30 June 2008
South Island Companies Holding Their Own
Inaugural Deloitte South Island Index Released
South Island listed companies outperformed the wider NZX 50 during 2007, and have not been hit as hard in the first quarter of 2008, according to the inaugural Deloitte South Island Index issued today.
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of listed companies with a registered office and/or a substantial portion of their operations in the South Island. There were 33 companies on the South Island Index in 2007, and 32 in 2008 (following the merger of Loan and Building Society with Canterbury Building Society.)
Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, said the South Island Index achieved an overall gain of 11.2% in 2007, while the NZX 50 index was up 0.3%. “This disparity can be attributed to two things – the first is the positive impact of capital-raising by Ebos Group, Cavotec MSL Holdings and New Zealand Windfarms, and the second is the South Island’s relative isolation from the shockwaves of the credit crunch that began to affect the global financial markets at the end of last year.”
He noted that the gains in market capitalisation masked the fact that 39% of companies on the South Island Index recorded a reduction in the 2007 calendar year, with the largest falls coming in the technology, retail and financial services sectors.
In the first quarter of 2008, the South Island Index delivered a drop of 11.2%, but this compared favourably to the 14.2% fall experienced by the NZX 50 in the same period.
Mr Munro said that the market was presenting challenges for many companies as the impact of the strong NZ dollar, a gloomy consumer outlook, and volatility in overseas markets began to bite. “It appears 2008 is set to be a year where caution is going to be exercised as things get a little bumpy – but there will be opportunities around for those prepared to be bold.”
All South Island sectors experienced declines in Q1 of 2008, with the technology (down 2.0%), port (-6.6.%) and primary produce (-8.0%) sectors least affected. Companies in the retail (-27.4%) and biotechnology (-22.3%) sectors had been hit particularly hard.
As in 2007, Ryman Healthcare remained the South Island’s largest listed company with a market capitalisation of $855m as at 31 March 2008, followed by PGG Wrightson ($596.5m) and NZ Farming Systems Uruguay ($341.9m).
The Deloitte South Island Index will be released throughout the year, tracking the performance of South Island companies on a quarterly basis. Mr Munro said the Index would provide investors, companies and the public with an interesting perspective on the financial markets of the Mainland.
About Deloitte in New Zealand
Deloitte New Zealand brings together more than 900 specialist professionals providing audit, tax, technology and systems, strategy and performance improvement, risk management, corporate finance, business recovery, forensic and accounting services. Our people are based in Auckland, Hamilton, Wellington, Christchurch and Dunedin, serving clients that range from New Zealand's largest companies and public sector organisations to smaller businesses with ambition to grow.
Deloitte's local experts draw on best practice and innovative methodologies from around the world as part of Deloitte Touche Tohmatsu, whose 150,000 people globally serve over 80 percent of the world's largest companies. A long track record and a wealth of international research into the needs of growing organisations has made Deloitte the world's leading advisor to emerging businesses. For more information about Deloitte in New Zealand, look to our website www.deloitte.co.nz
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names “Deloitte,” “Deloitte & Touche,” “Deloitte Touche Tohmatsu,” or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.