2015 Annual Report Highlights

Infratil's businesses

Infratil owns energy, transport and social infrastructure businesses that provide essential services to individuals and communities.
If they are efficient and provide good services they create opportunities for profitable growth.


Trustpower’s renewable generation in New Zealand and Australia is sufficient to power 310,000 and 200,000 householders respectively.

Trustpower delivered a 19% increase in EBITDAF and a 13% uplift in underlying net earnings. The main source of the increase was the commissioning of the Snowtown II wind farm and the purchase of 105MW of additional Australian hydro and wind generation assets from the NSW government. Good retail growth in New Zealand also contributed. On the negative, generation on both sides of the Tasman was 8% below long-term expected average output, largely due to a lack of wind.

Now that it has been commissioned, Snowtown II has been independently valued at A$730 million, A$309 million above cost. The other generation assets that were acquired were also independently valued at A$23 million more than their A$72 million purchase cost.

Trustpower has exceptional talent in the structuring and execution of wind projects and in this field small nuances can make a substantial difference to the cost of plant, the amount of generation derived, and the revenue achieved. The excellent price paid for the generation assets acquired from the NSW government reflects the reality that few companies in Australia have Trustpower’s expertise in managing wind and hydro generation of this type.

Naturally it is hoped that further similar opportunities arise, but one impediment to this is the Australian Government review of its renewable energy targets. The original goal was to get to 41,000GWh of renewable generation by 2020 (about the same level as New Zealand and about 20% of Australia’s total). Although 17,000GWh has been commissioned the target has now been provisionally reduced to 33,000GWh. When this is confirmed in legislation it is hoped that the greater regulatory certainty will allow Trustpower to successfully progress the development of additional wind farms. It has sites in South Australia, Victoria and New South Wales which are at the latter stages of consenting and have a total potential capacity of 890MW (Snowtown II installed capacity is 270MW).

Over last year Trustpower increased its New Zealand electricity sales by 12% in volume to 8% more customers. Trustpower has also achieved considerable success with its offer of a bundle of services so that a customer can choose any of electricity, gas, internet and telephone. 52,000 of Trustpower’s customers now take more than one service, up from 38,000 a year prior.

Trustpower table

Financial Trends

EBITDAF & Generation

Year ended 31 March

Over the decade Trustpower’s EBITDAF has risen from $185 million to $331 million and its generation output from 1,791GWh to 3,681GWh.

Trustpower EBITDAF & Generation
EBITDAF per unit of Generation and the Average Market Price of Electricity

Year ended 31 March

New Zealand derived EBITDAF per unit of generation was about the same in FY2015 as a decade earlier. Stable Australian EBITDAF per unit of generation largely reflects the terms of Trustpower’s long-term electricity sales contracts.

Trustpower EBITDAF per unit of Generation and the Average Market Price of Electricity
Investment and Generation GWh

Year ended 31 March

Generation has risen from 1,791GWh to 3,681GWh due to $1.3 billion of investment over the period.

Trustpower Investment and Generation GWh

Wellington Airport

A foundation year. Regulatory approval of prices. Terminal and passenger services upgrade. 16% increase in international airline capacity. Joint venture with Wellington City to consent and investigate a runway extension to accommodate long-haul air services.

Wellington Airport progressed a number of initiatives that will have significant impact over the next few years. $22 million was invested in the first stages of a $250 million upgrade to the passenger experience.

Over the next four years it is expected that there will be a marked expansion of the domestic terminal and the international terminal arrivals area, the construction of a weatherproof multi-level car park, and it is hoped that a hotel will also be built to directly connect into the terminals.

The need for the expansion was highlighted on 27 March 2015 when the Airport experienced its busiest ever day when over 20,000 passengers arrived or departed.

Three new international air services were confirmed. Towards the end of the 2015 March financial year Jetstar commenced flying between Wellington and Coolangatta and Melbourne, and in June 2015 Fiji Airways is to start services to Nadi (with on-links to Los Angeles). In total these services will expand the Airport’s international capacity by 16%. Historically the growth in passenger numbers on any route has been strongly influenced by new entrant airlines. Inevitably they have a different offer than incumbents and seek out different potential travellers. They also stimulate incumbents to lift performance.

The domestic market is also changing as Air New Zealand changes its aircraft fleet and introduces bigger aircraft onto the more travelled routes while stopping services to smaller centres. Markets dislike a vacuum and a number of second tier carriers are expanding their networks to fill the gaps left by Air New Zealand.

On the regulatory front the Commerce Commission affirmed the acceptability of the airline charges set by Wellington Airport for the period June 2014 to March 2019. The annual disclosures required by the Commission of New Zealand’s three main airports make interesting reading as they now cover the four years since 2011. Wellington Airport is rated highly for its quality of service and is by far the most efficient (measured as cost per passenger).

The most attention grabbing development of the year was agreement between the Airport and the Wellington City Council to jointly fund a review of an extension of the runway and the application for resource consents to allow construction to occur. The immediate aim is to have construction consented by mid 2016, but there are detractors, including airlines that don’t favour Wellington gaining long haul services because they are concerned about the effect on services that use other airports. The project is explained in detail in the Infratil September 2014 Update.

