ANNUAL REPORT 20:14:00

Kota Loceng and Noble Regor working at the Tauranga Container Terminal

NEW ZEALAND’S PORT OF TAURANGA ANNUAL REPORT

21:32:15

Quentin Cribb, Linesman, in operation 24/7 at Mount Maunganui’s log yard. Around the clock, 365 days of the year, our Company provides a range of expert services across multiple business units in numerous locations throughout New Zealand.

Highlights

82.6% Final Dividend NPAT Total Trade Reduction in Volumes up to 50% 7th 10 Year Lost Time Injury 29 cents $78.3 Acquisition of Gantry Crane Kotahi Frequency Rate per share million 19.7 PrimePort Commissioned Agreement million tonnes

•  Significant improvement in health and safety •  Formed 100% subsidiary Timaru Container with a 92.1% reduction in TIR* to 3.1 per million Terminal Limited to lease and operate the CONTENTS: hours worked and the LTIFR** a reduction of container terminal in Timaru. 2 Company Structure 38 Sustainability 3 Results in Brief Corporate Governance Statement 82.6% to 3.1 per million hours worked. • Purchase of a 15 hectare site in Rolleston 44 •  Trade volumes up 3.5% to 19,736,902 tonnes. (Christchurch) for an inland port. 5 Chairman’s Report 48 Report of Directors to Shareholders 7 Board of Directors 50 Statutory Information •  Commissioning of seventh gantry crane. •  Signing of a 10 year container volume 8 Chief Executive’s Review 56 Audit Report •  Final dividend of 29 cents per share, lifting full contract with Kotahi for Tauranga and Timaru. 12 Senior Management Team 59 Financial Statements *TIR = Total Injury Frequency Rate 14 Our Customers 109 Financial and Operational Five Year Summary year dividend 8.7% to 50 cents per share. **LTIFR = Lost Time Injury Frequency Rate 20 Our Partners 111 2105 Future Outlook •  Acquired 50% shareholding in PrimePort 30 Our People 112 Company Directory Timaru Limited.

Annual Report 2014 1 45% Public 55% BOPRC

PORT OF TAURANGA COMPANY STRUCTURE PORT OF TAURANGA RESULTS IN BRIEF AUCKLAND

50% 50% 100% POTL KiwiRail POTL

Company Structure Results in Brief45% Public 55% BOPRC Year Year 2014 2013 $000 $000 Operating income 266,538 244,147 Northport 37.5% 37.5% Surplus after taxation – reported 78,252 112,123 Quadrant 100% POTL Pacific MetroPort Tauranga POTL Surplus after taxation – underlying 78,252 77,228 AUCKLAND 25.0% Total assets 1,154,883 1,112,581 PGB Trustees 45% The strength of our CompanyLimited lies in our Public 45% Total equity 812,419 793,878 55% foundations. Our building blocks are solid 50% 50% 100% BOPRC and well established and arePublic the basis of DividendsPOTL KiwiRail paid/proposed (per share) POTL 50 cents 46 cents our continued55% success Shareholders’ equity (%) 70.3 71.4 throughout New Zealand. BOPRC Rolleston (Christchurch) Net asset backing per share ($) 6.06 5.92 55% Bay of Plenty Timaru Return on average equity (%) 9.7 10.1 Regional Council Cargo throughput (000 tonnes) 19,737AUCKLAND 19,065 100% 50% 50%Containers (TEU) 759,587 848,384 45% Public POTL Timaru POTL District37.5% 37.5% HoldingsThe Board Quadrantapproved a final dividend of 29.0 cents per share ($39.5 million) after year end payable on 3 October 2014. 50% 50% 100% POTL Pacific 100% POTL POTL KiwiRail POTL 25.0% PGB Trustees Limited

AUCKLAND

37.5% 37.5% Quadrant 100% 100% POTL Pacific 50% 50% POTL POTL Timaru 50% POTL District 25.0% 50% 50% 50% Holdings PGB Trustees POTL NPC POTL Tappers Limited

AUCKLAND POTL POTL POTL POTL POTL POTL POTL POTL POTL 100% 100% 50% 50% 100% 50% 50% 50% 37.5%

100% 50% 50% POTL Timaru 50% 50% 50% 50% POTL District Holdings POTL NPC POTL Tappers Quadrant Pacific Northland Port Timaru KiwiRail Tapper Ports of Corporation District Transport Auckland 37.5% Holdings 50% 50% 50% 50% 50% 50% 50% 100% PGB POTL KiwiRail POTL Trustees 25.0%

50% 50% 50% 50% POTL NPC POTL Tappers

Annual Report 2014 Annual Report 2014 2 3

37.5% 37.5% Quadrant POTL Pacific 100% POTL 25.0% PGB Trustees Limited

100% 50% 50% POTL Timaru POTL District Holdings

50% 50% 50% 50% POTL NPC POTL Tappers PORT OF TAURANGA CHAIRMAN’S REPORT PORT OF TAURANGA CHAIRMAN’S REPORT

Chairman’s Report

I am particularly pleased to report on another successful year for Port of Tauranga, my first as its Chairman. It has been a watershed year. We have continued Underlying net profit after tax for the 2014 year to put the building blocks in place to position our reached a new record, rising 1.3% to $78.3 million port for the future when large 6,500 twenty foot from $77.2 million in the prior period. Net profit equivalent unit (TEU) ships will begin making regular after tax fell 30.2% to $78.3 million from $112.1 calls to this country. million a year earlier as the prior year benefited from a $38.2 million one-off gain from the sale of We will soon begin the harbour and channel our logistics subsidiary C3 Limited. dredging programme that will allow us to accommodate these ships as well as larger Our Subsidiary and Associate Companies generally bulk and cruise ships. The $50 million dredging delivered strong results despite some tough programme will complete a $200 million capital challenges. Northport reported a strong financial investment programme, which has seen an performance on the back of log export growth. extension to our Sulphur Point wharves, an Tapper Transport performed well in an extremely upgrading of our tug services, the addition of competitive environment, while successfully container cranes and straddles and our strategic integrating a new subsidiary and expanding its investments in the South Island. cross-docking services. Port of Tauranga’s new agreement with freight and Quality Marshalling had a tough year following the logistics provider Kotahi gives us the confidence loss of a major contract put to competitive tender. to proceed with this major investment. Kotahi, The company is now rebuilding and pursuing new a joint venture between Fonterra and Silver lines of business to grow profit. Fern Farms, manages freight for more than 30 customers including exporters of meat, wool, dairy, Our balance sheet is strong with net debt at timber, pharmaceuticals, horticulture and seafood. $254 million and gearing as measured by debt- The ten-year freight alliance commits Kotahi to to-debt plus equity steady at 29.7%. This gives channelling certain volumes through our Tauranga us plenty of capacity to fund the $50 million we :21 and Timaru Container Terminals. In turn we have expect to spend dredging Port of Tauranga’s TAURANGA shipping channels. 08:05 CONTAINER TERMINAL agreed to invest in the infrastructure required to enable visits from larger ships. In the 2014 financial year we invested $61.8 million There will be numerous flow-on benefits from in property, plant and equipment. Nine vessels berthed at Port of Tauranga this initiative. Notably it will cement Port of ACQUISITIONS demonstrating the capacity and capabilities of the Tauranga’s position as the country’s hub port and Port to manage the ever increasing cargo volumes. will spur the development of New Zealand’s coastal In August last year we purchased a 50% shipping industry. Our freight marshalling facilities shareholding in PrimePort Timaru and have taken a 35-year lease over PrimePort’s container Group EBITDa increased - at MetroPort in Auckland, Timaru and our new Rolleston inland port - will be vital components to terminal. The Timaru Container Terminal was then driving these developments. established as a wholly owned subsidiary of Port 5.5% to of Tauranga and Kotahi has recently taken a 49.9% FINANCIAL PERFORMANCE shareholding. The total investment was $142.5 million $21.8 million, funded from current bank facilities. Group EBITDa for the 12 months to 30 June 2014 increased 5.6% to $142.6 million from $135.0 Port of Tauranga subsidiary Tapper Transport NPAT achieves a million as an increase in bulk cargo transported purchased the assets of Priority Logistics new record rising across our wharves offset a temporary decline in Group, a transport and logistics company based container volumes. Total cargo volumes rose 3.5% in Mount Maunganui. MetroBox, the Group’s 1.3% to to more than 19.7 million tonnes from 19.1 million Auckland-based container storage, handling and $78.3 million tonnes a year earlier. maintenance company, has established a new

Annual Report 2014 Annual Report 2014 4 5 PORT OF TAURANGA CHAIRMAN’S REPORT PORT OF TAURANGA BOARD OF DIRECTORS

Board of Directors Pilot vessels in Tauranga Harbour. At the 2014 Annual Meeting, I will retire according to our Constitution and, being eligible, will offer myself for re-election.

INDUSTRY ENVIRONMENT Since 1997, we have seen the average length of container ships calling at Tauranga grow from 170 metres to more than 207 metres. The trend towards larger vessels is inevitable, and welcome, with cost savings for New Zealand importers and exporters estimated by the New Zealand Shippers’ Council to be in excess of $300 million a year.

FUTURE D A PILKINGTON A W BAYLIS J M CRONIN K R ELLIS BSc, BE, GradDip Dairy MCom (1st Class Hons), MNZM, JP, CA, AFInstD BCA (1st Class Hons) We are buoyed by the early success of our South Island Science & Technology FCA, FNZIM, AFInstD Economics, BE (1st Class John Cronin, an experienced Hons) Chemical activities and the welcome we have received from Chairman INDEPENDENT DIRECTOR company director, is Director communities and customers in mid and South Canterbury. INDEPENDENT DIRECTOR of Piccadilly Investments INDEPENDENT DIRECTOR Bill Baylis is Chairman of Limited and a Councillor David Pilkington was a Blackhead Quarries Limited, of Bay of Plenty Regional Kim Ellis is Chairman of NZ As well as strong growth in the dairy sector in the region, Dairy Holdings Limited and Council (Environment Bay Social Infrastructure Fund business partnership with container maintenance and member of Fonterra’s senior we see enormous potential in other primary produce executive team. He holds Director of PrimePort of Plenty). John joined the Limited, and a Director of repair firm Specialised Container Services (SCS). SCS Directorships in Ballance Timaru Limited. He has broad Board in August 2002. Ballance Agri-Nutrients sectors including forestry. There will still be bumps in Agri-Nutrients Limited, governance experience over Limited, EnviroWaste already operates the MetroBox site, plus an 11 hectare Douglas Pharmaceuticals a wide range of industries. Services Limited, Fonterra the road. Many of our exports are commodity-based and Limited, Northport Limited, Mr Baylis chairs the Audit Shareholders Fund (FSF) site in Mangere. Port of Tauranga Trustee Committee and joined the Management Company so are vulnerable to the cyclical nature of international Company Limited, PrimePort Board in February 2006. Limited, Freightways Limited, demand and price fluctuations. Timaru Limited, Restaurant Moa Group Limited, and DIVIDEND Brands NZ Limited, Tuatara Tasman Tanning Limited. Kim Brewing Company Limited joined the Board in May 2013. Reflecting our confidence in the Port’s prospects, and However, we believe our diverse cargoes and income and Zespri Group Limited. Mr Pilkington chairs Hellers our certainty over forecast container volumes following streams ensure the Port of Tauranga Group will continue and Rangatira Limited. He to grow steadily, as we consolidate our position as the has a strong background the Kotahi alliance, the Board has declared a final dividend in marketing, international of 29 cents per share, lifting the full-year, fully-imputed country’s leading port. business and supply chain logistics. He joined the dividend to 50 cents per share, representing an 8.7% Board in July 2005. increase over the prior year’s 46 cents per share. The record date for entitlements to the dividend is 19 September 2014 and the payment date is 3 October 2014. David Pilkington Chairman DIRECTORS I took the helm of the Board at the last Annual Meeting following the retirement of previous Chairman John Parker. Having been a Director since 2005, I was aware Timaru Container Terminal. of the depth of skill on the Board, and it is my privilege to chair such an experienced group. Sir Dryden will retire at this year’s Annual Meeting after 10 years on the Board. Sir Dryden has been a significant A R LAWRENCE M J SMITH SIR DRYDEN K TEMPEST contributor around the Board table and his experience and BCA (Business Admin) LLB SPRING INDEPENDENT DIRECTOR wise counsel will be missed. INDEPENDENT DIRECTOR A Tauranga lawyer, DSc (Hons), DistFInstD Keith Tempest retired in Michael Smith is 2009 after being Chief Alastair Lawrence is a very INDEPENDENT DIRECTOR A new Independent Director, Alastair Lawrence, was Chairman of Quayside Executive of TrustPower experienced corporate Group of Companies, Sir Dryden Spring was a for eight years. He is appointed in February in anticipation of the pending advisor and financier. He Craigs Investment Director of several large currently a Director of Bay was a Director of private Partners Investment publicly listed companies in Venue Limited, Crown Fibre retirement of Sir Dryden Spring. Alastair is a very investment bank Antipodes Management Limited New Zealand. Sir Dryden Holdings, NZ Bus Limited Consult Limited from 1998- and Craigs Investment joined the Board in April and Transpower Limited. experienced corporate advisor and banker, and we 2014. He was also a member Partners Superannuation 2004. He joined the Board in welcome his expertise and particularly his knowledge of of the Takeovers Panel in Management Limited and December 2010. its formative years from a Director of Custodial mergers and acquisitions. According to our Constitution 2001-2008, and a Director Services Limited, First of Landcare Research from Mortgage Trust and Norfolk Alastair is required to stand for election at our Annual 2004-2010. Southern Cross Limited. He Meeting. Alastair is currently a has an extensive corporate Director of, and investor and commercial legal in, a number of private New background. Mr Smith Zealand companies. He chairs the Remuneration joined the Board in February Committee and joined the 2014. Board in August 2001. Annual Report 2014 Annual Report 2014 6 7 PORT OF TAURANGA CHIEF EXECUTIVE’S REPORT PORT OF TAURANGA CHIEF EXECUTIVE’S REPORT

Chief Executive’s Review

Port of Tauranga seeks to profitably grow cargo volumes while providing an efficient and cost effective service to our customers. We delivered a strong financial result as we Meanwhile, we continue to build capacity benefited from the diversity of our cargo at Tauranga, commissioning our seventh sources. We successfully executed a number container crane in March and ordering two of further strategic building blocks during new tug boats for delivery early in 2015. We will the year, and we are now reaping the benefits, also shortly call for tenders on the first stage most notably in the form of our long term of our dredging project to deepen and widen alliance with freight and logistics management the shipping channels in Tauranga Harbour. company Kotahi. TRADE TRENDS We established a South Island presence for the first time as we pursue new frontiers Total cargo shipped across the Port during the of growth for the Port of Tauranga Group. financial year increased 3.5% to more than 19.7 We took over the operations of the Timaru million tonnes. Imports increased 6% to nearly Container Terminal and took a stake in 6.4 million tonnes, with significant increases PrimePort Timaru as we sought to offer in imported fertilisers (up 28%), and grain/ greater choice of cost-effective routes to stock feed supplements (up 28%). The figures South Island importers and exporters. reflect the confidence in the agricultural sector. We also purchased 15 hectares of industrial land at Rolleston, south of Christchurch, to Cement imports increased 14% due to establish an intermodal freight hub to receive, domestic construction industry growth and pack and distribute containerised cargo. The bulk liquid imports increased 16%. hub, modeled on our successful MetroPort Total exports increased by 2% to 13.4 million Auckland operation, is just 12 kilometres south tonnes. Log exports grew 12% to nearly 6.3 of the city and it enjoys excellent road and rail million tonnes. Growth slowed in the last connections. quarter as downward price pressure in China MARK CAIRNS :07 Chief Executive HEAD OFFICE Our new agreement with Kotahi has secured influenced volumes. Sawn timber exports 08:32 MOUNT MAUNGANUI the future of our South Island operations and dropped 18% following increases in domestic given us the confidence to further progress demand and the closure of a Rotorua timber our expansion plans at Tauranga. mill. Mark consults with the Port’s former We now have the certainty to invest in the Dairy product exports decreased 7% in volume. Property Manager Tony Reynish. infrastructure needed to accommodate Kiwifruit volumes decreased slightly, by 2%, the next generation of 6,500 twenty foot but are expected to start to increase again equivalent unit (TEU) ships and to do so in from the 2014/2015 financial year as kiwifruit Total cargo shipped a way that will deliver efficiencies for growers recover from the effects of the vine- up 3.5% to more than New Zealand shippers and reasonable returns killing disease PSA. to our shareholders. The number of containers handled decreased 19.7 million Kotahi has committed to provide up to by 10% to 759,587 TEU following the temporary 1.8 million TEU export containers to Port of loss of the Maersk Southern Star service. The tonnes Tauranga over the next decade. We will be service resumed its Tauranga calls in August investing in new infrastructure at the Timaru and, based on previous container volumes Container Terminal, including the addition of associated with this service, we expect it to MOVES another mobile harbour crane, to handle the deliver an additional 70,000 TEUs per annum. 39.4 PER HOUR increased container traffic. A record average net crane rate achieved in January 2014

Annual Report 2014 Annual Report 2014 8 9 PORT OF TAURANGA CHIEF EXECUTIVE’S REPORT PORT OF TAURANGA CHIEF EXECUTIVE’S REPORT

Loading kiwifruit at Mount Maunganui Wharf. All parts of the supply chain have been under pressure country. However we consider that any claim is one too and we acknowledge and appreciate the efforts of our many and so we have been working hard on improving our customers and service providers. safety culture and employee engagement. I am proud to report that this has significantly improved STAFF safety outcomes with a pleasing 92% reduction in Total At the end of 2013 we farewelled our long-serving Injury Frequency Rate. Commercial Manager Graeme Marshall, who retired after 16 years at Port of Tauranga. It was a fitting tribute when The changes we have made include better reporting of Graeme received the prestigious Sir Bob Owens Award accidents and near miss incidents, and greater personal for Outstanding Contribution to the Logistics and Supply accountability for safety. We are also rolling out best Chain Sector and Community from the Chartered Institute practice safety procedures and processes across all of of Logistics and Transport just prior to his departure. our subsidiary companies to ensure they are well placed to meet new workplace safety regulations. Our new Commercial Manager is Leonard Sampson. Leonard joined us from KiwiRail, where he was General PORT FOR THE FUTURE Manager of Sales and Marketing for five years. He also We are making excellent progress reinforcing our position held commercial roles at Mainfreight and Carter Holt as New Zealand’s pre-eminent freight gateway and we look Harvey before joining the rail freight industry. forward to the year ahead to complete further building Transhipped cargo (transferred from one ship to TAURANGA OPERATIONS Tony Reynish who officially retired as Property Manager in blocks towards achieving this goal. another at Tauranga) increased by nearly 5% over the The Tauranga operations are in good shape. Productivity 2012, following 25 years with the Company, is contracting year. Transhipped containers now represent 26% of the remains at global best standards, with the period from back working on a number of wider strategic projects, containers handled at the terminal. April to June 2014 seeing a record quarterly average net including the recently announced long term alliance with crane rate of 37.2 moves per hour. This is just ahead of the Kotahi. SOUTH ISLAND OPERATIONS record of 37.1 moves per hour achieved during the three Our Rolleston intermodal freight hub is due to open in early months ending 30 September 2013, and is well ahead of SAFETY RECORD IMPROVES Mark Cairns 2015. The hub will allow exporters to aggregate cargo the New Zealand average rate of 32.8 moves per hour for Chief Executive Port of Tauranga has the lowest level of Accident bound for our container terminal at Timaru, and similarly the same period. In January, the team achieved a record Compensation Corporation claims of any port in the allow importers to efficiently access the Christchurch average net crane rate of 39.4 moves per hour. domestic market. We have ordered two new tug boats powerful enough to When completed, it will provide capacity for up to 100,000 handle the increasingly larger vessels visiting the port. TEUs per year. It includes 680 ground slots and a 500 Each 24 metre tug will have bollard pulls of 74 tonnes, metre rail siding to accommodate trains with the capacity compared with the current tugs’ bollard pulls of 50, 40 and to carry 75 TEUs. An empty container depot will also 28 tonnes. The new tugs will arrive early in 2015 and will be developed to receive, repair, wash and store empty replace the 36-year-old Kaimai and 21-year-old Te Matua. containers. A warehouse covering two hectares will be We are developing a log storage strategy to manage the built for storage, container packing, devanning and cross- growth in volume expected over the next few years, with docking operations. log export volumes having more than doubled over the past five years. We have now completed the sealing of all AUCKLAND OPERATIONS existing log storage areas and we are developing more In Auckland, we expanded our MetroBox container handling berth-side marshalling space. service to a second location in Mangere, in partnership with container repair and maintenance group Specialised First call for MV Lars Maersk arriving at Port of Tauranga. Container Services. MetroBox now has capacity for more than 20,000 empty containers on the two rail-served sites. We have also purchased the 6.8 hectare Gateside Industrial Park next door to MetroPort and MetroBox at Southdown in Auckland. It is also very close to Tapper Transport’s freight hub, and our MetroPack operation. Gateside’s three industrial warehouses and office building bolster our expansion options in the long term. MetroPort is currently serviced by up to six trains daily transporting containers to and from Tauranga.

Carter Holt Harvey paper reels awaiting export on wharf.

Annual Report 2014 Annual Report 2014 10 11 PORT OF TAURANGA SENIOR MANAGEMENT TEAM PORT OF TAURANGA SENIOR MANAGEMENT TEAM

From left to right STEVEN GRAY MARK CAIRNS LEONARD SAMPSON SARA LUNAM DAN KNEEBONE Senior Management Team Chief Financial Officer Chief Executive Commercial Manager Corporate Services Manager Property and Infrastructure Manager

Annual Report 2014 Annual Report 2014 12 13 PORT OF TAURANGA OUR CUSTOMERS PORT OF TAURANGA OUR CUSTOMERS OUR CUSTOMERS

LARRY BILODEAU Chief Executive - Ballance Agri-Nutrients Limited

Having the southern hemisphere’s “We are a farmer-owned co-operative so we are very “ sensitive to costs and bigger ships will bring us savings. most efficient port on its doorstep It makes us more efficient and that’s really good for business,” says Larry. is a bonus for one of the country’s “It’s not just about the harbour’s capacity either, it’s about how the larger volumes of cargo are landed and handled. leading fertiliser manufacturers, We’re pleased to see the Port investing in the right Ballance Agri-Nutrients. equipment, people and infrastructure.” ” Larry says Ballance is increasingly focussed on supporting farmers with the information they need to improve In the ever-challenging environment in which Ballance efficiency and environmental performance. operates – where complicated supply and demand factors are constantly changing – Port of Tauranga is able to offer “We don’t just sell fertiliser any more. We try to help our a reliable, fast and efficient service. customers manage their environmental issues and make sure they can operate within their consents,” says Larry. :31 Ballance Agri-Nutrients Chief Executive Larry Bilodeau DISCHARGING FERTILISER AT MOUNT MAUNGANUI says farmer demand for fertilisers can be volatile because “We have a field force of more than 120 qualified people to 09:27 it is so weather dependent, however supplies are usually help our farmers with nutrient management. We are also providing IT tools to give them the information they need several weeks away by sea. to run their businesses.” “With the large volumes we handle, it’s just not practical or Larry says Port of Tauranga understands the need for “Port of Tauranga understands cost-effective to have a lot of product in storage either,” information, communication and investment. says Larry. the need for information, “I really couldn’t ask for a better relationship,” he says. That’s why Ballance’s strong connection with the Port is communication and so important. Efficient handling of imports, and Ballance’s Ballance is one of the Port’s longest-standing customers. proximity to the wharves at Mount Maunganui, ensure It was established in 1955 as the Bay of Plenty Fertiliser investment. I really couldn’t ask imported products are distributed as quickly as possible. Co-operative and the first imports of finished products arrived soon afterwards. The fertiliser factory – right for a better relationship.” While most of Ballance’s raw materials arrive on bulk across the road from the Mount Maunganui wharves – ships, containers are increasingly being utilised for their opened in 1957. convenience, cost and quality benefits. Approximately Ballance, which is owned by 18,000 farmer shareholders, Ballance is supportive of Port of Tauranga’s plans imports more than a million tonnes of bulk products each to accommodate larger vessels, both bulk and year and around 60% of that, or 20,000 truckloads’ worth, container ships. arrives at Port of Tauranga. 20,000 truckloads of Ballance bulk products leave the Port of Tauranga every year.

Annual Report 2014 Annual Report 2014 14 15 PORT OF TAURANGA OUR CUSTOMERS PORT OF TAURANGA OUR CUSTOMERS OUR CUSTOMERS

PAUL MCGILVARY Chief Executive - Tatua Co-operative Dairy Company Limited

The Port is a very important because we focus hard on in full, on specification, on time “ deliveries.” part of our supply chain. Their “We have to have immaculate customer service to stay attention to detail and attention competitive. We can’t afford any mistakes or doubt.” Paul says the two entities have a close working to quality allow us to compete in relationship based on a similar culture. Both have strong the way we do. customer relationships, some spanning four decades. ” Tatua’s products fall into six main areas: high quality dairy One of Port of Tauranga’s longest-standing customers ingredients, specialty nutritionals, flavour ingredients, bio- celebrates its 100th birthday this year. nutrients, food service and consumer products such as its famous Dairy Whip launched in 1979. Waikato’s Tatua Co-operative Dairy Company is marking the occasion by investing in its biggest-ever capital The co-operative’s 109 farmer shareholders are all located project, a $65 million dryer in its factory near Morrinsville within 12 kilometres of the factory, and milk is processed :48 TATUA DISTRIBUTION due to open in April. within 24 hours of arriving at the factory in Tatuanui. 10:47 WAREHOUSE Chief Executive Paul McGilvary says it is a watershed year Environmental sustainability is a strong strategic focus for Tatua, one of only two dairy co-operatives to remain for Tatua, as is investing in its people. independent following industry deregulation in 2001. “We are also trying to ensure we attract and keep “It’s a very exciting time for us. good people. Staff, shareholders, customers, partners, “Our export focus means suppliers – they are each integral to what we are trying to “We are preparing to double our specialty powders Tatua relies heavily on Port of do.” business within the next few years,” says Paul. “We expect Tauranga for excellent service in the next decade to go from 300 to 500 staff and for The demand for more and faster information about revenue to go from $250 million to $400 million.” products is driving change in the industry, throughout the with no avoidable delays.” supply chain. Tatua exports 94% of its products to more than 60 countries. Its export focus means Tatua relies heavily on “Customers and regulatory authorities need to know Port of Tauranga for excellent service with no avoidable where the product is, the status of it, exactly when it is Tatua exports delays. arriving, and all the test results that go with it,” says Paul. “The Port is a very important part of our supply chain. “We are moving towards a point where we will need to be 94% Their attention to detail and attention to quality allow us able to track every piece of product almost back to the to compete in the way we do. Consistency is crucial to us cow it came from.” of its products to more than 60 countries.

