Napier Port Holdings Ltd · NZX:NPH
Napier Port — FY2021 Earnings Presentation
37 slides from Napier Port's earnings presentation, November 2021
Slide 1: Keeping Our Region Connected to the World – Annual Results 2021
KEEPING OUR REGION CONNECTED TO THE WORLD ANNUAL RESULTS 2021
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This presentation has been prepared by Napier Port Holdings Limited (together with Port of Napier Limited, "Napier Port"). This presentation is being provided to you on the basis that you are, and you represent and warrant that you are, Past performance: Any past perf
Slide 3: Presenting Today
PRESENTING TODAY ALASDAIR MACLEOD TODD DAWSON KRISTEN LIE CHAIRMAN CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER 3
Slide 4: Welcome & Introduction
WELCOME & INTRODUCTION Another successful year under challenging conditions Growth in trade & financial results ahead of forecast & guidance Good progress on strategic initiatives, including 6 Wharf and our Culture of Care and further enhancing our sustainability governance and launching our sustain
Slide 5: Highlights
HIGHLIGHTS
Slide 6: Highlights – 2021 Financial Year
HIGHLIGHTS 2021 FINANCIAL YEAR Strong financial results – setting new records A resilient local economy and rural sector, buoyant export markets Demonstrating operational resilience in the face of challenging container shipping environment & reduced operational footprint Significant progress on stra
Slide 7: Strategy – Driving Growth and Resilience
STRATEGY – DRIVING GROWTH AND RESILIENCE A PLATFORM FOR GROWTH • 6 Wharf – significant construction progress • Planning advanced for operational integration • Expect to be operational during 2H FY2022 STRATEGIC PROJECTS • Health and safety development programme progressed • Focus in year on critical
Slide 8: 6 Wharf Construction – Advancing with Confidence
6 WHARF CONSTRUCTION – ADVANCING WITH CONFIDENCE STATUS1 • All 400 reinforced concrete piles completed • All 4,500 seawall revetment armour blocks cast, 3,850 now in place • 26 of 32 deck concrete pours completed • 1.0 million m3 of around 1.3 million m3 dredging completed • All 10 MoorMaster units
Slide 9: Record Trade Result Driven by Log Exports
RECORD TRADE RESULT DRIVEN BY LOG EXPORTS TRADE OVERVIEW Variance Volume FY2021 FY2020 kT / TEU % Total cargo (kT) 5,869 5,049 +820 +16.3 Containerised cargo (TEU) 276,000 268,000 +8,000 +2.9 Bulk cargo (kT) 3,950 3,121 +829 +26.6 - Logs exports (kT) 3,019 2,365 +653 +27.6 • Volume records for total
Slide 10: Record Financial Results Despite Challenges
RECORD FINANCIAL RESULTS DESPITE CHALLENGES FINANCIAL RESULTS OVERVIEW FY2021 FY2020 Variance $M $M $M % Revenue 109.5 100.4 +9.0 +9.0 Result from operating activities 43.8 41.2 +2.6 +6.4 Net profit after tax - underlying¹ 22.0 20.6 +1.4 +7.0 Cash flow from operations - underlying¹ 34.8 29.7 +5.1 +1
Slide 11: Financial & Operating Performance
FINANCIAL & OPERATING PERFORMANCE
Slide 12: Record Trade Result Drives Revenue Growth
RECORD TRADE RESULT DRIVES REVENUE GROWTH • 9.0% total revenue growth year-on-year (YoY) • Revenue increases of 32.7% for bulk cargo and 4.8% for container services, nil cruise revenue • Revenue growth also supported by higher average revenue per unit1 (ARPU) FY2021 REVENUE PROGRESSION FY2021 REVENU
Slide 13: Bulk Cargo – Record Volume and Revenue
BULK CARGO – RECORD VOLUME AND REVENUE • Bulk revenue increased 32.7% YoY to $41.5m • Volume growth +0.83 million tonnes (+26.5%) to record 3.95 million tonnes • Bulk cargo average revenue per tonne increased 4.8% to $10.50/T from $10.02/T • Cargo mix • Includes one-off cost recovery revenue of $0.2
Slide 14: Record Log Volume – Million Tonnes
