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South Port beats own profit estimate

Wednesday 4th August 2010

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South Port New Zealand, the Bluff-based port operator, beat its forecast earnings for the year to the end of June.

The company said its net profit will be between $3.5 million and $3.7 million, ahead of its previous guidance of a $3.5 million profit, though changes to tax rules cut that from an estimated $5.6 million to $5.8 million.

Like many companies, South Port has factored in the government’s recent Budget announcement and legislation to reduce the tax depreciation rate on buildings to zero percent and to reduce the corporate tax rates to 28% from 30%.

South Port’s adjustment to deferred tax and income tax payable is approximately $2.1 million its chief executive Mark O’Connor said, causing a reduction in bottom line profit. The 2009 full year profit was $4.1 million.

“We’ve had busier than normal cargo and warehousing activity, and reached a favourable proposed agreement with NZ Aluminium Smelters of arrears and ongoing charges applicable to the Tiwai Wharf Licence,” he said.

“There was also a one-off impairment adjustment, or a reduction in value, associated with our existing mobile harbour crane.”

There will be no change to the actual tax payable until the 2011/2012 income year, he said. The additional tax payable due to the tax depreciation is estimated to be approximately $70,000 a year. This 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 a year.

The shares were unchanged at $2.68 in trading today.

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