2017 Annual Report Highlights

Highlights

276,000 households using renewably generated electricity

5,960,000 airport passengers

76,000 households with internet and telephone

3,800 student residents

5,300 residents in retirement accommodation or care

58 million public transport trips

Highlights

Year ended 31 March

2017

2016

Net Parent Surplus¹

$66.1m

$438.3m

Underlying EBITDAF

$519.5m

$462.1m

Capital Expenditure

$728.2m

$220.9m

Divestments

-

$530.5m

Net Debt
(Infratil and 100% subsidiaries)

$913.3m

36% of capitalisation 

$295.9m

14% of capitalisation 

Ordinary Dividends Declared

15.75cps

14.25cps

1. In FY2017 there was no contribution from discontinued operations. In FY2016 $436.3 million was contributed by the earnings and sale gains from businesses sold in that year.

Underlying EBITDAF increased 12%. The net surplus for FY2017 did not include contributions from one-offs or divestments and it was reduced by acquisition costs, the cost of the Trustpower demerger and by Infratil maintaining cash deposits throughout the year. 

Infratil  delivered $728.2 million of investment,  including $161.1 million of internal capital spending and $560.1 million spent acquiring new holdings. It is the largest value of investment the group has ever undertaken in one year.

The investments resulted in the net debt of the wholly-owned group rising to $913.3 million, although on 11th April 2017 this was reduced by $237.9 million with receipt of the Metlifecare sales proceeds (the shareholding was purchase in November 2013 for $147.9 million).

Financial Trends

The graphs show the evolution of Infratil's underlying EBITDAF, cash flow, dividend, investment spending, portfolio of businesses and capital structure.

Financial Trends

Underlying EBITDAF

 (Earnings before interest, tax, depreciation, amortisation and adjustments for fair value movements, realisations and impairments)

 

Financial Trends 1 v1.3
Operating cash flows and dividends

Operating cash flow comprises underlying EBITDAF less payments of interest and tax and changes in working capital. Dividends are shown on a per share basis and exclude special dividends.

 

Financial Trends 2 v1.3
Investment outlays

Over the decade Infratil has invested $4,082 million. 71% of this amount involved Infratil’s businesses investing in their own activities and the remaining 29% involved Infratil acquiring shareholdings in businesses. Infratil also divested assets amounting to $2,070 million.

 

Financial Trends 3 v1.5
Infratil's assets

Changes to Infratil’s asset profile reflects the investments and divestments noted above, depreciation and changes in market values. 

 

Financial Trends 4 v1.5
Infratil's capital structure

The proportion of Infratil's funding provided by equity (at market value) and perpetual and dated debt.

 

Financial Trends 5 v1.3

Financial Performance & Position

Consolidated Results

Year Ended 31 March
$Millions

2017

2016

Operating revenue

$1,913.8

$1,775.7

Operating expenses

($1,380.4)

($1,284.3)

Depreciation & amortisation

($186.5)

($172.1)

Net interest

($165.7)

($169.9)

Tax expense

($24.6)

($24.8)

Revaluations

($26.2)

($65.4)

Discontinued operations

-

$436.3

Net profit after tax

$130.4

$495.5

Minority earnings

($64.3)

($57.2)

Net parent surplus

$66.1

$438.3


The rise in revenue and operating costs was largely due to Trustpower, Tilt Renewables and Perth Energy increasing energy generation and retailing activities.
Net interest fell as lower interest rates offset increased net average debt. 

Revaluations include gains and changes of value on hedges used to cover energy prices, interest rates and foreign exchange rates. It also includes a charge to reflect the difference between the book and sale value, after balance date, of the Metlifecare shareholding.

Discontinued operations in 2016 were Z Energy and iSite. There were no businesses sold during the current year. The sale of Metlifecare subsequent to balance date resulted in a $54.5 million change which is included under revaluation.
 

Reconciliation of Net Parent Surplus To Underlying EBITDAF

Year Ended 31 March
$Millions

  2017

2016

Net parent surplus

$66.1

$438.3

Minority Interests

$64.3

$57.2

Metlifecare & RetireAustralia underlying earnings

$46.3

$33.5

Metlifecare & RetireAustralia equity accounted earnings

($82.5)

($67.0)

NZ Bus onerous depot lease provision

-

 $4.2

Trustpower demerger costs

$16.7

-

Canberra Data Centres transaction costs

$5.6

-

Loss/(gain) on foreign exchange & derivatives

($29.0)

$13.6

Net realisations, revaluations, impairments

$55.2

$51.8

Depreciation & amortisation

$186.5

$173.2

Net interest

$165.7

$169.9

Tax expense

$24.6

$24.5

Underlying EBITDAF

$519.5

$462.1

The shaded area covers adjustments required to give underlying earnings. They remove the effects of one-off events and for the two retirement companies they remove unrealised fair value changes and add back realised gains and development margins. 


