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Infratil results for the year ended 31 March 2011

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:

• Earnings (EBITDAF) $460 million +27%.
• Operating Earnings +92%. Net Parent Surplus +122%
• Parent Comprehensive Income $118 million +305%. 19.6 cents per share
• Net Operating Cashflow $179 million +36%
• Capital and investment spending $475 million +146% (not including Z Energy’s own capital spending of $29 million)
• Early refinancing of all Infratil Infrastructure bonds maturing in FY12. Extension of bank facilities. Bond issuances by TrustPower and Greenstone Energy (as Z Energy was then called).
  
  A final dividend of 4.25 cents per share fully imputed will be paid 17 June to shareholders on the registry as at 3 June. The Dividend Reinvestment Plan will operate for this dividend with the price of shares issued in lieu of cash dividends to be the weighted average price recorded on the NZX 7th to 13th June inclusive. Shares will be issued 17 June.
  
  The dividend is a 13% increase on that paid last year.
  
  Infratil’s mandate is to provide its shareholders with exposure to growing infrastructure businesses with the aim of delivering good risk-adjusted returns over time. The main expected source of those shareholder returns will be increases in the value of Infratil’s businesses. However, post the GFC financial markets place more weight on cashflows and earnings and while Infratil remains a long-term investor, capital has been reweighted towards delivering current income. This year’s strong earnings growth is a consequence of this evolution in strategy. This growth is projected to continue.
  
  

  Infratil Results announcement in full

  Infratil Results Presentation

  Results Breakdown

  Infratil Ltd Audited Financial Statements for the Year Ended 31 March 2011