INFRATIL LIMITED FULL YEAR RESULT YEAR ENDED 31 MARCH MAY 2012

Transcription

1 INFRATIL LIMITED FULL YEAR RESULT YEAR ENDED 31 MARCH MAY 2012

2 INFRATIL GROUP 2011/12 OVERVIEW Strong momentum leading into 2012/13 Strong 2 nd half momentum has carried FY EBITDAF over $500m All core businesses have met or exceeded our expectations for FY12 $172m of FY12 capital expenditure largely targeting future growth projects Strong capital position with duration added to debt profile and significant head room for future investment Final dividend of 5.00cps, up 18% on PY High level of confidence in FY13 Infratil group forecasts and future earnings 2

3 INFRATIL GROUP FINANCIAL RESULTS Financial highlights Year Ended 31 March ($Millions) (1) Variance % Change EBITDAF (continuing activities) (2) $520.2 $470.9 $ Operating Earnings (continuing activities) (2) $199.3 $192.2 $ Net Surplus after Tax, MI and Disc Ops $51.6 $64.5 ($12.9) (20.0) Net Operating Cash Flow $196.4 $178.5 $ Capital Expenditure/Investment $171.9 $475.3 ($303.4) (63.8) (1) 2011 EBITDAF and operating earnings excludes fair value gain on acquisition of $60.7 million (2) Continuing operations in FY11 and FY12 exclude Infratil Airports Europe Limited which is held for sale at 31 March

4 INFRATIL GROUP 2011/12 REPORTED EARNINGS Consolidated P/L Group Financial Performance ($Millions) FY March 2012 FY March 2011 Operating revenue $2,218.9 $2,040.2 EBITDAF (continuing activities) $520.2 $470.9 Net interest ($187.2) ($167.8) Depreciation & amortisation ($133.7) ($110.9) Operating Earnings $199.3 $192.2 FV gains on acquisition of equity interest - $60.7 Net gain (loss) on reval of financial derivatives $19.2 ($3.9) Net investment realisations/(impairments) $4.3 ($0.5) Tax (1) ($58.4) ($81.4) Discontinued operation (2) ($37.4) ($47.5) Net Surplus after Tax $127.0 $119.6 Minority interests ($75.4) ($55.1) Net Parent Surplus $51.6 $64.5 (1) Includes for 2011 $35m of non-cash tax charges related to removal of tax depreciation on long life buildings (2) Discontinued operation in FY11 and FY12 refers to Infratil Airports Europe Limited which is held for sale at 31 March

5 INFRATIL GROUP 2011/12 OVERVIEW Earnings/cash flow ahead of expectations EBITDAF (1) $49.3m increase to $520.2m (+10.5% pcp) Reflects revenue growth from generation investment in 2010 and disciplined approach to margin and opex management Strong performances from TPW, NZ Bus & Infratil Australia Z Energy and WIAL have performed to expectations NET EARNINGS Group earnings of $127.0m, and earnings after minority interests of $51.6m, up from $58.9m and $3.8m respectively (excluding prior period FV gain on acquisition of Z Energy) Improved operating margins partly offset by higher depreciation on PY asset revaluations and higher interest costs OPERATING CASH FLOW $196m for the year (+10% pcp) reflecting the improved margins and working capital management FINAL DIVIDEND* - final dividend of 5.0 cps fully imputed payable on 15 June 2012 to shareholders recorded as owners by the registry as at 1 June (last year 4.25 cps) * The DRP will continue to operate for this dividend. The price of the DRP shares will be the weighted average price recorded on the NZX over 5 th 11 th June inclusive. Shares will be issued 15 th June (1) EBITDAF from continuing operations excluding $60.7m fair value gain on acquisition recorded in

