17 May 2001
Infratil's consolidated net profit after tax and investment realisations for the year ended 31 March 2001 was $16.5million, compared with $34.2million for the previous year. The result includes consolidation of Wellington International Airport Limited ("WIAL") and, for two months, Glasgow Prestwick International Airport ("Glasgow Prestwick").
Consolidated earnings before depreciation, interest and tax ("EBDIT"), excluding investment realisations and after deducting minority interests, rose 7.6% to $35.5million. While EBDIT has risen, net profit after tax has declined due to lower realisation gains, higher interest costs, and lower dividend receipts. Realisation gains vary from year to year depending on the particular timing and scale of sales. Higher interest costs relate to investments that have occurred over the last 18 months. Dividend income has fallen due to the sale from higher yielding investments, principally CentralPower, and more growth orientated reinvestment.
Total dividends received from investments, excluding WIAL, were $18.2million compared to $23.0million for the previous year. If interest income and dividends received from WIAL are included the figures rise to $27.7million and $31.0million, respectively.
Infratil's direct interest costs increased to $13.0million from $9.4million. The interest cost mainly relates to the $150.6million of Infrastructure Bonds on issue. The interest costs consolidated from WIAL and Glasgow Prestwick were $11.0million compared to $6.6million for the previous year.
The result includes net gains from investment realisation and revaluations of $11.6million, down from $22.2million in the previous year during which Infratil sold most of its CentralPower investment. This year Infratil gained from the sale of its residual CentralPower and most of its Powerco shares, while incurring losses principally from the sale of Natural Gas Corporation ("NGC") shares and writing down to market its residual NGC holding. This did not include the NGC shares that are the subject of arbitration. Infratil received $1.30 for each of these 26.6million shares with arbitration to decide what level of additional payment is to be made. Infratil's residual asset value for these shares is equivalent to $0.32 per share, being the difference between their average cost of $1.62 and the $1.30 sale proceeds received to date. The outcome of the arbitration is expected at the end of May 2001.
STATEMENT OF FINANCIAL POSITION AND FUNDING
Infratil's Statement of Financial Position at 31 March 2001 shows equity of $223.5million and total assets of $613.2million, including the consolidation of WIAL and Glasgow Prestwick. Excluding minorities and valuing those two investments at cost and other investments at current market prices results in net tangible assets of $322.5million ($1.74 per Infratil share).
During the year, Infratil issued a further $29.2million of Infrastructure Bonds before closing the programme in August 2000. No issuance occurred under the authorisation granted by shareholders at the 2000 Annual Meeting. It is intended to renew this authorisation at this year's Annual Meeting, as this form of funding remains attractive given the long term nature of Infratil's investments.
A final dividend of 3 cents per share and a further special dividend of 2.25 cents per share, both fully imputed, will be paid on 8 June 2001 to all shareholders on the register as at 5.00 p.m. 1 June 2001.
The final ordinary and special dividends, together with the interim dividend paid on 24 November 2001, represent a total distribution for the year of 9.25 cents per share, fully imputed, equivalent to a gross dividend of 13.8 cents per share for a full tax paying shareholder.
The dividends paid for the year reflect not only Infratil's financial results and position but also its policy of, when possible, passing through imputation credits to shareholders.
SHARE AND BOND BUYBACK
During the year Infratil bought back 3.52million shares at an average price of $1.16 each. These shares were cancelled at 31 March 2001. No Infrastructure Bonds were repurchased.
WELLINGTON INTERNATIONAL AIRPORT LTD (67%)
WIAL's EBDIT to 31 March 2001 increased 23.6% to $23.6million from $19.1million.
The improvement reflected growth in the domestic aviation market over the second half of the year, Qantas Airways' increase in transtasman capacity, good performance by retail and other airport user services, and rigorous cost containment.
The result would have been over $2.0million higher but for the combined effects of the default of Qantas New Zealand, the costs of the Commerce Commission inquiry, and the failure of Ansett New Zealand to re-establish market share following the pilots' strike in 1999.
GLASGOW PRESTWICK INTERNATIONAL AIRPORT (67%)
In January 2001, Infratil made its first offshore investment with the Â£14.8million (NZ$48.57million) acquisition of 67% of Glasgow Prestwick in Scotland.
Glasgow Prestwick derives income from a range of services (aeronautical, passengers, freight, defence, and ground facilities) providing both solid diversification and considerable growth opportunity.
As projected, Infratil's acquisition costs and Glasgow Prestwick's own transition costs were greater than the investment's income contribution in the two months to 31 March 2001 resulting in a net cost of $1.2million before funding costs and elimination of minorities. Over the medium term the investment is budgeted to provide increasing value.
PORT OF TAURANGA (24.6%)
Port of Tauranga ("POT") achieved a record net after tax profit of $19.65million in the year to 30 June 2000 and followed with $10.58million in the six months to 31 December 2000.
The results reflect continuing strong growth in container volumes and were achieved despite a volume decline in the six months brought about by markedly reduced log exports.
POT, in a joint venture with Northland Port Corporation, is building a new port at Marsden Point in Northland and has expanded its South Auckland METROPORT. METROPORT continues to achieve strong shipping line support with FESCO New Zealand Express Line recently making Tauranga its sole North Island call for a weekly service to the Far East that is expected to add 20,000 containers per annum.
In the six months to 30 September 2000 TrustPower achieved a net profit of $16.9million up from $15.2million for the comparable period in 1999. Dividends paid were 9.21 cents per share, up from 8.66 cents per share.
TrustPower has shown strong growth in energy retailing, evidenced by its increase in customer numbers to 280,000 today from 220,000 at 31 March 2000. In generation, TrustPower continues to enhance the control systems of its power stations and to progress development options. In this regard, the success of the Coleridge power station upgrade indicates the benefits that accrue from privatisation.
TRANZ RAIL (7.2%)
Infratil has followed Tranz Rail since its privatisation and made the investment, which had a market value of $35.8million as at 31 March 2001, in expectation of attractive long-term returns. However, with the company embarking on a comprehensive restructuring Infratil is waiting on outcomes before deciding on its investment options.
Your Board has decided that it is appropriate for the Company to change its name from Infrastructure & Utilities NZ Limited to Infratil Limited. Since inception seven years ago, the Company has been generally referred to as Infratil. However, given the existence of Infratil Australia an earlier name change was deemed inappropriate. With the takeover of Infratil Australia, this potential confusion is no longer relevant, hence the name change to Infratil Limited.
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