZX Announcement and Media Release

NZX: SPN: South Port New Zealand

Reduced volumes across most of South Port’s key commodities, and inflationary pressure on
costs have negatively impacted South Port’s financial performance in the first half of the
financial year.

“The agricultural and forestry sectors have been under significant pressure for several months
due to poor market conditions, which is negatively reflected in most of our import and export
bulk cargoes, says Chair, Philip Cory-Wright.”

This deterioration in trade is common across the port sector and unfortunately South Port is not
immune.

These market conditions have been reflected in South Port’s net profit after tax (NPAT) for the
first six months of FY2024 at $3.0 million (FY2023 $5.2 million).

Total cargo activity was 1,488,000 tonnes (FY2023 1,732,000 tonnes). This represents a
decrease in cargo flows of 244,000 tonnes or 14%.

Increases were registered in cement (+14,000 t) and timber (+17,000 t), however other cargoes
were negatively impacted with woodchips (-72,000 t), logs (-68,000 t), alumina (-43,000 t), stock
food (-39,000 t) and fertiliser (-37,000 t) down in comparison to the prior half year.

108 large vessel calls were registered (FY2023, 139 calls), a direct reflection of the reduced
cargo flows through the Port. Container volumes are showing some signs of recovery with
21,000 Twenty-foot equivalent units (TEU) handled through the terminal (FY2023, 18,000 TEU).

Container vessels transiting the Port were the same as last year at 17 calls.

Contributing factors to the year include:

• Inflationary pressures on labour and materials.
• Insurance costs have substantially increased.
• Increased finance costs due to an upwards movement in interest rates and additional
debt on the balance sheet.

OPERATIONS

Cold Storage Operation: The cold store operation has performed well. Increased volumes of
meat products being handled, longer dwell times and reduced overheads compared with the
same period last year has seen an improved result for this business unit.

Syncrolift – Dry Dock: After a major maintenance programme in FY2023, the syncrolift has
shown a marked improvement in FY2024. Increased vessel dockings and reduced maintenance
costs have also seen a better result for this operation.

CLIMATE-RELATED DISCLOSURES

From the 2024 reporting period it will be mandatory for South Port to produce climate-related
statements according to disclosure requirements in the External Reporting Board (XRB)
standards.

South Port is progressing towards meeting these requirements, to be published in this year’s
annual report.

INITIATIVES

“The Kia Whakaū project to dredge and remove seabed materials to 9.7m chart datum (10.7m
at high tide) in the harbour entrance channel was successfully completed and celebrated with a
formal opening on 30 October 2023,” says Chief Executive Nigel Gear.

“The Company is taking a staged approach to the new draft by declaring an interim operating
draft of 10.3m at high tide to assess the handling of deeper draft vessels before moving to the
full 10.7m at high tide.”

Meridian Energy, with Ngāi Tahu’s support, continues working with Woodside Energy and
Mitsui towards making a final investment decision in 2025 for the development of a world-class
hydrogen and ammonia facility in Southland.

South Port is assisting these parties with port and shipping-related enquiries in relation to the
export of green ammonia.

It has been a busy cruise period in the south, with cruise vessels transiting through the Sounds
in Fiordland before making port calls at Bluff and along the east coast of New Zealand. It is
pleasing that this activity has led to a record number of vessel calls into Bluff.

NEW ZEALAND ALUMINIUM SMELTER (NZAS)

NZAS is currently in discussions with the electricity generators to establish a potential supply
contract that will allow the smelter to continue operating after 31 December 2024.

In early February 2024, the CEO of Meridian Energy, Neal Barclay, told a Parliamentary Select
Committee that good progress is being made in negotiations with Rio Tinto which would lead to
a long-term future for the NZAS aluminium smelter.


WIND FARM OPPORTUNITIES

There are a number of wind farm opportunities in Southland at differing stages of development.
It is anticipated they will accelerate once the NZAS smelter’s future is resolved. The most
advanced are Mercury Energy’s Kaiwera Downs and Contact Energy’s Wyndham proposed wind
farms. Stage one of Mercury Energy’s 240MW Kaiwera Downs wind farm, 15km east of Gore,

was completed and officially opened on 20 November 2023. Shipments for the second stage of
the development, although not confirmed, are expected to begin arriving in early 2025.

A fast-track resource consent application for Contact Energy’s Southland Wind Farm project, was
lodged with the Environmental Protection Authority on 22 December 2023.

If the consent is approved, it is hoped that construction would begin in 2025 with the wind farm
to be fully operational by 2027.

OUTLOOK

Global events continue to create uncertainty and provide challenges to our business operations.

“The wars in both Ukraine and the Middle East are continuing to impact marketplaces, which
has a flow-on impact on commodity prices and volumes handled through the Port” said Mr
Cory-Wright.

“The container supply chain is facing additional challenges with the war in the Middle East
escalating into the Gulf of Aden and the Red Sea, preventing shipping lines gaining access to
the Suez Canal, resulting in longer transit times to market.”

The Company has invested significant capital in recent years to upgrade the Island Harbour and
develop our infrastructure for future growth opportunities.

