Property Revaluations Hit Bottom-Line but Trading Operations on Par
1 October 2009

The impact of International Financial Reporting Standards (IFRS) accounting treatments is behind a reported sharp dip in Port Marlborough’s 2009 annual profit result. Despite achieving a trading profit in line with the previous year in extremely challenging trading conditions, Port Marlborough recorded an after-tax loss for the year ending 30 June 2009 of $7.79 million, driven largely by required asset revaluations and other non-cash impacts of IFRS based reporting.

Chairman Ed Johnson said that the operational business of the company had held up well in challenging economic conditions, with revenues and expenditure across all trading areas maintained at levels consistent with those achieved in the 2008 financial year.

“However, the reported result reflects the impacts of adverse fair value movement in interest rate derivatives and revaluations of the Company’s property portfolio which must now be recorded in the Income Statement rather than as movements in Balance Sheet reserves,” he said. “Adjusting for the impact of investment property revaluations, impairments and derivatives (interest rate swaps), Port Marlborough achieved a pre-tax trading surplus of $6.32 million, just 5% behind the comparable 2008 result ($6.66 million).”

Total Group revenues (excluding revaluations), slipped 3% to $18.24 million, (2008: 18.83m), attributable to a recessionary trading environment that saw income from port installations and services decline 7%. As anticipated, total ferry passenger and freight volumes (including rail and commercial vehicles) through the port were down 10% on the previous year and log exports through the port decreased 22%. Revenues were bolstered by the Meridian Westwind wind farm project cargoes and consistent performance from marina operations.

Dividends totalling $4.5 million were paid to the port company’s shareholder MDC Holdings Ltd, a wholly-owned subsidiary of the Marlborough District Council. This figure includes a $2.5 million special dividend, which makes up part of a $10 million special dividend to be paid to the shareholder over a two year period, with the balance due in March 2010. This will take total dividends paid by Port Marlborough since its establishment in 1988 to in excess of $50 million.  
 
Mr Johnson said that while uncertainty in the economic climate is likely to continue to put volumes in all trading operations under pressure, the Company has a strong balance sheet, a low debt/equity ratio and sound strategies in place to respond to the changing business environment.