Annual Report 2014 Annual Report 2014 16 17 PORT OF TAURANGA OUR CUSTOMERS PORT OF TAURANGA OUR CUSTOMERS OUR CUSTOMERS

BRODIE STEVENS Country Manager - China Navigation Company

We’ll see bigger and more He says Port of Tauranga’s ongoing investment in the quality “ of the port’s facilities and services makes a difference. frequent ships on the coastal routes, “The stevedores and marshalling companies are also especially as the links between constantly challenging themselves to look for improvement. It’s a big plus for us when we know we are going to achieve Timaru and Tauranga kick in.” efficient loading and unloading of our vessels,” says Brodie. “We like the innovative and positive approach. It’s a busy The China Navigation Company’s (CNCo) continued port with a really positive vibe about it.” investment in New Zealand shipping recognises the growing CNCo’s liner shipping arm, Swire Shipping, operates six of importance of hub ports such as Tauranga. its new multi-purpose “S Class” vessels for containers, The company has committed new state-of-the-art vessels breakbulk, bulk and project cargoes, on routes servicing to its liner and bulk shipping services, as well as acquiring New Zealand. :21 coastal shipping company Pacifica earlier this year. Its newly established handysize division, Swire Bulk, is also PORT OF TAURANGA CHANNEL Brodie Stevens, CNCo’s Country Manager, New Zealand, says investing in modern, fuel efficient newbuilding vessels, 11:15 the Pacifica purchase in February reflected the emerging including 24 x 39,200 DWT “B Delta 39” and 4 x 38,000 DWT hub port model. Imabari bulk carriers. “We see an important role for coastal shipping in the idea These ships will serve Tauranga primarily for log exports, and of hubbing cargo at key ports such as Tauranga,” says fertiliser and grain imports. “Port of Tauranga is being Brodie. “There are significant commercial, operational In October 2013, the new multi-purpose vessel MV Shengking innovative in extending its and environmental benefits in using coastal shipping to was officially named at Tauranga on her maiden voyage. supply chain with Timaru. consolidate cargoes at the larger ports.” The new log fitted bulk carrier MVEredine made its maiden “We’ll see bigger and more frequent ships on the coastal voyage to the port in June 2014. The ceremonies to mark That’s an opportunity for us.” routes, especially as the links between Timaru and Tauranga these occasions were held at Tauranga in recognition of its central role in CNCo and Swire Shipping’s Australasian, Asian kick in,” he says. and Pacific operations. Pacifica has recently added a direct sea freight link between “Tauranga is the key port for us in New Zealand and this Tauranga and Lyttelton to handle increasing volumes of substantial investment in larger, modern, eco-designed southbound cargo. vessels recognises its importance,” says Brodie. Brodie says further services and capacity will be added to 78 Established in 1872, the first CNCo vessel called in New meet customer demand. Swire vessels visited Port Zealand in 1883 with a cargo of 1,200 tons of tea from China. of Tauranga in 2014 “Port of Tauranga is being innovative in extending its supply CNCo is the deep-sea shipping arm of the multi-national chain with Timaru. That’s an opportunity for us,” says Brodie. Swire Group.

Annual Report 2014 Annual Report 2014 18 19 45% Public 55% BOPRC

AUCKLAND

50% 50% 100% POTL KiwiRail POTL

PORT OF TAURANGA OUR PARTNERS PORT OF TAURANGA OUR PARTNERS

37.5% 37.5% Quadrant POTL Pacific 100% POTL :38 25.0% NORTHPORT, PGB Trustees 11:47 MARSDEN POINT Limited

Total tonnes handled increased 6%

100% 50% 50% POTL Timaru POTL District Holdings

JON MOORE Chief Executive - Northport Limited OUR PARTNERS

50% 50% 50% 50% POTL NPC POTL Tappers As we get bigger and busier we Other investment included ongoing stormwater works, “ civil works to raise low-lying storage areas out of the need to ensure our systems and water table and converting all on-water navigation aids to processes keep pace,” says Jon. renewable energy sources (solar and wind). A new 8.5 metre aluminium workboat was designed and ” built locally to help maintain navigation equipment and Northport Limited again broke records in cargo volumes undertake survey requirements. and ship visits in 2013/2014. Northport is installing “book ends” to increase on-port log Total tonnes handled increased 6% to 3.3 million, while storage capacity and has purchased a second sweeper export log volumes increased 1.5%. Other export forestry to ensure no bark, log dust or cargo residue enters the products also increased 4% in volume. harbour. Ship numbers increased by 11 to 264, an increase of 4% on Health and safety has been a strong focus during the year. 2012/2013. Two new staff have been employed – a Port Operations New products handled included more than 47,000 tonnes Manager and a Health and Safety Officer – to lead of palletised cement, received and packed into containers changes. to send to Tahiti, as well as 25,392 tonnes of project cargo Northport has established a port facility health and safety for the Refining New Zealand expansion project nearby. forum involving all of the main port users. Northport Chief Executive Jon Moore says berth “The forum has produced an over-arching plan for all port occupancy rates continue to rise and planning is underway users so that working together and alongside each other to extend the existing wharf, which is 570 metres in length is as safe as possible,” says Jon. and has three berths. Security systems have also been upgraded. The port is The proposed extension already has resource consent and accessed more than 18,600 times a month on average, Jon can be instigated as demand for space increases at the says, so raising user awareness is an ongoing challenge. Whangarei deep water port. Just over 2,350 individuals completed port safety and security inductions during the year. In the past year, Northport has completed corrosion protection works on the wharf face steel sheet piling. “As we get bigger and busier we need to ensure our The project to prevent galvanic and microbial corrosion systems and processes keep pace,” says Jon. was completed 20% under budget by a team combining An internet-based berth planning system has been Australian design and local installation expertise. introduced and is visible to customers and port users via “Essentially we’ve given the structure a new lease of life,” the Northport website. says Jon.

Annual Report 2014 Annual Report 2014 20 21 PORT OF TAURANGA OUR PARTNERS PORT OF TAURANGA OUR PARTNERS

:43 12:22 PORT OF TAURANGA 45% Public 55% BOPRC Quality Marshalling is operational at 5 locations throughout New Zealand

AUCKLAND

50% 50% 100% POTL KiwiRail POTL

SHAYNE JENKINS General Manager - Quality Marshalling Limited OUR PARTNERS

37.5% 37.5% Quadrant POTL Pacific 100% POTL “We are drawing on our core expertise in logistics 25.0% We are drawing on our core PGB Trustees “ management to apply our machinery and skilled staff in Limited expertise in logistics management different applications,” says Shayne. to apply our machinery and skilled The new container handling contracts come on top of Quality Marshalling expanding its operations at Northport staff in different applications. in a new log stevedoring venture. ” The company has made a considerable investment Quality Marshalling has won new business at Northport, in customer-focused IT systems to enhance its Port of Tauranga and Timaru, as it rebuilds from a competitiveness in the forestry export sector. challenging start to the 2013/2014 financial year. 100% Online web access allows clients real-time visibility of 50% 50% POTL Timaru Through a competitive tender process, Quality Marshalling stock arriving at the port, storage within the port and POTL District Holdings lost a significant log handling contract at Mount shipment loading information. Maunganui and Murupara in December 2013. “We are very focused on giving our customers accurate “We have experienced a very challenging year,” says and timely information for managing their cargo inventory,” General Manager, Shayne Jenkins, who has 21 years’ says Shayne. experience in the forestry export industry. “It is the most Quality Marshalling, established in 1991, has log handling competitive market I have seen since I have been in the operations at Northport, as well as providing machinery industry.” and services at the Port of Napier and Red Stag sawmill “But we have had some growth opportunities and there near Rotorua. are new lines of business for us to diversify,” he says.

50% 50% 50% 50% Quality Marshalling won a competitive tender to manage POTL NPC POTL Tappers a rail container transfer site at Port of Tauranga, and has also established an operation at the Timaru Container Terminal.

Annual Report 2014 Annual Report 2014 22 23 45% Public 55% BOPRC

AUCKLAND

PORT OF TAURANGA OUR PARTNERS PORT OF TAURANGA OUR PARTNERS 50% 50% 100% POTL KiwiRail POTL :06 METROPORT 12:43 AUCKLAND CITY Tapper Transport has a total on-road fleet of

37.5% 37.5% 81 trucks Quadrant POTL Pacific 100% POTL 25.0% PGB Trustees Limited

Priority Logistics Senior Management Team Tapper Transport Limited Senior Management Team From left to right Aaron Forster, Graeme Forsythe, Clint Burgess From left to right Darcy Hart, Grant MacLachlan, Mike West, Leo McCormack OUR PARTNERS 100% 50% 50% POTL Timaru POTL District Holdings We have also opened up new containers at facilities adjacent to the rail-connected “ Southdown hub. avenues of business for Tapper, The acquisition of Priority Logistics has allowed Tapper to such as our expertise in bulk liquids now offer cross-docking services in the Bay of Plenty too. Priority Logistics is operating a MetroPack service out and dangerous goods. of a facility at the Tauranga Container Terminal, taking ” delivery of import and export cargoes and unpacking or packing containers for delivery. Tapper Transport had a good year growing its container transport and cross-dock businesses in Auckland while MetroPack is a relatively new offering from Tapper and it extending its services to the Bay of Plenty. has enjoyed good growth since its launch two years ago. 50% 50% 50% 50% At the beginning of the 2013/2014 financial year, Tapper Priority Logistics’ former owner Aaron Forster, who has POTL NPC POTL Tappers Transport purchased Priority Logistics. The Mount stayed with the company, says the merger has brought Maunganui-based company specialises in transport and benefits to customers of both companies. logistics services, including bulk liquid cartage, throughout Priority Logistics trucks now have access to Tapper’s the North Island. Auckland depot for the daily freight shuttle between Port of Tauranga’s Sara Lunam, who is Acting Chief Tauranga and Auckland. Executive of Tapper, says it has been great to see the two “Having a 24-hour depot for our trucks to work from has businesses working so well together as their operations worked very well. We can consolidate loads, work longer become more closely aligned and integrated. hours and we don’t have to rely on a customer being open “There are lots of challenges in this very competitive to turn around a truck,” says Aaron. market but our people have been working together to “We have also opened up new avenues of business for build the businesses, and we are seeing the reward for Tapper, such as our expertise in bulk liquids and dangerous those efforts,” she says. goods.” Tapper is New Zealand’s largest container transport Priority Logistics has implemented Tapper Transport’s company and operates the country’s largest container market-leading online programme for tracking containers freight station, next to MetroPort in South Auckland. from sea to delivery. It integrates with port information Since Port of Tauranga acquired Tapper Transport in 2010, systems and can be customised to operate seamlessly the two companies have worked together to integrate with customer systems. their adjacent Southdown sites, creating a freight and Priority Logistics has also established a Customs-bonded distribution hub at the heart of Auckland’s industrial area. freight facility at its Mount Maunganui depot. Tapper established an export packing and cross-docking business, MetroPack, which unpacks and re-packs

Annual Report 2014 Annual Report 2014 24 25 PORT OF TAURANGA OUR PARTNERS PORT OF TAURANGA OUR PARTNERS

:35 PRIMEPORT 12:56 TIMARU

of the South Island’s population is located within 75% 200km of PrimePort Timaru

ROGER GOWER Chairman - PrimePort Timaru Limited OUR PARTNERS

With the port being in growth “With the port being in growth mode, we are seeing “ ancillary businesses pick up and other companies mode, we are seeing ancillary wanting to use the port or relocate nearby,” says Roger. businesses pick up and other “We knew that this alliance was going to be good for South Canterbury but we have been pleasantly surprised companies wanting to use the by the speed at which Port of Tauranga has been able to port or relocate nearby. increase business,” says Roger. ” “It has been quicker than we dared hope for. This is a hugely important investment for the port as well as for Port of Tauranga’s new strategic alliance with PrimePort South Canterbury.” Timaru gives the Company direct access to one of New Zealand’s fastest growing agricultural areas. Roger says the growth means investment in equipment and infrastructure will have to be brought forward. The Business at Timaru’s port is growing rapidly as a result port is already building a new wharf for bulk cement of the alliance with Port of Tauranga. importer Holcim, which is relocating its South Island In the few months between Port of Tauranga taking distribution hub to Timaru. over operation at the Timaru Container Terminal and the “The pace of expansion is presenting challenges, but peak of the season in March, the number of containers they are good challenges to have,” he says. handled increased by a third. There has been a large increase in refrigerated container volumes. PrimePort Timaru Chairman Roger Gower says the flow- on effects of increased business have been felt across the port as well as the South Canterbury region.

Annual Report 2014 Annual Report 2014 26 27 PORT OF TAURANGA OUR PARTNERS PORT OF TAURANGA OUR PARTNERS

:03 TIMARU CONTAINER 14:10 TERMINAL

A new mobile harbour crane to be commissioned in May 2015

GRANT WILSON MARTYN MCCOLGAN Terminal Logistics Manager Container Terminal Manager OUR PARTNERS

Everyone involved has gone “Everyone involved has gone to great lengths to ensure “ the transition has been as smooth as possible. This joint to great lengths to ensure the approach has allowed growth to occur almost immediately.” transition has been as smooth as Port of Tauranga bought a 50% stake in PrimePort Timaru and leased the container terminal for up to 35 years. It possible. This joint approach has acquired the container terminal operating assets and created a new subsidiary, Timaru Container Terminal Limited, allowed growth to occur almost to operate it. immediately. PrimePort Timaru still operates the bulk cargo and marine ” services operations at the port. Martyn McColgan, currently Manager of both the Tauranga The alliance with PrimePort Timaru has been further and Timaru Container Terminals, says he has been boosted by Port of Tauranga’s new strategic freight alliance overwhelmed by the support of both staff and customers with Kotahi, who will take a 49.9% share of Timaru Container in South Canterbury. Terminal Limited. Kotahi has committed significant volumes Martyn and Grant Wilson, Terminal Logistics Manager, of dairy, meat and other export cargoes to the port. have spent considerable time at Timaru ensuring that A new mobile harbour crane has been purchased to productivity is increased and operations aligned with increase productivity and capacity. It is expected to be those at Tauranga Terminal so that Timaru can handle the commissioned in May 2015. increased container volumes expected in 2014. Timaru Container Terminal has obtained a Customs “The introduction of the Timaru Container Terminal Limited Controlled Area licence for the facility, allowing export and subsidiary has been made significantly easier by the import customers to avoid logistical challenges in dealing welcome and enthusiasm of the local community,” with a wider range of international markets. says Martyn.

AnnualAnnual Report 2014 Annual Report 2014 2828 29 PORT OF TAURANGA OUR PEOPLE PORT OF TAURANGA OUR PEOPLE

OUR PEOPLE

I admire the Senior He says it is personally rewarding to give back to “ the charity, which offered his family crucial support Management Team and the during Victoria’s illness. Board in the way they have Moss has just celebrated his 10th anniversary at the Port. He works jointly in Security and the Customer expanded operations and Service Centre. “I enjoy the challenge of being the man on the spot, continually look to the future of doing my bit to make it all happen,” he says. New Zealand shipping and port Prior to joining the Company, Moss’s varied career operations. included working in mining in Australia, being a tour :17 MOSS CARLIN guide and driver in Europe, roles in tourism and RATA STREET ENTRANCE Security/Customer Service Centre ” construction in eastern and southern Africa, and MOUNT MAUNGANUI A good employee is often willing to go the extra 14:12 being a restaurant manager in Auckland. mile for their employer. In Moss Carlin’s case, his employer was willing to go the extra mile for him – He was working as a logistics manager in the log Moss on site at Port of Tauranga’s Rata with Port of Tauranga Chief Executive Mark Cairns export industry when the role came up at the Port, Street entrance confiming the identity even volunteering to shave his head in support of a at the time of major changes to maritime security of a staff member. charity close to Moss’s heart. protocols. Moss invited Mark to join him in the annual “Beach Bald Since then, he has watched operations change and Funrazor” to support the Child Cancer Foundation, a grow exponentially. “I enjoy the challenge of being the charity that Moss has been involved in ever since his “Working at the Port gives me a level of security daughter was diagnosed with a brain tumour in 2008. that allows us, as a family, to achieve what we want man on the spot, doing my bit to Victoria, now aged 16, has fully recovered. for our future,” says Moss. make it all happen.” “The Company and my colleagues really backed us,” “I admire the Senior Management Team and the says Moss. “That support was really valuable to us Board in the way they have expanded operations at the time and I’ll never forget it.” and continually look to the future of New Zealand Mark raised more than $50,000 for the charity at shipping and port operations,” he says. 20,085 the 2012 head-shaving event. “Of course there are issues that crop up from time people have completed Moss helped to raise another $35,000 for the to time, but that’s the same as in any organisation. the induction process foundation by negotiating with insurers to auction As long as we keep talking, we keep sorting.” to gain access to the off one of the Rena’s salvaged lifeboats, and a Port of Tauranga to Mercedes car recovered from the wreck. conduct business Annual Report 2014 Annual Report 2014 30 31 PORT OF TAURANGA OUR PEOPLE PORT OF TAURANGA OUR PEOPLE

OUR PEOPLE

There are people working here “Right from the first interview, I could tell that this “ Company had a great culture. It was a very relaxed aged from 20 to 70. A lot have atmosphere, but there were a lot of exciting things worked here for a long time and going on,” says Thomas. “Although it’s not a large finance team, there is plenty have great stories and a whole of scope for me to grow and be challenged in my new position.” lot of knowledge. Thomas says dealing with such a variety of people :12 THOMAS WANSBONE ” has also boosted his social skills. HEAD OFFICE Financial Accountant Thomas Wansbone’s first job out of university has 14:30 MOUNT MAUNGANUI been busier than most. “There are people working here aged from 20 to 70,” he says. “A lot have worked here for a long time and The young accountant joined Port of Tauranga in have great stories and a whole lot of knowledge.” 2011, straight from four years at Victoria University Thomas consults with IT/Finance in Wellington. Thomas is now studying for his Chartered Manager Simon Kebbell about the Accountant qualification and is looking forward to the His arrival coincided with intense growth across the 2014 financial statements. opportunities his new, more senior role will bring. organisation as well as acquisitions to the Group. Moving to Tauranga has also given him the chance “Since then we’ve acquired two new Subsidiaries and to indulge in the surfing, fishing and other outdoor an Associate Company. Profits have gone up by 35% “It’s been really exciting, even pursuits he enjoyed as a youngster at his parents’ since I’ve been here,” says Thomas. at an entry level position. Bay of Plenty beach house. “It’s been really exciting, even at an entry level “It has always been a second home for me so I was There have been no barriers position. There have been no barriers to me always keen to move here on a permanent basis,” participating in a wide range of projects. to me participating in a wide says Te Awamutu-born Thomas. “If you are willing to put your hand up then you are “I’m very fortunate in that I have got this great range of projects.” encouraged.” lifestyle as well as a great corporate job.” Thomas has recently been promoted to the role of 35% Financial Accountant. increase in profits over the last three years

Annual Report 2014 Annual Report 2014 32 33 PORT OF TAURANGA OUR PEOPLE PORT OF TAURANGA OUR PEOPLE

OUR PEOPLE

We are the best performing “We started with three cranes and three ships a “ week,” says Pieter. terminal in Australasia and Fifteen years later, the numbers paint a different we’re still improving thanks to a picture: annual ship visits at the Tauranga Container Terminal are closer to 800, there are now seven :05 PIETER VAN DEVENTER fantastic and eclectic team. container cranes and the terminal berth length has TAURANGA Terminal Shipping and Planning Manager ” recently been extended by nearly a third. CONTAINER TERMINAL 19:32 Pieter van Deventer is Port of Tauranga’s container The increasing cargo volumes require a steadfast Terminal Shipping and Planning Manager – and focus on constantly improving productivity. unofficial photographer. Pieter on site at the Tauranga “It’s always a fantastic achievement when you break Container Terminal. Many of the Port’s publications feature Pieter’s a previous record. With the larger vessels coming in, photographic images of the port and harbour, rates of more than 100 container moves an hour will tracking its history since container operations began have to become the norm to maintain our customers’ “I’ve been fortunate in being able seriously in the late 1990s. schedule integrity,” says Pieter. Pieter joined Port of Tauranga in June 1999 after “We are the best performing terminal in Australasia to come back to the Bay of Plenty 17 years at sea and 11 years of modern liner vessel and we’re still improving thanks to a fantastic and after all my time overseas and operations management, primarily for P&O Nedlloyd eclectic team.” and its predecessors, in New Zealand and Asia. Dutchman Pieter is very proud of his adopted town find such a rewarding position.” Pieter’s return to Tauranga after a nine year posting and its port. He first moved to Tauranga after he to Singapore coincided with the Port’s acquisition met his New Zealand-born wife here while on shore of the first major customer for the new container leave in 1979. terminal at Sulphur Point. “I’ve been fortunate in being able to come back to Over 800 “They had an all-new team that was in need of some the Bay of Plenty after all my time overseas and find ship visits at the Tauranga assistance in terminal and vessel planning, so that’s such a rewarding position.” Container Terminal annually when and where I was invited in.

Annual Report 2014 Annual Report 2014 34 35 PORT OF TAURANGA OUR PEOPLE PORT OF TAURANGA OUR PEOPLE

OUR PEOPLE

We like to have support “We like to have support readily available. Having “ locally-sourced products also creates opportunities readily available. Having for collaboration,” says Ricki. locally-sourced products also Kaitaia-raised Ricki is a former computer technician. She had never been on a boat before she landed a creates opportunities for job working on boats for Fullers Ferries in Auckland. She fell in love with working on the water and was collaboration. soon studying for her inshore launchmaster’s ticket. ” After five years at Fullers, she spent five years in the Ricki Ross is leading a project to ensure Port of Harbour Control Office at Ports of Auckland, before Tauranga’s “control tower” can cope with an even joining Port of Tauranga last year. busier future. While much of her time these days is spent writing Ricki has recently stepped up into a newly-created policies and procedures, she still works shifts as a role as Customer Service Centre Supervisor. Shipping Co-ordinator. In the new position, Ricki will lead an overhaul of “One of the things we are trying to improve is the the systems and processes of the Service Centre :15 RICKI ROSS way we process information, so it helps if I can stay CUSTOMER Customer Service Centre Supervisor to ensure they are able to cope with the advent of plugged in to day-to-day operations,” says Ricki. 20:05 SERVICE CENTRE bigger vessels and more ship visits. The Customer Service Centre operates 24 hours a “The environment is only going to get more day, seven days a week. At least two staff monitor demanding so I am looking at all of our needs, from various information sources and communicate with Ricki monitors cargo operations and proactive training programmes through to equipment ships, agents, stevedores and marshallers. ensures environmental compliance is upgrades,” says Ricki. being met. They manage berth bookings and ship movements, Ricki is working alongside Port Manager Operations deal with enquiries from the public, monitor safety Phil Julian to ensure the Centre is utilising best and security, and communicate with border agencies. practice in all its procedures. “The Customer Service Centre The Centre was established 15 years ago and is still “We are involving port users in desk-top emergency unique amongst New Zealand ports. operates 24 hours a day, seven response scenarios,” says Ricki. “We’re making sure we have robust systems by continually testing and Ricki is appreciating the lifestyle benefits of her move days a week.” improving them. to the Bay of Plenty. “Technology advances so rapidly that we need to “My family gets to enjoy an idyllic lifestyle in a make sure we’re up-to-date.” beautiful location and I also have the opportunity to forge an exciting career,” she says. 1,612 While Port of Tauranga keeps an eye on international trends, it chooses local suppliers whenever possible, Ship departures especially in IT. in 2014

Annual Report 2014 Annual Report 2014 36 37 PORT OF TAURANGA SUSTAINABILITY PORT OF TAURANGA SUSTAINABILITY

Our People

achieved a 39.2% reduction in the injury Port of Tauranga’s health severity rate.” and safety measures The Port, however, is aiming for a zero harm workplace so will work to reduce have shown a dramatic injury rates even further. improvement in the past At 30 June 2014, Port of Tauranga employed 177 full time employees, up year as a renewed focus from 174 for the prior year. The Company has reaped rewards. also employed 14 permanent part timers and more than 25 casual employees. The Total Injury Rate (TIR) has decreased Port of Tauranga is regarded as an from 39.2 injuries per million hours worked “employer of choice”, which is reflected in in 2012/2013 to just 3.1 in the 2013/2014 a consistently low staff turnover rate of financial year, a 92% improvement. around 5%. Health and Safety Manager Pat Kirk says Of the nine employees to leave Port of the stronger focus on safety initially Tauranga this year, four retired. One resulted in an increase in reported injuries retiree, Drew McFarlane, had worked in as staff were encouraged to declare all Port operations for 43 years, while incidents, no matter how minor. Jo Barnett had worked in the Property “A year later, we can see the benefit of team for 34 years prior to her retirement. that approach,” says Pat. “We have also

The 12 month rolling year end TIR figures for the last five years are:

2009/2010 :15 46.5 02:07 PORT OF TAURANGA 2010/2011 21.7 Operational servicemen tying up vessels at Port of Tauranga. 2011/2012 33.9 177 2012/2013 39.2 Full time staff employed by Port of Tauranga Limited 3.1 2013/2014

TIR per million hours

Annual Report 2014 Annual Report 2014 38 39 PORT OF TAURANGA SUSTAINABILITY PORT OF TAURANGA SUSTAINABILITY

Our Community

In education, Port of Tauranga awards Port of Tauranga, as the scholarships annually to assist young people largest port in the country, to complete their university studies. The Turirangi Te Kani Memorial Scholarships is at the heart of the Bay are now in their 24th year, with nine tertiary of Plenty and Waikato students receiving financial help towards their studies in 2014. regional economies. The Company is in the third year of its The Company recognises its important role partnership with the Phillips Trust to fund in economic development and supports a the Port of Tauranga Rescue Winch on the wide range of organisations and initiatives. TrustPower TECT Rescue Helicopter. Port of Tauranga Senior Managers sit on the The helicopter was deployed 142 times Tect Helicopter Boards of Priority One, the Bay of Plenty’s during the year, with the Port of Tauranga economic development agency, and the Rescue Winch critical to seven of those image from POTL Tauranga Chamber of Commerce, as well as rescue missions. supporting ExportNZ. Community Investment image library Port of Tauranga’s Corporate Services In lieu of end of year gifts for customers, Manager Sara Lunam is a business Port of Tauranga donated $6,000 to the ambassador for Western Bay @ Work, which Tauranga Community Foodbank and $4,000 runs an annual career and business expo to to the Kids Can Charity. Through the popular highlight career opportunities and attract annual Port tours, visitors donated another new businesses to the region. $1,000 toward the TrustPower TECT Rescue The Company has also launched a cadetship Helicopter. scheme for tertiary students. Second Staff have participated in a number of year business studies students from Bay fundraising activities for other charities of Plenty Polytechnic spend a year gaining including the prostate cancer “Movember” work experience in different parts of the appeal, raising a stunning $3,500 from The Trustpower TECT Rescue Helicopter demonstrates the new container terminal operations. staff and customer donations. The Breast rescue winch system sponsored by the Port of Tauranga. In sport, Port of Tauranga has been the Cancer Foundation “Pink for a Day” and principal sponsor of the Port of Tauranga other charities have also benefited from our Cameron Brown wins the 25th Three cruise ships berthed at Port of Tauranga. Half Ironman for the past 22 years. It is employees’ generosity. Port of Tauranga Half Ironman Caption??? an event that attracts top athletes from in a time of 03:54:11. Cruise Ships Boost Economy around New Zealand and overseas. Cruise ships visiting the Bay of Plenty remain Reigning event and New Zealand champ steady in number but are growing in size. Cameron Brown won the Port of Tauranga For the past two summer seasons, the Port Half Ironman for an unprecedented 10th has hosted regular calls from the 317-metre time in 2014, the 25th anniversary of the Celebrity Solstice and 312-metre Voyager annual triathlon. of the Seas, the largest ever cruise ships to visit. In November, both were in port at once, consuming almost one third of the two kilometre berth length at Mount Maunganui. In January, three vessels were in port and 2014 Community provided a spectacle for beachgoers as they Investment departed in quick succession in the early 2% Environment 5% Arts evening. 8% Education Visiting passengers and crew make a 18% Sport 29% Community significant economic contribution to the 38% Business Bay of Plenty, estimated at around $45 million for the 2013/2014 season. Around 240,000 passengers and crew were aboard cruise ships calling at Mount Maunganui over the summer. Employee Phil Julian supporting The Annual Report 2014 Breast Cancer Foundation “Pink for a Day.” Annual Report 2014 40 41 PORT OF TAURANGA SUSTAINABILITY PORT OF TAURANGA SUSTAINABILITY

The Nga Matarae Charitable Trust has representatives While it will set its own priorities for spending, the trust Our Environment from Tauranga Moana iwi - Ngai Te Rangi, Ngati Ranginui is expected to fund projects to mitigate any unavoidable and Ngati Pukenga – as well as the Tauranga Moana Iwi adverse effects on cultural and spiritual values caused by Customary Fisheries Trust, the Mauao Trust and two senior the dredging work. Port of Tauranga representatives. So far, the trust has welcomed applications for A new charitable trust has been established to promote The Port has funded the trust with a $500,000 initial scholarships for students descended from Tauranga the wellbeing of Te Awanui Tauranga Harbour as the payment, and will donate $50,000 per annum through to Moana iwi undertaking study in a discipline that would 2027, the life of the resource consents governing the benefit the harbour. Port’s dredging project gets under way. dredging work. The Port hopes the trust will form the basis of an ongoing relationship with Tauranga Moana hapu and iwi, the kaitiaki (guardians) of Te Awanui Tauranga Moana.

