Forum Archive Index - October 2003
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[sharechat] Noddy and Big Ears at the LPC AGM
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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