I will now bring you up to date with recent trading indicators from our investment in Northport and the other port-related businesses.
NORTHPORT
I am pleased to report that trading for the first four months of the financial year is ahead of budget and ahead of last year's volumes. While projections are for a slower fourth quarter of 2011 indications still are that we will once again see another year with cargo volumes well in excess of 2 million tonnes.
Currently all cargoes are experiencing above budget levels which is a healthy sign.
The high level of log exports has created some storage and congestion issues within the port area. To alleviate the storage constraints some temporary storage area has been established on Northland Port Corporation land outside the port gate. This has provided time for the planning of an additional 3 hectares of paved log storage area within the port. Tenders have recently been let for this work and it will commence shortly with completion expected before Christmas.
To alleviate vehicle congestion the decision has also been made to relocate the log scaling operations outside the port gate on to Northland port land and to construct a second entrance to the port to the west of the main entrance.This capital expenditure will be funded by NPC and be the subject of a long term lease arrangement. Work on this project will also commence shortly with completion also expected before Christmas.
A business development manager has recently been contracted jointly with NPC to promote the port and the adjacent industrial land with the expected outcome of increased cargo volumes. This initiative is already proving its worth with some valuable contacts made and opportunities being pursued.
I have great pleasure in advising that we have recently received confirmation from the Minister of Conservation of her decision to grant a long term lease of the seabed below the reclamation to the company on terms which are acceptable. This brings to an end long standing discussions between the parties and provides the company with security of tenure. Lease arrangements are currently being finalised.
NORTHPORT COOLSTORES/NORTHLAND STEVEDORING SERVICES
Both joint ventures continue to operate satisfactorily and within budget.
INDUSTRIAL LAND
The development and tenanting of the company's industrially zoned land still continues at a frustratingly slow pace. However there have been some positive developments recently.
An area of approximately 3 hectares has been leased to Northport to alleviate logs storage constraints within the port area. While this is of a short term nature it has provided rental income which will assist in financing development of the area.
As mentioned earlier we have also reached agreement with Northport to relocate the log scaling operations to the area just outside the port gates. This alleviates the congestion and queueing problems which were being experienced as a result of the high level of log exports, and has the added benefit of providing NPC with a long term rental stream.
Discussions are also well advanced with another party to erect a storage building adjacent to the existing storage buildings close to the port boundary. The intention is to provide opportunity to create additional cargo volumes through the port and import products which are currently coming north by road. This project is likely to commence shortly with completion expected in the first quarter of the 2012 calendar year.
We have also been successful in leasing the old service station premises on the corner of Port Marsden Highway and Marsden Bay Drive to a trucking company. It is pleasing to have the premises tenanted as we have experienced ongoing problems with vandalism since it was vacated.
While there is still a considerable way to go it is pleasing to at least see some progress in tenanting the company's substantial landholdings that in time will be of such importance to the trade through the port.
MINORITY INTERESTS
At the last AGM the directors were asked to consider the possibility of having a director to represent the interests of minority shareholders. THis would require a change to the company's constitution, which in turn would require the agreement of the major shareholder, the Northland Regional Council.
The directors debated the matter during the year and concluded that the role of any director is to represent all shareholders rather than individual factions, and the most important quality for a director is his or her skillset, rather than who they represent. Decisions regarding director nomination are made on this basis.
The directors advised the Northland Regional Council of this view and the decision was made not to make any change to the constitution.
I trust that shareholders will understand this point of view, and assure you that the decisions made by the board are made in the best interests of all shareholders.
THANKS
To Jim Smillie and his support team at Northland Port Corporation, to Jon Moore, CEO at Northport and all his staff and contractors at Northport, the management and staff at coolstores and stevedores, thank you for your support and commitment during the year.
To my fellow directors, thank you for your ongoing support and advice.
To the Northland Regional Council, thanks for your positive support over the year.
Geoff Vazey
CHAIRMAN
Whangarei
28 October 2011