Annual Report 2014 Annual Report 2014 42 43 PORT OF TAURANGA CORPORATE GOVERNANCE STATEMENT PORT OF TAURANGA CORPORATE GOVERNANCE STATEMENT

CORPORATE GOVERNANCE STATEMENT

The Directors are elected by shareholders and objectives with management and monitors the by rotation may, if eligible, stand for re-election. −− is not a material supplier or customer of the are responsible for the corporate governance of performance of management directly and through Newly appointed Directors must seek re-election at Company or related company, or an officer of (or the Company. Corporate governance describes Board Committees, monitors compliance and the first Annual Meeting of shareholders following otherwise materially associated with) a material how a company looks after the interests of its risk management, ensuring the Company has the their appointment. supplier or customer; or shareholders. appropriate controls and policies. The Board considers new Director nominations and −− has no material contractual relationship with the The Board and Management of Port of Tauranga are The practices adopted by the Board are prescribed succession planning for Directors. Company or a related company other than as a committed to ensuring that the Company adheres to in the Board Charter, which sets out the protocols The Board has access to executive management, Director; or best practice governance principles and maintains for operation of the Board, and in the Code of Ethics, and key executive managers are invited to attend the highest ethical standards. which sets out the manner in which Directors and −− has not served on the Board for a period which and participate in appropriate sessions of Board employees should conduct themselves. could, or could be reasonably perceived to, The Board is committed to high standards of meetings. materially interfere with his/her ability to act in corporate governance. The Company’s corporate The Board delegates the day-to-day affairs and the best interests of the Company; or governance practices reflect and satisfy the responsibilities to the Chief Executive to deliver the DIRECTOR INDEPENDENCE −− is free from any interest and any business or following reports: strategic direction and goals determined by the The Board determines annually on a case-by-case Board. other relationship which could, or could reasonably −− NZX – Appendix 16 Corporate Governance Best basis, who in its view, are independent Directors. be perceived to, materially interfere with his/her Practice Code. With the approval of the Chairman, Directors are The factors that the Company will take into account ability to act in the best interests of the Company. entitled to seek independent professional advice on when assessing the independence of its Directors The Board has set a 10% materiality threshold −− Corporate Governance in New Zealand – Principles any aspect of the Directors’ duties, at the Company’s are outlined in our Board Charter and state that in line with NZX guidelines in determining and Guidelines – A Handbook for Directors, expense. Executive and Advisors by the Securities a Director will be deemed not to be independent if independence. In addition to the quantitative case- Commission, New Zealand. The full content of the Company’s corporate they: by-case assessment is the qualitative assessment. governance policies, practices and procedures can be −− are a substantial security holder of the Company, Specifically, the Board will consider whether there −− ASX Corporate Governance Council Corporate found on the Company’s website: are any factors or considerations which may mean Governance Principles and Recommendations, or an associated person of a substantial security www.port-tauranga.co.nz holder (other than solely as a consequence of that the Director’s interest, business or relationship other than the following areas. could, or could be reasonably perceived to, materially The Board is committed to reviewing these policies being a Director); or The Board has not set measurable objectives for interfere with the Director’s ability to act in the best annually. achieving gender diversity. The Board considers −− have a relationship (other than in their capacity interests of the Company. that merit based appointments are the appropriate as a Director) with the Company or a substantial BOARD COMPOSITION The Board considers that David Pilkington’s role as approach for selection of employees and Directors, security holder of the Company (or one of their Director of Zespri Group Limited and Ballance Agri- and as such, has not set specific targets for gender The Constitution states that there shall be no more associated persons has such a relationship) and, Nutrients Limited, two major customers of the Port, diversity. than nine Directors, nor less than six, and comprising by virtue of that relationship, that Director (or of no more than two members or employees of associated person) is likely to derive, in the current does not preclude him from being considered an The Chairman of the Remuneration Committee is the shareholding authority, who may hold office as financial year of the Company, a substantial independent director. also Chairman of Quayside Securities Limited, our Directors of the Company at the same time. portion of their annual revenue during such Mr Pilkington has no involvement in any matters major shareholder, so therefore is not independent. financial year. regarding tariffs and has no ability to influence The Board sees no conflict on the Remuneration The Board currently comprises of eight non- decisions on such matters. The Port of Tauranga Committee as the Chairman is qualified for the role executive Directors of which six are independent. Equally, a Director will be independent if he/she is not is not a material supplier of services to Zespri or and is independent for remuneration purposes. The Chairman of the Board is David Pilkington. a member of management and: The biography of each Board Member, including Ballance. −− has not been employed in an executive capacity by ROLE OF THE BOARD AND MANAGEMENT each Directors’ skills, experience, expertise, other the Company or any related company, or been a Mr Ellis is also a Director of Ballance Agri-Nutrients directorships and the term held by each Director The primary role of the Board is the protection and Director after ceasing to hold such employment, Limited and we also consider him to be independent. at the date of this Annual Report is set out in the enhancement of shareholder value while respecting within the last three years; or Based on the above factors, John Cronin and Michael the rights of other stakeholders. Good corporate Directors section on page 7 of this Annual Report. −− has not been a principal of a material professional Smith are considered not to be independent, given governance is core to ensuring the creation, In accordance with the Company’s Constitution, adviser or a material consultant to the Company their relationship with Quayside Securities Limited protection and enhancement of shareholder value. one-third, or the number nearest to one-third of the or a related company, or an employee materially (holding over 54% of the shares in Port of Tauranga Directors retire by rotation at each meeting. The The Board oversees the business and affairs of the associated with the service provided, within the Limited). Directors to retire are those who have been longest Company, establishes the strategies and financial last three years; or in office since their last election. Directors retiring

Annual Report 2014 Annual Report 2014 44 45 PORT OF TAURANGA CORPORATE GOVERNANCE STATEMENT PORT OF TAURANGA CORPORATE GOVERNANCE STATEMENT

CONFLICTS OF INTEREST mix of expertise and experience. When a vacancy CONTINUOUS DISCLOSURE The Chief Financial Officer must approve all trading Where any Port of Tauranga Director has a conflict exists, or where it is considered that the Board The Board has adopted the NZX Continuous of Port of Tauranga shares prior to the trade of interest or is otherwise interested in any would benefit from the services of a new Director Disclosure Rules to ensure all material matters are occurring. with particular skills, the Committee selects a panel transaction, that Director is generally required released to the financial markets in a clear and timely The NZX is advised of all trades of Port of Tauranga of candidates with the appropriate expertise and to disclose his or her conflict of interest to the manner. shares by Directors and the Senior Management experience. The most suitable candidate is then Company, and thereafter will normally not be able Team. recommended for appointment. The Director must to participate in the discussion, nor vote in relation RISK MANAGEMENT to the relevant matter. The Company maintains a stand for re-election at the next general meeting of Disclosure and Communication shareholders. We are committed to managing risk to protect our register of disclosed interests. people, the environment, financial business risks, Port of Tauranga is committed to promoting investor Nomination Committee: company assets and our reputation. confidence by ensuring all shareholders are provided BOARD AND COMMITTEE MEETINGS J S Parker, Chairman (resigned October 2013) information about the Company in compliance with The following table outlines the number of meetings D A Pilkington, Chairman (appointed Chairman of The Company has a comprehensive risk management NZX and ASX Listing Rules, such that: Committee December 2013) system in place which is used to identify and manage attended by Directors during the course of the 2014 −− all investors have equal and timely access to financial year: A W Baylis, Director all business risks. The system identifies the key risks J M Cronin, Director facing the Company and the status of initiatives material information concerning the Company, including its financial situation, performance, BOARD COMMITTEES K R Ellis, Director employed to reduce them. FULL ownership and governance; and BOARD AUDIT NOMINATION* REMUNERATION A R Lawrence, Director Management report to the Board annually, on the M J Smith, Director −− Company announcements are factual and A W Baylis 7 2 - - effectiveness of the Company’s management of Sir Dryden Spring, Director material risks. comprehensive. J M Cronin 7 - - - K Tempest, Director The Chief Executive and Chief Financial Officer have Diversity K R Ellis** 6 2 - - Remuneration Committee confirmed in writing to the Audit Committee that the Port of Tauranga is committed to providing equal A R Lawrence*** 3 - - - The Remuneration Committee operates under a Company’s financial statements are in accordance employment opportunities. J S Parker**** 3 1 - 3 charter which requires it to determine and review with the accounting standards. As at 30 June 2014, 18.0% of the Company were D A Pilkington 7 1 - 3 remuneration for Directors, Chief Executive As part of risk management the Port has a female employees. Female representation at senior and senior executives, and ensure appropriate M J Smith 7 2 - 3 comprehensive Treasury Policy that sets out management level was 20%. There were no female performance incentives are in place. Sir Dryden Spring 7 2 - - procedures to minimise financial market risk. Board Members. Remuneration Committee: K Tempest 7 - - 3 The Board has not set measurable objectives for M J Smith, Chairman POLICIES achieving gender diversity. The Board considers Total meetings held 7 2 - 3 K R Ellis, Director Code of Ethics that merit based appointments are the appropriate *As all Directors are on the Nomination Committee, the matter relating to D A Pilkington, Director approach for selection of employees and Directors, the Nomination Committee was discussed in the May 2014 Board Meeting. K Tempest, Director Port of Tauranga requires the highest standards **Appointed 31 May 2014. of honesty and integrity from its Directors, and as such, has not set specific targets for gender ***Appointed 1 February 2014. diversity. ****Retired 24 October 2013. BOARD PERFORMANCE Management and employees. The Board of Directors has established three The Board has included in its Charter, a requirement A Code of Ethics has been developed and approved Committees for audit, nomination and remuneration. to conduct an annual review of the Board, Board by the Board which sets out the ethical and Audit Committee Committees and individual Directors. behavioural standards expected by the Company’s The Audit Committee operates under a charter Directors, Senior Management Team and employees. which requires it to assist the Board in fulfilling its COMMUNICATION WITH SHAREHOLDERS The policy sets out the ethical and behavioural responsibilities regarding management’s accounting Port of Tauranga is committed to ensure that standards and professional conduct expected. practices, policies and controls, relative to the shareholders are informed of all major developments Group’s financial position, and to review and make affecting the Group. Insider Trading appropriate inquiry into the audit of the Group’s An Interim and Annual Report are published and The Board has approved an Insider Trading Policy financial statements by external auditors. The Audit that applies to all Directors, the Senior Management Committee operates under a charter approved by posted onto the Company’s website. All shareholders requesting a hard copy are sent one. Team and anyone else notified by the Chief Financial the Board and reviewed by external auditors each Officer, from time to time, that has access to year. Announcements to NZX and media are also posted material information not available to the public. on the website, as are copies of presentations to Audit Committee: Under the policy the above persons cannot trade A W Baylis, Chairman analysts which are done in conjunction with the half and full year results announced. Port of Tauranga shares, or advise or encourage D A Pilkington, Director others, to trade or hold Port of Tauranga shares, if M J Smith, Director Shareholders can receive all media announcements they are in possession of material information that is Sir Dryden Spring, Director automatically by joining the mailing list on the not publicly available. Company’s website. Nomination Committee In addition, shares can only be traded in selected The Nomination Committee operates under a charter Shareholders may raise matters for discussion at periods after the announcements of interim and which requires it to review the composition of the Annual Meetings. annual results. Board, to ensure that the Board has the appropriate

Annual Report 2014 Annual Report 2014 46 47 PORT OF TAURANGA REPORT OF DIRECTORS TO SHAREHOLDERS PORT OF TAURANGA REPORT OF DIRECTORS TO SHAREHOLDERS

REPORT OF DIRECTORS TO

DIRECTORS The LTI is set at 30% of FR. Fifty percent of SHAREHOLDERS the opportunity will be earned by achieving Total Mr David Alan Pillkington will retire by rotation Shareholder Return (TSR) targets measured by the and, being eligible, offer himself for re-election, Sir ranking of Port of Tauranga Limited against the Dryden Thomas Spring will retire by rotation and is Your Directors take pleasure in presenting their MetroBox Auckland Limited is a 50:50 venture NZX50 less Australian listed stocks. The second not seeking re-election, and Mr Alastair Roderick Annual Report including the financial statements of company with KiwiRail Limited for storing, cleaning, 50% will be earned by achieving target earnings per Lawrence will offer himself for election, at the the Company and its subsidiaries for the year ended washing and inspecting shipping containers at the share growth. The LTI targets are detailed below: 30 June 2014. Southdown rail terminal at Auckland – MetroPort. Annual Meeting on Thursday 23 October 2014. The operation is managed by Specialised Container The report includes all information required to be TSR PERCENTILE RANKING EARNED Services Limited (SCS). SENIOR MANAGEMENT TEAM disclosed under the Companies Act 1993 and by NZX. Below 40 Nil Port of Tauranga has a 37.5% shareholding in Cubic The Company has an Executive Remuneration Policy At 50 50% ACTIVITIES Transport Services Limited, which specialises in that sets the framework for rewarding the Chief Above 50 to below 75 50 – 99% Executive and direct reports to the Chief Executive. At 75 or above 100% The Company operates a port located at Tauranga moving freight within New Zealand. with an inland port located in Auckland (MetroPort). On 29 November 2013 Port of Tauranga Limited The policy aims to attract, retain and motivate EPS* 3 YEAR CAGR** EARNED The main activities undertaken are: purchased a 50% shareholding in PrimePort Timaru high-calibre executives. The overall remuneration 0% Nil structure is designed to deliver rewards that Limited. PrimePort operates the bulk port and 3.5% 50% −− wharf facilities are competitive in the labour market and to link marine fleet, as well as leases the container terminal 7.0% 100% remuneration to performance over the short, −− back up land for the storage and transit of to Timaru Container Terminal Limited. 8.0% 110% import and export cargo medium and long term. On 29 November 2013 Port of Tauranga Limited 9.0% 120% −− Port of Tauranga’s executive remuneration *Earnings per share berthage acquired a 100% shareholding in Timaru Container **Compounded annual growth rate Terminal Limited, a newly formed company that recognises acceptable performance in the fixed −− cranes leases and operates the container terminal at remuneration component and the delivery of As at 30 June 2014 $1.060 million has been accrued −− tug and pilotage services for exporters, importers PrimePort Timaru. business growth goals in the short and long term for LTI for the Chief Executive and direct reports and shipping companies performance based remuneration components. (30 June 2013: $2.082 million). On 27 May 2014 PortConnect Limited, a 50:50 joint −− leasing of land and buildings venture company with Ports of Auckland Limited, The Board, through the Remuneration Committee, The Chief Executive’s remuneration for the year was set up to operate an online cargo management sets the remuneration structure for the Chief ended 30 June 2014 was made up as follows: −− a container terminal system, connecting ports to their logistics Executive and Senior Management Team. The Port of Tauranga owns 100% of Tapper Transport companies. Company’s Senior Management Team’s total $000 Limited which provides wharf cartage of containers, remuneration is made up of a mix of: Fixed Remuneration (FY14) 700 Short Term Incentive (FY13) 357 packing and unpacking, and warehousing. Tapper RESULTS −− Fixed Remuneration (FR); Transport’s warehouse is located near MetroPort. Long Term Incentive (2010 Vesting) 407 Underlying net tax paid surplus for the year was Tapper Transport purchased Priority Logistics −− Short Term Incentive (STI); and Total $1,464 $78.252 million (2013: $77.228 million). Limited on 1 July 2013. −− Long Term Incentive (LTI). Equity of the Group at year end totalled AUDITORS Port of Tauranga purchased 100% of Quality $812.419 million, compared with the 2013 year end Marshalling Limited on 1 February 2013. Quality Chief Executive Remuneration Under section 19 of the Port Companies Act 1988, total of $793.878 million. Marshalling is performing log marshalling, scaling The FR is determined in relation to the market for the Audit Office is the Auditor of the Company. The and stevedoring at Northport. Quality Marshalling Total net interest bearing debt at year end was comparable sized and performing companies, and Audit Office has appointed, pursuant to section 32 operates the rail siding at the Tauranga Terminal as $254.471 million, compared with $190.787 million in includes all benefits, allowances and deductions. The of the Public Audit Act 2001, the firm of KPMG to well as operating at Rotorua, Kaingaroa and Napier. 2013. position in the market will normally be comparable undertake the audit on its behalf. In conjunction with Northland Port Corporation (NZ) to the median. Adjustments are not automatic and The amount paid as audit fees and for other DIVIDENDS Limited, a company listed on NZX, a port at Marsden are determined by performance which is reviewed services provided by the Auditors is set out in the Point was developed which trades as Northport An interim dividend on ordinary shares of 21.0 cents annually. accounts. Limited. per share was paid during the year. Short Term Incentive For and on behalf of the Board of Directors Northport Limited has formed a 50:50 venture Directors have approved a final dividend of 29.0 The STI is set at 60% of FR. Seventy percent of the company (North Tugz Limited) with Ports of Auckland cents per ordinary share. The final dividend will be STI is linked to Company financial performance with Limited to undertake towage operations within the paid on Friday 3 October 2014 to all shareholders the actual opportunity in the range of 0% to 130%. Whangarei Harbour, in particular, providing marine on the Company’s register at the close of business Thirty percent is based on achieving strategic …………………………………………………. services at Marsden Point. on Friday 19 September 2014. A solvency certificate objectives with the actual opportunity in the range has been completed in support of the dividend of 0% to 100%. Objectives are set each year. Chairman Port of Tauranga has a 50% shareholding in resolution. MetroPack Limited with Tapper Transport also Long Term Incentive holding 50%. MetroPack have a packing operation at All dividends are fully imputed. Non-resident MetroPort. shareholders will receive an additional amount under The LTI is a three year overlapping synthetic the foreign investor tax credit regime in lieu of (phantom) share scheme where, subject to …………………………………………………. imputation credits. performance, cash earned must be committed to acquiring Company shares. Director 21 August 2014

Annual Report 2014 Annual Report 2014 48 49 PORT OF TAURANGA STATUTORY INFORMATION PORT OF TAURANGA STATUTORY INFORMATION STATUTORY INFORMATION AS AT 30 JUNE 2014

INTERESTS REGISTER Director Interest Entity The Company is required to maintain an Interests Register in which particulars of certain transactions and matters involving the Directors must Kim Rowland Ellis Chairman – resigned during the year Macaulay Metals be recorded. Chairman NZ Social Infrastructure Fund Limited The matters set out below were recorded in the Interests Register of the Company during the financial year. Director Ballance Agri-Nutrients Limited GENERAL NOTICE OF INTEREST BY DIRECTORS Director EnviroWaste Services Limited

The Directors of the Company have declared interests in the following identified entities as at 30 June 2014: Director Fonterra Shareholders Fund (FSF) Management Company Director Interest Entity Director Freightways Limited John Suffield Parker Chairman – resigned during the year Northport Limited Director – resigned during the year Jucy Group Limited Director Dairy Holdings Limited Director Moa Group Limited Director – resigned during the year Port of Tauranga Trustee Company Limited Director Tasman Tanning Limited Director / Shareholder Graeme Paul Limited Trustee Wanganui Collegiate School Director / Shareholder Nuzeafarm (Singapore) Limited Alastair Roderick Lawrence Chairman Brittain Wynyard Limited Director / Shareholder Valley Properties Limited Director / Shareholder Antipodes Capital Limited Trustee Ruapehu Alpine Lifts Limited Director / Shareholder Antipodes Frontier Limited Arthur William Baylis Chairman Blackhead Quarries Limited Director / Shareholder Antipodes Properties Limited Chairman Dairy Holdings Limited Director / Shareholder Antipodes Ventures Limited Chairman – resigned during the year Landcorp Farming Limited Director / Shareholder CBS Advisory Limited Director – resigned during the year Dunedin City Holdings Limited Director / Shareholder Glenorchy Pastoral Management Limited Director Edincorp Business Services Limited Director / Shareholder Haines Australia Limited Director Melbourne St Developments Limited Director / Shareholder Snowball Effect Limited Director Palmer & Son Limited Trustee JAB Hellaby Trust Director Palmer Oliver Holdings Limited David Alan Pilkington Chairman Hellers Director – resigned during the year Pengxin New Zealand Farm Management Limited Chairman Rangatira Limited Director – appointed during the year PrimePort Timaru Limited Director Aragorn Limited (Zespri subsidiary) Director Tenby Estate Limited Director Ballance Agri-Nutrients Limited Director / Shareholder Edincorp Equities Limited Director Douglas Pharmaceuticals Limited John Michael Cronin Chairman / Trustee South Waikato Investment Trust Director – appointed during the year Northport Limited Councillor Bay of Plenty Regional Council Director – appointed during the year Port of Tauranga Trustee Company Limited Director – appointed during the year Heretaunga Water Limited Director – appointed during the year PrimePort Timaru Limited Director Piccadilly Investments Limited Director – resigned during the year Ruapehu Alpine Lifts Limited Trustee South Waikato Development Trust Director – appointed during the year Tuatara Brewing Company Limited Director Zespri Group Limited Director / Shareholder Excelsa Associates Limited Director & Chair, Finance Committee Restaurant Brands New Zealand Limited Independent Appointee – resigned during the year Wellington City Council Audit and Risk Management Sub-Committee Trustee New Zealand Community Trust

Annual Report 2014 Annual Report 2014 50 51 PORT OF TAURANGA STATUTORY INFORMATION PORT OF TAURANGA STATUTORY INFORMATION

Director Interest Entity REMUNERATION OF DIRECTORS Michael John Smith Chairman Craigs Investment Partners Investment Management Directors’ fees received, or due and receivable during the year, are as follows: Limited GROUP PARENT COMPANY Chairman Craigs Investment Partners Superannuation Management Limited 2014 2013 2014 2013 $ $ $ $ Chairman Quayside Group of Companies A W Baylis 78,674 61,861 63,474 61,861 Chairman – resigned during the year Tauranga City Investments Limited J M Cronin 55,294 53,681 55,294 53,681 Chairman / Trustee FC Beazley Trust K R Ellis 56,324 13,519 56,325 13,519 A R Lawrence* 23,208 0 23,208 0 Director Aurora Limited J S Parker** 50,953 113,498 47,620 113,498 Director Bethlehem Country Club Limited D A Pilkington 129,707 55,727 101,174 55,727 Director Custodial Services Limited M J Smith 63,474 61,861 63,474 61,861 Director First Mortgage Managers Limited Sir Dryden Spring 59,384 57,771 59,384 57,771 Director Norfolk Southern Cross Limited K Tempest 57,399 55,726 57,399 55,726 *Appointed 1 February 2014. Director NZ Golf **Retired 24 October 2013. Director Quayside Holdings Limited Director Quayside Properties Limited REMUNERATION OF EMPLOYEES Director Quayside Securities Limited The number of employees whose total annual remuneration including salary, performance bonuses, employer’s contributions to superannuation and health schemes, and other sundry benefits received in their capacity as employees, was within the specified bands as follows: Director The Body Corporate Chair Limited Director The Cascades Retirement Resort Limited PARENT COMPANY Director The Takahoa Bay Company Limited Remuneration Number of Number of Range Employees Employees Consultant (no proprietary interest) Holland Beckett $000 2014 2013 Sir Dryden Spring Director (Alternate) – resigned during the year Northport Limited 100 – 109 16 24 Member (Advisory Board) – resigned during the Visy Industries Limited 110 – 119 17 15 year 120 – 129 16 14 130 – 139 10 7 Trustee The New Zealand Business and Parliament Trust 140 – 149 2 5 Keith Tempest Director – appointed during the year Bay Venue Limited 150 – 159 2 4 Director Crown Fibre Holdings 160 – 169 4 4 Director NZ Bus Limited 170 – 179 7 2 Director Transpower Limited 180 – 189 0 2 190 – 199 4 3 Note: 1 Mr J S Parker retired from the Board 24 October 2013. 210 – 219 5 4 2 Mr A R Lawrence appointed to the Board 1 February 2014. 220 – 229 3 3 290 – 299 1 0 300 – 309 0 2 370 – 379 1 0 380 – 389 0 1 490 – 499 0 3 570 – 579 1* 0 650 – 659 2* 0 960 – 969 0 1 1,460 – 1,470 1* 0

*Includes vesting of 2010 Long Term Incentive Scheme and payment of FY13 Short Term Incentive.

