The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Nassau Container Port operator is targeting a 16.26 per cent increase in shareholder profits for its 2017 financial year, with import volumes already 5 per cent ahead of projections for the first three months.

Arawak Port Development Company (APD), in its 2016 annual report, is projecting that total income attributable to equity investors will increase by more than $700,000 to $5.044 million for the 12 months to end-June 2017.

The BISX-listed port operator, updating shareholders on its performance for the three months to end-September 2016, said its direct operating margin (DOM) for the period was 42 per cent - five percentage points higher than forecast.

And APD’s revenues were also “tracking about 1 per cent over budget” for the same three months, helping to produce a 2017 first quarter in which there was a 25.1 per cent year-over-year jump in total comprehensive income - from $1.275 million to $1.596 million.

“For the 2017 fiscal year, we are forecasting gross revenue of $28.156 million (2016: $27.08 million) or 4 per cent over the prior year actual revenue, while net income is projected to be $5.044 million or $705,615 over the 2016 actual net income of $4.338 million,” APD’s 2016 annual report projected.

“Our import TEU (twenty-foot equivalent unit) volumes are currently 5 per cent over budget as at September 30, 2016, and we continue to see a steady import of used vehicles from Asia.

“Nassau Container Port’s TEU volumes as at September 2016 are tracking 5 per cent over budget. Total revenue as at September 2016 is tracking about 1 per cent over budget.”

Despite the import-generating activity foreshadowed by Baha Mar’s likely construction completion, and subsequent phased opening, APD has taken a conservative position on potential import volumes during the 12 months to end-June 2017.

Noting the increased importation of construction materials in Hurricane Matthew’s wake, the BISX-listed operator said: “Total market volumes are expected to remain around 62,000 import TEUs for 2017, or 500 over the 2016 TEU budget volumes of 61,500 import TEUs.

“Our total revenue as at September 30, 2016, is ahead of budget by approximately $466,000 or 46 per cent. Total expenses as at September 30, 2016, are under budget by $337,000 or 8 per cent.”

APD said its gross accounts receivables had increased by $624,048 in 2016 as a result of a $700,168 impairment related to unpaid rental income owed by Baha Mar - a sum it believes it can recover.

Michael Maura, APD’s chief executive, told shareholders that the company was still awaiting clarity from the Ministry of Finance and Department of Inland Revenue on how Value-Added Tax (VAT) will be applied to international cargo and shipping.

APD has “passionately recommended” that such services be ‘zero-rated’ for VAT purposes, so that all ‘input’ tax can be recovered even though the 7.5 per cent levy is not charged by itself.

“Our Nassau Container Port community is still unsure as to how VAT will be assessed on international cargo,” Mr Maura wrote.

“We have passionately recommended to the Department of Inland Revenue that all port and carrier services related to international shipments be zero-rated so as to avoid possible increases in international shipping charges. We look forward to clarification on this matter soon.”

He added: “The Department of Inland Revenue has recognised the significant economic character of international trade, and the impact that subtle changes to tax application at the border can have, resulting in significant cost implications to the trading market.

“While much progress was made, the Department of Inland Revenue had not finalised its VAT procedures for international trade.”

Looking back at its 2016 financial year, APD said: “Despite our actual import TEU volumes for 2016, of 61,778, being over budget by 278 TEUs or 0.45 per cent, revenue from the bulk car carrier business was able to compensate for any fall-off in revenues from storage fees.

“This resulted in some 11,400 bulk car carrier vehicles landing at our facility and revenues of approximately $1.972 million from landing and security fees. Approximately 2,760 or 32 per cent more bulk car carrier vehicles were imported than our forecasted volume of 8,640.

“Additionally, revenues from storage fees were approximately $378,423 under budget. This was attributable to the fact that the carriers were evacuating empty containers before the allowed free time had expired.”

APD added: “Our Direct Operating Margin (DOM) for 2016 was 37 per cent (2015: 41 per cent), which was 2 per cent higher than our forecasted DOM of 35 per cent.

“For the period ended September 2016, our DOM is 42 per cent, which is 5 per cent higher than our forecasted DOM for the same period.

“Operating expenses, including depreciation of $20.523 million for the period ended June 30, 2016, were $8,081 or 0.04 per cent higher than our 2016 forecasted operating expenses of $20.515 million.”