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Infratil Monthly Operational Report
30 July 2010
The first quarter of the financial
year was positive for Infratil's businesses, operationally and financially.
It was an active period for the Company
encompassing closing the Shell transaction, a Special Meeting which
voted through changes to Infratil's constitution, the receipt of
$42 million from the exercise of warrants issued in 2004, the first
dividend paid with a DRP in operation, the regulatory steps required
for listing in Australia and delivery of the annual report to share
and bondholders. Share and bondholders will also have received the
notice of meeting for the Annual Meeting which is to be held in
Wellington on 11 August. The period also saw the retirement of Anthony
Muh from Infratil's board, although he remains an alternate to Duncan
The annual report is only one part
of Infratil's communication programme, albeit the most important
as it brings together a full explanation of the group's strategy
as well as summarising all matters germane to asset and liability
management and providing financial records of the year to 31 March
2010. In July and August members of the Infratil management team
will be presenting to investors in centres around New Zealand and
over 2,000 people are expected to attend these briefings. In March
Infratil again won the INFINZ corporate communicator award.
It was very pleasing to see that diver Gabe Armstrong-Jones was
recently selected for the Commonwealth Games team. Gabe is a member
of the Wellington High Performance Aquatics programme which is supported
by Infratil and Wellington Airport.
Work commenced on the Mahinerangi wind
farm and further progress was also delivered to have TrustPower's
hydro projects fully consented.
The introduction of the ETS appears to have resulted in a small increase in wholesale electricity prices, which is of benefit to TrustPower as its renewable generations facilities do not produce CO2 and consequently do not incur an emission cost.
Some commentators have mistakenly claimed that the ETS is a waste
of time/money as it will not change consumer behaviour. They miss
a key point, the ETS has and will change the behaviour of generators.
Anticipation of the ETS was a material factor behind the development
and construction of wind, geothermal and hydro generation facilities
over the last five years. Without the ETS (or something with the
same effect) there is little doubt that New Zealand would have seen
(and would see) more construction of long-life coal and gas-fired
New Zealand's CO2 emissions per unit of electricity consumed are amongst the lowest in the world (about a sixth of Australia's), which will be a significant advantage to the country as emission prices rise in future.
Infratil Energy Australia
IEA launched its new national brand
LUMO to replace the previous state
based names. With retail accounts approaching 425,000 it has become
apparent that a national brand was required for both better name
recognition and the ability to partner in promotions with national
organisations. Lumo has recently supported the Bicycle Network in
support of a National road safety campaign - Lumo Energy Light Up!,
aimed to promote safety and awareness of cyclists at night time
across Melbourne, Brisbane and Adelaide. Lumo is also the founding
partner of the "Bikes for Bush foundation", whose aim
is to promote healthy living and an active lifestyle in remote indigenous
communities through cycling.
Over the quarter wholesale energy prices
continued to decline in the states where IEA is active. This is
a bonus for IEA which has no investment in base-load generation
and can "cherry pick" the least cost energy source for
its retail customers.
After last year's back office and
excess-gas issues, this year has been easier, in particular wholesale
gas prices have been a little firmer and IEA's excess capacity has
been lower. A very detailed review of IEA's back office has indicated
that credit and collection issues are performing as expected, that
the back office operations cost about the same as similar services
at much larger energy retailers, and that IEA has largely avoided
the onerous set-up costs many larger companies seem to incur.
Both of IEA's generation projects remain
on track for completion on time and budget. Over the period IEA's
West Australian Kwinana station (which is expected to be commissioned
in the next quarter) received a benefit when the State energy agency
increased its schedule of capacity payments.
Over the first 3 months of local ownership
the focus at Greenstone Energy was on delivering smooth operational
transition and the integration of new members to the management
team. Whether it was due to public support of the change of ownership,
or the myriad other factors which influence consumers in a competitive
market (especially price) the period also saw Greenstone achieve
absolute and market-share growth.
A key feature of Greenstone's strategy
is to expand services and capacity by developing investment opportunities
and over the quarter work began on a new petrol station for Bethlehem,
near Tauranga, a new truck refuelling station opened near Whangarei
and Greenstone acquired a further petrol station on Auckland's North
Shore. Greenstone's access to locally refined fuel has also increased
as a result of the recently commissioned Refinery expansion. In
addition to these initiatives, the first three months of local ownership
has seen approximately 20 jobs brought onshore.
From July Greenstone (along with the other fuel companies) became
liable for the emissions from use of the fuels it sells and this
has been reflected in pump prices. It is estimated that Greenstone's
total annual liability under ETS could amount to as much as $100
million and this is resulting in a review of bio-fuels as such fuels
do not create an emission liability.