Annual Report 2014 Annual Report 2014 52 53 PORT OF TAURANGA STATUTORY INFORMATION PORT OF TAURANGA STATUTORY INFORMATION

DIRECTORS’ LOANS SUBSTANTIAL SECURITY HOLDERS There were no loans by the Company to Directors. The following information is given in accordance with section 26 of the Securities Amendment Act 1988. According to notices received, the following persons were substantial security holders in the Company as at 21 August 2014. DIRECTORS’ INSURANCE Number of The Group has arranged policies of Directors’ Liability Insurance, which together with a Deed of Indemnity, ensures that generally Directors Holder Shares Held % will incur no monetary loss as a result of actions undertaken by them as Directors. Certain actions are specifically excluded, for example the Quayside Securities Limited 73,687,536 54.14 incurring of penalties and fines, which may be imposed in respect of breaches of the law. The total number of issued voting securities of the Company as at 21 August 2014 was 136,116,246. SHAREHOLDER INFORMATION DIRECTORS’ SECURITY HOLDINGS The ordinary shares of Port of Tauranga Limited are listed on NZX. The information in the disclosures below has been taken from the Held by Company’s registers as at 21 August 2014. Beneficially Held Associated Persons TWENTY LARGEST ORDINARY EQUITY HOLDERS 30.06.14 30.06.13 30.06.14 30.06.13 A W Baylis 0 0 10,000 10,000 % of Number Issued J M Cronin 0 0 2,500 2,500 Holder Held Equity K R Ellis 0 0 12,550 12,550 Quayside Securities Limited 73,687,536 54.14 A R Lawrence* 0 0 0 0 New Zealand Central Securities Depository Limited 13,429,540 9.87 J S Parker** 0 0 0 78,450 Custodial Services Limited (3 a/c) 4,707,901 3.46 D A Pilkington 0 0 0 0 Custodial Services Limited (2 a/c) 2,034,181 1.49 M J Smith 0 0 22,370 22,370 Sir Dryden Spring 32,000 32,000 4,500 4,500 Kotahi Logistics LP 2,000,000 1.47 K Tempest 0 0 0 0 FNZ Custodians Limited 1,851,597 1.36 Custodial Services Limited (18 a/c) 1,301,313 0.96 *Appointed 1 February 2014. **Retired 24 October 2013. Custodial Services Limited (4 a/c) 1,136,867 0.84 Investment Custodial Services Limited (C a/c) 575,603 0.42 Masfen Securities Limited 545,000 0.40 Custodial Services Limited (1 a/c) 543,603 0.40 Custodial Services Limited (16 a/c) 473,919 0.35 JB Were (NZ) Nominees Limited (55215 a/c) 400,000 0.29 Lloyd James Christie 307,000 0.23 Forsyth Barr Custodians Limited (1-33 a/c) 303,211 0.22 New Zealand Depository Nominee Limited (1 a/c) 278,573 0.20 Karen Maureen Pensabene 260,000 0.19 Aaron James Forster and Lloyd & Associates Limited 207,125 0.15 Fraser Grant McKenzie & Dorothy Ann McKenzie 200,306 0.15 Custodial Services Limited (6 a/c) 196,812 0.14 Total 104,440,087 76.73

DISTRIBUTION OF EQUITY SECURITIES

% of Number Number of Issued Range of Equity Holdings of Holders Shares Held Equity 1 – 5,000 8,870 14,008,201 10.29 5,001 – 10,000 924 6,974,554 4.99 10,001 – 50,000 446 8,449,319 6.21 50,001 – 100,000 17 1,224,787 0.90 100,001 and over 28 105,639,385 77.61 Total 10,285 136,116,246 100.00

Annual Report 2014 Annual Report 2014 54 55 PORT OF TAURANGA INDEPENDENT AUDITOR’S REPORT PORT OF TAURANGA INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF PORT OF TAURANGA LIMITED AND GROUP’S FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

The Auditor-General is the auditor of Port of Tauranga Basis of opinion We did not examine every transaction, nor do we guarantee Independence Limited (the Company) and Group. The Auditor-General has We carried out our audit in accordance with the Auditor- complete accuracy of the financial statements. Also we did When carrying out the audit, we followed the independence appointed me, Murray Dunn, using the staff and resources General’s Auditing Standards, which incorporate the not evaluate the security and controls over the electronic requirements of the Auditor-General, which incorporate of KPMG, to carry out the audit of the financial statements International Standards on Auditing (New Zealand). publication of the financial statements. the independence requirements of the External Reporting of the Company and Group on her behalf. Those standards require that we comply with ethical In accordance with the Financial Reporting Act 1993, we Board. We have audited the financial statements of the Company requirements and plan and carry out our audit to obtain report that we have obtained all the information and In addition to the audit and half year review, we have and Group on pages 59 to 108, that comprise the reasonable assurance about whether the financial explanations we have required. We believe we have obtained carried out assignments in the areas of a security statement of financial position as at 30 June 2014, the statements are free from material misstatement. sufficient and appropriate audit evidence to provide a assessment, and security awareness training, which income statement, statement of comprehensive income, Material misstatements are differences or omissions basis for our audit opinion. are compatible with those independence requirements. statement of changes in equity and statement of cash of amounts and disclosures that, in our judgement, are Other than the audit and these assignments, we have no Responsibilities of the Board of Directors flows for the year ended on that date and the notes to the likely to influence shareholders’ overall understanding relationship with or interests in the Company or any of its financial statements that include accounting policies and of the financial statements. If we had found material The Board of Directors is responsible for preparing subsidiaries. other explanatory information. misstatements that were not corrected, we would have financial statements that: referred to them in our opinion. - comply with generally accepted accounting practice in Opinion An audit involves carrying out procedures to obtain New Zealand; and Financial statements Murray Dunn audit evidence about the amounts and disclosures in the - give a true and fair view of the Company and Group’s KPMG In our opinion the financial statements of the Company and financial statements. The procedures selected depend financial position, financial performance and cash flows. On behalf of the Auditor-General Group on pages 59 to 108: on our judgement, including our assessment of risks The Board of Directors is responsible for such internal Tauranga, New Zealand - comply with generally accepted accounting practice in of material misstatement of the financial statements control as it determines is necessary to enable the New Zealand; whether due to fraud or error. In making those risk preparation of financial statements that are free from -  comply with International Financial Reporting Standards; assessments, we consider internal control relevant to material misstatement, whether due to fraud or error. The and the preparation of the Company and Group’s financial Board of Directors is also responsible for the publication statements that give a true and fair view of the matters - give a true and fair view of the Company and Group’s: of the financial statements, whether in printed or to which they relate. We consider internal control in order electronic form. - financial position as at 30 June 2014; and to design audit procedures that are appropriate in the The Board of Directors’ responsibilities arise from the - financial performance and cash flows for the year circumstances but not for the purpose of expressing an Financial Reporting Act 1993 and the Port Companies ended on that date. opinion on the effectiveness of the Company and Group’s Act 1988. internal control. Other legal requirements An audit also involves evaluating: Responsibilities of the Auditor In accordance with the Financial Reporting Act 1993 we report that, in our opinion, proper accounting records have - the appropriateness of accounting policies used and We are responsible for expressing an independent opinion been kept by the Company and Group as far as appears whether they have been consistently applied; on the financial statements and reporting that opinion from an examination of those records. - the reasonableness of the significant accounting to you based on our audit. Our responsibility arises from section 15 of the Public Audit Act 2001 and section 19 of Our audit was completed on 21 August 2014. This is the estimates and judgements made by the Board of the Port Companies Act 1988. date at which our opinion is expressed. Directors; The basis of our opinion is explained below. In addition, we - the adequacy of all disclosures in the financial outline the responsibilities of the Board of Directors and statements; and our responsibilities, and explain our independence. - the overall presentation of the financial statements.

Annual Report 2014 Annual Report 2014 56 57 PORT OF TAURANGA FINANCIAL STATEMENTS PORT OF TAURANGA INCOME STATEMENTS

INCOME FINANCIAL STATEMENTS STATEMENTS 2014 FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

GROUP PARENT COMPANY 2014 2013 2014 2013 Note NZ$000 NZ$000 NZ$000 NZ$000 INCOME STATEMENTS...... 59 STATEMENTS OF COMPREHENSIVE INCOME...... 60 Revenue 8 266,273 244,011 209,243 210,928 STATEMENTS OF CHANGES IN EQUITY...... 61 Other income 8 265 136 8,406 10,265 Operating income 266,538 244,147 217,649 221,193 STATEMENTS OF FINANCIAL POSITION...... 62

STATEMENTS OF CASH FLOWS...... 63 Contracted services for port operations (43,369) (49,127) (41,688) (49,168) RECONCILIATION OF SURPLUS AFTER TAXATION TO Contracted services for transport operations (4,809) (4,507) 0 0 CASH FLOWS FROM OPERATING ACTIVITIES...... 65 Employee benefit expenses 9 (41,549) (32,927) (22,987) (22,217) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS...... 66 Direct fuel and power expenses (12,329) (9,951) (7,082) (7,598) Maintenance of property, plant and equipment (14,605) (9,905) (7,196) (6,794) Other expenses 10 (17,605) (14,631) (10,409) (10,087) Operating expenses (134,266) (121,048) (89,362) (95,864) Results from operating activities 132,272 123,099 128,287 125,329

Depreciation and amortisation 13, 14 (22,389) (18,558) (18,758) (16,537) Impairment of property, plant and equipment 13 (160) 0 (160) 0 (22,549) (18,558) (18,918) (16,537)

Operating profit before finance costs and taxation 109,723 104,541 109,369 108,792

Finance income 11 1,124 2,123 1,093 2,106 Finance expenses 11 (15,406) (17,987) (15,276) (17,673) Net finance costs (14,282) (15,864) (14,183) (15,567)

Gain on sale of Equity Accounted Investee 5 0 38,214 0 42,265 Share of profit from Equity Accounted Investees 17 9,370 10,360 0 0 Profit before income tax 104,811 137,251 95,186 135,490 Income tax expense 12 (26,559) (25,128) (24,393) (23,811) Profit for the period 78,252 112,123 70,793 111,679

Attributable to: Owners of the Parent Company 78,252 112,132 70,793 111,679 Non controlling interest 0 (9) 0 0 Profit for the period 78,252 112,123 70,793 111,679

Basic earnings per share attributable to ordinary equity holders of 22 58.3 83.6 the Parent Company (cents)

Supplementary (Non Statutory) Disclosure Underlying Profit After Tax Underlying profit after tax is presented to allow readers to make a more meaningful comparison of the Group’s profit after removing one-off and non operational items.

Underlying profit after tax 5 78,252 77,228 70,793 72,733 Underlying earnings per share (cents) 22 58.3 57.6

These statements are to be read in conjunction with the notes on pages 66 to 108.

Annual Report 2014 Annual Report 2014 58 59 PORT OF TAURANGA STATEMENTS OF COMPREHENSIVE INCOME PORT OF TAURANGA STATEMENTS OF CHANGES IN EQUITY

STATEMENTS OF STATEMENTS OF COMPREHENSIVE INCOME CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

GROUP PARENT COMPANY Share Hedging Revaluation Retained Non Controlling Capital Reserve Reserve Earnings Interest Total 2014 2013 2014 2013 Note NZ$000 NZ$000 NZ$000 NZ$000 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 GROUP NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Profit after tax attributable to owners of the Parent Company 78,252 112,123 70,793 111,679 Balance at 1 July 68,381 68,421 (7,002) (16,471) 598,905 597,547 133,594 84,489 0 (112) 793,878 733,874

Other comprehensive income Profit for the period 0 0 0 0 0 0 78,252 112,132 0 (9) 78,252 112,123 Items that are or may be reclassified to profit or loss: Other comprehensive 0 0 3,316 9,469 (8) 1,366 0 0 0 0 3,308 10,835 income Effective portion of changes in fair value of cash flow hedges, net 36 1,902 36 1,902 Transfer to retained 0 0 0 0 0 (8) 0 8 0 0 0 0 of tax * earnings on disposal Change in fair value of cash flow hedges transferred to income 3,157 6,607 3,157 6,607 Total comprehensive 0 0 3,316 9,469 (8) 1,358 78,252 112,140 0 (9) 81,560 122,958 statements, net of tax* income Changes in cash flow hedges transferred to property, plant and (58) 696 (58) 696 equipment, net of tax* Increase/(decrease) in 16 (40) 0 0 0 0 0 0 0 0 16 (40) share capital Share of net change in cash flow hedge reserves of Equity 17 181 264 0 0 Dividends paid during the 0 0 0 0 0 0 (63,035) (63,035) 0 0 (63,035) (63,035) Accounted Investees year (refer to note 21(b)) 9,469 9,205 3,316 3,135 Total transactions with 16 (40) 0 0 0 0 (63,035) (63,035) 0 0 (63,019) (63,075) owners in their capacity as owners Items that will never be reclassified to profit or loss: Acquisition of non 0 0 0 0 0 0 0 0 0 121 0 121 Share of net change in revaluation reserve of Equity Accounted 17 (8) 1,366 0 0 controlling interest without Investees change in control (8) 1,366 0 0 Total change in ownership 0 0 0 0 0 0 0 0 0 121 0 121 interest in Subsidiaries Total other comprehensive income 3,308 10,835 3,135 9,205 Total movements in equity 16 (40) 3,316 9,469 (8) 1,358 15,217 49,105 0 112 18,541 60,004 Total comprehensive income 81,560 122,958 73,928 120,884 Balance at 30 June 68,397 68,381 (3,686) (7,002) 598,897 598,905 148,811 133,594 0 0 812,419 793,878

Attributable to: Owners of the Parent Company 81,560 122,967 73,928 120,884 Share Hedging Revaluation Retained Capital Reserve Reserve Earnings Total Non controlling interest 0 (9) 0 0 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Total comprehensive income 81,560 122,958 73,928 120,884 PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

*Tax effect is disclosed in notes 12 and 26. Balance at 1 July 68,841 68,841 (6,767) (15,972) 582,614 582,622 115,984 67,332 760,672 702,823

Profit for the period 0 0 0 0 0 0 70,793 111,679 70,793 111,679 Other comprehensive income 0 0 3,135 9,205 0 0 0 0 3,135 9,205 Transfer to retained earnings on disposal 0 0 0 0 0 (8) 0 8 0 0 Total comprehensive income 0 0 3,135 9,205 0 (8) 70,793 111,687 73,928 120,884

Dividends paid during the year 0 0 0 0 0 0 (63,035) (63,035) (63,035) (63,035) (refer to note 21(b)) Total transactions with owners in their 0 0 0 0 0 0 (63,035) (63,035) (63,035) (63,035) capacity as owners Total movements in equity 0 0 3,135 9,205 0 (8) 7,758 48,652 10,893 57,849 Balance at 30 June 68,841 68,841 (3,632) (6,767) 582,614 582,614 123,742 115,984 771,565 760,672

These statements are to be read in conjunction with the notes on pages 66 to 108. These statements are to be read in conjunction with the notes on pages 66 to 108.

Annual Report 2014 Annual Report 2014 60 61 PORT OF TAURANGA STATEMENTS OF FINANCIAL POSITION PORT OF TAURANGA STATEMENTS OF CASH FLOWS

STATEMENTS OF STATEMENTS OF FINANCIAL POSITION CASH FLOWS

AS AT 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

GROUP PARENT COMPANY GROUP PARENT COMPANY 2014 2013 2014 2013 2014 2013 2014 2013 Note NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Assets Cash flows from operating activities Property, plant and equipment 13 998,742 946,929 969,699 933,435 Cash was provided from: Intangible assets 14 43,873 42,637 3,064 3,502 Receipts from customers 262,476 248,214 207,356 216,118 Advances and receivables 15 0 1,857 142 2,104 Interest received 280 890 249 873 Investments in Subsidiaries 16 0 0 40,699 40,694 Dividends received 0 0 8,155 8,881 Investments in Equity Accounted Investees 17 71,079 49,915 41,576 21,800 262,756 249,104 215,760 225,872 Total non current assets 1,113,694 1,041,338 1,055,180 1,001,535 Cash was applied to: Cash and cash equivalents 1,560 37,218 349 24,980 Payments to suppliers and employees (137,988) (120,992) (94,180) (95,495) Receivables and prepayments 19 38,569 33,234 48,372 45,777 Taxes paid (27,355) (26,926) (25,397) (26,418) Derivative financial instruments 18 52 81 52 81 Interest paid (15,055) (17,792) (15,055) (17,568) Inventories 20 1,008 710 918 639 (180,398) (165,710) (134,632) (139,481) Total current assets 41,189 71,243 49,691 71,477 Net cash inflow from operating activities 82,358 83,394 81,128 86,391 Total assets 1,154,883 1,112,581 1,104,871 1,073,012 Cash flows from investing activities Equity Cash was provided from: Share capital 21(a) 68,397 68,381 68,841 68,841 Proceeds from sale of property, plant and equipment 140 485 7 322 Hedging reserve 21(c) (3,686) (7,002) (3,632) (6,767) Proceeds from disposal of Equity Accounted Investee 0 53,401 0 53,401 Revaluation reserve 21(d) 598,897 598,905 582,614 582,614 Proceeds from repayment of capital notes 0 16,599 0 16,599 Retained earnings 148,811 133,594 123,742 115,984 Finance lease payments received, including interest 4,258 4,280 4,258 4,280 Total equity attributable to owners of the Parent Company 812,419 793,878 771,565 760,672 Receipts from Subsidiaries 0 0 2,803 135 Total equity 812,419 793,878 771,565 760,672 Dividends from Equity Accounted Investees 8,155 8,881 0 0 12,553 83,646 7,068 74,737 Liabilities Loans and borrowings 23 96,129 79,767 95,000 79,000 Cash was applied to: Deferred consideration 24 500 500 500 500 Cash outflow for property, plant and equipment (61,119) (68,105) (53,960) (66,215) Derivative financial instruments 18 3,340 8,692 3,340 8,692 Cash outflow for intangibles (516) (625) (476) (596) Provisions 25 1,752 1,298 1,450 1,010 Purchase of Subsidiaries, net of cash acquired 0 (27,252) 0 (27,247) Deferred tax liabilities 26 48,718 48,458 47,153 47,769 Purchase of loans from Holmes Ventures Limited 0 (5,753) 0 (5,753) Total non current liabilities 150,439 138,715 147,443 136,971 Purchase of Equity Accounted Investees (19,776) 0 (19,776) 0 Interest capitalised on property, plant and equipment (395) (1,271) (395) (1,271) Loans and borrowings 23 160,202 146,312 160,000 146,000 Payments under finance leases, including interest (437) (519) 0 0 Deferred consideration 24 0 1,500 0 1,500 Advances to Subsidiaries 0 0 (1,785) (8,884) Derivative financial instruments 18 1,209 812 1,209 812 Advances to Equity Accounted Investee (1,400) 0 (1,400) 0 Trade and other payables 27 19,101 19,561 14,821 16,042 Consideration for net assets of Priority Logistics Group (10,000) 0 0 0 Provisions 25 2,043 3,657 1,433 3,446 Consideration for net assets of PrimePort Timaru Limited’s container (2,062) 0 0 0 Income tax payable 9,470 8,146 8,400 7,569 terminal operations Total current liabilities 192,025 179,988 185,863 175,369 Payment of deferred and contingent consideration (1,500) (2,000) (1,500) (2,000) Total liabilities 342,464 318,703 333,306 312,340 (97,205) (105,525) (79,292) (111,966) Total equity and liabilities 1,154,883 1,112,581 1,104,871 1,073,012 Net cash used in investing activities (84,652) (21,879) (72,224) (37,229)

For and on behalf of the Board of Directors who authorised these financial statements for issue on 21 August 2014.

…………………………………………. ……………………………………………. Chairman Director

These statements are to be read in conjunction with the notes on pages 66 to 108. These statements are to be read in conjunction with the notes on pages 66 to 108.

Annual Report 2014 Annual Report 2014 62 63 PORT OF TAURANGA STATEMENTS OF CASH FLOWS PORT OF TAURANGA RECONCILIATION OF SURPLUS AFTER TAXATION TO CASH FLOWS FROM OPERATING ACTIVITIES

STATEMENTS OF RECONCILIATION OF SURPLUS AFTER TAXATION CASH FLOWS TO CASH FLOWS FROM OPERATING ACTIVITIES

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

GROUP PARENT COMPANY GROUP PARENT COMPANY 2014 2013 2014 2013 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Cash flows from financing activities Reported surplus after taxation 78,252 112,123 70,793 111,679 Cash was provided from: Increase in borrowings 64,155 30,000 64,000 30,000 Items classified as investing/financing activities: Proceeds from issue of new shares 16 0 0 0 64,171 30,000 64,000 30,000 Finance lease interest revenue (771) (1,233) (771) (1,233) Finance lease interest expense 130 90 0 0 Cash was applied to: Gain on disposal of Equity Accounted Investee 0 (38,214) 0 (42,265) Dividends paid (63,035) (63,035) (63,035) (63,035) Gain on sale of property, plant and equipment (15) (136) (1) (80) Repayment of borrowings (34,000) (466) (34,000) 0 (656) (39,493) (772) (43,578) Purchase of premium paid collars (500) 0 (500) 0 Repurchase of shares in the Parent Company 0 (40) 0 0 Add/(less) non cash items and non operating items: (97,535) (63,541) (97,535) (63,035) Depreciation 21,030 17,451 17,824 15,847 Net cash used in financing activities (33,364) (33,541) (33,535) (33,035) Amortisation expense 1,359 1,107 934 690

Net (decrease)/increase in cash held (35,658) 27,974 (24,631) 16,127 Decrease in deferred taxation expense (2,119) (917) (1,834) (886) Add opening cash brought forward 37,218 9,244 24,980 8,853 Fair value movement in non hedge accounted derivatives (52) 0 (52) 0 Ending cash carried forward 1,560 37,218 349 24,980 Ineffective portion of change in fair value of cash flow hedge (21) 357 (21) 357 Subvention payment 0 0 353 0 Cash balances in statements of financial position Additional provisions net of reversals (1,160) 442 (1,573) 431 Cash and cash equivalents 1,560 37,218 349 24,980 Share of surpluses retained by Equity Accounted Investees (9,370) (10,360) 0 0 Ending cash carried forward 1,560 37,218 349 24,980 Impairment of property, plant and equipment 160 0 160 0 Interest on contingent consideration 0 34 0 34 Increase in impairment of trade receivables 47 0 29 0 9,874 8,114 15,820 16,473

Add/(less) movements in working capital: Change in trade receivables and prepayments (5,612) 3,934 (4,120) 3,488 Change in inventories (298) (141) (279) (153) Change in income tax payable 1,324 (881) 831 (1,717) Change in trade and other payables (526) (262) (1,145) 199 (5,112) 2,650 (4,713) 1,817 Net cash flows from operating activities 82,358 83,394 81,128 86,391

These statements are to be read in conjunction with the notes on pages 66 to 108. These statements are to be read in conjunction with the notes on pages 66 to 108.

Annual Report 2014 Annual Report 2014 64 65 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

1 REPORTING ENTITY 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Port of Tauranga Limited (referred to as the “Parent Company”) is a company incorporated and domiciled in New Zealand, registered Equity Accounted Investees are accounted for using the equity method. The consolidated financial statements under the Companies Act 1993 and listed on the New Zealand Stock Exchange (“NZX”). The Parent Company is an issuer in terms of include the Group’s share of the income and expenses of Equity Accounted Investees, after adjustments to align the the Financial Reporting Act 1993. accounting policies with those of the Group, from the date that significant influence or joint control commences, until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in The financial statements for the Port of Tauranga Limited comprise the Port of Tauranga Limited and its Subsidiaries and the Group’s an equity investee, the carrying amount of that interest (including any long term investments) is reduced to nil and interest in Equity Accounted Investees (referred to as the “Group”). the recognition of further losses is discontinued, except to the extent that the Group has an obligation or has made payments on behalf of the investee. In respect of Equity Accounted Investees, the carrying amount of goodwill is included in the carrying amount of the 2 BASIS OF PREPARATION investment and not tested for impairment separately. (iii) Transactions Eliminated on Consolidation (a) Statement of Compliance Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). in preparing the consolidated financial statements. Unrealised gains arising from transactions with Equity Accounted They comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRSs), and other applicable financial Investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses reporting standards as appropriate for profit-oriented entities. The financial statements also comply with International Financial are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Reporting Standards (IFRS), the Companies Act 1993, the Port Companies Act 1988 and the Financial Reporting Act 1993. (b) Business Combinations and Investments in Equity Accounted Investees The financial statements were approved by the Board of Directors on 21 August 2014. The Group applies the acquisition method for all business combinations. The consideration transferred in an acquisition includes the (b) Basis of Measurement fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and the fair value of The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their contingent consideration. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at fair fair value: derivative financial instruments, land, buildings, harbour improvements, and wharves and hardstanding. value at acquisition date, irrespective of the extent of non controlling interest. The methods used to measure fair values are discussed further in note 4. The Group measures goodwill as the fair value of consideration transferred, less the fair value of the net identifiable assets and (c) Functional and Presentation Currency liabilities assumed at acquisition date. The same approach is used to ascertain the value of goodwill included within the carrying amount of investments in Equity Accounted Investees. These financial statements are presented in New Zealand Dollars (NZ$), which is the Group’s functional currency. All financial information presented in New Zealand Dollars has been rounded to the nearest thousand. If the cost of a business combination is less than the fair value of the net identifiable assets transferred, the difference is recognised directly in the income statements. (d) Use of Estimates and Judgements If the cost of investment in an Equity Accounted Investee is less than the fair value of the share of net identifiable assets of the The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the investee, the difference is recognised by the Group in the income statement within share of profit from Equity Accounted Investees. application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Transaction costs that the Group incurs in connection with a business combination such as legal fees, due diligence fees and other professional and consulting fees are expensed as incurred. When investing in an Equity Accounted Investee, the same types of Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the transaction costs are included as a component of the cost of the investment. period in which the estimate is revised and in any future periods affected. (c) Foreign Currency In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have a significant effect on the amount recognised in the financial statements, are detailed below: Transactions in foreign currencies are translated into the functional currency of Group entities at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the • valuation of land, buildings, harbour improvements, and wharves and hardstanding (refer to notes 4(a) and 13); translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the • valuation of financial instruments (refer to notes 4(c) and 4(d)); income statements, except when deferred in equity as qualifying cash flow hedges. • intangible assets (refer to note 14); (d) Financial Instruments • lease classification and accounting for arrangements containing a lease (refer to notes 15 and 23); (i) Non Derivative Financial Instruments • provisions (refer to note 25); and Non derivative financial instruments comprise investments in equity securities, advances and receivables, cash and cash equivalents, loans and borrowings, deferred consideration and trade and other payables. • business combinations (refer to note 4(e)). Non derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through the profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non derivative financial instruments are measured as described below. 3 SIGNIFICANT ACCOUNTING POLICIES A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. The accounting policies set out below have been applied consistently to all periods presented in these financial statements. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining substantially all risks and rewards of (a) Basis of Consolidation the asset. Ordinary purchases and sales of financial assets are accounted for at trade date, the date that the Group (i) Subsidiaries commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations as specified in the contract expire or are discharged or cancelled. Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or rights that presently are exercisable, are taken into account. The financial statements of Subsidiaries are included in less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are the consolidated financial statements from the date that control commences until the date that control ceases. included as a component of cash and cash equivalents for the purpose of the statement of cash flows. (ii) Equity Accounted Investees Accounting for finance income and expense is discussed in note 3(n). The Group’s interests in Equity Accounted Investees comprise interests in associates and joint ventures. Loans and Receivables and Other Liabilities Associates are those entities in which the Group has significant influence, but not control or joint control, over the Subsequent to initial recognition, other non derivative financial instruments are measured at amortised cost using the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby effective interest method, less any impairment losses. the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its Loans and receivables and other liabilities comprise: advances and receivables; cash and cash equivalents; trade and other liabilities. receivables; loans and borrowings; deferred consideration and trade and other payables. Investments in Equity Securities Investments in equity securities of Subsidiaries and Equity Accounted Investees are measured at cost in the separate financial statements of the Parent Company.

