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Infratil lifts 1H dividend as Z sell-down floods coffers; pretax earnings slip

Tuesday 12th November 2013

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Infratil, the listed infrastructure investor, raised its first-half dividend after trebling its money from the sell-down of service station chain Z Energy, while pretax earnings were hurt by smaller contributions from power company investments.

The Wellington-based company will pay an interim dividend of 3.75 cents per share, up from 3.25 cents a year earlier, on Dec. 13 with a record date of Nov. 29, it said in a statement. The hike came after the company booked a $182.5 million net gain from the float of Z Energy, which helped Infratil post a net profit of $230 million in the six months ended Sept. 30, turning from a loss of $16.5 million a year earlier.

"The (dividend) increase reflects Infratil's higher cash earnings, sound financial position and the goal of providing shareholders with growing tangible returns," it said.

Earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDAF) fell 4.2 percent to $278.8 million, with smaller contributions from its TrustPower and Australian energy units due to lower electricity generation volumes in New Zealand, and weak winter demand in Australia.

Infratil affirmed annual EBITDAF guidance of between $500 million and $540 million, and increased forecast operational cash flow to between $360 million and $400 million, from a previous range of between $300 million and $340 million.

The company had previously indicated plans to lift its dividends and was going to embark on a share buyback to help prop up the share price, before deciding to buy a 19.9 percent stake in retirement village operator and developer Metlifecare, a sector Infratil hasn't previously invested in.

"The sector is subject to highly favourable demand trends, Metlifecare is a good entry point in regards to value and opportunity and the factors which will drive Metlifecare's success are ones with which Infratil management are well acquainted," the company said.

Infratil also increased its ownership in HR and payroll software firm PayGlobal to 54 percent from 33 percent previously after the company restructured its capital. That means PayGlobal has become a subsidiary of the group, with $3.2 million of goodwill arising from the restructure, and net assets of $3.6 million.

Morrison & Co received management fees of $10.7 million in the first half, up from $10.1 million a year earlier.

The company's shares fell 1 percent to $2.46 in trading yesterday, and have gained 8.4 percent this year.

TrustPower's EBITDAF fell 7.8 percent to $153.2 million in the half and Infratil Energy Australia's earnings dropped 19 percent to $57.4 million, partially reflecting a stronger New Zealand dollar.

Wellington International Airport's earnings rose 7.3 percent to $42.4 million with a 6 percent increase in passenger numbers, while NZ Bus reported a 1.4 percent fall in EBITDAF to $21.5 million, due to a decline in patronage.

Infratil fully impaired it's the value of its Manton and Glasgow Prestwick airports, which it's in the process of exiting, in what it called "very poor" financial outcomes brought on by the global financial crisis.

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