Airport table

Financial Trends

EBITDAF & Passengers

Year ended 31 March

Over the decade EBITDAF rose from $47 million to $82 million. Passenger numbers lifted by 885,000 comprising 17% more domestic and 37% more international.

Airport EBITDAF & Passengers
Aeronautical & Services Income per Passenger

Year ended 31 March

Wellington Airport’s 46% increase in EBITDAF/Passenger (to $15.04) reflects better passenger services, a doubling of property income, and good cost control. Airline charges per passenger were almost static in real terms over the decade.

Airport Aeronautical & Services Income per Passenger
The Cost of Travel

Year ended 31 March

The last decade has been a game of two halves as regards air travel costs for Kiwis. For five years domestic and international fares moved in unison, but since December 2010 Statistics New Zealand figures show that domestic air travel has become 44% relatively more expensive than international travel.

Airport cost of travel new2

NZ Bus

10th year of ownership, a decade of achievement. 33% passenger increase on Auckland services. Average fares down 13% in real terms. No increase in real costs per passenger. New long-term contracts will provide the opportunity for the next decade.

NZ Bus experienced strong 6% patronage growth in Auckland and a more modest 1% increase in Wellington/Hutt Valley.

In both regions NZ Bus played its part with better buses and driver training and improved systems. Auckland’s much superior growth rate reflects Auckland Transport’s network wide investment and focus on lifting patronage.

What is apparent from the NZ Bus figures is that bus public transport could do much more for much less than the alternatives being progressed by the transport agencies in both regions.

Over the five year period consumer prices rose 9% and average hourly wages 14%. Wellington/Hutt’s population rose by 4% and Auckland’s by 6%.

The cost of markedly expanded bus based public transport in Auckland, Wellington and the Hutt would be a small fraction of the cost of either building more roads or expanding rail. Regrettably both of those activities receive much more political support and public money.

However, at least one positive regulatory change is due for bus public transport. Over the next year new contracts will finally be implemented after literally a decade of wrangling. The contract uncertainty has probably impeded transport regulators from providing more funding to bus services, and the lack of certainty has hampered operators from investing in their businesses.

The contract details which have been provisionally disclosed offer bus companies medium-term certainty (6 to 12 years) and seem likely to transfer most patronage and fare risk to the transport agencies. Today if someone doesn’t catch the bus, it is the operators who are at risk. Under the new contracts it will be the rate payers’ problem.

Under the new regime a successful operator will provide a safe, reliable, low cost service and this is the focus of NZ Bus management.

FY2015 EBITDAF was reduced by $5 million due to one off initiatives and non- recurring costs associated with preparing for the new contracting regime.

NZ Bus achieved the ACC’s highest standard of safety accreditation.

NZbus table 1


NZbus table 2

Financial Trends

​EBITDAF & Passengers

Year ended 31 March

Over the decade passenger trips were stable in Wellington/Hutt, while in Auckland they increased 17% (excluding services NZ Bus no longer provides, Auckland growth was 33%). By coincidence EBITDAF per passenger trip was the same in 2006 as in 2015, which in both cases was unsatisfactory.

NZBus EBITDAF & Passengers
Revenue & Costs

Year ended 31 March

Since 2006 total fare income has risen 26% (almost exactly the same as the CPI) while the average individual fare has risen less than half the CPI at 12%. Contract income is up 53% or 37% per passenger. Costs per passenger are unchanged in real terms from a decade ago.

NZBus Revenue & Costs
Income & Costs per Passenger

Year ended 31 March

Per passenger, NZ Bus’s contract income has risen from $1.11 to $1.52/pax. Passenger income has increased from $1.94 to $2.18/pax. Operating costs per passenger have risen from $2.59 to $3.24 ($3.16 if FY2015 one off costs are excluded).

NZBus Income & Costs per Passenger

Other Investments

​Z Energy

(20% Infratil ownership)

For the year ended 31 March 2015 Z Energy reported $241 million EBITDAF (replacement cost basis) up from $219 million the previous year and declared dividends of 24.2 cents per share up from 22 cents per share previously.

Improved refining margins contributed $7 million to the uplift and further improvement from this source is anticipated once the $365 million upgrade to the refinery is completed later this year.

Otherwise Z reported higher sales, margins and ancillary income as a result of its extensive capital spending programme over the last five years (which has averaged $63 million per annum). Z is on track to generate up to a further $40 million in EBITDAF gains from its various improvement projects.

Subsequent to balance date, Z announced that, subject to regulatory approval, it will acquire the New Zealand downstream operations of Chevron for $785 million. This would increase Z’s earnings and allow significant cost savings.


(20% Infratil ownership)

Metlifecare made a $16 million equity accounted contribution to Infratil over the year.

The Company’s half year performance to 31 December 2014 showed a 70% increase in underlying profit to $26 million, including realised resale gains and development margins of $17 million up from $10 million for the same period the previous year.

Over the six months 231 units gained new residents, including 29 units for the first time and construction was underway on a further 198 units and care beds; which is consistent with Metlifecare’s goal of 5% per annum capacity growth.