Annual Report 2014 Annual Report 2014 66 67 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Derivative Financial Instruments and Hedging Activities Land and buildings that are not integral or associated with port operations and are leased with the principal objective of earning rentals and/or for capital appreciation are accounted for as investment properties. The Group uses derivative financial instruments to hedge its exposure to foreign exchange, commodity and interest rate risks arising from operational, financing and investment activities. In accordance with its Treasury Policy, the Group does (ii) Subsequent Costs not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the Derivative financial instruments qualifying for hedge accounting are classified as non current if the maturity of the item can be reliably measured. instrument is greater than 12 months from reporting date and current if the instrument matures within 12 months from reporting date. Derivatives accounted for as trading instruments are classified as current. All repairs and maintenance costs attributable to property, plant and equipment, are charged to the income statements during the financial period in which they are incurred. Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on (iii) Depreciation remeasurement to fair value is recognised immediately in the income statements. However, where derivatives qualify for Depreciation is provided on a straight line basis on all property, plant and equipment, other than freehold land and hedge accounting, recognition of any resultant gain or loss depends on the nature of the hedging relationship (see below). capital dredging (included within harbour improvements), at rates calculated to allocate the assets’ cost or valuation Cash Flow Hedges less estimated residual value, over their estimated useful lives. Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in Major useful lives are: the cash flow hedge reserve to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in Freehold Buildings fair value are recognised in the income statements. Freehold buildings 33 to 100 years If the hedging instrument no longer meets the criteria for hedge accounting, expires, or is sold, terminated or exercised, Harbour Improvements then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in the hedging Maintenance dredging 3 years reserve remains there until the highly probable forecast transaction, upon which the hedging was based, occurs. When the Wharves and Hardstanding hedged item is a non financial asset, the amount recognised in the hedging reserve is transferred to the carrying amount Wharves 10 to 60 years of the asset when it is recognised. In other cases the amount recognised in the hedging reserve is transferred to the Wharf rocks 150 to 200 years income statements in the same period that the hedged item affects the income statements. Wharf piles 60 to 130 years (e) Property, Plant and Equipment Basecourse 50 years (i) Recognition and Measurement Asphalt 15 years The Group has five classes of property, plant and equipment: Plant and Equipment Gantry cranes 10 to 40 years - freehold land Floating plant 10 to 25 years - freehold buildings Other plant and equipment 5 to 25 years Electronic equipment 3 to 5 years - harbour improvements Depreciation methods, useful lives and residual values are reassessed at each reporting date. - wharves and hardstanding (f) Dividend Income - plant and equipment Dividend income is recognised on the date that the Group’s right to receive payment is established. Land, buildings, harbour improvements, and wharves and hardstanding are measured at fair value, based upon periodic valuations by external independent valuers. Revaluations are performed with sufficient regularity to ensure (g) Intangible Assets that the carrying value of an asset does not differ materially from its fair value. (i) Goodwill Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, Goodwill that arises upon the acquisition of Subsidiaries is included in intangible assets. In respect of Equity Accounted and the net amount is restated to the revalued amount of the asset. Increases in the carrying amounts arising Investees, the carrying amount of goodwill is included in the carrying amount of the investment. on revalued assets are credited to the revaluation reserve in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in the income statements, the increase is first recognised in the income Goodwill is measured at cost less accumulated impairment losses. statements. Decreases that reverse previous increases of the same asset, are first charged against the revaluation (ii) Other Intangible Assets reserve attributable to the asset, all other decreases are charged to the income statements. Other intangible assets acquired by the Group, which have finite useful lives, are measured at cost less accumulated Upon disposal or derecognition, any revaluation reserve relating to the particular asset being disposed or amortisation and accumulated impairment losses. derecognised is transferred to retained earnings. (iii) Subsequent Expenditure Capital and maintenance dredging are held as harbour improvements within property, plant and equipment. Capital Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific dredging has an indefinite useful life and is not depreciated as the channel is maintained via maintenance dredging to asset to which it relates. its original depth and contours. Maintenance dredging is depreciated over three years. (iv) Amortisation Plant and equipment are stated at historical cost less depreciation and impairment losses. Amortisation is recognised in the income statements on a straight line basis over the useful lives of intangible assets, The cost of purchased property, plant and equipment is the value of the consideration given to acquire the assets other than goodwill, from the date that they are available for use. The estimated useful lives for the current and and the value of other directly attributable costs which have been incurred in bringing the assets to the location and comparative periods are as follows: condition necessary for their intended service. Cost also includes transfers from the hedging reserve of any gains/ losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Rail services agreement 10 to 15 years Computer software 1 to 10 years The cost of assets constructed by the Group includes the cost of all materials used in construction, associated borrowing costs, direct labour on the project and an appropriate proportion of variable and fixed overheads. The (h) Leased Assets Group capitalises borrowing costs where they are directly attributable to the acquisition, construction or production (i) Where the Group is the Lessee of a qualifying asset. A qualifying asset is deemed as having expenditure exceeding $500,000 and takes a substantial period, greater than six months, to complete and prepare the asset for its intended use. Costs cease to be capitalised Leases, in terms of which the Group assumes substantially all the risks and rewards of ownership, are classified as as soon as the asset is ready for productive use. finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in Land and buildings held by Port of Tauranga Limited to provide a port facility to facilitate trade and commerce will be accordance with the accounting policy applicable to that asset. accounted for as property, plant and equipment, notwithstanding that certain land and buildings are leased to port customers and operators.

Annual Report 2014 Annual Report 2014 68 69 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(ii) Where the Group is the Lessor (iii) Transport Operations When assets are leased under a finance lease, where the lessee effectively receives substantially all the risks and Transport operations revenue is recognised when the service is performed. If at reporting date, the service is in rewards of ownership of the leased items, the present value of the lease payments is recognised as a receivable. The progress, then the portion performed is recognised in the current year. difference between the gross receivable and the present value of the receivable is recognised as unearned finance (iv) Freight Handling income. Freight handling revenue is recognised when the service is performed. If at reporting date, the service is in progress, Assets leased under operating leases are included in property, plant and equipment, in the statements of financial then the portion performed is recognised in the current year. position, as appropriate. (v) Forestry Services Income (i) Inventories Forestry services income is recognised when the service is performed. If at reporting date the service is in progress, Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary then the portion performed is recognised in the current year. course of business, less the estimated costs of completion and selling expenses. The cost of inventories is determined on a first- in first-out basis, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and (n) Finance Income and Expense condition. Finance income comprises interest income on funds invested, finance lease interest, foreign currency gains, and gains on hedging (j) Impairment of Assets instruments that are recognised in the income statements. Interest income is recognised as it accrues, using the effective interest method. Finance lease interest is recognised over the term of the lease using the net investment method, which reflects a constant The carrying amounts of the Group’s property, plant and equipment, intangibles and investments in Equity Accounted Investees and periodic rate of return. receivables, are reviewed at each reporting date to determine whether there is any objective evidence of impairment. Finance expenses comprise interest expense on borrowings, finance lease interest expense, unwinding of the discount of provisions, With respect to goodwill, it is tested for impairment at least annually. foreign currency losses, impairment losses recognised on financial assets (except for trade receivables), and losses on hedging Property, Plant and Equipment, Intangibles and Investments in Equity Accounted Investees instruments that are recognised in the income statements. Except as described in note 3(e)(i), all borrowing costs are recognised in the income statements using the effective interest method. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing (o) Lease Payments impairment of individual assets for which it is not possible to estimate the recoverable amount, these assets are grouped at the Payments made under finance leases are allocated between the liability and finance charges, using the effective interest method, so lowest levels for which there are separately identifiable cash flows (cash generating units). Impairment losses recognised in respect as to achieve a constant periodic rate of interest on the finance balance outstanding. The property, plant and equipment acquired of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating unit and under finance leases are depreciated over the shorter of the asset’s useful life and the lease term. then to reduce the carrying amount of the other assets in the cash generating unit on a pro-rata basis. Payments made under operating leases are recognised in the income statements on a straight line basis over the term of the Impairment losses directly reduce the carrying amount of assets and are recognised in the income statements, unless the asset is lease. Lease incentives are recognised as an integral part of the total lease expense, over the term of the lease. carried at a revalued amount in which case it is treated as a revaluation decrease and recognised in equity. An impairment loss in respect of goodwill is not reversed. (p) Income Tax Expense Advances and Receivables Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statements except to the extent that it relates to items recognised in other comprehensive income or equity. The recoverable amount of advances and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Advances and receivables with a short duration are not Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the discounted. reporting date, and any adjustment to tax payable in respect of previous years. (k) Employee Benefits Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes, and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: (i) Long Term Employee Benefits the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination The Group grants employees certain one-off annual leave entitlements upon reaching certain long service targets. The and that affects neither accounting or taxable profit; and differences relating to investments in Subsidiaries and Equity Accounted liability for long service leave is measured as the present value of expected future payments to be made in respect of Investee entities, to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax services provided by employees up to reporting date, using the projected unit credit method. Consideration is given to rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or the expected future wage and salary levels, experience of employee departures and periods of service. Expected future substantively enacted by the reporting date. payments are discounted using market yields at the reporting date on New Zealand Government bonds with terms to A deferred tax asset is recognised to the extent that it is probable future taxable profits will be available against which temporary maturity that match, as closely as possible, the estimated future cash outflows. differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no (ii) Short Term Benefits longer probable that the related tax benefit will be realised. Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related (q) Earnings Per Share service is provided. The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss A provision is recognised for the amount expected to be paid under short term cash bonus or profit sharing plans if attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding for the the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the Parent Company during the period. employee, and the obligation can be estimated reliably. (r) Operating Segments (l) Provisions The Group determines and presents operating segments based on the information that is internally provided to the Chief Executive, A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be who is the Group’s Chief Operating Decision Maker (CODM), as defined by NZ IFRS 8 Operating Segments. estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are The Group operates in four main reportable segments, being: determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. • Port Operations – consists of providing and managing port services, and cargo handling facilities through the Port of Tauranga, MetroPort and the Timaru Container Terminal. The Port’s terminal and bulk operations have been aggregated (m) Revenue together within the Port Operations segment, due to the similarities in economic characteristics, customers, nature of Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary products and processes, and risks. course of the Group’s activities. Revenue is shown, net of GST, rebates and discounts. Revenue is recognised as follows: • Property Services – consists of managing and maintaining the Port’s property assets. (i) Port Services • Forestry Services – consists of the marshalling and scaling activities of Quality Marshalling Limited. Port services revenue is recognised when the related service is performed. If at reporting date, the service is in • Transport Services – consists of the road transport and freight handling activities, of Tapper Transport Limited, Tapper SIP progress, then the portion performed is recognised in the current year. Limited and MetroPack Limited. (ii) Rental Income The four main business segments are managed separately as they provide different services to customers and have their own Rental income from property leased under operating leases is recognised in the income statements on a straight operational and marketing requirements. line basis over the term of the lease. Lease incentives provided are recognised as an integral part of the total lease The remaining activities of the Group are not allocated to individual business segments. income, over the term of the lease. The Group operates in one geographical area, that being New Zealand.

Annual Report 2014 Annual Report 2014 70 71 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4 DETERMINATION OF FAIR VALUES

(s) Group Financial Guarantees A number of the Group’s accounting policies and disclosures require the determination of fair value, being market value, for both financial and non financial assets and liabilities. Where the Parent Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Parent Company considers these to be insurance arrangements, and accounts for them as such. In this respect, When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are the Parent Company treats the guarantee contract as a contingent liability, until such time as it becomes probable that the Parent categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows: Company will be required to make a payment under guarantee. - Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. (t) Cash-settled Share Based Payments - Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie as prices) The fair value of the amount payable under the long term management incentive plan in respect of share appreciation rights, which or indirectly (ie derived from prices). are settled in cash, is recognised as an expense with a corresponding increase in liabilities over the period that management - Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). unconditionally become entitled to payment. The liability is re-measured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as employee benefit expenses in the income statement (refer to note 25). Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (u) New Standards Adopted and Pronouncements Not Yet Adopted (a) Land, Buildings, Harbour Improvements, and Wharves and Hardstanding The following new standards have been applied from 1 July 2013: All land, buildings, harbour improvements, and wharves and hardstanding, were revalued at fair value for non specialised assets and NZ IAS 1 Amendments to Presentation of Financial Statements depreciated replacement cost for specialised assets. The latest valuation was carried out by independent valuers at 30 June 2012, Amendments require entities to separate items presented in other comprehensive income into two groups based on whether they who have appropriate recognised professional qualifications and recent experience in the location and category of assets being will affect profit or loss in the future. valued (refer to note 13). NZ IFRS 12 Disclosures of Interests in Other Entities (b) Trade Receivables and Payables NZ IFRS 12 sets out the required disclosures for entities reporting under the two new standards, NZ IFRS 10 Consolidated The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to Financial Statements and NZ IFRS 11 Joint Arrangements, and replaces the disclosure requirements previously found in NZ IAS 28 their short term nature. Investments in Associates and Joint Ventures. The Group has applied these three new standards from 1 July 2013 however the (c) Derivatives changes have had no effect on any of the amounts recognised in relation to the Group’s investments in these financial statements. An additional disclosure has been included as required by NZ IFRS 12. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. NZ IFRS 13 Fair Value Measurement The fair value of financial instruments that are not traded in active markets (for example over-the-counter derivatives) are determined by using market accepted valuation techniques incorporating observable market data about conditions existing at each NZ IFRS 13 establishes a single framework for measuring fair value when such measurements are required or permitted by other reporting date. standards. It also replaces and expands the disclosure requirements about fair value measurement in other standards, including NZ IFRS 7 Financial Instruments: Disclosures. The Group has applied this new standard from 1 July 2013. The adoption of this The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward standard has had no significant impact on the measurements of the Group’s assets and liabilities. exchange contracts is determined using quoted forward exchange rates at the reporting date. NZ IAS 27 Separate Financial Statements Valuation inputs for valuing derivatives are as follows: Together with NZ IFRS 10 Consolidated Financial Statements, NZ IAS 27 Separate Financial Statements supersedes the previous Valuation Input Source version of NZ IAS 27 Consolidated and Separate Financial Statements. The new standard now solely sets out the accounting Interest rate forward price curve Published market swap rates. requirements for separate (non-consolidated) financial statements. The changes have had no effect on the amounts recognised in Foreign exchange forward prices Published spot foreign exchange rates and interest rate differentials. the financial statements during the reporting period. Discount rate for valuing interest rate Published market interest rates as applicable to the remaining life of the instrument NZ IAS 28 Investments in Associates and Joint Ventures and foreign exchange derivatives adjusted by the cost of credit of the counterparty for assets and the cost of credit of This supersedes the previous version of NZ IAS 28 Investments in Associates. The new standard prescribes the accounting the Group for liabilities. treatment for investments in associates and joint ventures using the equity method and defines the concept of ‘significant influence’ For more information on derivatives, refer to note 34. in relation to investees. The changes have had no effect on the classification of any of the Group’s investees during the reporting period. (d) Non Derivative Financial Assets and Liabilities (Including Deferred Consideration, Finance Lease Assets and Finance Lease Liabilities) NZ IAS 36 Amendments to Impairment of Assets Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest The International Accounting Standards Board has issued amendments to reverse the unintended requirement in NZ IFRS 13 Fair cash flows, and discounted at the market rate of interest at reporting date. Value Measurement to disclose the recoverable amount of every cash-generating unit to which significant goodwill or indefinite- lived intangible assets have been allocated. Under the amendments, recoverable amount is required to be disclosed only when an (e) Fair Value of Business Combinations impairment loss has been recognised or reversed. The Group has early adopted this standard, effective from 1 July 2013. The fair value methodologies used for determining the fair value of business combinations including the purchase of Equity The following new standard, amendment to standards and interpretations is effective for annual periods beginning after Accounted Investees is as follows: 1 July 2014, and has not been applied in preparing these financial statements: Asset Acquired Valuation Technique NZ IFRS 9 Financial Instruments Valuation of business acquired Market comparison technique: the fair value of the business is determined with This standard becomes mandatory for the Group’s 2019 consolidated financial statements and could change the classification and reference to EBITDa multiples evidenced in similar transactions. measurement of financial assets. Management is currently in the process of evaluating the potential effect of the adoption of NZ IFRS 9. Discounted cash flow technique: the fair value of the business is determined with reference to the anticipated free cash flows earned by the business over a forecast period discounted using a risk adjusted discount rate. Property, plant and equipment Market comparison technique and cost technique: the valuation model considers quoted market prices for similar items when available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

Annual Report 2014 Annual Report 2014 72 73 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

5 UNDERLYING PROFIT AFTER TAX (NON STATUTORY DISCLOSURE) 7 BUSINESS COMBINATIONS AND INVESTMENTS IN EQUITY ACCOUNTED INVESTEES

GROUP PARENT COMPANY During the period the Group has made a number of investments. 2014 2013 2014 2013 (a) Acquisition of Priority Logistics Group NZ$000 NZ$000 NZ$000 NZ$000 On 1 July 2013 Tapper Transport Limited purchased Priority Logistics Group (Priority Logistics), a transport and logistics group based in Mount Maunganui. Reporting profit after tax 78,252 112,123 70,793 111,679 Priority Logistics has a fleet of 35 trucks and warehouses providing transport and logistical solutions for containers, loose container Gain on sale of Equity Accounted Investee 0 (38,214) 0 (42,265) load freight centred in the Bay of Plenty, and bulk liquid distribution throughout the North Island. Loss on termination of interest rate swaps (refer to note 11) 0 4,610 0 4,610 In the 12 months to 30 June 2014 Priority Logistics contributed revenue of $12.101 million and after tax profit of $0.874 million. Tax impact of termination of interest rate swaps 0 (1,291) 0 (1,291) The following table summarises the major classes of consideration transferred, and the recognised amounts of assets acquired, Underlying profit after tax 78,252 77,228 70,793 72,733 and liabilities assumed at acquisition date: NZ$000 Underlying earnings per share (cents) (refer to note 22) 58.3 57.6

The Group sold its 50% share in C3 Limited to Asciano Limited on 28 November 2012 for $53.401 million and recorded a gain on Consideration transferred sale of $38.214 million (Parent Company $42.265 million) as a result of this transaction. Cash 10,000 The key differences between the underlying profit and the reported profit in 2013 relate to the sale of the investment in C3 Limited Total consideration transferred 10,000 and the derivative contracts closed out that related to debt repaid with consideration received from the sale.

Fair value of identifiable assets acquired and liabilities assumed 6 SEGMENTAL REPORTING Property, plant and equipment (refer to note 13) 9,239 Deferred tax liability (refer to note 26) (1,161) Due to the significant shared cost base of the Port, operating costs, measures of profitability, assets and liabilities, are aggregated and are not reported to the CODM at a segment level, but rather at a port level, as all business decisions are made at a “whole port level”. Employee liabilities (137) Total net identifiable assets 7,941 The Group segment results are as follows: Total goodwill (refer to note 14) 2,059 Port Property Unallocated Transport Forestry Operations Services (1) Services Services Group The Group incurred acquisition costs of $33,389 relating to external legal fees. These costs have been included in other expenses 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 in the income statements. Contingent Consideration Total segment revenue (external) 189,732 22,137 0 37,214 17,190 266,273 The Group has agreed to pay the vendors of Priority Logistics additional payments of up to $1.000 million contingent upon the realisation of certain profit forecasts over a two year period. No contingent consideration has been recognised as it is considered Share of profit from Equity 0 0 9,370 0 0 9,370 unlikely that these earnout targets will be achieved. Accounted Investees Goodwill Interest income 1 0 1,020 23 7 1,051 Goodwill recognised as a result of this acquisition is attributable mainly to Priority Logistics’ skilled work force and synergies expected Other income 2 0 324 12 0 338 to be achieved from integrating Priority Logistics into the Group’s existing business activities. Interest expense 0 0 (15,235) (130) 0 (15,365) (b) Purchase of the Container Terminal Operations of PrimePort Timaru Limited Depreciation and amortisation (39) 0 (18,758) (2,315) (1,277) (22,389) On 29 November 2013 Timaru Container Terminal Limited, a newly incorporated 100% Subsidiary of Port of Tauranga Limited, expense purchased the container terminal assets of PrimePort Timaru Limited and took over existing terminal operations. The major assets Other unallocated expenditure (2,638) 0 (88,442) (30,908) (12,479) (134,467) acquired included mobile harbour cranes and the forklift fleet. Income tax expense (103) 0 (24,393) (1,027) (1,036) (26,559) Operating the Timaru Container Terminal fits strategically with Port of Tauranga’s vision of becoming New Zealand’s hub port. It will Total segment result 186,955 22,137 (136,114) 2,869 2,405 78,252 allow South Island exporters and importers to benefit from the large number of international services that call at Tauranga, share the significant freight savings that will come with the arrival in New Zealand of the next generation of large ships and benefit from (1) Operating costs are not allocated to individual business segments within the Parent Company. Port of Tauranga’s container terminal expertise and world class productivity. Port Property Unallocated Transport Forestry In the period since acquisition, the Timaru Container Terminal Limited contributed revenue of $0.364 million and after tax profit of (1) Operations Services Services Services (2) Group $0.261 million. 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 The following table summarises the major classes of consideration transferred to acquire the assets and liabilities assumed at the acquisition date: Total segment revenue (external) 191,002 19,859 0 23,191 9,959 244,011 NZ$000

Share of profit from Equity 0 0 10,360 0 0 10,360 Accounted Investees Consideration transferred Interest income 0 0 2,107 15 1 2,123 Cash 2,062 Other income 0 0 38,294 0 56 38,350 Total consideration transferred 2,062 Interest expense 0 0 (16,295) (532) (803) (17,630) Depreciation and amortisation 0 0 (16,537) (1,439) (582) (18,558) Fair value of identifiable assets acquired and liabilities assumed expense Property, plant and equipment (refer to note 13) 2,072 Other unallocated expenditure 0 0 (96,001) (18,933) (6,471) (121,405) Employee liabilities (10) Income tax expense 0 0 (23,811) (713) (604) (25,128) Total net identifiable assets 2,062 Total segment result 191,002 19,859 (101,883) 1,589 1,556 112,123 Total goodwill 0

(1) Operating costs are not allocated to individual business segments within the Parent Company. The Group incurred acquisition costs of $16,052 relating to external legal fees. These costs have been included in other expenses (2) This segment commenced on 1 February 2013. in the income statements. Revenue derived from major customers, and the relevant operating segments is disclosed in note 34(c).

Annual Report 2014 Annual Report 2014 74 75 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

7 BUSINESS COMBINATIONS AND INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED) 10 OTHER EXPENSES

Transactions Separate from the Business Combination The following items of expenditure are included in other expenses:

Commencing 1 December 2013, Timaru Container Terminal Limited entered into a Lease Agreement with PrimePort Timaru GROUP PARENT COMPANY Limited, for the lease of the container terminal at the Port of Timaru. The initial lease term is for 15 years, with two 10 year rights 2014 2013 2014 2013 of renewal. NZ$000 NZ$000 NZ$000 NZ$000 (c) Purchase of 50% Interest in PrimePort Timaru Limited

On 29 November 2013 Port of Tauranga Limited acquired a 50% shareholding in PrimePort Timaru Limited, as part of a strategic Operating lease payments 4,074 3,172 1,198 1,168 alliance to facilitate coastal shipping and to promote the development of port services in Timaru. Directors’ fees 504 474 504 474 NZ$000 Increase/(decrease) in provision for impairment of trade receivables 47 (8) 29 0 Bad debts written off 141 17 141 17 Consideration transferred Subvention payment (refer to note 29) 0 0 353 0 Purchase of shares for cash 19,611 Auditors fees: Legal fees and due diligence expenses 160 Audit fees paid to principal auditor 177 164 96 110 Total cost of investment (refer to note 17) 19,771 Review of half year financial statements 12 12 12 12 50% share of fair value of identifiable assets 20,018 Fees paid for other services provided by the principal auditor: Discount on acquisition (247) Security assessment and awareness 5 19 5 19 Accounting advisory 0 7 0 7 The discount on purchase of investment has been recognised in the Group Income Statement within share of profit from Equity Accounted Investees. Research on comparable companies 0 6 0 6

Other services provided by the principal auditor during the reporting period consists of security assessment and awareness training. 8 OPERATING INCOME During the year ended 30 June 2013, other services provided by the principal auditor related to a review of internal security procedures, accounting treatment of loss on termination of interest rate swaps and research into industry trading and transaction GROUP PARENT COMPANY multiples. 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 11 FINANCIAL INCOME AND EXPENSE Revenue Port services income 189,732 191,002 186,875 191,026 GROUP PARENT COMPANY 2014 2013 2014 2013 Rental income 22,137 19,859 22,368 19,902 NZ$000 NZ$000 NZ$000 NZ$000 Forestry services income 17,190 9,959 0 0 Transport services income 37,214 23,191 0 0 Interest income on capital notes 0 461 0 461 Total revenue 266,273 244,011 209,243 210,928 Interest on finance lease 771 1,233 771 1,233 Interest income on bank deposits 280 429 249 412 Other income Ineffective portion of changes in fair value of cash flow hedges 21 0 21 0 Management fees 0 0 0 1,304 Fair value movement in derivatives not hedge accounted 52 0 52 0 Dividend income from Equity Accounted Investees (refer to note 17) 0 0 8,155 8,881 Finance income 1,124 2,123 1,093 2,106 Gain on sale of property, plant and equipment 15 136 1 80 Insurance proceeds 250 0 250 0 Interest expense on borrowings (15,491) (14,058) (15,491) (13,834) Total other income 265 136 8,406 10,265 Less: Operating income 266,538 244,147 217,649 221,193 Interest capitalised to property, plant and equipment 395 1,271 395 1,271 (15,096) (12,787) (15,096) (12,563) 9 EMPLOYEE BENEFIT EXPENSES Interest on finance leases (130) (90) 0 0 GROUP PARENT COMPANY Interest on deferred consideration (refer to note 24) (139) (109) (139) (109) 2014 2013 2014 2013 Interest on contingent consideration (refer to note 25) 0 (34) 0 (34) NZ$000 NZ$000 NZ$000 NZ$000 Loss on termination of interest rate swaps (refer to note 5) 0 (4,610) 0 (4,610) Currency option expense (41) 0 (41) 0 Wages and salaries 39,470 31,466 21,529 21,074 Ineffective portion of changes in fair value of cash flow hedges 0 (357) 0 (357) ACC levy 736 406 474 235 Finance expenses (15,406) (17,987) (15,276) (17,673) Kiwisaver contribution 1,183 908 869 793 Net finance costs (14,282) (15,864) (14,183) (15,567) Medical subsidy 160 147 115 115 Total 41,549 32,927 22,987 22,217 The average weighted interest rate for interest capitalised to property, plant and equipment was 5.70% for the current period (2013: 5.69%).

