30 June 2008
South Island Companies Holding Their Own
Inaugural Deloitte South Island Index Released
South Island listed companies outperformed the wider NZX 50 during 2007, and have not been hit as hard in the first
quarter of 2008, according to the inaugural Deloitte South Island Index issued today.
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of listed
companies with a registered office and/or a substantial portion of their operations in the South Island. There were 33
companies on the South Island Index in 2007, and 32 in 2008 (following the merger of Loan and Building Society with
Canterbury Building Society.)
Paul Munro, a corporate finance partner in Deloitte’s Christchurch office, said the South Island Index achieved an
overall gain of 11.2% in 2007, while the NZX 50 index was up 0.3%. “This disparity can be attributed to two things – the
first is the positive impact of capital-raising by Ebos Group, Cavotec MSL Holdings and New Zealand Windfarms, and the
second is the South Island’s relative isolation from the shockwaves of the credit crunch that began to affect the global
financial markets at the end of last year.”
He noted that the gains in market capitalisation masked the fact that 39% of companies on the South Island Index
recorded a reduction in the 2007 calendar year, with the largest falls coming in the technology, retail and financial
services sectors.
In the first quarter of 2008, the South Island Index delivered a drop of 11.2%, but this compared favourably to the
14.2% fall experienced by the NZX 50 in the same period.
Mr Munro said that the market was presenting challenges for many companies as the impact of the strong NZ dollar, a
gloomy consumer outlook, and volatility in overseas markets began to bite. “It appears 2008 is set to be a year where
caution is going to be exercised as things get a little bumpy – but there will be opportunities around for those
prepared to be bold.”
All South Island sectors experienced declines in Q1 of 2008, with the technology (down 2.0%), port (-6.6.%) and primary
produce (-8.0%) sectors least affected. Companies in the retail (-27.4%) and biotechnology (-22.3%) sectors had been hit
particularly hard.
As in 2007, Ryman Healthcare remained the South Island’s largest listed company with a market capitalisation of $855m as
at 31 March 2008, followed by PGG Wrightson ($596.5m) and NZ Farming Systems Uruguay ($341.9m).
The Deloitte South Island Index will be released throughout the year, tracking the performance of South Island companies
on a quarterly basis. Mr Munro said the Index would provide investors, companies and the public with an interesting
perspective on the financial markets of the Mainland.
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ENDS