6 INFRATIL GROUP 2011/12 EBITDAF BREAKDOWN Strong growth across all key subsidiaries FY 30 March ($Millions) TrustPower $300.2 $274.4 Infratil Energy Australia $64.4 $55.0 Wellington Airport $76.3 $72.3 NZ Bus $46.0 $40.1 Other, eliminations, etc. ($19.0) ($26.0) EBITDAF pre assoc $467.9 $415.8 Associates Z Energy (1) $52.3 $55.1 EBITDAF continuing $520.2 $470.9 EBITDAF discontinued ($11.9) ($11.3) Total EBITDAF $508.3 $459.6 (1) Z Energy 2011 comparative excludes FV gain on acquisition TrustPower EBITDAF increased 9% due to higher generation volumes and firmer wholesale prices IEA full year contribution from increased generation. Improved retail gross margins mitigated 2010 gas benefit arising from gas field outage Wellington Airport PAX growth of 1.1% driven by increase in international of 9.7%. Flat domestic PAX due to growth in Jetstar being offset by Virgin exit and impacts of CHCH earthquakes and ash cloud NZ Bus EBITDAF improvement of +15%, reflecting revenue growth of 7.8% from higher passengers and yield, and strong focus on costs Z Energy satisfactory full year performance in a difficult market of high crude oil prices and volatile currency. Z outperformed the market for both petrol and diesel sales in FY12 IAE discontinued operation following decision to market for sale 6

7 INFRATIL GROUP 2011/12 ADJUSTED EARNINGS ANALYSIS Adjusted earnings up 12.1% Adjusted Results ($Millions) FY March 2012 FY March 2011 Variance % Change Net Profit after Tax - reported $127.0 $119.6 $ % - Fair value gain on acquisition of Z Energy - ($60.7) - Net reval of derivatives & impairments/revaluations ($18.1) $3.2 - Z Energy equity earnings (adjust from HCA to CCS) ($10.6) ($16.4) - Tax effect of changes and 2010 law changes ($2.1) $ Add back result from discontinued operations $37.4 $47.5 Net Profit after Tax adjusted $133.6 $119.2 $ % Income statement normalised for a) revaluation of all energy, interest rate and FX derivatives, b) Z Energy earnings converted to CCS, c) impairments/realisations, d) results from discontinued operations and e) non-recurring items e.g. fair value gain on the acquisition of Z (2010) and the effect of tax changes in building depreciation and corporate tax rate (2010) 7

8 INFRATIL GROUP 2011/12 CAPITAL MANAGEMENT Support from bank and debt markets Comfortable gearing and strong support from senior lenders Bank capacity retained with $750m of total facilities and ~$400m of head room at 31 March 2012 Total group wholly owned debt (including PIIBs) of $1.2bn resulting in Infratil interest expense of $97m Gearing 40.8% (net dated debt / total net debt + equity capitalisation) Active in bond market activity across the group and share buybacks Infratil $81m new 5yr bond (including $6m roll-overs of 2011 maturities) at 8% and $66m 6yrs (including $16m of 2011 rollovers) at 8.5% IFT May and November 2011 bond maturities repaid Z Energy completed $150m 7yr bonds at 7.25% IFT share buybacks of 18.7m shares at average price of $1.84 New sources of capital introduced & bank re-financing completed Infratil $54m export credit facility for NZ Bus acquisitions (executed April 2011 and December 2011) Bank facility renewals completed for Infratil, TrustPower, Wellington Airport, Z Energy and Lumo 8

9 INFRATIL WHOLLY OWNED GROUP FACILITIES & MATURITY PROFILE Long-term funding with flexibility Total Infratil and wholly owned subsidiaries (1) borrowing facilities of $787m. Net drawn debt of $395m at 31 March, 2012 including RPS and utilised guarantees (excluding bonds) Senior borrowing facilities include senior debt, RPS and 9 year export credit facility Maturity profile illustrates access to debt markets for stable long-term infrastructure assets Infratil will continue to target debt maturities consistent with ownership of long-term assets As at 31 March ($ Millions) >4 yrs >10 yrs Bonds $57 $85 - $153 $328 $236 Infratil bank facilities (1) $98 $181 $118 $78 $55 - Vendor finance (2) $17 $18 $ % Sub. bank facilities $80 $ (1) Infratil and wholly-owned subs excludes TrustPower, WIAL, Perth Energy and Z Energy (2) Vendor finance used for Port Stanvac generation development funding 9

