16 May 2000
Infrastructure & Utilities NZ Limited's ("Infratil") consolidated net profit after tax and investment realisations for the year ended 31 March 2000 totalled $34.2million, compared with $26.6million for the previous year. Surplus on investment realisations was $22.2million from the sale of 16% of CentralPower Limited.
Net surplus after tax and minority interests, but excluding investment realisations, for the period was $12.0million. Consolidation of Wellington International Airport Limited (WIAL) for the first time makes comparisons with previous years not relevant.
Total dividends received from the Company's investments, excluding WIAL, increased by 15.7% to $23.0million from $19.9million for the previous year. This result was based on the strong operating performances of Infratil's major investments.
Infratil consolidates WIAL. The accounting treatment of Infratil's other investments reflects dividend income. Infratil's Statement of Financial Position shows its investments at acquisition cost, in aggregate $165.4million below market value as at balance date.
A final dividend for the year of 3 cents per share and a further special dividend of 2.25 cents per share, both fully imputed, were paid 24 March 2000 to ensure that those shareholders paying the maximum rates of taxation were not disadvantaged.
Total dividends paid for the year were 9.25 cents per share, fully imputed, equivalent to a gross dividend of 13.8cps for a full tax paying shareholder. Dividends paid for the year ended 31 March 1999 were 8 cents per share, fully imputed.
The dividends paid for the year reflect Infratil's financial results and position, and its policy of, when possible, passing through imputation credits to shareholders.
The last year has been one of significant progress at each of our key investments in energy, airports and ports. At a shareholder level Infratil has been active in consolidating its position in TrustPower Limited, WIAL and Port Of Tauranga Limited and otherwise rationalising its portfolio.
During the year the major shareholders of TrustPower reached agreement in respect of appointments to TrustPower's Board and Chris Lindell (Director of Infratil and Alliant Energy NZ) and Bruce Harker (of Morrison & Co) were appointed as TrustPower Directors. Coincidentally the other major shareholders in TrustPower also nominated appointments. Infratil and its partner Alliant Energy jointly own 43% of TrustPower.
Infratil and Alliant are actively working to see TrustPower gain the benefits of stable ownership and the associated certainty that will provide to its staff and customers. TrustPower is performing strongly even with very low electricity prices and strong retail competition.
During the year Infratil acquired a 6.7% stake in Natural Gas Corporation Holdings Limited (NGC) for $52.9million. Subsequently NGC committed to make an $824million investment into TransAlta. Infratil did not support the price NGC was to pay for this investment and voted against the acquisition. Consequently Infratil exercised its buyout rights under the Companies Act 1993 and NGC offered to purchase Infratil's 26.6million NGC shares at $1.30. Infratil rejected this offer and the final price is to be determined at arbitration.
Infratil sold 16% of CentralPower and effectively signalled its exit from the electricity line or distribution industry. This was required under the Electricity Industry Reform Act 1998, and has occurred at prices that have been very satisfactory to Infratil. The CentralPower sale realised a $22.2million profit relative to the book value. Infratil retains investments in CentralPower and Powerco with a book value of approximately $14.5million and a market value of $29.1million, and it is expected that the orderly realisation of these investments will also occur.
On 31 March 1999 Infratil acquired 39.6% of WIAL to take the Company's holding to 66%. This is therefore the first full year of WIAL consolidation with, and contribution to, Infratil.
WIAL's new terminal opened on 29 June 1999. Although still not yet fully operational it is producing a major increase in revenue for WIAL. In the six months to 31 March 2000 WIAL income from retail concessions increased by 50% over the prior equivalent period and carparking by 42%. Income from aeronautical activity was adversely effected by the Ansett strike and the airlines recent practice of not putting on enough international capacity to satisfy demand.
In 1999 Port of Tauranga enjoyed its strongest ever year both in terms of throughput and profitability. In the six months to 31 December 1999 operating revenue was up over 43% while net cashflows from operating activities increased 79% to $17.3million for the six months. Volumes across all of the Port's major export products have recovered and the South Auckland METROPORT has been notably successful. During the year Lloyd Morrison of Morrison & Co was appointed to the Board of Port of Tauranga.
To finance the 39.6% stake in WIAL acquired on 31 March 1999 Infratil issued $66million of Infrastructure Bonds maturing March 2004. This was followed by the establishment of a Bond Programme that has been well received by the investing community. As at 31 March 1999 $55.8million of Infrastructure Bonds had been issued under the Programme. This funding has enabled Infratil to reduce bank debt and to establish a core of long term funding that complements the nature of Infratil's investments and the stable cashflows generated by its utilities.
The 2000 Annual Meeting will be held in Auckland on Monday, 7 August.
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