Infratil Limited · NZX:IFT
Infratil — FY2014 Earnings Presentation
31 slides from Infratil's earnings presentation, May 13, 2014
Slide 1: Infratil Full Year Results Presentation
INFRATIL FULL YEAR RESULTS PRESENTATION Year Ended 31 March 2014 13 May 2014
Slide 2: Full Year Overview
Full Year Overview Value realisation and investment in new platforms • Record year for delivering net earnings and operating cash flows • $386m of gains on the Z Energy stake in the fiscal year following the successful IPO (realised and unrealised) • Satisfactory operating performance achieved despi
Slide 3: Financial Highlights
Financial Highlights Record increase in net surplus and operating cashflow Year Ended 31 March ($Millions) 2014 2013 Variance % Change EBITDAF (continuing activities)(1) 500.3 527.6 (27.3) (5.2%) Operating Earnings (continuing 167.5 183.5 (16.0) (8.7%) activities)(1)(2) Net Surplus after Tax, MI and
Slide 4: Result Summary
Result Summary Adjusted EBITDAF -7% on PY on softer trading conditions • $36.0m decrease in adjusted EBITDAF(1) of $501.8m (-7%), reflects slightly softer trading conditions vs prior period and a lower ownership stake in Z Energy following the IPO • Low NZ generation volume and strengthening NZD red
Slide 5: Result Summary
Result Summary Active management has delivered strong cash flows OPERATING CASHFLOW • $407.2m for the year (+41% pcp) including distributions from Z Energy of $107m, derivative realisations of $37.5m and reduced working capital requirements Z ENERGY IPO • IPO of 60% of Z Energy holding at $3.50 per
Slide 6: EBITDAF Breakdown
EBITDAF Breakdown Steady performance despite weaker trading conditions FY 31 March ($Millions) 2014 2013 • Trustpower – EBITDAF decrease of 6% as a result of lower NZ generation volumes Trustpower 277.4 294.8 (5%) and a significant strengthening of average NZD/AUD exchange rate (17%) Infratil Energy
Slide 7: Capital Market Overview
Capital Market Overview Strong capital position with capacity for future investment Comfortable gearing and • Infratil bank capacity retained with $784m of total strong support from senior facilities and ~$624m of head room at 31 March 2014 lenders • Wholly owned group debt has reduced by $214m • Ma
Slide 8: Debt Profile
Debt Profile Average duration provides flexibility • Net drawn bank debt of $109.5m at 31 March 2014 including utilised guarantees. Total Infratil and wholly owned subsidiaries(1) bank facilities of $784m • Senior borrowing facilities include senior debt with terms up to 5 years and 10 year export c
Slide 9: Net Asset Values
Net Asset Values Book Values at 31 March 31 March 31 March RECONCILIATION OF 12 MONTH Investment(1,2) ($Millions) 2014 2013 MOVEMENTS: Trustpower 1,036.7 1,226.0 • Trustpower – listed market value weakness reflects regulatory uncertainty Infratil Energy Australia 348.7 434.8 • IEA (Lumo and Perth En
Slide 10: NZ Energy - Trustpower
NZ Energy - Trustpower Challenging environment but growth potential • EBITDAF decreased 6% over prior period - Lower NZ generation and softer wholesale prices - Reduced sales volume - Increased retail competition reducing margin - Significant strengthening of NZD vs AUD • Increased spending on custo
Slide 11: NZ Energy - Trustpower: Competitive retail market place
NZ Energy - Trustpower Competitive retail market place • National market customer retail churn rates remain at high levels - Although Trustpower churn rates significantly lower than industry • Lower customer sales - Lower usage trends evident per customer - Tough C&I market • Significant increase in
Slide 12: Snowtown II – construction update and economic impact
NZ Energy - Trustpower Snowtown II – construction update and economic impact Project Status: • Transmission completed • 80 turbines erected • 73 turbines energised and connected • 66 turbines taken over under EPC • Commissioning total Stage 2 by July 2014 and handover by September 2014 Key Facts: •
Slide 13: Significant generation development options
NZ Energy - Trustpower Significant generation development options NZ Hydro, Wind and Irrigation • Near term over-supply headwind to investment • Continue to optimise existing schemes • Chart excludes $270m - $480m of potential investment for Lake Coleridge irrigation scheme (depending on final confi
Slide 14: NZ Fuel Distribution - Z Energy
NZ Fuel Distribution - Z Energy 12% growth in replacement cost operating EBITDAF • 12% growth in RC EBITDAF, +6% above the PFI • Growth in fuel and non-fuel margins delivered in competitive marketing environment • Retail and commercial customer satisfaction metrics continue to lead the market • Cont
Slide 15: Australian Energy - Lumo and Perth Energy
Australian Energy - Lumo and Perth Energy Another year of solid customer growth • 5% customer growth year in LUMO to 515,285, with strong 2nd half momentum (9% annualised in second half) • Revenue up 6.7% over pcp to $1bn • EBITDAF A$68.7m (-11% on pcp) largely due to weakness in generation earnings
Slide 16: Channel diversification and further customer growth expected
