Infratil has recorded flat earnings for the year ending March but next year should see a significant leap when the effects from the purchase of Shell’s downstream assets kick in.
The listed infrastructure company also highlighted the need for public/private partnerships in the local infrastructure scene when it released its annual result this morning.
Infratil (NZX: IFT) recorded a 1.7% rise in ebitdaf (earnings before interest, tax, depreciation, amortisation and financials) for the year, up from $357 million to $363 million.
But it is also forecasting that this figure could rise by as much as 18% next year to between $390 million and $430 million when the proceeds from its recently-purchased Shell assets are factored in.
Next year’s result will also see a further $210 million invested in the acquisition of the 50% interest in Shell’s New Zealand fuels processing, distribution and retailing activities, with that deal finalised after the end of the financial year.
It is expecting capital expenditure and investment to be more than $400 million over the 2011 year, but said that its future income growth would come from this investment.
In the release of its annual result today, the company said the ability to execute the Shell transaction indicated the benefits of maintaining flexibility and capability.
“Infratil was able to undertake what is believed to be an investment of great benefit to its shareholders because it could do the deal when others couldn’t. The transaction also shows the advantage Infratil was able to gain by maintaining credibility with capital providers such as the banks, the New Zealand Superannuation Fund and its own share and bond holders.”
During the past 12 months Infratil raised $392 million through various asset sales and reduced total debt by $382 million to $830 million.
In its search for longer term debt, Infratil said it was now considering the availability and cost of bond funding as this was “intrinsically more suited” to Infratil’s assets. Infratil’s last bond issue closed in May 2007.
The company did mange to lift operating earnings by 16% to $90 million and the net surplus of $29 million was a $220 million turnaround on the previous year. It included a $68 million loss on non-cash hedge revaluations and a $84 million net gain realised on the sale of assets.
It said strong returns were delivered by TrustPower and Wellington Airport, while Infratil Energy Australia and NZ Bus had “satisfactory outcomes given the impact of negative one-off items in both businesses”.
As a final note for the future, the company said “profound changes may be on the horizon” in the infrastructure business, with demands for better infrastructure hitting a wall as governments had less capacity to pay for it.
Infratil said it was likely to see an increased willingness from governments to partner with private providers.
“In New Zealand progress in these directions is just starting, but in Australia there is a track record of sourcing private provision of public facilities. New Zealanders remain wary of private ownership of infrastructure, but Infratil’s history of partnerships with public bodies, councils and community trusts, shows how good relationships can be developed for the benefit of communities and investors.”
The company’s board have issued a final fully imputed dividend of 3.75 cps, which will be paid June 25. A dividend reinvestment plan has also been established and will operate for the final dividend.
Robert Smith
Tue, 18 May 2010