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[sharechat] Noddy and Big Ears at the LPC AGM

From: "" <>
Date: Sun, 19 Oct 2003 22:18:51 +1300

First to introduce the characters.

'Big Ears' is yours truly.   I had those hound dog ears flapping, listening 
for any tasty morsels falling from the tongues of directors (loosened by 
after function beer) that wasn't going to make it into the newspapers.

'Noddy' is Christchurch City Councillor Paddy Austin, bringing with her 
the clout of 65% Lyttelton Port Company owner, the Christchurch City 
Council.   Austin,  I dubbed as 'Noddy' after last year's AGM.   During 
the People's Republic of Christchurch personnel verses LPC 
management clash, a public battle fought using the print media as the 
outgoing company chairman went down, mouth blazing, (followed by 
his chief executive a month afterwards).   At the time Austin was able 
to overrule any 'will of the AGM meeting' with her infamous 'nod'.   A 
quick bow of the head by 65% shareholder representative 'Noddy' was 
all it took to end any debate.

At the 2002 AGM,  it was the election to the board  of councillor Erin 
Baker (yes the ex-ironwoman multisport champion) that really stirred 
the pot.   Her business experience, or lack of it, was questioned.   The 
fact that Baker didn't even show up for her own election caused a stir.   
Nevertheless the military like melee between the minority shareholders 
and  stevedores, up against the already selected 'suits', was resolved 
with Austin's affirmative head gesture.   Noddy was able to bulldoze 
the City Council's desired election result through.   As things panned 
out Baker didn't even last a year as a director, quitting to pursue other 

Now we fast forward to AGM 2003 where three bus loads of 
shareholders had been treated to a pre-meeting hour long coach tour 
of the port   And didn't Christchurch turn on a near perfect weather 
day, to show off the port at its best!   This positive start meant it was a 
little unsettling to see a rather nervous new chairman, Barney 
Sundstrum, mount the dais to deliver his first annual address.     Was 
he nervous about the news he had to deliver to shareholders?   Or was 
it the presence of 'Noddy', sitting incognito in the back row, and the 
memory of last years AGM that so unsettled him?

'Incognito' is probably the wrong word to use here.   If you can imagine 
a tall power dressed maori woman with flaming dyed red curly hair 
surrounded by short white men with carefully polished pink pates and 
conservative cut suits, you get a better impression of just how well 
'Noddy' blended in.  I suspect that although Sundstrum nominally was 
in charge of the meeting, and was supported by his board as they sat 
in a row facing the audience from the stage, like gladiators ready to 
defend him, that the new chairman thought control lay elsewhere.   He 
knew that each and every board member had their positions hanging 
by a string, under threat of having their director's career sliced short.   
The figurative sword possessed by the woman with the flaming red 
curls in the back row of the auditorium was forever poised, threatening 
to sever the strings of her stage puppets.

First an overview.  I'm mangling some of the information given by my 
bus tour guide, Chris Conner (Operations Director) with information 
delivered in the Chairman's and Chief Executive's addresses to give 
you readers a better picture.    Port Import business grows in response 
to population growth.  Port export growth is linked to the performance 
of our primary producers and manufactured good exporters.  
Biosecurity issues, in particular proposals to inspect container seals at 
every stage of handling, are going to add to costs.

Now the good news.   Outlook for the coal trade is very positive.   
Completion of the new conveyor belt loading and unloading systems 
will boost the amount of coal that can be received from 18,000-20,000 
tonnes per day up to 25,000 tonnes per day with less labour.   
Investigation of technology that could allow containers to be stacked 
higher means that significant growth in the container trade using the 
existing land base floorscape is possible.   The threat of major 
competition from direct export of coal from Westport has receded.  
Some coal will be going out that way, but harbour depth restrictions 
mean that this will be largely a barging operation.   It still makes best 
commercial sense to operate the big coal boats out of Lyttelton.

Now here is the bad news.   Winning new container business is a long 
term game,  and any significant upturn in container trade is at least 2-3 
years away.   Increasing size of ships has meant the main wharf facility 
at Cashin Quay has effectively reduced from four berths to three 
berths.   There has been underinvestment in port infrastructure which 
has left the oil wharf in dire need of replacement over the next two to 
three years.    Furthermore management would like to see another 
absolutely brand new wharf off the end of the spit at Cashin Quay 
dedicated to coal loading.   The outlook for the rest of the business 
(logs, import cars, fuel, fertilizer and Westland Milk) is at best flat and 
some margins have eroded, due to competition.  Time delays on the 
commissioning of the automated coal receival hopper, due to difficult 
damp conditions during construction (the hopper is below sea level), 
and the resultant loading guarantee penalties, means that the cost of 
the coal facility project has blown out from $26.2m to $31m.   For 
FY2004, higher depreciation charges and higher channel dredging 
costs of now around $1m per year means that earnings, in the form of 
net profit after tax are forecast to decline again to $11.2m (c.f. $11.6m 
in FY2003) after tax or $18.7m EBIT (c.f. $19.0m in FY2003).

To end on a more positive note, the meeting was noticeable by the 
absence of significant watersider dissatisfaction (and all employees 
are now shareholders) from the floor.    There was the absolute 
commitment from management to get the operation onto a 'one 
company' (rather than an 'us' and 'them') footing.   Even to the extent 
that moving management personel out of their ivory tower on the hill, 
was something that had been mentioned at board level.

During the nominations for re-election of directors there was plenty of 
time to witness 'the nod' first hand, so I can at least say I have 
observed the famous gesture.    Will Big Ears be at the Lyttelton Port 
Company AGM in FY2004?   Very probably.    What about Noddy?   
With Paddy Austin's stated intention to resign from the Christchurch 
City Council at the end of this Council term, that is less certain.


discl: hold LPC

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