RECORD LOG VOLUME – 3 MILLION TONNES • Log export volume +0.65 million tonnes (+27.6%) YoY with strong log export market conditions sustained during the year • Less volume volatility in FY2021 • Alert Level 4 lockdown in August 2021 did not materially impact volume LOG EXPORT VOLUME FY2021 ALL CARGO
Slide 15: Container Services Revenue Growth Despite Disruptions
CONTAINER SERVICES REVENUE GROWTH DESPITE DISRUPTIONS • Container Services revenue up 4.8% YoY • Volume increased 8,000 TEU (+2.9%) YoY • Tranships and DLRs up 6,000 TEU – shipping schedule disruptions • Reefer volumes up 3,000 TEU. Meat exports increased 13.5%, apple exports reduced 1.5% • Average
Slide 16: Impact of Container Shipping Disruptions
IMPACT OF CONTAINER SHIPPING DISRUPTIONS • Container vessel calls reduced by 51 to 242, largely due to shipping line omissions • Fuller container vessels/ less cargo space availability – cargo competing for on-board slots • Increase in rehandling and restacking as export containers rebooked onto sub
Slide 17: Opex Increase with Activity and FY2020 COVID Measures Unwind
OPEX INCREASE WITH ACTIVITY AND FY2020 COVID MEASURES UNWIND • Employee benefit expenses up 10.8% YoY • FY2021: unwinding of COVID-19 response measures in FY2020 & strategic investment in people and capability • Property and plant expenses up 10.7% due to higher fuel costs and external plant hire •
Slide 18: Higher Operating Result: Margin Maintained
HIGHER OPERATING RESULT: MARGIN MAINTAINED • Result from operating activities up $2.6m (+6.4%) • Operating margin maintained at least 40%, despite cost pressures and nil cruise revenue RESULT FROM OPERATING ACTIVITES % Revenue 40.8% 41.0% 40.0% $50 43.8 40.7 41.2 $40 $30 Millions $20 $10 $- FY2019 F
Slide 19: NPAT Higher with Operating Result
NPAT HIGHER WITH OPERATING RESULT • Underlying NPAT¹ increased by $1.5m (+7.0%) • Higher operating result (+$2.6m pre-tax) NET PROFIT AFTER TAX $25.0 23.2 22.0 22.0 20.5 19.6 $20.0 $15.0 Millions $10.0 6.8 $5.0 $- FY2019 FY2020 FY2021 Reported NPAT Underlying NPAT 1- Refer to appendices for reconcil
Slide 20: Capital Expenditure – Delivering Wharf
CAPITAL EXPENDITURE – DELIVERING 6 WHARF • Capital expenditure of $110.4m1 • 6 Wharf construction $100.9m2, cumulative total $134.2m • Other development in support of strategic initiatives and growing revenue • includes further reefer capacity and interim payments for the log debarker • Inflationary
Slide 21: Cash Flow & Liquidity
CASH FLOW & LIQUIDITY FY2021 FY2020 Var $M $M $M Operating cash flows 34.8 29.3 5.5 Investing cash flows (103.6) (46.0) -57.6 Dividends (15.6) (5.0) -10.6 Other financing cash flows (0.1) (1.6) +1.5 Reduction in cash and cash equivalents (6.5) (23.3) Increase in bank debt (78.0) - • Strong operating
Slide 22: Capital Management
CAPITAL MANAGEMENT • Target ratio of Net Debt to EBITDA ceiling of 3.5x through the 6 Wharf construction period, with the expectation that the ratio will be managed to within its long-term target range of 2.0x - 3.0x over time, following completion of 6 Wharf • Better than expected underlying earnin
Slide 23: Conclusion & Outlook
CONCLUSION & OUTLOOK
Slide 24: Conclusion
CONCLUSION KEEPING OUR REGION CONNECTED Strong financial result in the face of operational challenges and constrained container supply chain environment Demonstrated resilience of people and diversity of our regional cargo base Significant progress on strategic initiatives and strategic roadmap on-t
Slide 25: Current Outlook – Looking Forward to FY2022
CURRENT OUTLOOK LOOKING FORWARD TO FY2022 Continuation of container-based supply chain and shipping disruptions expected in FY2022 Living with COVID-19 in the community – implemented mandatory vaccination policy for staff, moving towards mandatory vaccination for port access by end of the calendar y