Greenstone also began preparation for a bond issue to repay bank
debt. While Greenstone has facilities from ANZ, BNZ, HSBC and Westpac
through to 2013, bond funding has the attraction of being longer
term and providing diversification. The response from brokers and
investors to the announcement of this intention was very positive.
June patronage in the Northern Region was 6% higher than recorded last year with much of the increase coming from tertiary students and seniors, especially in Auckland’s west.
||3 months to 30 June||12 months to 30 June
Patronage in the Southern Region was 4% higher than the prior year with the Airport Flyer continuing to be the route with the strongest increase.
||3 months to 30 June
||12 months to 30 June
On 27 July members of the Wellington
Tramways and Manufacturing and Construction Workers Unions met to
consider two new Collective Employment Agreements which had been
negotiated by NZ Bus and the unions over the previous four months.
The Agreements were to cover workshop and bus operator staff to
the end of 2012 for the Hutt Valley and beginning of 2013 for Wellington.
The negotiation process to reach this position was very constructive
but regrettably the workshop and bus operators voted not to accept
Agreements. NZ Bus will now be re-engaging with the unions to produce
an outcome which is acceptable to the staff and other stakeholders.
While the “no” vote was a disappointment, this year's discussions
have been cordial and have resulted in minimal disruption of services.
In June NZ Bus chief executive Bruce Emson joined the pledge to
Zero Harm Workplaces an initiative launched by John Key and Kate
Wilkinson with the goal of improving workplace health and safety.
NZ Bus also launched an initiative to increase the training and
responsibilities of group supervisors.
Snapper instigated a trial with East West Ferry, GO Wellington and Valley Flyer for integrating ticketing/fares between the ferries and buses.
A different type of trial was undertaken at the Roller Derby held
at TSB Arena in July. Members of the over 3,500 fans with Snappers
had access to a fast entry queue and were able to purchase food
and beverages more quickly than those with cash or eftpos. Not surprisingly
given the high-speed adrenalin nature of the sport, Snapper users
were very appreciative of their reduced queue time. It will not
be long before all Wellington event venues should have Snapper entry
and payment options to reduce the aggravation of missing the first
ten minutes of a game through poor ticketing systems and having
to queue the entire half-time break to buy chips.
Snapper remains on track to be available on local taxis in late August. This is likely to become an increasingly attractive payment option as new chip and PIN technology on credit cards slow down that form of payment.The Snapper website has been renewed to make it easier to top up online with the Feeder which can be used on computers using Windows and Mac operating systems.
Wellington Airport joined a group
representing Wellington stakeholders concerned about the proposed
Alliance of Virgin Blue and Air New Zealand. The common interest
of the group's members is that Wellington retains good air links
with Australia. Regrettably the airlines' request for regulatory
approval for the Alliance can avoid scrutiny by the New Zealand
consumer protection agency and consequently is not subject to the
normal review entailed by an application to the Commerce Commission.
The Wellington Stakeholder submission can be viewed here
|| June Domestic
3 months to 30 June
In June, passengers were up 4% relative to the
year prior on a capacity increase of 1%. Year-to-date, passengers
were up 1%.
Domestic passengers in June rose 5% on the same month last year.
Auckland traffic was flat, Christchurch and regional routes increased
7% and 9% respectively. Capacity was up 1% on the trunk and down
3% on regional services.
International passengers increased 3%
in June compared to the previous year (which included now discontinued
services to Coolangatta and Nadi). Melbourne passengers grew by
4% on a similar lift in capacity, Sydney had a 13% increase in passengers
with additional capacity provided by Pacific Blue, and Brisbane
passengers fell 4% with a similar decline in capacity.
Despite the challenges of the Wellington weather, the finishing
of the work on the Rocks international terminal extension is running
to schedule. Visitors to the Airport are becoming aware of its visual
impact as the copper cladding becomes visible and international
passengers leaving Wellington will soon also become aware of the
significant improvement of facilities.
Passenger numbers were up 7% in June
relative to the same month last year driven by the increased leisure
capacity. Glasgow's sunshine routes are performing particularly
well with strong load factors and forward bookings.
Freight volumes were 2% ahead of those anticipated
3 months to 30 June
3 months to 30 June
Freight traffic through Manston rose
12% against the previous year for the same month, with the rolling
3 month total up 5%. The recent demise of MK Airlines is beginning
to be compensated by Egypt Air and Meridian who have increased capacity.
The Flybe Edinburgh service continues to attract good passenger
loads and is running ahead of expectation with encouraging forward
|| June Passengers
|| Total Freight
3 Months to 30 June
| Total Passengers
3 Months to 30 June
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