17 May 2011
The last year was perhaps Infratil’s most successful with regards to earnings, value growth and investment in future value creation. Supporting these outcomes was comprehensive liability and risk management and the unheralded but crucial strengthening of the management team.
The standout event was the acquisition of Z Energy in partnership with the New Zealand Superannuation Fund. The 50% holding cost Infratil $210 million and for the year contributed an exceptional reported return of $116 million ($55 million earnings and $61 million asset revaluations). More importantly the Z Energy team has developed a comprehensive strategy to grow the business through investment in its distribution, logistics, and marketing capability.
The other highlight was the $55 million earnings contribution from Infratil Energy Australia. Given that Infratil formed this company as a start-up several years ago it is gratifying to see the returns now resulting from the capital and effort which have been committed.
The economic and regulatory backdrop was generally difficult and all of Infratil’s businesses faced material challenges. Indications of the future are more positive: the ongoing deregulation of Australia’s energy market; New Zealand’s introduction of the Emission Trading Scheme; continued integration of the Australasian aviation market; indications that the New Zealand Government is slowly opening the door on more private ownership of state owned businesses and infrastructure; the gradual economic recovery; and a more positive regulatory approach in Auckland towards privately provided public transport.
Infratil’s notable financial milestones for the year included:
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