Annual Report 2014 Annual Report 2014 76 77 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

12 INCOME TAX 13 PROPERTY, PLANT AND EQUIPMENT

Components of Tax Expense Wharves Freehold Freehold and Harbour Plant and Work in GROUP PARENT COMPANY Land Buildings Hardstanding Improvements Equipment Progress Total 2014 2013 2014 2013 GROUP NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Gross carrying amount: Profit before income tax for the period 104,811 137,251 95,186 135,490 Balance at 1 July 2012 442,498 66,942 175,504 115,959 124,367 20,863 946,133 Additions 6,102 2,319 0 1,385 3,220 55,266 68,292 Income tax on the surplus for the period at 28.0 cents 29,347 38,430 26,652 37,937 Disposals 0 0 0 0 (2,187) 0 (2,187) Transfers from work in 0 1,918 36,706 1,674 20,987 (61,285) 0 Tax effect of amounts which are non deductible/(taxable) in progress calculating taxable income: Transferred to intangible 0 0 0 0 0 (1,374) (1,374) Non taxable gain on sale of C3 Limited 0 (10,700) 0 (11,834) assets (refer to note 14) Adjustment for prior period (3) 150 (3) 150 Quality Marshalling (Mount 0 349 0 0 8,426 0 8,775 Share of Equity Accounted Investees after tax income (2,624) (2,901) 0 0 Maunganui) Limited assets acquired on acquisition Benefit of imputation credits received 0 0 (2,283) (2,497) Balance at 30 June 2013 448,600 71,528 212,210 119,018 154,813 13,470 1,019,639 Other (161) 149 27 55 Income tax expense 26,559 25,128 24,393 23,811 Balance at 1 July 2013 448,600 71,528 212,210 119,018 154,813 13,470 1,019,639 Additions 1,757 522 81 0 7,657 51,820 61,837 Disposals 0 0 0 0 (879) 0 (879) GROUP PARENT COMPANY Transfers from work in 27,538 9,847 5,296 3,737 13,825 (60,243) 0 2014 2013 2014 2013 progress NZ$000 NZ$000 NZ$000 NZ$000 Transferred to intangible 0 0 0 0 0 (20) (20) assets (refer to note 14) The income tax expense is represented by: PrimePort Timaru Limited – 0 0 0 0 2,072 0 2,072 Timaru Container Terminal Current tax expense Limited’s assets acquired on Tax payable in respect of the current period 28,394 25,724 25,917 24,376 acquisition (refer to note 7) Adjustment for prior period 284 321 310 321 Priority Logistics Group assets 0 2,989 0 0 6,250 0 9,239 acquired on acquisition Total current tax expense 28,678 26,045 26,227 24,697 (refer to note 7) Balance at 30 June 2014 477,895 84,886 217,587 122,755 183,738 5,027 1,091,888 Deferred tax expense Adjustment for prior period (287) (171) (313) (171) Accumulated depreciation Origination/reversal of temporary differences (1,832) (746) (1,521) (715) and impairment: Total deferred tax expense (refer to note 26) (2,119) (917) (1,834) (886) Balance at 1 July 2012 0 0 0 0 (57,097) 0 (57,097) Income tax expense 26,559 25,128 24,393 23,811 Depreciation expense 0 (1,811) (6,698) (1,370) (7,572) 0 (17,451) Disposals 0 0 0 0 1,838 0 1,838 Balance at 30 June 2013 0 (1,811) (6,698) (1,370) (62,831) 0 (72,710) Income tax recognised in other comprehensive income:

GROUP PARENT COMPANY Balance at 1 July 2013 0 (1,811) (6,698) (1,370) (62,831) 0 (72,710) 2014 2013 2014 2013 Depreciation expense 0 (2,139) (7,422) (1,782) (9,687) 0 (21,030) NZ$000 NZ$000 NZ$000 NZ$000 Impairment 0 0 0 0 (160) 0 (160) Disposals 0 0 0 0 754 0 754 Cash flow hedges 1,218 3,580 1,218 3,580 Balance at 30 June 2014 0 (3,950) (14,120) (3,152) (71,924) 0 (93,146) Total (refer to note 26) 1,218 3,580 1,218 3,580

Carrying amounts: Imputation Credit Account Net book value as at 448,600 69,717 205,512 117,648 91,982 13,470 946,929 30 June 2013 GROUP PARENT COMPANY Net book value as at 477,895 80,936 203,467 119,603 111,814 5,027 998,742 2014 2013 2014 2013 30 June 2014 NZ$000 NZ$000 NZ$000 NZ$000

Imputation credits available for use in subsequent 55,480 48,057 50,965 46,080 reporting periods

Annual Report 2014 Annual Report 2014 78 79 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Wharves Valuation Information Freehold Freehold and Harbour Plant and Work in All land, buildings, harbour improvements, and wharves and hardstanding have been revalued to fair value, being market value, for non Land Buildings Hardstanding Improvements Equipment Progress Total specialised assets and depreciated replacement cost (DRC) for specialised assets. The valuation was carried out as at 30 June 2012. PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 The fair value measurement has been categorised as a level 3 fair value based on the inputs to the valuation technique.

Gross carrying amount: Wharves, hardstanding and harbour improvements assets owned by Port of Tauranga Limited are classified as specialised assets and have accordingly been valued on a depreciated replacement cost basis. The significant assumptions applied in the valuation of these Balance at 1 July 2012 442,498 66,942 175,504 115,959 119,127 20,863 940,893 assets are: Additions 6,102 2,319 0 1,385 377 55,266 65,449 • Replacement unit cost: replacement unit costs were calculated taking into account: Disposals 0 0 0 0 (515) 0 (515) • Port of Tauranga Limited’s historic cost data including any recent competitively tendered construction works. Transfers from work in 0 1,918 36,706 1,674 20,987 (61,285) 0 progress • Published cost information. Transfer to intangible assets 0 0 0 0 0 (1,374) (1,374) • The Opus construction cost database. (refer to note 14) • Long run price trends. Balance at 30 June 2013 448,600 71,179 212,210 119,018 139,976 13,470 1,004,453 • Historic costs adjusted for changes in price levels. • An allowance of between 16 – 18% has been included for costs directly attributable to bringing assets into working Balance at 1 July 2013 448,600 71,179 212,210 119,018 139,976 13,470 1,004,453 condition. Additions 1,757 393 81 0 281 51,762 54,274 • An allowance of between 1 – 2% has been included for Port of Tauranga Limited’s management costs. Disposals 0 0 0 0 (80) 0 (80) • An allowance of between 0.3 – 1.5% has been included for the financing cost of capital held over construction period. Transfers from work in 27,538 9,847 5,296 3,737 13,825 (60,243) 0 progress • Depreciation: the calculated remaining lives of assets were reviewed, taking into account: Transfer to intangible assets 0 0 0 0 0 (20) (20) • Observed and reported condition, performance and utilisation of the asset. (refer to note 14) • Future use of the asset (Port of Tauranga Limited’s development strategy). Balance at 30 June 2014 477,895 81,419 217,587 122,755 154,002 4,969 1,058,627 • Planned replacement programme (forward maintenance plans). • Expected changes in technology. Accumulated depreciation and impairment: • Consideration of current use, age and operational demand. Balance at 1 July 2012 0 0 0 0 (55,438) 0 (55,438) • Residual values. Depreciation expense 0 (1,803) (6,698) (1,370) (5,976) 0 (15,847) The significant assumptions applied in the valuation of land and buildings are: Disposals 0 0 0 0 267 0 267 • Highest and best use of land: this has been determined by reference to zoning by the Tauranga City Council District Plan. Most of Balance at 30 June 2013 0 (1,803) (6,698) (1,370) (61,147) 0 (71,018) the land owned by Port of Tauranga Limited is zoned port business with a small portion of land at Mount Maunganui and Sulphur Point having industrial business zoning.

Balance at 1 July 2013 0 (1,803) (6,698) (1,370) (61,147) 0 (71,018) • Current market expectations: this is based on yield and recent local sales. Depreciation expense 0 (2,009) (7,422) (1,782) (6,611) 0 (17,824) • Market value of buildings: this is made on a depreciated replacement cost basis with that assessment compared against actual or Impairment 0 0 0 0 (160) 0 (160) likely market rental capitalised at an appropriate rate of return between 5% and 10%. Disposals 0 0 0 0 74 0 74 • Current occupancy rates of premises. Balance at 30 June 2014 0 (3,812) (14,120) (3,152) (67,844) 0 (88,928) • The impact of major building relocation and demolition planned by Port of Tauranga Limited to facilitate better utilisation of the wharf areas, including the prospect of increased berthage at Sulphur Point.

Carrying amounts: • No restriction of title: valuation is made on the assumption that having no legal title to the Tauranga harbour foreshore does not impact on the value of Port of Tauranga Limited’s assets. Net book value as at 448,600 69,376 205,512 117,648 78,829 13,470 933,435 30 June 2013 For each revalued class of property, plant and equipment, the notional carrying amount that would have been recognised, had the Net book value as at 477,895 77,607 203,467 119,603 86,158 4,969 969,699 assets been carried under the cost model, would be: 30 June 2014 GROUP PARENT COMPANY 2014 2013 2014 2013 Notional Notional Notional Notional Carrying Carrying Carrying Carrying Amount Amount Amount Amount NZ$000 NZ$000 NZ$000 NZ$000

Freehold land 104,719 75,424 104,719 75,424 Freehold buildings 60,070 48,889 56,741 48,548 Wharves and hardstanding 89,090 88,630 89,090 88,630 Harbour improvements 28,514 26,470 28,514 26,470 Total 282,393 239,413 279,064 239,072

Annual Report 2014 Annual Report 2014 80 81 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) 14 INTANGIBLE ASSETS

Restriction on Title Computer Rail Services An area of 8,000 square metres of land located between the Sulphur Point wharves and the Parliamentary approved reclamation does Goodwill Software Agreement Total not have formal title. Actions are being taken to resolve the issue and obtain title. The resolution lies with the Government. GROUP NZ$000 NZ$000 NZ$000 NZ$000 Security Cost: Certain items of property, plant and equipment have been pledged as security against certain loans and borrowings of the Group (refer Balance at 1 July 2012 to note 23). 11,554 7,552 10,000 29,106 Intangible assets acquired on acquisition of Quality Marshalling 0 7 0 7 Occupation of Foreshore Limited Port of Tauranga Limited holds consent to occupy areas of the Coastal Marine Area to enable the management and operation of port Goodwill recognised on acquisition of Quality Marshalling Limited 24,831 0 0 24,831 related commercial undertakings that it acquired under the Port Companies Act 1988. The consented area includes a 10 metre Transferred from fixed assets work in progress (refer to note 13) 0 1,374 0 1,374 radius around navigation aids and a strip from 30 to 60 metres wide along the extent of the wharf areas at both Sulphur Point and Mount Maunganui. Additions 0 635 0 635 Operating Leases Balance at 30 June 2013 36,385 9,568 10,000 55,953 Included in the financial statements are land, buildings, and plant and equipment, leased to customers under operating leases. Balance at 1 July 2013 36,385 9,568 10,000 55,953 2014 2014 2013 2013 Additions 0 516 0 516 Cost/ Accumulated Cost/ Accumulated Valuation Depreciation Valuation Depreciation Goodwill recognised on acquisition of Priority Logistics Group 2,059 0 0 2,059 GROUP NZ$000 NZ$000 NZ$000 NZ$000 (refer to note 7) Transferred from fixed assets work in progress (refer to note 13) 0 20 0 20 Land 206,996 0 199,021 0 Balance at 30 June 2014 38,444 10,104 10,000 58,548 Buildings 39,970 (1,000) 40,471 (1,016) Plant and equipment 458 (335) 404 (298) Accumulated amortisation and impairment: Total 247,424 (1,335) 239,896 (1,314) Balance at 1 July 2012 0 (4,204) (8,005) (12,209) Amortisation expense 0 (769) (338) (1,107) Balance at 30 June 2013 0 (4,973) (8,343) (13,316) 2014 2014 2013 2013 Cost/ Accumulated Cost/ Accumulated Valuation Depreciation Valuation Depreciation Balance at 1 July 2013 0 (4,973) (8,343) (13,316) PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 Amortisation expense 0 (1,021) (338) (1,359) Balance at 30 June 2014 0 (5,994) (8,681) (14,675) Land 206,996 0 199,021 0 Buildings 39,970 (1,000) 40,471 (1,016) Carrying amounts: Total 246,966 (1,000) 239,492 (1,016) Net book value 30 June 2013 36,385 4,595 1,657 42,637 Net book value 30 June 2014 38,444 4,110 1,319 43,873 Future minimum lease receivables from non cancellable operating leases are as follows:

GROUP PARENT COMPANY 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000

Within one year 11,516 14,640 11,479 14,627 One year to five years 23,987 33,909 23,981 33,909 Greater than five years 19,689 21,177 19,689 21,177 Total 55,192 69,726 55,149 69,713

Annual Report 2014 Annual Report 2014 82 83 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

14 INTANGIBLE ASSETS (CONTINUED) 15 ADVANCES AND RECEIVABLES

Computer Rail Services GROUP PARENT COMPANY Software Agreement Total 2014 2013 2014 2013 PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Cost: Advances to Subsidiary 0 0 142 247 Balance at 1 July 2012 4,128 10,000 14,128 Finance lease – gross receivable (refer to note 15(a)) 0 2,116 0 2,116 Additions 606 0 606 Finance lease – unearned finance income (refer to note 15(a)) 0 (259) 0 (259) Transferred from fixed assets work in progress (refer to note 13) 1,374 0 1,374 Total 0 1,857 142 2,104 Balance at 30 June 2013 6,108 10,000 16,108 (a) Finance Lease Receivable

Balance at 1 July 2013 6,108 10,000 16,108 In August 2003 Port of Tauranga Limited entered into an agreement with Genesis for the importation of coal for the Huntly power Additions 476 0 476 station. As part of this agreement, a coal conveyor system was constructed by the Port and Genesis agreed to lease this conveyor system for a 15 year period. Genesis were also granted an option to extend the lease for an additional 15 year period, for a Transferred from fixed assets work in progress (refer to note 13) 20 0 20 nominal rental of $1.00. As Genesis effectively receives substantially all the risks and rewards of ownership of the conveyor system, Balance at 30 June 2014 6,604 10,000 16,604 the lease is treated as a finance lease by Port of Tauranga Limited. The effective interest rate on the finance lease receivable is 14.32% (2013: 14.32%). Accumulated amortisation and impairment: GROUP PARENT COMPANY Balance at 1 July 2012 (3,911) (8,005) (11,916) 2014 2013 2014 2013 Amortisation expense (352) (338) (690) NZ$000 NZ$000 NZ$000 NZ$000 Balance at 30 June 2013 (4,263) (8,343) (12,606) Gross receivables from finance lease Balance at 1 July 2013 (4,263) (8,343) (12,606) Amortisation expense (596) (338) (934) Current portion Balance at 30 June 2014 (4,859) (8,681) (13,540) Not later than one year (refer to note 19) 2,116 4,258 2,116 4,258

Carrying amounts: Non current portion Net book value 30 June 2013 1,845 1,657 3,502 Later than one year and not later than five years 0 2,116 0 2,116 Net book value 30 June 2014 1,745 1,319 3,064 Total gross receivables from finance lease 2,116 6,374 2,116 6,374 Computer Software Computer software assets are stated at cost, less accumulated amortisation and impairment. Unearned finance income Rail Services Agreement Current portion Port of Tauranga Limited has paid $10,000,000 to KiwiRail for expanded services and obligations over a 10 year period, relating to a seven-day-a-week rail link to MetroPort Auckland. The term of this agreement expires in 2018. Not later than one year (refer to note 19) (259) (771) (259) (771) Goodwill Non current portion Goodwill relates to goodwill arising on the acquisition of Subsidiaries in respect of the transport services cash generating unit and forestry services cash generating unit. Later than one year and not later than five years 0 (259) 0 (259) Goodwill was tested for impairment as at 30 June 2014, based upon the value in use of cash generating units to which the goodwill Total unearned finance income (259) (1,030) (259) (1,030) relates. Value in use was determined by discounting five year future cash flows, generated from the continuing use of the units. The calculation of value in use was based upon the following key assumptions: GROUP PARENT COMPANY • Cash flows were projected using management forecasts. 2014 2013 2014 2013 • The anticipated annual profit growth included in the cash flow projections for the years 2015 to 2019 have been based upon NZ$000 NZ$000 NZ$000 NZ$000 expected growth levels and forecasted business activities. For the transport services cash generating unit a 5% growth rate has been applied over the period. For the forestry services cash generating unit an average 8.75% growth rate has been Present value of minimum lease receipts applied over the period. Not later than one year 1,857 3,487 1,857 3,487 • Terminal cash flows were estimated using a constant growth rate of 2% after year five. Later than one year and not later than five years 0 1,857 0 1,857 • A pre-tax discount rate of 15% was applied in determining the recoverable amount of the units. Total present value of minimum lease receipts 1,857 5,344 1,857 5,344 The values assigned to the key assumptions represent management’s assessment of future trends in the transport and forestry industries and are based on both external sources and internal sources (historical data).

Annual Report 2014 Annual Report 2014 84 85 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

16 INVESTMENTS IN SUBSIDIARIES 17 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED)

Investments in Subsidiaries Comprises: Included within the carrying value is:

GROUP PARENT COMPANY GROUP 2014 2013 2014 2013 Balance 2014 2013 Name of Entity % % % % Date NZ$000 NZ$000

MetroPack Limited 100.00 100.00 50.00 50.00 30 June Goodwill 2,913 2,913 Port of Tauranga Trustee Company Limited 100.00 100.00 100.00 100.00 30 June The Group has interests in a number of individually immaterial Equity Accounted Investees. Northport Limited is considered to be the Quality Marshalling (Mount Maunganui) Limited 100.00 100.00 100.00 100.00 30 June only individually material Equity Accounted Investee in which the Group participates. Tapper SIP Limited 100.00 100.00 100.00 100.00 30 June Northport Limited Tapper Transport Limited 100.00 100.00 100.00 100.00 30 June Port of Tauranga Limited has a 50% shareholding in the port at Marsden Point which trades as Northport Limited (Northport) Timaru Container Terminal Limited 100.00 0 100.00 0 30 June (2013: 50%), with Northland Port Corporation (NZ) Limited holding the remaining 50%. The principal activity of Port of Tauranga Trustee Company Limited is to hold shares in trust for employees. The company has no Northport also has a 50% shareholding in North Tugz Limited (2013: 50%), with Ports of Auckland Limited holding the remaining trading activities and the issued and paid up capital is $2. The company is incorporated in New Zealand. 50%. North Tugz Limited has been established to undertake the marine services within the Whangarei Harbour including Marsden The principal activity of Tapper Transport Limited is to operate an Auckland-based road transport and logistics company. The company Point. was acquired on 1 April 2010 and is incorporated in New Zealand. Northport is structured as a separate vehicle and the Group has a residual interest in the net assets of Northport. Accordingly, the The principal activity of Tapper SIP Limited is to operate an Auckland-based inland freight centre. The company was acquired on 1 April Group has classified its interests in Northport as a joint venture. 2010 and is incorporated in New Zealand. The following table summarises the financial information of Northport as included in its own financial statements, adjusted for fair value The principal activity of MetroPack Limited is to operate as a freight operator providing container packing, unpacking and freight adjustments at acquisition and differences in accounting policies. The table also reconciles the summarised financial information to the transport services. The company was incorporated, in New Zealand, in December 2010 and the issued and paid up capital is $100. carrying amount of the Group’s interest in Northport. Port of Tauranga Limited has a 50:50 shareholding in MetroPack Limited with Tapper Transport Limited. 2014 2013 The principal activities of Quality Marshalling (Mount Maunganui) Limited is to provide log marshalling, log scaling services and contracted container terminal services. The company was acquired on 31 January 2013 and is incorporated in New Zealand. Percentage ownership interest 50% 50% The Timaru Container Terminal Limited was incorporated on 3 September 2013 with share capital of $5,000. The principal activity is to operate the container terminal operations at PrimePort Timaru Limited. NZ$000 NZ$000 PARENT COMPANY 2014 2013 Non current assets 128,786 128,474 NZ$000 NZ$000 Current assets (including cash and cash equivalents 2014: $537,000, 2013: ($30,644)) 5,018 3,949

Non current liabilities (including non current financial liabilities excluding trade and other payables and (33,621) (1,580) Opening investment at cost 40,694 12,447 provisions 2014: $33,621,000, 2013: $1,580,000) Additions 5 28,247 Current liabilities (including current financial liabilities excluding trade and other payables and provisions (4,849) (35,219) Closing investment at cost 40,699 40,694 2014: $1,998,000, 2013: $32,784,493)

Net assets (100%) 95,334 95,624 Group’s share of net assets (50%) 47,667 47,812 17 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES Carrying amount of interest in joint venture 47,667 47,812

GROUP PARENT COMPANY 2014 2013 2014 2013 Revenue 38,322 35,516 NZ$000 NZ$000 NZ$000 NZ$000 Depreciation and amortisation (3,827) (3,514) Interest expense (2,022) (2,255) Investments in Equity Accounted Investees Income tax expense (5,395) (5,275) Ordinary shares at cost – opening balance 0 0 21,800 32,936 0 0 21,800 32,936 Net profit after tax 15,920 15,048 Other comprehensive income (200) 3,258 Total comprehensive income (100%) 15,720 18,306 Balance at beginning of period 49,915 61,993 0 0 Group’s share of total comprehensive income (50%) 7,860 9,153 Share of after tax surplus 9,370 10,360 0 0 Dividends received by the Group 8,005 6,556 Share of hedging reserve 181 264 0 0 Share of revaluation reserve (8) 1,366 0 0 MetroBox Auckland Limited Disposals 0 (15,187) 0 (11,136) Port of Tauranga Limited has a 50% shareholding in MetroBox Auckland Limited (MetroBox) (2013: 50%), with KiwiRail holding the Purchase of shares in PrimePort Timaru Limited (refer to note 7) 19,771 0 19,771 0 remaining 50% (2013: 50%). Formation of PortConnect Limited 5 0 5 0 MetroBox is located alongside MetroPort and fits with the Group’s strategic objective of developing a “freight village” in South Auckland, Dividends received (8,155) (8,881) 0 0 with MetroPort giving customers the ability to select from a range of container handling services. 71,079 49,915 19,776 (11,136) MetroBox is structured as a separate vehicle and the Group has a residual interest in the net assets of MetroBox. Accordingly, the Balance at end of period 71,079 49,915 41,576 21,800 Group has classified its interest in MetroBox as a joint venture.

Annual Report 2014 Annual Report 2014 86 87 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

17 INVESTMENTS IN EQUITY ACCOUNTED INVESTEES (CONTINUED) 18 DERIVATIVE FINANCIAL INSTRUMENTS

Cubic Transport Services Limited GROUP PARENT COMPANY Port of Tauranga Limited has a 37.5% shareholding in Cubic Transport Services Limited (Cubic), with Quadrant Pacific Limited holding 2014 2013 2014 2013 37.5% and PGB Trustee Limited holding the remaining 25%. NZ$000 NZ$000 NZ$000 NZ$000 Cubic is a domestic transport operator and is involved in managing and distributing cargo throughout New Zealand using road, rail and coastal shipping (on behalf of freight forwarders). Current assets The Group is considered to have significant influence over Cubic without joint control. Accordingly, the Group has classified its interest Foreign currency derivatives – not hedge accounted 52 0 52 0 in Cubic as an Associate. Foreign currency derivatives – cash flow hedges 0 81 0 81 PrimePort Timaru Limited Total assets 52 81 52 81 On 29 November 2013, Port of Tauranga Limited acquired a 50% shareholding in PrimePort Timaru Limited (PrimePort), with Timaru District Holdings Limited holding the remaining 50%. Current liabilities PrimePort operates the bulk and marine operations of Port of Timaru and leases the container terminal wharf facilities to Timaru Foreign currency derivatives – cash flow hedges (1,149) 0 (1,149) 0 Container Terminal Limited. Interest rate derivatives – cash flow hedges (60) (812) (60) (812) PrimePort is structured as a separate vehicle and the Group has a residual interest in the net assets of PrimePort. Accordingly, the Total current liabilities (1,209) (812) (1,209) (812) Group has classified its interest in PrimePort as a joint venture.

PortConnect Limited Non current liabilities Port of Tauranga Limited has a 50% shareholding in PortConnect Limited (PortConnect), with Ports of Auckland Limited holding the Interest rate derivatives – cash flow hedges (3,340) (8,692) (3,340) (8,692) remaining 50%. PortConnect was established under a joint venture agreement on 27 May 2014. Total non current liabilities (3,340) (8,692) (3,340) (8,692) PortConnect operates an online cargo management system, connecting ports to their logistics companies. Total liabilities (4,549) (9,504) (4,549) (9,504) PortConnect is structured as a separate vehicle and the Group has a residual interest in the net assets of PortConnect. Accordingly, the Group has classified its interest in PortConnect as a joint venture. For additional information about the Group’s use of derivatives refer to note 34. The following table summarises the financial information relevant to the Group’s interests in individually immaterial joint ventures. The table, in conjunction with the information for Northport above, also reconciles to the carrying amount of the Group’s interest in Equity Accounted Investees. 19 RECEIVABLES AND PREPAYMENTS

Total Total GROUP PARENT COMPANY 2014 2013 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Current assets 5,486 1,420 Trade receivables 31,433 25,373 24,681 20,842 Non current assets 21,773 1,825 Less: Total assets 27,259 3,245 Provision for impairment of trade receivables (54) (7) (29) 0 Receivables from Equity Accounted Investees, Subsidiaries and 66 66 291 534 Current liabilities 3,039 346 related parties Non current liabilities 1,791 1,785 31,445 25,432 24,943 21,376 Total liabilities 4,830 2,131 22,429 1,114 Net assets Advances to Equity Accounted Investees (refer to note 29) 3,185 1,785 3,185 1,785 Advances to Subsidiaries (refer to note 29) 0 0 16,335 17,601 Goodwill 976 976 Prepayments and sundry receivables 2,082 2,530 2,052 1,528 Fair value adjustment on acquisition 7 13 Finance lease – gross receivable (refer to note 15) 2,116 4,258 2,116 4,258 Carrying amount of interest in individually immaterial Equity Accounted Investees 23,412 2,103 Finance lease – unearned finance income (refer to note 15) (259) (771) (259) (771) Total 38,569 33,234 48,372 45,777 Revenues 11,969 4,297 Expenses (10,559) (3,920) Current trade and other receivables are non interest-bearing and receipt is normally on 30 day terms, therefore the carrying value of Net profit after tax 1,410 377 debtors and other receivables approximate their fair value.

The ageing of trade receivables at reporting date was: Other comprehensive income 273 0 Total comprehensive income 1,683 377 GROUP PARENT COMPANY 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000

Not past due 26,502 22,836 21,522 19,125 Past due 0 – 30 days 4,540 2,197 2,991 1,606 Past due 30 – 60 days 262 242 117 94 Past due 60 – 90 days 109 83 31 2 More than 90 days 20 15 20 15 Total 31,433 25,373 24,681 20,842

Annual Report 2014 Annual Report 2014 88 89 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

19 RECEIVABLES AND PREPAYMENTS (CONTINUED) 21 CAPITAL AND RESERVES (CONTINUED)

Impairment for trade receivables is calculated as a percentage of specific overdue debts which, based on historical performance and (c) Hedging Reserve individual investigation, are unlikely to be collected. The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments, Movements in the provision for impairment of receivables were as follows: related to hedged transactions that have not yet occurred. GROUP PARENT COMPANY (d) Revaluation Reserve 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 The revaluation reserve relates to the revaluation of land, buildings, wharves and hardstanding, and harbour improvements.

Opening balance 7 15 0 0 22 EARNINGS PER SHARE Additional provision 47 0 29 0 Reversed during the period 0 (8) 0 0 Group Balance as at 30 June 54 7 29 0 The calculation of basic earnings per share at 30 June 2014 of 58.3 cents per share (2013: 83.6 cents per share) was based on the profit attributable to ordinary shareholders of $78,252,000 (2013: $112,132,000) and a weighted average number of ordinary shares outstanding of 134,116,246 (2013: 134,116,246). There are no dilutive potential ordinary shares (2013: nil). 20 INVENTORIES Underlying Earnings Per Share GROUP PARENT COMPANY The calculation of underlying earnings per share for the Group at 30 June 2014 of 58.3 cents per share (2013: 57.6 cents per 2014 2013 2014 2013 share) was based on the underlying profit after tax of $78,252,000 (2012: $77,228,000) and a weighted average number of NZ$000 NZ$000 NZ$000 NZ$000 ordinary shares outstanding of 134,116,246 (2013: 134,116,246), refer to note 5.