The Company’s total development pipeline comprises 1,089 units and 370 care beds, and additional land holdings are being sought in the Auckland area.

The average gain between the payment to outgoing and incoming residents rose to $132,000 per unit ($111,000 a year prior). 

The average Embedded Value of occupied units rose to $147,000 (this is the amount Metlifecare expects to receive from the re-occupation of all its units in due course) up from $124,000 a year prior.


(50% Infratil ownership)

Over the three months to 31 March 2015 RetireAustralia delivered to the acquisition forecast with EBITDAF of A$6.6 million and operating cash flows of A$11.2 million (before financing and acquisition costs). The net surplus before acquisition related costs was A$3.1 million, which was reduced to a loss of A$11.4 million after taking those costs into account. (NB: to reconcile these figures to those shown elsewhere in this report divide the amounts by 2 to reflect Infratil’s 50% ownership).

For the year to 30 June 2015 it is forecast that RetireAustralia will roll over the occupation of approximately 350 existing units and will sell about 80 rights to occupy new units. The quarter’s performance was consistent with this expectation.

After 31 March RetireAustralia refinanced its A$250 million of medium term debt facilities which will reduce its interest cost.

Two independent directors were appointed to assist RetireAustralia expedite development plans and to expand its care offering, while a new Chief Executive is being sought to replace Tim Russell, the founding CEO, who has stepped into a consultancy role.

Infratil Infrastructure Property (IIP)

(100% Infratil ownership)

IIP was established to provide specialist focus to the ownership of land utilised by Infratil subsidiaries, which to date mainly comprises the depots used by NZ Bus. 

Over the last year IIP completed stage one of the redevelopment of land previously used for bus parking in New Lynn, Auckland and the acquisition and leasing to NZ Bus of a new depot in Thorndon, Wellington.

In both cities, the availability of large flat sites is constrained and land use and values are changing which makes it a challenge to minimise the cost of bus depots, on the one hand, while maximising the value of the land on the other hand. 

The redevelopment of the Kilbirnie and Auckland City bus depots are particular goals for FY2016.

The New Lynn development was undertaken in joint venture with Auckland Council and entailed both parties contributing land no longer required for public transport. IIP developed the site into a medical centre, car parks and residential units, which have been partially sold down for $20 million, realising a $5 million profit. Sale of the rest of the property is expected to occur in FY2016.

Snapper Services

(100% Infratil ownership)

Snapper was originally established to provide cost-efficient ticketing systems to New Zealand public transport operators.

It has successfully executed this mandate, including the integration of smartcard tickets with the use of mobile phones. This work gained international recognition with receipt of the Transport Ticketing Technology of the Year award in London earlier this year.

This success also resulted in Snapper, in partnership with Vix Technologies, securing a contract to provide ticketing and payment services to the National Transport Authority for the Republic of Ireland.

In a technology sector which is changing quickly, Snapper has developed and installed a suite of excellent payment and information products thanks to the calibre of its team.


(100% Infratil ownership)

iSite provides a third of New Zealand’s commercial outdoor advertising and is championing the shift from static to digital billboards. 

Reflecting its professionalism and focus on measuring results for its customers it won the industry’s Media Business of the Year award for 2015 against competition from Media Works and TVNZ.

iSite’s EBITDAF contribution to Infratil rose to $5.2 million from $4.7 million the previous year.

Perth Energy

(80% Infratil ownership)

The Western Australian electricity market is both physically remote from those of the eastern states and was set up with a regulatory structure which placed much greater power in the hands of state owned entities and regulatory agencies. Over 2014 this model was comprehensively reviewed and found wanting in several areas. Whilst the government has not supported all of the recommendations put forward by the review, it is in favour of introducing full retail contestability into the electricity market, which is positive for Perth Energy.

Material changes are not expected to be implemented before 2017 and are being closely followed. In the meantime Perth Energy had a satisfactory year in FY2015. 

Retail revenue was down 10% and EBITDAF fell 12% to A$13.1 million, but external debt was reduced to A$51.2 million and the holding value of Infratil’s stake was unchanged at NZ$76.7 million.

Australian Social Infrastructure Partners Fund (ASIP)

Australian state and federal government commitment to use Public-Private Partnership funding for schools, hospitals, roads, etc. is expected to provide investment opportunities that offer attractive risk/return terms.

However, the technical complexity of the projects requires specialist expertise so Infratil has chosen to progress its investments through ASIP.

To date ASIP has invested in two projects and has bid to participate in a number of others.

The two which were successful were:

  • the A$232 million Queensland Aspire Schools initiative 
  • the A$1,850 million Royal Adelaide Hospital. 

Construction of the schools is now complete and the Queensland government is making distributions to capital providers.

The Hospital is expected to be commissioned in 

Infratil’s contribution to Aspire Schools was A$8.8 million and over FY2015 A$0.6 million of distributions were received on this capital.

Infratil’s contribution to the Royal Adelaide Hospital now totals A$19.1 million and the first distribution on this is expected in FY2017.

It is hoped that over FY2016 ASIP is successful in gaining a role with additional projects.

Full Annual Report 2015
Full Annual Report 2015
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