10 INFRATIL GROUP NET ASSET VALUATIONS NAV growth reflects ongoing investment Investment / Assets (1) ($Millions) March Mar TrustPower $1,154 $1,146 Infratil Energy Australia $477 $442 Wellington Airport $326 $297 Z Energy $331 $312 Infratil Airports Europe $70 $101 NZ Bus $246 $208 Other $65 $57 Total $2,669 $2,563 (1) Values exclude 100% subsidiaries cash balances and deferred tax where CGT does not apply TrustPower value change reflects NZX market price (i.e. passive portfolio per share valuation) Change in value of IEA due to currency revaluations, hedges and increased receivables, prepayments and inventory WIAL increase in value due to asset revaluation $210 million invested in Z Energy + share of net income and FV assessment (business valuation and multiple growth not recognised) NZ Bus investment in new buses - comparable acquisition multiples suggest significant value uplift from cost The value of Kent and Glasgow Prestwick airports and investment properties have been impaired by $26m from the 31 March 2011 independent valuations Other investments include Isite, Snapper and Property 10

11 NZ ENERGY TRUSTPOWER Consistent earnings with growing options EBITDAF increased 9% over prior period Higher NZ generation and firmer wholesale prices Higher revenue from Snowtown I Electricity customer numbers decreased to 209k from 221k at 31 March reduced acquisition activity in final quarter due to replacement of core IT systems Good progress on pipeline of material investment options 2 nd stage 270MW Snowtown Wind Farm in SA Further 970MW of wind development options secured in VIC & NSW future irrigation options (Canterbury primary focus) Firm wholesale prices and reasonable storage position suggest positive FY13 outlook for TPW 11

12 NZ ENERGY TRUSTPOWER Credible retail performance versus market TrustPower Losses vs Market 35% 30% 25% 20% 15% 10% 5% National What s My Number? campaign is driving customer churn Retaining high value customer segments 2012 focus on service and product excellence post billing system upgrade Product allocation to highest value markets TPW rated highest for service and community commitment in EA survey 0% Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 TPW Losses Market Switches 12

13 NZ ENERGY TRUSTPOWER Snowtown II PPA milestone achieved Scale: 270 MW Turbine Supply: Siemens 3MW turbines under EPC Contract PPA: 15 Year Term with Origin Energy Transmission: TrustPower will own Ownership: North: South: transmission to grid connection. Wind Farm divided into two separately metered wind farms 144MW (TPW to own) 126MW (TPW to sell but provide management services) Financial Close: Target 2 nd quarter 2012/13 13

14 NZ ENERGY TRUSTPOWER TPW retains significant NPV options MW MW Generation Development Pipeline - New Zealand 1,400 1,200 1, ,800 1,600 1,400 1,200 1, Existing Assets Consented Identified - not yet consented Hydro Wind Diesel Generation Development Pipeline - Australia ,220 Existing Assets Consented Identified - not yet consented NZ hydro and wind near term over-supply headwind to investment incremental investment in existing hydro assets show benefits strong NZ$ benefits good wind projects Arnold hydro scheme on hold for now Australian wind 20% by 2020 renewable energy target largely met by wind PPA s mitigate risk co-investor model enables large scale, better value projects and spreads risk newly acquired options strengthen pipeline in NSW and Victoria 14

15 NZ ENERGY TRUSTPOWER Well positioned for 2012/13 and beyond NZ hydro storage remains below average for this time of year TPW s hydro storage lakes are currently close to average current wholesale prices are firm Squeeze on retail margins make channel segmentation and cost control more important Clear programme of value add generation investment in NZ Focusing our development expertise on the Australian wind programme which should provide near term upside Mixed ownership model will improve whole of industry capital allocation 15

16 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Z Energy - Leadership in downstream oil Current cost EBITDAF +10.0% to $172m despite slower economic growth and increased price-based competition Z sales volumes flat versus -1% for industry Reported earnings impacted negatively by NZ Refining and effect of historic cost accounting Associate earnings -60% (or $6m) HCA adjustment -52% (or $32m) Expect to see competitive gains during 2012/13 given recent significant investment in brand, reformatting of stores and portfolio management ~$35m of net incremental EBITDA projected given current in-flight strategic initiatives Z leading industry discussion on sustainable investment and margins, including; capital recovery charge, national storage and distribution capability, service standards and reliability of supply 16

