28 February 2013
Containers Contribute to strong start of year for Lyttelton Port of
Christchurch
Lyttelton Port of Christchurch (LPC) has continued its strong performance for
the first six months of the 2012/2013 financial year, with revenue increasing
to $54.2 million (up 4.5% on the same period last financial year) and Profit
after taxation increasing 15.1% to $3.3 million.
Key factors contributing to these results have been the increase in container
volumes, bulk fuel volumes and dry bulk imports.
"This six-month period has provided us with a strong base for the full year"
said Chairman Rodger Fisher. "We continue to consolidate growth in our
container business and other cargoes, largely due to the result of
strengthening relationships and support from our customers.
The increase in dairy volumes from new and expanding facilities in the
Canterbury region is a key factor in our on-going business growth.
We continue to work on and refine our Reinstatement and Development Plan, and
good progress has been made with advancing the future shape of the Port."
The statutory consolidated result, which includes earthquake effects such as
additional costs and depreciation on earthquake assets, offset by insurance
proceeds, is a profit after taxation of $3.3 million. This compares to a
$2.8 million profit for the same period to 31 December 2011, an increase of
15.1%.
"This after-tax result is proof of the underlying strength of the business
and reflects solid business performance, particularly in container volumes
and bulk cargoes," Mr Fisher said.
Revenues totalled $54.2 million, up 4.5% from $51.8 million in the previous
comparative period.
LPC is now outside its business interruption indemnity periods. This has
impacted in two main areas:
Cruise revenue - no accrual has been made for revenue losses in the current
period
Ongoing earthquake related expenditure - the view has been taken that from 1
July 2012, costs under $250,000 per item that would previously have been
"quake related" will now be included in the "normalised" result. Costs
meeting this threshold totalled approximately $350,000 in the period.
With regard to the depreciation on earthquake assets, a number of emergency
repairs have been made to LPC''s harbour structures and these repairs by their
nature have an economic life which exceeds 12 months. They are not the
permanent structures LPC is entitled to under its material damage insurance
policies, but temporary repairs made under its business interruption
policies. However, given the life of these structures, they are required to
be capitalised under IFRS and then written off over their economic life.
An additional insurance income accrual of $1.0 million for the period ended
31 December 2012 has taken the total accrual to $30.0 million. This accrual
related to costs incurred under the material damage policy.
Operational Performance
Highlights for the year to date have included continued growth in the
container trade and an increase in general cargo volumes across a number of
trades.
"This has been a very positive start to the year" said Chief Executive Peter
Davie,
"Our container trade continues to grow, increasing 2.1% compared to this time
last year and enabled by the excellent planning and high productivity from
our staff. Given the ongoing difficult working conditions due to earthquake
damage, that growth is an achievement we can all be proud of."
Following the contraction in Solid Energy''s business, coal volumes declined
to 991,383 tonnes (down 19.9% on last year). LPC is forecasting a 17%
reduction in its 30 June 2013 coal volumes which is estimated to result in a
$0.7 million reduction in its after tax earnings. LPC is working closely
with Solid Energy given the Company''s publicly stated financial position, and
will inform the market if there are any material developments.
There has been 10% uplift in bulk fuel tonnage to 558,537 tonnes over the six
month period. In addition, dry bulk volumes have increased 6.0% to 339,085
tonnes. Cement, grain and fishing volumes continue to rise, while fertiliser
volumes were lower compared to the same period last year. Good volumes are
expected for the next six months.
CityDepot continued to experience growth with high demand for dairy
containers, and experienced additional rail volume through the rail siding
all in conjunction with extended hours of service.
