Morrison and Co says other clients aligned with Infratil, offer investment opportunities
LATEST: Morrison & Co, the Wellington-based investment manager that founded Infratil [NZX: IFT] in 1994, says clients taken on since then are potential partners of the listed fund and provide a wider scope for assessing business opportunities.
Morrison & Co Infrastructure Management was paid a management fee of $19 million by Infratil for the year ended March 31, down from $19.7 million a year earlier. Notes to Infratil's annual accounts also show other fees paid to parties associated with Morrison & Co, including for investment banking services, of $2.6 million, down from $2.9 million in 2013.
Since 2006 it also has a global infrastructure investment mandate from the New Zealand Superannuation Fund, which is a cornerstone investor in Public Infrastructure Partnership Fund that Morrison & Co launched in 2009. It has a "strategic partnership" with Fisher Funds since buying a 26 percent stake in that firm in 2008 and inviting managing director Carmel Fisher onto its board and this year was appointed as an investment manager for the Australian government's Future Fund.
Marko Bogoievski, who is chief executive of both Morrison & Co and Infratil, was asked at Infratil's annual results briefing how shareholders in the fund could be confident they were getting a benefit from the 'symbiotic relationship' between the two entities when investment opportunities were identified.
"Morrison & Co itself is representing a few more clients and I think the clients that we're taking on in every respect are potential co-investment partners with Infratil and they enable us as an organisation, in this case talking about Morrison & Co, to scan more opportunities, to develop more capability in additional sectors," Bogoievski said. "I think you get access to origination and capability that we're probably unlikely to have as a standalone organisation operating in a market like this alone."
He referred questions about the relationship to Infratil chairman Mark Tume but said "I would accept that as markets evolve you need to consistently assess whether that's the right relationship going forward."
Bogoievski said with 20 years of data and behaviour "you can judge for yourself whether the relationship has been a positive one or not."
Tume wasn't immediately available to comment.
Infratil had net assets of $2.6 billion as at March 31, down from $2.68 billion a year earlier. It will pay a final dividend of 7 cents a share, up from 6 cents a year earlier and bringing annual payments to 10.75 cents. The company said on a conference call that it was confident of double-digit growth in dividends for the 2015 and 2016 years as gains from investments stoke cash flows.
Infratil's shares rose 2.2 percent to $2.34 on the NZX and have gained 40 percent over the past five years, while the NZX 50 Index rose 85 percent. The stock is rated a 'buy' based on the consensus of six analysts polled by Reuters.
EARLIER: Infratil full-year earnings fall as forecast, affirms pickup for 2015
Infratil [NZX: IFT], the energy, airport and transport investor, posted a 5.3 percent drop in pretax earnings, meeting guidance, on a weaker contribution from Trustpower and Infratil Energy Australia Group. The company reiterated earnings will grow in 2015.
Earnings before interest, tax, depreciation, amortisation and fair value movements were $500 million in the year ended March 31, down from $528 million a year earlier. Net profit jumped to $199 million from $3 million, driven by a net gain of $183 million from the sale of Z Energy and valuation adjustments.
Infratil's 50.4 percent holding in Trustpower is its biggest single investment and accounted for 55 percent of Ebitdaf in the full year at $277 million, down from $295 million a year earlier. The utility has already posted its annual results, which showed the impact of a drop in hydro generation in the face of dry weather and depressed wholesale energy prices.
The company described 2014 as "a dynamic year" including the successful float of Z Energy, the exit from its unprofitable Glasgow Prestwick and Kent airports and the acquisition of a 19.9 percent stake in retirement village operator Metlifecare.
The shares rose 1.8 percent to $2.33 and have gained 0.9 percent this year.
The company also agreed to invest A$100 million in the Australian Social Infrastructure Partnership, with the first A$12 million made post March 31.
The company's 66 percent-owned Wellington International Airport provided the second-largest earnings contribution at $86 million, up from $83 million in 2013 on gains in aeronautical and passenger services income.
Earnings at Infratil Energy Australia Group (IEA) fell to A$61 million from A$80 million and the decline was inflated by the effect of translating earnings back into a strong kiwi dollar. Infratil said today it has started a review of the Lumo and Direct Connect Australia units of IEA that may take six months and will determine whether the businesses are kept as is or sold.
NZ Bus, which operates the bus services in Auckland and Wellington, posted a 9 percent drop in earnings to $40 million, coming in below budget, which Infratil said reflected disappointing passenger growth and engineering costs to comply with new regulations.
Earnings for 2015 would be "between 6 percent and 12 percent higher than this year's $500 million," the company said.
"Next year it is expected that New Zealand's economy will continue to drive demand for transport and energy and that there will be increasing private provision of infrastructure on both sides of the Tasman," the company said.
Infratil will pay a final dividend of 7 cents a share, up from 6 cents a year earlier and bringing annual payments to 10.75 cents.