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Fonterra Contract Highlight of First Six Months

Fonterra Contract Highlight of First Six Months for Lyttelton Port of Christchurch

In announcing the half year result for Lyttelton Port of Christchurch, Chairman Mr Rodger Fisher commented that “revenue had reduced 2.4% to $42.1 million, compared to the same period last year, and net profit after taxation (NPAT) reduced to $3.67 million, compared to $5.66 million.” Mr Fisher further commented that ”Key influences on this are changes in cargo mix and significant differences in the timing of maintenance spend when compared with last year.”

Earnings before interest, taxation, depreciation and amortisation were $13.1 million for the first half of the 2010 year.

“The first half of the year has been a challenging period for the company but Lyttelton has shown resilience in a difficult environment, with the container trade in particular showing continued growth,” said Mr Fisher.” The port is in the fortunate position of holding an almost equal import/export trade balance, buffering the company from extreme decreases in either sector.”

“The highlight of the six month period to 31 December 2009 was the signing of the contract with Fonterra to move the majority of its cargo from their Clandeboye plant. The movement of this cargo began in earnest in October 2009 and continues to help grow the volume of full containers shipped through the port” said Chief Executive Mr Peter Davie.

“Further rationalisation of shipping services has resulted in a reduction in ship calls, but volumes have continued to increase. Although empty container volumes have reduced, the volume of full containers through the Container Terminal has increased by 3.4% compared to last year” added Mr Davie.

Mr Fisher noted that “The first six months of the previous financial year (July to December 2008) produced a strong trading result, but the second half was weaker due to the impact of the worldwide recession in the 2009 calendar year. In comparison the first half of this financial year is in line with our normal trading pattern of earlier years where we have normally experienced a stronger result in the second half of the financial year.”

Other highlights for the year-to-date have included, lodging of consent applications for expansion of the coal yard and the deeper harbour dredging project and receipt of the Antipodes report on the potential merger with Port Otago. Further to this, on 19 February 2010 in a joint statement from the Chairmen of LPC and POL, it was announced that the Boards had agreed that continuing to work towards a potential operational merger is warranted.

“Coal volumes declined to 855,213 tonnes, down 9.7% compared to the same period last year. This decline in coal volume was largely due to a reduction in demand from steelmakers as a result of the global economic downturn and the industrial action experienced by Solid Energy in late 2009. In addition to this, the first shipment of Pike River Coal did not take place until February 2010. However, looking forward we believe that full-year coal volumes will remain in line with those achieved in the 2009 financial year.” Mr Davie said.

“Log exports have been the stand out business in our non terminal trades; we have experienced a record first six months with log exports growing 112% on the same period last year. Most of the demand has come from China but we are also encouraged to see Korean markets starting to show a lift in demand again” Mr Davie further noted.

In other trades motor vehicle imports have continued to decline while fuel has remained relatively unchanged. Fertiliser has remained steady but overall dry bulk imports have declined slightly from last year.

“We anticipate that volumes will increase in the second half of the financial year, however, the year to 30 June 2010 remains very challenging” said Mr Davie. “Our full year NPAT expectation remains between $9.0 and $10 million as previously advised to the market, with the likelihood that the result will be at the bottom end of this range.”

The Directors have declared an interim dividend of 1.5 cents/share, fully imputed, which will be paid to shareholders on 26 March 2010.

Key Achievements

We signed the new commercial contract with Fonterra for the transport of dairy products for export through the Container Terminal

The Board approved a new rail siding project which will increase capacity in line with our overall strategy of increasing the amount of cargo moved by rail and will make it the most efficient port siding in the South Island.

Volumes of full containers shipped through the Container Terminal increased 3.4% compared to the same period last year

The Antipodes report on the potential merger with Port Otago was received for consideration by the Directors and post this time we made an announcement in conjunction with Port Otago Ltd. that both Boards believe that continuing to work towards a potential operational merger is warranted.

We lodged a consent application for a deeper harbour capital dredging project

We lodged a consent application for expansion of the coal yard

Container capacity has been increased by extending the container yard, through the removal of the shed on Cashin Quay 1.

ENDS

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