Summary of the Highlights for the Six Months
LPC''s financial and operational highlights for the six months include:
15.1% rise in profit after tax to $3.3 million
4.5% rise in revenues to $54.2 million
2.1% rise in total TEUs to a record 170,030, and 4.7% rise at the Container
Terminal to 164,890 TEUs
Te Awaparahi Bay reclamation now over 3.5 hectares with 8,000 square metres
of storage space available
Retained Tertiary Status (highest level) following an ACC Workplace Safety
Management Practice Audit in October
Investment in four new diesel electric straddles in the Container Terminal to
meet demand and enhance service requirements due for delivery in April 2013
LPC Directors University of Canterbury Scholarship for 2013. An annual
scholarship of $10,000 towards the first year of study available to LPC staff
members and their immediate families, funded jointly by Directors and LPC.
Dividend
The payment of dividends has been suspended until the Directors are
comfortable with the progress being made on insurance matters.
"The situation remains the same as our advice to the market in November 2012.
Whilst some insurance payments have been received, matters with our insurers
are not yet finalised and the total financial impact of the earthquake damage
remains unclear," Mr Fisher said. "The payment of dividends therefore remains
suspended, although we see no reason why we would not revert back to paying
dividends once matters have been resolved."
Insurance update
Since the Shareholder meeting on 2 November 2012, LPC has continued to work
constructively with the insurers on its claims. Good progress is now being
made in all areas; material damage, business interruption and contract works.
Regarding the material damage claim; LPC has been in further discussion
regarding its draft Reinstatement Plan, and is receiving feedback from the
insurers on a number of aspects. Reinstatement designs for the key harbour
structures are underway, with construction planned to commence during 2013.
LPC will commence public consultation on the wider building programme this
year.
LPC''s Head Office building at Norwich Quay is also a focus for reinstatement
as soon as possible. Final engineering reports are expected shortly, which
will provide LPC with advice on whether the building is to be repaired or
rebuilt. Discussions can then commence with the insurers on the required
solution. As LPC reinstates its infrastructure, funds are expected to flow as
the costs are incurred in line with the Pay as You Go process.
LPC''s material damage policy entitles LPC to receive indemnity progress
payments on earthquake damaged and destroyed assets that are covered for
reinstatement. To receive these payments the indemnity value first needs to
be established. Opus International Consultants Ltd has been engaged to
undertake an indemnity valuation for six key harbour structures. This work
is almost completed, and will be provided in the near future to the insurers
for consideration. Once the indemnity valuation is agreed, the insurers are
required to make a progress indemnity payment for these structures.
Progress is continuing to be made on the business interruption claim, with
constructive interaction between the loss adjusters. Substantiation of claims
for the loss of revenue and increased costs as a result of the earthquakes is
ongoing.
The contract works claim for damage to the works underway at CQ1 on 13 June
2011 has been submitted to insurers and is currently under review by their
loss adjusters. LPC expects this matter to be resolved in the near future.
Outlook
Trade volumes are expected to continue to grow in the second half of the
current financial year. LPC''s current expectation for the full year
Earthquake-adjusted Profit after taxation is between $13 million and $15
million. The reduction from the 30 June 2012 full year Earthquake-adjusted
Profit after taxation of $17.0m is largely due to LPC moving outside its
indemnity period for cruise revenue and the reduction in Solid Energy coal
volumes.
"We''re anticipating rounding out the year with strong trade results" said Mr
Davie. "There are challenges to be expected as we continue to keep the Port
operational throughout the rebuild and development while ensuring we meet the
needs of our customers. We provide a vital link to the Canterbury region as
it moves forward in the rebuild of the city. We have been fundamental in the
execution of the Greater Christchurch Transport Statement designed to help
guide the development and management of Greater Christchurch transport
programmes and partners'' investment strategies towards a strong and resilient
future".
Mr Fisher concluded, "We will continue our efforts on growing the business,
and the commencement of the long-term reinstatement of assets as well as
progressing our insurance claims. We will keep the market informed as the
next six months unfolds".
-Ends-
For further information contact:
RODGER FISHER PETER DAVIE
Chairman Chief Executive
Lyttelton Port of Christchurch Lyttelton Port of Christchurch
021 947 571 (03) 328 8198
027 444 1254
End CA:00233596 For:LPC Type:HALFYR Time:2013-02-28 17:05:56