Inventory of parts and consumables 1,008 710 918 639 23 LOANS AND BORROWINGS Included in inventories at 30 June 2014 was $222,000 of straddle parts (2013: $289,000) and $643,000 of crane parts (2013: $151,000) purchased for planned maintenance of machinery in the following financial year. Other major components of This note provides information about the contractual terms of the Group’s interest bearing loans and borrowings. For additional inventories include diesel fuel and fender parts. information about the Group’s exposure and sensitivity to interest rate risk, refer to note 34. GROUP PARENT COMPANY 2014 2013 2014 2013 21 CAPITAL AND RESERVES NZ$000 NZ$000 NZ$000 NZ$000

(a) Share Capital Non current liabilities GROUP PARENT COMPANY Fixed rate bond (refer to note 23(a)) 50,000 0 50,000 0 2013 2013 2014 2014 Standby revolving cash advance facility (refer 23(b)) 45,000 79,000 45,000 79,000 NZ$000 NZ$000 NZ$000 NZ$000 Advances from employees (refer to note 23(g)) 300 71 0 0 Finance lease liabilities (refer to note 23(h)) 829 696 0 0 Ordinary shares issued Total non current liabilities 96,129 79,767 95,000 79,000 Balance as at 1 July 134,070,196 134,052,916 134,116,246 134,116,246 Shares issued during year 1,400 44,400 0 0 Current liabilities Shares repurchased by the Group during the year 0 (27,120) 0 0 Commercial papers (refer to note 23c) 160,000 146,000 160,000 146,000 Balance as at 30 June 134,071,596 134,070,196 134,116,246 134,116,246 Advances from employees (refer to note 23(g)) 0 74 0 0 All shares are fully paid and have no par value. All shares rank equally with one vote attached to each fully paid ordinary share. Finance lease liabilities (refer to note 23(h)) 202 238 0 0 During the year 1,400 shares at $11.70 per share were issued to employees from the Port of Tauranga Trustee Company Limited Total current liabilities 160,202 146,312 160,000 146,000 (2013: 44,400 shares at $6.25 per share). Total 256,331 226,079 255,000 225,000 During the year no shares were repurchased on market and transferred to the Port of Tauranga Trustee Company Limited as part of the Employee Share Ownership Plan (2013: 27,120 shares at an average value of $11.71 per share). (a) Fixed Rate Bond Refer to note 32 for additional information on the Employee Share Ownership Plan. On 29 October 2013 the Parent Company issued a six year $50 million fixed rate bond bearing a fixed interest rate of 5.865% per annum. Interest is payable every six months on 29 April and 29 October and the bond has a final maturity in October 2019. The (b) Dividends Parent Company incurred costs of $0.109 million in connection with the issuance of the bond which has been capitalised and is The following dividends were declared and paid during the period: being amortised over the term of the bond.

GROUP PARENT COMPANY (b) Standby Revolving Cash Advance Facility Agreement 2014 2013 2014 2013 The Parent Company has a $280 million (2013: $280 million) financing arrangement with ANZ Banking Group (New Zealand) NZ$000 NZ$000 NZ$000 NZ$000 Limited, Bank of New Zealand Limited and the Commonwealth Bank of Australia, New Zealand branch. The facility, which is secured, provides for both direct borrowings and support for issuance of commercial papers. During the current period the Parent Company negotiated an extension to the maturity of this facility. Final 2013 dividend paid 26.0 cents per share 34,870 36,211 34,870 36,211 (2012: 27.0 cps) The standby revolving cash advance facility comprises of three tranches (2013: three tranches), tranche 1, a $100 million (2013: Interim 2014 dividend paid 21.0 cents per share 28,165 26,824 28,165 26,824 $100 million) facility maturing 31 January 2016 (2013: 31 July 2014), tranche 2, a $50 million (2013: $50 million) facility (2013: 20.0 cps) maturing 31 July 2017 (2013: 31 July 2016), and tranche 3, a $130 million (2013: $130 million) facility maturing 31 July 2019 Total 63,035 63,035 63,035 63,035 (2013: 31 July 2018). These facilities are secured by way of a ships’ mortgage over certain floating plant assets ($2,240,000, 2013: $2,498,000), mortgages over the land and building assets ($555,502,000, 2013: $517,976,000), and by a general The dividends are fully imputed. Supplementary dividends of $322,342 (2013: $413,596) were paid to shareholders not tax security agreement over the assets of the Parent Company ($1,104,871,000, 2013: $1,073,012,000). resident in New Zealand, for which the Group received a foreign tax credit entitlement. A final dividend of 29 cents (2013: 26 cents) per share to a total of $39,473,711 (2013: $34,870,224) has been approved subsequent to reporting date. The final dividend was not approved until after year end, therefore it has not been accrued in the current year financial statements.

Annual Report 2014 Annual Report 2014 90 91 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

23 LOANS AND BORROWINGS (CONTINUED) 23 LOANS AND BORROWINGS (CONTINUED)

(c) Commercial Papers GROUP PARENT COMPANY Commercial papers are secured, short term discounted debt instruments issued by the Parent Company for funding requirements 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 as a component of its banking arrangements. The commercial paper programme is fully backed by committed term bank facilities. At 30 June 2014 the Parent Company and Group had $160 million of commercial paper debt that is classified within current liabilities (2013: $146 million). Due to this classification the Group’s current liabilities exceed the Group’s current assets. Despite Present value of minimum lease payments this fact, the Parent Company and Group do not have any liquidity or working capital concerns as a result of the commercial paper Not later than one year 202 238 0 0 debt being interchangeable with direct borrowings within the standby revolving cash advance facility which is a term facility. Refer to Later than one year and not later than five years 655 696 0 0 note 23(b). Later than five years 174 0 0 0 (d) Overdraft Facility Total present value of minimum lease payments 1,031 934 0 0

Tapper Transport Limited has a $900,000 overdraft facility with the Bank of New Zealand Limited, which is primarily used for short The weighted average effective interest rate implicit in the leases is 13.60% (2013: 12.87%). term working capital requirements. This facility has no fixed duration and is secured via a general security agreement over all assets of the company. At 30 June 2014 this facility was undrawn (2013: nil). Finance lease liabilities relate to leases over certain items of operating plant and equipment by Tapper Transport Limited. (i) Fair Values of Loans and Borrowings (e) Multi Option Facility Agreement The amortised cost of variable rate loans and borrowings is assumed to closely approximate fair value as debt facilities are repriced The Parent Company has a $5 million (2013: $5 million) multi option financing facility with the Bank of New Zealand Limited, which every 90 days. is primarily used for short term working capital requirements. At 30 June 2014 this facility was undrawn (2013: nil). This facility expires on 31 December 2014 (2013: 31 December 2013). The Parent Company has the option to roll-over this facility for the (j) Terms and Debt Repayment Schedule period of one year, by giving notice to the Bank of New Zealand prior to the expiry of the facility. This facility is secured by way of a Terms and conditions of outstanding interest bearing loans are as follows: ships’ mortgage over certain floating plant assets ($2,240,000, 2013: $2,498,000), and by a general security agreement over the land and building assets of the Parent Company ($555,502,000, 2013: $517,976,000). GROUP PARENT COMPANY Year of 2014 2013 2014 2013 (f) Headroom Facility Maturity NZ$000 NZ$000 NZ$000 NZ$000 The Parent Company has a $30 million (2013: $30 million) revolving cash advance facility with ANZ Banking Group (New Zealand) Limited, used for headroom purposes. The facility is secured by way of a ship’s mortgage over certain floating plant assets Fixed rate bond 2019 50,000 0 50,000 0 ($2,240,000, 2013: $2,498,000), mortgages over the land and building assets ($555,502,000, 2013: $517,976,000), and by a general security agreement over the assets of the Parent Company ($1,104,871,000, 2013: $1,073,012,000). At 30 Standby revolving cash advance facility – 2016 45,000 0 45,000 0 June 2014 this facility is undrawn (2013: nil) and expires 13 months after the date of notice given by the Parent Company or ANZ tranche 1 Banking Group (NZ) Limited. Standby revolving cash advance facility – 2014 0 14,000 0 14,000 tranche 1 (g) Advances From Employees Standby revolving cash advance facility – 2016 0 65,000 0 65,000 Advances from employees are contributions by employees to the Employee Share Ownership Plan (ESOP), refer to note 32. tranche 2 Commercial papers 2014 160,000 0 160,000 0 (h) Finance Lease Liabilities Commercial papers 2013 0 146,000 0 146,000 GROUP PARENT COMPANY Total 255,000 225,000 255,000 225,000 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 The average weighted interest rate of interest bearing loans was 5.59% at 30 June 2014 (2013: 3.79%).

Gross payables under finance leases 24 DEFERRED CONSIDERATION

Current portion Tapper Transport Limited Not later than one year 315 349 0 0 An amount of $1.000 million was retained by the Group in the 2013 period as a “Warranty Retention Fund” to satisfy any potential claims that may arise subsequent to acquisition. On 16 April 2014, $1.000 million was paid to the vendors, there are no further accounts owing. Non current portion Later than one year and not later than five years 860 922 0 0 Quality Marshalling Limited Later than five years 186 0 0 0 An amount of $500,000 (2013: $1.000 million) has been retained by the Group as a “Warranty Retention Fund” to satisfy any Total non current 1,046 922 0 0 potential claims that may arise subsequent to acquisition. An amount of $500,000 was held for a period of one year from settlement Total gross payables under finance leases 1,361 1,271 0 0 and was paid out on 31 January 2014. An additional amount of $500,000 shall be held for a period of three years from the date of settlement. Whilst any Warranty Retention Fund remains owing to the vendors, interest shall be paid on the amount owing at a rate of 10% per annum. Future finance charges on finance leases

Current portion Not later than one year (113) (111) 0 0

Non current portion Later than one year and not later than five years (205) (226) 0 0 Later than five years (12) 0 0 0 Total non current (217) (226) 0 0 Total future finance charges on finance leases (330) (337) 0 0

Annual Report 2014 Annual Report 2014 92 93 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

25 PROVISIONS 25 PROVISIONS (CONTINUED)

(a) Non Current Liabilities (b) Current Liabilities

GROUP PARENT COMPANY GROUP PARENT COMPANY 2014 2013 2014 2013 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Employee benefits – long service leave provision Employee benefits – profit sharing and bonuses Balance at beginning of period 1,010 982 1,010 982 Balance at beginning of period 1,424 1,905 1,364 1,873 Additional provision 155 181 155 181 Additional provision 1,086 1,517 949 1,457 Unused amounts reversed (67) (24) (67) (24) Utilised during the period (1,536) (1,998) (1,536) (1,966) Utilised during the period (52) (129) (52) (129) Balance at end of period 974 1,424 777 1,364 Balance at end of period 1,046 1,010 1,046 1,010 Employee benefits – Management Long Term Incentive (LTI) Employee benefits – Management Long Term Incentive (LTI) Balance at beginning of period 2,082 0 2,082 0 Balance at beginning of period 0 1,170 0 1,170 Additional provision 0 912 0 912 Additional provision 404 0 404 0 Utilised during the period (889) 0 (889) 0 Transferred to current (refer to note 25(b)) 0 (1,170) 0 (1,170) Unused amounts reversed (537) 0 (537) 0 Balance at end of period 404 0 404 0 Transferred from non current (refer to note 25(a)) 0 1,170 0 1,170 Balance at end of period 656 2,082 656 2,082 Unearned lease incentive income Balance at beginning of period 288 335 0 0 Contingent consideration Additional provision 135 104 0 0 Balance at beginning of period 0 1,966 0 1,966 Transferred to current (refer to note 25(b)) (121) (151) 0 0 Utilised during the period 0 (2,000) 0 (2,000) Balance at end of period 302 288 0 0 Unwind of discount, interest 0 34 0 34 Total non current provisions 1,752 1,298 1,450 1,010 Balance at end of period 0 0 0 0

Unearned lease incentive income Balance at beginning of period 151 121 0 0 Transferred from non current (refer to note 25(a)) 121 151 0 0 Utilised during the period (151) (121) 0 0 Balance at end of period 121 151 0 0

Wharf maintenance Balance at beginning of period 0 0 0 0 Additional provision 292 0 0 0 Balance at end of period 292 0 0 0 Total current provisions 2,043 3,657 1,433 3,446

Long Service Leave Provision Underlying assumptions for provisions relate to the probabilities of employees reaching the required vesting period to qualify for long service leave. Probability factors for reaching long service leave entitlements are based on historic employee retention information.

Employee Benefits – Profit Sharing and Bonuses The Profit Sharing and Bonus Scheme rewards eligible employees based on a combination of company performance against budget and personal performance. The incentive is generally paid biannually.

Employee Benefits – Management Long Term Incentive (LTI) Members of the Parent Company’s Executive Management Team are eligible to receive payment under the Management Long Term Incentive Scheme, implemented during the 2011 financial year. The scheme is classified as a cash settled share based payment scheme and is based upon a combination of total shareholder return versus an index and earnings per share growth, both over a three year period. The amount recognised in the income statements of the Parent Company during the period is ($133,000), (2013: $912,000).

Unearned Lease Incentive Income Unearned lease incentive income relates to operating lease agreements for the lease of properties at Southdown, Auckland with the Group as a lessee. The lease incentive is recognised over the contractual term of the lease against rental expense in the income statements.

Wharf Maintenance Under the terms of PrimePort Timaru Limited’s lease agreement with Timaru Container Terminal Limited, Timaru Container Terminal Limited must provide for up to $500,000 in wharf maintenance expenditure per year. This maintenance provision is cumulative over the term of the lease.

Annual Report 2014 Annual Report 2014 94 95 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

26 DEFERRED TAXATION 27 TRADE AND OTHER PAYABLES

Assets Liabilities Net GROUP PARENT COMPANY 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 GROUP NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000

Deferred tax (asset)/liability Accounts payable 5,044 4,406 3,372 3,001 Property, plant and equipment 0 0 50,267 49,966 50,267 49,966 Accruals 13,920 15,152 11,254 13,027 Intangible assets 0 0 851 846 851 846 Payables due to Equity Accounted Investees and related parties 137 3 195 14 Finance lease receivables 0 0 520 1,497 520 1,497 Total 19,101 19,561 14,821 16,042 Derivatives (1,413) (2,654) 0 23 (1,413) (2,631) Payables denominated in currencies other than the functional currency are nil (2013: AUD 6,600). Trade receivables (8) 0 0 0 (8) 0 Trade and other payables are non interest-bearing and are normally settled on 30 day terms, therefore the carrying value of trade and Provisions and accruals (1,489) (1,215) 0 0 (1,489) (1,215) other payables approximates their fair value. Finance lease payables (10) (5) 0 0 (10) (5) Total (2,920) (3,874) 51,638 52,332 48,718 48,458 28 OPERATING LEASE OBLIGATIONS

Recognised in the Statements of GROUP PARENT COMPANY Financial Position Recognised in the 2014 2013 2014 2013 on Acquisition of Subsidiary Income Statements Recognised in Equity NZ$000 NZ$000 NZ$000 NZ$000 2014 2013 2014 2013 2014 2013 GROUP NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Obligations payable after reporting date on non cancellable operating leases are as follows: Property, plant and equipment 1,199 262 (898) (453) 0 0 Within one year 3,817 2,226 686 687 Intangible assets 0 0 5 75 0 0 One year to two years 3,314 2,233 649 669 Finance lease receivables 0 0 (977) (853) 0 0 Two years to five years 7,196 4,276 1,817 1,844 Derivatives 0 0 0 (1) 1,218 3,580 Greater than five years 9,074 3,486 1,779 1,779 Trade receivables 0 0 (8) 0 0 0 Total 23,401 12,221 4,931 4,979 Provisions and accruals (38) 0 (236) 221 0 0 The Group leases a number of properties and various items of equipment under operating leases. All properties and plant are leased Finance lease payables 0 0 (5) 94 0 0 at market rentals and reviewed at regular intervals. It has been determined that substantially all the risks and rewards of the leased Total 1,161 262 (2,119) (917) 1,218 3,580 assets remain with the lessor, and therefore the Group classifies the leases as operating leases.

Assets Liabilities Net 29 RELATED PARTY TRANSACTIONS 2014 2013 2014 2013 2014 2013 PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Related party transactions with related parties:

2014 2013 Deferred tax (asset)/liability NZ$000 NZ$000 Property, plant and equipment 0 0 48,962 49,739 48,962 49,739 Intangible assets 0 0 203 85 203 85 Transactions with Related Parties Finance lease receivables 0 0 520 1,497 520 1,497 MetroPack Limited Derivatives (1,413) (2,654) 0 23 (1,413) (2,631) Advances by Port of Tauranga Limited 347 700 Trade receivables (8) 0 0 0 (8) 0 Advances by Tapper Transport Limited 146 500 Provisions and accruals (1,111) (921) 0 0 (1,111) (921) Services provided by Port of Tauranga Limited 173 13 Total (2,532) (3,575) 49,685 51,344 47,153 47,769 Services provided to Port of Tauranga Limited 26 0 Accounts payable by Port of Tauranga Limited 30 0 Recognised in the Services provided by Tapper Transport Limited 1,257 910 Income Statements Recognised in Equity Accounts receivable by Tapper Transport Limited 137 111 2014 2013 2014 2013 PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 Services provided to Tapper Transport Limited 454 250 Accounts payable by Tapper Transport Limited 46 206 Property, plant and equipment (777) (414) 0 0 Tax subvention payment received from Port of Tauranga Limited 353 0 Intangible assets 118 75 0 0 Tax subvention payment received from Tapper Transport Limited 353 0 Finance lease receivables (977) (853) 0 0 Derivatives 0 0 1,218 3,580 Port of Tauranga Trustee Company Limited Trade receivables (8) 0 0 0 Advances to Port of Tauranga Trustee Company Limited for employees in share ownership plan by 142 296 Port of Tauranga Limited Provisions and accruals (190) 306 0 0 Accounts payable by Port of Tauranga Limited 12 14 Total (1,834) (886) 1,218 3,580

Annual Report 2014 Annual Report 2014 96 97 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

29 RELATED PARTY TRANSACTIONS (CONTINUED) 29 RELATED PARTY TRANSACTIONS (CONTINUED)

2014 2013 Controlling Entity NZ$000 NZ$000 Quayside Securities Limited owns 54.94% of the ordinary shares in Port of Tauranga Limited. Quayside Securities Limited is beneficially owned by Bay of Plenty Regional Council, the Ultimate Controlling Party. Transactions with the Quality Marshalling Limited Ultimate Controlling Party during the period include services provided to Port of Tauranga Limited, $11,000 (2013: $18,000) and Advances by Port of Tauranga Limited 6,948 5,753 accounts payable by Port of Tauranga Limited, $0 (2013: $2,000). Accounts receivable by Port of Tauranga Limited 264 277 Transactions with Key Management Personnel Services provided by Port of Tauranga Limited 103 1,260 The Group does not provide any non cash benefits to Directors and Executive Officers in addition to their Directors’ fees or salaries. Accounts payable by Port of Tauranga Limited 148 0 GROUP PARENT COMPANY Services provided to Port of Tauranga Limited 454 0 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 Tapper Transport Limited Services provided by Port of Tauranga Limited 45 259 Directors Advances by Port of Tauranga Limited 8,450 11,100 Directors’ fees recognised during the period 504 474 504 474 Accounts receivable by Port of Tauranga Limited 10 253 Services provided to Port of Tauranga Limited 0 41 Executive Officers Accounts payable by Port of Tauranga Limited 9 0 Executive salaries and short term employee benefits recognised 2,592 2,842 2,592 2,842 during the period

Timaru Container Terminal Limited Share based payments recognised during the period 1,545 0 1,545 0 (refer to note 25) Advances by Port of Tauranga Limited 590 0 Services provided by Port of Tauranga Limited 90 0 All Executive Officers participate in a cash settled share based incentive scheme. Accounts receivable by Port of Tauranga Limited 13 0 Accounts payable by Port of Tauranga Limited 5 0 30 COMMITMENTS Sale of fixed assets to Quality Marshalling Limited 1,195 0 GROUP PARENT COMPANY Transactions With Equity Accounted Investees 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000

Cubic Transport Services Limited Capital commitments for property, plant and equipment Services provided to Tapper Transport Limited 1 15 Estimated capital commitments for the Group contracted for at 31,373 9,205 30,108 6,505 Services provided by Tapper Transport Limited 575 802 balance date but not provided for Accounts receivable by Tapper Transport Limited 57 50 Major capital commitments at 30 June 2014 relate to the purchase of two tugs and 15 hectares of land in Rolleston. Major capital commitments at 30 June 2013 related to the purchase of a container crane. MetroBox Auckland Limited Advances by Port of Tauranga Limited 1,785 1,785 Services provided to Tapper Transport Limited 35 39 31 CONTINGENT LIABILITIES Accounts payable by Tapper Transport Limited 6 3 At 30 June 2014 for the Group and Parent Company there were no contingent liabilities (2013: nil), other than the contingent consideration referred to in note 7. Northport Limited Services provided by Port of Tauranga Limited 32 15 Accounts receivable by Port of Tauranga Limited 4 3 32 EMPLOYEE SHARE OWNERSHIP PLAN The Parent Company has an Employee Share Ownership Plan (ESOP), in terms of section DC12 of the Income Tax Act 2007. At the PortConnect Limited reporting date the ESOP held 0.03% of the Parent Company’s share capital in ordinary shares (2013: 0.03%). Services provided to Port of Tauranga Limited 110 0 To finance the plan the ESOP borrows from the Parent Company interest free, repayable over three years. The ESOP has no external funding. The ESOP has a non beneficial interest in all shares allocated to employees, and a beneficial interest in shares which have not Advances by Port of Tauranga Limited 1,400 0 been allocated. Accounts payable by Port of Tauranga Limited 126 0 Neither the Parent Company nor its related parties have rights to acquire shares held by the plan. Employees are able to subscribe for shares up to a value of $2,340 once every three years. PrimePort Timaru Limited Services provided to Timaru Container Terminal Limited 1,272 0 The value of shares issued is set at 90% of the average market price of the share on the day of issue. Accounts payable by Timaru Container Terminal Limited 131 0 At reporting date the Group held 44,650 shares under the ESOP (2013: 46,050 shares), and of these, 43,300 shares (2013: 45,800 shares) were allocated to employees and have been paid up to $300,000 (2013: $145,215), and $143,653 (2013: Services provided by Timaru Container Terminal Limited 4 0 $313,101) remains to be paid. This is to be repaid over a three year term. No shares are subject to options. Accounts receivable by Timaru Container Terminal Limited 5 0 The Trustees of the ESOP are appointed by the Directors of the Parent Company. Accounts receivable by Port of Tauranga Limited 12 0 The shares held by the ESOP carry the same voting rights as other issued ordinary shares. Voting rights attached to the shares held During the year the Parent Company and Tapper Transport Limited made a subvention payment to MetroPack Limited of $353,471 by Trustees are to be exercised by the Trustees at their discretion in the case of a vote on a poll, or on any particular resolution. each in exchange for tax losses of the same amount. The payment was offset against loans in each of the individual financial statements and has been eliminated in the Group financial statements. During the year, the Group entered into transactions with companies in which Group Directors hold directorships. These directorships have not resulted in the Group having a significant influence over the operations, policies, or key decisions of these companies. No related party debts have been written off, forgiven or provided for as doubtful during the year.

