Asset sales help Infratil half-year

By Phil Boeyen, ShareChat Business News Editor

Tuesday 13th November 2001

Realisation gains have boosted the interim profit of utilities investor Infratil (NZSE: IFT) by 73%.

The company has recorded a profit of $17.47 million for the six months to the end of September, up from $10.12 million last year. An ordinary dividend of 2.75 cents a special dividend of 1.25 cents per share has been declared.

Gains on the sale of investments added $17.82 million to the result, including the sale of its last stake in the electricity lines industry, divesting NGC shares and reducing its holding in the Port of Tauranga (NZSE: POT) to just below 20%.

Earnings before depreciation, interest and tax, and before investment realisation gains and after deducting minority interests, increased 20% to $19.83 million from $16.51 million. Operating profit before taxation and realisations was $850,000 compared to $1.82 million in 2000.

Despite its exposure to the power and airport sectors Infratil says 2002 looks to offer considerable prospect.

"In particular, Wellington International Airport and TrustPower are likely to be achieving markedly better results. Glasgow Prestwick is registering strong traffic growth and should continue to increase returns," the company says.

"Port of Tauranga will have opened its Marsden Point facility and could well continue to surprise on the upside with its Tauranga trade."

Infratil says while Wellington International Airport experienced a difficult six months, particularly in the aftermath of the Qantas New Zealand failure, income had recovered to budget levels by August and by September passenger numbers were above the same month last year.

Glasgow Prestwick International Airport has also been performing in line with projections and a completed retail development at the airport has boosted revenue.

"The post September 11 Northern Hemisphere slow-down in air travel has had limited effect in Glasgow Prestwick thus far," Infratil says.

"Ryanair, which carries over 80% of the passengers using the Airport, has not experienced a sustained fall in patronage. Fewer people may be flying on international long haul flights, particularly transatlantic. However, short haul intra European traffic on low cost carriers has been robust and has, to date, shown little, if any, negative consequences from the wider industry downturn."

Infratil admits its power company investment, TrustPower (NZSE: TPW) was hurt by the high wholesale prices during winter but future income prospects have been enhanced by the recent increases in electricity prices.

"Higher retail prices will both underpin TrustPower's retail profitability and assist in the development of its hydro and wind powered generation," the company says.

Meanwhile the company has signalled it is willing to look at future technology investments outside the utilities sector, because targeting technology investments related directly to the infrastructure sector has proved too restrictive.

As a result it wants to modify its management contract with Morrison & Co to get both commitment to, and exclusivity for, such international and technology investments.

"The anticipated move into technology takes advantage of both the company's and the manager's strong position in New Zealand at a time when there are many exciting investment prospects and a limited number of parties with the capital and skills to invest in, and support, these businesses.

"Infratil's consideration of technology investments will be as a small percentage of its assets, to enable it to build its exposure slowly and take a low risk initial exposure to business opportunities which have potential, if successful, to become major investments for the company over a period of time," the company says.

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