The deepening of our entrance channel is especially important as it will allow us to take greater
payloads, improve the supply chain and provide safer transit for vessels calling at the Port.

There are a number of opportunities on the horizon, and we are now in the position to take
advantage of these as they arise.

In February 2024, Fonterra upgraded its dairy payout forecast. In addition, good progress appears
to have been made in negotiations with Rio Tinto over long term supply arrangements for the
NZAS aluminium smelter. The Government has also announced a new fast track consenting
process which may assist projects such as Ngāi Tahu’s proposed Hananui open ocean
aquaculture farm at Rakiura (Stewart Island).

These are unlikely to have material effects on South Port this financial year but do provide some
reasons for optimism that the current downturn will be short lived.

Based on all known factors at the date of releasing its 2024 interim result, South Port estimates
that its full-year earnings should fall in the range of $7.3 million to $8.0 million (FY2023 - $11.7
million).

DIVIDEND

Despite the expectation of a reduced full-year earnings, the Directors have declared a fully
imputed interim dividend of 7.50 cents per share (2023 – 7.50 cents) payable on 12 March
2024.

The Board will consider the Company’s financial year-end result, market conditions, and trading
outlook before determining the final distribution to shareholders.

ENDS.

For further information contact:

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

Media:
Mrs Charlotte Scoles
Communications Advisor
South Port New Zealand Ltd
Tel: 021 775 298
Email: cscoles@southport.co.nz

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Financial Statements
Statement of Comprehensive Income
Total operating revenues
from Port services 25,475 24,939 53,589
Total operating expenses (16,235) (14,731) (30,385)
Operating profit before
administrative and 9,240 10,208 23,204
finance costs
Administrative expenses (3,227) (2,690) (5,341)
Operating profit before
financing costs 6,013 7,518 17,863

Financial income 33 368 272
Financial expenses (1,793) (760) (1,725)

Net financing costs (1,760) (392) (1,453)
Other income 36 95 104
Surplus before income tax 4,289 7,221 16,514
Income tax (1,256) (2,068) (4,802)
Net surplus after income tax 3,033 5,153 11,712
Other comprehensive income – – –
Total comprehensive
surplus/(loss) after income tax 3,033 5,153 11,712
Basic earnings per share $0.116 $0.196 $0.446
Statement of Cash Flows
SIX MONTH PERIOD ENDED
31 DECEMBER 2023
Cash flows from operating
(note 7) 876 5,434 16,448
Cash flows from investing (8,706) (9,508) (14,040)
Cash flows from financing 8,336 4,838 (2,676)
506 764 (268)
31/12
2022
$000’s
31/12
2023
$000’s
Year to
30/06/23
$000’s
31/12
2022
$000’s
31/12
2023
$000’s
Year to
30/06/23
$000’s
UnauditedUnauditedAudited
UnauditedUnauditedAudited
Statement of Financial Position
AS AT 31 DECEMBER 2023
TOTAL EQUITY 57,829 55,311 59,903
Non-Current Assets
Property, plant & equipment 92,550 84,184 87,727
Right-of-use assets 282 379 330
Deferred tax asset 1,130 1,189 1,106
Financial assets 173 870 658
Total non-current assets 94,135 86,622 89,821
Current Assets
Cash and cash equivalents 1,541 2,067 1,035
Trade and other receivables 10,514 8,868 6,509
Financial assets 451 441 541

Total current assets 12,506 11,376 8,085
Total assets 106,641 97,998 97,906
Non-Current Liabilities
Employee entitlements 63 56 59
Loans and borrowings 43,500 35,500 25,000
Lease liabilities 220 320 262
Total non-current liabilities 43,783 35,876 25,321
Current Liabilities
Loans and borrowings – – 5,000
Trade and other payables 3,588 4,358 4,105
Employee entitlements 1,946 1,874 1,897
Provision for taxation (597) 492 1,582
Lease liabilities 92 87 98

Total current liabilities 5,029 6,811 12,682

Total liabilities 48,812 42,687 38,003
TOTAL NET ASSETS 57,829 55,311 59,903

Net asset backing per share $2.20 $2.11 $2.28
31/12
2022
$000’s
31/12
2023
$000’s
Year to
30/06/23
$000’s
UnauditedUnauditedAudited
NET INCREASE/(DECREASE)
IN CASH
SIX MONTH PERIOD ENDED
31 DECEMBER 2023
5