17 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Trading conditions sluggish Gross Refinery Margin (US$/bbl) Industry Volumes (m litres) Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2012 NZRC Z Singapore Marker Global margin deterioration in 1Q 2012 No clear trend for the future with a short term bearish outlook Data sourced from NZRC and IEA Premium Regular Diesel Jet Crude prices range bound USD$ /bbl Retail sales remain soft post recession Commercial sales tracking GDP growth Data sourced from LAPT returns 17

18 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Growing share in a challenging market Petrol Volumes - all channels Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Petrol and diesel sales represent about 70% of Z s total volumes For FY12, YoY sales for the industry are 3% for petrol and +2% for diesel Petrol volumes are lowest since 2004 All volume data indexed back to Jan 2010 and sourced from LAPT returns Z Industry (excl. Z) 125 Diesel Volumes - all channels Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Average Daily Customer Count (000 s) Q Q Q2010 3Q2010 1Q Q Q 2012 Z Industry (excl. Z) Fuel Only Shop Only Fuel & Shop 18

19 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Z volumes/margins are relatively stable 1,400 Total Volumes for all Products (ml per half year) 200 Gross Margins excluding Store ($m per half year) 25 1,200 1, average FY H FY2012 2H FY2012 refinery marketing average FY2011 1H FY2012 2H FY2012 marketing Other supply GRM less processing fee & coastal distribution Fuels cpl (RHS) MED importer margin - petrol cpl (RHS) MED importer margin - diesel cpl (RHS) 0 19

20 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY EBITDAF reflected a tough 4 th quarter Key Variables Full Year Actual Half Year Forecast Gross refinery margin (USD/bbl) $6.70 $7.50 RNZ processing volume (ml) 1,930 1,970 Sales volume (ml) 2,647 2,600 Operating costs $250m $ m Operating EBITDAF (CC) $172m $ m Capex $74m $85-90m Significant deterioration in refinery margins in 4Q plus unplanned shutdowns in 2H reduced net GRM by $19m YoY Retail sales volumes and margins affected by increased competitor activity in 4Q $12m of capex carried forward into FY13 as some projects are not yet completed, e.g. brand rollout 20

21 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Strong pipeline of incremental EBITDA $40 $35 $30 $25 $20 $15 $10 INITIATIVE ($m) - Product procurement - Scheduling optimisation - Diesel portfolio management - General Aviation network - Marine market - Brand change - Store refits - Car washes $5 $0 FY13 FY14 FY15 Retail Commercial S&D 21

22 NZ FUEL DISTRIBUTION & MARKETING Z ENERGY Z Energy outlook remains very positive Key Variables FY 2013 FY 2012 FY 2011 Average crude price (USD/bbl) $120 $109 $85 Average crude price (NZD/bbl) $156 $137 $115 Gross refinery margin (USD/bbl) $7.00 $6.70 $7.53 RNZ processing volume (ml) 1,880 1,930 1,901 Sales Volume (ml) 2,600 2,647 2,654 Operating costs $ m $250m $244m Operating EBITDAF (CC) $ m $172m $157m Capex $70-90m $74m $29m Refinery margins assume a recovery beyond 1Q Volume loss from competitor activity offset by strategic projects and new sites or rebuilds Full capital recovery charge benefits not included in these estimates Capex includes a carry forward from FY12 of $12m and the balance represents the expected commitment irrespective of timing of spend due to project pace $50m of terminal capex is not included in the forecast and depends on market conditions 22

23 AUSTRALIAN ENERGY LUMO AND PERTH ENERGY Second year of strong earnings growth Strong 12 month growth despite intense competition across all States revenue growth of A$82.0m (+12.0%) customer growth in NEM of 8% to 442,000 - annualised growth rate of 13% over 2 nd half strong market entry into NSW and continued net growth in VIC, QLD, SA and WA EBITDAF A$49.8m (+17%) Lumo and Perth Energy improved contribution from Perth Energy improved net margins in electricity higher gas supply costs (versus FY11) flattening of electricity demand due to energy efficiency products and mild summer Well positioned hedge book Increased investment in back office capability and systems Generation plant revaluations to A$277m 23

