STEPPING AHEAD ANNUAL REPORT 2017: PART 1of 2 Napier Port is stepping ahead. We’re investing now to build a bright future for our customers, our staff, the economy and our community. CONTENTS CHAIRMAN’S REPORT 2 CHIEF EXECUTIVE OFFICER’S REPORT 4 YEAR’S HIGHLIGHTS 6 STEPPING UP 9 FUTURE-PROOFING OUR PORT 10 BUILDING OUR FUTURE 12 A STANDING OVATION 16 OPERATIONAL PERFORMANCE 18 FINANCIAL PERFORMANCE 22 SENIOR MANAGEMENT TEAM 23 BETTER PEOPLE 24 BETTER ANSWERS 26 HEALTH & SAFETY 28 COMMUNITY 30 ENVIRONMENT 32 END OF AN ERA 34 ANNUAL REPORT 2017: PART 1 of 2 • 1 CHAIRMAN’S REPORT It has been a remarkable year for Napier Port. The efforts of staff and the strong leadership of the senior management team enabled Napier Port to respond swiftly to the disruption in the national supply chain caused by the Kaikoura earthquake. Our people and culture are our most important taonga and investing in them has created a stronger company. The health and safety of every person on and significant investment will be required port is the board’s top priority. Reflecting in order to ensure the port can handle this this, the Health and Safety Committee growth in our cargo base. transitioned to a whole-of-board function Napier Port operates in a global this year, emphasising that every director environment and we must sustain our is accountable when it comes to safety. relevance for both shippers and shipping All directors are now spending time in the lines. Having the right infrastructure in operational environment to strengthen place is critical to ensuring shipping lines our understanding of the risks and continue to take our high-value products safety challenges presented by a port to the world at competitive rates. environment. This year we’ve been laying the In the wake of the Kaikoura earthquake, foundations for the future success of additional cargo volumes coming Napier Port – and by extension, the future from outside our traditional catchment growth of our customers, our economy contributed to an exceptionally strong and our community. We’ve purchased financial result for Napier Port this year. land for a future freight hub in Whakatu, A net profit of $16.7 million saw a invested in higher bookends for log dividend of $10.7 million delivered to stacks, and begun development of the Hawke’s Bay Regional Investment a second offsite depot in Pandora. Company. Growth in cargo volumes is expected to return to a more traditional Napier Port has a strong vision for the pattern in 2018, and financial results are future, and a robust strategy in place tempered by the need to invest heavily to achieve it. A key element in the shape over the coming years. of our future is the development of a new wharf, to enable Napier Port to berth the This year saw new records for log exports larger vessels that are beginning and containerised cargo, and major to service New Zealand trades. growth is forecast for the pipfruit and An efficient, resilient and future-ready forestry sectors over the next decade. port is only one factor in enabling the Napier Port plays an important role in future growth of our region. We also ensuring our region continues to thrive, have to look outside our boundaries 2 • NAPIER PORT | STEPPING AHEAD and ensure that long-term regional FAREWELL GARTH planning allows for increasing cargo volumes and strategic transport links. At the end of this year, Napier Port will Napier Port is sharing our vision farewell long-serving Chief Executive with a broad range of stakeholders, Garth Cowie. Garth has overseen a connecting with local and central remarkable period of continuous growth government alongside industry, iwi and and his leadership, vision and dedication our community, to build an understanding over the past 18 years has ensured Napier of Napier Port’s future needs and the Port is well-positioned for the future. benefits for the region. After a rigorous recruitment process, the board appointed Todd Dawson to the CHANGES ON THE BOARD role in October. Todd is a strong leader and After ten years, Jon Nichols retires from the board is confident that he brings the the board at this year’s AGM. Those skill, experience and tenacity to take Napier who have had the pleasure of working Port forward. He takes the helm in January alongside him during that time have 2018, and we look forward to welcoming appreciated his breadth of knowledge, him and his family to Hawke’s Bay. capacity for robust debate, and genuine interest in all areas of the port. On behalf THANK YOU of the board, I thank him for his service and Thank you to the board for their service, professional contribution to Napier Port. to our customers and stakeholders