Notes to the Financial Statements
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2023
01 Activities of South Port Group
The Group is primarily involved in providing and managing port
and warehousing services.
02 Accounting Policies
The Group is a Financial Markets Conduct (FMC) reporting entity
for the purposes of the Financial Reporting Act 2013 and the
Financial Markets Conduct Act 2013. These financial statements
comply with these Acts and have been prepared in accordance
with the New Zealand equivalents to international Financial
Reporting Standards (NZ IFRS) and other applicable Financial
Reporting Standards, as appropriate for profit orientated entities.
These financial statements comply with International Financial
Reporting Standards (IFRS) as appropriate for condensed interim
financial statements. They comply with New Zealand equivalents
to International Accounting Standards 34 (NZ IAS 34) Interim
Financial Reporting, and International Accounting Standards 34.
There has been no change in accounting policies. All policies have
been applied on a consistent basis with the most recent annual
report.
03 Employee Share Rights
The Group adopted a performance share rights plan during this
period. The plan grants participants a right to receive ordinary
shares in South Port NZ for no consideration if the vesting
conditions are met. Vesting is subject to certain performance
conditions measured over a three-year period and the participants
remaining employed by the Group during that period.
The plan is an equity-settled share-based payment arrangement
for accounting purposes. The fair value of the rights is
expensed on a straight-line basis over the vesting period with a
corresponding increase in equity.
30,928 rights were granted during the period, having an
estimated fair value of $142,000, with $9,000 of this being
expensed during the period ended 31 December 2023.
04 Taxation
Income tax expense comprises current and deferred tax at the
company tax rate of 28%. Income tax expense is recognised in
the Statement of Comprehensive Income except to the extent
that it relates to items recognised directly in equity, in which
case it is recognised in equity.
05 Segmental Reporting
The South Port Group operates in the Port Industry in
Southland, New Zealand, and therefore only has one
reportable segment and one geographical area based on the
information as reported to the chief operating decision maker on
a regular basis. South Port engaged with one major customer
who contributed individually greater than 10% of its total
revenue for the period ended 31 December 2023. This customer
contributed $4.38 million for the six months ended 31 December
2023 (2022: $4.14 million).
6

Parent Company
South Port New Zealand Limited
Subsidiary
Awarua Holdings Limited
Group
Companies
Net cash provided by operating
activities
Total equity at beginning
of the period 59,903 55,274 55,274
Profit/(loss) after income tax 3,033 5,153 11,712
Other comprehensive income – – –
Total comprehensive surplus 3,033 5,153 11,712
Share based payment reserve 9 – –
Distributions to shareholders (5,116) (5,116) (7,083)
Total equity at end of the period 57,829 55,311 59,903
31/12
2022
$000’s
Year to
30/06/23
$000’s
31/12
2023
$000’s
Unaudited
06 Statement of Changes In Equity
SIX MONTH PERIOD ENDED
31 DECEMBER 2023
Unaudited
Surplus after taxation 3,033 5,153 11,712
Add/(less) items classified
as investing/financing activities – – –
Add/(less) non-cash items 2,981 1,839 4,514
Add/(less) movement in working
capital (5,138) (1,558) 222

876 5,434 16,448

07 Net Cash Flow from Operating Activities
Audited
Directors
Phillip Cory-Wright
Chair
Cassandra Crowley
Nicola Greer
Michelle Henderson
Clare Kearney
John Schol
Corporate
Executives
Nigel Gear
Chief Executive
Geoff Finnerty
Port General Manager
Jamie May
Commercial Manager
Hayden Mikkelsen
Container Manager
Frank O’Boyle
Infrastructure and
Environmental Manager
Lara Stevens
Chief Financial Officer
Murray Wood
Warehousing Manager
Helen Young
People and Safety Manager
7

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Distribution Notice

Updated as at June 2023



Please note: all cash amounts in this form should be provided to 8 decimal places, including zeros (ie 0.01001000)

Section 1: Issuer information
Name of issuer South Port New Zealand Limited
Financial product name/description Fully Paid Shares
NZX ticker code
ISIN (If unknown, check on NZX
website)
NZSPNE0001S8
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 01/03/2024
Ex-Date (one business day before the
Record Date)
29/02/2024
Payment date (and allotment date for
DRP)
12/03/2024
Total monies associated with the
distribution
1

$1,967,617.35
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.10416667
Gross taxable amount
3
$0.10416667
Total cash distribution
4
$0.07500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.01323529
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed X

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.

Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
6

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

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

Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)

DRP strike price per financial product

Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms

Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Lara Stevens – Chief Financial Officer
Contact person for this
announcement
Lara Stevens
Contact phone number (03) 212 8159
Contact email address lstevens@southport.co.nz
Date of release through MAP

16/02/2024






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

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Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at June 2023


Results for announcement to the market
Name of issuer South Port New Zealand Limited
Reporting Period 6 months to 31 December 2023
Previous Reporting Period 6 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$25,544 0.6%
Total Revenue $25,544 0.6%
Net profit/(loss) from
continuing operations
$3,033 -41.1%
Total net profit/(loss) $3,033 -41.1%
Final Dividend
Amount per Quoted Equity
Security
$0.07500000
Imputed amount per Quoted
Equity Security
$0.02916667
Record Date 01/03/2024
Dividend Payment Date 12/03/2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.20 $2.11
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood

Authority for this announcement
Name of person

authorised
to make this announcement
Lara Stevens – Chief Financial Officer
Contact person for this
announcement
Lara Stevens
Contact phone number (03) 212 8159
Contact email address lstevens@southport.co.nz
Date of release through MAP

16/02/2024

Unaudited financial statements accompany this announcement.