24 AUSTRALIAN ENERGY LUMO AND PERTH ENERGY Building a sustainable business Sales and operations Development of multiple channels to market Improved retention and win-back capability Strong momentum into 2012/13 Lumo is developing its brand, customer relationships and performance to reduce churn and target preferred customer groups expanded channels to market through connections business, partnering and direct online channels with target growth rate consistent with the last 6 months continued strong focus on wholesale risk management and well positioned to improve gas margins due to balanced and optimised gas portfolio 2012/13 EBITDAF outlook A$60m- A$70m (including Perth Energy) 24

25 NZ AIRPORTS WELLINGTON AIRPORT GDP+ growth from a core asset EBITDAF +5.7% to $76.3m Commercial revenue +9.7% due to strong growth in vehicle and duty free revenue CAPEX - $22m invested during the year including completion of new hangar, extension of main terminal car park and new baggage handling system. Future CAPEX focused on main terminal and additional car park enhancements Pricing and regulation new schedule of aeronautical prices have been set for the next 5 years. Commerce Commission review of the effectiveness of the new information disclosure regime is set to commence during FY13 Aeronautical revenue +7.2% strong international growth +9.7% primarily due to Air NZ/Virgin alliance flat domestic PAX due to Jetstar growth being offset by Virgin exit and impact of Christchurch and ash clouds 25

26 NZ PUBLIC TRANSPORT NZ BUS Improved capability and outlook EBITDAF +14.7% to $46.0m strong annual patronage growth in AKL (+6.3%) and WLG (+0.4%) tightly managed direct labour and maintenance costs and reduced overheads Major investment in fleet, facilities and people 236 new Alexander Dennis buses ordered and 114 delivered by March 2012 new state of the art depot in Onehunga pathway to safer driving programme Partnerships Public Transport Operating Model ( PTOM ) announced, signaling a commercial partnership approach to delivery of PT services partnership with Auckland Transport for the successful launch of the new Flagship bus services and HOP smartcard substantial contribution to the PT success associated with the RWC

27 INFRATIL GROUP CAPITAL EXPENDITURE Strong ongoing investment programme Capex ($Millions) FY March 2012 Outlook Mar 2013 TrustPower $49 $40-$50 Australian Energy $22 $40-$45 Wellington Airport $22 $20-$30 Public Transport $64 $50-$55 Euro Airports & Other $15 $5-$10 SUB TOTAL $172 $ Z Energy (1) $74 $85-$90 Total $246 $240 - $280 (1) 100% of Z Energy CAPEX TrustPower generation enhancement, and continued investment in customer care and billing systems (FY13 does not include Snowtown II development) Australian Energy organic customer growth and system developments /enhancements Wellington Airport carpark expansion, new private aircraft hangar, and further apron developments Public Transport NZ Bus fleet upgrade to meet future growth and regulatory requirements and Snapper Z Energy rebranding and reformatting of retail service stations 27

28 INFRATIL GROUP OUTLOOK Outlook reflects operating leverage FY 31 March ($Millions) FY 2012 Actual FY 2013 Outlook EBITDAF normalised (continuing operations) $510 $530 - $560 Net Interest ($187) ($190 - $200) Operating Cash Flow $196 $260 - $290 Depreciation and amortisation $134 ($145 - $155) 2013 EBITDAF range $530m - $560m - major assumptions: - Consistent gains across all businesses reflecting expected returns on recent CAPEX investment and ongoing improvement in operating margins delivered in 2011/12 - Improved overall contribution from Infratil Energy Australia due to balanced gas position and retail growth - Normalised for Z Energy CCS adjustment Operating cash flow reflects EBITDAF growth and lower working capital requirements, particularly in IEA where gas prepayments and banked gas inventory will be utilised 28

29 INFRATIL GROUP SUMMARY Clear long-term agenda and focus Ensure all core businesses are delivering real growth in cash flow and earnings Ensure capital structure and risk management systems can sustain inevitable shocks and future volatility - lock-in LT debt and committed financing at attractive allin costs Complete the sale of businesses or assets with limited growth potential Marketing process underway for Glasgow Prestwick and Kent Airports and review of ongoing investment in Perth Energy continues Actively scan origination opportunities in targeted sectors Address capital diversity by developing relationships with potential future domestic and international co-investors Look to reset or reinforce positions for the next 15 years of growth 29

30 For more information:

31 INFRATIL GROUP APPENDIX Z Energy Profit & Loss 31