Containers Contribute to Strong Start of Year
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.”
|Summary of Financial Results: 31 December 2012||31 December 2011||Movement|
|Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA)||18,339||18,632||(1.6%)|
|Earnings Before Interest and Taxation (EBIT)||12,903||13,252||(2.6%)|
|Earthquake-Adjusted Profit After Taxation||7,951||9,532||(16.6%)|
|Earthquake Impacts (net of Taxation)||(4,700)||(6,708)||29.9%|
|Profit After Taxation||3,251||2,824||15.1%|
|Shareholders’ Equity (percentage)||63.83%||62.19%||2.6%|
|Earnings Per Share (cents)||3.2||2.8||15.1%|
|Net Asset Backing Per Share (dollars)||2.69||2.48||8.6%|
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 $51.8 million in the previous comparative period.
|The changes in the Earthquake-adjusted Profit between the two periods are outlined in the table below, along with a reconciliation of the reported profit to Earthquake-adjusted Profit: 6 months ended||31 December 2012||31 December 2011|
|$ millions||$ millions|
|Profit after tax||3.3||2.8|
|add Cruise revenue||-||1.4|
|add Earthquake expenditure||5.2||7.9|
|add Depreciation on earthquake assets||2.3||-|
|less Insurance income||(1.0)||-|
|Earthquake-adjusted Profit after Tax||8.0||9.5|
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.
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. Page 3
|Summary of Operational Performance Indicators: 31 December 2012||31 December 2011||Movement|
|Total Container Volumes (TEUs)||170,030||166,582||2.1%|
|Total Containers through the Container Terminal (TEU's)||164,890||157,457||4.7%|
|Coal Exports (tonnes)||991,383||1,237,894||(19.9%)|
|Log Exports (tonnes)||156,699||161,020||(2.7%)|
|Bulk Fuel (tonnes)||558,537||507,981||10.0%|
|Dry Bulk Imports (tonnes)||339,085||319,824||6.0%|
|Ship Visits (number)||464||480||(3.3%)|
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.
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.”
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. Page 4
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.
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”.