South Island listed companies continue record-breaking run

23 July 2013

South Island listed companies continue their record breaking run

Deloitte South Island Index achieves remarkable 47.1% growth for year to 30 June 2013

A fourth successive quarter of gains shows that South Island listed companies are taking a lead navigating the country out of its recent economic doldrums, according to the latest Deloitte South Island Index.

The annual review of the quarterly Index report was released at a function in Christchurch today attended by Finance Minister Hon Bill English and South Island business leaders.

The Index, which tracks the performance of 31 listed companies with operations in the South Island, avoided the traditional seasonal winter slowdown period and achieved sustained growth for every quarter of the year, gaining a remarkable $2.16 billion (47.1%) in market capitalisation in the full year to 30 June 2013.

Twenty-one of the 31 companies in the Index grew during the past 12 months and the South Island Index’s 47.1% annual growth outperformed the NZX 50 (30.6%), the Dow Jones (15.8%) and the ASX All Ords (15.5%) during the year to 30 June 2013.

Paul Munro, a corporate finance partner at Deloitte’s Christchurch office, says the performance of the Deloitte South Island Index during the past 12 months is a reflection of investors’ recognition of Southern resolve and ingenuity to overcome challenges and succeed in trying economic conditions.

“The resilience that South Island companies have shown over recent years, in adverse economic conditions, is remarkable. That strength underpins the performance over the past 12 months across a number of sectors resulting in investors scrambling for shares in established companies like Ryman Healthcare, Kathmandu and Skyline Enterprises, as well as creating a positive environment for new capital raising as seen in the recent successful share issues for Moa Group, SLI Systems and Ebos Group,” Mr Munro says.

Unsurprisingly, once again Ryman Healthcare was the standout performer for the year with an impressive $1,455.0 million increase (84.1%) in market capitalisation on the back of its eleventh successive year of record profits. Ebos Group retained its second ranked position on the Index after gaining $232.7 million (58.7%) in market capitalisation and Kathmandu Holdings increased its market capitalisation by $252.5 million (99.4%) in the year to 30 June 2013.

Conversely, the company with the largest fall in market capitalisation was Bathurst Resources, dropping $263.9 million (74.4%) over the year to 30 June 2013 amidst multiple legal proceedings. Both Silver Fern Farms and NZ Windfarms also had a disappointing previous 12 months, dropping $35.1 million (41.2%) and $23.9 million (51.5%) respectively in the year to 30 June 2013.

Every sector except Energy & Mining gained market capitalisation during the year to 30 June 2013. The star performer, on a percentage basis, was the Bio-technology sector producing a remarkable 171.9% growth rate. Every company in the sector achieved positive results over the past year; however the vast majority of the sector’s growth was due to the $111.0 million (207.5%) gain in market capitalisation by Pacific Edge.

The South Island Index has been produced quarterly since March 2008. It has followed the movement in market capitalisation of South Island listed companies from 31 December 2006 to 30 June 2013 and over this period the index as a whole has increased by 63.0%, with the majority of the gain coming from the exceptional performance over the past 12 months.

In comparison to the other major indices, no other index achieved anything that matches the Deloitte South Island Index’s performance since its inception. The Dow Jones was the only other index achieving growth in double figures gaining 19.6%. The NZX 50 increased 9.5% over the same period while the ASX All Ords has struggled to battle its way upward since its low point in February 2009, still down 15.4% since the base period of December 2006.

“The investments in the Christchurch rebuild and the resilience of the South Island’s primary sector continue to underpin the performance of the wider South Island economy, creating a solid platform for continued growth,” says Mr Munro.

“A number of companies on the Index are likely to benefit from the rebuild finally kicking off in earnest over the coming 12 months and the signalled end of quantitative easing measures in the United States should provide some relief from the high NZ dollar assisting the export driven primary sector.”

“As for the Deloitte South Island Index itself, the next 12 months will likely see the additions of Synlait Milk and Meridian Energy with their scheduled listings on the NZX. Synlait Milk, with an approximate market capitalisation of $322 million, would join the Index in fifth place while Meridian Energy, with an expected market capitalisation of more than $5 billion, would be the largest company on the Index once listed,” adds Mr Munro.

To see the full Deloitte South Island Index annual review and quarterly report, go to www.deloitte.com/nz/southislandindex.

About the Deloitte South Island Index
The Deloitte South Island Index measures movements in market capitalisation, tracking the performance of 30 listed companies with a registered office and/or a substantial portion of their operations in the South Island.

About Deloitte in New Zealand
Deloitte New Zealand brings together more than 800 specialist professionals providing audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Our people are based in Auckland, Hamilton, Wellington, Christchurch and Dunedin, serving clients that range from New Zealand’s largest companies and public sector organisations to smaller businesses with ambition to grow.

Deloitte’s local experts draw on best practice and innovative methodologies from around the world as part of Deloitte Touche Tohmatsu. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s approximately 182,000 professionals are committed to becoming the standard of excellence. For more information about Deloitte in New Zealand, go to our website www.deloitte.co.nz

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/nz/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

ENDS

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