BusinessDesk report by Tina Morrison
CentrePort, the Wellington port operator, turned to an annual loss after damage from November’s Kaikoura earthquake last year weighed on its business.
The port company posted a loss of $2.3 million in the 12 months ended June 30, from a profit of $11.6 million a year earlier, it said in a statement. The year-earlier earnings were restated due to a change in the accounting treatment of convertible notes. Underlying profit before earthquake-related income, fair value adjustments and tax slipped 32 percent to $10.8 million.
CentrePort was forced to suspend operations immediately following the Nov. 14 earthquake last year as it dealt with damage to its buildings and liquefaction and it was forced to modify its services to get them up and running.
In the past year, the port has received $173 million of insurance income which helped fund a $28 million temporary works programme to secure 125 metres of the 585-metre wharf. That enabled its two ship-to-shore cranes to resume operations last month. Some 185 piles were driven an average of 40 metres into the soil, and 644 gravel columns were embedded in the ground to reduce liquefaction from future earthquakes.
Speaking in one of the port’s dozen or so temporary office buildings in its ‘portacom village’, chief executive Derek Nind said the past year had been “like a rollercoaster” as the company got the business back up and running, set about assessing the damage from the quake, and worked out whether assets should be demolished or repaired.
The company is expecting further insurance income as engineers and insurers complete their deliberations. It estimates total material damage claims to total $350 million for the port and more than $106 million for commercial properties. It increased the provision for write-downs in the value of its commercial properties to $32 million, from $20.4 million in its first-half accounts.
The port has told its shareholders, the Wellington and Manawatu-Wanganui regional councils, that it’s unlikely to pay a dividend for three years following the quake.
In the latest year, its operating revenue fell 16 percent to $63.7 million, not including $9 million in business interruption insurance. Operating expenses were little changed at $60 million.
CentrePort said it is now focussing on its long-term plan as it reassesses its strategy following the earthquake and subsequent damage.
News from CentrePort
CentrePort’s underlying profit before earthquake-related income, fair value adjustments and tax was $10.8 million for the 2016/17 financial year, up from $5.4 million for the six months ending 31 December 2016.
The Port’s revenue for the year ended 30 June 2017 was $63.7 million. This is down on the $76.2 million for the previous year, but does not include $9.0 million in business interruption insurance income received following last November’s Kaikoura earthquake.
This performance was driven by strong growth in vehicles, cruise, fuel and log trades, which are up on last year by 32%, 12%, 7% and 5% respectively.
Profit after tax from continuing operations was $51.7 million, but CentrePort decided it was necessary to make a provision of $63.0 million to invest in resilience over the coming years. When combined with a $9.0 million increase in the value of Port land this has resulted in the company posting a $2.3 million loss.
In the past year, CentrePort received $173 million in insurance income, which helped fund the $28 million temporary works programme to allow a reinstatement of its two ship-to-shore cranes, which are now operational. Insurance income is expected to rise further as engineers and insurers complete their deliberations. Total material damage claims are estimated to be $350 million for the Port and in excess of $106 million for commercial properties.
CentrePort has increased the provision for write downs in the value of commercial properties to $32.0 million, up from $20.4 million for the six months ending 31 December 2016.
Chairman Lachie Johnstone said the Board was pleased by the financial results and the progress the company had made to recover from last year’s earthquake. “These results show us investing in the Port’s resilience. They also show strong underlying performance.”
Chief executive Derek Nind says CentrePort had decided to account for the impact of the earthquake sooner rather than later.
“Our financial statements shows us facing up to the damage we’ve sustained, and investing to build our resilience in the future. We’re also seeing the benefits of being well insured, and expect these benefits to continue. We’re now focussed on completing temporary recovery works, and formulating plans for the long-term regeneration of the Port.”