Infratil Limited · NZX:IFT
Infratil — Investor Presentation (July 2002)
43 slides from Infratil's investor presentation, July 2002
Slide 1: Investor Presentation July 2002
Investor Presentation July 2002
Slide 2: Track Record / Returns
Track Record / Returns • Eight year return to shareholders 21.9% pa Infratil's Sharemarket Performance ! NZSE40 Gross 600 ! 5.5% pa (inclusive of IC) 500 400 • NTA growth 17.1% pa Index 300 200 • Average investment IRR 28.5% 100 pa 0 ! NTA growth and IRR based off Mar-90 Sep-90 Mar-91 Sep-91 Mar-92
Slide 3: Contents
Contents • Infratil overview • Financial performance and circumstances • Wellington International Airport • Glasgow Prestwick International Airport • TrustPower • Port of Tauranga • Initial Venture investments • Management contract July 2002 / Page 3
Slide 4: Portfolio Evolution
Portfolio Evolution Future 31 March 2002 $499M ! Investment criteria Infratil Holdings • High returns with low risk WIAL • Areas of expertise Glasgow Prestwick TrustPower • Control/influence Port of Tauranga Other 31 March 1998 31 March 2002 Airports Electricity $203M Generation Infratil Sector Expo
Slide 5: Investment / Control Profile
Investment / Control Profile Bonds $170.6m Infratil Banks $28.6m Management Contract Co-Investment Agreement H.R.L. Morrison & Co Group Alliant Energy 67% Glasgow Prestwick 66% Wellington 19.9% Port of Tauranga 27.9% TrustPower Other International Airport International Airport $101m $194m $39m $112m
Slide 6: 2001 / 2002 Events
2001 / 2002 Events • Portfolio ! Final sale from Powerco and NGC ! Sale of a 5% stake in Port of Tauranga ! Purchase of 1.5% in TrustPower • Funding ! $20m of 10 year Bonds issued ! Overall reduction in net debt (to $142.0m from $174.6m) • Investments ! WIAL consultation & regulatory review of aeron
Slide 7: Financial Performance Y/E March 2002
Financial Performance Y/E 31 March 2002 $000 2002 2001 Operating revenue 128,249 68,161 Operating expenses 122,852 63,241 Operating surplus before tax 5,397 4,920 Realisations & revaluations 28,039 11,573 Tax (1,618) 380 Surplus attributable to minorities (1,853) (402) Equity accounting deficit (7,3
Slide 8: Financial Performance
Financial Performance $000 2002 2001 2000 1999 1998 1997 EBITDAR 1 40,632 35,546 33,010 15,474 9,862 5,770 Realisation 28,039 11,573 22,200 11,383 244 620 NPAT 22,573 16,471 34,168 26,555 10,106 6,318 Dividends (cps) 7.00 9.25 9.25 8.00 5.00 3.00 Consolidated Assets 796,690 613,163 499,871 418,279 1
Slide 9: Returns Break-Down
Returns Break-Down $millions 2002 2001 2000 Dividends received (excluding WIAL) 11.9 18.2 23.0 Interest & other income (excluding 2.2 1.2 1.2 interest from WIAL) Realisations & revaluations 28.0 11.6 22.2 Wellington International Airport Earnings contribution before interest, 16.8 16.5 13.5 tax & de
Slide 10: 2002 Developments
2002 Developments • Investment objectives/criteria: ! Targeting above average risk-adjusted returns ! Positions of influence relevant to management expertise • International airports ! Opportunities under review Europe & USA • Venture capital ! Short listed by Crown to participate in VIF ! Investmen
Slide 11: Wellington International Airport
Wellington International Airport $000 2002 2001 Change Aero Income 24,023 24,058 -0.1% Aeronautical Passenger Aero Income $000 Numbers Income per Other income 13,062 11,736 11.3% 000’s pax $ Ordinary expenses 10,973 11,684 -6.1% 2002 Consultation / inquiry 1,493 539 WIAL 24,023 3,704 6.49 2001 EBITD
Slide 12: Wellington International Airport
Wellington International Airport • Price consultation with airlines ! New prices from 1 July 2002 Comparative Cost Index ! Price setting model described in 180 March Update 170 ! WIAL has underachieved income 160 target due to low passenger growth 150 Domestic Air Travel 1 140 130 • Commerce Commiss
Slide 13: Wellington International Airport
Wellington International Airport $M Revenue (000s) Passengers 40 4,000 Property Domestic International Passenger Services 3,500 Aeronautical 30 3,000 2,500 20 2,000 10 1,500 1997 1998 1999 2000 2001 2002 1997 1998 1999 2000 2001 2002 $M Earnings % $M Aeronautical Returns/Income 40 10 10 Return on Ae
Slide 14: Wellington International Airport
Wellington International Airport • Valuation (Current) • Property Development !Aeronautical = replacement cost ! Current project 4.5 hectare retail park • $30m !Non-Aero = market/DCF ! Further 10 hectares available ! Financing to be evaluated $000 2002 2000 ! Developments must: Aeronautical • Meet I
Slide 15: Wellington International Airport: Key determinants
