Chairman's Report

The after tax surplus for the year to 30 June 2008 was $10.049 million compared to last year‘s $9.33 million. The profit includes a one off gain of $7.65 million resulting from the sale of the Company’s 50% interest in the Marsden Cove waterway and marina joint venture.

Final and special dividends amounting to 17 cents per share were declared in August and paid to shareholders on the 26th September. These added to the interim dividend of 3 cents per share bring the total to 20 cents per share for the period.

Northport Ltd

(50:50 Joint Venture with Port of Tauranga) A net increase of about 100,000 revenue tonnes lead to a better than budgeted operating profit from the investment in Northport. Log throughput was down slightly on last year, however veneer and triboard cargoes were down markedly reflecting depressed conditions in the Japanese market.

Very good increases in shipments of LVL (laminated veneer lumber), sawn timber, woodchip, fertilser and cement more than compensated for the above mentioned decreases in other areas.

Palm Kernel (used for stock feed) is now being imported through the port and it is anticipated this trade will see steady growth.

During the year Hancock Forests sought expressions of interest in a supply contract for woodchip material. Marusumi was the successful tenderer and as a result plans are now well under way to increase by half, the size of the existing woodchip storage pad at the port in anticipation of doubling the contracted chip volumes over the next three to five years.

Hancock Forests are presently seeking preliminary expressions of interest in wood supply contracts from high density fibreboard manufacturers. An outcome is expected over the next 12 months with exciting prospects for Northport.

North Port Coolstores (1989) Ltd

Northland Stevedoring Services UJV While Coolstores had a satisfactory year benefiting from increased kiwifruit and butter volumes, the stevedoring joint venture struggled to meet previous year’s levels of profitability.

Marsden Point Land Bank

Efforts to attract tenants with potential export or import cargoes have been disappointing.

Directors are conscious of the very low returns from the land bank.

A review of a number of options is presently taking place and I would expect to avail shareholders of any outcome at the Annual General Meeting in October.

Marsden Cove Ltd

Earlier in the year the decision to sell the investment in the Marsden Cove waterways and marina project was made.

The initial aim to combine the Company’s land with Hopper’s expertise to provide a world class development for the area, was in the Directors’ view achieved.

The profit from the sale combined with previous year’s income from the project amounted to approximately $12 million over the four years of our involvement.

Sea-Tow Ltd

Since balance date the Company has received repayment in full ($5.525 million) of the advance made to Sea-Tow management four years ago, to assist it with the purchase of Northland Port Corporation‘s interest.

Outlook

There is anticipation that log volumes will lift significantly in the last quarter of our financial year due to favourable (to New Zealand exporters) influences in the Russian, Korean and Indian markets. We also expect woodchip export volumes to steadily increase as Marasumi builds capacity to process logs arising from the new supply contract with Hancocks.

We therefore expect improved tonnages over those achieved in the year under review.

Efforts to enhance returns from the capital employed in the land bank will continue.

Thanks

To my fellow Directors, thank you once again for support and counsel during the year. To Jim Smillie - the Company’s General Manager, Jon Moore - CEO at Northport and their respective support staff, as well as all management and staff at North Port Coolstores and Northland Stevedoring Services, thanks for your continued efforts and can do attitude.

Mike Daniel
Chairman