Australian Energy - Lumo and Perth Energy Channel diversification and further customer growth expected • Customer Growth 24,515 (+5% YoY) (+9% 2nd half annualised) - First half pause in D2D due to regulatory scrutiny - 2nd half sales momentum from above the line advertising and multi- channel strate
Slide 17: NZ Airports - Wellington Airport
NZ Airports - Wellington Airport GDP+ growth from a core asset • EBITDAF +3.6% to $86m, Aeronautical revenue +5.3% - Passengers increased to 5.44m - Strong international PAX +3.6%, due to strong growth on Melbourne and Sydney routes - Domestic PAX +0.8% with solid growth on the main trunk as airline
Slide 18: NZ Public Transport - NZ Bus
NZ Public Transport - NZ Bus Challenging PT market - weak growth and higher operating costs • Total passengers of 58m +0.3% growth, reflecting very weak first half growth - Passenger growth recovery (+4% in last quarter) from joint approach with Auckland Transport to improve service reliability and
Slide 19: NZ Bus: Investment in operational capability continues
NZ Public Transport - NZ Bus Investment in operational capability continues • On-going investment in fleet, people and technology - 135 new Alexander Dennis buses delivered in FY14. 285 new buses in Auckland and 58 in Wellington in the last 3 years - Continue to up-skill drivers through “Pathway to
Slide 20: NZ Public Transport - Snapper
NZ Public Transport - Snapper Scale platform with on-going innovation • PT continues to provide good opportunities - 46.6m transactions processed in FY14. Wellington ~72% of NZ Bus transactions used Snapper ~110k active users - GWRC and other regions are investigating the implementation of region-wi
Slide 21: Property - Infratil Infrastructure Property
Property - Infratil Infrastructure Property Working in partnership with local government • Owner and manager of 7 bus depots and investment properties • Acquired new site in 2013 and agreed new lease to NZBus as maintenance facility in Wellington • Completed construction of the ~$30m New Lynn Mercha
Slide 22: Z Energy IPO
Z Energy IPO Significant gain from capital recycling • On 21 August 2013, Infratil and NZ Super sold 60% of their holding and Z Energy Limited was listed on the NZX and ASX at $3.50 per share • Gross proceeds from the IPO were $840m. Net gain on IPO and revaluations were as follows: IFT Reported gai
Slide 23: Portfolio Activity
Portfolio Activity Entry into new sectors and investment platforms METLIFECARE (MET) • Acquisition of 19.9% of MET completed on 28 November 2013 for $147.9m ($3.53 per share) • Revaluation to market value ($4.32 per share) on acquisition date recognises gain of $33.1m • Infratil has 2 directors on t
Slide 24: IEA/Lumo Strategic Review
IEA/Lumo Strategic Review Lumo and Direct Connect assets likely to attract attention • Assets comprise over +520,000 customers in the NEM, 165MW of peaking generation and +110,000 p.a. utility connection business (“Direct Connect”) • Lumo Energy and Direct Connect Australia are likely to play an imp
Slide 25: Capital Expenditure
Capital Expenditure Completion of Snowtown II and WIAL growth capex dominate • Trustpower - Completion of 31 March FY15 Snowtown II ($55m) and ongoing Capex ($Millions) 2014 Outlook optimisation of NZ hydro facilities Trustpower 349.7 75 - 95 • Australian Energy – acquisition related to customer gro
Slide 26: 2014/15 Outlook
2014/15 Outlook Growth set to resume FY 2014 FY 2015 $Millions Actual Outlook(1) EBITDAF – continuing operations 500.3 530 - 560 Net interest 181.0 180 - 190 Operating cash flow 407.2 330 - 360 Depreciation and amortisation 151.8 170 - 180 (1) Assumes no major changes in the IFT portfolio 2014/15 EB
Slide 27: Infratil Group - Summary
Infratil Group - Summary Cultivating available options will accelerate future growth • Recent period of substantial value creation through strong operating performance, capital management and asset recycling - Broad strategic review of investment in IEA, Lumo and Direct Connect assets is underway •
Slide 28: For more information go to www.infratil.com
FOR MORE INFORMATION GO TO WWW.INFRATIL.COM Infratil 2014 28
Slide 29: Appendix I: Consolidated Profit & Loss
Appendix I Consolidated Profit & Loss FY March FY March Group Financial Performance ($Millions) 2014 2013 Operating revenue (before fair value gain on 2,384.0 2,400.0 Metlifecare) Operating expenditure (1,883.7) (1,872.4) EBITDAF (continuing activities) 500.3 527.6 Net interest (181.0) (195.4) Depre
Slide 30: Appendix II - Adjusted Earnings Reconciliation
Appendix II - Adjusted Earnings Reconciliation March March % Variance Year Ended 31 March ($Millions) 2014 2013 Change Net Profit after Tax – reported 274.6 77.0 197.6 256.6% • Net (gain)/loss on foreign exchange and derivativesi (53.1) 14.4 • Net investment revals, realisations and impairments (218
Slide 31: Appendix III: Z Energy HCA to RC Adjustment
Appendix III Z Energy HCA to RC Adjustment • Historic cost earnings (as required by IFRS) are subject to fluctuations in the value and volume of stock due to changes in oil prices, exchange rates and deliveries • Management and capital providers therefore focus on replacement cost earnings for Z Ene