Infratil goes better than expectations

Stakes in energy companies helped boost earnings for diversified investment company Infratil which beat its guidance and delivered a larger than expected dividend to shareholders.

The dividend rose from 14.25c a year ago to 15.75c per share, but that was 5c per share ahead of expectations of brokers Forsyth Barr, but in line with Craigs Investment Partners’ expectations.

A tailwind for the recently demerged hydro and wind farm companies Trustpower and Tilt Renewables boosted underlying earnings by more than $36 million, to a combined total of $366.2 million from the two companies, for its year to March.

"The weather literally provided a late windfall for Tilt and Trustpower’s generation," Infratil said  yesterday.

Canberra Data Centre and ANU Student Accommodation also made first time contributions of respectively $10.6 million and $7 million.

Infratil shares were up 1% at $3.02 after the announcement.

Infratil’s consolidated underlying earnings before interest, tax, depreciation, tax, depreciation, amortisation and financial instruments (Ebitdaf) was up 12.4% to $519.5 million from $462.1 million  a year ago. Infratil’s after-tax profit declined from $437.2 million a year ago to $66.2 million, as Infratil had a year earlier benefited from $436.3 million of gains on the sale of Z Energy and iSite.

Craigs Investment partners broker Peter McIntyre said Infratil’s Ebitdaf, up 12.4% to $519.5 million, was "significantly above" the earlier guidance range of $485 million to $505 million.

"We had expected Infratil to be on the upside of the range, but this exceeded our expectations," he said.

That was due to a higher than forecast contribution from Canberra Data Centres and lower than expected level of corporate costs, of about $5million, Mr McIntyre said.

Forsyth Barr broker Damian Foster singled out the main Ebitdaf contributors as the strong Trustpower performance, due to favourable hydro conditions, and also the first contributions from Canberra Data Centres and ANU Student Accommodation.

After Infratil’s sale of its stake in Metlifecare, Mr Foster said it now had $630 million available for investment.

"A key questions remains what it will invest that cash in ... most likely to be within the portfolio or modest bolt-on acquisitions that add value to existing assets, such as additional retirement villages in Australia," he said.

Infratil said its available cash and committed bank facilities, following the Metlifecare sale, stood at $631 million.

Infratil said as at year end it had invested $728.2 million; $168.1 million was internal capital expenditure and $560.1 million was spent acquiring new investments.

"This was the most active year for acquisitions in Infratil’s 23-year history," Infratil said.

The $728.1million of investments increased Infratil’s  net debt to $913.3 million , but just after balance date debt was reduced by $237.9 million following the receipt of proceeds from Metlifecare, which had been acquired in November 2013 for $147.9 million. Mr Foster noted Perth Energy, which had delivered a first  loss of $9.7 million then a  second-half loss of $4.4million for the year was an improvement, but still a concern.

"Infratil had provided a $A22.9 million loan to support the business," and Mr Foster expected Infratil to  provide more information on Perth Energy.

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