South Port lifts 2010 profit guidance

South Port today announced an upgrade in earnings guidance for the year ended 30 June 2010.

Chief Executive, Mark O’Connor, said, “Several factors have impacted the 2010 trading year including:

• 
  Busier than normal cargo and warehousing activity,
• 
  Reaching a favourable proposed agreement with New Zealand Aluminium Smelters (NZAS) over arrears and ongoing charges applicable to the Tiwai Wharf Licence,
• 
  A one-off impairment adjustment (reduction in value) associated with theCompany’s existing mobile harbour crane
• A one-off non-cash adjustment to income tax as a result of the Government’s recent changes to tax depreciation and corporate tax rates

 

We now anticipate our unaudited Net Profit After Tax (NPAT) will be in the range of $3.5 - $3.7 million for the year ended 30 June 2010. This compares favourably with our previous guidance of a full year result estimate of $3.5 million.”

As indicated above the full year profit has been affected by the Government’s recent Budget announcement and subsequent legislation change to reduce the tax depreciation rate on buildings to zero per cent and to reduce corporate tax rates from 30% to 28%. This will produce an adjustment to deferred tax and income tax payable of approximately $2.1 million (causing a reduction in bottom line profit). The required tax adjustment is a one-off, non-cash accounting entry which has no impact on South Port’s underlying profitability, cash flows or dividend policy.

Had this adjustment to profit not been required South Port’s estimated NPAT would have been in the range of $5.6 million - $5.8 million compared with the 2009 full year result of $4.1 million.

There will be no change to the actual tax payable until the 2011/2012 income year, with the additional tax payable due to the tax depreciation estimated to be approximately $70,000 per annum. This increase in tax will be more than offset by the Company tax rate reduction to 28% in 2011/12 which will reduce tax payable by approximately $120,000 per annum.