Over the period, Infratil Energy Australia was sold for a net $671 million and assets previously held under “Other”, with a 31 March 2014 value of $19 million, were sold for $28 million ($26 million after tax). These included a property in New Lynn which had been developed in partnership with the Auckland Council and a shareholding in PayGlobal.
Changes to the values of Trustpower, Metlifecare and Z Energy are due to changes in their share prices on the NZX. $1.6 million was also invested in Metlifecare through the reinvestment of dividends. Changes in the value of NZ Bus reflect the difference between the companies’ net surplus over the period and payments to shareholders.
For 31 March 2015 “Other” includes iSite, Snapper, Infratil Infrastructure Property and Australian Social Infrastructure Partners (ASIP).
For 31 March 2015 a NZ$/A$ exchange rate of 0.9785 was used (0.9364 for 2014).
Over the period bank and vendor funding of Infratil and 100% subsidiaries reduced from a net debt position of $72.7 million on 31 March 2014 to a net cash position of $228.4 million on 31 March 2015 (including $308.6 million of cash).
As at 31 March 2015 Infratil and 100% subsidiaries had $356.2 million of committed bank funding facilities of which $276 million was undrawn. Over the year bank commitments were reduced from $784 million to reduce the cost of carrying excess facilities.
The following tables give the breakdown for the last two financial years of Infratil’s Adjusted EBITDAF, depreciation & amortisations, interest and tax (the adjustments are to include Z Energy’s contribution on a replacement cost basis and, for FY2015, to exclude the RetireAustralia acquisition costs). The third table below reconciles these figures with Infratil’s reported net parent surplus.
For FY2015 the average NZ$/A$ exchange rate was 0.9259. (0.8809 in FY2014).
Trustpower’s $53.3 million increase reflected increased Australian generation from newly commissioned/ acquired capacity.
Z Energy’s lower contribution was due to Infratil reducing its shareholding from 50% to 20% and Z Energy reporting lower earnings on an historic cost basis.
Last year's working capital movements included $107 million of distributions received from Z Energy and a $38 million gain from realised foreign exchange contracts.
Infratil deploys capital either through subsidiaries, such as Trustpower building the Snowtown wind farm, or by direct acquisition, such as the purchase of 50% of RetireAustralia.
Over the last five years Infratil has invested $2,285 million (and realised $1,138 million through asset sales). Of the $2,285 million 73% was through subsidiaries (buses, terminal facilities, electricity generation plant, etc) and 27% was external (buying shares in Z Energy, RetireAustralia, Metlifecare and via ASIP).
For the last two years, investments in Metlifecare and RetireAustralia relate solely to Infratil’s purchase of shares in the relevant companies. No internal investment activity by those two companies is included in the table, and nor is that of Z Energy since Infratil reduced its holding from 50% to 20%.
Infratil’s strategy for providing growing returns and value uplift for its shareholders is based on ongoing investment.
When shareholders consider whether Infratil is a yield or a growth stock, the answer is provided by a comparison of the respective allocation of funds. Over the period when $2,285 million was invested, Infratil and subsidiaries paid $705 million to shareholders ($336 million to Infratil shareholders and $369 million to minority owners of subsidiaries).
The presentation by CEO Marko Bogoievski at the Infratil 31 March 2015 Investor Day is worth watching. Investing in today’s market means finding niches which are not being chased by those with low rate of return expectations. By and large that means finding businesses where a high level of expertise and skill is required. Trustpower’s investment in Australian wind and hydro generation is an excellent case study. Trustpower has the right team of people to undertake a series of projects (the construction of Snowtown I and II and the acquisition of NSW generation facilities via Green State Power). None of the opportunities were “captive” and each has created value though a highly disciplined approach and by having options and skills not generally available to other infrastructure investors.
Over the year Infratil’s share price rose from $2.27 on 1 April 2014 to $3.18 on 31 March 2015. Fully imputed dividends of 7 cents per share and 19.5 cents per share were paid in June and December 2014.
Had the dividends been reinvested in Infratil shares at the time they were paid they would have provided a return of 13.9% per annum on the 1 April 2014 share price. The share price appreciation returned a further 40.1% per annum. The total return amounted to 54.0% per annum. The prior year returns were 4.2% per annum from dividends and -4.2% from share price movement.
Over the last five years Infratil’s compound return after tax to shareholders was 18.9% per annum. Over the 21 years since Infratil listed, compound after tax returns have been 18.3% per annum.
Year ended 31 March
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 2015, own 10,840 shares worth $34.474.
Approximately 20% of Infratil’s shares changed hands over the year (15% the prior year). New Zealand domiciled ownership remained at slightly over 75%. Excluding individuals and management, the largest 25 shareholders increased their holdings slightly to 48% up from 46%.
Infratil has approximately 23,000 individual shareholders including those whose shares are held by broker nominees and 16,000 bond holders, excluding bond holders who also hold shares. Approximately 100 of the owners are domiciled offshore.