Slide 26: FY2021 Dividend
FY2021 DIVIDEND Final dividend of 4.7 cps declared Fully imputed Record date: 6 December 2021 Payment date: 16 December 2021 Total dividends, in respect of FY2021, of 7.5 cps, fully imputed 26
Slide 27: Questions
QUESTIONS
Slide 28: Appendices
APPENDICES The following appended financial information provides a summary of financial information for the year ended 30 September 2021 (FY2021) compared to the corresponding period in 2020 (FY2020). Reconciliations provided are extracted from and should be read in conjunction with the Supplemental
Slide 29: Revenue
REVENUE NZ$000 FY2021 FY2020 Container services 65,331 62,339 Bulk cargo 41,488 31,275 Cruise - 4,300 Sundry revenue 282 252 Revenue from port operations 107,101 98,166 Revenue from property operations 2,359 2,261 Total operating income 109,460 100,427 29
Slide 30: Operating Expenses
OPERATING EXPENSES Employee benefit expenses NZ$000 FY2021 FY2020 Wages & salaries 33,478 30,535 Other employee benefit expenses 2,698 2,102 Total employee benefit expenses 36,176 32,638 Property and plant expenses NZ$000 FY2021 FY2020 Plant expenses 5,793 5,380 Site expenses 1,287 1,203 Fuel & Powe
Slide 31: Operating Expenses
OPERATING EXPENSES Other operating expenses NZ$000 FY2021 FY2020 Administration expenses 5,677 5,215 Occupancy expenses 6,263 5,023 Contract labour 4,526 4,415 Other staff expenses 1,506 1,564 Total other operating expenses 17,973 16,216 31
Slide 32: Capital Expenditure
CAPITAL EXPENDITURE NZ$000 FY2021 FY2020 Development capex 6 Wharf pre-construction - 991 6 Wharf construction 100,916 33,319 Additional tug - 5,082 Acquisition and development of off-port depot services land - 2,599 Refrigerated container capacity 1,201 - Other development capex 3,140 882 Total dev
Slide 33: Reconciliation of Underlying Net Profit After Tax
RECONCILIATION OF UNDERLYING NET PROFIT AFTER TAX¹ NZ$000 FY2021 FY2020 Reported net profit after tax 23,164 22,012 Adjustments: IPO transaction and related costs/ (reversals) - (285) Fair value movements (1,200) (1,000) Impairment of infrastructure assets for 6 Wharf development - 551 Tax impact of
Slide 34: Reconciliation of Underlying Net Cash Flows from Operating Activities
RECONCILIATION OF UNDERLYING NET CASH FLOWS FROM OPERATING ACTIVITIES¹ NZ$000 FY2021 FY2020 Reported net cash flows from operating activities 34,790 29,327 Adjustments IPO transaction and related costs - 478 Tax impact of adjustments - (100) Underlying net cash flows from operating activities 34,790
Slide 35: Dividend Policy
DIVIDEND POLICY • The Board is targeting paying total dividends within a range of 70% to 90% of Free Cash Flow1 • Free Cash Flow1 is a non-NZ GAAP measure adopted by Napier Port. It excludes capital expenditure on development projects (including 6 Wharf) and the interest costs which will be capitali
Slide 36: Our Strategy Builds on a Strong Business
OUR STRATEGY BUILDS ON A STRONG BUSINESS A LONG TERM ASSET ESSENTIAL TO THE HEALTH OF THE HAWKE’S BAY ECONOMY RELEVANCE DURING COVID-19 AN INFRASTRUCTURE ASSET ESSENTIAL TO THE HEALTH OF THE HAWKE’S BAY ECONOMY Napier Port is an essential regional infrastructure asset and, by connecting Hawke’s Bay
Slide 37: Further Information on Napier Port
FURTHER INFORMATION ON NAPIER PORT To learn more about Napier Port and what it does please refer to our website at www.napierport.co.nz See our website Investor Centre for: • Share price information • Links to NZX results and market announcements • Key calendar dates • Publications, including: - Ann