Breakdown of Consolidated Underlying EBITDAF & Net Surplus Before Revaluations

The following tables give the breakdown of Infratil’s underlying EBITDAF, depreciation & amortisation, interest and tax by business, for the last two financial years. 

Year Ended 31 March 2017


$ Millions

Underlying EBITDAF

D&A

Interest

Tax

Underlying Earnings

Ownership

Infratil Share Of Earnings

Trustpower

$234.5

($47.5)

($40.6)

($36.9)

$109.5

51%

$55.9

Tilt Renewables

$131.7

($78.6)

($33.8)

($10.1)

$9.2

51%

$4.7

Perth Energy

($14.1)

($5.6)

($5.1)

$7.4

($17.4)

80%

($13.9)

Longroad¹

($2.9)

-

-

-

($2.9)

45%

($2.9)

Wellington Airport

$90.5

($21.7)

($21.5)

($11.9)

$35.4

66%

$23.4

NZ Bus

$43.7

($32.3)

($7.3)

($1.2)

$2.9

100%

$2.9

RetireAustralia¹

$31.4

-

-

-

$31.4

50%

$31.4

Metlifecare¹

$14.9

-

-

-

$14.9

20%

$14.9

ANU Student Accommodation¹

$7.0

-

-

-

$7.0

50%

$7.0

Canberra Data Centres¹

$10.6

-

-

-

$10.6

48%

$10.6

Corporate & Other

($27.8)

($0.8)

($57.4)

$28.1

($57.9)

100%

($57.9)

Total

$519.7

($186.5)

($165.7)

($24.6)

$142.7

 

$76.1

1. With Metlifecare, RetireAustralia, Canberra Data Centres, ANU Student Accommodation and Longroad Energy,  Infratil accounts for its share of their earnings.

Year Ended 31 March 2016  

$ Millions

Underlying EBITDAF

D&A

Interest

Tax

Underlying Earnings

Ownership

Infratil Share

Trustpower

$329.4

($117.0)

($81.1)

($33.2)

$98.1

51%

$50.1

Perth Energy

$2.9

($6.4)

($4.2)

$2.1

($5.6)

80%

($4.5)

Wellington Airport

$86.1

($16.5)

($16.8)

($11.1)

$41.7

66%

$27.5

NZ Bus

$42.0

($31.4)

($3.0)

$0.4

$8.0

100%

$8.0

RetireAustralia¹

$21.1

-

-

-

$21.1

50%

$21.1

Metlifecare¹

$12.4

-

-

-

$12.4

20%

$12.4

Corporate & Other

($31.8)

($0.8)

($64.8)

$17.0

($80.4)

100%

($80.4)

Total

$462.1

($172.1)

($169.9)

($24.8)

$95.3

 

$34.2

Discontinued operations

$18.4

($1.1)

-

$0.3

$17.6

100%

$17.6

 

             

 

1. With Metlifecare and RetireAustralia,  Infratil accounts for its share of their earnings.

  
 
Underlying EBITDAF

EBITDAF is a common measure of a company's operational earning,. From this figure a number of cost and contributions (as highlighted int he table above are deducted to give the underlying value.

Year Ended 31 March
$ Millions

2017

2016

Trustpower

$234.5

$329.4

Tilt Renewables

$131.7

-

Perth Energy

($14.1)

$2.9

Longroad Energy¹

($2.9)

-

Wellington Airport

$90.5

$86.1

NZ Bus

 $43.7

$42.0 

RetireAustralia¹ 

$31.4 

$21.1 

Metlifecare¹ 

$14.9 

$12.4 

ANU Student Accommodation¹ 

$7.0 

Canberra Data Centres¹ 

$10.6 

Corporate & Other 

($27.8) 

($31.8) 

Underlying EBITDAF (continuing operations) 

$519.5 

$462.1 

 Discontinued operations

 $18.4

1. The EBITDAF contributions of Metlifecare, Canberra Data Centres, ANU Student Accommodation, Longroad Energy and RetireAustralia reflect 20%, 48%, 50%, 45% and 50% respectively of those companies' net surplus excluding unrealised fair value movements on investment properties. 