Annual Report 2014 Annual Report 2014 98 99 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

33 SUBSEQUENT EVENTS 34 FINANCIAL INSTRUMENTS (CONTINUED)

Rolleston The Group held the following financial instruments at reporting date: Port of Tauranga Limited signed an agreement with the Selwyn District Council to purchase 15 hectares of land in the Izone Industrial Assets Held Park at Rolleston for development as an intermodal freight hub. The Izone development is a 180 hectare industrial park 12 kilometres Designated for Trading Other Total south of Christchurch, with excellent road and rail connections, which has been established to cater for manufacturing, warehousing at Fair Through Profit Loans and Amortised Carrying Fair and logistics businesses. Port of Tauranga is planning to establish an intermodal freight hub to receive, pack and distribute GROUP Value or Loss Receivables Cost Amount Value containerised cargo. The proposed purchase amounted to $15 million and settled on 12 August 2014. 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 MetroBox Limited Assets Port of Tauranga Limited, KiwiRail Limited and Specialised Container Services (Auckland) Limited have signed a heads of agreement to expand the services of MetroBox Limited (previously MetroBox Auckland Limited) to an additional site at Southdown, Auckland. Cash and cash equivalents 0 0 1,560 0 1,560 1,560 The arrangement will see the restructure of the ownership of MetroBox Limited, which is currently jointly owned by Port of Tauranga Receivables and prepayments 0 0 38,569 0 38,569 38,761 Limited and KiwiRail Limited with the parties holding 50% each. The shareholding in the restructured entity is proposed to be 37.5%, Derivative financial instruments 0 52 0 0 52 52 37.5%, and 25.0% owned by Port of Tauranga Limited, Specialised Container Services (Auckland) Limited, and KiwiRail Limited Total current assets respectively. The changes are expected to take place in late 2014. 0 52 40,129 0 40,181 40,373 Total assets 0 52 40,129 0 40,181 40,373 Kotahi Logistics On 1 August 2014 Port of Tauranga Limited issued 2.0 million shares to Kotahi Logistics as part of a strategic 10 year freight Liabilities alliance. The new arrangement is founded on the following: Loans and borrowings 0 0 0 96,129 96,129 96,043 • Kotahi has committed to provide up to 1.8 million twenty foot equivalent units (TEU) export cargo containers to the Port of Tauranga over the next 10 years, commencing 1 August 2014; Deferred consideration 0 0 0 500 500 537 Derivative financial instruments • Kotahi has committed significant export cargo to Timaru Container Terminal Limited for the next 10 years, commencing 3,340 0 0 0 3,340 3,340 1 August 2014; Total non current liabilities 3,340 0 0 96,629 99,969 99,920 • the Port of Tauranga has committed to investment in infrastructure to enable visits from the larger 6,500 TEU container ships within the next few years; and Loans and borrowings 0 0 0 160,202 160,202 160,299 • Kotahi will receive a 49.9% shareholding in Timaru Container Terminal Limited. Derivative financial instruments 1,209 0 0 0 1,209 1,209 Trade and other payables 0 0 0 19,101 19,101 19,101 Total current liabilities 1,209 0 0 179,303 180,512 180,609 34 FINANCIAL INSTRUMENTS Total liabilities 4,549 0 0 275,932 280,481 280,529 The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk, currency risk and commodity risk). This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes Designated Other Total for measuring and managing risk, and the Group’s management of capital. at Fair Loans and Amortised Carrying Fair GROUP Value Receivables Cost Amount Value The Group’s overall financial risk management programme focuses on the unpredictability of financial markets and seeks to minimise 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 potential adverse effects on the financial performance of the Group.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s financial risk management Assets framework. The Audit Committee is responsible for developing and monitoring the Group’s financial risk management policies, and Advances and receivables 0 1,857 0 1,857 1,933 reports regularly to the Board of Directors on its activities. Total non current assets 0 1,857 0 1,857 1,933 The Group’s financial risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Financial risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. Cash and cash equivalents 0 37,218 0 37,218 37,218 The Board of Directors oversees how management monitors compliance with the Group’s financial risk management policies and Receivables and prepayments 0 33,234 0 33,234 33,819 procedures and reviews the adequacy of the financial risk management framework in relation to the risks faced by the Group. Derivative financial instruments 81 0 0 81 81 Total current assets 81 70,452 0 70,533 71,118 Total assets 81 72,309 0 72,390 73,051

Liabilities Loans and borrowings 0 0 79,767 79,767 79,813 Deferred consideration 0 0 500 500 517 Derivative financial instruments 8,692 0 0 8,692 8,692 Total non current liabilities 8,692 0 80,267 88,959 89,022

Loans and borrowings 0 0 146,312 146,312 146,415 Deferred consideration 0 0 1,500 1,500 1,591 Derivative financial instruments 812 0 0 812 812 Trade and other payables 0 0 19,561 19,561 19,561 Total current liabilities 812 0 167,373 168,185 168,379 Total liabilities 9,504 0 247,640 257,144 257,401

Annual Report 2014 Annual Report 2014 100 101 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

34 FINANCIAL INSTRUMENTS (CONTINUED) 34 FINANCIAL INSTRUMENTS (CONTINUED)

Assets Held (a) Fair Value Estimation Designated for Trading Other Total at Fair Through Profit Loans and Amortised Carrying Fair The fair value of finance lease receivables and finance lease payables, are based upon the net present value of interest and capital PARENT COMPANY Value or Loss Receivables Cost Amount Value payments over their term. The applicable discount rates used in determining the fair value of finance lease receivables and finance 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 lease payables, were 6.55% (2013: 6.18%), and 7.43% (2013: 6.89%). The fair value of deferred consideration is based upon the net present value of the anticipated future cash outflows. The applicable Assets discount rate used in determining the fair value of deferred consideration was 5.22% (2013: 4.36%). Advances and receivables 0 0 142 0 142 142 Further information on the basis for determining fair values is disclosed in note 4. Total non current assets 0 0 142 0 142 142 (b) Fair Value Hierarchy The following table analyses financial instruments classified as either designated at fair value or held for trading through the income Cash and cash equivalents 0 0 349 0 349 349 statements, by valuation method. Refer to note 4 for details of the different hierarchy level definitions which have been used. Receivables and prepayments 0 0 48,372 0 48,372 48,564 GROUP AND Level 1 Level 2 Level 3 Total Derivative financial instruments 0 52 0 0 52 52 PARENT COMPANY 2014 NZ$000 NZ$000 NZ$000 NZ$000 Total current assets 0 52 48,721 0 48,773 48,965 Total assets 0 52 48,863 0 48,915 49,107 Assets per the statements of financial position Derivative financial instrument assets 0 52 0 52 Liabilities Total assets 0 52 0 52 Loans and borrowings 0 0 0 95,000 95,000 94,910 Deferred consideration 0 0 0 500 500 537 Liabilities per the statements of financial position Derivative financial instruments 3,340 0 0 0 3,340 3,340 Derivative financial instrument liabilities 0 (4,549) 0 (4,549) Total non current liabilities 3,340 0 0 95,500 98,840 98,787 Total liabilities 0 (4,549) 0 (4,549)

Loans and borrowings 0 0 0 160,000 160,000 160,000 Derivative financial instruments 1,209 0 0 0 1,209 1,209 GROUP AND Level 1 Level 2 Level 3 Total PARENT COMPANY 2013 NZ$000 NZ$000 NZ$000 NZ$000 Trade and other payables 0 0 0 14,822 14,822 14,822 Total current liabilities 1,209 0 0 174,822 176,031 176,031 Assets per the statements of financial position Total liabilities 4,549 0 0 270,322 274,871 274,818 Derivative financial instrument assets 0 81 0 81 Total assets 0 81 0 81 Designated Other Total at Fair Loans and Amortised Carrying Fair Liabilities per the statements of financial position PARENT COMPANY Value Receivables Cost Amount Value 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Derivative financial instrument liabilities 0 (9,504) 0 (9,504) Total liabilities 0 (9,504) 0 (9,504) Assets There were no transfers between fair value hierarchies during 2014 (2013: nil). Advances and receivables 0 2,104 0 2,104 2,180 (c) Credit Risk Total non current assets 0 2,104 0 2,104 2,180 Counterparty credit risk is the risk of losses (realised or unrealised) arising from a counterparty failing to meet its contractual obligations. Financial instruments which potentially subject the Group to credit risk, principally consist of bank balances, trade Cash and cash equivalents 0 24,980 0 24,980 24,980 receivables, advances to Subsidiaries and Equity Accounted Investees, finance lease receivables and derivative instruments. Receivables and prepayments 0 45,777 0 45,777 46,362 Derivative financial instruments 81 0 0 81 81 Exposure to Credit Risk Total current assets 81 70,757 0 70,838 71,423 The carrying amount of financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at reporting date was: Total assets 81 72,861 0 72,942 73,603 GROUP PARENT COMPANY Liabilities 2014 2013 2014 2013 NZ$000 NZ$000 NZ$000 NZ$000 Loans and borrowings 0 0 79,000 79,000 79,000 Deferred consideration 0 0 500 500 517 Derivative financial instruments 52 81 52 81 Derivative financial instruments 8,692 0 0 8,692 8,692 Advances and receivables 0 1,857 142 2,104 Total non current liabilities 8,692 0 79,500 88,192 88,209 Receivables and prepayments 38,569 33,234 48,372 45,777 Cash and cash equivalents 1,560 37,218 349 24,980 Loans and borrowings 0 0 146,000 146,000 146,000 Total 40,181 72,390 48,915 72,942 Deferred consideration 0 0 1,500 1,500 1,591 Derivative financial instruments 812 0 0 812 812 The only significant concentration of credit risk at reporting date relates to bank balances, finance lease receivables for the Genesis Trade and other payables 0 0 16,042 16,042 16,042 equipment lease and advances to Subsidiaries and Equity Accounted Investees. Management are satisfied with the credit quality of all these debtors and does not anticipate any non performance. Total current liabilities 812 0 163,542 164,354 164,445 The Group only transacts in treasury activity (including investment, borrowing and derivative transactions) with Board approved Total liabilities 9,504 0 243,042 252,546 252,654 counterparties. Unless otherwise approved by the Board, counterparties are required to be New Zealand registered banks with a Standard & Poor’s credit rating of A+ or above. The Group continuously monitors the credit quality of the financial institutions that are counterparties and does not anticipate any non performance.

Annual Report 2014 Annual Report 2014 102 103 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

34 FINANCIAL INSTRUMENTS (CONTINUED) 34 FINANCIAL INSTRUMENTS (CONTINUED)

The Group adheres to a credit policy that requires each new customer to be analysed individually for credit worthiness before Statements the Group’s standard payment terms and conditions are offered. Customer payment performance is constantly monitored with of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than customers not meeting creditworthiness being required to transact with the Group on cash terms. The Group generally does not GROUP Position Cash Flows or Less Months Years Years 5 Years require collateral. 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 The nature of the Group’s business means that the top ten customers account for 49.0% of total Group revenue (2013: 53.8%). The Group is satisfied with the credit quality of these debtors and does not anticipate any non performance. Non derivative financial liabilities In the current period there were no sales transactions with single customers which amounted to 10% or more of the Group’s Loans and borrowings (226,079) (237,448) (148,134) (2,083) (17,182) (69,768) (281) revenues. Deferred consideration (2,000) (2,214) (86) (1,549) (50) (529) 0 In the 2013 financial year, the following table sets out revenue attributable to sales transactions with single customers whose Trade and other payables (19,561) (19,561) (19,561) 0 0 0 0 business amounts to 10% or more of the Group’s revenues, and the operating segments that this revenue is attributed to: Total non derivative (247,640) (259,223) (167,781) (3,632) (17,232) (70,297) (281) financial liabilities Port GROUP Operations Total 2013 NZ$000 NZ$000 % Derivatives Interest rate derivatives outflow (9,504) (9,793) (2,002) (2,473) (3,325) (2,742) 749 Customer 1 25,676 25,676 10.5 Foreign currency derivatives (d) Liquidity Risk Outflow 0 (3,471) (3,471) 0 0 0 0 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group’s Inflow 81 3,552 3,552 0 0 0 0 approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient cash and borrowing facilities Total derivatives (9,423) (9,712) (1,921) (2,473) (3,325) (2,742) 749 available to meet its liabilities when due, under both normal and adverse conditions. The Group’s cash flow requirements and the Total (257,063) (268,935) (169,702) (6,105) (20,557) (73,039) 468 utilisation of borrowing facilities are continuously monitored, and it is required that committed bank facilities are maintained at a minimum of 10% above maximum forecast usage. Funding risk is the risk that arises when either the size of borrowing facilities or the pricing thereof is not able to be replaced on Statements similar terms, at the time of review with the Parent Company’s banks. To minimise funding risk it is Board policy to spread the of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than facilities’ renewal dates and the maturity of individual loans. Where this is not possible, extensions to, or the replacement of, PARENT COMPANY Position Cash Flows or Less Months Years Years 5 Years borrowing facilities are required to be arranged at least six months prior to each facility’s expiry. 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 The following table sets out the contractual cash outflows for all financial liabilities (including estimated interest payments) and derivatives: Non derivative financial liabilities Loans and borrowings (255,000) (277,754) (162,906) (2,892) (49,849) (10,641) (51,466) Statements Deferred consideration (500) (579) (25) (25) (529) 0 0 of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than GROUP Position Cash Flows or Less Months Years Years 5 Years Trade and other payables (14,822) (14,822) (14,822) 0 0 0 0 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Total non derivative (270,322) (293,155) (177,753) (2,917) (50,378) (10,641) (51,466) financial liabilities Non derivative financial liabilities Derivatives Loans and borrowings (256,331) (279,409) (163,358) (3,050) (50,131) (11,218) (51,652) Interest rate derivatives outflow (3,400) (3,888) (1,613) (1,150) (1,330) (203) 408 Deferred consideration (500) (579) (25) (25) (529) 0 0 Foreign currency derivatives Trade and other payables (19,101) (19,101) (19,101) 0 0 0 0 Outflow (1,149) (20,285) (14,179) (6,106) 0 0 0 Total non derivative (275,932) (299,089) (182,484) (3,075) (50,660) (11,218) (51,652) Inflow 52 19,170 13,496 5,674 0 0 0 financial liabilities Total derivatives (4,497) (5,003) (2,296) (1,582) (1,330) (203) 408 Total (274,819) (298,158) (180,049) (4,499) (51,708) (10,844) (51,058) Derivatives Interest rate (3,400) (3,888) (1,613) (1,150) (1,330) (203) 408 derivatives outflow Foreign currency derivatives Outflow (1,149) (20,285) (14,179) (6,106) 0 0 0 Inflow 52 19,170 13,496 5,674 0 0 0 Total derivatives (4,497) (5,003) (2,296) (1,582) (1,330) (203) 408 Total (280,429) (304,092) (184,780) (4,657) (51,990) (11,421) (51,244)

Annual Report 2014 Annual Report 2014 104 105 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

34 FINANCIAL INSTRUMENTS (CONTINUED) 34 FINANCIAL INSTRUMENTS (CONTINUED)

Statements (i) Interest Rate Risk of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than Interest rate risk is the risk of financial loss, or impairment to cash flows in current or future periods, due to adverse PARENT COMPANY Position Cash Flows or Less Months Years Years 5 Years movements in interest rates on borrowings or investments. The Group uses interest rate derivatives to manage its 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 exposure to variable interest rate risk by converting variable rate debt to fixed rate debt. At reporting date, the interest rate profile of the Group and Parent Company’s interest bearing financial assets/ Non derivative financial liabilities (liabilities) were: Loans and borrowings (225,000) (236,033) (147,908) (1,887) (16,960) (69,278) 0 Carrying Amount Deferred consideration (2,000) (2,214) (86) (1,549) (50) (529) 0 GROUP PARENT COMPANY Trade and other payables (16,042) (16,042) (16,042) 0 0 0 0 2014 2013 2014 2013 Total non derivative (243,042) (254,289) (164,036) (3,436) (17,010) (69,807) 0 NZ$000 NZ$000 NZ$000 NZ$000 financial liabilities

Fixed rate instruments Derivatives Finance lease receivables 1,857 5,344 1,857 5,344 Interest rate derivatives outflow (9,504) (9,793) (2,002) (2,473) (3,325) (2,742) 749 Fixed rate bond (50,000) 0 (50,000) 0 Foreign currency derivatives Finance lease payables (1,031) (934) 0 0 Outflow 0 (3,471) (3,471) 0 0 0 0 Deferred consideration (500) (2,000) (500) (2,000) Inflow 81 3,552 3,552 0 0 0 0 Interest rate derivatives (3,400) (9,504) (3,400) (9,504) Total derivatives (9,423) (9,712) (1,921) (2,473) (3,325) (2,742) 749 Total (53,074) (7,094) (52,043) (6,160) Total (252,465) (264,001) (165,957) (5,909) (20,335) (72,549) 749

The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are expected to Variable rate instruments occur and also impact on the income statements: Commercial papers (160,000) (146,000) (160,000) (146,000) Standby revolving cash advance facility (45,000) (79,000) (45,000) (79,000) Statements GROUP AND of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than Cash balances 1,560 37,218 349 24,980 PARENT COMPANY Position Cash Flows or Less Months Years Years 5 Years Total (203,440) (187,782) (204,651) (200,020) 2014 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 Sensitivity Analysis Interest rate swaps If, at reporting date, bank interest rates had been 100 basis points higher/lower, with all other variables held Liabilities (3,400) (3,888) (1,613) (1,150) (1,330) (203) 408 constant, the result would increase/(decrease) post tax profit or loss and the hedging reserve by the amounts shown below. The analysis is performed on the same basis for 2013. Foreign currency derivatives

Outflow (1,149) (15,609) (9,503) (6,106) 0 0 0 Profit or Loss Cash Flow Hedge Reserve Inflow 0 14,442 8,768 5,674 0 0 0 100 bp 100 bp 100 bp 100 bp Total (4,549) (5,055) (2,348) (1,582) (1,330) (203) 408 Increase Decrease Increase Decrease GROUP NZ$000 NZ$000 NZ$000 NZ$000

Statements Variable rate instruments (1,460) 1,460 0 0 GROUP AND of Financial Contractual 6 Months 6 – 12 1 – 2 2 – 5 More Than PARENT COMPANY Position Cash Flows or Less Months Years Years 5 Years Interest rate derivatives 2,184 (1,629) 4,054 (4,886) 2013 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 NZ$000 30 June 2014 724 (169) 4,054 (4,886)

Interest rate swaps Variable rate instruments (1,298) 1,318 0 0 Liabilities (9,504) (9,793) (2,002) (2,473) (3,325) (2,742) 749 Interest rate derivatives 1,331 (1,331) 5,245 (5,546) Foreign currency derivatives 30 June 2013 33 (13) 5,245 (5,546) Outflow 0 (3,471) (3,471) 0 0 0 0 Inflow 81 3,552 3,552 0 0 0 0 Profit or Loss Cash Flow Hedge Reserve Total (9,423) (9,712) (1,921) (2,473) (3,325) (2,742) 749 100 bp 100 bp 100 bp 100 bp (e) Market Risk Increase Decrease Increase Decrease PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Variable rate instruments (1,473) 1,473 0 0 The Group uses derivative financial instruments such as interest rate swaps and foreign currency options to hedge certain risk Interest rate derivatives 2,184 (1,629) 4,054 (4,886) exposures. All derivative transactions are carried out within the guidelines set out in the Group’s Treasury Policy which have been 30 June 2014 711 (156) 4,054 (4,886) approved by the Board of Directors. Generally the Group seeks to apply hedge accounting in order to manage volatility in the income statements. Variable rate instruments (1,379) 1,398 0 0 Interest rate derivatives 1,331 (1,331) 5,245 (5,546) 30 June 2013 (48) 67 5,245 (5,546)

Annual Report 2014 Annual Report 2014 106 107 PORT OF TAURANGA NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PORT OF TAURANGA FINANCIAL AND OPERATIONAL FIVE YEAR SUMMARY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL AND OPERATIONAL FOR THE YEAR ENDED 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES FIVE YEAR SUMMARY AS AT 30 JUNE 2014 : PORT OF TAURANGA LIMITED AND SUBSIDIARIES

34 FINANCIAL INSTRUMENTS (CONTINUED)

(ii) Currency Risk Foreign currency risk is the risk arising from the variability of the NZD currency values of the Group’s assets, liabilities FINANCIAL and operating cash flows, caused by changes to foreign exchange rates. Year Year Year Year Year The Group does not have any material exposure to currency risk except for the one-off purchases of assets (eg plant 2014 2013 2012 2011 2010 and machinery) denominated in foreign currencies. It is Group policy that foreign exchange exposures on imported $000 $000 $000 $000 $000 goods must be hedged by way of foreign exchange forward contracts or options to a minimum of 50% at the time the Operating income 266,538 244,147 227,242 185,374 148,076 exposure is known with certainty on all transactions in excess of NZ$200,000. EBITDa 142,565 134,992 128,898 108,868 *93,516 At 30 June 2014, the Group had entered into forward contracts to purchase USD 12.462 million (2013: EUR 2.095 Surplus after taxation – reported 78,252 112,123 73,469 58,398 38,016 million) and a foreign currency option to purchase EUR 3.000 million (2013: nil) for capital commitments. Surplus after taxation – underlying 78,252 77,228 73,469 57,922 49,403 Sensitivity Analysis Dividends paid related to earnings 63,035 63,035 44,258 40,224 36,193 If, at reporting date, a 10% strengthening/weakening of the above currency against the New Zealand dollar occurred Total equity 812,419 793,878 733,874 700,252 668,468 with all other variables held constant, it would increase/(decrease) post tax profit or loss and the cash flow hedge Net interest bearing debt 254,471 190,787 187,183 188,795 198,528 reserve by the amounts shown below. The analysis is performed in the same basis for 2013. Total assets 1,154,883 1,112,581 1,033,878 990,468 956,273 Profit or Loss Cash Flow Hedge Reserve Interest cover (times) 7.8 8.3 8.2 6.6 6.3 10% 10% 10% 10% Shareholders’ equity (%) 70.3 71.4 71.0 70.7 69.9 GROUP AND Increase Decrease Increase Decrease Return on average equity (%) 9.7 10.1 10.2 8.5 7.5 PARENT COMPANY NZ$000 NZ$000 NZ$000 NZ$000 Share price ($) 15.45 13.90 11.08 8.85 6.65 Market capitalisation ($) 2,072,096 1,864,215 1,486,008 1,186,742 891,629 Foreign currency derivatives (37) 414 (943) 1,156 Net asset backing per share ($) 6.06 5.92 5.47 5.22 4.99 30 June 2014 Underlying earnings per share (cents per share) 58.3 57.6 54.8 43.6 36.9

Foreign currency derivatives 0 0 (174) 344 *Includes $2.352 million negative revaluation movement. 30 June 2013 The Board approved a final dividend of 29.0 cents per share ($39.5 million) after year end payable on 3 October 2014. (iii) Commodity Price Risk The Group manages commodity price risks through the use of negotiated supply contracts and commodity derivatives. OPERATIONAL The negotiated supply contracts are for the purpose of receipt in accordance with the Group’s expected usage requirements only and are not accounted for as financial instruments. Year Year Year Year Year 2014 2013 2012 2011 2010 The Group uses commodity derivatives and fuel swap agreements, to reduce the impact of price changes on fuel Cargo throughput (000 tonnes) 19,737 19,065 18,452 15,390 13,748 costs in accordance with Group policy. Up to 75% of the next twelve months’ operating fuel costs may be hedged via commodity derivatives. At 30 June 2014, the Group had no commodity derivative contracts outstanding (2013: nil). Containers (TEU) 759,587 848,384 796,024 590,506 511,343 Net crane rate (container moves per hour)* 36.9 34.5 30.6 35.0 35.1 (f) Capital Management Ship departures 1,612 1,529 1,501 1,329 1,225 The Board’s policy is to maintain a strong capital base, which the Group defines as total shareholders’ equity, so as to maintain Berth occupancy (%) 43 40 40 34 30 investor, creditor and market confidence, and to sustain the future business development of the Group. The Board endeavours to Total cargo ship days in port 2,364 2,232 2,189 1,839 1,661 maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and Turn-around time per cargo ship (days) 1.5 1.5 1.4 1.4 1.4 security afforded by a sound capital position. The Group has established policies in capital management, including the specific requirements that interest cover is to be maintained at a minimum of three times and that the [debt/(debt + equity)] ratio is to be Cargo tonnes per ship 12,921 12,469 12,123 11,606 11,223 maintained at a 40% maximum. It is also Group policy that the dividend payout is maintained between a level of between 70% and Average cargo ship gross tonnage (GT) 24,924 24,641 22,435 21,491 20,675 100% of surplus after tax. Average cargo ship length overall (metres) 187 187 179 177 174 The Group and Parent Company are required to comply with certain financial covenants in respect of external borrowings namely Number of employees – Port of Tauranga Limited 191 185 169 158 155 that: interest cover is to be maintained at a minimum of 2.5 times; shareholders’ funds as a percentage of total tangible assets Lost time injuries (LTI – frequency)** 3.1 14.1 5.9 6.2 18.6 must exceed 45% at all times; and total tangible assets and earnings before interest and taxes (EBIT) for the Parent Company must Total injury (frequency rate) 3.1 31.0 26.8 21.7 46.5 at all times exceed 85% of total tangible assets and EBIT respectively for the Group. There have been no changes in the Group’s approach to capital management during the year. *As measured by the Australian Productivity Commission. **Number of lost time claims per million hours worked. The Port of Tauranga Limited has complied with all capital management policies and covenants during the reporting periods. Operational data relates to the Parent Company as opposed to the Group.

Annual Report 2014 Annual Report 2014 108 109 PORT OF TAURANGA 2015 FUTURE OUTLOOK PORT OF TAURANGA 2015 FUTURE OUTLOOK

Rolleston development 621 2.2663ha 620 :00 3102m 2 619 Future Outlook 2100m 671 2 2396m 20:15 2 614 672 3616m 2369m 2 2 The 15 hectare Rolleston site that was purchased E 613 622 3889m 1.2502ha 2 DRIV will be developed into a container freight village 615 612 1.6051ha H 5207m 2 and will be operational early 2015. 623 1.8477ha ELEIG611 3661m N 616 2 609 1.6543ha 1.6435ha H STO610 O 3657m S 2 608 K 1.1097ha Y 617 N 1.7575ha S RO 649 1.4482ha 607 675 9016m 3913m 2 A 2 618 D 677 624 606 8790m 8240m 8760m 2 3110m 2 648 2 2 625 1.5394ha 678 8892m 1830m 2 2 605 679 8759m 1830m 626 H 2 2 1.2729ha YN 650 651 503 3359m 8220m DS DRIV 1.605ha 647 2 2 652 604 8916m 627 4293m 413 7040m 2 2 2 HANN 5500m 8200m 2 2 412/11 O 653 603 601 VER PL 5195m 654 4239m 7749m 7800m 2 2 5292m 2 2 2 646 2 2 1.1910ha A E CE 602 R 628 410 645 5347m 8045m 4960m 409 9996m 2 2 414/415/416 5420m 2 2 IS D DETR 644 642 O 2 8578m 6343m 408 2 2 OIT 2 629 2 3500m 2 643 6434m 2 D 407 IZ R 1.1217ha 2 O 4200m 417 2 2 N ILLIN 2 418 E 2050m 406 D 419 630 511 2050m 4200m R 2 2 2 2 2 420 405 7048m 36 2050m 2 2 2050m 2 4230m 34 2 5920m 33 35 421 32 2 604 4854m639 1257m 2 2047m 4040m 2 RA 31 5508m 631 2 6300m 2047m 422 Port of 2 D 30 9418m R 640 IUS L 2047m 4040m 506 2 984m 2 2047m 426 646 7,190m OO 423 4165m K D 2763m638 2 P 5990m 425 9651m 2 N 2 Tauranga 4510m 641 LI 2 1595m637 2 2 946m IZ 29 ON 636 2 1598m 4630m 2 E D 28 2 633 Intermodal 1602m635 507 50 26 1023m R 2 C 7,431m 8850m 6850m 2 2655m634 E 27 1.0ha 4092m603 4564m632 LAN N 2 2 607 2 TRUM 6450m E R 1680m 2 51 D Freight 1.18ha 2 2 52 LINK 8600m 2 53 66 5960m 2 Hub 2.34ha 54 6290m2 L 57 55 P 3.27ha 1.08ha ND

2 WESTLA

2 65 I Z 3800m 56 O 4000m N 60 E 58 2.2ha D 7.0ha R

59 2.18ha

AD

ES RO N JO www.izone.org.nz

Lot Availability FOR SALE SOLD FUTURE STAGE UNDER OPTION UNDER CONTRACT

New Tugs

Two new 74 tonne bollard pull tugs to The Tauranga and Timaru Container Terminal arrive in February and May 2015 to Agreement with Kotahi will see increased handle the bigger ships forecast. container volumes from August 2015.

Dredging Programme 17.4m N Sulphur Point (now 14.1m) Wharves

We will shortly call for tenders on the (10.4m) first stage of our dredging project to 16.0m deepen and widen the shipping channels (now 12.9m) in Tauranga Harbour. Mount Maunganui Wharves

Existing channel deepen approx 3m to 16.0m inner and 17.4m outer

Widen channel

No change

Annual Report 2014 Annual Report 2014 110 111 PORT OF TAURANGA COMPANYFINANCIAL DIRECTORY AND OPERATIONAL FIVE YEAR SUMMARY COMPANY DIRECTORY

DIRECTORS REGISTERED OFFICE BANKERS SHARE REGISTRY

D A Pilkington Salisbury Avenue ANZ National Bank Limited For enquiries about share transactions, change of address or Chairman Mount Maunganui dividend payments contact: Bank of New Zealand Private Bag 12504 A W Baylis Link Market Services Limited Tauranga Mail Centre ASB Institutional PO Box 91976 J M Cronin Tauranga 3143 Victoria Street West New Zealand K R Ellis Auckland 1142 A R Lawrence (appointed 1 February 2014) Telephone 07 572 8899 CREDIT RATING AGENCY Telephone 09 375 5998 Facsimile 07 572 8800 J S Parker (retired 24 October 2013) Facsimile 09 375 5990 Standard & Poor’s (S&P) Internet www.port-tauranga.co.nz M J Smith Australia Email [email protected] Email [email protected] Sir Dryden Spring Port of Tauranga Limited’s rating: BBB+/Stable/A-2 K Tempest FINANCIAL CALENDAR AUDITORS 3 October 2014 Final dividend payment Murray Dunn EXECUTIVE KPMG 23 October 2014 Annual Meeting M C Cairns Tauranga 19 February 2015 Half year results announcement (On behalf of the Auditor-General) Chief Executive March 2015 Interim Report published S G Gray 13 March 2015 Interim dividend payment Chief Financial Officer 30 June 2015 Financial year end S M Lunam SOLICITORS Corporate Services Manager 20 August 2015 Annual results announcement L Sampson Holland Beckett September 2015 Annual Report published Commercial Manager Tauranga D Kneebone Property & Infrastructure Manager

Annual Report 2014 112 NEW ZEALAND’S www.port-tauranga.co.nz