for This year saw the sad loss of former their ongoing support, and to Napier Napier Port director John Shaskey, who Port staff, who stepped up under difficult passed away in June. John served on the circumstances this year. Napier Port Napier Port board from 2011 until 2016, is at an exciting juncture, and with the and always brought a sharp intellect support of our customers, community and business acumen to the table. His and staff, we look forward to forging passing is a great loss to the the path ahead with confidence. New Zealand business community. Banking and investment specialist Stephen Moir joined the board in December. His expertise is proving an asset and we are pleased to have secured his services. ALASDAIR MACLEOD CHAIRMAN ANNUAL REPORT 2017: PART 1 of 2 • 3 CHIEF EXECUTIVE OFFICER’S REPORT It has been an historic year for Napier Port. Major challenges tested our capabilities, and Napier Port rose to the occasion. We’ve taken our place on the national stage, and shown that big things can be achieved within a confined footprint. It was a year of challenges in 2017, and Safety is at the core of everything we Napier Port stepped up. When the Kaikoura do, and we are proud to have managed earthquake struck, damaging infrastructure an extended peak season without any and disrupting the national supply chain, lost time injuries. However, our safety Napier Port swung into action. Swift and journey is never-ending and we continue decisive leadership ensured that when to search for better answers to our safety cargo destined for Wellington’s damaged challenges. We are proudly leading the CentrePort began to land on our wharves, way in safety innovation, developing new the people, plans and plant were in place tools, implementing new technology, to handle it. Our people pulled together and sharing learnings to improve safety in a way that demonstrated the value of across the ports sector. our investment in building an agile culture and the meaning of our ‘Better People, FOCUSING AHEAD Better Answers’ philosophy. Growth across Central New Zealand With containerised cargo already is accelerating, and it isn’t set to slow forecast to grow, these extraordinary any time soon. Log exports are forecast circumstances saw Napier Port handle a to double in the next ten years. Hawke’s record 288,444 TEU this year. The long- Bay’s reputation as a tourist destination anticipated ‘Wall of Wood’ also started to is spreading, and the value of our local stack up on port, and a record number of tourism industry climbs with every year. cruise passengers disembarked at Napier. The apple industry is surging ahead, planting millions of trees and targeting January 5th brought a major milestone $1 billion in exports by 2022. for Napier Port, as we welcomed the giant cruise liner Ovation of the Seas. Napier Port is investing now to ensure At 348 metres LOA, it was the biggest we are well-placed to handle the Central vessel ever to have berthed at Napier New Zealand cargo base into the future. Port and could not be berthed by a This year, we expanded our heavy plant number of larger ports. The success of fleet, boosted our log yard infrastructure, her call at Napier was testament to what and replenished our small forklift fleet. our team can achieve with the support The purchase of additional land holdings of our community and local partners. in Pandora and Whakatu will future- 4 • NAPIER PORT | STEPPING AHEAD proof Napier Port’s footprint, enabling year. It has been an honour to serve in this the development of an offsite container role for the past 18 years, and I am very wash and repair facility in the short term proud of all that Napier Port has achieved. and the opportunity to establish an inland Over the course of that period, Napier Port freight hub in future. has grown from a breakbulk port handling 2.2 million tonnes of cargo and 58,972 The most crucial element in our future TEU into a diverse operation handling a strategy is the development of a wharf record 4.75 million tonnes and 288,444 capable of handling the next generation TEU. Continuous growth year-on-year has of larger vessels. With cruise lines enabled us to invest in our people, plant building ever-larger ships and container and technology, ensuring Napier Port lines cascading bigger vessels into is in excellent shape for the future. New Zealand trades, we are already seeing an increase in the size of vessels It has been my privilege to have worked calling at Napier Port. As Central New with many outstanding, dedicated and Zealand grows, it is vital that Napier talented staff and directors during my time Port has the capability to handle the at Napier Port.