Wellington International Airport Key determinants of future profitability & value • Passenger throughput ! Airfares • Requiring competition & capacity • Air NZ Express / Freedom / Qantas / Virgin • Passenger spend ! More international than domestic • Regulation ! Commerce Commission has started from
Slide 16: Glasgow Prestwick International Airport
Glasgow Prestwick International Airport 2002 2001 Scheduled Passengers 1,150,000 896,000 Non-Scheduled Passengers 159,000 92,000 Total Passengers 1,309,000 988,000 Freight Volume (tonnes) 42,630 42,164 Total Aero Income £8.76m £7.17m Concession Contribution £3.45m £2.23m Property Income £3.02m £2.65
Slide 17: Glasgow Prestwick International Airport
Glasgow Prestwick International Airport • Infratil’s investment cost $48.5m GPIA Fixed Asset Valuation Valuation $112.4m £ million 2002 2001 • Retail ! Contribution +55% Airport ! Per pax +17% Land and surfaces 25.10 Plant, equipment, buildings 16.60 ! Three new concessionairs Other • WH Smith (reta
Slide 18: Passengers (000)
Glasgow Prestwick International Airport Passenger and Freight Throughput 1,400 80 Scheduled Pax Charter Pax Freight 1,200 70 Passengers (000) Tonnes (000) 1,000 60 800 50 600 40 400 30 200 20 1996 1997 1998 1999 2000 2001 2002 • June Quarter 2002 ! Pax 375,595 vs 306,458 ! Freight 9,601 vs 11,006 Ju
Slide 19: Glasgow Prestwick : Ryanair
Glasgow Prestwick : Ryanair Year ended March 2001 896,000 Ryanair passengers used GPIA YE March 2002: 1,150,000 pax (+28%) Year to 31 March 2002, Ryanair pre-tax profit £105m. British Airways' short-haul European network £244m loss Ryanair carried 11.1 million passengers for an average fare of £33 (
Slide 20: Glasgow Prestwick : Ryanair
Glasgow Prestwick : Ryanair • Lower costs = lower fares = The Ryanair Formula London - Dublin higher growth • Aircraft productivity • Internet distribution (+90%) • YE March 2002 56 routes 10m pax • YE March 2003 75 routes 12.5m pax July 2002 / Page 20
Slide 21: Glasgow Prestwick : Ryanair
Glasgow Prestwick : Ryanair Growth Plans reflecting aircraft Current Scale (by pax) orders and options (by pax) 60 50 31.2 Million 29.7 pax 30 40 25 22.8 30 20 16.0 13.1 15 11.8 11.1 20 9.6 10 8.1 5.8 10 5 0 0 02 03 04 05 06 07 08 09 10 BA S M E SA IA SA S IA R C KL T U ER AI N AN AL JE G TA N SY N
Slide 22: Glasgow Prestwick: Key determinants
Glasgow Prestwick International Airport Key determinants of future profitability & value • Passenger throughput • Per Pax spend • Freight • Property development July 2002 / Page 22
Slide 23: TrustPower
TrustPower • The 2001 winter will not be • Immediate plans repeated: ! Optimise existing retailing ! New board unity ! Development and enhancement of ! Focus on risk management power stations ! Focus on establishing stable ! Development of renewable growing profitability base “options” ! Capital eff
Slide 24: TrustPower
TrustPower Monthly Average Wholesale Electricity Price 25 20 $M Financial Performance cents/kWh 15 Annual Average Price 700 100 10 Revenue EBITDA NPAT 600 5 80 500 0 1999 2000 2001 2002 400 60 Year Ended March 300 40 Annual Average Electricity Prices per Customer Type 200 25.0 Residential 20 Commerc
Slide 25: TrustPower
TrustPower Long Run Electricity Prices Figure 4. Electricity Prices and Plant Economics Generation Type New Generation Issues Estimated Required Electricity Price (cents/kWh) Base Price Carbon Tax Total Gas-Fired (CCGT) Declining gas availability and 4.8 - 5.8 0.2 – 1.0 5.0 – 6.8 increasing gas pric
Slide 26: TrustPower
TrustPower $m 2002 2001 2000 1999 1998 1997 Revenue 604 508 429 189 147 131 EBITDA 40 67 69 54 53 45 NPAT 1 23 27 17 21 16 Assets 855 867 813 770 418 352 Debt 179 143 146 120 85 67 SHF 598 623 596 582 303 260 Customers 280,000 266,000 220,000 208,000 97,000 88,000 Generation GWh 1,522 1,613 1,498 47
Slide 27: TrustPower: Key determinants
TrustPower Key determinants of future profitability & value • Gas prices • Co2 tax • Renewable incentives • Retail stability and value add July 2002 / Page 27
Slide 28: Port of Tauranga
Port of Tauranga Port of Tauranga Total Trade $M Financial Performance 12 300 8.00 80 Containers (thousands) Forestry Share Price 10 Other Exports 250 Imports 6.00 EBITDA 60 Tonnes (millions) Share Price 8 Containers (rhs) 200 NPAT 6 150 4.00 40 4 100 2.00 20 2 50 0 0 0.00 0 1990 1992 1994 1996 1998
Slide 29: Port of Tauranga
Port of Tauranga Meat Exports Log Exports 50 100 % of total exports % of total exports Tauranga Whangarei Napier 40 80 30 60 20 40 10 20 Tauranga Auckland Napier 0 0 1998 1999 2000 2001 1998 1999 2000 2001 Non-Log Forestry Exports Dairy Exports 60 % of total exports 80 50 % of total exports Tauranga
