Infrastructure company Infratil has booked a $32.4 million loss for the first half of the year to September, largely caused by the revaluation of assets.
Infratil's investments include Infratil Airports Europe, TrustPower, Wellington Airport and Infratil Energy Australia, and it is negotiating with the New Zealand Superannuation Fund for the pair to buy Shell's New Zealand energy distribution and refining assets in a 50:50 joint deal.
Industry sources have speculated the Shell assets to be worth around $1 billion.
Infratil shares were slightly down yesterday, trading around $1.52.
Craigs Investment Partners broker Peter McIntyre said non-cash impairments (the writedown of asset values) had to be undertaken every six months. However, while some assets were losing value at present, in the future they would be revalued upward and added to net profit after tax, as a non-cash item.
"Infratil have numerous large assets so it [the writedowns and subsequent loss] were not unexpected by the market," he said.
Infratil had downgraded its own profit guidance to $355 million to $370 million in earnings before interest, tax, depreciation, amortisation and financial instruments, the latter under International Financial Reporting Standards, Mr McIntyre said.
Before September 30, about $63 million was received from the sale of property and the Fullers Ferry business. After the balance date, $152 million was received from the sale of Infratil's interests in Lubeck and Auckland airports, NZPA reported.
"Infratil is keeping its cash-cow investments intact, Wellington Airport and TrustPower, but is selling other assets to raise money for the Shell deal," Mr McIntyre said. Negotiations for the deal are understood to be "at an advanced stage".
Infratil said it was working with the New Zealand Superannuation Fund to acquire Shell's New Zealand energy distribution and refining assets.
"If completed, the transaction would be attractively priced and result in control of an integrated downstream energy business in a stable market with earnings growth opportunities," Infratil said.
Its operating surplus for the six months to the end of September was $70.4 million, compared with $67 million a year earlier. Non-cash charges of $80 million for asset and financial instrument revaluation were partially offset by $26.2 million in cash gains on the sale of investments, resulting in a net loss of $31.4 million, compared with a net surplus of $7.3 million last year.
A fully imputed dividend of 2.5c per share is to be paid.
The earnings outlook for the 2009-10 financial year was slightly lower than indicated six months ago, while still forecast to be higher than in 2008-9.
That outlook reflected softer trading conditions and slower recovery from the recession, Infratil said.
Negative impacts of gas prices in Australia, a labour dispute in Auckland and weak passenger traffic affecting Infratil Airports Europe had offset the otherwise improving underlying performance of Wellington Airport, TrustPower and Infratil Energy Australia.
- Additional reporting by NZPA.