Consolidated Operating Cash Flow

Year Ended 31 March
$ Millions

2017

2016

Underlying EBITDAF (continuing operations)

$519.5

$462.1

Net interest

($156.4)

($161.8)

Tax paid

($47.7)

($51.8)

Working capital/other

($70.4)

($12.5)

Discontinued operations

-

$14.4

Operating cash flow

$245.0

$250.4

 

Infratil's Assets

$Millions

31 March 2017

31 March 2016

Trustpower

$734.8

$1,223.6

Tilt Renewables

$341.8

-

Perth Energy

$73.4

$69.2

Longroad Energy

$33.2

-

Wellington Airport

$414.5

$408.9

NZ Bus

$191.2

$201.5

Metlifecare

$237.9

$222.7

RetireAustralia

$278.2

$252.9

ANU Student Accommodation

$91.2

-

Canberra Data Centres

$426.3

-

Other

$84.8

$73.2

 

$2,897.8

$2,435.5

For 31 March 2017 an NZ$/A$ exchange rate of 0.9142 was used (0.9027 for 2016).
Values exclude 100% subsidiaries' cash balances and deferred tax where capital gains tax does not apply.


Over the period Trustpower demerged into two companies (Trustpower and Tilt Renewables). Infratil retained the same 51% shareholding in both.

Metlifecare's 31 March 2017 value reflects the net value received for the shareholding when it was sold on 11th April 2017 after balance date.

Changes in the value of Wellington Airport, RetireAustralia and NZ Bus reflect the difference between the companies' net surplus over the period and payments to shareholders. The value of the Group's Australian assets also changed with fluctuations in the NZ$/A$ exchange rate. Perth Energy's value change reflect all the above noted factors and Infratil's advance of an additional $25.0 million.

"Other" now includes Snapper, Infratil Infrastructure Property, ASIP and Envision.

 

Infratil's Funding 

$Millions

31 March 2017

31 March 2016

Net cash of 100% subsidiaries

($92.2)

($661.1)

Dated Infrastructure Bonds

$773.6

$723.6

Perpetual Infrastructure Bonds

$231.9

$233.4

Market Value Infratil equity

$1,629.8

$1844.4

Total capital

$2543.2

$2,140.3

Net dated debt / total capital

26.8%

2.9%

Net debt / total capital

35.9%

13.8%


The $617.5 million increase in net debt reflected the $728.2 million invested over the year.

As at 31 March 2017 Infratil and 100% subsidiaries had $298.8 million of committed bank funding facilities of which $246.0 million was undrawn.

Infratil guaranteed borrowing facilities of Perth Energy which as at 31 March 2017 amounted to $74.1 million and were drawn to $47.7 million.

 

Shareholder Returns & Ownership

Infratil’s share price fell from $3.28 on 31 March 2016 to $2.91 on 31 March 2017. Fully imputed dividends of 9.0 cents and 5.75 cents per share were paid in June and December 2016 respectively.

Had the dividends been reinvested in Infratil shares at the time they were paid they would have provided a fully imputed return of 5.0% per annum. on the 31 March 2016 share price.

Added together, the dividend and share price movement resulted in shareholders incurring a fall in value of 6.8% per annum.

Over the last five years Infratil’s compound return after tax to shareholders has been 15.5% per annum. Over the 23 years since Infratil listed compound after tax returns have been 16.8% per annum.

Someone who invested $1,000 in Infratil shares on 31 March 1994 and subsequently reinvested all dividends and the value of rights issues, etc. (i.e. who neither took money out nor put money in) would, as at 31 March 2017, own 12,099 shares worth $35,209.

 

23 Year Track Record 

TrackRecord 1 v1.4 

 

Ownership

Approximately 25% of Infratil's shares changed hands over the year, slightly more than the prior year.

Infratil repurchased 2,510,000 shares for $7.0 million (average price $2.90) which were cancelled (along with 4,500,000 shares purchased in prior years). 237,521 shares were issued for $548,199 under incentive arrangements with operating company management.

New Zealand domiciled ownership was stable at slightly over 75%. The ten largest New Zealand institutional holdings amounted to 113 million shares as at 31 March 2017 from 140 million shares a year ago. The ten largest offshore institutional holdings rose to 91 million shares from 88 million a year prior. Interests associated with ex management employees and directors sold 12 million shares. 

 

31 March 2017

31 March 2016

 

Million Shares

%

Million Shares

%

NZ retail investors

276

49%

250

44%

NZ institutions

121

22%

149

27%

Management/other

38

7%

50

9%

Offshore¹

125

22%

113

20%

 

560

 

562

 

1. As at 31 March 2017 12.5 million shares held by interests associated with a retired director were also deemed to be held by an offshore party giving total offshore ownership of 24.5%.

Infratil has approximately 23,000 individual shareholders and 16,000 bondholders. 

Annual Report 2017
Annual Report 2017
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