17 Nov 1999
The consolidated unaudited net profit after taxation before investment realisations for the six months ended 30 September 1999 totalled $4.82 million. Including investment realisations the consolidated net profit after tax was $26.98 million. This result is not comparable with the previous year due to the consolidation of Wellington International Airport Limited ("WIAL") for the first time. The controlling interest in WIAL was acquired on the 31 March 1999 and trading results have been consolidated since that date.
Dividends received during the period increased by 17% from $6.83 million to $7.98 million. The increase in dividend income is due to a dividend of $1.90 million from Natural Gas Corporation Holdings Limited ("NGC") and an increase in the dividend from Powerco Limited. This figure does not include a cash dividend of $4.95 million received from WIAL, which is reflected in the parent company accounts.
Investment realisations of $22.17 million for the six months resulted mainly from the sale of 16% of CentralPower Limited ("CentralPower").
Consolidated EBITDA (earnings before interest, tax, depreciation and amortisation, not including investment realisations) was $14.39 million, and interest of $1.83 million was paid on the Infratil Infrastructure Bonds and interest of $4.36 million paid on bank debt.
A fully imputed interim dividend of 2.75 cents per share and a special fully imputed dividend of 1.25 cents per share will be paid on 10 December 1999 to all shareholders on the register as at 5.00 pm, 3 December 1999. The payment of the special dividend reflects the policy of passing through imputation credits to shareholders where possible and also reflects the positive financial results for the period, including the gain on the sale of the CentralPower investment. Last year's interim dividend was 2.75 cents per share.
INFRASTRUCTURE BONDS AND WARRANTS
In May 1999 the Company completed the 1:10 non-renounceable issue of Infrastructure Bonds and Infratil Warrants at $1.40 to shareholders.
As at 30 September 1999 there were 47,122,849 Infrastructure Bonds on issue and 47,118,229 Infratil Warrants. At this date, the Infrastructure Bonds were trading at $1.34 and the Warrants at $0.38, giving a 'package' value of $1.72.
BALANCE SHEET AND INVESTMENTS Infratil's Statement of Financial Position at 30 September 1999, with net assets of $183 million and total assets of $501 million, reflects the impact of the consolidation of WIAL and the issue of Infrastructure Bonds. If investments were valued at current market value the net assets would exceed $400 million.
Domestic passenger numbers of 1.60 million in the six months to 30 September 1999 were 1.8% higher than the equivalent six months to 30 September 1998. Over the same period international passengers increased 3.6% to 0.22 million. The low domestic passenger growth reflected similarly low economic activity over the period, with the Ansett pilots' strike and lock out also impacting in August and September. A slowing of international passenger growth was reflected in a flattening of international capacity. However, the very high load factors on the transtasman routes suggest some growth is currently being lost because the airlines are prioritising other routes.
The opening of the first phase of the new Terminal Area Development on 29 June 1999 resulted in major increases in concession revenue. In the six months to 30 September 1999, WIAL income from duty free increased by 20.4% over the prior equivalent period, carparking by 13.3%, rental cars by 43.8% and food and beverages by 139%.
Development continues at the airport, with international inbound duty free facilities due for completion in December 1999 and new outbound duty free facilities to be completed by June 2000. A new warehouse, leased to AEI will be completed by the end of November 1999.
TRUSTPOWER LIMITED ("TRUSTPOWER")
Infratil and its electricity industry partner Alliant International see TrustPower as pivotal to their continued involvement in the further rationalisation of the New Zealand electricity generation and retail sector. Accordingly, during the period Infratil and Alliant International worked with TrustPower and other major shareholders to consider options for future strategies to enhance the position of the Company.
PORT OF TAURANGA LIMITED ("PORT OF TAURANGA")
Port of Tauranga has had a period of strong performance. In particular, key strategies which have a long term positive impact on the Port's positioning and value have been implemented successfully. At the recent AGM, the Chief Executive noted that total trade for the first quarter was 24% ahead of the previous equivalent period, with a 122% lift in container numbers.
The opening of METROPORT in South Auckland has been very successful. The operation's core customer, ANZDL, started its operations from early June. The operation is performing effectively and ANZDL is exceeding its own and the Port's expectations in terms of volumes. The success of METROPORT has led further shipping lines to begin or increase trade through the Port, further substantiating the Port's position as a major container operation.
In recent months, core bulk export trades have also increased markedly, reflecting a turnaround in Asia's fortunes, far earlier than Infratil had anticipated.
During the six month period, Infratil invested approximately $50 million to acquire a 6.3% shareholding in NGC. Infratil expects NGC to expand its energy interests significantly in the medium term to ensure its competitive involvement in the energy supply industry.
On 30 July 1999 Infratil announced that it had entered into an unconditional contract for sale and purchase with Palmerston North City Council and CentralPower Electricity Trust in respect of 16% of its 21% shareholding in CentralPower. This transaction settled on 28 October 1999.
Infratil was required to sell its CentralPower shares to comply with the Electricity Industry Reform Act 1998. CentralPower, by selling its generation and electricity retailing assets, had become an electricity lines business and the Act specifically prohibited investors like Infratil holding significant stakes in both lines and generation or retailing businesses. Infratil was able to dispose of its interest in CentralPower in an orderly manner, thus enhancing shareholder value.
The sale price was at an average $4.31 per share with the total selling price being $45.8 million. The sale of the shareholding was achieved at a significant premium over market transactions at that time with recent sales of CentralPower having been at $3.30 per share. Infratil's average cost price per share was $2.10. The sale value reflected the strategic nature of Infratil's position, something that the Company strives to achieve with all its investments.
The performance of Infratil's major investments over the half has been excellent. The outlook continues to be bright. We expect further changes involving TrustPower and its position in the electricity industry. Both WIAL and Port of Tauranga appear poised for good operating results. In addition, there are attractive investment opportunities for the Company to consider.
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