Slide 30: New Investment Fields
New Investment Fields • Technology / Venture Capital ! 3 years of investigation without an investment ! No attractive pure technology/utility over-laps. Technology is boundary-less • Offshore airports ! Build on M&Co expertise and Glasgow Prestwick • Australia ! M&Co experience ! Utility/Infrastruct
Slide 31: Venture Capital
Venture Capital • Three investments so far • Total initial commitment $6 million • Each company has expertise/experience and is looking to grow • Companies delivering a traditional service with technology to lower costs and enhance quality July 2002 / Page 31
Slide 32: PayGlobal
PayGlobal • Integrated service for payroll, time & attendance, rostering and human resources • New internet delivery service/product building on earlier success • Barrier to entry = product + track record ! Employers demand 100% accuracy • New Zealand, Australia • Infratil investment $3.8 million ww
Slide 33: Plato Health Systems
Plato Health Systems • Software for converting doctor/nurse patient treatment records into computer code that is used to determine healthcare funding • Focused on US market where payment is by ailment/treatment ! Fee allocation very complex and specific depending on both what was wrong with patient
Slide 34: Victoria Electricity Limited
Victoria Electricity Limited • Electricity retail start-up in Victoria Australia ! Recently introduced free contestability ! Highly regulated. 3 existing “franchise” companies • VEL model ! Cost and risk minimisation ! Counter to “incumbent wisdom” that scale is critical ! Low customer gain cost (<2
Slide 35: Venture Investment Fund
Venture Investment Fund • Infratil shortlisted with Orion Ventures • $15-20m commitment if it progresses • Crown provides capital and pays for management ! Infratil and Orion may purchase the Crown’s investments after 5 years to return Government • 7.0%pa • Advantages to Infratil: ! Crown effectivel
Slide 36: Offshore Airports
Offshore Airports • M&Co Airport Group seeking opportunities internationally ! Near major population centers ! Suitable for large scale low fare & freight airlines ! Avoidance of competitive processes ! Focus USA and Europe ! M&Co has experience with low-fare / freight operators • Significant number
Slide 37: Existing Management Contract
Existing Management Contract • Infratil managed under contract by Morrison & Co ! M&Co provides a mix of industry and investment skills • Fees based off capital employed ! 1.08% up to $150m. 0.80% marginal cost ! Any other fees fully disclosed and contested • November 2001 Interim Report raised the
Slide 38: Proposed Changes
Proposed Changes • NZ Utility Investments ! No change • Australian Utility investments ! Additional incentive fee • Existing VC investments ! Higher base fee on investments (rebated against existing fee) + incentive fee • VIF investments ! Higher base fee on commitments (rebated against existing fee
Slide 39: Management Contract Comparisons
Management Contract Comparisons Fund/Manager Value Base Fee Incentive Fee Macquarie Airports Group A$1b 1.5% capitalisation 20% of returns >MSCI WTI Macquarie Infrastructure Group A$5.2b 1.25% net 15% of returns >ASX investments Australia Infrastructure Fund A$400m 1% net assets 10% of returns over
Slide 40: International Investments
International Investments • 1.5% pa Base Fee (rebated against existing management fees) ! Excludes investment in NZ and Australia ! Paid on the gross cost of investments (adjusted for cash income and FX gains/losses) ! No payment on revaluations • Incentive Fee 20% of returns above 12% pa after tax
Slide 41: Venture Investments
Venture Investments • Non – VIF Investments (existing 3) ! 2% on net sums invested up to $7.5m and 1.2% thereafter ! Incentive Fee 20% of realised portfolio gains over 17.5% pa pre tax • VIF Base Fee ! Base Fee 2.5% pa of commitment (net of cost value of any realisations) ! If the portfolio value <
Slide 42: Fee Changes
Fee Changes • Base Fees • Incentive Fees ! Reflect a very careful assessment ! Fixed hurdle rate of management cost • No chance of shareholders doing ! Very transparent and reflect the poorly and manager well independence of the Infratil board ! Hurdle is high by the standards of recent • Any furthe
Slide 43: Future
Future • Focus on new high returning investments ! Airports internationally ! Technology ! Utilities in New Zealand/Australia • Focus on enhancing the return of existing investments ! WIAL, TrustPower, Glasgow Prestwick, PoT • Portfolio managed to balance maturity/risk/potential • Funding from monet