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South Island firms continue to reach new heights

Deloitte South Island Index passes the $10 billion mark for the first time

South Island listed companies have continued to perform well, breaking the $10 billion barrier for the first time since the inception of the Deloitte South Island Index in 2007.

The 24th edition of the Deloitte South Island Index, for the quarter to 31 December 2013, saw the index grow by $995.8 million (10.0%) in terms of market capitalisation. This result ensured that the Index completed the 2013 calendar year with a perfect score of growth in all four quarters, up $3.59 billion (48.9%) during the year to 31 December 2013.

The Index’s 10.0% quarterly growth placed it ahead of benchmark indices during the quarter to 31 December 2013. In comparison, the Dow Jones and the ASX All Ords achieved the next highest growth rates of 9.6% and 2.6% respectively, while the NZX 50 finished neutral over the same period.

Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says that the South Island Index’ has continued its remarkable run outperforming the other tracked indices.

This dominance, combined with the Index breaking the $10 billion barrier, clearly indicates a boom period for investor confidence in South Island listed companies,” says Mr McClay.

"This positive trend is especially encouraging given the number of non-listed businesses that are struggling in post-earthquake Christchurch and the well-publicised recent losses of significant Dunedin employers.”

The standout performance of the quarter to 31 December 2013 came from Pacific Edge, which increased its market capitalisation by 184.9% following the issuance of just over 37.8 million shares and the increase of its share price by $0.80 (150.9%) to $1.33 per share.

“The phenomenal percentage growth of the Dunedin-based company saw Pacific Edge almost triple in size during the quarter to 31 December 2013,” says Mr McClay.

”The exceptional increase in the company’s share price followed Pacific Edge’s two announcements in October that it had signed agreements with FedMed and America’s Choice Provider Network (ACPN) to provide 54 million Americans with access to Pacific Edge’s Cxbladder, a cancer detection test.”

The Index’s top performer for the quarter ending 31 December 2013, in terms of the dollar value of their market capitalisation, was Ryman Healthcare. Ryman’s market capitalisation increased by $450.0 million (12.9%) over the quarter, on the back of their announcement of an underlying profit of $58.5 million for the first half of the year – a new record for the company and up 22% on the previous year. This marked the ninth quarter in a row that Ryman Healthcare has achieved growth.

The biggest decline for the quarter to 31 December 2013 came from EBOS Group, which suffered a reversal of its recent results losing $51.9 million in market capitalisation, a decline of 3.5%.

This greater-than-normal dollar value decrease is a symptom of the company’s newly found size after the Symbion acquisition in the middle of 2013. It is foreseeable that EBOS Group may have big swings in the dollar value of its market capitalisation due to its significantly increased scale,” says Mr McClay.

Seven of the eight industry sectors in the Deloitte South Island Index posted positive movements in the quarter to 31 December 2013. The Biotechnology sector was the leading performer, gaining $288.0 million (173.2%) and almost tripling in size from the start of the quarter. The astounding growth of the sector was mainly due to the issuance of new shares and increases in share price for Pacific Edge and BLIS Technologies.

Only the Manufacturing & Distribution sector did not display positive growth, experiencing a decline in market capitalisation of 2.6%. Three of the four companies in the sector declined over the quarter, with the exception being Skellerup Holdings which grew by 5.5%.

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

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