The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port’s throughput volumes were 1,000 ahead of expectations during its 2012 fourth quarter, Tribune Business was told yesterday, with shipping companies reporting up to a 30 per cent improvement in vessel turnaround time from the new facility.

Despite unveiling a $2.239 million net loss for the year to end-June 2012, executives at BISX-listed Arawak Port Development (APD) told Tribune Business that this was almost 17 per cent less than what had been projected in the company’s initial public offering (IPO) prospectus.

APD’s red ink is a common experience for start-up companies, and shareholders should not panic, as both Michael Maura, its chief executive, and Dion Bethell, chief financial officer, said they were “cautiously optimistic” the company would be profitable in its current financial year.

Disclosing that APD was anticipating a “spike” or increase of 300 twenty-foot equipment units (TEUs) per week in the first quarter next year, due to the Baha Mar project, Mr Maura indicated this held out the potential to both lower tariffs and deliver improved shareholder returns.

He added that the Gladstone Freight Terminal was handling 160 round trip containers per week from a ‘break bulk’ perspective, with 50 per cent of that facility’s warehouse still available for lease.

And Mr Maura suggested that long-term, APD would seek to expand beyond port operations into the development of commercial properties, in a bid to diversify revenue streams and enable it lower tariffs levied on Bahamian business and consumers further.

APD, which on October 29, 2012, negotiated an eight-month extension to the maturity date for its $43 million Royal Bank of Canada bridging loan, also revealed it would not seek to do this again.

This means that it will look to replace the loan facility with a bond/preference share issue some time during the 2013 first half, as the maturity date was extended to end-July 2013.

An assessment of APD’s 2012 financial performance is difficult, given that is still in start-up mode and there are no prior year comparisons.

It does have 20 years of exclusivity, though, and Mr Bethell said its total comprehensive loss of $2.239 million was more than $450,000 less than the $2.693 million given in the IPO prospectus’s financial projections.

“We’re $450,000 better than we had forecast. To put things in perspective, that’s the result of watching the pennies and operations beginning as forecast in the fourth quarter of 2012,” Mr Bethell told Tribune Business.

Mr Maura said shareholders, and the Bahamian capital markets, would get their first true year-over-year comparisons for APD’s performance in 2014.

“The biggest difference you will find at the end of 2013 will be that it will be one full year of operations, as opposed to a year that comprised 75 per cent development and 25 per cent operations,” Mr Maura added.

Confirming that APD was still seeking to payout/replace its $43 million bridging loan from Royal Bank of Canada, Mr Bethell said the company did not want to negotiate a further extension.

Some $35.384 million of that facility had been drawn down by end-June 2012, with another $1.813 million taken after year-end.

Mr Bethell said APD wanted to complete construction of its administration building and a BEC sub-station using the bridge facility’s proceeds.

“Management and directors felt it best to extend the loan facility to help us complete those areas of the project,” he explained.

“The intention is not to seek a further extension of the loan facility. The intention is that we will have some sort of facility to take out the bridge before the expiration, but I don’t want to go out on a limb and put a date on it.”

Mr Maura said APD was forecast to generate dividend yields of 2.54 per cent in 2013, followed by 4.77 per cent and 5.66 per cent in 2013 and 2014 respectively.

He indicated that management was relatively confident of achieving this, given its conservative financial projections and failure to account for Baha Mar’s potential impact.

Noting that shipping carriers were anticipating a 300 TEU per week increase come the 2013 first quarter, something he described as significant, Mr Maura told Tribune Business that container throughput volumes were already more than 7 per cent up on projections,.

“Our plan spoke to volumes of approximately 14,000 TEUs for the last quarter of 2012, and we’re pretty much around 15,000 TEUs, give or take,” he said.

“We’re in good shape. Ideally, it would be a wonderful thing if we simultaneously lowered tariffs and delivered larger dividends for shareholders than anticipated.

“Based off what we know today, what we’re trending and tracking to do, the information from Baha Mar and what they’re tracking to do, we’re cautiously optimistic we’ll be in the black by 2013.”

With 20-25 per cent of containers transiting to the Gladstone Road Freight terminal to be broken down by consignment, Mr Maura said: “It’s basically a one-stop shop. We still have some space to rent. We have 50 per cent of the warehouse space taken up under lease, so we have 45,000 square feet of warehouse space available.”

Mr Maura also disclosed to Tribune Business that Tropical Shipping was “turning their vessels around in 30 per cent less time today than they did a year ago”.

But he added: “I don’t want people to believe we’ve hit a grand slam first out; we can always get better.”

Mr Bethell said “98 per cent” of the $2.514 million owed by related parties to APD at the 2012 year-end related to normally recurring balances owed by the shipping companies for services rendered to it. Only a small portion, he added, related to dredge sale proceeds.

And the $413,089 in impaired accounts receivables, some $213,089 of which is provided for, related to sums owed by Atlantic Caribbean Line (ACL), which has ceased doing business. Mr Bethell said arrangements had been made to collect the sums owed.

Looking to the medium and long-term, Mr Maura told Tribune Business: “We’re looking forward to other commercial developments that may come our way.

“We would want to look at developing other commercial properties that lend themselves to different types of businesses. It may not be related to ocean-going cargo. It could be restaurants that need space.

“We would like to see that happen in time if APD is successful, broadening and widening its business beyond the pure scope of port operations, so we can have other sources of income coming into APD’s bucket. That revenue will allow us to bring those tariff rates further down.”